Exhibit 13
THERMO POWER CORPORATION
Consolidated Financial Statements as of September 30, 1995
PAGE
Thermo Power Corporation
Consolidated Statement of Income
Year Ended
---------------------------------------
(In thousands except September 30, October 1, October 2,
per share amounts) 1995 1994 1993
-------------------------------------------------------------------------
Revenues (Note 11) $103,255 $ 89,334 $ 75,429
-------- -------- --------
Costs and Operating Expenses:
Cost of revenues 79,823 70,026 60,855
Selling, general and administrative
expenses (Note 8) 15,886 14,203 11,846
Research and development expenses 3,065 1,622 995
-------- -------- --------
98,774 85,851 73,696
-------- -------- --------
Operating Income 4,481 3,483 1,733
Interest Income 1,919 1,278 1,161
Interest Expense (includes $37 and
$307 to parent company in fiscal
1994 and 1993) (23) (61) (342)
Gain on Sale of Investments, Net
(includes $768, $616 and $404 on
sale of related party investments)
(Note 8) 730 582 576
-------- -------- --------
Income Before Provision for Income
Taxes and Minority Interest 7,107 5,282 3,128
Provision for Income Taxes (Note 7) 2,737 2,034 1,205
Minority Interest Expense 182 - -
-------- -------- --------
Net Income $ 4,188 $ 3,248 $ 1,923
======== ======== ========
Earnings per Share $ .34 $ .26 $ .18
======== ======== ========
Weighted Average Shares 12,372 12,291 10,676
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
2PAGE
Thermo Power Corporation
Consolidated Balance Sheet
September 30, October 1,
(In thousands) 1995 1994
-------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $ 23,504 $ 7,474
Available-for-sale investments, at quoted
market value (amortized cost of $10,624)
(includes $429 of related party investments)
(Notes 2 and 8) 10,666 -
Short-term investments, at cost (quoted market
value of $20,723) (includes $800 of related
party investments) - 20,405
Accounts receivable, less allowances of $530
and $590 18,203 13,638
Unbilled contract costs and fees 6,228 5,236
Inventories 22,249 14,862
Prepaid income taxes (Note 7) 3,213 3,003
Other current assets 752 135
-------- --------
84,815 64,753
-------- --------
Rental Assets, at Cost, Net 6,406 4,195
-------- --------
Property, Plant and Equipment, at Cost, Net 8,467 7,679
-------- --------
Long-term Available-for-sale Investments,
at Quoted Market Value (amortized cost of $471)
(includes $339 invested in parent company common
stock) (Notes 2 and 8) 733 -
-------- --------
Long-term Investments, at Cost (quoted market
value of $565) (includes $18 invested in parent
company common stock) - 471
-------- --------
Other Assets 223 -
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Note 3) 7,773 5,523
-------- --------
$108,417 $ 82,621
======== ========
3PAGE
Thermo Power Corporation
Consolidated Balance Sheet (continued)
September 30, October 1,
(In thousands except share amounts) 1995 1994
-------------------------------------------------------------------------
Liabilities and Shareholders' Investment
Current Liabilities:
Accounts payable $ 13,262 $ 9,929
Accrued payroll and employee benefits 2,732 2,466
Customer advances 971 1,139
Accrued warranty costs 2,100 3,368
Accrued income taxes 1,368 924
Other accrued expenses 4,242 3,510
Due to Thermo Electron Corporation and
affiliated companies - 274
-------- --------
24,675 21,610
-------- --------
Deferred Income Taxes (Note 7) 118 192
-------- --------
Long-term Obligations (Note 10) 364 344
-------- --------
Commitments (Notes 8 and 9)
Common Stock of Subsidiary Subject to Redemption
($18,450 redemption value) (Note 1) 17,435 -
-------- --------
Shareholders' Investment (Notes 4 and 5):
Common stock, $.10 par value, 30,000,000 shares
authorized; 12,478,544 and 12,425,273 shares
issued 1,248 1,243
Capital in excess of par value 53,898 53,211
Retained earnings 10,822 6,634
Treasury stock at cost, 49,758 and 121,140 shares (341) (613)
Net unrealized gain on available-for-sale
investments (Note 2) 198 -
-------- --------
65,825 60,475
-------- --------
$108,417 $ 82,621
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
4PAGE
Thermo Power Corporation
Consolidated Statement of Cash Flows
Year Ended
---------------------------------------
September 30, October 1, October 2,
(In thousands) 1995 1994 1993
-------------------------------------------------------------------------
Operating Activities:
Net income $ 4,188 $ 3,248 $ 1,923
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Depreciation and amortization 2,082 1,867 1,298
Provision for losses on accounts
receivable 3 (2) (149)
Gain on sale of investments, net
(Note 8) (730) (582) (576)
Minority interest expense 182 - -
Increase (decrease) in deferred
income taxes (166) - 391
Changes in current accounts,
excluding the effects of
acquisitions:
Accounts receivable (4,568) (1,236) (1,337)
Inventories and unbilled
contract costs and fees (8,881) 693 (2,329)
Other current assets (558) 366 (510)
Accounts payable 3,333 767 1,109
Other current liabilities 196 (677) 2,999
Other (191) 85 -
-------- -------- --------
Net cash provided by (used in)
operating activities (5,110) 4,529 2,819
-------- -------- --------
Investing Activities:
Acquisitions, net of cash
acquired (Note 3) (2,500) (7,947) (13,185)
Purchases of available-for-sale
investments (365) - -
Proceeds from sale and maturities of
available-for-sale investments 9,074 - -
Proceeds from sale of related party
investments 1,599 1,462 447
(Increase) decrease in short-term
investments - 9,326 (23,657)
Purchases of long-term investments - (453) -
Purchases of property, plant and
equipment (2,101) (875) (661)
Increase in rental assets (2,848) (1,856) -
Other 273 66 423
-------- -------- --------
Net cash provided by (used in)
investing activities $ 3,132 $ (277) $(36,633)
-------- -------- --------
5PAGE
Thermo Power Corporation
Consolidated Statement of Cash Flows (continued)
Year Ended
---------------------------------------
September 30, October 1, October 2,
(In thousands) 1995 1994 1993
-------------------------------------------------------------------------
Financing Activities:
Net proceeds from issuance of
Company and subsidiary common
stock (Note 1) $ 18,064 $ 266 $ 36,133
Issuance of obligations to
parent company - - 5,000
Repayment of obligations to
parent company (Note 8) - (3,000) (5,000)
Repayment of long-term obligations (56) (198) (232)
-------- -------- --------
Net cash provided by (used in)
financing activities 18,008 (2,932) 35,901
-------- -------- --------
Increase in Cash and Cash Equivalents 16,030 1,320 2,087
Cash and Cash Equivalents at
Beginning of Year 7,474 6,154 4,067
-------- -------- --------
Cash and Cash Equivalents at
End of Year $ 23,504 $ 7,474 $ 6,154
======== ======== ========
Cash Paid For:
Interest $ 23 $ 61 $ 343
Income taxes $ 2,796 $ 1,575 $ 1,169
Noncash Investing Activities:
Fair value of assets of acquired
companies $ 2,500 $ 10,571 $ 21,897
Cash paid for acquired companies (2,500) (7,947) (13,185)
-------- -------- --------
Liabilities assumed of acquired
companies $ - $ 2,624 $ 8,712
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
6PAGE
Thermo Power Corporation
Consolidated Statement of Shareholders' Investment
Net
Unrealized
Common Gain on
Stock, Capital in Available-
$.10 Par Excess of Retained Treasury for-sale
(In thousands) Value Par Value Earnings Stock Investments
- --------------------------------------------------------------------------------
Balance September 26, 1992 $ 811 $16,876 $ 1,463 $ (848) $ -
Net income - - 1,923 - -
Net proceeds from public
offering of common stock 431 35,567 - - -
Issuance of stock under
employees' and directors'
stock plans - 43 - 92 -
Tax benefit related to
employees' and directors'
stock plans - 241 - - -
------- ------- ------- ------- ---------
Balance October 2, 1993 1,242 52,727 3,386 (756) -
Net income - - 3,248 - -
Issuance of stock under
employees' and directors'
stock plans 1 122 - 143 -
Tax benefit related to
employees' and directors'
stock plans - 362 - - -
------- ------- ------- ------- ---------
Balance October 1, 1994 1,243 53,211 6,634 (613) -
Net income - - 4,188 - -
Issuance of stock under
employees' and directors'
stock plans 5 534 - 272 -
Tax benefit related to
employees' and directors'
stock plans - 153 - - -
Effect of change in
accounting principle
(Note 2) - - - - 268
Change in net unrealized
gain on available-for-
sale investments (Note 2) - - - - (70)
------- ------- ------- ------- ---------
Balance September 30, 1995 $ 1,248 $53,898 $10,822 $ (341) $ 198
======= ======= ======= ======= =========
The accompanying notes are an integral part of these consolidated financial
statements.
7PAGE
Thermo Power Corporation
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Relationship with Thermo Electron Corporation
Thermo Power Corporation (the Company) was incorporated on June 6, 1985, as
a wholly owned subsidiary of Thermo Electron Corporation (Thermo Electron).
As of September 30, 1995, Thermo Electron owned 7,832,326 shares of the
Company's common stock, representing 63% of such stock outstanding.
Principles of Consolidation
The accompanying financial statements include the accounts of the Company,
its wholly owned subsidiaries, and its 78%-owned privately held subsidiary,
ThermoLyte Corporation (ThermoLyte). All significant intercompany accounts
and transactions have been eliminated.
Fiscal Year
The Company has adopted a fiscal year ending the Saturday nearest September
30. References to fiscal 1995, 1994, and 1993 are for the fiscal years
ended September 30, 1995, October 1, 1994, and October 2, 1993,
respectively. Fiscal years 1995 and 1994 each included 52 weeks; 1993
included 53 weeks. The 53-week year did not have a material impact on the
Company's results of operations.
Revenue Recognition
The Company recognizes revenues upon shipment of its products or upon
completion of services it renders, and recognizes rental revenues on a
straight-line basis over the term of the rental contract. The Company
provides a reserve for its estimate of warranty costs at the time of
shipment. Revenues and profits on contracts are recognized using the
percentage-of-completion method. Revenues recorded under the
percentage-of-completion method, including revenues from research and
development contracts, were $53,045,000 in fiscal 1995, $51,862,000 in
fiscal 1994, and $43,622,000 in fiscal 1993. The percentage of completion
is determined by relating the actual costs incurred to date to management's
estimate of total costs to be incurred on each contract. If a loss is
indicated on any contract in process, a provision is made currently for the
entire loss. Contracts at the Company's FES division generally provide for
billing of customers on a fixed-price basis upon contract completion.
Contracts at the Company's Tecogen division generally provide for billing
of customers on a cost-plus-fixed-fee basis as costs are incurred. Revenues
earned on contracts in process in excess of billings are classified as
"Unbilled contract costs and fees" in the accompanying balance sheet. There
are no significant amounts included in the accompanying balance sheet that
are not expected to be recovered from existing contracts at current
contract values, or that are not expected to be collected within one year,
including amounts that are billed but not paid under retainage provisions.
Research and Development Arrangements
The Company has research and development arrangements with the natural gas
industry and various governmental agencies. Revenues in the accompanying
statement of income include $4,917,000, $5,209,000, and $6,457,000, and
cost of revenues include $3,548,000, $4,197,000, and $5,310,000 related to
these arrangements in fiscal 1995, 1994, and 1993, respectively. The
Company is required to pay royalties for any technologies developed or
products commercialized under several of these arrangements. Selling,
general and administrative expenses in the accompanying statement of income
8PAGE
Thermo Power Corporation
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (continued)
include royalty expense related to these arrangements of $51,000, $75,000,
and $80,000 in fiscal 1995, 1994, and 1993, respectively.
Income Taxes
Pursuant to a tax allocation agreement between the Company and Thermo
Electron, the Company was included in the consolidated income tax returns
filed by Thermo Electron for the period from September 27, 1992 through
February 10, 1993. The agreement provided that the Company would pay to
Thermo Electron amounts comparable to the taxes the Company would have paid
if it had filed separate tax returns. Subsequent to the Company's public
offering of common stock in February 1993, Thermo Electron's equity
ownership of the Company was reduced below 80% and, as a result, the
Company is required to file its own income tax returns.
In accordance with Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," the Company recognizes deferred
income taxes based on the expected future tax consequences of differences
between the financial statement basis and the tax basis of assets and
liabilities calculated using enacted tax rates in effect for the year in
which the differences are expected to be reflected in the tax return.
Earnings per Share
Earnings per share have been computed based on the weighted average number
of shares outstanding during the year. Because the effect of the exercise
of stock options would be immaterial, they have been excluded from the
earnings per share calculation. Fully diluted earnings per share have not
been presented because the effect of the exercise of stock options and the
conversion of the Company's subordinated convertible note, which was repaid
in December 1993, would be immaterial or antidilutive.
Cash and Cash Equivalents
As of September 30, 1995, $22,381,000 of the Company's cash equivalents
were invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Company in effect lends excess cash to Thermo Electron,
which Thermo Electron collateralizes with investments principally
consisting of corporate notes, U.S. government agency securities, money
market funds, commercial paper, and other marketable securities, in the
amount of at least 103% of such obligation. The Company's funds subject to
the repurchase agreement are readily convertible into cash by the Company
and have an original maturity of three months or less. The repurchase
agreement earns a rate based on the Commercial Paper Composite Rate plus 25
basis points, set at the beginning of each quarter. Cash equivalents are
carried at cost, which approximates market value.
Available-for-sale Investments
Pursuant to SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," effective October 2, 1994, the Company's debt and
marketable equity securities are accounted for at market value (Note 2).
Prior to fiscal 1995, these investments were carried at the lower of cost
or market value.
9PAGE
Thermo Power Corporation
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (continued)
Inventories
Inventories are stated at the lower of cost (on a first-in, first-out
basis) or market value and include materials, labor, and manufacturing
overhead. The components of inventories are as follows:
(In thousands) 1995 1994
------------------------------------------------------------------------
Raw materials and supplies $17,453 $11,568
Work in process and finished goods 4,796 3,294
------- -------
$22,249 $14,862
======= =======
Rental Assets
The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation over the estimated useful lives of the rental assets, which
range from five to seven years. Accumulated depreciation was $985,000 and
$348,000 at fiscal year-end 1995 and 1994, respectively.
Property, Plant and Equipment
The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the
estimated useful lives of the property as follows: buildings - 40 years;
machinery and equipment - 3 to 12 years; and leasehold improvements - the
shorter of the term of the lease or the life of the asset. Property, plant
and equipment consist of the following:
(In thousands) 1995 1994
------------------------------------------------------------------------
Land and buildings $ 4,993 $ 4,378
Machinery, equipment and leasehold improvements 10,239 9,032
------- -------
15,232 13,410
Less: Accumulated depreciation and amortization 6,765 5,731
------- -------
$ 8,467 $ 7,679
======= =======
Cost in Excess of Net Assets of Acquired Companies
The excess of cost over the fair value of net assets of acquired companies
is amortized using the straight-line method over 40 years. Accumulated
amortization was $300,000 and $142,000 at fiscal year-end 1995 and 1994,
respectively. The Company assesses the future useful life of this asset
whenever events or changes in circumstances indicate that the current
useful life has diminished. The Company considers the future undiscounted
cash flows of the acquired businesses in assessing the recoverability of
this asset.
10PAGE
Thermo Power Corporation
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (continued)
Common Stock of Subsidiary Subject to Redemption
In March 1995, the Company's ThermoLyte subsidiary sold 1,845,000 units,
each unit consisting of one share of ThermoLyte common stock, $.001 par
value, and one redemption right, at $10.00 per unit, for net proceeds of
$17,253,000. Holders of the common stock purchased in the offering will
have the option to require ThermoLyte to redeem in December 1998 or 1999
any or all of their shares at $10.00 per share. The redemption rights are
guaranteed on a subordinated basis by Thermo Electron. The Company has
agreed to reimburse Thermo Electron in the event Thermo Electron is
required to make a payment under the guarantee. The difference between the
redemption value and the original carrying amount of common stock of
subsidiary subject to redemption is accreted using the straight-line method
over the period ending December 1998, which corresponds to the first
redemption period. The accretion is charged to minority interest expense in
the accompanying statement of income. ThermoLyte is developing a line of
propane-fueled lighting products, including flashlights, area lights or
lanterns, and hazard lights. Following the offering, the Company owned 78%
of ThermoLyte's outstanding common stock.
2. Available-for-sale Investments
Effective October 2, 1994, the Company adopted SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." In accordance with
SFAS No. 115, the Company's debt and marketable equity securities are
considered "Available-for-sale investments" in the accompanying balance
sheet and are carried at market value, with the difference between cost and
market value, net of related tax effects, recorded currently as a component
of shareholders' investment titled "Net unrealized gain on available-for-
sale investments." Effect of change in accounting principle in the
accompanying statement of shareholders' investment represents the
unrealized gain, net of related tax effects, pertaining to available-for-
sale investments held by the Company on October 2, 1994.
The aggregate market value, cost basis, and gross unrealized gains and
losses of short- and long-term available-for-sale investments by major
security type, as of September 30, 1995, are as follows:
Gross Gross
Market Cost Unrealized Unrealized
(In thousands) Value Basis Gains Losses
-------------------------------------------------------------------------
Tax-exempt securities $ 5,002 $ 5,000 $ 2 $ -
Government agency securities 5,082 5,106 - 24
Corporate bonds 429 365 64 -
Other 886 624 322 60
------- ------- ------- -------
$11,399 $11,095 $ 388 $ 84
======= ======= ======= =======
Short- and long-term available-for-sale investments in the
accompanying balance sheet at September 30, 1995, include $9,209,000 with
11PAGE
Thermo Power Corporation
Notes to Consolidated Financial Statements
2. Available-for-sale Investments (continued)
contractual maturities of one year or less, $1,457,000 with contractual
maturities of more than one year through five years, and $733,000 with
contractual maturities of more than five years. Actual maturities may
differ from contractual maturities as a result of the Company's intent to
sell these securities prior to maturity and as a result of put and call
options that enable either the Company and/or the issuer to redeem these
securities at an earlier date.
The cost of available-for-sale investments that were sold was based on
specific identification in determining realized gains and losses recorded
in the accompanying statement of income. Gain on sale of investments, net
in the accompanying statement of income for the year ended September 30,
1995, resulted from gross realized gains of $768,000 and gross realized
losses of $38,000 relating to the sale of available-for-sale investments.
3. Acquisition
Effective May 1, 1994, the Company acquired NuTemp, Inc. (NuTemp) for
$7,947,000 in cash. In fiscal 1995, the Company paid an additional
$2,500,000 as a result of NuTemp having achieved certain previously agreed
upon performance goals through the period ending May 1, 1995. NuTemp is a
supplier of both remanufactured and new industrial refrigeration and
commercial cooling equipment for sale or rental.
The acquisition of NuTemp has been accounted for using the purchase
method of accounting, and its results of operations have been included in
the accompanying financial statements from the effective date of
acquisition. The cost of this acquisition exceeded the estimated fair value
of the acquired net assets by $6,465,000, which is being amortized over 40
years. Allocation of the purchase price was based on an estimate of the
fair value of the net assets acquired. Pro forma data is not presented
since the acquisition of NuTemp was not material to the Company's financial
condition or results of operations.
4. Common Stock
At September 30, 1995, the Company had reserved 1,656,966 unissued shares
of its common stock for possible issuance under stock-based compensation
plans.
5. Stock-based Compensation Plans
The Company has stock-based compensation plans for its key employees,
directors, and others. Two of these plans, adopted in 1986, permit the
grant of nonqualified and incentive stock options. A third plan, adopted in
fiscal 1994, permits the grant of a variety of stock and stock-based awards
as determined by the human resources committee of the Company's Board of
Directors (the Board Committee), including restricted stock, stock options,
stock bonus shares, or performance-based shares. To date, only nonqualified
stock options have been awarded under these plans. The option recipients
and the terms of options granted under these plans are determined by the
12PAGE
Thermo Power Corporation
Notes to Consolidated Financial Statements
5. Stock-based Compensation Plans (continued)
Board Committee. Generally, options granted to date are exercisable immediately,
but are subject to certain transfer restrictions and the right of the Company to
repurchase shares issued upon exercise of the options at the exercise price,
upon certain events. The restrictions and repurchase rights generally lapse
ratably over periods ranging from three to ten years after the first anniversary
of the grant date, depending on the term of the option, which may range from
five to twelve years. Nonqualified stock options may be granted at any price
determined by the Board Committee, although incentive stock options must be
granted at not less than fair market value of the Company's stock on the date of
grant. To date, all options have been granted at fair market value. The Company
also has a directors' stock option plan, adopted in 1991 and amended in fiscal
1995, that provides for the grant of stock options in the Company and its
majority-owned subsidiaries to nonemployee directors pursuant to a formula
approved by the Company's shareholders. Options in the Company awarded under
this plan are exercisable six months after the date of grant and expire three or
seven years after the date of grant. In addition to the Company's stock-based
compensation plans, certain officers and key employees may also participate in
the stock-based compensation plans of Thermo Electron or its majority-owned
subsidiaries.
No accounting recognition is given to options granted at fair market value
until they are exercised. Upon exercise, net proceeds, including tax benefits
realized, are credited to equity. A summary of the Company's stock option
information is as follows:
1995 1994 1993
----------------- ----------------- ----------------
Range of Range of Range of
Number Option Number Option Number Option
(In thousands except of Prices of Prices of Prices
per share amounts) Shares per Share Shares per Share Shares per Share
- --------------------------------------------------------------------------------
Options outstanding, $ 4.20- $ 2.92- $ 2.92-
beginning of year 1,259 $10.15 536 $10.15 477 $10.15
8.95- 7.90- 8.00-
Granted 296 17.53 788 9.18 117 9.73
4.20- 2.92- 2.92-
Exercised (111) 9.58 (64) 7.58 (16) 8.33
7.45- 4.20- 2.92-
Lapsed or cancelled (38) 9.58 (1) 8.33 (42) 9.58
----- ----- -----
Options outstanding, $ 4.20- $ 4.20- $ 2.92-
end of year 1,406 $17.53 1,259 $10.15 536 $10.15
===== ===== =====
$ 4.20- $ 4.20- $ 2.92-
Options exercisable 1,406 $17.53 1,258 $10.15 534 $10.15
===== ===== =====
Options available for
grant 97 355 393
===== ===== =====
13PAGE
Thermo Power Corporation
Notes to Consolidated Financial Statements
6. Employee Benefit Plans
Employee Stock Purchase Plan
Substantially all of the Company's full-time employees are eligible to
participate in an employee stock purchase plan sponsored by the Company.
Prior to the November 1995 plan year, shares of the Company's and Thermo
Electron's common stock could be purchased at the end of a 12-month plan
year at 85% of the fair market value at the beginning of the plan year, and
the shares purchased were subject to a one-year resale restriction.
Effective November 1, 1995, the applicable shares of common stock may be
purchased at 95% of the fair market value at the beginning of the plan
year, and the shares purchased will be subject to a six-month resale
restriction. Shares are purchased through payroll deductions of up to 10%
of each participating employee's gross wages. During fiscal 1995, 1994, and
1993, the Company issued 25,859 shares, 40,219 shares, and 11,602 shares of
its common stock, respectively, under this plan.
401(k) Savings Plan and Employee Stock Ownership Plan
The majority of the Company's employees are eligible to participate in
Thermo Electron's 401(k) savings plan and certain employees are eligible to
participate in Thermo Electron's employee stock ownership plan.
Contributions to the Thermo Electron 401(k) savings plan are made by both
the employee and the Company. Company contributions are based upon the
level of employee contributions. For these plans, the Company contributed
and charged to expense $653,000, $656,000, and $532,000 in fiscal 1995,
1994, and 1993, respectively.
Postemployment Benefits
Effective October 3, 1993, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." SFAS No. 112 requires the
recognition of the cost of postemployment benefits if certain criteria are
met and the amount of benefits can be reasonably estimated. The adoption of
this statement did not have a material impact on the Company's financial
statements.
7. Income Taxes
The components of the provision for income taxes are as follows:
(In thousands) 1995 1994 1993
-----------------------------------------------------------------------
Currently payable:
Federal $2,150 $1,933 $ 724
State 525 493 336
------ ------ ------
2,675 2,426 1,060
------ ------ ------
Deferred (prepaid), net:
Federal 54 (333) 168
State 8 (59) (23)
------ ------ ------
62 (392) 145
------ ------ ------
$2,737 $2,034 $1,205
====== ====== ======
14PAGE
Thermo Power Corporation
Notes to Consolidated Financial Statements
7. Income Taxes (continued)
The provision for income taxes in the accompanying statement of income
differs from the provision calculated by applying the statutory federal
income tax rate of 34% to income before provision for income taxes and
minority interest due to the following:
(In thousands) 1995 1994 1993
-----------------------------------------------------------------------
Provision for income taxes at
statutory rate $2,416 $1,796 $1,064
Increases (decreases) resulting from:
State income taxes, net of
federal benefit 353 286 207
Income from tax-preferred securities (122) (213) (82)
Nondeductible expenses 83 73 26
Other 7 92 (10)
------ ------ ------
$2,737 $2,034 $1,205
====== ====== ======
Deferred income taxes and prepaid income taxes in the accompanying
balance sheet consist of the following:
(In thousands) 1995 1994
-------------------------------------------------------------
Deferred income taxes:
Available-for-sale investments $ 107 $ -
Depreciation - 167
Other 11 25
------ ------
$ 118 $ 192
====== ======
Prepaid income taxes:
Inventory basis difference $1,031 $ 481
Accrued warranty costs 819 1,289
Accrued compensation 590 505
Other accruals and reserves 496 494
Allowance for doubtful accounts 207 234
Depreciation and amortization 70 -
------ ------
$3,213 $3,003
====== ======
8. Related Party Transactions
Corporate Services Agreement
The Company and Thermo Electron have a corporate services agreement under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management,
certain employee benefit administration, tax advice and preparation of tax
returns, centralized cash management, and certain financial and other
services, for which the Company pays Thermo Electron annually an amount
equal to 1.20% of the Company's revenues. Prior to January 1, 1995, the
15PAGE
Thermo Power Corporation
Notes to Consolidated Financial Statements
8. Related Party Transactions (continued)
Company paid an annual fee equal to 1.25% of the Company's revenues. Prior
to January 3, 1993, the Company paid an annual fee equal to 1% of the
Company's revenues. The annual fee is reviewed and adjusted annually by
mutual agreement of the parties. For these services, the Company was
charged $1,250,000, $1,117,000, and $898,000 in fiscal 1995, 1994, and
1993, respectively. Management believes that the service fee charged by
Thermo Electron is reasonable and that such fees are representative of the
expenses the Company would have incurred on a stand-alone basis. The
corporate services agreement is renewed annually but can be terminated upon
30 days' prior notice by the Company or upon the Company's withdrawal from
the Thermo Electron Corporate Charter (the Thermo Electron Corporate
Charter defines the relationships among Thermo Electron and its
majority-owned subsidiaries). For additional items such as employee benefit
plans, insurance coverage, and other identifiable costs, Thermo Electron
charges the Company based upon costs attributable to the Company.
Other Related Party Services
Prior to January 1995 and October 1993, the Company used contract
administration and other services and data processing services,
respectively, of a majority-owned subsidiary of Thermo Electron, which were
charged based on actual usage. For these services, the Company was charged
$31,000, $117,000, and $251,000 in fiscal 1995, 1994, and 1993,
respectively. As of January 1995 and October 1993, the Company provides
contract administration and other services and data processing services,
respectively, to one wholly owned and four majority-owned subsidiaries of
Thermo Electron, which are charged based on actual usage. For these
services, the Company charged $209,000 and $107,000 in fiscal 1995 and
1994, respectively.
Leases
The Company leases an office and laboratory facility from Thermo Electron
under an agreement expiring in September 1997. Prior to April 1993, the
Company subleased a portion of this facility to a majority-owned subsidiary
of Thermo Electron. The accompanying statement of income includes expenses
from this operating lease of $170,000, $170,000, and $133,000 in fiscal
1995, 1994, and 1993, respectively, net of sublease income of $37,000 in
fiscal 1993. The future minimum payments due under this operating lease as
of September 30, 1995, are $170,000 per year in fiscal 1996 and 1997. Total
future minimum lease payments are $340,000.
Repurchase Agreement
The Company invests excess cash in a repurchase agreement with Thermo
Electron as discussed in Note 1.
Short-term Available-for-sale Investments
At September 30, 1995, the Company's short-term available-for-sale
investments included $429,000 of 6.5% subordinated convertible debentures
due 1997, which were purchased on the open market for $365,000. The
debentures have a par value of $365,000 and were issued by Thermo Process
Systems Inc., which is a majority-owned subsidiary of Thermo Electron.
Sale of Parent Company Common Stock
During fiscal 1993, the Company sold 18,000 shares of its Thermo Electron
common stock to an unrelated party for net proceeds of $447,000, which
resulted in a gain of $404,000. At September 30, 1995, the Company owned
16PAGE
Thermo Power Corporation
Notes to Consolidated Financial Statements
8. Related Party Transactions (continued)
7,313 shares of Thermo Electron common stock that were purchased for
$18,000 and have market value of $339,000. The Company's investment in
Thermo Electron common stock is included in long-term available-for-sale
investments in the accompanying balance sheet. Share information for Thermo
Electron has been restated to reflect a three-for-two stock split effected
in May 1995.
Long-term Obligations
On May 4, 1987, the Company issued a $3,000,000 principal amount 6.2%
subordinated convertible note to Thermo Electron due May 1997, and
convertible into shares of the Company's common stock at $9.775 per share.
This note was repaid in December 1993.
9. Commitments
In addition to the lease described in Note 8, the Company leases equipment
and manufacturing, engine testing, service, and office facilities under
operating leases expiring at various dates through fiscal 2004. The
accompanying statement of income includes expenses from these operating
leases of $1,044,000, $711,000, and $640,000 in fiscal 1995, 1994, and
1993, respectively. Future minimum payments due under these operating
leases at September 30, 1995, are $1,047,000 in fiscal 1996; $815,000 in
fiscal 1997; $472,000 in fiscal 1998; $461,000 in fiscal 1999; $438,000 in
fiscal 2000; and $1,275,000 in fiscal 2001 and thereafter. Total future
minimum lease payments are $4,508,000.
10. Long-term Obligations
At September 30, 1995, the Company's long-term obligations included a
$305,000 mortgage loan, which is secured by property at the Company's FES
division with a net book value of $4,010,000. The loan is payable in equal
monthly installments with the final payment in fiscal 2002. The interest
rate on this loan is 75% of the prime rate, and averaged 6.42% and 5.0% in
fiscal 1995 and 1994, respectively.
The annual requirements for long-term obligations as of September 30,
1995, are $58,000 in fiscal 1996; $55,000 in fiscal 1997; $56,000 in fiscal
1998; $59,000 in fiscal 1999; $58,000 in fiscal 2000; and $136,000 in
fiscal 2001 and thereafter. Total requirements of long-term obligations are
$422,000.
11. Segment Data and Export Sales
The Company's principal businesses consist of manufacturing, marketing, and
servicing: industrial refrigeration and commercial cooling equipment;
gasoline engines for recreational boats, LPG (liquefied petroleum gas) and
gasoline engines for lift trucks, and natural gas engines for fleet
vehicles and industrial applications; and natural gas cooling and
cogeneration systems, as well as conducting research and development on
applications of thermal energy. In addition, the Company rents commercial
cooling and industrial refrigeration equipment, which is included in the
Industrial Refrigeration Systems segment.
Export revenues to Asia accounted for 10%, 10%, and 7% of the Company's
total revenues in fiscal 1995, 1994, and 1993, respectively. Other export
17PAGE
Thermo Power Corporation
Notes to Consolidated Financial Statements
11. Segment Data and Export Sales (continued)
revenues accounted for 5%, 6%, and 5% of the Company's total revenues in
fiscal 1995, 1994, and 1993, respectively. In general, export sales are
denominated in U.S. dollars. Information for fiscal 1995, 1994, and 1993,
with respect to the Company's business segments, is shown in the following
table.
(In thousands) 1995 1994 1993
--------------------------------------------------------------------------
Revenues:
Industrial Refrigeration Systems $ 64,708 $ 57,372 $ 42,369
Engines 24,848 20,204 19,216
Cooling and Cogeneration Systems 15,873 13,192 14,862
Intersegment sales elimination (a) (2,174) (1,434) (1,018)
-------- -------- --------
$103,255 $ 89,334 $ 75,429
======== ======== ========
Operating income:
Industrial Refrigeration Systems $ 6,689 $ 5,206 $ 3,389
Engines (120) 188 (866)
Cooling and Cogeneration Systems 961 820 685
Corporate (b) (3,049) (2,731) (1,475)
-------- -------- --------
$ 4,481 $ 3,483 $ 1,733
======== ======== ========
Identifiable assets:
Industrial Refrigeration Systems $ 48,249 $ 36,980 $ 24,278
Engines 17,193 10,402 10,677
Cooling and Cogeneration Systems (c) 23,549 5,691 5,823
Corporate (d) 19,426 29,548 38,735
-------- -------- --------
$108,417 $ 82,621 $ 79,513
======== ======== ========
Depreciation and amortization:
Industrial Refrigeration Systems $ 1,551 $ 1,350 $ 757
Engines 329 314 304
Cooling and Cogeneration Systems 192 203 237
Corporate 10 - -
-------- -------- --------
$ 2,082 $ 1,867 $ 1,298
======== ======== ========
Capital expenditures:
Industrial Refrigeration Systems $ 1,545 $ 540 $ 266
Engines 344 223 270
Cooling and Cogeneration Systems 150 112 125
Corporate 62 - -
-------- -------- --------
$ 2,101 $ 875 $ 661
======== ======== ========
(a) Intersegment sales are accounted for at prices that are representative
of transactions with unaffiliated parties.
(b) Primarily corporate general and administrative expenses and other
expenses for new lines of business.
(c) Includes $17.3 million in net proceeds from ThermoLyte's fiscal 1995
private placement.
(d) Primarily cash, cash equivalents, and short-term investments.
18PAGE
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Thermo Power Corporation:
We have audited the accompanying consolidated balance sheet of Thermo Power
Corporation (a Massachusetts corporation and 63%-owned subsidiary of Thermo
Electron Corporation) and subsidiaries as of September 30, 1995 and October
1, 1994, and the related consolidated statements of income, shareholders'
investment, and cash flows for each of the three years in the period ended
September 30, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Thermo Power Corporation and subsidiaries as of September 30, 1995 and
October 1, 1994, and the results of their operations and their cash flows
for each of the three years in the period ended September 30, 1995, in
conformity with generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements,
effective October 2, 1994, the Company changed its method of accounting for
investments in debt and marketable equity securities.
Arthur Andersen LLP
Boston, Massachusetts
November 3, 1995
19PAGE
Thermo Power Corporation
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview
The Company's business can be divided into three segments: Industrial
Refrigeration Systems, Engines, and Cooling and Cogeneration Systems.
Through the Company's FES division, the Industrial Refrigeration Systems
segment supplies standard and custom-designed refrigeration systems used
primarily by the food-processing, petrochemical, and pharmaceutical
industries. NuTemp, Inc. (NuTemp), which was acquired in May 1994, is a
supplier of both remanufactured and new industrial refrigeration and
commercial cooling equipment for sale or rental. NuTemp's industrial
refrigeration equipment is used primarily in the food-processing,
petrochemical, and pharmaceutical industries, and its commercial cooling
equipment is used primarily in institutions and commercial buildings, as
well as by service contractors. The demand for NuTemp's equipment is
typically highest in the summer period.
Within the Engines segment, the Company's Crusader Engines division
(Crusader) manufactures gasoline engines for recreational boats; natural
gas engines for vehicles, cooling, pumping, refrigeration, and other
industrial applications; and LPG (liquefied petroleum gas) and gasoline
engines for lift trucks.
The Cooling and Cogeneration Systems segment consists of the Company's
Tecogen division and the Company's ThermoLyte Corporation (ThermoLyte)
subsidiary, formed in March 1995. Tecogen designs, develops, markets, and
services packaged cooling and cogeneration systems fueled principally by
natural gas for sale to a wide range of commercial, institutional,
industrial, and multi-unit residential users. Certain large-capacity
cooling systems are manufactured by FES, and the cogeneration systems are
manufactured by Crusader. Tecogen also conducts research and development on
applications of thermal energy. The Company formed its ThermoLyte
subsidiary to complete the development and commercialization of a family of
propane-powered flashlights, emergency lights, area lights, and other
lighting products.
Results of Operations
Fiscal 1995 Compared With Fiscal 1994
Total revenues increased 16% to $103,255,000 in fiscal 1995 from
$89,334,000 in fiscal 1994. Industrial Refrigeration Systems segment
revenues increased 13% to $64,708,000 in 1995 from $57,372,000 in 1994.
Industrial Refrigeration Systems segment revenues increased $5,577,000 due
to the inclusion of sales for a full year from NuTemp, which was acquired
in May 1994. Engines segment revenues increased 23% to $24,848,000 in 1995
from $20,204,000 in 1994 primarily due to increased demand for Crusader's
inboard marine-engine related products and, to a lesser extent, natural
gas-fueled TecoDrive(R) engines. Results for 1994 included $1,632,000 of
revenues from sterndrive marine engine-related products. The Company's
sterndrive customer exited that market in fiscal 1994. Cooling and
Cogeneration Systems segment revenues increased 20% to $15,873,000 in 1995
from $13,192,000 in 1994 due to the inclusion of a fee of $1,187,000
received from one of the Company's distributors of packaged cogeneration
systems to satisfy the financial obligations under a minimum purchase
contract and an increase of $1,184,000 in revenues from gas-fueled cooling
systems. These increases were offset in part by a decrease in revenues from
packaged cogeneration systems.
20PAGE
Thermo Power Corporation
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Fiscal 1995 Compared With Fiscal 1994 (continued)
The gross profit margin increased to 23% in fiscal 1995 from 22% in
fiscal 1994. The gross profit margin for the Industrial Refrigeration
Systems segment increased to 25% in 1995 from 24% in 1994 primarily due to
the inclusion of higher-margin NuTemp revenues for the full year of 1995
compared with five months in 1994. The gross profit margin for the Engines
segment decreased to 11% in 1995 from 12% in 1994 primarily due to startup
costs associated with new products and, to a lesser extent, higher warranty
expenses in 1995 compared with 1994. The gross profit margin for the
Cooling and Cogeneration Systems segment increased to 29% in 1995 from 25%
in 1994 primarily due to the fee received from one of the Company's
distributors of packaged cogeneration systems discussed above.
Selling, general and administrative expenses as a percentage of
revenues decreased to 15% in fiscal 1995 from 16% in fiscal 1994 primarily
due to an increase in total revenues. Research and development expenses
increased to $3,065,000 in 1995 from $1,622,000 in 1994 primarily due to
development costs associated with natural gas-engine products and, to a
lesser extent, gas-fueled lighting products.
Interest income increased to $1,919,000 in fiscal 1995 from $1,278,000
in fiscal 1994, reflecting interest income earned on the proceeds from
ThermoLyte's March 1995 private placement and, to a lesser extent, higher
prevailing interest rates in 1995. The increase was offset in part by lower
average invested amounts as a result of the cash expended for the
acquisition of NuTemp in May 1994. Interest expense decreased to $23,000 in
1995 from $61,000 in 1994 due to the repayment of a $3,000,000 principal
amount 6.2% subordinated convertible note to Thermo Electron Corporation
(Thermo Electron) in the first quarter of fiscal 1994. The Company holds
certain investments in companies affiliated with Thermo Electron and has
sold, from time to time, a portion of these investments for a gain to the
Company. Gain on sale of investments, net, primarily represents a gain of
$768,000 in 1995 and $616,000 in 1994 relating to the sale of the Company's
investment in subordinated convertible debentures issued by Thermedics Inc.
(a majority-owned subsidiary of Thermo Electron). As of September 30, 1995,
the Company owned 7,313 shares of Thermo Electron common stock that were
purchased for $18,000 and have a market value of $339,000, and $429,000 of
6.5% subordinated convertible debentures due 1997 issued by Thermo Process
Systems Inc. (a majority-owned subsidiary of Thermo Electron) that were
purchased for $365,000. The Company may sell these investments from time to
time in the future.
The effective tax rate was 39% in both fiscal 1995 and 1994. This rate
exceeded the statutory federal income tax rate primarily due to the impact
of state income taxes.
Fiscal 1994 Compared With Fiscal 1993
Total revenues increased 18% to $89,334,000 in fiscal 1994 from $75,429,000
in fiscal 1993. Industrial Refrigeration Systems segment revenues increased
35% to $57,372,000 in 1994 from $42,369,000 in 1993 due to an increase in
demand for refrigeration packages and, to a lesser extent, the inclusion of
$5,804,000 in revenues from NuTemp. These increases were offset in part by
lower prices for refrigeration packages at the Company's FES division due
to increased competition in the refrigeration industry. Engines segment
21PAGE
Thermo Power Corporation
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Fiscal 1994 Compared With Fiscal 1993 (continued)
revenues increased to $20,204,000 in 1994 from $19,216,000 in 1993 due to
an increase of $794,000 in revenues from natural gas-fueled TecoDrive
engines and, to a lesser extent, an increase in revenues from marine
products. Revenues from marine products increased due to greater demand for
Crusader's inboard marine engine-related products and a one-time sterndrive
spare parts stocking order in the first six months of fiscal 1994, offset
in part by a decrease in sterndrive marine engine-related sales as a result
of the Company's sterndrive customer exiting that market. Cooling and
Cogeneration Systems segment revenues decreased to $13,192,000 in 1994 from
$14,862,000 in 1993 primarily due to a decline of $837,000 in revenues from
gas-fueled cooling systems and a decline of $825,000 in revenues from
sponsored research and development contracts.
The gross profit margin increased to 22% in fiscal 1994 from 19% in
fiscal 1993. The gross profit margin for the Industrial Refrigeration
Systems segment was 24% in 1994, compared with 23% in 1993. The inclusion
of higher-margin NuTemp revenues was offset in part by a decrease in
margins at FES due to lower prices resulting from increased competition in
the refrigeration industry. NuTemp's gross profit margin was 44% for the
period from May 1, 1994 to October 1, 1994. The gross profit margin for the
Engines segment increased to 12% in 1994 from 8% in 1993 primarily due to a
shift in the sales mix of marine products and, to a lesser extent, improved
margins on natural gas-fueled TecoDrive engines resulting from increased
revenues. The gross profit margin for the Cooling and Cogeneration Systems
segment increased to 25% in 1994 from 22% in 1993 primarily due to improved
margins on the Company's gas-fueled cooling systems resulting from a
reduction in manufacturing costs.
Selling, general and administrative expenses as a percentage of
revenues were 16% in both fiscal 1994 and 1993. Research and development
expenses increased to $1,622,000 in 1994 from $995,000 in 1993 primarily
due to higher development costs associated with natural gas-engine
products.
Interest income increased to $1,278,000 in fiscal 1994 from $1,161,000
in fiscal 1993 due to higher average invested amounts as a result of the
Company's public offering of common stock in February 1993, offset in part
by the cash expended for the acquisition of NuTemp in May 1994. Interest
expense decreased to $61,000 in 1994 from $342,000 in 1993 due to the
repayment of a $3,000,000 principal amount 6.2% subordinated convertible
note to Thermo Electron in the first quarter of fiscal 1994 and, to a
lesser extent, the repayment of a $5,000,000 promissory note to Thermo
Electron and short-term borrowings from Thermo Electron in the second
quarter of fiscal 1993. Gain on sale of investments, net, primarily
represents a gain of $616,000 on the sale of a portion of the Company's
investment in Thermedics subordinated convertible debentures in 1994, and a
gain of $404,000 on the sale of 18,000 shares of Thermo Electron common
stock in 1993.
The effective tax rate was 39% in both fiscal 1994 and 1993. This rate
exceeded the statutory federal income tax rate primarily due to the impact
of state income taxes.
22PAGE
Thermo Power Corporation
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Financial Condition
Liquidity and Capital Resources
Working capital was $60,140,000 at September 30, 1995, compared with
$43,143,000 at October 1, 1994. Included in working capital are cash, cash
equivalents, and short-term investments of $34,170,000 at September 30,
1995, compared with $27,879,000 at October 1, 1994. Of the $34,170,000
balance at September 30, 1995, $17,355,000 was held by ThermoLyte and the
remainder was held by the Company and its wholly owned subsidiaries. During
fiscal 1995, $5,110,000 of cash was used in operating activities. Accounts
receivable increased reflecting a higher sales level, while inventories
increased primarily due to a build-up of inventory at Crusader in
connection with several large orders for engines. Crusader began shipping
these orders in the first quarter of fiscal 1996. In March 1995, ThermoLyte
completed a private placement for net proceeds of $17,253,000 (Note 1). In
fiscal 1996, the Company expects to make capital expenditures of
approximately $4,500,000. The Company believes its existing resources are
sufficient to meet the capital requirements of its existing operations for
the foreseeable future.
23PAGE
Thermo Power Corporation
Selected Financial Information
(In thousands except
per share amounts) 1995(a) 1994(b) 1993(c) 1992 1991
-------------------------------------------------------------------------
Statement of Income
Data:
Revenues $103,255 $ 89,334 $ 75,429 $ 34,137 $ 27,144
Net income (loss) 4,188 3,248 1,923 355 (1,538)
Earnings (loss)
per share .34 .26 .18 .04 (.20)
Balance Sheet Data:
Working capital $ 60,140 $ 43,143 $ 50,467 $ 19,173 $ 26,667
Total assets 108,417 82,621 79,513 28,675 36,071
Long-term
obligations 364 344 3,395 3,000 12,274
Common stock of
subsidiary subject
to redemption 17,435 - - - -
Shareholders'
investment 65,825 60,475 56,599 18,302 16,941
Quarterly Information (Unaudited)
(In thousands except per share amounts)
1995 First Second Third Fourth
------------------------------------------------------------------------
Revenues $22,314 $24,912 $27,514 $28,515
Gross profit 5,266 5,493 5,868 6,805
Net income 787 805 1,106 1,490
Earnings per share .06 .07 .09 .12
1994 First Second Third(b) Fourth
------------------------------------------------------------------------
Revenues $19,775 $22,014 $23,381 $24,164
Gross profit 3,785 4,395 5,234 5,894
Net income 631 729 912 976
Earnings per share .05 .06 .07 .08
(a)Reflects the net proceeds of the Company's ThermoLyte Corporation
subsidiary private placement in fiscal 1995.
(b)Reflects the May 1994 acquisition of NuTemp, Inc.
(c)Reflects the October 1992 acquisition of FES and the net proceeds of
the Company's February 1993 public offering of common stock.
24PAGE
Thermo Power Corporation
Common Stock Market Information
The following table shows the market range for the Company's common stock
based on reported sales prices on the American Stock Exchange (symbol THP)
for fiscal 1995 and 1994.
1995 1994
---------------- -----------------
Quarter High Low High Low
--------------------------------------------------------------------
First $ 9 7/8 $ 8 5/8 $11 1/8 $ 8 3/4
Second 10 3/8 8 7/8 9 7/8 7 3/8
Third 18 7/8 9 3/4 8 1/2 7
Fourth 19 1/2 15 1/8 9 3/8 7 1/2
As of November 24, 1995, the Company had 493 holders of record of its
common stock. This does not include holdings in street or nominee names.
The closing market price on the American Stock Exchange for the Company's
common stock on November 24, 1995, was $14 1/4 per share.
Dividend Policy
The Company has never paid cash dividends and does not expect to pay cash
dividends in the foreseeable future because its policy has been to use
earnings to finance expansion and growth. Payment of dividends will rest
within the discretion of the Board of Directors and will depend upon, among
other factors, the Company's earnings, capital requirements, and financial
condition.
Stock Transfer Agent
American Stock Transfer & Trust Company is the stock transfer agent and
maintains shareholder activity records. The agent will respond to questions
on issuances of stock certificates, changes of ownership, lost stock
certificates, and changes of address. For these and similar matters, please
direct inquiries to:
American Stock Transfer & Trust Company
Shareholder Services Department
40 Wall Street, 46th Floor
New York, New York 10005
(718) 921-8200
Shareholder Services
Shareholders of Thermo Power Corporation who desire information about the
Company are invited to contact John N. Hatsopoulos, Chief Financial
Officer, Thermo Power Corporation, 81 Wyman Street, P.O. Box 9046, Waltham,
Massachusetts 02254-9046, by letter or telephone at (617) 622-1111. A
mailing list is maintained to enable shareholders whose stock is held in
street name, and other interested individuals, to receive quarterly and
annual reports as quickly as possible. If you would like your name added to
the list, please notify this office.
25PAGE
Thermo Power Corporation
Form 10-K Report
A copy of the Annual Report on Form 10-K for the fiscal year ended
September 30, 1995, as filed with the Securities and Exchange Commission,
may be obtained at no charge by writing to John N. Hatsopoulos, Chief
Financial Officer, Thermo Power Corporation, 81 Wyman Street, P.O. Box
9046, Waltham, Massachusetts 02254-9046.
Annual Meeting
The annual meeting of shareholders will be held on Monday, March 11, 1996,
at 10:00 a.m. at Thermo Electron Corporation, 81 Wyman Street, Waltham,
Massachusetts.
26PAGE