-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, EhraXqQg6XKhsg0Ne9m5qgvi/NFeHr5Pr2X8o6yL3Tsg7wca0CvDe/0mIh92dzm+ 7FFw7Lq/WcuXrFs9n41DUA== 0000721356-95-000003.txt : 19950508 0000721356-95-000003.hdr.sgml : 19950508 ACCESSION NUMBER: 0000721356-95-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950401 FILED AS OF DATE: 19950505 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: THERMEDICS INC CENTRAL INDEX KEY: 0000721356 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 042788806 STATE OF INCORPORATION: MA FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09567 FILM NUMBER: 95535045 BUSINESS ADDRESS: STREET 1: 470 WILDWOOD ST STREET 2: P O BOX 2999 CITY: WOBURN STATE: MA ZIP: 01888-1799 BUSINESS PHONE: 6176221000 10-Q 1 TMD Q195 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 --------------------------------------- FORM 10-Q (mark one) [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarter Ended April 1, 1995. [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Commission File Number 1-9567 THERMEDICS INC. (Exact name of Registrant as specified in its charter) Massachusetts 04-2788806 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 470 Wildwood Street, P.O. Box 2999 Woburn, Massachusetts 01888-1799 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 622-1000 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date. Class Outstanding at April 28, 1995 ---------------------------- ----------------------------- Common Stock, $.10 par value 33,605,161 PAGE Form 10-Q April 1, 1995 THERMEDICS INC. PART I - Financial Information Item 1 - Financial Statements (a)Consolidated Balance Sheet - Assets as of April 1, 1995 and December 31, 1994 (In thousands) April 1, 1995 December 31, 1994 ------------- ----------------- Current Assets: Cash and cash equivalents $ 33,129 $ 37,043 Short-term available-for-sale investments, at quoted market value (amortized cost of $61,036 and $72,731) 60,715 71,680 Accounts receivable, less allowances of $3,969 and $3,640 36,977 33,645 Unbilled contract costs and fees 704 497 Inventories: Raw materials and supplies 14,422 13,223 Work in process 7,145 5,429 Finished goods 9,007 8,149 Prepaid income taxes and expenses 4,228 4,676 -------- -------- 166,327 174,342 -------- -------- Property, Plant and Equipment, at Cost 25,649 24,367 Less: Accumulated depreciation and amortization 14,558 13,640 -------- -------- 11,091 10,727 -------- -------- Long-term Available-for-sale Investments, at Quoted Market Value (amortized cost of $60,942 and $46,863) 60,607 45,426 -------- -------- Other Assets 5,221 5,582 -------- -------- Cost in Excess of Net Assets of Acquired Companies 58,427 55,490 -------- -------- $301,673 $291,567 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 2PAGE Form 10-Q April 1, 1995 THERMEDICS INC. (a)Consolidated Balance Sheet - Liabilities and Shareholders' Investment as of April 1, 1995 and December 31, 1994 (In thousands except share amounts) April 1, 1995 December 31, 1994 ------------- ----------------- Current Liabilities: Notes payable $ 10,272 $ 10,576 Accounts payable 13,399 9,481 Deferred revenue 2,310 2,463 Customer deposits 1,559 2,546 Accrued payroll and employee benefits 6,498 7,369 Accrued income taxes 1,912 582 Accrued warranty costs 3,766 3,380 Other accrued expenses 9,700 7,675 Due to parent company 1,920 1,940 -------- -------- 51,336 46,012 -------- -------- Deferred Income Taxes and Other Items 1,529 1,565 -------- -------- Long-term Obligations: Subordinated convertible obligations 81,076 82,385 Other 226 166 -------- -------- 81,302 82,551 -------- -------- Minority Interest 31,019 29,674 -------- -------- Shareholders' Investment: Common stock, $.10 par value, 50,000,000 shares authorized; 33,430,793 and 33,303,135 shares issued 3,343 3,330 Capital in excess of par value 103,209 102,975 Retained earnings 30,328 27,066 Treasury stock at cost, 11,231 and 14,671 shares (288) (310) Cumulative translation adjustment 312 326 Net unrealized loss on available-for-sale investments (417) (1,622) -------- -------- 136,487 131,765 -------- -------- $301,673 $291,567 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 3PAGE Form 10-Q April 1, 1995 THERMEDICS INC. (b) Consolidated Statement of Income for the three months ended April 1, 1995 and April 2, 1994 (In thousands except per share amounts) Three Months Ended ------------------------------ April 1, 1995 April 2, 1994 ------------- ------------- Revenues $43,858 $27,293 ------- ------- Costs and Operating Expenses: Cost of revenues 24,286 15,656 Selling, general and administrative expenses 12,195 6,917 Expenses for research and development 2,381 2,254 ------- ------- 38,862 24,827 ------- ------- Operating Income 4,996 2,466 Interest Income 2,197 1,870 Interest Expense (938) (775) Gain on Sale of Investments - 241 Other Income (includes $25 from related party in 1994) 14 25 ------- ------- Income Before Provision for Income Taxes and Minority Interest 6,269 3,827 Provision for Income Taxes 2,320 1,522 Minority Interest Expense 687 153 ------- ------- Net Income $ 3,262 $ 2,152 ======= ======= Earnings per Share $ .10 $ .07 ======= ======= Weighted Average Shares 33,306 32,463 ======= ======= The accompanying notes are an integral part of these consolidated financial statements. 4PAGE Form 10-Q April 1, 1995 THERMEDICS INC. (c) Consolidated Statement of Cash Flows for the three months ended April 1, 1995 and April 2, 1994 (In thousands) Three Months Ended ------------------------------ April 1, 1995 April 2, 1994 ------------- ------------- Operating Activities: Net income $ 3,262 $ 2,152 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,365 859 Provision for losses on accounts receivable 290 203 Gain on sale of investments - (241) Minority interest expense 687 153 Other noncash expenses 418 223 (Decrease) increase in deferred income taxes (45) 544 Changes in current accounts, excluding the effects of acquisitions: Accounts receivable (2,445) (29) Inventories and unbilled contract costs and fees (2,969) 3,095 Prepaid income taxes and expenses 167 (421) Accounts payable 3,583 (5,964) Other current liabilities (1,285) (4,117) Other 16 2 -------- -------- Net cash provided by (used in) operating activities 3,044 (3,541) -------- -------- Investing Activities: Acquisitions, net of cash acquired (4,000) (41,073) Purchases of property, plant and equipment (1,059) (639) Proceeds from sale and maturities of available-for-sale investments 26,275 48,690 Purchases of available-for-sale investments (28,309) (41,131) Other 34 154 -------- -------- Net cash used in investing activities (7,059) (33,999) -------- -------- Financing Activities: Purchases of subsidiary common stock (179) (965) Net proceeds from issuance of Company and subsidiary common stock 514 574 Net proceeds from issuance of subordinated convertible debentures - 32,138 Repurchase of long-term obligations (132) - -------- -------- Net cash provided by financing activities 203 31,747 -------- -------- 5PAGE Form 10-Q April 1, 1995 THERMEDICS INC. (c) Consolidated Statement of Cash Flows for the three months ended April 1, 1995 and April 2, 1994 (In thousands) (continued) Three Months Ended ------------------------------ April 1, 1995 April 2, 1994 ------------- ------------- Exchange Rate Effect on Cash (102) 107 -------- -------- Decrease in Cash and Cash Equivalents (3,914) (5,686) Cash and Cash Equivalents at Beginning of Period 37,043 40,179 -------- -------- Cash and Cash Equivalents at End of Period $ 33,129 $ 34,493 ======== ======== Cash Paid For: Interest $ 622 $ 821 Income taxes $ 915 $ 384 Noncash Financing Activities: Conversion of convertible obligations $ 1,160 $ 3,725 The accompanying notes are an integral part of these consolidated financial statements. 6PAGE Form 10-Q April 1, 1995 THERMEDICS INC. (d) Notes to Consolidated Financial Statements - April 1, 1995 1. General The interim consolidated financial statements presented have been prepared by Thermedics Inc. (the Company) without audit and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of (a) the results of operations for the three-month periods ended April 1, 1995 and April 2, 1994, (b) the financial position at April 1, 1995, and (c) the cash flows for the three-month periods ended April 1, 1995 and April 2, 1994. Interim results are not necessarily indicative of results for a full year. The consolidated balance sheet presented as of December 31, 1994, has been derived from the consolidated financial statements that have been audited by the Company's independent public accountants. The consolidated financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in the annual financial statements and notes of the Company. The consolidated financial statements and notes included herein should be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994, filed with the Securities and Exchange Commission. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Overview The Company's business can be divided into two segments: Instruments and Other Equipment, and Biomedical Products. Through the Company's Thermedics Detection Inc. (Thermedics Detection) subsidiary, the Instruments and Other Equipment segment develops, manufactures, and markets high-speed detection instruments, including the Alexus (TM) system, a process detection instrument used in product quality assurance applications, and the EGIS (R) system, a security instrument used to detect explosives at airports and other locations. The Company's Ramsey Technology Inc. (Ramsey) subsidiary manufactures process control equipment that weighs and inspects bulk materials and packaged goods. Through the Company's Thermo Voltek Corp. (Thermo Voltek) subsidiary, the Instruments and Other Equipment segment also includes a line of electronic test instruments, and high-voltage power conversion systems. As part of its Biomedical Products segment, the Company's Thermo Cardiosystems Inc. (Thermo Cardiosystems) subsidiary has developed both an implantable pneumatic (IP), or air-driven, and an electric left ventricular-assist system (LVAS). In October 1994, the Company announced that the U.S. Food and Drug Administration (FDA) granted approval for commercial sales of the air-driven LVAS. With this approval, the air-driven system is available for sale to cardiac centers throughout the 7PAGE Form 10-Q April 1, 1995 THERMEDICS INC. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Overview (continued) United States and the Company began earning a profit on the sale of such systems in the fourth quarter of 1994. In general, a profit cannot be earned from the sale of an LVAS until the FDA has approved the device for commercial sales. The Company also manufactures enteral feeding products and a line of medical-grade polymers, which are used in catheters, tubing, and non-medical products such as Scent Seal fragrance samplers. Results of Operations First Quarter 1995 Compared With First Quarter 1994 Total revenues in the first quarter of 1995 were $43.9 million, compared with $27.3 million in the first quarter of 1994. Instruments and Other Equipment segment revenues increased 65% in 1995 to $32.8 million from $19.9 million in 1994. This increase reflects the inclusion of $14.0 million of additional revenues from Ramsey, which was acquired on March 16, 1994; an increase of $1.1 million in revenues from Thermo Voltek's Comtest subsidiary and KeyTek Instrument division resulting primarily from greater demand; and the inclusion of $1.0 million in revenues from Verifier Systems Limited and Kalmus Engineering Incorporated (Kalmus), which were acquired by Thermo Voltek in July 1994 and March 1995, respectively. These increases were offset in part by a decline in revenues of $3.5 million from Thermedics Detection. Process detection instrument sales were $6.4 million in 1995, compared with $10.5 million in 1994. This reduction is due to a decline in demand from Thermedics Detection's principal customer, which has substantially implemented its initial deployment of Alexus systems. While the Company has expanded its customer base, and continues to develop Alexus upgrades and new applications for its process detection technology in the food and beverage market, no assurance can be given that the Company will be able to significantly broaden the market for its process detection systems. Biomedical Products segment revenues increased 51% to $11.1 million in the first quarter of 1995 from $7.3 million in the first quarter of 1994. This improvement is primarily the result of an increase of $2.3 million in revenues from Thermo Cardiosystems due to an increase in the number of LVAS units shipped during the first quarter of 1995, which nearly doubled compared to the first quarter of 1994, and an increase in the price of the LVAS units. In the fourth quarter of 1994, Thermo Cardiosystems implemented a price increase in the U.S. for its air-driven LVAS that will be phased in during a six-month period and that will more than double the average price of an air-driven LVAS. The final phase of the price increase is scheduled to take effect during the second quarter of 1995. In addition, revenues from Scent Seal fragrance samplers increased $1.0 million as a result of increased demand. The gross profit margin was 45% in the first quarter of 1995, compared with 43% in the first quarter of 1994. The gross profit margin for the Instruments and Other Equipment segment was 45% in both 1995 and 1994. Improved margins at Thermedics Detection as a result of a change in the product mix were offset by the inclusion of lower-margin Ramsey revenues. 8PAGE Form 10-Q April 1, 1995 THERMEDICS INC. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) First Quarter 1995 Compared With First Quarter 1994 (continued) The gross profit margin for the Biomedical Products segment was 46% in 1995, compared with 38% in 1994, reflecting higher margins derived from Thermo Cardiosystems' LVAS due primarily to the first phase of the price increase which became effective in the fourth quarter of 1994, the increase in sales volume, and improvements in manufacturing efficiencies. Selling, general and administrative expenses as a percentage of revenues increased to 28% in the first quarter of 1995 from 25% in the first quarter of 1994 as a result of higher costs as a percentage of revenues at Ramsey and, to a lesser extent, increased selling efforts at Thermedics Detection. Research and development expenses as a percentage of revenues decreased to 5.4% in 1995 from 8.3% in 1994 due primarily to lower cost as a percentage of revenues at Ramsey. Interest income increased to $2.2 million in the first quarter of 1995, compared with $1.9 million in the first quarter of 1994 due to higher prevailing interest rates in 1995. Financial Condition Liquidity and Capital Resources Working capital, including cash, cash equivalents, and short-term available-for-sale investments, was $115.0 million at April 1, 1995, compared with $128.3 million at December 31, 1994. During the first quarter of 1995, $14.1 million of cash was used for the purchase of long-term available-for-sale investments, net of cash provided by the sale and maturities of these investments. Cash, cash equivalents, and short- and long-term available-for-sale investments were $154.5 million at April 1, 1995, compared with $154.1 million at December 31, 1994. Of the $154.5 million balance at April 1, 1995, $87.2 million was held by Thermo Cardiosystems, $32.6 million by Thermo Voltek, and the remainder by the Company and its wholly owned subsidiaries. In March 1995, Thermo Voltek acquired substantially all of the assets, subject to certain liabilities, of Kalmus for approximately $3.6 million in cash, subject to a post-closing adjustment. The Company intends, for the foreseeable future, to maintain at least 50% ownership of Thermo Cardiosystems and Thermo Voltek. This may require the purchase by the Company of additional shares of common stock or convertible debentures (which are then converted) of these two companies from time to time, if the number of the companies' outstanding shares increases, whether as a result of conversion of convertible notes or exercise of stock options issued by them, or otherwise. These or any other purchases may be made either in the open market or directly from Thermo Cardiosystems or Thermo Voltek, or pursuant to the conversion of all or part of the companies' subordinated convertible notes held by Thermedics. The Company's Board of Directors has authorized the purchase, during calendar year 1995, of up to $5.0 million of its own securities and those of Thermo Cardiosystems and Thermo Voltek. Any such purchases would be funded from working capital. Through April 1, 1995, the Company has expended $311,000 under this authorization. 9PAGE Form 10-Q April 1, 1995 THERMEDICS INC. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Liquidity and Capital Resources (continued) During 1995, the Company expects to make capital expenditures of approximately $5.5 million. The Company expects to continue to pursue its strategy of expanding its business both through the continued development, manufacture, and sale of new products, and through the possible acquisition of companies that will provide additional marketing or manufacturing capabilities and new products. The Company believes its existing resources are sufficient to meet the capital requirements of its existing operations for the foreseeable future. PART II - Other Information Item 6 - Exhibits See Exhibit Index on the page immediately preceding exhibits. 10PAGE Form 10-Q April 1, 1995 THERMEDICS INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized as of the 5th day of May 1995. THERMEDICS INC. Paul F. Kelleher ------------------------ Paul F. Kelleher Chief Accounting Officer John N. Hatsopoulos ------------------------ John N. Hatsopoulos Vice President and Chief Financial Officer 11PAGE Form 10-Q April 1, 1995 THERMEDICS INC. EXHIBIT INDEX ------------- Exhibit Number Document Page ------- ----------------------------------------------------- ---- 27 Financial Data Schedule. 12 EX-27 2 TMD Q195 F.D.S.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMEDICS INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED APRIL 1, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-30-1995 APR-01-1995 33,129 60,715 36,977 3,969 30,574 166,327 25,649 14,558 301,673 51,336 81,302 3,343 0 0 133,144 301,673 43,858 43,858 24,286 24,286 2,381 290 938 6,269 2,320 3,262 0 0 0 3,262 .10 0
-----END PRIVACY-ENHANCED MESSAGE-----