-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Acn1vm2Wa6nUZt4etlXaNPkNqDaNvMB0L9wdGOHxyVbyAysB7qhFGRQuLzKjsnNb MzBPhs44300TxGbTzGx9fQ== 0000721356-95-000007.txt : 19951107 0000721356-95-000007.hdr.sgml : 19951107 ACCESSION NUMBER: 0000721356-95-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951106 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: 95587303 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 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 September 30, 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 October 27, 1995 ---------------------------- ------------------------------- Common Stock, $.10 par value 33,957,479 PAGE Form 10-Q September 30, 1995 THERMEDICS INC. PART I - Financial Information Item 1 - Financial Statements (a)Consolidated Balance Sheet - Assets as of September 30, 1995 and December 31, 1994 (In thousands) (Unaudited) September 30, 1995 December 31, 1994 ------------------ ----------------- Current Assets: Cash and cash equivalents $ 34,204 $ 37,043 Short-term available-for-sale investments, at quoted market value (amortized cost of $72,358 and $72,731) (includes $2,135 of related party investments in 1995) 73,426 71,680 Accounts receivable, less allowances of $3,832 and $3,640 36,234 33,645 Unbilled contract costs and fees 3,690 497 Inventories: Raw materials and supplies 15,320 13,223 Work in process 9,614 5,429 Finished goods 9,296 8,149 Prepaid income taxes and expenses 4,645 4,676 -------- -------- 186,429 174,342 -------- -------- Property, Plant and Equipment, at Cost 27,817 24,367 Less: Accumulated depreciation and amortization 16,463 13,640 -------- -------- 11,354 10,727 -------- -------- Long-term Available-for-sale Investments, at Quoted Market Value (amortized cost of $48,178 and $46,863) 48,551 45,426 -------- -------- Other Assets 4,347 5,582 -------- -------- Cost in Excess of Net Assets of Acquired Companies 57,735 55,490 -------- -------- $308,416 $291,567 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 2PAGE Form 10-Q September 30, 1995 THERMEDICS INC. (a)Consolidated Balance Sheet - Liabilities and Shareholders' Investment as of September 30, 1995 and December 31, 1994 (In thousands except share amounts) (Unaudited) September 30, 1995 December 31, 1994 ------------------ ----------------- Current Liabilities: Notes payable and current maturities of long-term obligations $ 9,097 $ 10,576 Accounts payable 12,515 9,481 Deferred revenue 1,407 2,463 Customer deposits 2,456 2,546 Accrued payroll and employee benefits 6,746 7,369 Accrued income taxes 3,585 582 Accrued warranty costs 3,608 3,380 Other accrued expenses 8,374 7,675 Due to parent company 1,318 1,940 -------- -------- 49,106 46,012 -------- -------- Deferred Income Taxes and Other Items 1,660 1,565 -------- -------- Long-term Obligations: Subordinated convertible obligations 60,665 82,385 Other 151 166 -------- -------- 60,816 82,551 -------- -------- Minority Interest 43,241 29,674 -------- -------- Shareholders' Investment: Common stock, $.10 par value, 50,000,000 shares authorized; 33,783,641 and 33,303,135 shares issued 3,378 3,330 Capital in excess of par value 111,362 102,975 Retained earnings 38,011 27,066 Treasury stock at cost, 4,234 and 14,671 shares (288) (310) Cumulative translation adjustment 208 326 Net unrealized gain (loss) on available- for-sale investments 922 (1,622) -------- -------- 153,593 131,765 -------- -------- $308,416 $291,567 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 3PAGE Form 10-Q September 30, 1995 THERMEDICS INC. (b)Consolidated Statement of Income for the three months ended September 30, 1995 and October 1, 1994 (In thousands except per share amounts) (Unaudited) Three Months Ended ----------------------------------- September 30, 1995 October 1, 1994 ------------------ --------------- Revenues $41,224 $41,578 ------- ------- Costs and Operating Expenses: Cost of revenues 23,629 23,099 Selling, general and administrative expenses 10,963 11,787 Expenses for research and development 2,592 2,598 ------- ------- 37,184 37,484 ------- ------- Operating Income 4,040 4,094 Interest Income 2,240 1,810 Interest Expense (768) (738) Gain on Issuance of Stock by Subsidiary 1,838 - Gain on Sale of Investments 37 - Other Income (includes $24 from related party in 1994) - 24 ------- ------- Income Before Provision for Income Taxes and Minority Interest 7,387 5,190 Provision for Income Taxes 2,139 2,032 Minority Interest Expense 1,231 272 ------- ------- Net Income $ 4,017 $ 2,886 ======= ======= Earnings per Share $ .12 $ .09 ======= ======= Weighted Average Shares 33,770 33,184 ======= ======= The accompanying notes are an integral part of these consolidated financial statements. 4PAGE Form 10-Q September 30, 1995 THERMEDICS INC. (b)Consolidated Statement of Income for the nine months ended September 30, 1995 and October 1, 1994 (In thousands except per share amounts) (Unaudited) Nine Months Ended ----------------------------------- September 30, 1995 October 1, 1994 ------------------ --------------- Revenues $128,350 $111,274 -------- -------- Costs and Operating Expenses: Cost of revenues 71,630 63,565 Selling, general and administrative expenses 34,680 29,777 Expenses for research and development 7,822 7,655 -------- -------- 114,132 100,997 -------- -------- Operating Income 14,218 10,277 Interest Income 6,670 5,411 Interest Expense (2,629) (2,283) Gain on Issuance of Stock by Subsidiary 2,293 - Gain on Sale of Investments 37 230 Other Income (includes $74 from related party in 1994) 14 74 -------- -------- Income Before Provision for Income Taxes and Minority Interest 20,603 13,709 Provision for Income Taxes 6,720 5,463 Minority Interest Expense 2,938 698 -------- -------- Net Income $ 10,945 $ 7,548 ======== ======== Earnings per Share $ .33 $ .23 ======== ======== Weighted Average Shares 33,564 32,743 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 5PAGE Form 10-Q September 30, 1995 THERMEDICS INC. (c)Consolidated Statement of Cash Flows for the nine months ended September 30, 1995 and October 1, 1994 (In thousands) (Unaudited) Nine Months Ended ----------------------------------- September 30, 1995 October 1, 1994 ------------------ --------------- Operating Activities: Net income $ 10,945 $ 7,548 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,066 3,088 Provision for losses on accounts receivable 557 879 Gain on issuance of stock by subsidiary (2,293) - Gain on sale of investments (37) (230) Minority interest expense 2,938 698 Other noncash expenses 839 859 Increase (decrease) in deferred income taxes (45) 384 Changes in current accounts, excluding the effects of acquisitions: Accounts receivable (1,740) (855) Inventories and unbilled contract costs and fees (9,590) 8,330 Prepaid income taxes and expenses (553) (3,070) Accounts payable 2,630 (5,540) Other current liabilities (3,299) (5,218) Other - 5 -------- -------- Net cash provided by operating activities 4,418 6,878 -------- -------- Investing Activities: Acquisitions, net of cash acquired (4,155) (44,867) Purchases of property, plant and equipment (3,339) (2,362) Proceeds from sale and maturities of available-for-sale investments 72,121 60,297 Purchases of available-for-sale investments (72,675) (73,651) Other 25 (127) -------- -------- Net cash used in investing activities $ (8,023) $(60,710) -------- -------- 6PAGE Form 10-Q September 30, 1995 THERMEDICS INC. (c)Consolidated Statement of Cash Flows for the nine months ended September 30, 1995 and October 1, 1994 (In thousands) (Unaudited) (continued) Nine Months Ended ----------------------------------- September 30, 1995 October 1, 1994 ------------------ --------------- Financing Activities: Purchases of subsidiary common stock $ (179) $ (3,231) Net proceeds from issuance of Company and subsidiary common stock 1,249 1,785 Net proceeds from issuance of subordinated convertible debentures - 31,968 Issuance of note payable - 2,237 Repurchase of long-term obligations (132) - -------- -------- Net cash provided by financing activities 938 32,759 -------- -------- Exchange Rate Effect on Cash (172) 545 -------- -------- Decrease in Cash and Cash Equivalents (2,839) (20,528) Cash and Cash Equivalents at Beginning of Period 37,043 40,179 -------- -------- Cash and Cash Equivalents at End of Period $ 34,204 $ 19,651 ======== ======== Cash Paid For: Interest $ 2,113 $ 2,129 Income taxes $ 5,456 $ 3,281 Noncash Financing Activities: Conversion of convertible obligations $ 21,571 $ 9,745 The accompanying notes are an integral part of these consolidated financial statements. 7PAGE Form 10-Q September 30, 1995 THERMEDICS INC. (d) Notes to Consolidated Financial Statements - September 30, 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- and nine-month periods ended September 30, 1995 and October 1, 1994, (b) the financial position at September 30, 1995, and (c) the cash flows for the nine-month periods ended September 30, 1995 and October 1, 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 (R) 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 sensor 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. 8PAGE Form 10-Q September 30, 1995 THERMEDICS INC. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Overview (continued) As part of its Biomedical Products segment, the Company's Thermo Cardiosystems Inc. (Thermo Cardiosystems) subsidiary has developed two implantable left ventricular-assist systems (LVAS), a pneumatic, or air-driven system, and an electric version. 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 United States and the Company began earning a profit on the sale of such systems in the fourth quarter of 1994. A profit cannot be earned from the sale of an LVAS unless the FDA has approved the device for commercial sales. In August 1995, the electric LVAS received the European Conformity Mark (CE Mark), allowing commercial sales in all European Community countries. The portable driver for the air-driven LVAS was granted the CE Mark in early 1995. The Company also manufactures enteral feeding products and a line of medical-grade polymers, which are used in catheters, tubing, and non-medical products. Results of Operations Third Quarter 1995 Compared With Third Quarter 1994 --------------------------------------------------- Total revenues in the third quarter of 1995 were $41.2 million, compared with $41.6 million in the third quarter of 1994. Instruments and Other Equipment segment revenues decreased to $32.9 million in 1995 from $33.3 million in 1994. Revenues at Thermedics Detection declined to $6.0 million in 1995 from $12.7 million in 1994. Thermedics Detection process detection instrument sales declined to $3.9 million in 1995 from $8.1 million in 1994. This decline is due to a decrease in demand from Thermedics Detection's principal customer, which has substantially completed its deployment of Alexus product quality assurance 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. Thermedics Detection EGIS system sales declined to $877,000 in the third quarter of 1995, from $4.2 million in 1994. The Company's sales of the EGIS system have been made primarily to government entities outside of the U.S. During 1993 and 1994, large orders from the U.K. and German governments accounted for a significant portion of EGIS sales. These orders have now been filled. Demand for this highly specialized product will vary widely over time in a particular country, and among different countries, due to many factors beyond the control of the Company, such as budgetary constraints and social and political concerns about security. Due to the nature of the demand for the EGIS system, future sales levels will depend, 9PAGE Form 10-Q September 30, 1995 THERMEDICS INC. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Third Quarter 1995 Compared With Third Quarter 1994 (continued) --------------------------------------------------- to a significant extent, upon the Company's ability to obtain large orders from one or more government entities. These declines in revenues were offset in part by higher revenue from research and development contracts to develop new detection instruments. Revenues from Thermo Voltek increased $3.7 million due to an increase of $1.7 million in revenues at Comtest, due primarily to the introduction of a new product line in 1995, and due to the inclusion of $1.4 million in revenues from Kalmus Engineering Incorporated (Kalmus), which was acquired in March 1995. In addition, revenues from Ramsey increased by $2.6 million from the third quarter of 1994 due to an increase in demand. Biomedical Products segment revenues remained unchanged at $8.3 million in the third quarter of 1995 and 1994. Revenues at Thermo Cardiosystems increased by $2.5 million to $5.1 million in 1995 from 1994 due to an increase in the price of the LVAS that was phased in during the fourth quarter of 1994 and the first two quarters of 1995, and an increase in the number of air-driven and electric LVAS implants. The number of LVAS units shipped during the third quarter of 1995 increased by 37% compared with the third quarter of 1994. The increase in revenues at Thermo Cardiosystems was offset by a decline of $2.4 million in revenues from Scent Seal fragrance samplers. In June 1995, the Company entered into an agreement granting an exclusive license to all of its patents and know-how relating to the Scent Seal fragrance samplers to a third party in consideration for royalty payments on future sales by the licensee. In July 1995, Thermo Cardiosystems instituted a voluntary recall of an inflow valve conduit used in its LVAS. The recall was instituted after Thermo Cardiosystems determined that, on several occasions, one of the valve components may have abraded the valve conduit material, causing a blood leak. While the recall did not result in the suspension of sales of the LVAS, the Company believes that the recall temporarily impacted orders and total sales for the third quarter. Sales for the months of July and August were low, with July having the lowest monthly sales since commercialization, while sales in September were the highest ever attained. Although the Company believes that Thermo Cardiosystems has corrected this problem with the inflow valve conduit, no assurance can be given that similar problems will not arise in the future. The gross profit margin was 43% in the third quarter of 1995, compared with 44% in the third quarter of 1994. The gross profit margin for the Instruments and Other Equipment segment decreased to 40% in 1995 from 46% in 1994. This decline was due primarily to lower gross profit margins at Thermedics Detection due primarily to the lower sales volume and, to a 10PAGE Form 10-Q September 30, 1995 THERMEDICS INC. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Third Quarter 1995 Compared With Third Quarter 1994 (continued) --------------------------------------------------- lesser extent, the inclusion of greater revenues from lower-margin research and development contracts. In addition, Thermo Voltek had lower gross profit margins due primarily to higher European sales in one product line, which has lower margins due to competitive pricing pressure. The gross profit margin for the Biomedical Products segment increased to 52% in 1995 from 39% in 1994, reflecting higher margins at Thermo Cardiosystems resulting from the LVAS price increase, the increase in sales volume, and improvements in manufacturing efficiencies. In addition, the third quarter of 1994 included lower-margin revenues from Scent Seal fragrance samplers. Selling, general and administrative expenses as a percentage of revenues decreased to 27% in the third quarter of 1995 from 28% in the third quarter of 1994. The decrease was due primarily to lower costs as a percentage of revenues at Thermo Cardiosystems as a result of the higher sales volume in 1995. Research and development expenses as a percentage of revenues remained relatively unchanged at 6.3% in 1995 and 6.2% in 1994. Interest income increased to $2.2 million in the third quarter of 1995 from $1.8 million in the third quarter of 1994 due to higher prevailing interest rates in 1995. Interest expense increased to $768,000 in 1995 from $738,000 in 1994 as a result of borrowings by Ramsey's and Thermo Voltek's foreign subsidiaries, offset in part by a decrease in interest expense due to conversions of subordinated convertible obligations. The gain on the issuance of stock by subsidiary of $1.8 million in the third quarter of 1995 resulted from the conversion of $4.6 million principal amount of Thermo Voltek's 3 3/4% subordinated convertible debentures. The effective tax rate in the third quarter of 1995 was below the statutory federal income tax rate due primarily to the nontaxable gain on the issuance of stock by subsidiary. Minority interest expense increased to $1.2 million in the third quarter of 1995 from $272,000 in the third quarter of 1994 due to higher profits at the Company's 53%-owned Thermo Cardiosystems subsidiary and, to a lesser extent, the Company's 53%-owned Thermo Voltek subsidiary. 11PAGE Form 10-Q September 30, 1995 THERMEDICS INC. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) First Nine Months 1995 Compared With First Nine Months 1994 ----------------------------------------------------------- Total revenues in the first nine months of 1995 were $128.4 million, compared with $111.3 million in the first nine months of 1994. Instruments and Other Equipment segment revenues increased 11% to $98.5 million in 1995 from $88.7 million in 1994. Revenues increased $16.8 million due to the inclusion of sales for a full nine months from Ramsey, which was acquired March 16, 1994; and due to an increase in revenues from Thermo Voltek of $9.1 million, including $4.5 million due to the inclusion of revenues from businesses acquired in 1994 and 1995, and an increase of $2.8 million in revenues from Comtest due primarily to the introduction of a new product line in 1995. Revenues at Thermedics Detection were $22.2 million in 1995, compared with $38.2 million in 1994. Revenues from Thermedics Detection's process detection instruments declined to $14.6 million in 1995 from $28.5 million in 1994, and EGIS system revenues declined to $3.6 million in 1995 from $8.3 million in 1994. These declines in revenues were offset in part by higher revenue from research and development contracts to develop new detection instruments. The reasons for the decreases in revenues are the same as those discussed in the results of operations for the third quarter. Biomedical Products segment revenues increased 32% to $29.8 million in the first nine months of 1995 from $22.6 million in the first nine months of 1994. Revenues from Thermo Cardiosystems increased by $8.2 million to $15.0 million due to an increase in the price of the LVAS discussed in the results of operations for the third quarter and an increase in the number of air-driven and electric LVAS implants. The number of LVAS units shipped during the first nine months of 1995 increased by 59% compared with the first nine months of 1994. The increase in revenues from Thermo Cardiosystems was partially offset by a decline of $1.4 million in revenues from Scent Seal fragrance samplers due to the reason discussed in the results of operations for the third quarter. The gross profit margin was 44% in the first nine months of 1995, compared with 43% in the first nine months of 1994. The gross profit margin for the Instruments and Other Equipment segment was 43% in 1995 and 44% in 1994. Thermedics Detection's gross profit margin decreased in 1995 from 1994 as a result of lower sales volume and, to a lesser extent, the inclusion of lower-margin research and development contract revenue. In addition, Thermo Voltek's gross profit margin decreased in 1995 from 1994 due primarily to higher European sales in one product line, which has lower margins due to competitive pricing pressure. These decreases were offset in part by improved gross profit margins at Ramsey due to a reduction in operating expenses. The gross profit margin for the Biomedical Products segment was 49% in 1995, compared with 39% in 1994, reflecting higher margins at Thermo Cardiosystems resulting from the LVAS price increase, the increase in sales volume, and improvements in manufacturing efficiencies. 12PAGE Form 10-Q September 30, 1995 THERMEDICS INC. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) First Nine Months 1995 Compared With First Nine Months 1994 (continued) ----------------------------------------------------------- Selling, general and administrative expenses as a percentage of revenues remained unchanged at 27% in the first nine months of 1995 and 1994. Research and development expenses as a percentage of revenues decreased to 6.1% in 1995 from 6.9% in 1994 due primarily to lower costs as a percentage of revenues at Thermo Cardiosystems as a result of a higher sales volume in 1995. Interest income increased to $6.7 million in the first nine months of 1995 from $5.4 million in the first nine months of 1994 due to higher prevailing interest rates in 1995. Interest expense increased to $2.6 million in 1995 from $2.3 million in 1994 as a result of borrowings by Ramsey's and Thermo Voltek's foreign subsidiaries, offset in part by a decrease in interest expense due to conversions of subordinated convertible obligations. The gain on the issuance of stock by subsidiary of $2.3 million in 1995 resulted from the conversion of $5.6 million principal amount of Thermo Voltek's 3 3/4% subordinated convertible debentures. The effective tax rate in the first nine months of 1995 was below the statutory federal income tax rate due primarily to the nontaxable gains on the issuance of stock by subsidiary. Minority interest expense increased to $2.9 million in the first nine months of 1995 from $698,000 in the first nine months of 1994 due to higher profits at the Company's 53%-owned Thermo Cardiosystems subsidiary and, to a lesser extent, the Company's 53%-owned Thermo Voltek subsidiary. Financial Condition Liquidity and Capital Resources ------------------------------- Working capital, including cash, cash equivalents, and short-term available-for-sale investments, was $137.3 million at September 30, 1995, compared with $128.3 million at December 31, 1994. Cash, cash equivalents, and short- and long-term available-for-sale investments were $156.2 million at September 30, 1995, compared with $154.1 million at December 31, 1994. Of the $156.2 million balance at September 30, 1995, $88.8 million was held by Thermo Cardiosystems, $33.9 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 $3.8 million in cash. 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 13PAGE Form 10-Q September 30, 1995 THERMEDICS INC. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Liquidity and Capital Resources (continued) ------------------------------- 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, Thermo Voltek or Thermo Electron Corporation (Thermo Electron), or pursuant to the conversion of all or part of the subsidiaries' 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 September 30, 1995, the Company had expended $311,000 under this authorization. On July 20, 1995, Thermo Electron announced that it had signed a letter of intent to acquire Analytical Technology, Inc. (ATI), a Boston-based manufacturer and marketer of analytical instruments used primarily for testing and analysis, both in laboratories and in manufacturing. ATI operates through two divisions: laboratories and analytical instruments. Upon completion of the acquisition, it is anticipated that the Company would acquire the laboratory products division, which had revenues of approximately $46 million in 1994. This division sells electrochemistry, micro-weighing, and other instruments to detect the chemical composition of foods, beverages, and pharmaceuticals. The Company expects that it will finance this acquisition through a combination of internal funds and short-term borrowings from Thermo Electron. The completion of the acquisition is subject to several conditions, including execution of a mutually satisfactory acquisition agreement, obtaining applicable regulatory approvals and other customary conditions to closing. During the remainder of 1995, the Company expects to make capital expenditures of approximately $2.0 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. 14PAGE Form 10-Q September 30, 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 3rd day of November 1995. THERMEDICS INC. Paul F. Kelleher ------------------------ Paul F. Kelleher Chief Accounting Officer John N. Hatsopoulos ------------------------ John N. Hatsopoulos Vice President and Chief Financial Officer 15PAGE Form 10-Q September 30, 1995 THERMEDICS INC. EXHIBIT INDEX Exhibit Number Document Page ------- ----------------------------------------------------- ---- 27 Financial Data Schedule. EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMEDICS INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-30-1995 SEP-30-1995 34,204 73,426 36,234 3,832 34,230 186,429 27,817 16,463 308,416 49,106 60,816 3,378 0 0 150,215 308,416 41,224 41,224 23,629 23,629 37,184 557 768 7,387 2,319 4,017 0 0 0 4,017 .12 0
-----END PRIVACY-ENHANCED MESSAGE-----