-----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, FlhnpbWfhVmgMNXt4SseyBmm9Wrl72iB3Mha1T4zwrlsZwXCoqBEOsYA4k4cv+cY JAecjyTpvFSmoEquI6vHaA== 0000721356-96-000032.txt : 19960507 0000721356-96-000032.hdr.sgml : 19960507 ACCESSION NUMBER: 0000721356-96-000032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960330 FILED AS OF DATE: 19960506 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: 96556810 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 March 30, 1996. [ ] 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 26, 1996 ---------------------------- ----------------------------- Common Stock, $.10 par value 36,475,336 PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements THERMEDICS INC. Consolidated Balance Sheet (Unaudited) Assets March 30, December 30, (In thousands) 1996 1995 --------------------------------------------------------------------------- Current Assets: Cash and cash equivalents $ 48,645 $ 37,370 Short-term available-for-sale investments, at quoted market value (amortized cost of $74,363 and $76,682) (includes $2,322 and $2,052 of related party investments) 75,850 77,916 Accounts receivable, less allowances of $4,493 and $3,982 50,892 41,327 Unbilled contract costs and fees 1,178 1,582 Inventories: Raw materials and supplies 21,368 21,517 Work in process and finished goods 26,926 21,162 Prepaid income taxes and expenses 8,701 8,645 -------- -------- 233,560 209,519 -------- -------- Property, Plant and Equipment, at Cost 32,886 30,302 Less: Accumulated depreciation and amortization 19,017 17,369 -------- -------- 13,869 12,933 -------- -------- Long-term Available-for-sale Investments, at Quoted Market Value (amortized cost of $29,515 and $39,795) 29,325 39,953 -------- -------- Other Assets 6,472 4,171 -------- -------- Cost in Excess of Net Assets of Acquired Companies (Note 4) 121,852 101,574 -------- -------- $405,078 $368,150 ======== ======== 2PAGE THERMEDICS INC. Consolidated Balance Sheet (continued) (Unaudited) Liabilities and Shareholders' Investment March 30, December 30, (In thousands except share amounts) 1996 1995 -------------------------------------------------------------------------- Current Liabilities: Notes payable and current maturities of long-term obligations (includes $53,000 and $38,000 due to parent company) (Note 4) $ 66,477 $ 47,420 Accounts payable 18,476 16,336 Accrued payroll and employee benefits 7,784 8,893 Deferred revenue 1,734 1,705 Customer deposits 2,546 2,162 Accrued income taxes 5,126 2,340 Accrued warranty costs 3,880 3,637 Other accrued expenses 17,697 15,307 Due to parent company 6,626 1,606 -------- -------- 130,346 99,406 -------- -------- Deferred Income Taxes and Other Deferred Items 2,173 2,173 -------- -------- Long-term Obligations: Subordinated convertible obligations (Note 3) 32,372 44,919 Other 334 282 -------- -------- 32,706 45,201 -------- -------- Minority Interest 55,560 54,360 -------- -------- Shareholders' Investment: Common stock, $.10 par value, 50,000,000 shares authorized; 36,471,885 and 33,986,050 shares issued 3,647 3,399 Capital in excess of par value 133,020 120,665 Retained earnings 46,940 42,187 Treasury stock at cost, 987 and 2,146 shares (30) (42) Cumulative translation adjustment (101) (88) Net unrealized gain on available- for-sale investments 817 889 -------- -------- 184,293 167,010 -------- -------- $405,078 $368,150 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 3PAGE THERMEDICS INC. Consolidated Statement of Income (Unaudited) Three Months Ended ----------------------- March 30, April 1, (In thousands except per share amounts) 1996 1995 -------------------------------------------------------------------------- Revenues $60,282 $43,858 ------- ------- Costs and Operating Expenses: Cost of revenues 31,719 24,286 Selling, general and administrative expenses 18,949 12,195 Expenses for research and development 4,023 2,381 ------- ------- 54,691 38,862 ------- ------- Operating Income 5,591 4,996 Interest Income 2,106 2,197 Interest Expense (1,278) (938) Gain on Issuance of Stock by Subsidiary (Note 5) 2,516 - Gain on Sale of Investments 68 - Other Income - 14 ------- ------- Income Before Provision for Income Taxes and Minority Interest 9,003 6,269 Provision for Income Taxes 2,696 2,320 Minority Interest Expense 1,554 687 ------- ------- Net Income $ 4,753 $ 3,262 ======= ======= Earnings per Share $ .13 $ .10 ======= ======= Weighted Average Shares 35,597 33,306 ======= ======= The accompanying notes are an integral part of these consolidated financial statements. 4PAGE THERMEDICS INC. Consolidated Statement of Cash Flows (Unaudited) Three Months Ended ----------------------- March 30, April 1, (In thousands) 1996 1995 -------------------------------------------------------------------------- Operating Activities: Net income $ 4,753 $ 3,262 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,489 1,365 Provision for losses on accounts receivable 254 290 Gain on issuance of stock by subsidiary (Note 5) (2,516) - Gain on sale of investments (68) - Minority interest expense 1,554 687 Other noncash expenses 159 418 Decrease in deferred income taxes - (45) Changes in current accounts, excluding the effects of acquisitions: Accounts receivable (5,742) (2,445) Inventories and unbilled contract costs and fees (1,772) (2,969) Prepaid income taxes and expenses 198 167 Accounts payable 1,154 3,583 Other current liabilities 5,214 (1,285) Other (153) 16 -------- -------- Net cash provided by operating activities 5,524 3,044 -------- -------- Investing Activities: Acquisitions, net of cash acquired (Note 4) (25,797) (4,000) Proceeds from sale and maturities of available-for-sale investments 38,914 26,275 Purchases of property, plant and equipment (1,682) (1,059) Purchases of available-for-sale investments (26,247) (28,309) (Increase) decrease in other assets (2,645) 34 -------- -------- Net cash used in investing activities $(17,457) $ (7,059) -------- -------- 5PAGE THERMEDICS INC. Consolidated Statement of Cash Flows (continued) (Unaudited) Three Months Ended ----------------------- March 30, April 1, (In thousands) 1996 1995 -------------------------------------------------------------------------- Financing Activities: Purchases of subsidiary common stock $ (442) $ (179) Net proceeds from issuance of Company and subsidiary common stock (Note 5) 4,340 514 Proceeds from issuance of note payable to parent company (Note 4) 15,000 - Net increase in short-term borrowings 4,668 - Repayment and repurchase of long-term obligations (257) (132) -------- -------- Net cash provided by financing activities 23,309 203 -------- -------- Exchange Rate Effect on Cash (101) (102) -------- -------- Increase (Decrease) in Cash and Cash Equivalents 11,275 (3,914) Cash and Cash Equivalents at Beginning of Period 37,370 37,043 -------- -------- Cash and Cash Equivalents at End of Period $ 48,645 $ 33,129 ======== ======== Cash Paid For: Interest $ 758 $ 622 Income taxes $ 1,401 $ 915 Noncash Activities: Conversions of Company and subsidiaries' convertible obligations $ 12,290 $ 1,160 The accompanying notes are an integral part of these consolidated financial statements. 6PAGE THERMEDICS INC. Notes to Consolidated Financial Statements 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 March 30, 1996 and April 1, 1995, (b) the financial position at March 30, 1996, and (c) the cash flows for the three-month periods ended March 30, 1996 and April 1, 1995. Interim results are not necessarily indicative of results for a full year. The consolidated balance sheet presented as of December 30, 1995, 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 30, 1995, filed with the Securities and Exchange Commission. 2. Transfer of Common Stock In January 1996, the Company issued 1,688,161 shares of its common stock to Thermo Electron Corporation (Thermo Electron) in exchange for 315,199 shares of its Thermo Voltek Corp. (Thermo Voltek) subsidiary common stock and 529,965 shares of its Thermo Cardiosystems Inc. (Thermo Cardiosystems) subsidiary common stock. The shares of common stock were exchanged at their respective fair market values on the date of the transaction. 3. Redemption of Convertible Debentures In February 1996, the Company called for redemption on March 11, 1996, all of the outstanding principal amount of its 6 1/2% subordinated convertible debentures due 1998. During the three months ended March 30, 1996, approximately $7,780,000 of the outstanding principal amount of the debentures was converted into the Company's common stock. 4. Acquisitions In January 1996, the Company's Thermedics Detection Inc. (Thermedics Detection) subsidiary acquired the assets of Moisture Systems Corporation, based in Hopkington, Massachusetts, and certain affiliated companies (collectively, Moisture Systems), and the stock of Netherlands-based Rutter & Co. (Rutter) for a total purchase price of $22.3 million in cash, which included the repayment of $2.0 million of debt. In connection with these acquisitions, the Company borrowed $15.0 million from Thermo Electron pursuant to a promissory note due February 1997, and bearing interest at the 90-day Commercial Paper Composite Rate plus 25 basis points, set at the beginning of each quarter. 7PAGE THERMEDICS INC. 4. Acquisitions (continued) These acquisitions have been accounted for using the purchase method of accounting and their results of operations have been included in the accompanying financial statements from their respective dates of acquisition. The aggregate cost of these acquisitions exceeded the estimated fair value of the acquired net assets by $16.0 million, which is being amortized over 40 years. Allocation of the purchase price for these acquisitions was based on estimates of the fair value of the net assets acquired and is subject to adjustment upon finalization of the purchase price allocation. Pro forma data is not presented since these acquisitions were not material to the Company's results of operations and financial position. 5. Issuance of Stock by Subsidiary In March 1996, Thermedics Detection issued 300,000 shares of its common stock in a private placement for net proceeds of $3,000,000, resulting in a gain of $2,516,000. Following the private placement, the Company owned 97% of Thermedics Detection's outstanding common stock. 6. Subsequent Events Issuance of Stock by Subsidiary In May 1996, the Company's Thermo Sentron Inc. (Thermo Sentron) subsidiary issued 2,875,000 shares of its common stock in an initial public offering for net proceeds of approximately $42.3 million. Following the initial public offering, the Company owned 71% of Thermo Sentron's outstanding common stock. Transfer of Common Stock In April 1996, the Company issued 299,112 shares of its common stock to Thermo Electron in exchange for 107,500 shares of Thermo Voltek common stock and 90,000 shares of Thermo Cardiosystems common stock. The shares of common stock were exchanged at their respective fair market values on the date of the transaction. 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. The Instruments and Other Equipment segment includes Thermo Sentron Inc. (Thermo Sentron) which designs, develops, manufactures, and sells high-speed precision-weighing and inspection equipment for industrial production and packaging lines. The Instruments and Other Equipment segment also includes the former Orion laboratory products division (Orion) of Analytical Technology, Inc., which was acquired in December 1995. Orion is a manufacturer of electrochemistry, microweighing, process, and other instruments used to analyze the chemical compositions of foods, beverages, and pharmaceuticals, and to detect contaminants in environmental and high-purity water samples. The Instruments and Other Equipment segment, through the Company's Thermedics 8PAGE THERMEDICS INC. Overview (continued) Detection Inc. (Thermedics Detection) subsidiary, also develops, manufactures, and markets high-speed detection instruments, including the Alexus (R) system, a process-detection instrument used in product quality assurance applications in the beverage industry, and the EGIS (R) system, a security instrument used to detect explosives at airports and other locations. As a result of the January 1996 acquisition of Moisture Systems Corporation and certain affiliated companies (collectively, Moisture Systems) and Rutter & Co. (Rutter) by Thermedics Detection, the Company now offers a full range of infrared moisture analyzers for the food, forest, paper, pharmaceutical, and chemical industries. 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 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 the commercial sale in the U.S. of the air-driven LVAS for use as a bridge to heart transplant. With this approval, the air-driven system is available for sale to cardiac centers throughout the U.S. The electric version of the LVAS, which is currently being used in clinical trials in the U.S. for patients awaiting heart transplants, received the European Conformity Mark (CE Mark)in August 1995, allowing commercial sale in all European Community countries. The air-driven LVAS was granted the CE Mark in early 1994. In late 1995, the FDA approved the protocol for conducting clinical trials of the electric LVAS as an alternative to heart transplant in the U.S. In April 1996, the first implant under this clinical trial was performed using the LVAS as an alternative for nontransplant candidates. Until the Company's electric LVAS receives FDA commercial approval, sales of the electric LVAS will fluctuate depending upon the number of implants performed in ongoing studies at approved clinical sites and the number of implementation programs sold. The Company also develops, manufactures, and markets enteral nutrition-delivery systems and a line of polymers used in medical disposables and nonmedical, industrial applications, including safety glass and automotive coatings. Results of Operations First Quarter 1996 Compared With First Quarter 1995 Total revenues in the first quarter of 1996 were $60.3 million, compared with $43.9 million in the first quarter of 1995. Instruments and Other Equipment segment revenues increased to $49.8 million in 1996 from $32.8 million in 1995 due to the inclusion of $17.1 million in revenues from acquired businesses, primarily Orion, which was acquired in December 1995, and Moisture Systems and Rutter, which were acquired in January 1996. Thermedics Detection process-detection instrument sales to the beverage industry declined to $2.9 million in 1996 from $6.4 million in 1995. This decline is primarily due to a decrease in demand from Thermedics Detection's principal customer, which has substantially completed its deployment of Alexus product quality assurance systems. The decrease in revenues was offset in part by an increase in revenues from Thermedics Detection's EGIS system to $2.9 million in the first quarter of 1996, from 9PAGE THERMEDICS INC. First Quarter 1996 Compared With First Quarter 1995 (continued) $1.5 million in 1995, due primarily to an order received in 1996 from the U.S. government to provide Israel with counterterrorism support. Revenues from Thermo Voltek increased $3.3 million due to an increase of $1.7 million in revenue at its Comtest subsidiary, primarily as a result of greater overseas demand and the introduction of a new product line in 1995. Thermo Voltek revenues also increased $1.1 million due to the inclusion of revenues for the full quarter of 1996 from Kalmus Engineering Incorporated (Kalmus), which was acquired in March 1995. Biomedical Products segment revenues decreased slightly to $10.5 million in the first quarter of 1996 from $11.0 million in 1995 primarily due to a decline of $2.9 million in revenues from Scent Seal fragrance samplers. In June 1995, the Company entered into an agreement with a third party granting an exclusive license to all of its patents and know-how relating to the Scent Seal fragrance samplers. The Company recorded royalty income of $72,000 in the first quarter of 1996 related to this agreement. This decrease in revenues was offset in part by an increase of $2.3 million in revenues from Thermo Cardiosystems primarily due to a 49% increase in the number of air-driven and electric LVAS units shipped during the first quarter of 1996. The gross profit margin was 47% in the first quarter of 1996, compared with 45% in the first quarter of 1995. The gross profit margin for the Instruments and Other Equipment segment increased to 46% in 1996 from 44% in 1995 primarily due to the inclusion of higher-margin revenues at Orion, Moisture Systems, and Rutter, offset in part by a decrease in the gross profit margin due to declining sales volume of process-detection instruments to the beverage industry. The gross profit margin for the Biomedical Products segment increased to 55% in the first quarter 1996 from 46% in 1995, reflecting higher margins at Thermo Cardiosystems resulting from the increase in sales volume, improvements in manufacturing efficiencies and, to a lesser extent, the LVAS price increase that was phased in through the first half of 1995. In addition, the first quarter of 1995 included low-margin revenues from Scent Seal fragrance samplers. Selling, general and administrative expenses as a percentage of revenues increased to 31% in the first quarter of 1996 from 28% in the first quarter of 1995. The increase was primarily a result of higher expenses as a percentage of revenues due to lower sales volume of Thermedics Detection's process-detection instruments to the beverage industry in the first quarter of 1996, and higher expenses as a percentage of revenues at Orion, Moisture Systems, and Rutter. Research and development expenses as a percentage of revenues increased to 6.7% in first quarter of 1996 from 5.4% in 1995 primarily due to increased research and development expenses at Thermedics Detection. Interest income was $2.1 million and $2.2 million in the first quarter of 1996 and 1995, respectively. Interest expense increased to $1.3 million in 1996 from $0.9 million in 1995 as a result of additional borrowings by the Company to fund acquisitions, offset in part by a decrease in interest expense due to conversions of subordinated convertible obligations. 10PAGE THERMEDICS INC. First Quarter 1996 Compared With First Quarter 1995 (continued) Gain on the issuance of stock by subsidiary of $2.5 million in the first quarter of 1996 resulted from Thermedics Detection's March 1996 private placement of 300,000 shares of Thermedics Detection common stock (Note 5). The effective tax rate in the first quarter of 1996 was below the statutory federal income tax rate due primarily to the nontaxable gain on the issuance of stock by subsidiary, offset in part by state income taxes and nondeductible amortization of cost in excess of net assets of acquired companies. Minority interest expense increased to $1.6 million in the first quarter of 1996 from $0.7 million in the first quarter of 1995 due to higher profits at the Company's 54%-owned Thermo Cardiosystems subsidiary and, to a lesser extent, the Company's 53%-owned Thermo Voltek subsidiary. Liquidity and Capital Resources Consolidated working capital, including cash, cash equivalents, and short-term available-for-sale investments, was $103.2 million at March 30, 1996, compared with $110.1 million at December 30, 1995. Cash, cash equivalents, and short- and long-term available-for-sale investments were $153.8 million at March 30, 1996, compared with $155.2 million at December 30, 1995. Of the $153.8 million balance at March 30, 1996, $91.2 million was held by Thermo Cardiosystems, $33.7 million by Thermo Voltek, $4.9 million by Thermedics Detection, and the remainder by the Company and its wholly owned subsidiaries. During the first quarter of 1996, $5.5 million of cash was provided by operating activities and the Company expended $1.7 million on purchases of property, plant and equipment. In January 1996, the Company acquired the assets of Moisture Systems Corporation and certain affiliated companies, and the stock of Rutter & Co., for a total purchase price of $22.3 million in cash, which included the repayment of $2.0 million of debt. In connection with these acquisitions, the Company borrowed $15.0 million from Thermo Electron Corporation (Thermo Electron) pursuant to a promissory note due February 1997 (Note 4). Thermo Electron has indicated its intention to require the Company's indebtedness to Thermo Electron be repaid to the extent that the Company's liquidity and cash flow permit. In March 1996, Thermedics Detection issued shares of its common stock in a private placement for net proceeds of $3.0 million (Note 5). In April 1996, Thermo Sentron issued 2,875,000 shares of its common stock in an initial public offering for net proceeds of approximately $42.3 million. Thermo Sentron used part of the proceeds from the offering to repay $12.6 million in short-term borrowings from Thermo Electron and third parties. The Company intends, for the foreseeable future, to maintain at least 50% ownership of Thermo Cardiosystems, Thermo Voltek, and Thermo Sentron. This may require the purchase by the Company of additional shares of common stock or, if applicable, convertible debentures (which are then converted) of these companies from time to time, if the number of the companies' outstanding shares increases, whether as a result of conversion of 11PAGE THERMEDICS INC. Liquidity and Capital Resources (continued) 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, Thermo Sentron, or Thermo Electron, or pursuant to the conversion of all or part of Thermo Voltek's subordinated convertible notes held by the Company. In January 1996, the Company issued 1,688,161 shares of its common stock to Thermo Electron in exchange for 315,199 shares of Thermo Voltek common stock and 529,965 shares of Thermo Cardiosystems common stock. In April 1996, the Company issued 299,112 shares of its common stock to Thermo Electron in exchange for 107,500 shares of Thermo Voltek common stock and 90,000 shares of Thermo Cardiosystems common stock. The shares of common stock were exchanged at their respective fair market values on the dates of the transactions. During the remainder of 1996, the Company expects to make capital expenditures of approximately $5.0 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 expects that it will finance these acquisitions through a combination of internal funds, additional debt or equity financing from the capital markets, or short-term borrowings from Thermo Electron. 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. 12PAGE 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 6th day of May 1996. THERMEDICS INC. Paul F. Kelleher -------------------- Paul F. Kelleher Chief Accounting Officer John N. Hatsopoulos -------------------- John N. Hatsopoulos Vice President and Chief Financial Officer 13PAGE THERMEDICS INC. EXHIBIT INDEX Exhibit Number Document Page ------- ----------------------------------------------------- ---- 10 $15,000,000 Promissory Note dated as of February 13, 1996 issued by the Company to Thermo Electron Corporation. 27 Financial Data Schedule. EX-10 2 EXHIBIT 10 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT, AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, PLEDGED, MORTGAGED, HYPOTHECATED OR OTHERWISE TRANSFERRED (1) WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING THESE SECURITIES OR (2) UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. Thermedics Inc. Promissory Note Due February 11, 1997 Waltham, Massachusetts February 13, 1996 For value received, Thermedics Inc., a Massachusetts corporation (the "Company"), hereby promises to pay to Thermo Electron Corporation (hereinafter referred to as the "Payee"), or registered assigns, on February 11, 1997, as described below, the principal sum of fifteen million dollars ($15,000,000) or such part thereof as then remains unpaid, to pay interest from the date hereof on the whole amount of said principal sum remaining from time to time unpaid at a rate per annum equal to the rate of the Commercial Paper Composite Rate as reported by Merrill Lynch Capital Markets, as an average of the last five business days of the fiscal quarter, plus twenty-five (25) basis points, such interest to be payable in arrears on the first day of each fiscal quarter of the Company during the term set forth herein, until the whole amount of the principal hereof remaining unpaid shall become due and payable, and to pay interest on all overdue principal and interest at a rate per annum equal to the rate of interest announced from time to time by The First National Bank of Boston at its head office in Boston, Massachusetts as its "base rate" plus one percent (1%). Principal and all accrued but unpaid interest shall be repaid on February 11, 1997. Principal and interest shall be payable in lawful money of the United States of America, in immediately available funds, at the principal office of the Payee or at such other place as the legal holder may designate from time to time in writing to the Company. Interest shall be computed on an actual 360-day basis. This Note may be prepaid at any time or from time to time, in whole or in part, without any premium or penalty. All prepayments shall be applied first to accrued interest and then to principal. The then unpaid principal amount of, and interest outstanding on, this Note shall be and become immediately due and payable without notice or demand, at the option of the holder hereof, upon the occurrence of any of the following events: (a) the failure of the Company to pay any amount due hereunder within ten (10) days of the date when due; (b) any representation, warranty or statement made or furnished to the Payee by the Company in connection with this Note or the transaction from which it arises shall prove to have been false or misleading in any material respect as of the date when made or furnished; PAGE (c) the failure of the Company to pay its debts as they become due, the insolvency of the Company, the filing by or against the Company of any petition under the U.S. Bankruptcy Code (or the filing of any similar petition under the insolvency law of any jurisdiction), or the making by the Company of an assignment or trust mortgage for the benefit of creditors or the appointment of a receiver, custodian or similar agent with respect to, or the taking by any such person of possession of, any property of the Company; (d) the sale by the Company of all or substantially all of its assets; (e) the merger or consolidation of the Company with or into any other corporation in a transaction in which the Company is not the surviving entity; (f) the issuance of any writ of attachment, by trustee process or otherwise, or any restraining order or injunction not removed, repealed or dismissed within thirty (30) days of issuance, against or affecting the person or property of the Company or any liability or obligation of the Company to the holder hereof; and (g) the suspension of the transaction of the usual business of the Company. Upon surrender of this Note for transfer or exchange, a new Note or new Notes of the same tenor dated the date to which interest has been paid on the surrendered Note and in an aggregate principal amount equal to the unpaid principal amount of the Note so surrendered will be issued to, and registered in the name of, the transferee or transferees. The Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes. In case any payment herein provided for shall not be paid when due, the Company further promises to pay all cost of collection, including all reasonable attorneys' fees. No delay or omission on the part of the Payee in exercising any right hereunder shall operate as a waiver of such right or of any other right of the Payee, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion. The Company hereby waives presentment, demand, notice of prepayment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note. The undersigned hereby assents to any indulgence and any extension of time for payment of any indebtedness evidenced hereby granted or permitted by the Payee. 2PAGE This Note shall be governed by and construed in accordance with, the laws of the Commonwealth of Massachusetts and shall have the effect of a sealed instrument. THERMEDICS INC. By: John.W. Wood, Jr. ----------------- John W. Wood, Jr. President [Corporate Seal] Attest: Sandra L. Lambert ----------------- Sandra L. Lambert Clerk cc: Ron Burman Seth Hoogasian Maureen Jacobs Gary Jones Sandra Lambert Karen Levin Chris Vinchesi EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMEDICS INC.'S QUARTERLY REPORT FILED ON FORM 10-Q FOR THE QUARTER ENDED MARCH 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-28-1996 MAR-30-1996 48,645 75,850 55,385 4,493 48,294 233,560 32,886 19,017 405,078 130,346 32,706 3,647 0 0 180,646 405,078 60,282 60,282 31,719 31,719 4,023 254 1,278 9,003 2,696 4,753 0 0 0 4,753 .13 0
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