-----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, K/VuYnccHtesXzstZYiRTpKI5TfQpHzmQZL5wl9LQnE0Kh9NH1eJGkqF2fYm12ll iPPvfrEcF7dJy9DG3zd07g== 0000721356-97-000016.txt : 19970506 0000721356-97-000016.hdr.sgml : 19970506 ACCESSION NUMBER: 0000721356-97-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970329 FILED AS OF DATE: 19970505 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: THERMEDICS INC CENTRAL INDEX KEY: 0000721356 STANDARD INDUSTRIAL CLASSIFICATION: MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590] IRS NUMBER: 042788806 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09567 FILM NUMBER: 97595826 BUSINESS ADDRESS: STREET 1: 470 WILDWOOD ST STREET 2: P O BOX 2999 CITY: WOBURN STATE: MA ZIP: 01888-1799 BUSINESS PHONE: 6176221000 MAIL ADDRESS: STREET 1: 81 WYMAN STREET STREET 2: P.O. BOX 9046 CITY: WALTHAM STATE: MA ZIP: 02254 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 29, 1997. [ ] 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 25, 1997 ---------------------------- ----------------------------- Common Stock, $.10 par value 36,698,118 PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements THERMEDICS INC. Consolidated Balance Sheet (Unaudited) Assets March 29, December 28, (In thousands) 1997 1996 ----------------------------------------------------------------------- Current Assets: Cash and cash equivalents $130,252 $ 82,800 Short-term available-for-sale investments, at quoted market value (amortized cost of $65,872 and $64,950; includes $1,817 and $1,937 of related-party investments) 65,272 65,054 Accounts receivable, less allowances of $4,891 and $4,641 58,545 62,783 Inventories: Raw materials and supplies 23,570 28,209 Work in process and finished goods 32,535 26,021 Prepaid income taxes and expenses 15,264 14,713 -------- -------- 325,438 279,580 -------- -------- Property, Plant, and Equipment, at Cost 50,560 48,892 Less: Accumulated depreciation and amortization 28,897 27,342 -------- -------- 21,663 21,550 -------- -------- Long-term Available-for-sale Investments, at Quoted Market Value (amortized cost of $19,594 and $33,929) 19,588 33,920 -------- -------- Other Assets 8,326 7,885 -------- -------- Cost in Excess of Net Assets of Acquired Companies 113,297 113,764 -------- -------- $488,312 $456,699 ======== ======== 2PAGE THERMEDICS INC. Consolidated Balance Sheet (continued) (Unaudited) Liabilities and Shareholders' Investment March 29, December 28, (In thousands except share amounts) 1997 1996 ------------------------------------------------------------------------ Current Liabilities: Notes payable and current maturities of long-term obligations $ 5,897 $ 9,017 Accounts payable 18,993 19,615 Accrued payroll and employee benefits 9,949 11,951 Deferred revenue 1,640 1,397 Accrued income taxes 7,512 5,438 Accrued warranty costs 3,889 3,971 Other accrued expenses 19,622 18,421 Due to parent company and affiliated companies 2,404 1,600 -------- -------- 69,906 71,410 -------- -------- Deferred Income Taxes and Other Deferred Items 1,411 1,382 -------- -------- Long-term Obligations: Subordinated convertible obligations 73,451 74,345 Other 14 14 -------- -------- 73,465 74,359 -------- -------- Minority Interest 116,260 97,966 -------- -------- Shareholders' Investment: Common stock, $.10 par value, 100,000,000 shares authorized; 36,846,175 and 33,842,500 shares issued 3,685 3,684 Capital in excess of par value 133,458 138,433 Retained earnings 96,508 74,542 Treasury stock at cost, 154,469 and 166,144 shares (4,348) (4,729) Cumulative translation adjustment (1,645) (409) Net unrealized gain (loss) on available-for- sale investments (388) 61 -------- -------- 227,270 211,582 -------- -------- $488,312 $456,699 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 3PAGE THERMEDICS INC. Consolidated Statement of Income (Unaudited) Three Months Ended ----------------------- March 29, March 30, (In thousands except per share amounts) 1997 1996 ------------------------------------------------------------------------ Revenues $72,057 $68,994 ------- ------- Costs and Operating Expenses: Cost of revenues 36,961 35,809 Selling, general, and administrative expenses 21,964 20,964 Research and development expenses 5,584 4,974 ------- ------- 64,509 61,747 ------- ------- Operating Income 7,548 7,247 Interest Income 2,637 2,106 Interest Expense (269) (1,278) Gain on Issuance of Stock by Subsidiaries (Note 3) 17,075 2,516 Gain on Sale of Investments - 68 ------- ------- Income Before Provision for Income Taxes and Minority Interest 26,991 10,659 Provision for Income Taxes 3,764 3,332 Minority Interest Expense 1,261 2,070 ------- ------- Net Income $21,966 $ 5,257 ======= ======= Earnings per Share $ .56 $ .15 ======= ======= Weighted Average Shares 38,956 35,597 ======= ======= 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 29, March 30, (In thousands) 1997 1996 ------------------------------------------------------------------------ Operating Activities: Net income $ 21,966 $ 5,257 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,563 2,882 Provision for losses on accounts receivable 202 254 Gain on issuance of stock by subsidiaries (17,075) (2,516) Gain on sale of investments - (68) Minority interest expense 1,261 2,070 Other noncash expenses 16 37 Changes in current accounts, excluding the effects of acquisitions: Accounts receivable 2,906 (5,064) Inventories (2,389) (1,522) Prepaid income taxes and expenses (443) 182 Accounts payable (225) 1,312 Other current liabilities 2,142 5,612 -------- -------- Net cash provided by operating activities 10,924 8,436 -------- -------- Investing Activities: Acquisitions, net of cash acquired (1,059) (25,797) Proceeds from sale and maturities of available-for-sale investments 32,008 38,914 Purchases of available-for-sale investments (18,596) (26,247) Purchases of property, plant, and equipment (2,163) (2,187) Other 147 (2,657) -------- -------- Net cash provided by (used in) investing activities $ 10,337 $(17,974) -------- -------- 5PAGE THERMEDICS INC. Consolidated Statement of Cash Flows (continued) (Unaudited) Three Months Ended ----------------------- March 29, March 30, (In thousands) 1997 1996 ------------------------------------------------------------------------ Financing Activities: Net proceeds from issuance of Company and subsidiary common stock (Note 3) $ 28,446 $ 3,898 Purchases of Company and subsidiaries common stock (3,911) - International Technidyne transfer (to) from parent company 384 (2,338) Proceeds from issuance of note payable to parent company - 15,000 Repayment and repurchase of long-term obligations - (257) Net decrease in short-term borrowings 773 4,668 -------- -------- Net cash provided by financing activities 25,692 20,971 -------- -------- Exchange Rate Effect on Cash 499 (101) -------- -------- Increase in Cash and Cash Equivalents 47,452 11,332 Cash and Cash Equivalents at Beginning of Period 82,800 37,413 -------- -------- Cash and Cash Equivalents at End of Period $130,252 $ 48,745 ======== ======== Noncash Activities: Fair value of assets of acquired companies $ 1,433 $ 30,792 Cash paid for acquired companies (1,059) (26,826) -------- -------- Liabilities assumed of acquired companies $ 374 $ 3,966 ======== ======== Conversions of the Company's and subsidiaries' subordinated convertible obligations $ 4,650 $ 12,290 ======== ======== 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 the financial position at March 29, 1997, the results of operations for the three-month periods ended March 29, 1997, and March 30, 1996, and the cash flows for the three-month periods ended March 29, 1997, and March 30, 1996. Interim results are not necessarily indicative of results for a full year. Historical financial results have been restated to include International Technidyne Corporation (International Technidyne), which was acquired by the Company's majority-owned subsidiary, Thermo Cardiosystems Inc. (Thermo Cardiosystems), in a transaction accounted for in a manner similar to a pooling-of-interests (Note 2). 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 28, 1996, filed with the Securities and Exchange Commission. 2. Acquisition In March 1997, Thermo Cardiosystems announced its intention to acquire International Technidyne from Thermo Electron Corporation (Thermo Electron), the Company's parent company, in a merger in which approximately 3,356,000 shares of Thermo Cardiosystems' common stock would be issued in exchange for all of the outstanding shares of International Technidyne. On May 2, 1997, the transaction was completed, subject to Thermo Cardiosystems' shareholder approval of the issuance of the 3,355,705 Thermo Cardiosystems' shares issued to Thermo Electron in the merger. International Technidyne is a leading manufacturer of near-patient, whole-blood, coagulation-testing equipment and related disposables and also manufactures single-use, premium-priced, skin-incision devices. In 1996, International Technidyne's revenues and net income were $34.0 million and $4.7 million, respectively. Because Thermo Cardiosystems and International Technidyne were deemed for accounting purposes to be under control of their common majority owner, Thermo Electron, the transaction has been accounted for at historical cost in a manner similar to a pooling-of-interests. Accordingly, all historical financial information presented has been restated to reflect the acquisition of International Technidyne. The 3,355,705 shares of Thermo Cardiosystems' common stock issuable in exchange for International Technidyne will not be issued until the listing of such shares for trading upon American Stock Exchange has been approved by Thermo Cardiosystems' shareholders. Because the Company is the majority shareholder and intends to vote its shares in favor of such listing, the approval is assured and, therefore, the acquisition is considered to be complete as of January 1, 1996. Revenues and net 7PAGE THERMEDICS INC. 2. Acquisition (continued) income as previously reported for the separate entities prior to the acquisition and as restated for the combined company are as follows: Three Months Ended (In thousands) March 30, 1996 ----------------------------------------------------------------------- Revenues: Historical $60,282 International Technidyne 8,712 ------- $68,994 ======= Net Income: Historical $ 4,753 International Technidyne 1,020 Minority interest expense (516) ------- $ 5,257 ======= 3. Issuance of Stock by Subsidiary In March 1997, the Company's Thermedics Detection Inc. (Thermedics Detection) subsidiary issued 2,671,292 shares of its common stock in an initial public offering at $11.50 per share, for net proceeds of approximately $28.1 million, resulting in a gain of $17.1 million. Following the initial public offering, the Company owned 75% of Thermedics Detection's outstanding common stock. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, are made throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects," "seeks," "estimates," and similar expressions are intended to identify forward-looking statements. There are a number of important factors that could cause the results of the Company to differ materially from those indicated by such forward-looking statements, including those detailed under the caption "Forward-looking Statements" in Exhibit 13 to the Company's Annual Report on form 10-K, as amended, for the fiscal year ended December 28, 1996, filed with the Securities and Exchange Commission. 8PAGE THERMEDICS INC. 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 the Company's Thermo Sentron Inc. (Thermo Sentron) subsidiary, which designs, develops, manufactures, and sells high-speed precision-weighing and inspection equipment for industrial production and packaging lines; its Orion laboratory products division (Orion), which manufactures electrochemistry, microweighing, process, and other instruments used to analyze the chemical compositions of foods, beverages, and pharmaceuticals, and to detect contaminants in high-purity water; its Thermedics Detection Inc. (Thermedics Detection) subsidiary, which develops, manufactures, and markets high-speed detection instruments used in on-line industrial process applications, explosives detection, and laboratory analysis; and its Thermo Voltek Corp. (Thermo Voltek) subsidiary, which manufactures electromagnetic compatibility (EMC) testing instruments, high-voltage power-conversion systems, programmable power amplifiers, and radio frequency power amplifiers. As part of its Biomedical Products segment, the Company's Thermo Cardiosystems Inc. (Thermo Cardiosystems) subsidiary manufactures implantable left ventricular-assist systems (LVAS). Thermo Cardiosystems' electric LVAS is being used in Europe as a bridge to transplant and as an alternative to medical therapy. According to terms set by the U.S. Food and Drug Administration (FDA), no profit can be earned from the sale of an LVAS in the U.S. until the FDA has approved the device for commercial sale. With the FDA's approval, the Company began earning a profit on the sale of its air-driven LVAS in the fourth quarter of 1994. Until FDA approval has been obtained, the Company may not earn a profit on the sale in the U.S. of other products, such as the electric LVAS, currently used in clinical studies. Thermo Cardiosystems' International Technidyne Corporation (International Technidyne) subsidiary (Note 2) is a leading manufacturer of near-patient, whole-blood, coagulation-testing equipment and related disposables and also manufactures single-use, premium-priced, skin-incision devices. The Company also develops and manufactures enteral nutrition-delivery systems and a line of medical-grade polymers used in medical disposables and nonmedical, industrial applications, including safety glass and automotive coatings. A significant amount of the Company's revenues are derived from sales of products outside of the U.S., through export sales and sales by the Company's foreign subsidiaries. The Company expects an increase in the percentage of revenues derived from international operations. Although the Company seeks to charge its customers in the same currency as its operating costs, the Company's financial performance and competitive position can be affected by currency exchange rate fluctuations between the U.S. dollar and foreign currencies. Where appropriate, the Company uses forward contracts to reduce its exposure to currency fluctuations. 9PAGE THERMEDICS INC. Results of Operations First Quarter 1997 Compared With First Quarter 1996 Total revenues in the first quarter of 1997 were $72.1 million, compared with $69.0 million in the first quarter of 1996. Instruments and Other Equipment segment revenues increased to $53.2 million in 1997 from $49.8 million in 1996, primarily due to an increase in revenues of $3.1 million and $1.3 million at Thermedics Detection and Thermo Sentron, respectively, offset in part by a $0.9 million decline in revenues at Thermo Voltek. Revenues at Thermedics Detection increased to $12.4 million in 1997 from $9.3 million in 1996. Revenue from Thermedics Detection's process detection instruments increased to $4.7 million in 1997 from $1.3 million in 1996, primarily as a result of the continued fulfillment of a mandated product-line upgrade from The Coca-Cola Company to its existing installed base and, to a lesser extent, increased shipments of its InScan systems, introduced in early 1996. Revenues from the mandated product-line upgrade are expected to continue through the third quarter of 1997. Revenues from Thermedics Detection's EGIS explosives-detection systems and related services decreased to $1.0 million in 1997 from $2.9 million in 1996, primarily due to reduced demand in 1997 when compared with the sale in 1996 of eight EGIS systems to the U.S. government to provide counter-terrorism support in Israel. In May 1997, Thermedics Detection was awarded a $6.2 million contract for its EGIS systems from the Federal Aviation Administration. Revenues from Thermedics Detection's Moisture Systems subsidiary, acquired in the first quarter of 1996, increased $1.1 million, primarily due to the inclusion of revenues for the full quarter in 1997. Revenues from Thermo Sentron increased to $18.0 million in 1997 from $16.7 million in 1996, primarily due to the inclusion of revenues from the Endress + Hauser, Inc. solids-flow measurement product line, purchased in April 1996, and RCC Industrial Pty. Limited, acquired in February 1997. Revenues from Thermo Voltek decreased to $9.7 million in 1997 from $10.6 million in 1996, primarily due to a decline in revenues at Comtest and Keytek, offset in part by the inclusion of $1.7 million in revenues from Pacific Power Source Corporation, acquired in July 1996. The decline in revenues resulted primarily from lower demand for EMC test products and, to a lesser extent, a decline in the component-reliability market for electrostatic discharge test equipment caused by a slowdown in capital expenditures by the semiconductor industry. Biomedical Products segment revenues declined slightly to $18.8 million in the first quarter of 1997 from $19.2 million in the first quarter of 1996. Revenues from Thermo Cardiosystems decreased to $14.9 million in 1997 from $15.4 million in 1996, primarily due to a $1.7 million decrease in revenues from its air-driven LVAS, offset in part by a $0.7 million increase in revenues from its electric LVAS. The Company expects that revenues from Thermo Cardiosystems' LVAS will stabilize at current levels until the electric system is approved in the U.S. for commercial sale and for use outside the hospital. The Company believes that this approval could occur during 1997, however, there can be no assurance that Thermo Cardiosystems will receive this approval within the expected time period, or at all. Revenues from Thermo Cardiosystems' LVAS were also adversely affected by a slowdown in orders in response to a modification initiated by Thermo Cardiosystems of certain of its systems 10PAGE THERMEDICS INC. First Quarter 1997 Compared With First Quarter 1996 (continued) in the field. The modification was completed in the first quarter of 1997. The decrease in revenues in 1997 was also offset in part by the inclusion of $0.6 million in revenues from Nimbus Medical Inc. (Nimbus), acquired in December 1996, and, to a lesser extent, an increase in revenues from International Technidyne. The gross profit margin was 49% in the first quarter of 1997, compared with 48% in the first quarter of 1996. The gross profit margin for the Instruments and Other Equipment segment increased to 47% in 1997 from 46% in 1996, as a result of a change in product mix and field service efficiencies at Thermedics Detection and the inclusion of higher-margin revenues at Orion. To a lesser extent, gross profit margin increased due to the inclusion of higher-margin revenues at Moisture Systems for the full quarter in 1997. These increases were offset in part by a decrease in the gross profit margin at Thermo Voltek, primarily due to the sale of lower-margin products and the effect of a decrease in revenues. The gross profit margin for the Biomedical Products segment decreased to 53% in the first quarter of 1997 from 54% in the first quarter of 1996. This decrease was primarily due to a decline in the gross profit margin at Thermo Cardiosystems as a result of increased warranty costs associated with the LVAS modification and, to a lesser extent, the inclusion of low-margin revenues from Nimbus. These decreases were offset in part by an increase in gross profit margin at International Technidyne and in the Company's polymer products business as a result of manufacturing efficiencies. Selling, general, and administrative expenses as a percentage of revenues remained unchanged at 30% in the first quarters of 1997 and 1996. Higher marketing expenses as a result of an increase in sales force at Thermo Cardiosystems and Thermedics Detection and, to a lesser extent, increased expenses as a percentage of revenues at Thermo Voltek due to a decrease in revenues, were offset by lower general and administrative expenses at Thermedics Detection as a result of an increase in revenues in 1997 and nonrecurring costs in 1996. The nonrecurring costs in 1996 related to a reduction in personnel and other adjustments. Research and development expenses as a percentage of revenues increased to 7.7% in the first quarter of 1997 from 7.2% in the first quarter of 1996, primarily due to increased research and development expenses at Thermo Cardiosystems and, to a lesser extent, a decrease in revenues at Thermo Voltek. Interest income increased to $2.6 million in the first quarter of 1997 from $2.1 million in the first quarter of 1996, primarily due to higher average invested balances, primarily at Thermo Sentron as a result of its second quarter 1996 initial public offering. Interest expense decreased to $0.3 million in the first quarter of 1997 from $1.3 million in the first quarter of 1996, as a result of conversions of subordinated convertible obligations and a reduction in short-term borrowings at Thermo Sentron. 11PAGE THERMEDICS INC. First Quarter 1997 Compared With First Quarter 1996 (continued) The Company has adopted a strategy of spinning out certain of its businesses into separate subsidiaries and having these subsidiaries sell a minority interest to outside investors. The Company believes that this strategy provides additional motivation and incentives for the management of the subsidiaries through the establishment of subsidiary-level stock option incentive programs, as well as capital to support the subsidiaries' growth. As a result of the sale of stock by subsidiaries, the Company recorded gains of approximately $17.1 million in the first quarter of 1997 and $2.5 million in the first quarter of 1996 (Note 3). The size and timing of these transactions are dependent on market and other conditions that are beyond the Company's control. Accordingly, there can be no assurance that the Company will be able to realize gains from such transactions in the future. The effective tax rates in the first quarters of 1997 and 1996 were below the federal income tax rate primarily due to nontaxable gains on issuance of stock by subsidiaries, offset in part by the impact of state income taxes and the nondeductible amortization of cost in excess of net assets of acquired companies. Minority interest expense in the first quarter of 1997 decreased to $1.3 million from $2.1 million in the first quarter of 1996 due to lower profits at Thermo Cardiosystems and a net loss at Thermo Voltek, offset in part by the minority interest associated with Thermo Sentron. Liquidity and Capital Resources Consolidated working capital was $255.5 million at March 29, 1997, compared with $208.2 million at December 28, 1996. Cash, cash equivalents, and short- and long-term available-for-sale investments were $215.1 million at March 29, 1997, compared with $181.8 million at December 28, 1996. Of the $215.1 million balance at March 29, 1997, $82.5 million was held by Thermo Cardiosystems, $47.3 million by Thermedics Detection, $34.2 million by Thermo Sentron, $28.5 million by Thermo Voltek, and the remainder by the Company and its wholly owned subsidiaries. During the first quarter of 1997, $10.9 million of cash was provided by operating activities. Cash of $5.0 million, provided by a decrease in accounts receivable and an increase in other current liabilities, was offset in part by cash of $2.4 million used to fund an increase in inventories. Excluding purchases, sales, and maturities of available-for-sale investments, the Company's primary investing activities during the first quarter of 1997 included $2.2 million for purchases of property, plant, and equipment and $1.1 million for an acquisition. During the remainder of 1997, the Company expects to make capital expenditures of approximately $5.8 million. During the first quarter of 1997, the Company expended approximately $25.7 million for financing activities. In March 1997, Thermedics Detection issued shares of its common stock in an initial public offering for net proceeds of approximately $28.1 million (Note 3). 12PAGE THERMEDICS INC. Liquidity and Capital Resources (continued) The Company intends, for the foreseeable future, to maintain at least 50% ownership of Thermo Cardiosystems, Thermo Voltek, Thermo Sentron, and Thermedics Detection. This may require the Company to purchase additional shares of common stock or, if applicable, convertible debentures (which are then converted) of these companies from time to time, as the number of the companies' outstanding shares increase, 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, directly from Thermo Electron, or the relevant subsidiary, or, in the case of Thermo Voltek, pursuant to the conversion of all or part of its subordinated convertible notes held by the Company. The Company's Board of Directors authorized the repurchase, through June 1, 1997, of up to $10.0 million of its own securities. The Company's authorization also includes the purchase of securities of Thermo Cardiosystems, Thermo Voltek, and Thermo Sentron. In addition, the Company's Board of Directors authorized the purchase, through January 28, 1998, of up to an additional $5.0 million of securities of Thermo Voltek. Through March 29, 1997, the Company had expended $13.9 million under its authorizations, including $3.9 million expended in 1997. Thermo Cardiosystems' Board of Directors has authorized the repurchase, through August 12, 1997, of up to $10.0 million of its own securities and, through April 1, 1998, of up to an additional $20.0 million of its own securities. Thermo Voltek's Board of Directors has authorized the repurchase, through April 17, 1998, of up to $10.0 million of its own securities. Through March 29, 1997, Thermo Cardiosystems had expended $5.7 million under its authorizations, none of which was expended in 1997, and Thermo Voltek had not expended any funds under its authorizations. Any such purchases would be funded from working capital. 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. 13PAGE 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 1997. THERMEDICS INC. Paul F. Kelleher -------------------- Paul F. Kelleher Chief Accounting Officer John N. Hatsopoulos -------------------- John N. Hatsopoulos Vice President and Chief Financial Officer 14PAGE THERMEDICS INC. EXHIBIT INDEX Exhibit Number Document ------------------------------------------------------------------------ 2.1 Agreement and Plan of Reorganization among Thermo Cardiosystems Inc., ITC Acquisition Corp., Thermo Electron Corporation, ITC Holdings Inc., and International Technidyne Corporation dated as of May 2, 1997 (filed as Exhibit 2.1 to Thermo Cardiosystems' Quarterly Report on Form 10-Q for the quarter ended March 29, 1997 [File No. 1-10114] and incorporated herein by reference). 11 Statement re: Computation of Earnings per Share. 27 Financial Data Schedule. EX-11 2 Exhibit 11 THERMEDICS Computation of Earnings per Share Three Months Ended -------------------------- March 29, March 30, 1997 1996 -------------------------------------------------------------------------- Computation of Primary Earnings per Share: Net Income (a) $21,966,000 $ 5,257,000 ----------- ----------- Shares: Weighted average shares outstanding 36,683,351 35,597,432 Add: Shares issuable from assumed exercise of options (as determined by the application of the treasury stock method) 284,025 - Shares issuable from assumed conversion of subordinated convertible debentures 1,988,984 - ----------- ----------- Weighted average shares outstanding, as adjusted (b) 38,956,360 35,597,432 ----------- ----------- Primary Earnings per Share (a) / (b) $ .56 $ .15 =========== =========== EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMEDICS INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 29, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JAN-03-1998 MAR-29-1997 130,252 65,272 63,436 4,891 56,105 325,438 50,560 28,897 488,312 69,906 73,465 0 0 3,685 225,585 488,312 72,057 72,057 36,961 36,961 5,584 202 269 26,991 3,764 21,966 0 0 0 21,966 .56 0
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