-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, hav5S/ECA8Ip9x7Rp8FPxDPU0aY/iVnsZXXkVTz4VHsCoudhJ5iSnTdd6e+rRivZ 3hUt7tlmwderHhEHmnKwOw== 0000795986-95-000005.txt : 19950511 0000795986-95-000005.hdr.sgml : 19950511 ACCESSION NUMBER: 0000795986-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950401 FILED AS OF DATE: 19950509 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: THERMO INSTRUMENT SYSTEMS INC CENTRAL INDEX KEY: 0000795986 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 042925809 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09786 FILM NUMBER: 95535852 BUSINESS ADDRESS: STREET 1: 504 AIRPORT RD STREET 2: P O BOX 2108 CITY: SANTA FE STATE: NM ZIP: 87504 BUSINESS PHONE: 6176221000 MAIL ADDRESS: STREET 1: 81 WYMAN STREET 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 April 1, 1995. [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Commission File Number 1-9786 THERMO INSTRUMENT SYSTEMS INC. (Exact name of Registrant as specified in its charter) Delaware 04-2925809 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 504 Airport Road Post Office Box 2108 Santa Fe, New Mexico 87504-2108 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 622-1000 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date. Class Outstanding at April 28, 1995 ---------------------------- ----------------------------- Common Stock, $.10 par value 72,031,728 PAGE FORM 10-Q April 1, 1995 THERMO INSTRUMENT SYSTEMS INC. PART I - Financial Information Item 1 - Financial Statements (a) Consolidated Balance Sheet - Assets as of April 1, 1995 and December 31, 1994 (In thousands) April 1, December 31, 1995 1994 ---------- ------------ Current Assets: Cash and cash equivalents $ 145,910 $ 152,933 Available-for-sale investments, at quoted market value (amortized cost of $15,402 and $15,385) (includes $3,528 and $2,904 of related party investments) 16,647 15,931 Accounts receivable, less allowances of $9,939 and $8,779 171,199 159,615 Unbilled contract costs and fees 5,920 5,903 Inventories: Raw materials and supplies 71,534 65,441 Work in process 29,043 27,879 Finished goods 31,148 28,033 Prepaid expenses 6,271 5,388 Prepaid income taxes 28,195 28,533 ---------- ---------- 505,867 489,656 ---------- ---------- Property, Plant and Equipment, at Cost 175,658 170,907 Less: Accumulated depreciation and amortization 45,731 43,983 ---------- ---------- 129,927 126,924 ---------- ---------- Investment in Thermo Terra Tech Joint Venture 34,267 34,265 ---------- ---------- Patents and Other Assets 21,966 22,224 ---------- ---------- Cost in Excess of Net Assets of Acquired Companies 345,343 338,848 ---------- ---------- $1,037,370 $1,011,917 ========== ========== The accompanying notes are an integral part of these consolidated financial statements. 2PAGE FORM 10-Q April 1, 1995 THERMO INSTRUMENT SYSTEMS INC. (a) Consolidated Balance Sheet - Liabilities and Shareholders' Investment as of April 1, 1995 and December 31, 1994 (In thousands except share amounts) April 1, December 31, 1995 1994 ---------- ------------ Current Liabilities: Notes payable $ 49,767 $ 45,953 Accounts payable 40,751 38,594 Accrued payroll and employee benefits 33,743 33,085 Accrued income taxes 24,195 29,175 Accrued installation and warranty expenses 18,459 16,545 Customer deposits 13,219 11,115 Other accrued expenses 68,192 70,884 Due to parent company 12,570 13,999 ---------- ---------- 260,896 259,350 ---------- ---------- Deferred Income Taxes 18,130 21,347 ---------- ---------- Other Deferred Items 21,581 19,261 ---------- ---------- Long-term Obligations: Senior obligations, including $140,000 due to parent company 210,000 210,000 Subordinated obligations, including $984 and $1,334 due to parent company 31,768 38,196 Other 15,156 15,363 ---------- ---------- 256,924 263,559 ---------- ---------- Minority Interest 9,593 7,637 ---------- ---------- Shareholders' Investment (Note 4): Common stock, $.10 par value, 125,000,000 shares authorized; 72,870,773 and 48,156,101 shares issued 7,287 4,816 Capital in excess of par value 237,312 233,765 Retained earnings 229,500 212,584 Treasury stock at cost, 973,479 and 683,742 shares (12,191) (12,736) Cumulative translation adjustment 7,566 1,991 Net unrealized gain on available-for-sale investments 772 343 ---------- ---------- 470,246 440,763 ---------- ---------- $1,037,370 $1,011,917 ========== ========== The accompanying notes are an integral part of these consolidated financial statements. 3PAGE FORM 10-Q April 1, 1995 THERMO INSTRUMENT SYSTEMS INC. (b) Consolidated Statement of Income for the three months ended April 1, 1995 and April 2, 1994 (In thousands except per share amounts) Three Months Ended --------------------- April 1, April 2, 1995 1994 -------- -------- Revenues: Instruments $172,944 $147,587 Services - 12,195 -------- -------- 172,944 159,782 -------- -------- Costs and Expenses: Cost of instrument revenues 88,030 74,917 Cost of service revenues - 9,493 Selling, general and administrative expenses 49,613 41,028 Research and development expenses 12,479 9,106 -------- -------- 150,122 134,544 -------- -------- Operating Income 22,822 25,238 Interest Income 2,302 1,542 Interest Expense (includes $1,330 and $1,356 related to notes to parent company) (3,825) (4,098) Gain on Issuance of Stock by Subsidiary (Note 3) 4,714 - Equity in Income of Unconsolidated Subsidiaries, Net 17 65 -------- -------- Income Before Provision for Income Taxes and Minority Interest Expense 26,030 22,747 Provision for Income Taxes 8,974 9,895 Minority Interest Expense 140 - -------- -------- Net Income $ 16,916 $ 12,852 ======== ======== Earnings per Share: Primary $ .24 $ .18 ======== ======== Fully diluted $ .22 $ .17 ======== ======== Weighted Average Shares: Primary 71,492 69,860 ======== ======== Fully diluted 85,125 84,868 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 4PAGE FORM 10-Q April 1, 1995 THERMO INSTRUMENT SYSTEMS INC. (c) Consolidated Statement of Cash Flows for the three months ended April 1, 1995 and April 2, 1994 (In thousands) Three Months Ended -------------------- April 1, April 2, 1995 1994 -------- -------- Operating Activities: Net income $ 16,916 $ 12,852 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 6,139 5,783 Provision for losses on accounts receivable 655 234 Gain on issuance of stock by subsidiary (Note 3) (4,714) - Equity in income of unconsolidated subsidiaries, net (17) (65) Minority interest expense 140 - Decrease in deferred income taxes (3,217) - Other noncash expenses 772 872 Changes in current accounts, excluding the effects of acquisitions: Accounts receivable (607) (435) Inventories (1,468) (5,842) Other current assets 918 1,122 Accounts payable (2,184) 3,991 Other current liabilities (15,078) (1,369) -------- -------- Net cash provided by (used in) operating activities (1,745) 17,143 -------- -------- Investing Activities: Acquisitions, net of cash acquired (10,730) (90,669) Purchases of available-for-sale investments - (13,250) Purchases of property, plant and equipment (2,598) (2,160) Other 473 (1,372) -------- -------- Net cash used in investing activities (12,855) (107,451) -------- -------- Financing Activities: Repayment of long-term obligations (205) (299) Net proceeds from issuance of Company and subsidiary common stock (Note 3) 6,783 422 -------- -------- Net cash provided by financing activities $ 6,578 $ 123 -------- -------- 5PAGE FORM 10-Q April 1, 1995 THERMO INSTRUMENT SYSTEMS INC. (c) Consolidated Statement of Cash Flows for the three months ended April 1, 1995 and April 2, 1994 (In thousands) (continued) Three Months Ended -------------------- April 1, April 2, 1995 1994 -------- -------- Exchange Rate Effect on Cash $ 999 $ 246 -------- -------- Decrease in Cash and Cash Equivalents (7,023) (89,939) Cash and Cash Equivalents at Beginning of Period 152,933 177,442 -------- -------- Cash and Cash Equivalents at End of Period $145,910 $ 87,503 ======== ======== Cash Paid For: Interest $ 4,825 $ 5,660 Income taxes $ 12,664 $ 11,482 Noncash Financing Activities: Conversions of convertible obligations $ 6,428 $ 6,800 The accompanying notes are an integral part of these consolidated financial statements. 6PAGE FORM 10-Q April 1, 1995 THERMO INSTRUMENT SYSTEMS INC. (d) Notes to Consolidated Financial Statements - April 1, 1995 1. General The interim consolidated financial statements presented have been prepared by Thermo Instrument Systems Inc. (the Company) without audit and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of (a) the results of operations for the three-month periods ended April 1, 1995 and April 2, 1994, (b) the financial position at April 1, 1995, and (c) the cash flows for the three-month periods ended April 1, 1995 and April 2, 1994. Interim results are not necessarily indicative of results for a full year. The consolidated balance sheet presented as of December 31, 1994, has been derived from the consolidated financial statements that have been audited by the Company's independent public accountants. The consolidated financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in the annual financial statements and notes of the Company. The consolidated financial statements and notes included herein should be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994, filed with the Securities and Exchange Commission. 2. Potential Acquisition On April 17, 1995, the Company's ThermoSpectra Corporation subsidiary signed a letter of intent to acquire Gould Instrument Systems, Inc. (Gould Instrument) for approximately $25 million in cash, which includes repayment of bank debt. Gould Instrument develops, manufactures, and sells data acquisition systems, high-performance oscillographic recorders, and digital storage oscilloscopes for industrial, medical, scientific, and government applications. The acquisition is subject to certain conditions, including the completion of due diligence, negotiation of a definitive acquisition agreement, the approval of the boards of directors of both parties, and other customary conditions to closing. Gould Instrument had revenues of $51 million for the year ended December 31, 1994. 3. Transactions in Stock of Subsidiary On March 15, 1995, the Company's wholly owned Thermo BioAnalysis Corporation subsidiary (Thermo BioAnalysis) sold 700,000 shares of its common stock in a private placement at $10.00 per share for net proceeds of approximately $6.5 million, resulting in a gain of $4.7 million. Thermo BioAnalysis specializes in capillary electrophoresis and matrix-assisted laser desorption/ionization time-of-flight mass spectrometry for the analytical biochemistry and biopharmaceutical markets, as well as radiation detection and monitoring and nuclear health physics. On April 19, 1995, Thermo BioAnalysis sold 901,500 shares of its common stock in a private placement at $10.00 per share for net proceeds of approximately $8.4 million. Following the private placements, the Company owned 80% of Thermo BioAnalysis' outstanding common stock. 7PAGE FORM 10-Q April 1, 1995 THERMO INSTRUMENT SYSTEMS INC. (d) Notes to Consolidated Financial Statements - April 1, 1995 (continued) 4. Stock Split In February 1995, the Company declared a three-for-two stock split in the form of a 50% stock dividend that was distributed on April 14, 1995, to shareholders of record as of March 31, 1995. Common shares outstanding as of April 1, 1995, and all weighted average share and per share amounts have been restated to reflect the stock split. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations First Quarter 1995 Compared With First Quarter 1994 Revenues increased 8% to $172.9 million in the first quarter of 1995 from $159.8 million in the first quarter of 1994. Instruments segment revenues increased $25.4 million, or 17%, to $172.9 million in 1995 from $147.6 million in 1994. The increase was due to acquisitions, which added revenues of $28.1 million in the first quarter of 1995, offset by a decrease in revenues from the Company's air monitoring instruments subsidiary, as most orders in response to Phase I and II of the Clean Air Act of 1990 have been completed. The Company's acquisitions included several businesses within the EnviroTech Measurements & Controls group of Baker Hughes Incorporated (Baker Hughes) in March 1994 and the Analytical Instruments Division of Baird Corporation (Baird) in January 1995. Services segment revenues in 1994 represent revenues from the analytical laboratories and the nuclear health physics and environmental science and engineering services businesses that the Company contributed to the Thermo Terra Tech joint venture effective April 4, 1994. As a result, the Services segment operations are no longer consolidated in the Company's financial statements. The gross profit margin increased to 49% in the first quarter of 1995 from 47% in the first quarter of 1994. The increase reflects the transfer of the lower-margin businesses that comprised the Company's Services segment to the Thermo Terra Tech joint venture as discussed above. The gross profit margin for the Instruments segment was 49% in the first quarters of both 1995 and 1994. The gross profit margin for the Services segment was 22% in 1994. Selling, general and administrative expenses as a percentage of revenues increased to 29% in the first quarter of 1995 from 26% in the first quarter of 1994 as a result of higher costs as a percentage of revenues at acquired businesses and reduced shipments from the Company's air monitoring instruments subsidiary as discussed above. Research and development expenses were 7.2% of Instruments segment revenues in the first quarter of 1995, compared with 6.2% in the first quarter of 1994. The increase is consistent with the Company's objective of developing and marketing new products for current and future lines of business. 8PAGE FORM 10-Q April 1, 1995 THERMO INSTRUMENT SYSTEMS INC. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) First Quarter 1995 Compared With First Quarter 1994 (continued) Interest income increased to $2.3 million in the first quarter of 1995 from $1.5 million in the first quarter of 1994, primarily as a result of higher prevailing interest rates in 1995 compared with 1994, and interest income earned on the net proceeds from the issuance of common stock by the Company's ThermoSpectra Corporation subsidiary (ThermoSpectra) in the third and fourth quarters of 1994. The increase was offset in part by a reduction in cash as a result of the acquisitions of several businesses within the EnviroTech Measurements & Controls group of Baker Hughes in March 1994 and the Analytical Instruments Division of Baird in January 1995. Interest expense was $3.8 million in the first quarter of 1995, compared with $4.1 million in the first quarter of 1994. The decrease is primarily a result of the conversions of a portion of the Company's 6 5/8% subordinated convertible debentures into common stock of the Company. As a result of the sale of stock by its Thermo BioAnalysis Corporation subsidiary (Thermo BioAnalysis), the Company recorded a gain of $4.7 million in the first quarter of 1995. The gain represents an increase in the Company's proportionate share of the subsidiary's equity and is classified as "Gain on issuance of stock by subsidiary" in the accompanying statement of income (see Note 3 to Consolidated Financial Statements). The effective tax rate decreased to 34% in the first quarter of 1995 from 44% in the first quarter of 1994 due primarily to the nontaxable gain on the issuance of stock by the Company's Thermo BioAnalysis subsidiary. Excluding the impact of the gain on the issuance of stock by Thermo BioAnalysis in 1995, the effective tax rates in 1995 and 1994 exceeded the statutory federal income tax rate due to nondeductible amortization of cost in excess of net assets of acquired companies, the inability to provide a tax benefit on losses incurred at certain foreign subsidiaries, and the impact of state income taxes. Financial Condition Liquidity and Capital Resources Consolidated working capital at April 1, 1995, was $245.0 million, compared with $230.3 million at December 31, 1994, an increase of $14.7 million. Included in working capital are cash, cash equivalents, and available-for-sale investments of $162.6 million at April 1, 1995, and $168.9 million at December 31, 1994. Of the $162.6 million balance at April 1, 1995, $17.2 million was held by ThermoSpectra, $7.4 million by Thermo BioAnalysis, and $138.0 million by the Company and its wholly owned subsidiaries. During the first three months of 1995, $1.7 million of cash was used in operating activities, compared with $17.1 million of cash provided by operating activities during the first three months of 1994. The decrease in 1995 resulted primarily from the payment of current liabilities, including $12.7 million of federal and state tax payments. In March 1995, Thermo BioAnalysis completed a private placement of 700,000 shares of its common stock at $10.00 per share for net proceeds of approximately $6.5 million. In April 1995, Thermo BioAnalysis completed a private placement of 901,500 shares of its common stock at $10.00 per share for net proceeds of approximately $8.4 million. 9PAGE FORM 10-Q April 1, 1995 THERMO INSTRUMENT SYSTEMS INC. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Liquidity and Capital Resources (continued) During the remainder of 1995, the Company plans to make expenditures of approximately $8.4 million for property, plant and equipment. The Company believes that its existing resources are sufficient to meet the capital requirements of its existing operations for the foreseeable future. The Company has historically complemented internal development with acquisitions of businesses or technologies that extend the Company's presence in current markets or provide opportunities to enter and compete effectively in new markets. The Company will consider making acquisitions of such companies, product lines, or technologies that are consistent with its plans for strategic growth. On March 1, 1995, the Company entered into an agreement with Fisons plc (Fisons) to acquire the Scientific Instruments Division (the Division) of Fisons for approximately 202 million British pounds sterling. Consummation of the acquisition is subject to several conditions, including regulatory approvals, consent of certain third parties, and customary conditions to closing. The Company is currently responding to a second request for information from the Federal Trade Commission (FTC), and no assurance can be given that the Company will be able to provide information sufficient to satisfactorily address any FTC concerns regarding the potential effect of the transaction upon competition in the analytical instruments market. The Company intends to fund the purchase price from available cash and through borrowings from Thermo Electron Corporation (Thermo Electron). Thermo Electron has guaranteed the obligations of the Company under the Agreement. The purchase price is subject to a post-closing adjustment based on the net asset value of the Division as of the closing date. On April 17, 1995, the Company's ThermoSpectra subsidiary signed a letter of intent to acquire Gould Instrument Systems, Inc. for approximately $25 million in cash (see Note 2 to Consolidated Financial Statements). PART II - Other Information Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits See Exhibit Index on the page immediately preceding exhibits. (b) Reports on Form 8-K On March 6, 1995, the Company filed a Current Report on Form 8-K pertaining to its pending acquisition of the Scientific Instruments Division of Fisons plc. 10PAGE FORM 10-Q April 1, 1995 THERMO INSTRUMENT SYSTEMS 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 9th day of May 1995. THERMO INSTRUMENT SYSTEMS INC. Paul F. Kelleher ------------------------------- Paul F. Kelleher Chief Accounting Officer John N. Hatsopoulos ------------------------------- John N. Hatsopoulos Chief Financial Officer 11PAGE FORM 10-Q April 1, 1995 THERMO INSTRUMENT SYSTEMS INC. EXHIBIT INDEX Exhibit Number Document Page ------- -------- ---- 11 Statement re: Computation of earnings per share. 27 Financial Data Schedule. EX-11 2 Exhibit 11 THERMO INSTRUMENT SYSTEMS INC. Computation of Earnings per Share Three Months Ended ------------------------- April 1, April 2, 1995 1994 ----------- ----------- Computation of Fully Diluted Earnings per Share: Income: Net income $16,916,000 $12,852,000 Add: Convertible obligation interest, net of tax 1,517,000 1,631,000 ----------- ----------- Income applicable to common stock assuming full dilution (a) $18,433,000 $14,483,000 ----------- ----------- Shares: Weighted average shares outstanding 71,492,357 69,859,532 Add: Shares issuable from assumed conversion of convertible obligations 13,264,560 14,615,631 Shares issuable from assumed exercise of options (as determined by the application of the treasury stock method) 368,375 393,282 ----------- ----------- Weighted average shares outstanding, as adjusted (b) 85,125,292 84,868,445 ----------- ----------- Fully Diluted Earnings per Share (a) / (b) $ .22 $ .17 =========== =========== EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO INSTRUMENT SYSTEMS INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED APRIL 1, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-30-1995 APR-01-1995 145,910 16,647 171,199 9,939 131,725 505,867 175,658 45,731 1,037,370 260,896 115,940 7,287 0 0 462,959 1,037,370 172,944 172,944 88,030 88,030 12,479 655 3,825 26,030 8,974 16,916 0 0 0 16,916 .24 .22
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