0000795986-95-000009.txt : 19950811
0000795986-95-000009.hdr.sgml : 19950811
ACCESSION NUMBER: 0000795986-95-000009
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 19950701
FILED AS OF DATE: 19950810
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: 95560284
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
PAGE
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 July 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 July 28, 1995
---------------------------- ----------------------------
Common Stock, $.10 par value 72,912,619
PAGE
FORM 10-Q
July 1, 1995
THERMO INSTRUMENT SYSTEMS INC.
PART I - Financial Information
Item 1 - Financial Statements
(a) Consolidated Balance Sheet - Assets as of July 1, 1995 and
December 31, 1994 (In thousands)
July 1, December 31,
1995 1994
---------- ------------
Current Assets:
Cash and cash equivalents $ 211,152 $ 152,933
Available-for-sale investments, at quoted
market value (amortized cost of $2,312
and $15,385) (includes $4,553 and $2,904
of related party investments) 4,553 15,931
Accounts receivable, less allowances
of $10,520 and $8,779 176,751 159,615
Unbilled contract costs and fees 6,260 5,903
Inventories:
Raw materials and supplies 76,053 65,441
Work in process 38,178 27,879
Finished goods 32,186 28,033
Prepaid expenses 8,000 5,388
Prepaid income taxes 28,766 28,533
---------- ----------
581,899 489,656
---------- ----------
Property, Plant and Equipment, at Cost 185,633 170,907
Less: Accumulated depreciation and
amortization 49,593 43,983
---------- ----------
136,040 126,924
---------- ----------
Net Assets of Discontinued Operations (Note 4) - 34,265
---------- ----------
Patents and Other Assets 23,603 22,224
---------- ----------
Cost in Excess of Net Assets of Acquired
Companies (Note 2) 356,282 338,848
---------- ----------
$1,097,824 $1,011,917
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
2PAGE
FORM 10-Q
July 1, 1995
THERMO INSTRUMENT SYSTEMS INC.
(a) Consolidated Balance Sheet - Liabilities and Shareholders' Investment
as of July 1, 1995 and December 31, 1994 (In thousands except share
amounts)
July 1, December 31,
1995 1994
---------- ------------
Current Liabilities:
Notes payable $ 53,498 $ 45,953
Accounts payable 44,278 38,594
Accrued payroll and employee benefits 33,039 33,085
Accrued and current deferred income taxes 26,678 29,175
Accrued installation and warranty expenses 19,363 16,545
Customer deposits 12,474 11,115
Other accrued expenses 77,472 70,884
Due to parent company (Note 2) 27,566 13,999
---------- ----------
294,368 259,350
---------- ----------
Deferred Income Taxes 18,205 21,347
---------- ----------
Other Deferred Items 24,312 19,261
---------- ----------
Long-term Obligations:
Senior obligations, including $140,000 due
to parent company 210,000 210,000
Subordinated obligations, including $634
and $1,334 due to parent company 26,816 38,196
Other 14,647 15,363
---------- ----------
251,463 263,559
---------- ----------
Minority Interest 13,463 7,637
---------- ----------
Shareholders' Investment (Note 5):
Common stock, $.10 par value, 125,000,000
shares authorized; 73,393,188 and 48,156,101
shares issued 7,339 4,816
Capital in excess of par value 241,929 233,765
Retained earnings 248,173 212,584
Treasury stock at cost, 937,950 and
683,742 shares (11,858) (12,736)
Cumulative translation adjustment 9,040 1,991
Net unrealized gain on available-for-sale
investments 1,390 343
---------- ----------
496,013 440,763
---------- ----------
$1,097,824 $1,011,917
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
3PAGE
FORM 10-Q
July 1, 1995
THERMO INSTRUMENT SYSTEMS INC.
(b) Consolidated Statement of Income for the three months ended
July 1, 1995 and July 2, 1994 (In thousands except per share
amounts)
Three Months Ended
---------------------
July 1, July 2,
1995 1994
-------- --------
Revenues $185,744 $162,615
-------- --------
Costs and Expenses:
Cost of revenues 94,828 83,828
Selling, general and administrative expenses 51,887 42,660
Research and development expenses 13,711 11,314
-------- --------
160,426 137,802
-------- --------
Operating Income 25,318 24,813
Interest Income 2,952 1,196
Interest Expense (includes $1,451 and $1,348
to parent company) (3,872) (3,992)
Gain on Issuance of Stock by Subsidiary (Note 3) 4,831 -
Gain on Sale of Related Party Investments - 2,000
-------- --------
Income from Continuing Operations Before
Provision for Income Taxes and Minority
Interest Expense 29,229 24,017
Provision for Income Taxes 10,280 10,453
Minority Interest Expense 276 -
-------- --------
Income from Continuing Operations 18,673 13,564
Income from Discontinued Operations (less applicable
income taxes of $377 in 1994) (Note 4) - 520
-------- --------
Net Income $ 18,673 $ 14,084
======== ========
Earnings per Share from Continuing Operations:
Primary $ .26 $ .19
======== ========
Fully diluted $ .24 $ .18
======== ========
Earnings per Share:
Primary $ .26 $ .20
======== ========
Fully diluted $ .24 $ .18
======== ========
Weighted Average Shares:
Primary 72,266 70,455
======== ========
Fully diluted 85,263 84,847
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
4PAGE
FORM 10-Q
July 1, 1995
THERMO INSTRUMENT SYSTEMS INC.
(b) Consolidated Statement of Income for the six months ended July 1, 1995
and July 2, 1994 (In thousands except per share amounts)
Six Months Ended
---------------------
July 1, July 2,
1995 1994
-------- --------
Revenues $358,688 $310,202
-------- --------
Costs and Expenses:
Cost of revenues 182,858 158,745
Selling, general and administrative expenses 101,485 81,570
Research and development expenses 26,190 20,420
-------- --------
310,533 260,735
-------- --------
Operating Income 48,155 49,467
Interest Income 5,254 2,738
Interest Expense (includes $2,781 and $2,704
to parent company) (7,697) (8,090)
Gain on Issuance of Stock by Subsidiary (Note 3) 9,545 -
Gain on Sale of Related Party Investments - 2,000
-------- --------
Income from Continuing Operations Before
Provision for Income Taxes and Minority
Interest Expense 55,257 46,115
Provision for Income Taxes 19,254 20,075
Minority Interest Expense 416 -
-------- --------
Income from Continuing Operations 35,587 26,040
Income from Discontinued Operations (less applicable
income taxes of $650 in 1994) (Note 4) 2 896
-------- --------
Net Income $ 35,589 $ 26,936
======== ========
Earnings per Share from Continuing Operations:
Primary $ .50 $ .37
======== ========
Fully diluted $ .45 $ .34
======== ========
Earnings per Share:
Primary $ .50 $ .38
======== ========
Fully diluted $ .45 $ .36
======== ========
Weighted Average Shares:
Primary 71,879 70,157
======== ========
Fully diluted 85,240 84,858
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
5PAGE
FORM 10-Q
July 1, 1995
THERMO INSTRUMENT SYSTEMS INC.
(c) Consolidated Statement of Cash Flows for the six months ended
July 1, 1995 and July 2, 1994 (In thousands)
Six Months Ended
--------------------
July 1, July 2,
1995 1994
-------- --------
Operating Activities:
Net income $ 35,589 $ 26,936
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 11,765 11,841
Provision for losses on accounts receivable 937 534
Gain on issuance of stock by subsidiary
(Note 3) (9,545) -
Gain on sale of related party investments - (2,000)
Minority interest expense 416 -
Increase (decrease) in deferred income taxes 233 (3)
Other noncash expenses 1,466 510
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable 7,021 16,599
Inventories (5,973) (5,058)
Other current assets (317) (3)
Accounts payable (5,286) 2,356
Other current liabilities (749) (8,450)
-------- --------
Net cash provided by operating
activities 35,557 43,262
-------- --------
Investing Activities:
Acquisitions, net of cash acquired (Note 2) (38,016) (91,701)
Proceeds from sale of services businesses (Note 4) 34,267 -
Purchases of available-for-sale investments - (18,250)
Proceeds from sale and maturities of
available-for-sale investments 13,000 6,000
Proceeds from sale of long-term investments 981 303
Purchases of property, plant and equipment (4,559) (3,701)
Other 1,040 628
-------- --------
Net cash provided by (used in)
investing activities 6,713 (106,721)
-------- --------
Financing Activities:
Net proceeds from issuance of Company and
subsidiary common stock (Note 3) 15,344 570
Repayment of long-term obligations (853) (1,465)
Proceeds from issuance of long-term obligations - 75
-------- --------
Net cash provided by (used in)
financing activities $ 14,491 $ (820)
-------- --------
6PAGE
FORM 10-Q
July 1, 1995
THERMO INSTRUMENT SYSTEMS INC.
(c) Consolidated Statement of Cash Flows for the six months ended
July 1, 1995 and July 2, 1994 (In thousands) (continued)
Six Months Ended
-------------------
July 1, July 2,
1995 1994
-------- --------
Exchange Rate Effect on Cash $ 1,458 $ 808
-------- --------
Increase (Decrease) in Cash and Cash Equivalents 58,219 (63,471)
Cash and Cash Equivalents at Beginning of Period 152,933 177,442
-------- --------
Cash and Cash Equivalents at End of Period $211,152 $113,971
======== ========
Cash Paid For:
Interest $ 7,684 $ 7,016
Income taxes $ 21,064 $ 12,430
Noncash Financing Activities:
Conversions of convertible obligations $ 11,380 $ 10,892
The accompanying notes are an integral part of these consolidated financial
statements.
7PAGE
FORM 10-Q
July 1, 1995
THERMO INSTRUMENT SYSTEMS INC.
(d) Notes to Consolidated Financial Statements - July 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- and six-month periods ended July 1, 1995 and July 2, 1994, (b)
the financial position at July 1, 1995, and (c) the cash flows for the
six-month periods ended July 1, 1995 and July 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. Acquisition
On May 10, 1995, the Company's ThermoSpectra Corporation
(ThermoSpectra) subsidiary acquired Gould Instrument Systems, Inc. (GIS)
for approximately $25.6 million in cash, which includes repayment of $6.0
million of bank debt. To partially finance the acquisition of GIS,
ThermoSpectra borrowed $15.0 million from Thermo Electron Corporation
(Thermo Electron) pursuant to a promissory note due May 1996. This note
bears interest at the Commercial Paper Composite Rate plus 25 basis points
and is included in "Due to parent company" in the accompanying balance
sheet as of July 1, 1995. GIS develops, manufactures, and sells data
acquisition systems, high-performance oscillographic recorders, and digital
storage oscilloscopes for industrial, medical, scientific, and government
applications.
This acquisition has been accounted for using the purchase method of
accounting and the results of operations have been included in the
accompanying financial statements from the date of acquisition. The
aggregate cost of this acquisition exceeded the estimated fair value of the
acquired net assets by $11.5 million, which is being amortized over 40
years. Allocation of the purchase price was based on an estimate of the
fair value of the net assets acquired and is subject to adjustment. Pro
forma data is not presented since this acquisition was not material to the
Company's results of operations and financial position.
8PAGE
FORM 10-Q
July 1, 1995
THERMO INSTRUMENT SYSTEMS INC.
(d) Notes to Consolidated Financial Statements - July 1, 1995 (continued)
3. Transactions in Stock of Subsidiary
In March 1995, the Company's wholly owned Thermo BioAnalysis
Corporation (Thermo BioAnalysis) subsidiary 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. In April
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, resulting in a gain of $4.8 million. Following the private
placements, the Company owned 80% of Thermo BioAnalysis' outstanding common
stock. 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.
4. Discontinued Operations
Effective April 2, 1995, the Company and Thermo Process Systems Inc.
(Thermo Process) dissolved their Thermo Terra Tech joint venture. Thermo
Process purchased the services businesses formerly operated by the joint
venture from the Company for $34.3 million in cash. The Company owned 49%
of the joint venture and accounted for its interest in the joint venture
using the equity method. Prior to the joint venture's formation on April 2,
1994, the Company's services businesses comprised the Company's Services
segment and were consolidated in the Company's financial statements. The
sale of the businesses to Thermo Process represents the Company's disposal
of the operations that comprised its Services segment. Accordingly, the
operating results of the Company's Services segment for the three-month
period ended April 2, 1994, and the equity in the income of the joint
venture recorded by the Company are classified as "Income from discontinued
operations" in the accompanying statement of income. Revenues from the
Company's Services segment for the three-month period ended April 2, 1994
were $12.2 million.
5. 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. All weighted average share and
per share amounts have been restated to reflect the stock split.
6. Subsequent Events
Debenture Offering
In August 1995, the Company's wholly owned ThermoQuest Corporation
subsidiary issued and sold $96.2 million principal amount of 5%
subordinated convertible debentures due 2000.
9PAGE
FORM 10-Q
July 1, 1995
THERMO INSTRUMENT SYSTEMS INC.
(d) Notes to Consolidated Financial Statements - July 1, 1995 (continued)
6. Subsequent Events (continued)
Transaction in Stock of Subsidiary
In August 1995, the Company's ThermoSpectra Corporation
(ThermoSpectra) subsidiary sold 1,725,000 shares of its common stock in an
initial public offering at $14.00 per share for net proceeds of
approximately $21.7 million. Following the offering, the Company owned 74%
of ThermoSpectra's outstanding common stock.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Second Quarter 1995 Compared With Second Quarter 1994
Revenues increased $23.1 million, or 14%, to $185.7 million in the
second quarter of 1995 from $162.6 million in the second quarter of 1994,
due primarily to the acquisitions of the Analytical Instruments Division of
Baird Corporation in January 1995 and Gould Instrument Systems, Inc. (GIS)
in May 1995, which added revenues of $18.6 million in the second quarter of
1995. An increase in revenues of $8.3 million as a result of the favorable
effects of currency translation due to the decline in the value of the U.S.
dollar relative to foreign currencies in countries where the Company
operates was offset in part by a decline in revenues from the Company's air
monitoring instruments subsidiary and, to a lesser extent, certain other
subsidiaries. The Company's air monitoring instruments subsidiary's
revenues decreased as most orders in response to Phases I and II of the
Clean Air Act of 1990 have been completed. Orders booked by the Company
during the second quarter of 1995 exceeded its shipments by $10.7 million.
The gross profit margin remained relatively unchanged at 49% in the
second quarter of 1995 and 48% in the second quarter of 1994.
Selling, general and administrative expenses as a percentage of
revenues increased to 28% in the second quarter of 1995 from 26% in the
second quarter of 1994, due primarily to higher costs as a percentage of
revenues at acquired businesses and reduced revenues from the Company's air
monitoring instruments subsidiary as discussed above. Research and
development expenses as a percentage of revenues were 7.4% in 1995,
compared with 7.0% in 1994. The increase is consistent with the Company's
objective of developing and marketing new products.
Interest income increased to $3.0 million in the second quarter of
1995 from $1.2 million in the second 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 (ThermoSpectra) subsidiary
in the third and fourth quarters of 1994 and the Company's Thermo
BioAnalysis Corporation (Thermo BioAnalysis) subsidiary in the first and
second quarters of 1995. The increase was offset in part by a reduction in
cash as a result of the acquisitions of the Analytical Instruments Division
of Baird Corporation in January 1995 and GIS in May 1995. Interest expense
was $3.9 million in 1995, compared with $4.0 million in 1994.
10PAGE
FORM 10-Q
July 1, 1995
THERMO INSTRUMENT SYSTEMS INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Second Quarter 1995 Compared With Second Quarter 1994 (continued)
As a result of the sale of stock by Thermo BioAnalysis, the Company
recorded a gain of $4.8 million in the second 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 (Note 3).
The Company recorded a gain of $2.0 million in the second quarter of
1994 on the sale of a portion of its investment in Thermedics Inc.
(Thermedics) subordinated convertible debentures. Thermedics is a
majority-owned subsidiary of Thermo Electron Corporation (Thermo Electron).
The effective tax rate decreased to 35% in the second quarter of 1995
from 44% in the second quarter of 1994, due primarily to the nontaxable
gain on the issuance of stock by Thermo BioAnalysis. 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.
First Six Months 1995 Compared With First Six Months 1994
Revenues increased $48.5 million, or 16%, to $358.7 million in the
first six months of 1995 from $310.2 million in the first six months of
1994 due primarily to the acquisitions of several businesses within the
EnviroTech Measurements & Controls group of Baker Hughes Incorporated in
March 1994, the Analytical Instruments Division of Baird Corporation in
January 1995, and GIS in May 1995, which added revenues of $46.7 million in
the first six months of 1995. An increase in revenues of $15.7 million as a
result of the favorable effects of currency translation due to the decline
in the value of the U.S. dollar relative to foreign currencies in countries
where the Company operates was substantially offset by a decline in
revenues from the Company's air monitoring instruments subsidiary and, to a
lesser extent, certain other subsidiaries. The Company's air monitoring
instruments subsidiary's revenues decreased due to the reasons discussed in
the results of operations for the second quarter. Orders booked by the
Company in the first six months of 1995 exceeded its shipments by $16.9
million.
The gross profit margin remained unchanged at 49% in the first six
months of 1995 and 1994.
Selling, general and administrative expenses as a percentage of
revenues increased to 28% in the first six months of 1995 from 26% in the
first six months of 1994 due to the reasons discussed in the results of
operations for the second quarter. Research and development expenses as a
percentage of revenues were 7.3% in 1995, compared with 6.6% in 1994. The
increase is consistent with the Company's objective of developing and
marketing new products.
11PAGE
FORM 10-Q
July 1, 1995
THERMO INSTRUMENT SYSTEMS INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
First Six Months 1995 Compared With First Six Months 1994 (continued)
Interest income increased to $5.3 million in the first six months of
1995 from $2.7 million in the first six months of 1994, due to the reasons
discussed in the results of operations for the second quarter. Interest
expense was $7.7 million in 1995, compared with $8.1 million in 1994. The
decrease is primarily a result of the conversion 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 Thermo BioAnalysis, the Company
recorded gains of $9.5 million in the first six months of 1995 (Note 3).
The effective tax rate decreased to 35% in the first six months of
1995 from 44% in the first six months of 1994, due primarily to the
nontaxable gain on the issuance of stock by Thermo BioAnalysis. 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 the reasons discussed in the results of
operations for the second quarter.
Financial Condition
Liquidity and Capital Resources
Consolidated working capital at July 1, 1995, was $287.5 million,
compared with $230.3 million at December 31, 1994, an increase of $57.2
million. Included in working capital are cash, cash equivalents, and
available-for-sale investments of $215.7 million at July 1, 1995, and
$168.9 million at December 31, 1994. Of the $215.7 million balance at July
1, 1995, $10.7 million was held by ThermoSpectra, $18.3 million by Thermo
BioAnalysis, and $186.7 million by the Company and its wholly owned
subsidiaries. During the first six months of 1995, $35.6 million of cash
was provided by operating activities. A reduction in accounts receivable of
$7.0 million was offset by an increase in inventory of $6.0 million and a
reduction in accounts payable of $5.3 million.
The Company's investing activities provided $6.7 million of net cash
in the first six months of 1995. During the first six months of 1995 the
Company expended $38.0 million for acquisitions, including the acquisition
of GIS by ThermoSpectra in May 1995 for $25.6 million in cash.
Additionally, during the first six months of 1995, the Company and Thermo
Process Systems Inc. (Thermo Process) dissolved their Thermo Terra Tech
joint venture and the Company sold its services business formerly operated
by the joint venture to Thermo Process for $34.3 million in cash. The
Company also had proceeds of $13.0 million from the sale of
available-for-sale investments during the first six months of 1995.
The Company's financing activities provided $14.5 million of net cash
in the first six months of 1995. In March and April 1995, Thermo
BioAnalysis completed private placements of 1,601,500 shares of its common
stock at $10.00 per share for net proceeds of approximately $14.9 million.
12PAGE
FORM 10-Q
July 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)
In August 1995, ThermoSpectra sold 1,725,000 shares of its common
stock in an initial public offering at $14.00 per share for net proceeds of
approximately $21.7 million.
In August 1995, the Company's wholly owned ThermoQuest Corporation
subsidiary issued and sold $96.2 million principal amount of 5%
subordinated convertible debentures due 2000.
During the remainder of 1995, the Company plans to make expenditures
of approximately $6.4 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. On April 13, 1995, the Company announced that it had
received a "second request" for information regarding the transaction from
the U.S. Federal Trade Commission (FTC). The FTC and other national
regulatory competition authorities have expressed concern that completion
of the transaction in its original form would affect competition in markets
for certain product lines to be acquired by the Company, including the
market for mass spectrometers. On June 30, 1995, the Company and Fisons
agreed to extend the termination date under the agreement from June 30,
1995 to August 15, 1995 to allow for the negotiation of potential
modifications to the transaction. The Company anticipates that this date
will be further extended prior to August 15. In addition to receipt of
required antitrust regulatory approvals, completion of the transaction is
subject to consent of certain third parties, and the satisfaction of other
customary closing conditions. The Company intends to fund the purchase
price from available cash and through borrowings from Thermo Electron
Corporation (Thermo Electron). Borrowings from Thermo Electron will be at
prevailing market rates at the time funds are advanced. 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.
13PAGE
FORM 10-Q
July 1, 1995
THERMO INSTRUMENT SYSTEMS INC.
PART II - Other Information
Item 4 - Submission of Matters to a Vote of Security Holders
On May 22, 1995, at the Annual Meeting of Shareholders, the
shareholders elected ten incumbent directors to a one-year term expiring in
1996. The directors reelected at the meeting were: Marshall J. Armstrong,
Frank Borman, Elias P. Gyftopoulos, George N. Hatsopoulos, John N.
Hatsopoulos, Robert C. Howard, Frank Jungers, Robert A. McCabe, Arvin H.
Smith, and Polyvios C. Vintiadis. Mr. Armstrong, Mr. Howard, and Mr. McCabe
received 44,281,786 shares voted in favor of election and 6,913 shares
voted against; Dr. G. Hatsopoulos and Mr. J. Hatsopoulos received
44,281,785 shares voted in favor of election and 6,913 shares voted
against; Mr. Borman and Dr. Gyftopoulos received 44,281,682 shares voted in
favor of election and 7,016 shares voted against; Mr. Jungers received
44,279,536 shares voted in favor of election and 9,163 shares voted
against; Mr. Smith received 44,281,245 shares voted in favor of election
and 7,454 shares voted against; and Mr. Vintiadis received 44,281,661
shares voted in favor of election and 7,038 shares voted against. No broker
nonvotes were recorded on the election of directors.
The shareholders also approved a proposal to amend the directors stock
option plan to change the formula for the award of stock options to
purchase common stock of the Company to its outside directors and also to
provide for the automatic grant of stock options to purchase common stock
of majority-owned subsidiaries of the Company to its outside directors as
follows: 44,194,814 shares voted in favor, 63,307 shares voted against,
30,576 shares abstained, and there were 3 broker nonvotes.
Item 6 - Exhibits
See Exhibit Index on the page immediately preceding exhibits.
14PAGE
FORM 10-Q
July 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 August 1995.
THERMO INSTRUMENT SYSTEMS INC.
Paul F. Kelleher
-------------------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
-------------------------------
John N. Hatsopoulos
Chief Financial Officer
15PAGE
FORM 10-Q
July 1, 1995
THERMO INSTRUMENT SYSTEMS INC.
EXHIBIT INDEX
Exhibit
Number Document Page
------- ------------------------------------------------- ----
11 Statement re: Computation of earnings per share.
27 Financial Data Schedule.
PAGE
EX-11
2
Exhibit 11
THERMO INSTRUMENT SYSTEMS INC.
Computation of Earnings per Share
Three Months Ended Six Months Ended
------------------------ -------------------------
July 1, July 2, July 1, July 2,
1995 1994 1995 1994
----------- ----------- ----------- -----------
Computation of Fully Diluted
Earnings per Share from
Continuing Operations:
Income:
Net income $18,673,000 $13,564,000 $35,587,000 $26,040,000
Add: Convertible
obligation
interest, net
of tax 1,443,000 1,580,000 2,960,000 3,211,000
----------- ----------- ----------- -----------
Income applicable
to common
stock assuming
full dilution (a) $20,116,000 $15,144,000 $38,547,000 $29,251,000
----------- ----------- ----------- -----------
Shares:
Weighted average
shares outstanding 72,265,770 70,455,320 71,878,744 70,157,430
Add: Shares issuable
from assumed
conversion of
convertible
obligations 12,537,819 14,081,007 12,901,189 14,348,319
Shares issuable
from assumed
exercise of
options (as
determined by
the application
of the treasury
stock method) 459,669 310,480 459,669 351,882
----------- ----------- ----------- -----------
Weighted average
shares outstanding,
as adjusted (b) 85,263,258 84,846,807 85,239,602 84,857,631
----------- ----------- ----------- -----------
Fully Diluted Earnings
per Share from
Continuing Operations
(a) / (b) $ .24 $ .18 $ .45 $ .34
=========== =========== =========== ===========
PAGE
Exhibit 11
THERMO INSTRUMENT SYSTEMS INC.
Computation of Earnings per Share (continued)
Three Months Ended Six Months Ended
------------------------ -------------------------
July 1, July 2, July 1, July 2,
1995 1994 1995 1994
----------- ----------- ----------- -----------
Computation of Fully Diluted
Earnings per Share:
Income:
Net income $18,673,000 $14,084,000 $35,589,000 $26,936,000
Add: Convertible
obligation
interest, net
of tax 1,443,000 1,580,000 2,960,000 3,211,000
----------- ----------- ----------- -----------
Income applicable
to common
stock assuming
full dilution (a) $20,116,000 $15,664,000 $38,549,000 $30,147,000
----------- ----------- ----------- -----------
Shares:
Weighted average
shares outstanding 72,265,770 70,455,320 71,878,744 70,157,430
Add: Shares issuable
from assumed
conversion of
convertible
obligations 12,537,819 14,081,007 12,901,189 14,348,319
Shares issuable
from assumed
exercise of
options (as
determined by
the application
of the treasury
stock method) 459,669 310,480 459,669 351,882
----------- ----------- ----------- -----------
Weighted average
shares outstanding,
as adjusted (b) 85,263,258 84,846,807 85,239,602 84,857,631
----------- ----------- ----------- -----------
Fully Diluted Earnings
per Share (a) / (b) $ .24 $ .18 $ .45 $ .36
=========== =========== =========== ===========
PAGE
EX-27
3
5
1,000
6-MOS
DEC-30-1995
JUL-01-1995
211,152
4,553
176,751
10,520
146,417
581,899
185,633
49,593
1,097,824
294,368
110,829
7,339
0
0
488,674
1,097,824
358,688
358,688
182,858
182,858
26,190
937
7,697
55,257
19,254
35,587
2
0
0
35,589
.50
.45