-----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, KJv3oH9c0Kthsi8b5cv25huHcS/8DPJtYFIEHNUZzn9Bv2LoBBVDX4IaP3YZwuQl CQ9d2nUT+Xxrv+qVdQSzOg== 0000795986-96-000037.txt : 19960509 0000795986-96-000037.hdr.sgml : 19960509 ACCESSION NUMBER: 0000795986-96-000037 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960330 FILED AS OF DATE: 19960508 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: 96558085 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 March 30, 1996. [ ] 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.) 1275 Hammerwood Avenue Sunnyvale, California 94089 (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 94,054,651 PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements THERMO INSTRUMENT SYSTEMS INC. Consolidated Balance Sheet (Unaudited) Assets March 30, December 30, (In thousands) 1996 1995 -------------------------------------------------------------------------- Current Assets: Cash and cash equivalents $ 342,473 $ 395,233 Accounts receivable, less allowances of $12,977 and $12,569 322,348 211,906 Unbilled contract costs and fees 4,482 3,800 Inventories: Raw materials and supplies 125,163 80,959 Work in process 64,087 40,851 Finished goods 63,276 33,104 Prepaid expenses 30,052 9,450 Prepaid income taxes 44,802 31,233 ---------- ---------- 996,683 806,536 ---------- ---------- Property, Plant and Equipment, at Cost 261,335 189,085 Less: Accumulated depreciation and amortization 57,582 55,408 ---------- ---------- 203,753 133,677 ---------- ---------- Patents and Other Assets 28,309 29,611 ---------- ---------- Cost in Excess of Net Assets of Acquired Companies (Note 2) 554,461 402,989 ---------- ---------- $1,783,206 $1,372,813 ========== ========== 2PAGE THERMO INSTRUMENT SYSTEMS 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, including $30,000 due to parent company in 1996 (Note 2) $ 134,794 $ 55,822 Accounts payable 84,990 55,626 Accrued payroll and employee benefits 43,468 33,025 Accrued income taxes 30,615 25,875 Accrued installation and warranty expenses 32,060 17,962 Deferred revenue 42,236 20,759 Accrued acquisition expenses (Note 2) 82,944 20,687 Other accrued expenses 125,874 73,966 Due to parent company (Note 2) 100,466 12,919 ---------- ---------- 677,447 316,641 ---------- ---------- Deferred Income Taxes 20,129 20,168 ---------- ---------- Other Deferred Items 25,170 23,718 ---------- ---------- Long-term Obligations: Senior obligations, including $140,000 due to parent company 198,507 207,600 Subordinated obligations 209,512 214,775 Other 16,764 18,659 ---------- ---------- 424,783 441,034 ---------- ---------- Minority Interest 46,432 28,547 ---------- ---------- Shareholders' Investment: Common stock, $.10 par value, 125,000,000 shares authorized; 93,664,537 and 92,566,341 shares issued 9,366 9,257 Capital in excess of par value 262,747 248,468 Retained earnings 325,933 291,890 Treasury stock at cost, 868,100 and 917,985 shares (9,292) (9,724) Cumulative translation adjustment 491 2,814 ---------- ---------- 589,245 542,705 ---------- ---------- $1,783,206 $1,372,813 ========== ========== The accompanying notes are an integral part of these consolidated financial statements. 3PAGE THERMO INSTRUMENT SYSTEMS INC. Consolidated Statement of Income (Unaudited) Three Months Ended ----------------------- March 30, April 1, (In thousands except per share amounts) 1996 1995 -------------------------------------------------------------------------- Revenues $225,571 $172,944 -------- -------- Costs and Expenses: Cost of revenues 118,207 88,030 Selling, general and administrative expenses 65,709 49,598 Research and development expenses 16,549 12,479 Write-off of acquired technology (Note 2) 3,500 - -------- -------- 203,965 150,107 -------- -------- Operating Income 21,606 22,837 Interest Income 5,111 2,302 Interest Expense (includes $1,537 and $1,330 to parent company) (6,290) (3,825) Gain on Issuance of Stock by Subsidiaries (Note 3) 24,257 4,714 -------- -------- Income from Continuing Operations Before Provision for Income Taxes and Minority Interest Expense 44,684 26,028 Provision for Income Taxes 10,073 8,974 Minority Interest Expense 568 140 -------- -------- Income from Continuing Operations 34,043 16,914 Income from Discontinued Operations - 2 -------- -------- Net Income $ 34,043 $ 16,916 ======== ======== Earnings per Share from Continuing Operations: Primary $ .37 $ .19 ======== ======== Fully diluted $ .33 $ .17 ======== ======== Earnings per Share: Primary $ .37 $ .19 ======== ======== Fully diluted $ .33 $ .17 ======== ======== Weighted Average Shares: Primary 91,875 89,365 ======== ======== Fully diluted 107,269 106,407 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 4PAGE THERMO INSTRUMENT SYSTEMS INC. Consolidated Statement of Cash Flows (Unaudited) Three Months Ended ---------------------- March 30, April 1, (In thousands) 1996 1995 -------------------------------------------------------------------------- Operating Activities: Net income $ 34,043 $ 16,916 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 9,036 6,139 Provision for losses on accounts receivable 413 655 Gain on issuance of stock by subsidiaries (Note 3) (24,257) (4,714) Minority interest expense 568 140 Decrease in deferred income taxes (40) (3,217) Other noncash expenses 4,638 755 Changes in current accounts, excluding the effects of acquisitions: Accounts receivable 8,814 (607) Inventories (6,998) (1,468) Other current assets 1,168 918 Accounts payable (1,861) (2,184) Other current liabilities 5,012 (15,078) Other 198 - --------- --------- Net cash provided by (used in) operating activities 30,734 (1,745) --------- --------- Investing Activities: Acquisitions, net of cash acquired (Note 2) (239,406) (10,730) Purchases of property, plant and equipment (5,370) (2,598) Other 1,527 473 --------- --------- Net cash used in investing activities (243,249) (12,855) --------- --------- Financing Activities: Net proceeds from issuance of Company and subsidiaries' common stock (Note 3) 42,010 6,783 Short-term borrowings from parent company (Note 2) 89,012 - Issuance of note payable to parent company (Note 2) 30,000 - Repayment of long-term obligations (1,139) (205) --------- --------- Net cash provided by financing activities $ 159,883 $ 6,578 --------- --------- 5PAGE THERMO INSTRUMENT SYSTEMS INC. Consolidated Statement of Cash Flows (continued) (Unaudited) Three Months Ended ---------------------- March 30, April 1, (In thousands) 1996 1995 -------------------------------------------------------------------------- Exchange Rate Effect on Cash $ (128) $ 999 --------- --------- Decrease in Cash and Cash Equivalents (52,760) (7,023) Cash and Cash Equivalents at Beginning of Period 395,233 152,933 --------- --------- Cash and Cash Equivalents at End of Period $ 342,473 $ 145,910 ========= ========= Cash Paid For: Interest $ 6,923 $ 4,825 Income taxes $ 4,092 $ 12,664 Noncash Financing Activities: Conversions of convertible obligations $ 14,356 $ 6,428 The accompanying notes are an integral part of these consolidated financial statements. 6PAGE THERMO INSTRUMENT SYSTEMS INC. Notes to Consolidated Financial Statements 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 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. Acquisitions On March 29, 1996, the Company completed the acquisition of a substantial portion of the businesses comprising the Scientific Instruments Division of Fisons plc (Fisons), a wholly owned subsidiary of Rhone-Poulenc Rorer Inc., for approximately 123 million British pounds sterling in cash (approximately $187 million) and the assumption of approximately 24 million British pounds sterling of indebtedness (approximately $36 million). The purchase price is subject to post-closing adjustments equal to the amounts by which the net tangible assets and net debt of the acquired businesses on the closing date are greater or less than certain target amounts agreed to by the parties. To finance the acquisition, the Company used available cash in addition to borrowings of $89 million from Thermo Electron Corporation (Thermo Electron). Subsequent to the end of the quarter, the Company repaid a portion of the borrowings from Thermo Electron and issued a $65 million promissory note for the remaining indebtedness. The promissory note is due April 1997 and bears interest at the 90-day Commercial Paper Composite Rate plus 25 basis points, set at the beginning of each quarter. In the first quarter of 1996, the Company wrote off $3.5 million of acquired technology in connection with this acquisition. The businesses acquired are involved in the research, development, manufacture, and sale of analytical instruments to industrial and research laboratories worldwide. During the first quarter of 1996, the Company made several other acquisitions for approximately $62 million in cash, subject to post-closing adjustments. To partially finance one such acquisition, the Company's Thermo BioAnalysis Corporation subsidiary borrowed $30 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 THERMO INSTRUMENT SYSTEMS INC. 2. 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 cost of the acquisitions exceeded the estimated fair value of the acquired net assets by $159 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. In connection with the acquisition of certain businesses within the Scientific Instruments Division of Fisons, the Company established reserves totaling $61 million for estimated severance, excess facilities, and other exit costs associated with the acquisition, none of which was expended during the first quarter of 1996. The Company expects to substantially complete its review and restructuring of these businesses over the one-year period following the acquisition. Any changes in estimates of these costs will be recorded as adjustments to cost in excess of net assets of acquired companies. 3. Issuance of Stock by Subsidiary In March 1996, the Company's wholly owned ThermoQuest Corporation (ThermoQuest) subsidiary sold 3,000,000 shares of its common stock in an initial public offering at $15.00 per share for net proceeds of approximately $42 million, resulting in a gain of approximately $24 million. Subsequent to the end of the quarter, the underwriters of ThermoQuest's initial public offering exercised their over-allotment option to purchase an additional 450,000 shares of ThermoQuest's common stock for net proceeds of approximately $6 million. Following the initial public offering and the exercise of the over-allotment option, the Company owned 93% of ThermoQuest's outstanding common stock. 4. Subsequent Event In April 1996, the Company called for redemption on May 9, 1996 all of the outstanding principal amount of its 6 5/8% subordinated convertible debentures due 2001. The value of the securities into which the debentures are convertible exceeded the redemption amount as of the notice date of the redemption. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations First Quarter 1996 Compared With First Quarter 1995 Revenues increased $52.6 million, or 30%, to $225.6 million in the first quarter of 1996 from $172.9 million in the first quarter of 1995 primarily due to acquisitions, which included the analytical instrument division of Analytical Technology, Inc. (ATI) in December 1995, Gould Instrument Systems, Inc. (GIS) in May 1995, and Dynatech Laboratories 8PAGE THERMO INSTRUMENT SYSTEMS INC. First Quarter 1996 Compared With First Quarter 1995 (continued) Worldwide (DLW) in February 1996. Acquisitions added revenues of $40 million in the first quarter of 1996. The remainder of the increase in revenues resulted from greater demand experienced by the Company's existing businesses, primarily for ThermoQuest Corporation's (ThermoQuest) mass spectrometry products and Thermo Optek Corporation's (Thermo Optek) Fourier transform infrared products. These increases were offset in part by the unfavorable effects of currency translation due to the strengthening of the U.S. dollar relative to foreign currencies in countries where the Company operates. The gross profit margin decreased to 48% in the first quarter of 1996 from 49% in the first quarter of 1995 primarily due to lower margins at acquired businesses. As a result of the acquisition of a substantial portion of the businesses comprising the Scientific Instruments Division of Fisons plc (Fisons) (Note 2), the Company expects that the gross profit margin will continue to decline due to lower margins at these businesses. Selling, general and administrative expenses as a percentage of revenues was 29% in the first quarter of 1996 and 1995. Research and development expenses as a percentage of revenues remained relatively unchanged at 7.3% in 1996, compared with 7.2% in 1995. In the first quarter of 1996, the Company wrote off $3.5 million of acquired technology in connection with the acquisition of the businesses from Fisons (Note 2). Interest income increased to $5.1 million in the first quarter of 1996 from $2.3 million in the first quarter of 1995 primarily due to interest income earned on invested proceeds from the issuance of $192.5 million aggregate principal amount of 5% subordinated convertible debentures by ThermoQuest and Thermo Optek in August 1995 and October 1995, respectively. Interest income also increased, to a lesser extent, as a result of interest income earned on invested proceeds from the issuance of common stock by the Company's Thermo BioAnalysis Corporation (Thermo BioAnalysis) subsidiary in the first and second quarters of 1995 and the Company's ThermoSpectra Corporation (ThermoSpectra) subsidiary in the third quarter of 1995. The increase in interest income was offset in part by a reduction in cash as a result of the acquisitions of GIS in May 1995 and DLW in February 1996. Interest expense increased to $6.3 million in 1996 from $3.8 million in 1995 primarily due to the issuance of the 5% subordinated convertible debentures by ThermoQuest and Thermo Optek and, to a lesser extent, the issuance by Thermo BioAnalysis of a $30 million promissory note to Thermo Electron Corporation (Thermo Electron) to partially finance the acquisition of DLW. These increases were offset in part by the conversion of a portion of the Company's 6 5/8% subordinated convertible debentures and 3 3/4% senior convertible debentures into common stock of the Company. 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 $24 million in the first quarter of 1996 9PAGE THERMO INSTRUMENT SYSTEMS INC. First Quarter 1996 Compared With First Quarter 1995 (continued) and $4.7 million in the first quarter of 1995 (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 rate decreased to 23% in the first quarter of 1996 from 34% in the first quarter of 1995 primarily due to a higher nontaxable gain on the issuance of stock by subsidiary in 1996 compared with 1995. Excluding the impact of gain on issuance of stock by subsidiaries in 1996 and 1995, the effective tax rates in 1996 and 1995 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. Liquidity and Capital Resources Consolidated working capital was $319.2 million at March 30, 1996, compared with $489.9 million at December 30, 1995, a decrease of $170.7 million. Included in working capital are cash and cash equivalents of $342.5 million at March 30, 1996, and $395.2 million at December 30, 1995. Of the $342.5 million balance at March 30, 1996, $176.7 million was held by ThermoQuest, $21.5 million by ThermoSpectra, $10.0 million by Thermo BioAnalysis, and $134.3 million by the Company and its wholly owned subsidiaries, including Thermo Optek. The Company's operating activities provided $30.7 million of cash in the first three months of 1996. A decrease in accounts receivable of $8.8 million and an increase in other current liabilities of $5.0 million, which provided cash from operations, was offset in part by an increase of $7.0 million in inventories and a decrease of $1.9 million in accounts payable. The Company's investing activities used $243.2 million of cash in the first three months of 1996. The Company expended $239.4 million for acquisitions, including the acquisition of a substantial portion of the businesses comprising the Scientific Instruments Division of Fisons, and $5.4 million for the purchase of property, plant and equipment. The Company's financing activities provided $159.9 million of cash in the first three months of 1996. In March 1996, ThermoQuest sold shares of its common stock in an initial public offering for net proceeds of approximately $42 million. In February 1996, to partially finance the acquisition of DLW, Thermo BioAnalysis borrowed $30 million from Thermo Electron pursuant to a promissory note due February 1997 (Note 2). In March 1996, to partially finance the acquisition of certain businesses within the Scientific Instruments Division of Fisons, the Company borrowed $89 million from Thermo Electron. Subsequent to the end of the quarter, the Company repaid a portion of the borrowings from Thermo Electron and issued a $65 million promissory note due April 1997 for the remaining indebtedness (Note 2). In April 1996, the underwriters of ThermoQuest's initial public offering exercised their over-allotment option to purchase additional shares of ThermoQuest's common stock for net proceeds of approximately $6 million (Note 3). 10PAGE THERMO INSTRUMENT SYSTEMS INC. Liquidity and Capital Resources (continued) In April 1996, Thermo Optek filed a registration statement under the Securities Act of 1933 with the Securities and Exchange Commission covering shares of common stock to be offered in its initial public offering. During the remainder of 1996, the Company plans to make expenditures of approximately $15 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 businesses or technologies that are consistent with its plans for strategic growth. 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 No reports on Form 8-K were filed by the Company during the quarter covered by this report. The Company filed a Current Report on Form 8-K on April 12, 1996, pertaining to its acquisition of certain businesses within the Scientific Instruments Division of Fisons plc on March 29, 1996. The required financial statements of the businesses acquired and pro forma combined condensed financial statements will be filed by June 12, 1996, as part of an amendment to the Form 8-K. 11PAGE 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 8th day of May 1996. THERMO INSTRUMENT SYSTEMS INC. Paul F. Kelleher -------------------------------- Paul F. Kelleher Chief Accounting Officer John N. Hatsopoulos -------------------------------- John N. Hatsopoulos Chief Financial Officer 12PAGE THERMO INSTRUMENT SYSTEMS INC. Exhibit Index Exhibit Number Description of Exhibit Page ------- ------------------------------------------------ ---- 10.1 $30,000,000 Promissory Note dated as of February 13, 1996 issued by Thermo BioAnalysis Corporation to Thermo Electron Corporation. 10.2 $65,000,000 Promissory Note dated as of April 12, 1996 issued by the Company to Thermo Electron Corporation. 11 Statement re: Computation of earnings per share. 27 Financial Data Schedule EX-10.1 2 EXHIBIT 10.1 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. Thermo BioAnalysis Corporation Promissory Note Due February 11, 1997 Waltham, Massachusetts February 13, 1996 For value received, Thermo BioAnalysis Corporation, a Delaware 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 thirty million dollars ($30,000,000) 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. THERMO BIOANALYSIS CORPORATION By: Barry S. Howe -------------------------- Barry S. Howe President [Corporate Seal] Attest: Sandra L. Lambert --------------------- Sandra L. Lambert Secretary cc: Ron Burman Seth Hoogasian Maureen Jacobs Sandra Lambert Karen Levin Chuck Valenti Chris Vinchesi EX-10.2 3 EXHIBIT 10.2 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. Thermo Instrument Systems Inc. Promissory Note Due April 11, 1997 Waltham, Massachusetts April 12, 1996 For value received, Thermo Instrument Systems Inc., a Delaware corporation (the "Company"), hereby promises to pay to Thermo Electron Corporation (hereinafter referred to as the "Payee"), or registered assigns, on April 11, 1997, as described below, the principal sum of sixty-five million dollars ($65,000,000) 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 April 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. THERMO INSTRUMENT SYSTEMS INC. By: Arvin H. Smith -------------------------- Arvin H. Smith President and Chief Executive Officer [Corporate Seal] Attest: Sandra L. Lambert --------------------- Sandra L. Lambert Secretary cc: Terry Dudding Seth Hoogasian Maureen Jacobs Sandra Lambert Karen Levin Andy Pilla Gina Silvestri Chris Vinchesi EX-11 4 Exhibit 11 THERMO INSTRUMENT SYSTEMS INC. Computation of Earnings per Share Three Months Ended ---------------------------- March 30, April 1, 1996 1995 -------------------------------------------------------------------------- Computation of Fully Diluted Earnings per Share from Continuing Operations: Income: Net income $ 34,043,000 $ 16,914,000 Add: Convertible obligation interest, net of tax 1,348,000 1,517,000 ------------ ------------ Income applicable to common stock assuming full dilution (a) $ 35,391,000 $ 18,431,000 ------------ ------------ Shares: Weighted average shares outstanding 91,874,948 89,365,446 Add: Shares issuable from assumed conversion of convertible obligations 14,445,711 16,580,700 Shares issuable from assumed exercise of options (as determined by the application of the treasury stock method) 948,346 460,469 ------------ ------------ Weighted average shares outstanding, as adjusted (b) 107,269,005 106,406,615 ------------ ------------ Fully Diluted Earnings per Share from Continuing Operations (a) / (b) $ .33 $ .17 ============ ============ PAGE Exhibit 11 THERMO INSTRUMENT SYSTEMS INC. Computation of Earnings per Share (continued) Three Months Ended ---------------------------- March 30, April 1, 1996 1995 -------------------------------------------------------------------------- Computation of Fully Diluted Earnings per Share: Income: Net income $ 34,043,000 $ 16,916,000 Add: Convertible obligation interest, net of tax 1,348,000 1,517,000 ------------ ------------ Income applicable to common stock assuming full dilution (a) $ 35,391,000 $ 18,433,000 ------------ ------------ Shares: Weighted average shares outstanding 91,874,948 89,365,446 Add: Shares issuable from assumed conversion of convertible obligations 14,445,711 16,580,700 Shares issuable from assumed exercise of options (as determined by the application of the treasury stock method) 948,346 460,469 ------------ ------------ Weighted average shares outstanding, as adjusted (b) 107,269,005 106,406,615 ------------ ------------ Fully Diluted Earnings per Share (a) / (b) $ .33 $ .17 ============ ============ EX-27 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO INSTRUMENT SYSTEMS INC.'S QUARTERLY REPORT 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 342,473 0 335,325 12,977 252,526 996,683 261,335 57,582 1,783,206 677,447 284,783 9,366 0 0 579,879 1,783,206 225,571 225,571 118,207 118,207 20,049 413 6,290 44,684 10,073 34,043 0 0 0 34,043 .37 .33
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