-----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, AfTNCCk1QxlZJJyxvpovZR7pWbA1vN6FmVd0UbVC+UD54zjzTPujWT96XR4xOyve 9PFTpaT/IkVzIgSjJ2RYsQ== 0000813895-98-000002.txt : 19980121 0000813895-98-000002.hdr.sgml : 19980121 ACCESSION NUMBER: 0000813895-98-000002 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971106 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980120 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: THERMO POWER CORP CENTRAL INDEX KEY: 0000813895 STANDARD INDUSTRIAL CLASSIFICATION: AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585] IRS NUMBER: 042891371 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-10573 FILM NUMBER: 98509458 BUSINESS ADDRESS: STREET 1: 81 WYMAN ST STREET 2: PO BOX 9046 CITY: WALTHAM STATE: MA ZIP: 02254-9046 BUSINESS PHONE: 6176221000 MAIL ADDRESS: STREET 1: 81 WYMAN STREET CITY: WALTHAM STATE: MA ZIP: 02254 FORMER COMPANY: FORMER CONFORMED NAME: TECOGEN INC DATE OF NAME CHANGE: 19920703 8-K/A 1 FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ------------------------------------------- AMENDMENT NO. 1 ON FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): November 6, 1997 ________________________________________ THERMO POWER CORPORATION (Exact name of Registrant as specified in its charter) Massachusetts 1-10573 04-2891371 (State or other (Commission (I.R.S. Employer jurisdiction of File Number) Identification Number) incorporation or organization) 81 Wyman Street, P.O. Box 9046 Waltham, MA 02254-9046 (Address of principal executive offices) (Zip Code) (781) 622-1000 (Registrant's telephone number including area code) PAGE FORM 8-K/A Item 2. Acquisition or Disposition of Assets On November 6, 1997, Thermo Power Corporation ("Thermo Power" or "the Company") declared unconditional in all respects its cash tender offer for the outstanding ordinary shares of Peek plc (Peek). The aggregate cost to acquire all Peek ordinary shares, including related expenses, is estimated at approximately $166.7 million. As of January 16, 1998, the Company has paid for all Peek ordinary shares. The acquisition of the Peek shares was financed with borrowings from Thermo Electron Corporation ("Thermo Electron"), the Company's parent corporation. On November 17, 1997, the Company borrowed $160.0 million from Thermo Electron pursuant to a promissory note due in 1999. Such note bears interest at a rate equal to the 90-day Commercial Paper Composite Rate as reported by Merrill Lynch Capital Markets, plus 25 basis points, and is adjusted quarterly. Peek develops and installs equipment to monitor and regulate traffic flow in cities and towns around the globe, including traffic signal synchronization systems to minimize delays, variable message systems to advise drivers of accidents or construction, video systems to give real-time analysis of traffic flows at intersections and on highways, as well as automatic toll-collection systems. In addition, through its Field Data business, Peek develops and markets field measurement products. Subsequent to Peek's acquisition by the Company, the Company reached an agreement with ONIX Systems Inc. ("ONIX"), a majority-owned subsidiary of Thermo Instrument Systems Inc. ("Thermo Instrument"), to sell Peek's Field Data business, effective November 6, 1997, for $19.1 million. Thermo Instrument is a majority-owned subsidiary of Thermo Electron. The Company expects to receive payment from ONIX for the sale of the Field Data business in January 1998. The components of the sales price for the Field Data business consist of the net tangible book value of the Field Data business, goodwill, and the estimated tax liability relating to the sale. The goodwill was determined based upon a percentage of the Company's total goodwill associated with its acquisition of Peek, based on the aggregate 1997 revenues of the Field Data business relative to Peek's 1997 consolidated revenues. The Company has no present intention to use the plants, equipment, or other physical property acquired for purposes materially different from the purposes for which such assets were used prior to the acquisition. However, the Company will review the remaining businesses of Peek and its assets, corporate structure, capitalization, operations, properties, policies, management, and personnel. The Company may develop additional plans or proposals, including mergers, transfers of a material amount of assets, or other transactions or changes relating to the remaining acquired businesses. Any such transaction might involve Thermo Electron or its subsidiaries. 2PAGE FORM 8-K/A Item 7. Financial Statements, Pro Forma Combined Condensed Financial Information, and Exhibits (a)Financial Statements of Business Acquired Attached hereto. (b)Pro Forma Combined Condensed Financial Information Attached hereto. (c)Exhibits 23 Consent of Ernst & Young 3PAGE Peek plc Report and Accounts for the three years ended 31 December 1996 PAGE REPORT OF THE INDEPENDENT AUDITORS To The Board of Directors Peek plc We have audited the accompanying consolidated balance sheets of Peek plc as of 31 December 1996 and 1995, and the related consolidated statements of income, movements in shareholders' equity, cashflows and total recognised gains and losses for each of the three years in the period ended 31 December 1996. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with United Kingdom auditing standards which do not differ in any significant respect from United States generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the accounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Peek plc at 31 December 1996 and 1995, and the consolidated results of its operations and its consolidated cashflows for each of the three years in the period ended 31 December 1996, in conformity with accounting principles generally accepted in the United Kingdom, which differ in certain respects from those followed in the United States (see Note 24 of Notes to the Accounts). ERNST & YOUNG Chartered accountants London, England 11 March 1997, except for Note 24 - US GAAP reconciliation, as to which date is 19 January 1998. 2PAGE Peek plc Consolidated profit and loss account for the year ended 31 December 1996 1995 1994 (In thousands Notes of British pounds sterling) Turnover Continuing operations 2 Ongoing 159,159 133,485 124,074 Acquisitions 2,916 10,301 4,035 -------- -------- -------- 162,075 143,786 128,109 Discontinued operations - - 3,689 -------- -------- -------- 162,075 143,786 131,798 Cost of sales (107,494) (91,813) (82,969) -------- -------- -------- Gross profit 54,581 51,973 48,829 Net operating expenses: Selling and distribution (18,452) (15,494) (15,643) Technology (8,752) (8,485) (8,179) Administration (14,091) (15,524) (14,840) -------- -------- -------- (41,295) (39,503) (38,662) Operating profit 3 Continuing operations Ongoing 13,329 12,338 9,494 Acquisitions (43) 132 278 -------- -------- -------- 13,286 12,470 9,772 Discontinued operations - - 395 -------- -------- -------- 13,286 12,470 10,167 Exceptional items 7 Continuing activities - 3,915 382 Discontinued operations (6) - (42) -------- -------- -------- Profit on ordinary activities before interest 13,280 16,385 10,507 Net interest payable 5 (729) (403) (288) -------- -------- -------- Profit on ordinary activities before taxation 12,551 15,982 10,219 Taxation 6 (4,258) (4,099) (3,455) -------- -------- -------- Profit on ordinary activities after taxation 8,293 11,883 6,764 Minority interest - - (110) -------- -------- -------- Profit for the financial year(a) 8,293 11,883 6,654 Dividends 8 (4,114) (4,088) (4,059) -------- -------- -------- Retained profit 16 4,179 7,795 2,595 -------- -------- -------- Earnings per ordinary share 9 6.9p 9.9p 5.6p Adjusted earnings per ordinary share (excluding exceptional items) 9 6.9p 6.6p 5.3p Dividend per ordinary share 3.4p 3.4p 3.4p -------------------- (a) A summary of the significant adjustments to the profit for the financial year that would be required had United States generally accepted accounting principles been applied instead of those generally accepted in the United Kingdom is set out in Note 24 of Notes to the Accounts. 3PAGE Peek plc Group balance sheet at 31 December 1996 1995 (In thousands of British Notes pounds sterling) Net assets employed Fixed assets Tangible assets 10 14,220 14,701 Investments - - ------- ------- 14,220 14,701 Current assets Stocks 11 20,433 21,874 Debtors due within one year 12 48,173 44,898 Debtors due after more than one year 12 363 1,433 Cash and short term deposits 14,024 15,628 ------- ------- 82,993 83,833 Creditors: amounts due within one year 13 (48,821) (47,803) ------- ------- Net current assets 34,172 36,030 Total assets less current liabilities 48,392 50,731 Creditors: amounts due after more than one year 13 (18,173) (16,086) Provisions for liabilities and charges 14 Deferred taxation (1,128) (2,157) Other (139) (630) ------- ------- Net assets 28,952 31,858 ------- ------- Capital and reserves(a) Called up equity share capital 15 10,900 10,841 Called up non-equity share capital 15 25 25 Reserves (all equity) 16 18,027 20,992 ------- ------- Shareholders' funds 28,952 31,858 ------- ------- ____________________ (a) A summary of the significant adjustments to capital and reserves that would be required had United States generally accepted accounting principles been applied instead of those generally accepted in the United Kingdom is set out in Note 24 of Notes to the Accounts. 4PAGE Peek plc Consolidated cash flow statement for the year ended 31 December 1996 1995 1994 (In thousands Notes of British pounds sterling) Cash flow from operating activities 20 11,545 4,061 14,632 Returns on investments and servicing of finance 20 (550) (379) 128 Taxation (4,173) (4,954) (4,276) Capital expenditure and financial investment 20 (3,395) 489 (3,803) Acquisitions and disposals 20 (4,722) (5,070) (2,786) Equity dividends paid (3,952) (3,824) (3,789) ------ ------ ------ Cash (outflow)/inflow before financing (5,247) (9,677) 106 Financing 20 4,431 655 (682) ------ ------ ------ (Decrease)/increase in cash in the period (816) (9,022) (576) ------ ------ ------ Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash in the period (816) (9,022) (576) Cash (outflow)inflow from increase in debt and lease financing (4,090) (248) 911 ------ ------ ------ Change in net debt resulting from cash flows (4,906) (9,270) 335 Translation differences 1,213 (302) 570 ------ ------ ------ Movement in net (debt)/cash in the period (3,693) (9,572) 905 Net (debt)/cash at start of period (697) 8,875 7,970 ------ ------ ------ Net (debt)/cash at end of period(a) 21 (4,390) (697) 8,875 ------ ------ ------ ____________________ (a) The significant differences between the cashflow statement presented above and that required under United States generally accepted accounting principles are described in Note 24 of Notes to the Accounts. 5PAGE Peek plc Consolidated statement of total recognised gains and losses for the year ended 31 December 1996 1995 1994 (In thousands of British pounds sterling) Profit for the financial year 8,293 11,883 6,654 Currency translation differences on foreign currency net investments (2,738) 453 (306) Unrealised deficit on revaluation of property (659) - (195) ------ ------ ------ Total recognised gains and losses relating to the year 4,896 12,336 6,153 ------ ------ ------ Reconciliation of movements in consolidated shareholders' funds for the year ended 31 December 1996 1995 1994 (In thousands of British pounds sterling) Total recognised gains and losses relating to the year 4,896 12,336 6,153 Dividends (4,114) (4,088) (4,059) ------ ------ ------ 782 8,248 2,094 New share capital subscribed 493 647 696 Goodwill written off (4,181) (2,037) (2,156) Release of capital reserves - - (246) ------ ------ ------ Net (decrease)/increase in shareholders' funds (2,906) 6,858 388 Opening shareholders' funds 31,858 25,000 24,612 ------ ------ ------ Closing shareholders' funds 28,952 31,858 25,000 ------ ------ ------ 6PAGE Peek plc Notes to the Accounts 1 Accounting policies Basis of accounting The accounts are prepared under the historical cost convention, modified to include the revaluation of certain freehold and long leasehold land and buildings, in accordance with applicable accounting standards. Basis of consolidation The consolidated accounts incorporate the accounts of Peek plc and all its subsidiary undertakings to 31 December. The results of companies acquired during the year are included from the date control passes, and the results of companies disposed of during the year are included up to the date of disposal. Goodwill, which is the difference between the fair value of net assets acquired and the fair value of consideration paid, is written off to reserves in the year in which it arises. Undertakings, other than subsidiary undertakings, in which the group has an investment representing not less than 20% of the voting rights and over which it exerts significant influence, are treated as associated undertakings. The group accounts include the appropriate share of these undertakings' results and reserves based on audited accounts to 31 December. Depreciation Freehold land is not depreciated. Other assets are depreciated on a straight line basis to write off the cost less residual value over their estimated useful lives as follows: Freehold buildings 30-50 years Plant and equipment 3-10 years Leasehold property period of lease Motor vehicles 3-5 years Stocks Stocks are included in the accounts at the lower of cost (including manufacturing overheads, where appropriate) on a first in first out basis and net realisable value. Long-term contracts Profit on long-term contracts is taken as the work is carried out if the final outcome can be assessed with reasonable certainty. The profit included is calculated on a prudent basis to reflect the proportion of the work carried out at the year end by recording turnover and related costs (as defined in Stocks above) as contract activity progresses. Turnover is assessed individually for each contract to ensure it adequately reflects the value of work done. Revenues derived from variations on contracts are recognised only when they have been accepted by the customer. Full provision is made for losses on all contracts in the year in which they are first foreseen. 7PAGE Peek plc Notes to the Accounts continued Technology Expenditure on research and development is written off in the year in which it is incurred. Deferred taxation Provision is made under the liability method for all timing differences to the extent that they are expected to reverse in the foreseeable future without being replaced, at the rate at which it is estimated that they will become payable. No provision is made for the liability to corporation tax on capital gains which might arise if the freehold land and buildings were to be realised at their balance sheet values. Foreign exchange The accounts of overseas subsidiary undertakings are translated at the rate of exchange ruling at the balance sheet date. The exchange difference arising on the retranslation of opening net assets is taken directly to reserves. All other translation differences are taken to the profit and loss account with the exception of differences on foreign currency borrowings to the extent that they are used to finance or provide a hedge against group equity investments in foreign enterprises, which are taken directly to reserves together with the exchange differences on the carrying amount of the related investments. Pension costs Pension contributions for defined contribution schemes are charged to the profit and loss account as they fall due. Leases Assets held under finance leases and the related lease obligations are recorded in the balance sheet at the fair value of the leased assets at the inception of the lease. The rentals payable are apportioned between interest, which is charged in the profit and loss account, and capital, which reduces the outstanding lease obligation. Rental costs under operating leases are charged in the profit and loss account on a straight line basis over the lease term. Turnover Turnover represents the invoiced amount of goods sold and services provided during the year, net of value added tax, except in relation to material contracts where profit is recognised on a stage of completion basis. 8PAGE Peek plc Notes to the Accounts continued 2 Turnover and segmental analysis The group has two principal areas of activity, traffic and field data. It also operates within four main geographical markets, the United States and Canada, the United Kingdom, Continental Europe and Asia. Turnover, group profit on ordinary activities before taxation and net assets are analysed as follows: 1996 1995 1994 (In thousands of British pounds sterling) Area of activity Turnover Traffic 126,938 111,530 89,661 Field data 35,137 32,256 42,137 ------- ------- ------- 162,075 143,786 131,798 ------- ------- ------- Profit Segment profit: Traffic 11,520 10,507 6,185 Field data 1,766 1,963 3,982 ------- ------- ------- Operating profit 13,286 12,470 10,167 Non-operating exceptional items (6) 3,915 340 Net interest payable (729) (403) (288) ------- ------- ------- Profit on ordinary activities before taxation 12,551 15,982 10,219 ------- ------- ------- Net assets Segment net assets: Traffic 25,854 25,282 18,472 Field data 13,736 12,872 10,779 ------- ------- ------- 39,590 38,154 29,251 Unallocated net liabilities (10,638) (6,296) (4,251) ------- ------- ------- Net assets 28,952 31,858 25,000 ------- ------- ------- Geographical area Turnover External sales by destination: United States and Canada 48,792 49,690 52,435 United Kingdom 34,974 30,837 27,773 Continental Europe 58,700 48,346 45,737 Asia 12,827 9,899 3,393 Other 6,782 5,014 2,460 ------- ------- ------- 162,075 143,786 131,798 ------- ------- ------- External sales by origin: United States and Canada 49,410 47,161 50,553 United Kingdom 45,143 42,024 37,602 Continental Europe 56,182 45,695 42,577 Asia 11,340 8,906 1,066 ------- ------- ------- 162,075 143,786 131,798 ------- ------- ------- 9PAGE Peek plc Notes to the Accounts continued 1996 1995 1994 (In thousands of British pounds sterling) Geographical area Segment profit: United States and Canada (480) 2,269 2,635 United Kingdom 3,468 1,793 3,302 Continental Europe 11,324 8,215 5,312 Asia (1,026) 193 (1,082) ------- ------- ------- Operating profit 13,286 12,470 10,167 Non-operating exceptional items (6) 3,915 340 Net interest payable (729) (403) (288) ------- ------- ------- Profit on ordinary activities before taxation 12,551 15,982 10,219 ------- ------- ------- Net assets Segment net assets: United States and Canada 15,087 16,187 13,605 United Kingdom 8,582 8,600 8,850 Continental Europe 18,317 14,967 8,603 Asia (2,396) (1,600) (1,807) ------- ------- ------- 39,590 38,154 29,251 Unallocated net liabilities (10,638) (6,296) (4,251) ------- ------- ------- Net assets 28,952 31,858 25,000 ------- ------- ------- Unallocated net liabilities comprise those of non-operating companies together with all interest bearing assets and liabilities. 3 Operating profit The following charges are included: 1996 1995 1994 (In thousands of British pounds sterling) Depreciation Owned assets 2,869 2,527 2,175 Assets held under finance leases 311 234 64 Staff costs (see Note 4(d)) 42,856 40,549 37,028 Amounts charged by Ernst & Young: Audit fees 230 216 183 Other professional services 40 36 49 Hire of plant 650 553 532 Other operating lease rentals 3,321 2,883 2,567 10PAGE Peek plc Notes to the Accounts continued 4 Directors' emoluments and staff costs a) Directors' remuneration 1996 Perform- ance Basic related Long term Taxable Pension salary bonuses incentive benefits Fees conts Total (In thousands of British pounds sterling) K E Maud (Chairman) 184(a) 3 - 15 - - 202 The Viscount Slim (Deputy Chairman) - - - 6 21 - 27 G M Edge - - - - 18 - 18 A G Kellett 85 2 - 10 - 9 106 J G Sanger 132 2 24 13 - 15 186 A F Standley 188(a) 3 24 16 - - 231 D Walsh - - - - 18 - 18 --- --- --- --- --- --- --- 589 10 48 60 57 24 788 --- --- --- --- --- --- --- Of the amounts paid to Ken Maud, 136,000 British pounds sterling (1995 173,000 British pounds sterling) was paid by a subsidiary undertaking. 1995 Perform- ance Basic related Taxable Pension salary bonuses benefits Fees conts Total (In thousands of British pounds sterling) K E Maud (Chairman) 178(a) 63 18 - - 259 The Viscount Slim (Deputy Chairman) - - 4 20 - 24 G M Edge - - - 17 - 17 A G Kellett 72 28 10 - 10 120 P I Risberg - - - 17 - 17 J G Sanger 122 46 11 - 16 195 A F Standley 161(a) 65 11 - - 237 D Walsh - - - 17 - 17 --- --- --- --- --- --- 533 202 54 71 26 886 --- --- --- --- --- --- Of the amounts paid to Ken Maud, 173,000 British pounds sterling (1994 187,000 British pounds sterling) was paid by a subsidiary undertaking. (a) K E Maud and A F Standley have private pension plans to which the company makes no direct contribution having adjusted the base salaries of those directors accordingly. 11PAGE Peek plc Notes to the Accounts continued 1994 (In thousands of British pounds sterling) Fees 66 Salaries 513 Benefits 48 Performance related bonuses 279 Pension contributions 29 ----- 935 ----- The emoluments of the Chairman who is also the highest paid director are as follows: (In thousands of British pounds sterling) Salaries 183 Benefits 15 Performance related bonuses 98 Pension contributions 0 ----- 296 ----- Of this amount 187,000 British pounds sterling was paid by a subsidiary undertaking. The salaries and benefits of the executive directors are decided by the Remuneration Committee. The performance related bonuses are calculated by reference to formulae determined by the Compensation Committee. The formulae reflect improvements in profits and earnings per share in excess of the retail price index. Long term incentive plan As an incentive to focus on the long term performance of the group, certain directors and senior managers are eligible for a cash bonus based on the increase in the share price of Peek plc. This bonus is calculated by reference to the amount by which the mid market price of ordinary shares exceeds a base price for a given number of deemed shares. The bonus cannot be received unless the annual rate of earnings per share growth during the period starting with the financial year in which the notional grant was made, and ending with the financial year preceding the bonus date exceeds 15% compound. The bonus will be payable in the period between three and ten years after entrance to the scheme. In any one year each participant may only receive a bonus on the greater of 5,000 deemed shares or 25% of his holding. Both A F Standley and J G Sanger were granted 150,000 deemed shares at a value of 62p in 1991. A G Kellett was granted 75,000 deemed shares on 28 July 1994 at a value of 78.5p. 12PAGE Peek plc Notes to the Accounts continued b) Directors' emoluments (bandings) The number of directors of the Company, including the Chairman, whose emoluments, excluding pension contributions, fall within the following ranges were: 1996 1995 1994 Number Number Number 15,001-20,000 British pounds sterling 2 3 3 20,001-25,000 British pounds sterling - 1 1 25,001-30,000 British pounds sterling 1 - - 95,001-100,000 British pounds sterling 1 - - 105,001-110,000 British pounds sterling - 1 1 170,001-175,000 British pounds sterling 1 - - 175,001-180,000 British pounds sterling - 1 - 185,001-190,000 British pounds sterling - - 1 200,001-205,000 British pounds sterling 1 - - 230,001-235,000 British pounds sterling 1 - - 235,001-240,000 British pounds sterling - 1 1 255,001-260,000 British pounds sterling - 1 - 295,001-300,000 British pounds sterling - - 1 c) Directors' share options Full details of directors' shareholdings and options are recorded in the Company's Register of Directors' Interest which is open to inspection. Options granted under the Senior Executive Share Option plan are exercisable between three and ten years after the date of grant. Options granted under the Savings-related Share Option plan are exercisable five or seven years after the date of grant. 13PAGE Peek plc Notes to the Accounts continued c) Directors' share options (continued) The interests of directors in options to acquire shares in the Company are as follows: Directors' options At At 1 January 31 December Exercise Date of 1996 Granted Exercised 1996 price grant A G Kellett 50,000 - - 50,000(a) 77.33p 22.4.93 25,000 - - 25,000(a) 76.00p 11.10.93 10,000 - - 10,000(a) 90.50p 25.4.94 20,000 - - 20,000(a) 81.83p 1.5.95 1,498 - - 1,498(b) 82.90p 16.10.95 ------- ---- ---- ------- ------ -------- 106,498 - - 106,498 ------- ---- ---- ------- J G Sanger 50,000 - - 50,000(a) 68.00p 14.5.90 200,000 - - 200,000(a) 57.00p 16.10.90 8,975 - - 8,975(b) 49.30p 1.10.91 100,000 - - 100,000(a) 59.00p 24.2.92 100,000 - - 100,000(a) 77.33p 22.4.93 18,088 - - 18,088(b) 60.80p 7.10.93 50,000 - - 50,000(a) 76.00p 11.10.93 100,000 - - 100,000(a) 88.50p 10.10.94 1,498 - - 1,498(b) 82.90p 16.10.95 ------- ---- ---- ------- ------ -------- 628,561 - - 628,561 ------- ---- ---- ------- A F Standley 250,000 - - 250,000(a) 57.00p 16.10.90 13,539 - - 13,539(b) 49.30p 1.10.91 100,000 - - 100,000(a) 59.00p 24.2.92 100,000 - - 100,000(a) 77.33p 22.4.93 20,654 - - 20,654(b) 60.80p 7.10.93 50,000 - - 50,000(a) 76.00p 11.10.93 100,000 - - 100,000(a) 88.50p 10.10.94 ------- ---- ---- ------- ------ -------- 634,193 - - 634,193 ------- ---- ---- ------- (a) Senior Executive Share Option Plan (b) Savings-related Share Option Plan The middle market price of an ordinary share at the close of business on 31 December 1996 was 94p. In the year to 31 December 1996 the mid market price fluctuated between 131p and 84.5p. 14PAGE Peek plc Notes to the Accounts continued c) Directors' share options (continued) At At 1 January 31 December Exercise Date of 1995 Granted Exercised 1995 price grant A G Kellett 50,000 - - 50,000(a) 77.33p 22.4.93 25,000 - - 25,000(a) 76.00p 11.10.93 10,000 - - 10,000(a) 90.50p 24.4.94 - 20,000 - 20,000(a) 81.30p 1.5.95 - 1,498 - 1,498(b) 82.90p 16.10.95 ------- ------ ------ ------- ------ -------- 85,000 21,498 - 106,498 ------- ------ ------ ------- J G Sanger 50,000 - - 50,000(a) 68.00p 14.5.90 7,347 - (7,347)(b) - 49.00p 28.6.90 200,000 - - 200,000(a) 57.00p 16.10.90 8,975 - - 8,975(b) 49.30p 1.10.91 100,000 - - 100,000(a) 59.00p 24.4.92 100,000 - - 100,000(a) 77.33p 22.4.93 18,088 - - 18,088(b) 60.80p 7.10.93 50,000 - - 50,000(a) 76.00p 11.10.93 100,000 - - 100,000(a) 88.50p 10.10.94 - 1,498 - 1,498(b) 82.90p 16.10.95 ------- ------ ------ ------- ------ -------- 634,410 1,498 (7,347) 628,561 ------- ------ ------ ------- A F Standley 250,000 - - 250,000(a) 57.00p 16.10.90 13,539 - - 13,539(b) 49.30p 1.10.91 100,000 - - 100,000(a) 59.00p 24.4.92 100,000 - - 100,000(a) 77.33p 22.4.93 20,654 - - 20,654(b) 60.80p 7.10.93 50,000 - - 50,000(a) 76.00p 11.10.93 100,000 - - 100,000(a) 88.50p 10.10.94 ------- ------ ------ ------- ------ -------- 634,193 - - 634,193 ------- ------ ------ ------- (a) Senior Executive Share Option Plan (b) Savings-related Share Option Plan The mid market price on the date Mr Sanger exercised his options as above was 1.08 British pounds sterling. The middle market price of an ordinary share at the close of business on 31 December 1995 was 99p. In the year to 31 December 1995 the mid market price fluctuated between 112p and 73p. 15PAGE Peek plc Notes to the Accounts continued c) Directors' share options (continued) At At 1 January 31 December Exercise Date of 1994 Granted Exercised 1994 price grant A G Kellett 50,000 - - 50,000(a) 77.33p 22.4.93 25,000 - - 25,000(a) 76.00p 11.10.93 - 10,000 - 10,000(a) 90.50p 25.4.94 ------- ------- --- ------- ------ -------- 75,000 10,000 - 85,000 ------- ------- --- ------- J G Sanger 50,000 - - 50,000(a) 68.00p 14.5.90 7,347 - - 7,347(b) 49.00p 28.6.90 200,000 - - 200,000(a) 57.00p 16.10.90 8,975 - - 8,975(b) 49.30p 1.10.91 100,000 - - 100,000(a) 59.00p 24.4.92 100,000 - - 100,000(a) 77.33p 22.4.93 18,088 - - 18,088(b) 60.80p 7.10.93 50,000 - - 50,000(a) 76.00p 11.10.93 - 100,000 - 100,000(a) 88.50p 10.10.94 ------- ------- --- ------- ------ -------- 534,410 100,000 - 634,410 ------- ------- --- ------- A F Standley 250,000 - - 250,000(a) 57.00p 16.10.90 13,539 - - 13,539(b) 49.30p 1.10.91 100,000 - - 100,000(a) 59.00p 24.4.92 100,000 - - 100,000(a) 77.33p 22.4.93 20,654 - - 20,654(b) 60.80p 7.10.93 50,000 - - 50,000(a) 76.00p 11.10.93 - 100,000 - 100,000(a) 88.50p 10.10.94 ------- ------- --- ------- ------ -------- 534,193 100,000 - 634,193 ------- ------- --- ------- (a) Senior Executive Share Option Plan (b) Savings-related Share Option Plan No options were exercised or lapsed during the period. The middle market price of an ordinary share at the close of business on 31 December 1994 was 82p. d) Employees The average number of people employed by the group was: 1996 1995 1994 Number Number Number Production 1,007 989 947 Engineering 201 175 156 Sales and administration 529 458 420 ------ ------ ------ 1,737 1,622 1,523 ------ ------ ------ 16PAGE Peek plc Notes to the Accounts continued Their costs amounted to: 1996 1995 1994 (In thousands of British pounds sterling) Wages and salaries 37,646 35,537 32,336 Social security costs 3,951 3,826 3,539 Other pension costs 1,259 1,186 1,153 ------ ------ ------ 42,856 40,549 37,028 ------ ------ ------ 5 Net interest payable 1996 1995 1994 (In thousands of British pounds sterling) Interest receivable 400 712 605 Interest payable on: Bank overdrafts and loans repayable wholly within five years (1,046) (1,047) (858) Finance leases (83) (68) (35) ------ ------ ------ Net interest payable (729) (403) (288) ------ ------ ------ 6 Taxation 1996 1995 1994 (In thousands of British pounds sterling) United Kingdom taxation: Corporation tax at 33% 1,547 395 1,698 Adjustment in respect of prior years 324 (106) (672) Deferred taxation (175) 332 (125) ------- ------ ------ 1,696 621 901 Overseas taxation: Overseas taxes 2,562 3,478 2,554 ------- ------ ------ 4,258 4,099 3,455 ------- ------ ------ 17PAGE Peek plc Notes to the Accounts continued 7 Non-operating exceptional items 1996 1995 1994 (In thousands of British pounds sterling) Loss on disposal of businesses: Loss on the sale of Peek Verkehrssysteme GmbH in Germany (560) - - Transfer from goodwill reserve 554 - - Loss on sale of Edac Inc in Canada - - (42) Profit on disposal of shares of TrafficMaster plc - 3,915 382 ------- ------ ------ (6) 3,915 340 ------- ------ ------ In April 1996 the group sold Peek Verkehrssysteme GmbH, a German subsidiary company. Goodwill written off amounted to 384,000 British pounds sterling. Other associated disposal costs of 176,000 British pounds sterling were also incurred. The transfer from goodwill reserve is in respect of negative goodwill relating to a former subsidiary undertaking now written back. The exceptional item in 1995 relates to the group's disposal of its interest in TrafficMaster plc. In November 1994 the group disposed of Edac Inc, based in Scarborough, Ontario, whilst retaining a 25% interest in the proceeds from any subsequent sale of the business. 8 Dividends 1996 1995 1994 (In thousands of British pounds sterling) Ordinary 4,113 4,087 4,058 Preference 1 1 1 ----- ----- ----- 4,114 4,088 4,059 ----- ----- ----- The preference dividend relates to a non-equity interest. 18PAGE Peek plc Notes to the Accounts continued 9 Earnings per ordinary share 1996 1995 1994 The calculation of earnings per ordinary share is based upon the profit after taxation, preference dividends and minority interests, and on 120,743,220 ordinary shares (1995 119,901,965 ; 1994 119,166,319) being the weighted average number of ordinary shares in issue during the year 6.9p 9.9p 5.6p In order to improve comparability of the earnings per ordinary share calculation with earlier years, the earnings per ordinary share number is reported both before and after exceptional items Earnings per ordinary share (as above) 6.9p 9.9p 5.6p Non operating exceptional items - (3.3)p (0.3p) ---- ------ ------ Adjusted earnings per ordinary share (excluding exceptional items) 6.9p 6.6p 5.3p ---- ------ ------ 10 Tangible fixed assets 1996 Freehold land and Short Plant and Motor buildings leaseholds equipment vehicles Total (In thousands of British pounds sterling) Cost or valuation At 1 January 1996 5,761 1,148 15,365 1,395 23,669 Additions 37 256 2,926 367 3,586 Subsidiaries acquired - - 667 - 667 Disposals (2) (460) (249) (711) Revaluation adjustment (853) - - - (853) Exchange adjustment (194) (84) (1,790) (100) (2,168) ----- ----- ------ ------ ----- At 31 December 1996 4,751 1,318 16,708 1,413 24,190 ----- ----- ------ ------ ----- Depreciation At 1 January 1996 1,003 106 7,356 503 8,968 Charge for year 90 140 2,574 376 3,180 Disposals - (2) (425) (189) (616) Revaluation adjustment (194) - - - (194) Exchange adjustment (62) (20) (1,218) (68) (1,368) ----- ----- ------ ----- ------ At 31 December 1996 837 224 8,287 622 9,970 ----- ----- ------ ----- ------ Net book value At 31 December 1996 3,914 1,094 8,421 791 14,220 ----- ----- ------ ----- ------ At 1 January 1996 4,758 1,042 8,009 892 14,701 ----- ----- ------ ----- ------ 19PAGE Peek plc Notes to the Accounts continued Certain freehold properties were valued by external professional valuers, Chester-Ford, Chartered Surveyors, as at 31 December 1996. Property occupied by the company has been valued on the basis of existing use whereas investment property has been valued on the basis of open market value, (325,000 British pounds sterling). Both bases are in accordance with the Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors. These properties have been included in the balance sheet at their revalued amounts and the net deficit recognised in the year of 659,000 British pounds sterling has been deducted from the revaluation reserve established on the same properties following the previous valuation in December 1990. The historical cost of such properties is 2,158,000 British pounds sterling (1995 2,124,000 British pounds sterling). Included in the above amounts are assets with a net book value of 759,000 British pounds sterling (1995 884,000 British pounds sterling) held under finance leases. 1995 Freehold land and Short Plant and Motor buildings leaseholds equipment vehicles Total (In thousands of British pounds sterling) Cost or valuation At 1 January 1995 5,712 102 12,465 989 19,268 Reclassifications (246) 246 - - - Additions 270 785 3,487 380 4,922 Subsidiaries acquired - - 298 592 890 Disposals - (6) (1,560) (615) (2,181) Exchange adjustment 25 21 675 49 770 ----- ----- ------ ----- ------ At 31 December 1995 5,761 1,148 15,365 1,395 23,669 ----- ----- ------ ----- ------ Depreciation At 1 January 1995 928 15 6,180 338 7,461 Reclassifications (8) 8 - - - Charge for year 77 88 2,172 424 2,761 Disposals - (6) (1,462) (273) (1,741) Exchange adjustment 6 1 466 14 487 ----- ----- ------ ----- ------ At 31 December 1995 1,003 106 7,356 503 8,968 ----- ----- ------ ----- ------ Net book value At 31 December 1995 4,758 1,042 8,009 892 14,701 ----- ----- ------ ----- ------ At 1 January 1995 4,784 87 6,285 651 11,807 ----- ----- ------ ----- ------ 20PAGE Peek plc Notes to the Accounts continued Certain of the group's properties were valued at 31 December 1990 on an open market for existing use basis by an external professional valuer. These properties have been included in the balance sheet at their revalued amounts and the net surplus of 794,000 British pounds sterling has been added to reserves. The historical cost of such properties is 2,124,000 British pounds sterling (1994 2,124,000 British pounds sterling). Included in the above amounts are assets with a net book value of 884,000 British pounds sterling (1994 711,000 British pounds sterling) held under finance leases. 1994 Freehold land and Short Plant and Motor buildings leaseholds equipment vehicles Total (In thousands of British pounds sterling) Cost or valuation At 1 January 1994 5,667 362 15,418 641 22,088 Additions 390 16 3,046 385 3,837 Subsidiaries acquired - - 66 - 66 Disposals - (258) (5,768) (167) (6,193) Adjustment arising on revaluation (195) - - - (195) Exchange adjustment (150) (18) (297) 130 (335) ----- ----- ------ ---- ------ At 31 December 1994 5,712 102 12,465 989 19,268 ----- ----- ------ ---- ------ Depreciation At 1 January 1994 890 95 9,688 250 10,923 Charge for year 74 16 1,902 247 2,239 Disposals - (90) (5,268) (153) (5,511) Exchange adjustment (36) (6) (142) (6) (190) ----- ----- ------ ---- ------ At 31 December 1994 928 15 6,180 338 7,461 ----- ----- ------ ---- ------ Net book value At 31 December 1994 4,784 87 6,285 651 11,807 ----- ----- ------ ---- ------ At 1 January 1994 4,777 267 5,730 391 11,165 ----- ----- ------ ---- ------ Certain of the group's properties were valued at 31 December 1990 on an open market for existing use basis by an external professional valuer. These properties have been included in the balance sheet at their revalued amounts and the net surplus of 794,000 British pounds sterling has been added to reserves. The historical cost of such properties is 2,124,000 British pounds sterling (1993 2,124,000 British pounds sterling). Included in the above amounts are assets with a net book value of 711,000 British pounds sterling (1993 226,000 British pounds sterling) held under finance leases. 21PAGE Peek plc Notes to the Accounts continued 11 Stocks 1996 1995 (In thousands of British pounds sterling) Raw materials and consumables 10,068 13,076 Work in progress 6,086 4,826 Finished goods and goods for resale 4,279 3,972 ------ ------ 20,433 21,874 ------ ------ Balances on long term contracts included within work in progress shown above: Net cost less foreseeable losses 4,207 2,793 Less: applicable payments on account (1,341) (472) ------ ------ 2,866 2,321 ------ ------ 12 Debtors 1996 1995 (In thousands of British pounds sterling) Amounts due within one year: Trade debtors 42,148 38,905 Amounts recoverable on contracts 1,732 1,586 Other debtors 1,709 1,051 Prepayments and accrued income 1,232 1,657 Notes receivable 720 670 Advance corporation tax recoverable 632 1,029 ------ ------ 48,173 44,898 ------ ------ Amounts due after more than one year: Amounts recoverable on contracts - 204 Other debtors 45 1 Notes receivable 318 1,228 ------ ------ 363 1,433 ------ ------ Total debtors 48,536 46,331 ------ ------ The notes receivable after more than one year relate to deferred consideration arising on the disposal of the health and fitness division of Computer Instruments Corporation and of the shares of Edac Inc, all of which are due to be received within the next five years. 22PAGE Peek plc Notes to the Accounts continued 13 Creditors 1996 1995 (In thousands of British pounds sterling) Amounts due within one year: Trade creditors 20,906 19,088 Overdrafts 393 384 Corporation tax 4,157 3,889 Other taxes and social security costs 4,460 3,466 Other creditors 1,799 1,854 Finance leases 231 239 Accruals 12,788 14,806 Proposed dividend 4,087 4,077 ------ ------ 48,821 47,803 ------ ------ Amounts due after more than one year: Bank loans 17,290 15,129 Other creditors 383 384 Finance leases 500 573 ------ ------ 18,173 16,086 ------ ------ All bank loans are repayable between two and five years. The rate of interest payable varies and is based on the London interbank market rate. Obligations under finance leases 1996 1995 (In thousands of British pounds sterling) Amounts payable: Within one year 264 318 Within two to five years 572 646 After more than five years - 27 ------ ------ 836 991 Less finance charges allocated to future periods (105) (179) ------ ------ 731 812 ------ ------ 14 Provisions for liabilities and charges a) Deferred taxation Provided for Unprovided for 1996 1995 1996 1995 (In thousands of British pounds sterling) Excess capital allowances 268 133 46 269 Short term timing differences 860 2,024 - - ----- ----- -- --- 1,128 2,157 46 269 ----- ----- -- --- 23PAGE Peek plc Notes to the Accounts continued No provision has been made for deferred tax on the surplus on revaluation of land and buildings due to the existence of capital losses within the group. Furthermore, deferred tax on timing differences not expected to reverse is not provided. b) Other Movement on other provisions during the year ended 31 December is as follows: Arising from acquisitions 1996 1995 1994 (In thousands of British pounds sterling) Opening balance 630 1,487 2,045 Arising in year 99 - 614 Utilised in year (519) (526) (691) Released (60) (327) (425) Exchange adjustment (11) (4) (56) ----- ----- ----- Closing balance 139 630 1,487 ----- ----- ----- 15 Share capital a) Authorised 1996 1996 1995 No of No of 1996(1) shares 1995(1) shares Equity Ordinary shares of 9p each 13,500 150,000,000 13,500 150,000,000 Non-equity 2.8% net cumulative preference shares of 1 British pound sterling each 25 25,000 25 25,000 10% net redeemable cumulative preference shares of 1 British pound sterling each 100 100,000 100 100,000 Convertible redeemable preference shares of 9p each 135 1,500,000 135 1,500,000 ------ ------ 13,760 13,760 ------ ------ (1) Amounts in thousands of British pounds sterling. 24PAGE Peek plc Notes to the Accounts continued a) Authorised (continued) 1995 1995 1994 No of No of 1995(1) shares 1994(1) shares Equity Ordinary shares of 9p each 13,500 150,000,000 13,500 150,000,000 Non-equity 2.8% net cumulative preference shares of 1 British pound sterling each 25 25,000 25 25,000 10% net redeemable cumulative preference shares of 1 British pound sterling each 100 100,000 100 100,000 Convertible redeemable preference shares of 9p each 135 1,500,000 135 1,500,000 ------ ------ 13,760 13,760 ------ ------ (1) Amounts in thousands of British pounds sterling. b) Issued, called up and fully paid 1996 1996 1995 No of No of 1996(1) shares 1995(1) shares Equity Ordinary shares of 9p each 10,900 121,116,068 10,841 120,450,979 Non-equity 2.8% net cumulative preference shares of 1 British pound sterling each 25 25,000 25 25,000 10% net redeemable cumulative preference shares of 1 British pound sterling each - - - - Convertible redeemable preference shares of 9p each - - - - ------ ------ 10,925 10,866 ------ ------ (1) Amounts in thousands of British pounds sterling. 25PAGE Peek plc Notes to the Accounts continued b) Issued, called up and fully paid (continued) 1995 1995 1994 No of No of 1995(1) shares 1994(1) shares Equity Ordinary shares of 9p each 10,841 120,450,979 10,752 119,468,569 Non-equity 2.8% net cumulative preference shares of 1 British pound sterling each 25 25,000 25 25,000 10% net redeemable cumulative preference shares of 1 British pound sterling each - - - - Convertible redeemable preference shares of 9p each - - - - ------ ------ 10,866 10,777 ------ ------ (1) Amounts in thousands of British pounds sterling. c) Analysis of share capital The 2.8% net cumulative preference shares are non-redeemable and have a preferential right to return of capital on a winding up. The shares do not carry voting rights except where dividends due fall six months in arrears, in which instance there is one vote for each share held. The 10% net redeemable cumulative preference shares carry no voting rights other than those specified by the Board of directors at the time of grant. The convertible redeemable preference shares are redeemable at the option of the Company. Under the terms of the conversion, one ordinary share is receivable for each convertible redeemable preference share. d) Movement in share capital On 5 January 1996, 50,221 ordinary shares of 9p each were issued in connection with the scrip dividend offer made in respect of the interim dividend for the year ended 31 December 1995, the effective consideration being 52,330 British pounds sterling. On 5 July 1996, 77,277 ordinary shares of 9p each were issued in connection with the scrip dividend offer made in respect of the final dividend for the year ended 31 December 1995, the effective consideration being 98,915 British pounds sterling. On various dates during 1996, 439,403 and 98,188 ordinary shares of 9p each were issued in accordance with the terms of the Senior Executive Share Option Scheme and the Savings-related Share Option Scheme respectively, the consideration received being 341,367 British pounds sterling. 26PAGE Peek plc Notes to the Accounts continued d) Movement in share capital (continued) On 5 January 1995, 61,337 ordinary shares of 9p each were issued in connection with the scrip dividend offer made in respect of the interim dividend for the year ended 31 December 1994, the effective consideration being 50,358 British pounds sterling. On 5 July 1995, 233,291 ordinary shares of 9p each were issued in connection with the scrip dividend offer made in respect of the final dividend for the year ended 31 December 1994, the effective consideration being 191,065 British pounds sterling. On various dates during 1995, 609,412 and 78,370 ordinary shares of 9p each were issued in accordance with the terms of the Senior Executive Share Option Scheme and the Savings-related Share Option Scheme respectively,the consideration received being 405,327 British pounds sterling. e) Options granted at 31 December were: (i) Under the group's Senior Executive Share Option Scheme 1996 1996 1995 1995 No of Earliest No of Earliest ordinary date ordinary date Price shares exercisable shares exercisable 342.00p 3,332 1990 4,998 1990 68.00p 226,243 1993 370,323 1993 57.00p 450,000 1993 450,000 1993 65.00p 66,000 1994 76,000 1994 62.00p 10,000 1994 25,000 1994 59.00p 255,000 1995 340,000 1995 43.00p 132,000 1995 193,000 1995 77.33p 665,000 1996 805,000 1996 76.00p 475,000 1996 505,000 1996 90.50p 195,000 1997 205,000 1997 88.50p 445,000 1997 455,000 1997 81.83p 400,000 1998 430,000 1998 108.00p 365,000 1999 --------- --------- 3,687,575 3,859,321 --------- --------- (ii) Under the group's Savings-related Share Option Scheme 1996 1996 1995 1995 No of Earliest No of Earliest ordinary date ordinary date Price shares exercisable shares exercisable 49.00p 19,714 1995 19,714 1995 49.30p 161,084 1996 232,785 1996 60.80p 201,868 1998 222,862 1998 82.90p 234,849 2000 240,342 2000 --------- --------- 617,515 715,703 --------- --------- Options granted under the Senior Executive Share Option Plan are exercisable between the third and tenth anniversary of the date of grant. Options granted under the Savings-related Share Option Plan are exercisable five or seven years after the date of grant. 27PAGE Peek plc Notes to the Accounts continued 16 Reserves Capital Good- Redemp- Reval- Share will Capital tion uation Profit Total premium reserve reserve reserve reserve & loss reserves (In thousands of British pounds sterling) Balance at 1 January 1994 6,061 (16,842) 246 214 1,687 22,564 13,930 Exchange adjustment - - - - - (306) (306) Scrip dividend - - - - - 197 197 Premium on shares issued 404 - - - - - 404 Deferred considera- tion - - (246) - - - (246) Transfer to profit and loss reserve - - - - (698) 698 - Permanent diminution in value of - - - - (195) - (195) land and buildings Acquisition of TCT - (1,834) - - - - (1,834) Acquisitions - others - (322) - - - - (322) Retained profit for the year - - - - - 2,595 2,595 ----- ------- ---- --- ---- ------ ------ Balance at 31 December 1994 6,465 (18,998) - 214 794 25,748 14,223 28PAGE Peek plc Notes to the Accounts continued 16 Reserves (continued) Capital Good- Redemp- Reval- Share will Capital tion uation Profit Total premium reserve reserve reserve reserve & loss reserves (In thousands of British pounds sterling) Exchange adjustment - - - - - 453 453 Scrip dividend - - - - - 215 215 Premium on shares issued 343 - - - - - 343 Acquisition of GMTS - (2,037) - - - - (2,037) Retained profit for the year - - - - - 7,795 7,795 ----- ------- ---- --- ---- ------ ------ Balance at 31 December 1995 6,808 (21,035) - 214 794 34,211 20,992 Exchange adjustment - - - - - (2,738) (2,738) Scrip dividend - - - - - 140 140 Premium on shares issued 294 - - - - - 294 Goodwill arising on acquisitions - (4,011) - - - - (4,011) Transfer to profit and loss account - (170) - - - - (170) Freehold properties revaluation - - - - (659) - (659) Retained profit for the year - - - - - 4,179 4,179 ----- ------- ---- --- ----- ------ ------ Balance at 31 December 1996 7,102 (25,216) - 214 135 35,792 18,027 ----- ------- ---- --- ----- ------ ------ The goodwill written off to reserves net of that relating to disposals since 1 January 1987 amounts to: 1996 41,367,000 British pounds sterling; 1995 37,185,000 British pounds sterling; 1994 35,148,000 British pounds sterling. 29PAGE Peek plc Notes to the Accounts continued 17 Commitments a) Capital expenditure 1996 1995 (In thousands of British pounds sterling) Contracted for but not provided in the accounts 94 167 Authorised but not contracted for 37 9 ----- ----- 131 176 ----- ----- b) Operating leases Annual commitments under non-cancellable operating leases are as follows: 1996 1995 (In thousands of British pounds sterling) Operating leases expiring: Within one year 731 728 Within two to five years 1,624 1,870 Over five years 1,166 632 ----- ----- 3,521 3,230 ----- ----- 18 Pension commitments The group operates a defined contribution scheme in the UK. Total outstanding contributions at 31 December 1996 were 84,039 British pounds sterling (1995 60,005 British pounds sterling; 1994 21,000 British pounds sterling). The pension costs charged for the year ended 31 December 1996 were 503,000 British pounds sterling (1995 355,000 British pounds sterling; 1994 301,000 British pounds sterling). Pension arrangements in other countries in which Peek operate are in accordance with local requirements and practice. The total pension costs charged for 1996 for countries other than the UK were 756,000 British pounds sterling (1995 831,000 British pounds sterling; 1994 852,000 British pounds sterling) and the outstanding contributions at 31 December 1996 amounted to 161,663 British pounds sterling (1995 292,247 British pounds sterling; 1994 275,000 British pounds sterling). 19 Contingent liabilities The Company has given guarantees in respect of borrowings entered into by certain subsidiaries to the extent of 10,848,000 British pounds sterling (1995 10,692,000 British pounds sterling). 30PAGE Peek plc Notes to the Accounts continued 20 Cash flow statement a) Reconciliation of operating profit to operating cash flows: 1996 1995 1994 (In thousands of British pounds sterling) Operating profit 13,286 12,470 10,167 Profit on sale of fixed assets (96) (141) (7) Utilisation in year of provisions made on acquisitions (519) (526) (691) Release of unutilised provisions made on acquisitions (60) (327) (425) Write off of investment in associated undertaking - 141 - Depreciation 3,180 2,761 2,239 Increase in debtors (4,780) (11,752) (5,784) (Decrease)/Increase in creditors (1,199) 3,223 11,125 Decrease/(Increase) in stock 1,733 (1,788) (1,992) ------ ------- ------ Net cash inflow from operating activities 11,545 4,061 14,632 ------ ------- ------ b) Analysis of cash flows for headings shown net in the cashflow statement (i) Returns on investments and servicing of finance 1996 1995 1994 (In thousands of British pounds sterling) Interest received 349 682 938 Interest paid (801) (992) (791) Preference dividend paid (1) (1) (1) Interest element of finance lease rental payments (97) (68) (18) ------ ------- ------ Net cash (outflow)/inflow from returns on investment and servicing of finance (550) (379) 128 ------ ------- ------ (ii) Capital expenditure and financial investment 1996 1995 1994 (In thousands of British pounds sterling) Purchase of tangible fixed assets (3,586) (4,923) (3,837) Sale of fixed asset investments - 4,845 - Sale of plant and machinery 191 567 34 ------ ------- ------ Net cash (outflow)/inflow from capital expenditure and financial investment (3,395) 489 (3,803) ------ ------- ------ 31PAGE Peek plc Notes to the Accounts continued (iii) Acquisitions and disposals 1996 1995 1994 (In thousands of British pounds sterling) Purchase of subsidiary undertakings (4,979) (5,528) (3,710) Deferred consideration paid (331) (320) (637) Deferred consideration received 588 790 - Proceeds from sale of businesses - - 1,646 Purchase of investment - associated undertakings - (12) (85) ------ ------- ------ Net cash outflow from acquisitions and disposals (4,722) (5,070) (2,786) ------ ------- ------ (iv) Financing 1996 1995 1994 (In thousands of British pounds sterling) Issue of ordinary share capital 341 406 228 Debt due in more than one year New loan notes repayable in 2001 4,144 - (1,339) Net movement in finance lease obligations (54) 249 429 ------ ------- ------ Net cash inflow/(outflow) from financing 4,431 655 (682) ------ ------- ------ c) Purchase and sale of businesses: 1996 On 15 April 1996 the group acquired the trade and assets of Fleetlogic BV, based in the Netherlands. On 10 July 1996 the group acquired the trade and assets of Kemp & Lauritzen A/S, based in Denmark. The net assets of the businesses acquired were as follows: Fair value Book value Adjustments to group (In thousands of British pounds sterling) Net assets acquired: Fixed assets 667 - 667 Goodwill 4,011 - 4,011 Stocks 1,131 (150) 981 Creditors (299) (381) (680) ------ ------- ------ 5,510 (531) 4,979 ------ ------- ------ Satisfied by: Cash 4,979 The businesses acquired during 1996 generated an operating cash outflow of 98,000 British pounds sterling. Adjustments have been made to the book values of assets acquired in order to reflect Peek group accounting policies and to reflect their estimated realisable values. On 15 April 1996 the group disposed of Peek Verkehrssyteme GmbH, its traffic 32PAGE Peek plc Notes to the Accounts continued operation in Berlin. The company had net liabilities of 25,000 British pounds sterling on disposal satisfied by a payment made to the acquirers. On disposal the company had fixed assets of 20,000 British pounds sterling, inventory of 185,000 British pounds sterling and receivables of 45,000 British pounds sterling, with creditors of 275,000 British pounds sterling. 1995 On 17 February 1995 the group acquired the customer services division, the Bus Tracker operation and the products and systems business of GEC-Marconi Transport Systems Limited. On 2 February 1996 the group acquired the alarm monitor business and assets of Fisher-Rosemount Limited. The net assets of the business acquired were as follows: Fair value Book value Adjustments to group (In thousands of British pounds sterling) Fixed assets 890 - 890 Goodwill 2,037 - 2,037 Stocks 2,302 (698) 1,604 Debtors 3,122 (345) 2,777 Creditors (1,700) (80) (1,780) ------ ------ ------ Net assets 6,651 (1,123) 5,528 ------ ------ ------ Satisfied by: Cash 5,528 The businesses acquired during 1995 contributed 191,000 British pounds sterling to the group's net operating cashflows. 1994 Net assets of companies acquired during the year were comprised as follows: Fair value Book value Adjustments to group (In thousands of British pounds sterling) Fixed assets 66 - 66 Goodwill 2,156 - 2,156 Stocks 1,603 (123) 1,480 Debtors 1,231 - 1,231 Creditors (312) (248) (560) ----- ----- ----- 4,744 (371) 4,373 ----- ----- ----- The businesses acquired during the year utilised 419,000 British pounds sterling of the group's net operating cash flows and utilised 44,000 British pounds sterling for the group's investing activities. Businesses disposed of during the year contributed 541,000 British pounds sterling to the group's operating cashflows and utilised 58,000 British pounds sterling for investing activities. 33PAGE Peek plc Notes to the Accounts continued Sale of businesses (In thousands of British pounds sterling) 1994 Net assets disposed of Fixed assets 682 Stocks 841 Debtors 722 Creditors (716) Loss on disposal of Edac Inc (42) ----- 1,487 ----- Satisfied by Loan note payable within one year 80 Loan note payable after more than one year 710 Cash 697 ----- 1,487 ----- 21 Reconciliation of Net Debt At Exchange At start of year Cash flow movement end of year 1994 (In thousands of British pounds sterling) Cash at bank 23,996 (850) 1,140 24,286 Overdrafts (294) 274 - (20) Debt due after 1 year (15,597) 1,339 (569) (14,827) Finance leases (135) (428) (1) (564) ------- ------ ----- ------- 7,970 335 570 8,875 ------- ------ ----- ------- 1995 Cash at bank 24,286 (8,655) 26 15,628 Overdrafts (20) (364) - (384) Debt due after 1 year (14,827) - (331) (15,129) Finance leases (564) (248) - (812) ------- ------ ----- ------- 8,875 (9,267) (305) (697) ------- ------ ----- ------- 1996 Cash at bank 15,628 (807) (797) 14,024 Overdrafts (384) (9) - (393) Debt due after 1 year (15,129) (4,144) 1,983 (17,290) Finance leases (812) 54 27 (731) ------- ------ ----- ------- (697) (4,906) 1,213 (4,390) ------- ------ ----- ------- 34PAGE Peek plc Notes to the Accounts continued 22 List of principal participating interests Country of Holding of registration Participating ordinary (or incorporation) Interests share capital and operation Sichuan Modern Control System Peoples Republic Engineering Company Limited 41% of China 23 Companies Act 1985 These financial statements do not comprise the Company's statutory accounts within the meaning of the Companies Act. Statutory accounts for the years ended 31 December 1996, 1995 and 1994 have been delivered to the Registrar of Companies for England and Wales. The auditors' reports on such accounts were unqualified. 24 US GAAP Reconciliation Basis of operation The above accounts have been prepared in accordance with accounting principles generally accepted in the United Kingdom (UK GAAP) which differ in certain material respects from those generally accepted in the United States (US GAAP). The significant differences are described below. a) Goodwill Under UK GAAP, goodwill arising on acquisitions is eliminated directly against reserves. Amounts are transferred from reserves and charged through the profit and loss account when the related investments are sold or written down as a result of a permanent diminution in value. Under US GAAP, goodwill is capitalised and amortised by charges against income over a period not exceeding 40 years. The group periodically assesses the recoverability of unamortised goodwill based on anticipated future earnings. b) Deferred taxation Under UK GAAP, deferred taxes are accounted for to the extent that it is considered probable that a liability or asset will crystallise in the foreseeable future. Under US GAAP deferred taxes are accounted for on all temporary differences on a full provision basis, and a valuation allowance is established in respect of those deferred tax assets where it is more likely than not that some portion will remain unrealised. 35PAGE Peek plc Notes to the Accounts continued c) Revaluation of land and buildings UK GAAP allows the periodic revaluation of land and buildings. Professional valuations of some of the group's properties were carried out at December 1996 and previously at December 1990. The group calculates depreciation on the revalued basis from the date of the revaluation. Under US GAAP such revaluations would not be reflected in the accounts and depreciation would be based on historical cost. d) Foreign currency Under both UK GAAP and US GAAP, cumulative exchange differences arising on the retranslation of foreign enterprises are taken to reserves. On disposal these differences are not transferred to the profit and loss account under UK GAAP. Under US GAAP, when an investment in a foreign enterprise is sold, the cumulative exchange differences previously taken to reserves are included in the net profit for the period as part of the gain or loss on sale. e) Dividends Under UK GAAP, dividends and the related advance corporation tax (ACT) are recorded in the accounts for the financial year to which they relate. Under US GAAP, dividends are recorded in the period in which they are declared. f) Non-operating exceptional items Under US GAAP, the profit/(losses) arising on the disposal of businesses would have been included in the determination of operating profit. g) Earnings per share Earnings per share computed under US GAAP methodology do not differ significantly from those computed using UK GAAP methodology. However under US GAAP it is not permitted to report earnings per share excluding exceptional items. 36PAGE Peek plc Notes to the Accounts continued The following is a summary of the adjustments to net income for the years ended 31 December 1994, 1995 and 1996, and shareholders' equity as at 31 December 1995 and 1996, which would have been required if the accounts had been prepared in accordance with US GAAP: 1996 1995 1994 (In thousands of British pounds sterling) Profit for the financial year as reported in the consolidated profit and loss account 8,293 11,883 6,654 Adjustments Amortisation of goodwill (967) (921) (856) Deferred taxation methodology differences (46) (269) (231) Depreciation on revalued assets 16 16 20 Foreign currency cumulative movements (265) - 258 ------ ------ ----- Net income in accordance with US GAAP 7,031 10,709 5,845 ------ ------ ----- Earnings per share 5.8p 8.9p 4.9p 1996 1995 (In thousands of British pounds sterling) Capital and reserves as reported in the consolidated balance sheet 28,952 31,858 Adjustments Goodwill cost 40,812 37,185 amortisation (5,833) (4,904) Deferred taxation methodology differences (46) (269) Fixed assets cost (135) (794) amortisation 153 137 Dividends 2,820 2,820 ACT receivable 632 705 payable (705) (705) Corporation tax payable 73 - ------ ------ Shareholders' equity under US GAAP 66,723 66,033 ------ ------ 37PAGE Peek plc Notes to the Accounts continued h) Consolidated statement of cash flows The cashflow statements prepared under UK GAAP present substantially the same information as those prepared under US GAAP. There are differences, however, with regard to classification of items within the statements and as regards the definition of cash. Under UK GAAP, cashflows are presented separately for operating activities, returns on investments and servicing of finance, taxation, capital expenditure and financial investment, acquisitions and disposals, equity dividends paid, management of liquid resources and financing activities. US GAAP, however, requires only three categories of cash flow activity to be reported: operating, investing and financing. Cashflows from taxation and returns on investments and servicing of finance shown under UK GAAP would be included as operating activities under US GAAP. Cashflows from capital expenditure and financial investment, acquisitions and disposals shown separately under UK GAAP would be included as part of the investing activities under US GAAP. The payment of dividends would be included as a financing activity under US GAAP. Under US GAAP, cash includes cash equivalents with initial maturities of less than three months and excludes bank overdrafts. The categories of cash flow activity under US GAAP can be summarised as follows: 1996 1995 1994 (In thousands of British pounds sterling) Cash inflow/(outflow) from operating activities 6,822 (1,272) 10,484 Cash outflow from investing activities (8,117) (4,581) (6,589) Cash inflow/(outflow) from financing activities (3,611) (3,417) (3,560) ------ ------ ------ Movement in cash and cash equivalents (4,906) (9,270) 335 Effects of foreign exchange rate changes 1,213 (302) 570 Cash and cash equivalents at 1 January (697) 8,875 7,970 ------ ------ ------ Cash and cash equivalents at 31 December (4,390) (697) 8,875 ------ ------ ------ 38PAGE Peek plc Unaudited Accounts for the nine months ended 30 September 1997 PAGE Interim accounts Peek plc Unaudited consolidated profit and loss account for the nine months ended 30 September (In thousands of British pounds sterling) 1997 1996 Turnover Continuing operations Ongoing 79,572 101,673 Acquisitions - 1,591 ------- ------- 79,572 103,264 Discontinued operations 7,987 - ------- ------- 87,559 103,264 Cost of sales (66,950) (70,048) ------- ------- Gross profit 20,609 33,216 Net operating expenses: Selling and distribution (12,900) (13,920) Technology (6,320) (6,705) Administration (20,728) (11,275) ------- ------- (39,948) (31,900) Operating (loss)/profit Continuing operations Ongoing (18,845) 1,315 Acquisitions - 1 ------- ------- (18,845) 1,316 Discontinued operations (494) - ------- ------- (19,339) 1,316 Exceptional items Continuing activities - - Discontinued operations 781 (560) ------- ------- (Loss)/profit on ordinary activities before interest (18,558) 756 Net interest payable (557) (489) ------- ------- (Loss)/profit on ordinary activities before taxation (19,115) 267 Taxation (182) (281) ------- ------- Loss on ordinary activities after taxation (19,297) (14) Minority interest - - Dividends (402) (2,687) ------- ------- Retained loss (19,699) (2,701) ------- ------- Loss per ordinary share (15.9)p (0.0)p 2PAGE Peek plc Unaudited group consolidated balance sheet at 30 September (In thousands of British pounds sterling) 1997 Net assets employed Fixed assets Tangible assets 11,867 Current assets Stocks 18,612 Debtors due within one year 27,041 Debtors due after more than one year 400 Cash and short term deposits 10,766 ------- 56,819 Creditors: amounts due within one year (36,142) ------- Net current assets 20,677 Total assets less current liabilities 32,544 Creditors: amounts due after more than one year (17,600) Provisions for liabilities and charges Deferred taxation (769) Other (92) ------- Net assets 14,083 ------- Capital and reserves Called up equity share capital 11,013 Called up non-equity share capital 25 Reserves (all equity) 3,045 ------- Shareholders' funds 14,083 ------- 3PAGE Peek plc Unaudited consolidated cashflow statement for the nine months ended 30 September (In thousands of British pounds sterling) 1997 1996 Cash outflow from operating activities (6,999) (582) Returns on investments and servicing of finance (638) (427) Taxation (2,788) (3,303) Capital expenditure and financial investment (2,033) (2,780) Acquisitions and disposals 13,377 (4,450) Equity dividends paid (3,668) (3,952) ------- ------- Cash outflow before financing (2,749) (15,494) Financing (106) 163 ------- ------- Decrease in cash in the period (2,855) (15,331) Reconciliation of net cash flow to movement in net debt Decrease in cash in the period (2,855) (15,331) Cash inflow from increase in debt and lease financing 399 270 ------- ------- Change in net debt resulting from cash flows (2,456) (15,061) Translation differences (308) 280 ------- ------- Movement in net debt in the period (2,764) (14,781) Net debt at start of period (4,390) (697) ------- ------- Net debt at end of period (7,154) (15,478) ------- ------- Divested businesses In March 1997, the group disposed of Peek STM-Verkehrssysteme GmbH. In June 1997, Husky Computers Limited and Husky Computers Inc were sold. The results of these operations are included in the above interim accounts for the period within which they were a part of the group. 4PAGE Peek plc Unaudited notes to the Accounts 1 These interim accounts are unaudited, but in the opinion of management all adjustments needed to give a fair presentation (consisting of normal accruals) have been made. 2 Taxation for the nine months ended 30 September 1997 is based on the effective rate it is estimated will apply in the year ended 31 December 1997. No tax assets in respect of current year trading accounts have been recognised as recoverability is uncertain in the foreseeable future. 3 Accounting policies are as stated in the last annual accounts. 4 The results of the Husky group of companies are included up to 20 June 1997, the date control passed. 5 Exceptional items in 1997 are analysed as follows: (In thousands of British pounds sterling) Operating Termination costs in relation to the group's former Chairman, K E Maud (400) ----- Non-operating Gain on sale of Husky group of companies of 6,120,000 British pounds sterling offset by goodwill previously written off to reserves of 4,927,000 British pounds sterling. 1,193 Loss on sale of Peek-STM Verkehrssysteme GmbH including 400,000 British pounds sterling of goodwill previously written off (412) ----- 781 ----- 6 The interim dividend will be payable on 3 January 1998 to ordinary shareholders on the register on 12 November 1997. 5PAGE Peek plc Unaudited notes to the Accounts 7 Segmental analysis Unaudited Unaudited Audited 9 months 9 months 12 months to 30.09.97 to 30.09.96 to 31.12.96 Operating Operating Operating Turnover profit Turnover profit Turnover profit (In thousands of British pounds sterling) By activity Traffic 70,081 (18,855) 78,018 1,054 126,938 11,520 Field data 17,478 (84) 25,246 262 35,137 1,766 ------ ------- ------- ----- ------- ------ 87,559 (18,939) 103,264 1,316 162,075 13,286 Operating exceptional items (400) - - ------- ----- ------ (19,339) 1,316 13,286 Net interest payable (557) (489) (729) Non-operating exceptional items 781 (560) (6) ------- ----- ------ (Loss)/profit before taxation (19,115) 267 12,551 ------- ----- ------ 6PAGE Peek plc Unaudited notes to the Accounts continued 8 Unaudited US GAAP reconciliation (In thousands of British pounds sterling) 1997 1996 Loss for the nine months ended 30 September under UK GAAP (19,297) (14) Adjustments Amortization of goodwill (730) (717) Deferred taxation methodology differences - (202) Depreciation on revalued assets 2 12 Foreign currency cumulative movement 388 43 ------- ------- Net loss in accordance with US GAAP (19,637) (878) ------- ------- Loss per share (16.1)p (0.7)p 1997 Capital and reserves under UK GAAP 14,083 Adjustments Goodwill cost 35,485 amortisation (5,410) Deferred taxation methodology differences - Fixed assets cost (135) depreciation 117 Dividends and ACT - -------- Shareholders' equity under US GAAP 44,140 -------- Cashflow The categories of cash flow activity under US GAAP can be summarised as follows: 1997 1996 Cash outflow from operating activities (10,425) (4,312) Cash inflow/(outflow) from investing activities 11,344 (7,230) Cash outflow from financing activities (3,375) (3,519) ------- ------- Movement in cash and cash equivalents (2,456) (15,061) Effects of foreign exchange rate changes (308) 280 Cash and cash equivalents at 1 January (4,390) (697) ------- ------- Cash and cash equivalents at 30 September (7,154) (15,478) ------- ------- 7PAGE FORM 8-K/A Item 7. Financial Statements, Pro Forma Combined Condensed Financial Information, and Exhibits (b) Pro Forma Combined Condensed Financial Information The following unaudited pro forma combined condensed financial statements set forth the results of operations for the year ended September 27, 1997, as if the acquisition of Peek by the Company had occurred at the beginning of fiscal 1997, and the financial position as of September 27, 1997, as if the acquisition of Peek by the Company had occurred at September 27, 1997. Peek has a fiscal year which differs from the Company's fiscal year-end. The historical results of operations of Peek have been adjusted to conform to the Company's fiscal year-end for purposes of the pro forma combined condensed statement of operations. The historical results of operations and financial position of Peek have also been adjusted to exclude businesses divested and to conform with U.S. GAAP. Divested businesses include Peek STM-Verkehrssysteme GmbH, Husky Computers Limited, and Husky Computers Inc., sold by Peek prior to its acquisition by the Company, and Peek's Field Data business. Subsequent to the Company's acquisition of Peek, the Company reached an agreement with ONIX to sell Peek's Field Data business, effective November 6, 1997, for $19.1 million. The Company expects to receive payment from ONIX for the sale of the Field Data business in January 1998. In addition, the unaudited pro forma combined condensed financial statements set forth the results of operations and financial position as if the issuance of a $160.0 million promissory note to Thermo Electron and the sale of the Field Data business to ONIX had occurred at the beginning of fiscal 1997 for the pro forma combined condensed statement of operations and at September 27, 1997 for the pro forma combined condensed balance sheet. The acquisition has been accounted for using the purchase method of accounting. The pro forma results of operations are not necessarily indicative of future operations or the actual results that would have occurred had the acquisition of Peek been consummated at the beginning of fiscal 1997. The consolidated financial statements of Peek filed under part (a) of this item should be read in conjunction with the pro forma combined condensed financial information. 4PAGE THERMO POWER CORPORATION PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS Year Ended September 27, 1997 (Unaudited)
Historical Pro Forma ----------------------------------------------------- ------------------ Peek ------------------------------------------- Adjustments U.S. GAAP -------------------- Excluding Thermo U.K. Divested U.S. Divested Adjust- Power GAAP Businesses GAAP Businesses ments Combined -------- -------- ---------- -------- ----------- -------- -------- (In thousands except per share amounts) Revenues $121,046 $240,047 $(45,395) $ - $194,652 $ - $315,698 -------- -------- -------- -------- -------- -------- -------- Costs and Operating Expenses: Cost of revenues 99,154 171,211 (25,873) - 145,338 882 245,374 Selling, general, and administrative expenses 16,926 66,543 (14,372) 1,262 53,433 4,444 74,803 Research and development expenses 2,296 13,722 (3,601) - 10,121 - 12,417 Other nonrecurring income - (2,189) - (637) (2,826) - (2,826) -------- -------- -------- -------- -------- -------- -------- 118,376 249,287 (43,846) 625 206,066 5,326 329,768 -------- -------- -------- -------- -------- -------- -------- Operating Income (Loss) 2,670 (9,240) (1,549) (625) (11,414) (5,326) (14,070) Interest and Other Income (Expense), Net 1,864 (1,963) 22 - (1,941) (8,637) (8,714) -------- -------- -------- -------- -------- -------- -------- Income (Loss) Before Income Taxes and Minority Interest 4,534 (11,203) (1,527) (625) (13,355) (13,963) (22,784) Income Tax Provision (Benefit) 2,118 6,821 64 - 6,885 (11,471) (2,468) Minority Interest Expense 312 - - - - - 312 -------- -------- -------- -------- -------- -------- -------- Net Income (Loss) $ 2,104 $(18,024) $ (1,591) $ (625) $(20,240)$ (2,492)$(20,628) ======== ======== ======== ======== ======== ======== ======== Earnings (Loss) per Share $ .17 $ (1.69) ======== ======== 12,212 Weighted Average Shares 12,212 ======== ======== See notes to pro forma combined condensed financial information. 5PAGE THERMO POWER CORPORATION PRO FORMA COMBINED CONDENSED BALANCE SHEET September 27, 1997 (Unaudited) Historical Pro Forma ----------------------------------------------------- ----------------- Peek ------------------------------------------- Adjustments U.S. GAAP -------------------- Excluding Thermo U.K. Divested U.S. Divested Adjust- Power GAAP Businesses GAAP Businesses ments Combined -------- -------- ---------- -------- ----------- -------- -------- (In thousands) Assets Current Assets: Cash and short-term investments $ 28,518 $ 17,290 $ (2,111) $ - $ 15,179 $(4,536) $39,161 Accounts receivable 21,012 35,566 (3,414) - 32,152 - 53,164 Inventories and unbilled contract costs and fees 24,740 29,891 (3,058) - 26,833 882 52,455 Prepaid income taxes and other current assets 3,337 8,504 (506) - 7,998 19,100 30,435 -------- -------- -------- -------- -------- -------- -------- 77,607 91,251 (9,089) - 82,162 15,446 175,215 -------- -------- -------- -------- -------- -------- -------- Rental Assets, at Cost, Net 10,276 - - - - - 10,276 -------- -------- -------- -------- -------- -------- -------- Property, Plant, and Equipment, at Cost, Net 10,591 19,058 (1,134) 32 17,956 (2,605) 25,942 -------- -------- -------- -------- -------- -------- -------- Long-term Available-for- sale Investments 2,200 - - - - (2,200) - -------- -------- -------- -------- -------- -------- -------- Other Assets 236 - - - - - 236 -------- -------- -------- -------- -------- -------- -------- Cost in Excess of Net Assets of Acquired Companies 7,082 - (5,672) 48,300 42,628 107,725 157,435 -------- -------- -------- -------- -------- -------- -------- $107,992 $110,309 $(15,895) $ 48,332 $142,746 $118,366 $369,104 ======== ======== ======== ======== ======== ======== ======== 6PAGE THERMO POWER CORPORATION PRO FORMA COMBINED CONDENSED BALANCE SHEET (continued) September 27, 1997 (Unaudited) Historical Pro Forma ----------------------------------------------------- ----------------- Peek ------------------------------------------- Adjustments U.S. GAAP -------------------- Excluding Thermo U.K. Divested U.S. Divested Adjust- Power GAAP Businesses GAAP Businesses ments Combined -------- -------- ---------- -------- ----------- -------- -------- (In thousands) Liabilities and Shareholders' Investments Current Liabilities $ 22,899 $ 58,191 $ (3,102) $ - $ 55,089 $ 18,145 $ 96,133 -------- -------- -------- -------- -------- -------- -------- Deferred Income Taxes 114 1,235 - - 1,235 - 1,349 -------- -------- -------- -------- -------- -------- -------- Long-term Obligations 252 28,266 (1,623) - 26,643 160,000 186,895 -------- -------- -------- -------- -------- -------- -------- Common Stock of Subsidiary Subject to Redemption 18,059 - - - - - 18,059 -------- -------- -------- -------- -------- -------- -------- Shareholders' Investment 66,668 22,617 (11,170) 48,332 59,779 (59,779) 66,668 -------- -------- -------- -------- -------- -------- -------- $107,992 $110,309 $(15,895) $ 48,332 $142,746 $118,366 $369,104 ======== ======== ======== ======== ======== ======== ======== See notes to pro forma combined condensed financial information. 7PAGE FORM 8-K/A THERMO POWER CORPORATION NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION (Unaudited) Note 1 - Basis of Presentation The results of operations of Peek have been presented in the pro forma combined condensed statement of operations in accordance with U.K. generally accepted accounting principles (GAAP), adjusted to exclude divested businesses and to conform to U.S. GAAP. Divested businesses include businesses divested by Peek prior to its acquisition by the Company and Peek's Field Data business. Subsequent to the Company's acquisition of Peek, the Company reached an agreement with ONIX to sell Peek's Field Data business, effective November 6, 1997, for $19.1 million. The historical financial statements of Peek are denominated in British pounds sterling, and have been translated at the average exchange rate of 1.640 U.S. dollars per British pound sterling for the pro forma combined condensed statement of operations and the exchange rate of 1.606 U.S. dollars per British pound sterling for the pro forma combined condensed balance sheet at September 27, 1997. The allocation of the purchase price is based on an estimate of the fair market value of the net assets acquired and is subject to adjustment. To date, no information has been gathered that would cause the Company to believe that the final allocation of the purchase price will be materially different than the preliminary estimate. Note 2 - Pro Forma Adjustments to Pro Forma Combined Condensed Statement of Operations (In thousands, except in text) Year Ended September 27, 1997 ------------- Debit (Credit) Adjustments to Convert U.K. GAAP to U.S. GAAP --------------------------------------------- Selling, General, and Administrative Expenses Record amortization of cost in excess of net assets of acquired companies over 40 years, recorded to shareholders' investment under U.K. GAAP $1,262 ------ Other Nonrecurring Income Record gain on foreign businesses sold during the twelve months ended September 27, 1997, relating to the cumulative translation adjustment for those businesses, recorded to shareholders' investment under U.K. GAAP (637) ------ 8PAGE FORM 8-K/A THERMO POWER CORPORATION NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION (Unaudited) Note 2 - Pro Forma Adjustments to Pro Forma Combined Condensed Statement of Operations (In thousands, except in text) (continued) Year Ended September 27, 1997 ------------- Debit (Credit) Pro Forma Adjustments --------------------- Cost of Revenues Increase in the work-in-process and finished goods inventories of Peek to the estimated selling price, less the sum of the costs of disposal and a reasonable profit allowance for the Company's selling efforts $ 882 --------- Selling, General, and Administrative Expenses Service fee of 1.0% of the revenues of Peek for the twelve months ended September 27, 1997, for services provided under a services agreement between the Company and Thermo Electron 1,947 Amortization over 40 years of $150,353,000 of cost in excess of net assets of acquired companies created by the acquisition of Peek, net of amortization of cost in excess of net assets of acquired companies recorded in Peek's historical results of operations, as adjusted to conform to U.S. GAAP and for divested businesses 2,497 --------- 4,444 --------- Interest and Other Income (Expense), Net Decrease in interest income as a result of the use of cash and short-term investments to partially finance the acquisition of Peek, including $2.2 million of cash expended for the acquisition of Peek shares prior to September 27, 1997, calculated using the 90-day Commercial Paper Composite Rate plus 25 basis points, or 5.85% 394 Record interest income on the $19.1 million receivable from ONIX relating to the sale of the Field Data business, calculated using the 90-day Commercial Paper Composite Rate plus 25 basis points, or 5.85% (1,117) Increase in interest expense as a result of borrowing from Thermo Electron of $160.0 million to partially finance the acquisition of Peek, calculated using the 90-day Commercial Paper Composite Rate plus 25 basis points, or 5.85% 9,360 --------- 8,637 --------- 9PAGE FORM 8-K/A THERMO POWER CORPORATION NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION (continued) (Unaudited) Note 2 - Pro Forma Adjustments to Pro Forma Combined Condensed Statement of Operations (In thousands, except in text) (continued) Year Ended September 27, 1997 ------------- Debit (Credit) Pro Forma Adjustments (continued) --------------------- Income Tax Provision (Benefit) Income tax benefit associated with the adjustments above (excluding the amortization of cost in excess of net assets of acquired companies), calculated at the Company's statutory rate of 40% $ (4,586) Reverse income tax provision recorded in the historical results of operations of Peek for the quarter ended December 31, 1996, in recognition of Peek's pre-tax loss for the twelve months ended September 27, 1997, for which no tax benefit has been recorded (6,885) --------- (11,471) --------- 10PAGE FORM 8-K/A THERMO POWER CORPORATION NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION (continued) (Unaudited) Note 3 - Pro Forma Adjustments to Pro Forma Combined Condensed Balance Sheet (In thousands, except in text) September 27, 1997 -------------- Debit (Credit) Adjustments to Convert U.K. GAAP to U.S. GAAP --------------------------------------------- Property, Plant, and Equipment, at Cost, Net Reverse U.K. GAAP adjustments for periodic revaluation of land and buildings, net of related depreciation, to adjust carrying value to historical cost $ 32 --------- Cost in Excess of Net Assets of Acquired Companies Reclassify cost in excess of net assets of acquired companies, net of accumulated amortization, recorded to shareholders' investment under U.K. GAAP 48,300 --------- Shareholders' Investment Effect of adjustment to property, plant, and equipment, net (32) Effect of adjustment to cost in excess of net assets of acquired companies (48,300) --------- (48,332) --------- Pro Forma Adjustments --------------------- Cash and Short-term Investments Cash payments to acquire Peek (164,536) Proceeds from the issuance of note payable to Thermo Electron 160,000 --------- (4,536) --------- Inventories and Unbilled Contract Costs and Fees Increase in the work-in-process and finished goods inventories of Peek to the estimated selling price, less the sum of the costs of disposal and a reasonable profit allowance for the Company's selling efforts 882 --------- 11PAGE FORM 8-K/A THERMO POWER CORPORATION NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION (continued) (Unaudited) Note 3 - Pro Forma Adjustments to Pro Forma Combined Condensed Balance Sheet (In thousands, except in text) (continued) September 27, 1997 -------------- Debit (Credit) Pro Forma Adjustments (continued) --------------------- Prepaid Income Taxes and Other Current Assets Record receivable from ONIX for the sale of the Field Data business $ 19,100 --------- Property, Plant, and Equipment, at Cost, Net Write-down of buildings, machinery, and equipment to fair value (2,605) --------- Long-term Available-for-sale Investments Reclassification of the cost associated with the acquisition of Peek shares prior to September 27, 1997 to purchase price (2,200) --------- Cost in Excess of Net Assets of Acquired Companies Additional cost in excess of net assets of acquired companies relating to the acquisition of Peek 107,725 --------- Current Liabilities Estimated accrued acquisition expenses, primarily severance and abandoned-facility payments (14,062) Estimated accrued acquisition expenses for costs relating to the Peek acquisition, primarily investment banking fees and related transaction costs (3,083) Accrual for estimated tax liability relating to the sale of the Field Data business to ONIX (1,000) --------- (18,145) --------- Long-term Obligations Record borrowing from Thermo Electron to partially finance the acquisition of Peek (160,000) --------- Shareholders' Investment Elimination of Peek's equity accounts 59,779 --------- 12PAGE FORM 8-K/A 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, on this 20th day of January 1998. THERMO POWER CORPORATION Paul F. Kelleher ------------------------------ Paul F. Kelleher Chief Accounting Officer
EX-23 2 Exhibit 23 Consent of Independent Auditors ------------------------------- We consent to the incorporation by reference in the previously filed registration statements of Thermo Power Corporation of our report dated 11 March 1997, except for Note 24 - US GAAP reconciliation, as to which date is 16 January 1998, with respect to the consolidated financial statements of Peek plc as of 31 December 1996 and 1995, and for the three years ended 31 December 1996, which report appears in the Form 8-K/A of Thermo Power Corporation dated 19 January 1998, as follows: Registration Statement No. 33-19061 on Form S-8, Registration Statement No. 33-19062 on Form S-8, Registration Statement No. 33-25051 on Form S-8, Registration Statement No. 33-52814 on Form S-8, Registration Statement No. 33-87674 on Form S-8, Registration Statement No. 33-87686 on Form S-8, Registration Statement No. 33-87692 on Form S-8, and Registration Statement No. 33-65273 on Form S-8. ERNST & YOUNG Chartered accountants London, England 19 January 1998 -----END PRIVACY-ENHANCED MESSAGE-----