-----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, FwgOw2XaQ1M4+ZEzg+4Cz/EipvQXFtBcgBdBjsUQZMI8SUDSMV5UfLk2abUuSWuo 4Sf6BJcNktLy+8+yQls98w== 0000886346-97-000016.txt : 19970806 0000886346-97-000016.hdr.sgml : 19970806 ACCESSION NUMBER: 0000886346-97-000016 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970522 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970805 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: THERMO FIBERTEK INC CENTRAL INDEX KEY: 0000886346 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY (NO METALWORKING MACHINERY) [3550] IRS NUMBER: 521762325 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11406 FILM NUMBER: 97651801 BUSINESS ADDRESS: STREET 1: 81 WYMAN ST STREET 2: P O BOX 9046 CITY: WALTHAM STATE: MA ZIP: 02254 BUSINESS PHONE: 6176221000 MAIL ADDRESS: STREET 1: 81 WYMAN STREET CITY: WALTHAM STATE: MA ZIP: 02254 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ------------------------------------------- AMENDMENT NO. 2 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): May 22, 1997 ________________________________________ THERMO FIBERTEK INC. (Exact name of Registrant as specified in its charter) Delaware 1-11406 52-1762325 (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, Massachusetts 02254-9046 (Address of principal executive offices) (Zip Code) (617) 622-1000 (Registrant's telephone number including area code) PAGE FORM 8-K/A Item 2. Acquisition or Disposition of Assets On May 22, 1997, Thermo Fibertek Inc. (the "Company") acquired the stock-preparation business (the "Stock-preparation Business") of the Black Clawson Company and Subsidiaries ("Black Clawson") for $107,750,000 in cash. The purchase price is subject to a post-closing adjustment equal to the amount by which the net tangible assets of the Stock-preparation Business as of the closing date are greater or less than, as the case may be, certain target amounts set forth in the Asset Purchase Agreement dated as of May 22, 1997 between the Company, and certain of its affiliates, and Black Clawson, and certain of its affiliates (the "Agreement"). The purchase price includes $3.9 million in cash held in escrow by a third party for the subsequent acquisition of Black Clawson's French subsidiary. The Company has entered into a definitive agreement to acquire the French subsidiary and the parties to the agreement have taken all actions required to effect such acquisition except for certain procedural matters in France related to the transfer of the consideration for the business. Because these remaining matters are within the control of the Company, the financial statements filed with this Form 8-K/A include the French subsidiary. Such matters are expected to be completed in August 1997. The purchase price was based upon the Company's determination of the fair value of the Stock-preparation Business, and the terms of the Agreement were determined by arms-length negotiation among the parties. To finance the acquisition, the Company borrowed $110 million from Thermo Electron Corporation ("Thermo Electron"), the Company's majority stockholder. The indebtedness to Thermo Electron bears interest at a rate equal to the 90-day Commercial Paper Composite Rate plus 25 basis points, set at the beginning of each quarter, and is due January 5, 1999. The note was repaid in July 1997 with the net proceeds from the sale of $153 million principal amount of 4 1/2% subordinated convertible debentures due 2004. The Company has no present intention to use the plant, 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 Stock-preparation Business and its assets, corporate structure, capitalization, operations, properties, policies, management and personnel. After completion of this review, the Company may develop alternative plans or proposals, including mergers, transfers of a material amount of assets or other transactions or changes relating to the Stock-preparation Business. 2PAGE FORM 8-K/A Item 7. Financial Statements, Pro Forma Combined Condensed Financial Information and Exhibits (a) Consolidated Financial Statements of Business Acquired Attached hereto. 3PAGE STOCK-PREPARATION BUSINESS OF BLACK CLAWSON COMPANY AND SUBSIDIARIES Consolidated Financial Statements For the Years Ended March 31, 1997 and 1996 1PAGE Report of Independent Public Accountants To the Board of Directors of Black Clawson Company and Subsidiaries: We have audited the accompanying consolidated balance sheet of the stock-preparation business of Black Clawson Company and Subsidiaries (collectively referred to as the Company) as of March 31, 1997 and 1996, and the related consolidated statements of income, shareholders' investment, and cash flows for each of the two years in the period ended March 31, 1997. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with 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 amounts 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 financial position of the stock-preparation business of Black Clawson Company and Subsidiaries as of March 31, 1997 and 1996, and the results of their operations and their cash flows for each of the two years in the period ended March 31, 1997, in conformity with generally accepted accounting principles. Arthur Andersen LLP Boston, Massachusetts August 4, 1997 2PAGE Stock-preparation Business of Black Clawson Company and Subsidiaries Consolidated Statement of Income Year Ended March 31, -------------------- (In thousands) 1997 1996 ------------------------------------------------------------------------ Revenues $ 98,427 $103,728 -------- -------- Costs and Operating Expenses: Cost of revenues 71,720 77,568 Selling, general, and administrative expenses (Note 5) 22,383 20,327 Research and development expenses 2,109 2,116 -------- -------- 96,212 100,011 -------- -------- Operating Income 2,215 3,717 Interest Income 125 83 Interest Expense (251) (340) Other Income, Net 292 247 -------- -------- Income Before Provision for Income Taxes 2,381 3,707 Provision for Income Taxes (Note 3) 863 1,520 -------- -------- Net Income $ 1,518 $ 2,187 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 3PAGE Stock-preparation Business of Black Clawson Company and Subsidiaries Consolidated Balance Sheet March 31, March 31, (In thousands) 1997 1996 ------------------------------------------------------------------------ Assets Current Assets: Cash $ 695 $ 1,896 Accounts receivable, less allowances of $1,462 and $1,157 19,686 21,183 Unbilled contract costs and fees 3,536 264 Inventories 13,082 13,339 Prepaid income taxes (Note 3) 2,084 1,766 Other current assets 702 799 -------- -------- 39,785 39,247 -------- -------- Property, Plant, and Equipment, at Cost, Net 5,048 5,235 -------- -------- Other Assets 840 1,678 -------- -------- $ 45,673 $ 46,160 ======== ======== Liabilities and Shareholder's Investment Current Liabilities: Current maturities of long-term obligations (Note 4) $ 1,051 $ 1,329 Accounts payable 14,979 20,044 Accrued payroll and employee benefits 1,038 1,140 Billings in excess of contract costs and fees 676 787 Customer deposits 3,353 3,204 Accrued warranty costs 1,447 1,835 Other accrued expenses 2,650 3,582 -------- -------- 25,194 31,921 -------- -------- Deferred Income Taxes and Other Deferred Items (Note 3) 652 584 -------- -------- Long-term Obligations (Note 4) 3,445 4,773 -------- -------- Commitments (Note 6) Shareholder's Investment (Note 9): Parent company investment 15,733 9,076 Cumulative translation adjustment 649 (194) -------- -------- 16,382 8,882 -------- -------- $ 45,673 $ 46,160 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 4PAGE Stock-preparation Business of Black Clawson Company and Subsidiaries Consolidated Statement of Cash Flows Year Ended March 31, -------------------- (In thousands) 1997 1996 ----------------------------------------------------------------------- Operating Activities: Net income $ 1,518 $ 2,187 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,008 853 Provision for losses on accounts receivable 305 768 Deferred income tax benefit (162) (196) Other noncash items 250 285 Changes in current accounts: Accounts receivable 1,719 (6,523) Inventories and unbilled contract costs and fees (2,604) (1,258) Other current assets (219) (634) Accounts payable (5,116) 8,452 Other current liabilities (1,676) 4,356 -------- -------- Net cash provided by (used in) operating activities (4,977) 8,290 -------- -------- Investing Activities: Purchases of property, plant, and equipment (748) (1,521) Other 644 245 -------- -------- Net cash used in investing activities (104) (1,276) -------- -------- Financing Activities: Transfers from (to) parent company 5,139 (2,493) Repayment of long-term obligations (1,082) (2,809) -------- -------- Net cash provided by (used in) financing activities 4,057 (5,302) -------- -------- Exchange Rate Effect on Cash (177) 156 -------- -------- Increase (Decrease) in Cash (1,201) 1,868 Cash at Beginning of Year 1,896 28 -------- -------- Cash at End of Year $ 695 $ 1,896 ======== ======== Cash Paid For: Interest $ 45 $ 97 Income taxes $ 1,054 $ 1,686 The accompanying notes are an integral part of these consolidated financial statements. 5PAGE Stock-preparation Business of Black Clawson Company and Subsidiaries Consolidated Statement of Shareholder's Investment Year Ended March 31, -------------------- (In thousands) 1997 1996 ----------------------------------------------------------------------- Net Parent Company Investment Balance at beginning of year $ 9,076 $ 9,382 Net income 1,518 2,187 Transfers from (to) parent company 5,139 (2,493) ------- ------- Balance at end of year 15,733 9,076 ------- ------- Cumulative Translation Adjustment Balance at beginning of year (194) - Translation adjustment 843 (194) ------- ------- Balance at end of year 649 (194) ------- ------- Total Shareholder's Investment $16,382 $ 8,882 ======= ======= The accompanying notes are an integral part of these consolidated financial statements. 6PAGE Stock-preparation Business of Black Clawson Company and Subsidiaries Notes to Consolidated Financial Statements 1. Nature of Operations and Summary of Significant Accounting Policies Basis of Presentation and Nature of Operations The Stock-preparation Business (the Company) consisted of four wholly owned subsidiaries and one division of the Black Clawson Company and Subsidiaries (Black Clawson). The Company's principal products include recycling equipment used in processing fiber for the manufacture of "brown paper" such as that used for corrugated boxes. On May 22, 1997, Thermo Fibertek Inc. (Thermo Fibertek), an 86%-owned subsidiary of Thermo Electron Corporation (Thermo Electron), purchased the assets, subject to certain liabilities, of the Company for $107.8 million in cash, subject to a post-closing adjustment (Note 9). The purchase price includes $3.9 million in cash held in escrow by a third party for the subsequent acquisition of Black Clawson's French subsidiary. The Company has entered into a definitive agreement to acquire the French subsidiary and the parties to the agreement have taken all actions required to effect such acquisition except for certain procedural matters in France related to the transfer of the consideration for the business. Because these remaining matters are within the control of the Company, the financial statements filed with this Form 8-K/A include the French subsidiary. Such matters are expected to be completed in August 1997. Principles of Consolidation The accompanying financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Fiscal Year The Company's fiscal year end is March 31. References to 1997 and 1996 are for the fiscal years ended March 31, 1997 and 1996. The Company's European operations, which include operations in the United Kingdom and France, have fiscal years ending on December 31 to allow for sufficient time for the Company to receive financial statements. 7PAGE Stock-preparation Business of Black Clawson Company and Subsidiaries Notes to Consolidated Financial Statements 1. Nature of Operations and Summary of Significant Accounting Policies (continued) Revenue Recognition The Company generally recognizes revenues upon shipment of its products. The Company provides a reserve for its estimate of warranty costs at the time of shipment. Revenues and profits on long-term contracts are recognized using the percentage-of-completion method. Revenues recorded under the percentage-of-completion method were $30,792,000 in 1997 and $32,571,000 in 1996. The percentage of completion is determined by relating the actual costs incurred to date to management's estimate of total costs to be incurred on each contract. If a loss is indicated on any contract in process, a provision is made currently for the entire loss. The Company's contracts generally provide for billing of customers upon the attainment of certain milestones specified in each contract. Revenues earned on contracts in process in excess of billings are classified as unbilled contract costs and fees, and amounts billed in excess of revenues are classified as billings in excess of contract costs and fees in the accompanying balance sheet. There are no significant amounts included in the accompanying balance sheet that are not expected to be recovered from existing contracts at one year, including amounts that are billed but not paid under retainage provisions. Income Taxes The Company's domestic operations are included in the consolidated income tax returns filed by Black Clawson. In accordance with Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," the Company recognizes deferred income taxes based on the expected future tax consequences of differences between the financial statement basis and the tax basis of assets and liabilities calculated using enacted tax rates in effect for the year in which the differences are expected to be reflected in the tax return. Inventories Work-in-process inventory is stated on a first-in, first-out basis, which approximates actual cost, and is not in excess of market. All other inventories are stated at the lower of average cost or market value and include materials, labor, and manufacturing overhead. The components of inventories are as follows: (In thousands) 1997 1996 ----------------------------------------------------------------------- Raw materials and supplies $ 2,024 $ 2,471 Work in process 4,190 4,760 Finished goods 6,868 6,108 ------- ------- $13,082 $13,339 ======= ======= 8PAGE Stock-preparation Business of Black Clawson Company and Subsidiaries Notes to Consolidated Financial Statements 1. Nature of Operations and Summary of Significant Accounting Policies (continued) Property, Plant, and Equipment The costs of additions and improvements are capitalized, while maintenance and repairs are charged to expense as incurred. The Company provides for depreciation and amortization using the straight-line and declining balance methods over the estimated useful lives of the property as follows: buildings, 15 to 30 years; machinery and equipment, 3 to 10 years; and drawings and patterns, 5 to 7 years. Property, plant, and equipment consists of the following: (In thousands) 1997 1996 ---------------------------------------------------------------------- Land and buildings $ 3,671 $ 3,773 Machinery and equipment 8,507 7,965 Drawings and patterns 1,988 1,190 Construction in progress - 815 ------- ------- 14,166 13,743 Less: Accumulated depreciation and amortization 9,118 8,508 ------- ------- $ 5,048 $ 5,235 ======= ======= Other Assets Other assets in the accompanying balance sheet includes the cost of patents that are amortized using the straight-line method over an estimated useful life of 10 years. These assets were $523,000 and $685,000, net of accumulated amortization of $1,383,000 and $1,256,000, at year-end 1997 and 1996, respectively. Foreign Currency All assets and liabilities of the Company's foreign subsidiaries are translated at year-end exchange rates, and revenues and expenses are translated at average exchange rates for the year, in accordance with SFAS No. 52, "Foreign Currency Translation." Resulting translation adjustments are reflected as a separate component of shareholder's investment titled "Cumulative translation adjustment." Foreign currency transaction gains and losses are included in the accompanying statement of income and are not material for the two years presented. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 9PAGE Stock-preparation Business of Black Clawson Company and Subsidiaries Notes to Consolidated Financial Statements 2. Employee Benefit Plans Defined Benefit Pension Plan and Postretirement Benefit Plan The Company participates in a Black Clawson-sponsored defined benefit retirement plan covering substantially all non-union employees. Additionally, substantially all union employees are covered either by one of these plans or a plan not controlled or administered by Black Clawson or the Company. Benefits are based on years of service and average final compensation. For these plans, the Company was charged $363,000 and $349,000 in 1997 and 1996, respectively. In addition, the Company participates in a domestic postretirement benefit plan of Black Clawson that provides postretirement medical and other retirement benefits to current retirees and their spouses, as well as certain current full time employees and their spouses upon their retirement. In most cases, employees must have at least 10 years of service prior to retirement in order to be eligible to participate in the plan at age 65. In addition to medical coverage, the plan provides dental, vision, and drug benefits as well as life insurance to a small group of retirees. The plan provides the retiree and spouse with a fixed sum of money per month with which to purchase postretirement medical insurance. For this plan, the Company was charged $389,000 and $419,000 in 1997 and 1996, respectively. 10PAGE Stock-preparation Business of Black Clawson Company and Subsidiaries Notes to Consolidated Financial Statements 3. Income Taxes The components of income before provision for income taxes in the accompanying statement of income are as follows: (In thousands) 1997 1996 ---------------------------------------------------------------------- Domestic $ (841) $2,186 Foreign 3,222 1,521 ------ ------ $2,381 $3,707 ====== ====== The components of the provision for income taxes in the accompanying statement of income are as follows: (In thousands) 1997 1996 ---------------------------------------------------------------------- Currently payable (receivable): Federal $ (129) $ 911 Foreign 1,110 424 State 44 381 ------ ------ 1,025 1,716 ------ ------ Prepaid, net: Federal (126) (152) State (36) (44) ------ ------ (162) (196) ------ ------ $ 863 $1,520 ====== ====== The provision for income taxes in the accompanying statement of income differs from the provision calculated by applying the statutory federal income tax rate of 34% to income before provision for income taxes due to the following: (In thousands) 1997 1996 ---------------------------------------------------------------------- Provision for income taxes at statutory rate $ 810 $1,260 Increases resulting from: State income taxes, net of federal tax 5 222 Foreign tax rate differential 14 3 Nondeductible expenses 34 35 ------ ------ $ 863 $1,520 ====== ====== 11PAGE Stock-preparation Business of Black Clawson Company and Subsidiaries Notes to Consolidated Financial Statements 3. Income Taxes (continued) Prepaid income taxes and deferred income taxes in the accompanying balance sheet consist of the following: (In thousands) 1997 1996 ---------------------------------------------------------------------- Prepaid income taxes: Reserves and accruals $ 433 $ 531 Inventory reserves and basis difference 1,555 1,136 Accrued compensation 96 99 ------ ------ $2,084 $1,766 ====== ====== Deferred income taxes, net: Depreciation $ 392 $ 304 ====== ====== A provision has not been made for U.S. or additional foreign taxes on $8 million of undistributed earnings of foreign subsidiaries that could be subject to tax if remitted to the U.S. because the Company currently plans to keep these amounts permanently reinvested overseas. The Company believes that any additional U.S. tax liability due upon remittance of such earnings would be immaterial due to available U.S. foreign tax credits. 4. Short- and Long-term Obligations The Company's French subsidiary, Black Clawson - Europe, filed for protection under French bankruptcy statutes in August 1990. A formal plan of reorganization was accepted by a French court in May 1991, under which creditors accepting the plan of reorganization were to be paid 70% of the amount owed to them over a seven-year period commencing March 1, 1992 and ending March 1, 1998, and creditors rejecting the plan were to be paid the full amount owed to them over a seven-year period commencing March 1, 1993 and ending March 1, 1999. Amounts included in the accompanying balance sheet related to these obligations were current maturities of long-term obligations of $1,051,000 and $972,000 in 1997 and 1996, respectively, and long-term obligations of $3,445,000 and $4,773,000 in 1997 and 1996, respectively. In connection with the acquisition of the Company on May 22, 1997, all remaining liabilities under this plan of reorganization were paid to the Company's creditors, and Black Clawson - Europe emerged from bankruptcy. 12PAGE Stock-preparation Business of Black Clawson Company and Subsidiaries Notes to Consolidated Financial Statements 4. Short- and Long-term Obligations (continued) In December 1988, the Company borrowed 14 million French Francs from a syndication of banks. This debt had a maturity date of December 1996, and accrued interest at the Paris interbank offering rate plus 2%. The amount outstanding under this borrowing at March 31, 1996 was $357,000 and was included in current maturities of long-term obligations in the accompanying balance sheet. The Company repaid this obligation in fiscal 1997. A significant portion of the Company's accounts receivable and inventory was used to collateralize the debt of Black Clawson in both 1997 and 1996 based upon a formula established by Black Clawson's bank. 5. Related Party Transactions Black Clawson provides certain services to the Company, which include legal advice and services, risk management, personnel administration, tax advice and preparation of tax returns, and certain financial and other services. For these services, the Company was charged $3,757,000 and $3,415,000 in 1997 and 1996, respectively. For additional items such as employee benefit plans, insurance coverage, and other identifiable costs, Black Clawson charged the Company based upon costs attributable to the Company. The Company had revenues from SBCCS Constructors Joint Venture, a 25%-owned general partnership interest of Black Clawson, of $14,718,000 in 1996. The Company had no revenues from this joint venture in 1997. 6. Commitments Operating Leases The Company leases portions of its office and operating facilities under various noncancellable operating lease arrangements expiring at various dates through 2000. The accompanying statement of income includes expenses from operating leases of $1,422,000 and $1,593,000 in 1997 and 1996, respectively. The future minimum payments due under noncancellable operating leases as of March 31, 1997, are $960,000 in 1998; $214,000 in 1999; and $50,000 in 2000. Total future minimum lease payments are $1,224,000. 13PAGE Stock-preparation Business of Black Clawson Company and Subsidiaries Notes to Consolidated Financial Statements 7. Fair Value of Financial Instruments The Company's financial instruments consist mainly of cash and cash equivalents, accounts receivable, current maturities of long-term obligations, accounts payable, long-term obligations, and forward exchange contracts. The carrying amount of these financial instruments, with the exception of current maturities of long-term obligations, long-term obligations, and forward exchange contracts, approximate fair value due to their short-term nature. The Company's current maturities of long-term obligations and long-term obligations are obligations of the Company's French subsidiary which was operating under a formal plan of reorganization under French bankruptcy statutes during 1997 and 1996 (Note 4). Since the Company was unable to borrow funds from a third party in an arms-length transaction, the fair value of these obligations is not estimable. On May 22, 1997, all long-term obligations were repaid by the Company. The Company enters into forward exchange contracts to hedge certain firm purchase and sale commitments denominated in currencies other than its subsidiaries' local currencies, principally U.S. dollars, British pounds sterling, and French francs. The purpose of the Company's foreign currency hedging activities is to protect the Company's local currency cash flows related to these commitments from fluctuations in foreign exchange rates. The amounts of such forward exchange contracts at year-end 1997 and 1996 were $215,000 and $1,120,000, respectively. The fair value of the Company's forward exchange contracts was a receivable of $195,000 and $1,113,000 in 1997 and 1996, respectively. The fair value of forward exchange contracts is the estimated amount that the Company would receive upon termination of the contract, taking into account the change in foreign exchange rates. 14PAGE Stock-preparation Business of Black Clawson Company and Subsidiaries Notes to Consolidated Financial Statements 8. Geographical Information The Company is engaged in one business segment: the design and manufacture of processing machinery for paper-recycling. The following table shows data for the Company by geographic area. (In thousands) 1997 1996 ------------------------------------------------------------------------ Revenues: United States $ 61,213 $ 68,059 United Kingdom 24,304 23,073 France 18,685 15,555 Other 213 - Transfers among geographic areas (a) (5,988) (2,959) -------- -------- $ 98,427 $103,728 ======== ======== Income before provision for income taxes: United States $ (24) $ 3,360 United Kingdom 2,490 1,097 France 655 434 Other (906) (1,174) -------- -------- Operating income 2,215 3,717 Interest and other income (expense), net 166 (10) -------- -------- $ 2,381 $ 3,707 ======== ======== Identifiable assets: United States $ 25,082 $ 24,900 United Kingdom 13,467 10,935 France 6,693 10,325 Other 431 - -------- -------- $ 45,673 $ 46,160 ======== ======== Export revenues included in United States revenues above (b) $ 14,269 $ 5,517 ======== ======== (a) Transfers among geographic areas are accounted for at prices that are representative of transactions with unaffiliated parties. (b) In general, export sales are denominated in U.S. dollars. 15PAGE Stock-preparation Business of Black Clawson Company and Subsidiaries Notes to Consolidated Financial Statements 9. Subsequent Event On May 22, 1997, Thermo Fibertek Inc. acquired the assets, subject to certain liabilities, of the Company for $107.8 million in cash, subject to a post-closing adjustment. The purchase price includes $3.9 million in cash held in escrow by a third party for the subsequent acquisition of the Company's French subsidiary. The Company has entered into a definitive agreement to acquire the French subsidiary and the parties to the agreement have taken all actions required to effect such acquisition except for certain procedural matters in France related to the transfer of the consideration for the business. Because these remaining matters are within the control of the Company, the financial statements filed with this Form 8-K/A include the French subsidiary. Such matters are expected to be completed in August 1997. 16PAGE 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 December 28, 1996, and the three-month period ended March 29, 1997, as if the acquisition of the stock-preparation business (Stock-preparation Business) of Black Clawson Company and Subsidiaries (Black Clawson) by the Company had occurred at the beginning of 1996, and assuming there is no post-closing purchase price adjustment. The pro forma combined condensed statement of income for the year ended December 28, 1996, includes the results of operations of the Company for the year ended December 28, 1996, and of the Stock-preparation Business for the fiscal year ended March 31, 1997. The European operations of the Stock-preparation Business, which includes operations in the United Kingdom and France, have a fiscal year ending December 31, and results for this period are included in the consolidated results of operations of the Stock-preparation Business for fiscal years ending March 31. The pro forma combined condensed statement of income for the three-month period ended March 29, 1997, includes the results of operations of the Company for the three-month period ended March 29, 1997, and of the European and U.S. operations of the Stock-preparation Business for the three-month period ended March 31, 1997. The results of operations for the three-month period ended March 31, 1997 for the U.S. operations of the Stock-preparation Business are included in the pro forma combined condensed statements of income for both the twelve months ended December 28, 1996 and the three months ended March 29, 1997. 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 the Stock-preparation Business been consummated at the beginning of 1996. The consolidated financial statements filed under part (a) of this item should be read in conjunction with the pro forma combined condensed financial statements. PAGE FORM 8-K/A THERMO FIBERTEK INC. PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME Year Ended December 28, 1996 (Unaudited) Historical Pro Forma ---------------------- ---------------------- Stock- Thermo preparation Fibertek Business Adjustments Combined ---------- ----------- ----------- --------- (In thousands except per share amounts) Revenues $ 192,209 $ 98,427 $ - $ 290,636 ---------- ---------- ---------- ---------- Costs and Operating Expenses: Cost of revenues 109,537 71,720 755 182,012 Selling, general, and administrative expenses 47,093 22,383 (220) 69,256 Research and development expenses 5,460 2,109 - 7,569 ---------- ---------- ---------- ---------- 162,090 96,212 535 258,837 ---------- ---------- ---------- ---------- Operating Income 30,119 2,215 (535) 31,799 Interest and Other Income (Expense), Net 2,905 166 (6,196) (3,125) ---------- ---------- ---------- ---------- Income Before Income Taxes and Minority Interest 33,024 2,381 (6,731) 28,674 Provision for Income Taxes 12,684 863 (2,692) 10,855 Minority Interest Expense 446 - - 446 ---------- ---------- ---------- ---------- Net Income $ 19,894 $ 1,518 $ (4,039) $ 17,373 ========== ========== ========== ========== Earnings per Share: Primary $ .33 $ .28 ========== ========== Fully diluted $ .31 $ .27 ========== ========== Weighted Average Shares: Primary 61,040 61,040 ========== ========== Fully diluted 64,343 64,343 ========== ========== See notes to pro forma combined condensed statement of income. 5PAGE FORM 8-K/A THERMO FIBERTEK INC. PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME Three Months Ended March 29, 1997 (Unaudited) Historical Pro Forma ---------------------- ---------------------- Stock- Thermo preparation Fibertek Business Adjustments Combined ---------- ----------- ----------- --------- (In thousands except per share amounts) Revenues $ 44,667 $ 23,612 $ - $ 68,279 ---------- ---------- ---------- ---------- Costs and Operating Expenses: Cost of revenues 25,536 17,129 - 42,665 Selling, general, and administrative expenses 12,975 5,906 (104) 18,777 Research and development expenses 1,276 - - 1,276 ---------- ---------- ---------- ---------- 39,787 23,035 (104) 62,718 ---------- ---------- ---------- ---------- Operating Income 4,880 577 104 5,561 Interest and Other Income (Expense), Net 1,281 197 (1,557) (79) ---------- ---------- ---------- --------- Income Before Income Taxes and Minority Interest 6,161 774 (1,453) 5,482 Provision for Income Taxes 2,317 280 (581) 2,016 Minority Interest Expense 384 - - 384 ---------- ---------- ---------- ---------- Net Income $ 3,460 $ 494 $ (872) $ 3,082 ========== ========== ========== ========== Earnings per Share: Primary $ .06 $ .05 ========== ========== Fully diluted $ .06 $ .05 ========== ========== Weighted Average Shares: Primary 61,140 61,140 ========== ========== Fully diluted 64,189 64,189 ========== ========== See notes to pro forma combined condensed statement of income. 6PAGE FORM 8-K/A THERMO FIBERTEK INC. NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (Unaudited) Note 1 - Basis of Presentation 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 Income (In thousands, except in text) Year Ended Three Months December 28, Ended 1996 March 29, 1997 ------------ -------------- Debit (Credit) Cost of Revenues Increase in the finished goods inventory of the Stock-preparation Business to the estimated selling price, less the sum of the costs of disposal and a reasonable profit allowance for the Company's selling efforts $ 755 $ - ------- ------- Selling, General, and Administrative Expenses Elimination of service fee charged to the Stock-preparation Business by Black Clawson (3,757) (978) Service fee of 1.0% of the revenues of the Stock-preparation Business for the fiscal year ended March 31, 1997, and the three-month period ended March 31, 1997, for services that would have been provided under a services agreement between the Company and Thermo Electron 984 236 Amortization over 40 years of $90,108,000 of cost in excess of net assets of acquired companies created by the acquisition of the Stock-preparation Business 2,253 563 Amortization over 10 years of a $3,000,000 non-compete agreement entered into in connection with the acquisition of the Stock-preparation Business 300 75 ------- ------- (220) (104) ------- ------- 7PAGE FORM 8-K/A THERMO FIBERTEK INC. NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (continued) (Unaudited) Note 2 - Pro Forma Adjustments to Pro Forma Combined Condensed Statement of Income (In thousands, except in text) (continued) Year Ended Three Months December 28, Ended 1996 March 29, 1997 ------------ -------------- Debit (Credit) Interest Expense Increase in interest expense as a result of the issuance of a promissory note to Thermo Electron to finance the $107,750,000 purchase price for the acquisition of the Stock-preparation Business, calculated using the 90-day Commercial Paper Composite Rate plus 25 basis points, or 5.75% for the year ended December 28, 1996, and 5.78% for the three-month period ended March 29, 1997 $ 6,196 $ 1,557 ------- ------- Provision for Income Taxes Income tax benefit associated with the adjustments above (2,692) (581) ------- ------- 8PAGE FORM 8-K/A THERMO FIBERTEK INC. NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (continued) (Unaudited) Item 7. Financial Statements, Pro Forma Combined Condensed Financial Information and Exhibits (c) Exhibits 23 Consent of Arthur Andersen LLP 9PAGE 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 5th day of August 1997. THERMO FIBERTEK INC. Paul F. Kelleher -------------------- Paul F. Kelleher Chief Accounting Officer 10 EX-23 2 Exhibit 23 Consent of Independent Public Accountants ----------------------------------------- To Thermo Fibertek Inc.: As independent public accountants, we hereby consent to the use of our reports and to all references to our Firm included in or made a part of this Form 8-K. Arthur Andersen LLP Boston, Massachusetts August 4, 1997 -----END PRIVACY-ENHANCED MESSAGE-----