Filed Pursuant to
Rules 424(b)(3) and
424(c) of the Securities
Act of 1933 Registration
No. 333-15381
Prospectus Supplement
---------------------
Supplement to Prospectus
dated
January 10, 1997
as supplemented by Prospectus Supplements
dated
March 27, 1997 and May 22, 1997
TREX MEDICAL CORPORATION
1,962,000
Common Stock
This prospectus supplement relates to 1,962,000 shares of Common
Stock, par value $.01 per share, of Trex Medical Corporation (the
"Company").
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
No dealer, salesman or any other person has been authorized to give
any information or to make any representations in connection with this
offering other than those contained in this Prospectus and, if given or
made, such information or representation must not be relied upon as having
been authorized by the company or by any other person. All information
contained in this Prospectus is as of the date of this Prospectus. This
Prospectus does not constitute any offer to sell or a solicitation of any
offer to buy any security other than the securities covered by this
Prospectus, nor does it constitute an offer to or solicitation of any
person in any jurisdiction in which such offer or solicitation may not be
lawfully made. Neither the delivery of this Prospectus nor any sale or
distribution made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company
since the date hereof.
____________________________________
August 20, 1997
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Item 1 - Financial Statements
-----------------------------
TREX MEDICAL CORPORATION
Consolidated Balance Sheet
(Unaudited)
Assets
June 28, September 28,
(In thousands) 1997 1996
------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 30,232 $ 33,966
Accounts receivable, less allowances
of $1,291 and $1,264 41,584 29,104
Inventories:
Raw materials and supplies 27,295 20,513
Work in process 11,509 9,218
Finished goods 5,128 3,279
Prepaid expenses 1,182 1,316
Prepaid income taxes 5,712 5,712
-------- --------
122,642 103,108
-------- --------
Property, Plant, and Equipment, at Cost 22,068 17,259
Less: Accumulated depreciation and
amortization 5,539 3,489
-------- --------
16,529 13,770
-------- --------
Cost in Excess of Net Assets of Acquired
Companies 82,406 83,972
-------- --------
$221,577 $200,850
======== ========
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TREX MEDICAL CORPORATION
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
June 28, September 28,
(In thousands except share amounts) 1997 1996
------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 14,305 $ 12,598
Accrued payroll and employee benefits 3,976 4,616
Accrued income taxes 8,359 2,010
Accrued warranty costs 5,996 5,344
Customer deposits 3,513 3,414
Accrued commissions 3,326 1,938
Other accrued expenses 9,433 10,265
Due to affiliated companies 700 3,089
-------- --------
49,608 43,274
-------- --------
Deferred Income Taxes 170 170
-------- --------
Long-term Obligations:
4.2% Subordinated convertible note, due to
parent company 8,000 8,000
Other 71 109
-------- --------
8,071 8,109
-------- --------
Shareholders' Investment (Note 3):
Common stock, $.01 par value, 50,000,000
shares authorized; 28,892,630 and
28,592,630 shares issued and outstanding 289 286
Capital in excess of par value 143,783 139,667
Retained earnings 19,656 9,344
-------- --------
163,728 149,297
-------- --------
$221,577 $200,850
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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TREX MEDICAL CORPORATION
Consolidated Statement of Income
(Unaudited)
Three Months Ended
-----------------------
June 28, June 29,
(In thousands except per share amounts) 1997 1996
-----------------------------------------------------------------------
Revenues (includes $2,604 and $3,100 from
affiliated companies; Note 2) $58,103 $36,681
------- -------
Costs and Operating Expenses:
Cost of revenues (includes $1,554 and
$1,506 for affiliated companies
revenues; Note 2) 34,818 20,720
Selling, general, and administrative
expenses 10,786 6,835
Research and development expenses (Note 2) 6,164 4,775
------- -------
51,768 32,330
------- -------
Operating Income 6,335 4,351
Interest Income 437 176
Interest Expense, Related Party (84) (412)
Other Income (Expense), Net 188 (28)
------- ------
Income Before Provision for Income Taxes 6,876 4,087
Provision for Income Taxes 3,216 1,918
------- -------
Net Income $ 3,660 $ 2,169
======= =======
Earnings per Share:
Primary $ .13 $ .10
======= =======
Fully diluted $ .13 $ .09
======= =======
Weighted Average Shares:
Primary 28,893 22,386
======= =======
Fully diluted 28,893 25,694
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
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TREX MEDICAL CORPORATION
Consolidated Statement of Income
(Unaudited)
Nine Months Ended
-----------------------
June 28, June 29,
(In thousands except per share amounts) 1997 1996
------------------------------------------------------------------------
Revenues (includes $10,455 and $5,612 from
affiliated companies; Note 2) $171,661 $103,510
-------- --------
Costs and Operating Expenses:
Cost of revenues (includes $6,360 and
$2,688 for affiliated companies
revenues; Note 2) 105,173 58,312
Selling, general, and administrative
expenses 30,249 20,530
Research and development expenses (Note 2) 18,508 12,945
-------- --------
153,930 91,787
-------- --------
Operating Income 17,731 11,723
Interest Income 1,431 616
Interest Expense, Related Party (252) (1,284)
Other Income, Net 402 7
-------- --------
Income Before Provision for Income Taxes 19,312 11,062
Provision for Income Taxes 9,000 5,159
-------- --------
Net Income $ 10,312 $ 5,903
======== ========
Earnings per Share:
Primary $ .36 $ .27
======== ========
Fully diluted $ .36 $ .26
======== ========
Weighted Average Shares:
Primary 28,804 21,839
======== ========
Fully diluted 28,804 25,310
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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TREX MEDICAL CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
Nine Months Ended
---------------------
June 28, June 29,
(In thousands) 1997 1996
-----------------------------------------------------------------------
Operating Activities:
Net income $ 10,312 $ 5,903
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,716 2,302
Provision for losses on accounts receivable 133 88
Other noncash items 6 (85)
Changes in current accounts, excluding the
effects of acquisition:
Accounts receivable (12,613) (2,964)
Inventories (10,922) (2,518)
Other current assets 134 (4,006)
Accounts payable 1,707 (438)
Other current liabilities 4,627 6,498
Other (73) -
-------- --------
Net cash provided by (used in) operating
activities (2,973) 4,780
-------- --------
Investing Activities:
Acquisition, net of cash acquired - (18,817)
Purchases of property, plant, and equipment (4,842) (2,515)
Proceeds from sale of property, plant, and
equipment - 46
-------- --------
Net cash used in investing activities (4,842) (21,286)
------- --------
Financing Activities:
Net proceeds from issuance of Company
common stock (Note 3) 4,119 18,688
Other (38) (5)
-------- --------
Net cash provided by financing activities 4,081 18,683
-------- --------
Increase (Decrease) in Cash and Cash
Equivalents (3,734) 2,177
Cash and Cash Equivalents at Beginning of
Period 33,966 202
-------- --------
Cash and Cash Equivalents at End of Period $ 30,232 $ 2,379
======== ========
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TREX MEDICAL CORPORATION
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Nine Months Ended
---------------------
June 28, June 29,
(In thousands) 1997 1996
-----------------------------------------------------------------------
Noncash Activities:
Fair value of assets of acquired Company $ - $28,956
Cash paid for acquired Company - (18,878)
-------- --------
Liabilities assumed of acquired Company $ - $ 10,078
======== ========
Issuance of subordinated convertible note
to parent company $ - $ 42,000
Conversion of subordinated convertible
note by parent company $ - $ 3,000
The accompanying notes are an integral part of these consolidated financial
statements.
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TREX MEDICAL CORPORATION
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been
prepared by Trex Medical Corporation (the Company) without audit and, in
the opinion of management, reflect all adjustments of a normal recurring
nature necessary for a fair statement of the financial position at June 28,
1997, the results of operations for the three- and nine-month periods ended
June 28, 1997, and June 29, 1996, and the cash flows for the nine-month
periods ended June 28, 1997, and June 29, 1996. Interim results are not
necessarily indicative of results for a full year.
The consolidated balance sheet presented as of September 28, 1996, has
been derived from the consolidated financial statements that have been
audited by the Company's independent public accountants. The consolidated
financial statements and notes are presented as permitted by Form 10-Q and
do not contain certain information included in the annual financial
statements and notes of the Company. The consolidated financial statements
and notes included herein should be read in conjunction with the financial
statements and notes included in the Company's Annual Report on Form 10-K
for the fiscal year ended September 28, 1996, filed with the Securities and
Exchange Commission.
2. Transactions With Affiliated Companies
Revenues from affiliated companies in the accompanying statement of
income includes $2,597,000 and $10,427,000 during the three- and nine-month
periods ended June 28, 1997, respectively, for sales of laser systems to
ThermoLase Corporation, a majority-owned subsidiary of ThermoTrex
Corporation, the majority owner of the Company. During the three- and
nine-month periods ended June 29, 1996, the Company sold laser systems to
ThermoLase for aggregate revenues of $3,010,000 and $5,250,000,
respectively.
The Company was charged $500,000 and $1,500,000 by ThermoTrex in the
three- and nine-month periods ended June 28, 1997, respectively, for
research and development services provided under a license agreement. The
Company was charged $450,000 and $1,350,000 under this agreement in the
three- and nine-month periods ended June 29, 1996, respectively.
During the three- and nine-month periods ended June 28, 1997, the
Company purchased high-transmission cellular (HTC) grids valued at $127,000
and $609,000, respectively, from the Tecomet division of Thermo Electron
Corporation, the majority owner of ThermoTrex, under a design and
production arrangement. During the three- and nine-month periods ended June
29, 1996, the Company purchased HTC grids valued at $93,000.
3. Sale of Common Stock
In December 1996, the Company sold 300,000 shares of its common stock
at $14.50 per share, for net proceeds of approximately $4,119,000.
Following the sale, ThermoTrex owned 79% of the Company's outstanding
common stock.
8
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Item 2 - Management's Discussion and Analysis of Financial Condition and
------------------------------------------------------------------------
Results of Operations
---------------------
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations.
For this purpose, any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," anticipates," "plans,"
"expects," "seeks," "estimates," and similar expressions are intended to
identify forward-looking statements. There are a number of important
factors that could cause the results of the Company to differ materially
from those indicated by such forward-looking statements, including those
detailed under the caption "Forward-looking Statements" in Exhibit 13 to
the Company's Annual Report on Form 10-K for the fiscal year ended
September 28, 1996, filed with the Securities and Exchange Commission.
Overview
The Company designs, manufactures, and markets mammography equipment
and minimally invasive stereotactic breast-biopsy systems, general- purpose
radiography (X-ray) equipment, and X-ray imaging systems used for cardiac
catheterization and angiography, as well as radiographic/ fluoroscopic
procedures. The Company sells its systems worldwide principally through a
network of independent dealers. In addition, the Company manufactures
mammography and radiography systems as an original equipment manufacturer
(OEM) for other medical equipment companies such as United States Surgical
Corporation, General Electric Company, Inc., and the Philips Medical
Systems North America Company subsidiary of Philips N.V. The Company has
four operating units: Lorad, a manufacturer of mammography and stereotactic
breast-biopsy systems; Bennett X-Ray Corporation, a manufacturer of
general-purpose X-ray and mammography equipment; XRE Corporation, a
manufacturer of X-ray imaging systems used in the diagnosis and treatment
of coronary artery disease and other vascular conditions; and Continental
X-Ray Corporation, a manufacturer of general-purpose and specialized X-ray
systems.
The Company conducts all of its manufacturing operations in the United
States and sells its products on a worldwide basis. The Company anticipates
that an increasing percentage of its revenues will be from export sales.
The Company's export sales are denominated in U.S. dollars; however, the
Company's financial performance and competitive position can be affected by
currency exchange rate fluctuations affecting the relationship between the
U.S. dollar and foreign currencies.
Results of Operations
Third Quarter Fiscal 1997 Compared With Third Quarter Fiscal 1996
-----------------------------------------------------------------
Revenues increased 58% to $58.1 million in the third quarter of fiscal
1997 from $36.7 million in the third quarter of fiscal 1996. Revenues
increased $16.5 million as a result of the acquisitions of Continental in
September 1996 and XRE in May 1996. Revenues at Lorad
9
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Third Quarter Fiscal 1997 Compared With Third Quarter Fiscal 1996
-----------------------------------------------------------------
(continued)
increased 13% in fiscal 1997, primarily as a result of increased sales of
higher-priced mammography systems.
The gross profit margin declined to 40% in the third quarter of fiscal
1997 from 44% in the third quarter of fiscal 1996, primarily due to the mix
of products sold at Lorad, as well as the inclusion of lower-margin
revenues at Continental.
Selling, general, and administrative expenses as a percentage of
revenues remained constant at 19% in the third quarter of fiscal 1997 and
fiscal 1996. Research and development expenses increased to $6.2 million in
fiscal 1997 from $4.8 million in fiscal 1996. Research and development
expenses increased $1.7 million due to the acquisitions of XRE and
Continental, offset in part by lower expenses at Lorad due to the
acceleration of product development expenses in 1996 for the Company's M-IV
mammography system. Research and development expenses reflect the Company's
continued efforts to develop and commercialize new products, including the
full-breast digital mammography system and direct-detection X-ray sensor,
as well as enhancements of existing systems.
Interest income in the third quarter of fiscal 1997 primarily
represents interest earned on the invested proceeds from the Company's
initial public offering of common stock in July 1996, net of cash paid for
the September 1996 acquisition of Continental. Interest expense, related
party, represents interest associated with the $42.0 million principal
amount 4.2% subordinated convertible note issued to ThermoTrex. Interest
expense decreased in fiscal 1997, compared with fiscal 1996, as a result of
the conversion by ThermoTrex of $34.0 million principal amount, primarily
in the fourth quarter of fiscal 1996.
The effective tax rate was 47% in the third quarter of fiscal 1997 and
fiscal 1996. The effective tax rate exceeds the statutory federal income
tax rate primarily due to the impact of state income taxes and
nondeductible amortization of cost in excess of net assets of acquired
companies.
First Nine Months Fiscal 1997 Compared With First Nine Months Fiscal 1996
-------------------------------------------------------------------------
Revenues increased 66% to $171.7 million in the first nine months of
fiscal 1997 from $103.5 million in the first nine months of fiscal 1996.
Revenues increased $50.7 million as a result of the acquisitions of
Continental in September 1996 and XRE in May 1996. Revenues at Lorad
increased 21% in fiscal 1997 as a result of increased sales of
higher-priced mammography systems, increased sales of lasers to ThermoLase,
and increased demand for biopsy systems.
The gross profit margin declined to 39% in the first nine months of
fiscal 1997 from 44% in the first nine months of fiscal 1996, primarily due
to the mix of products sold at Lorad, as well as the inclusion of
lower-margin revenues at Continental.
10
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First Nine Months Fiscal 1997 Compared With First Nine Months Fiscal 1996
-------------------------------------------------------------------------
(continued)
Selling, general, and administrative expenses as a percentage of
revenues decreased to 18% in the first nine months of fiscal 1997 from 20%
in the first nine months of fiscal 1996, primarily due to increased
revenues at Lorad and Bennett and, to a lesser extent, lower advertising
and other selling expenses at Bennett. Research and development expenses
increased to $18.5 million in fiscal 1997 from $12.9 million in fiscal
1996. Research and development expenses increased $5.4 million due to the
acquisitions of XRE and Continental, and reflect the Company's continued
efforts to develop and commercialize new products, including the
full-breast digital mammography system and direct-detection X-ray sensor,
as well as enhancements of existing systems.
Interest income in the first nine months of fiscal 1997 primarily
represents interest earned on the invested proceeds from the Company's
initial public offering of common stock in July 1996, net of cash paid for
the September 1996 acquisition of Continental. Interest expense, related
party, represents interest associated with the $42.0 million principal
amount 4.2% subordinated convertible note issued to ThermoTrex. Interest
expense decreased in fiscal 1997, compared with fiscal 1996, as a result of
the conversion by ThermoTrex of $34.0 million principal amount, primarily
in the fourth quarter of fiscal 1996.
The effective tax rate was 47% in the first nine months of fiscal 1997
and fiscal 1996. The effective tax rate exceeds the statutory federal
income tax rate primarily due to the impact of state income taxes and
nondeductible amortization of cost in excess of net assets of acquired
companies.
Liquidity and Capital Resources
Consolidated working capital was $73.0 million at June 28, 1997,
compared with $59.8 million at September 28, 1996. Included in working
capital are cash and cash equivalents of $30.2 million at June 28, 1997,
compared with $34.0 million at September 28, 1996.
Net cash used in operating activities was $3.0 million in the first
nine months of fiscal 1997. During this period, $10.9 million and $12.6
million of cash was used to fund increases in inventories and accounts
receivable, respectively. Inventories increased primarily to support the
Company's increased sales, new product introductions at Bennett and Lorad,
and, to a lesser extent, materials required for commitments under an OEM
agreement. The increase in accounts receivable resulted primarily from the
timing of third quarter shipments at Lorad, as well as the Company's
increased sales to international customers, which have longer payment
cycles.
The Company expended $4.8 million for property, plant, and equipment in
the first nine months of fiscal 1997 and expects to make capital
expenditures of approximately $1.1 million during the remainder of the
fiscal year.
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Liquidity and Capital Resources (continued)
In December 1996, the Company issued 300,000 shares of its common stock
in a private placement for net proceeds of approximately $4.1 million.
Although the Company generally expects to have positive cash flow from
its existing operations, the Company may require significant amounts of
cash for any acquisition of a business or technology. The Company expects
that it will finance any such acquisitions through a combination of
internal funds, additional debt or equity financing, and/or short-term
borrowings from ThermoTrex or Thermo Electron Corporation, although it has
no agreement with these companies to ensure funds will be available on
acceptable terms or at all. The Company believes its existing resources are
sufficient to meet the capital requirements of its existing operations for
the foreseeable future.
AA972320001
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