Filed Pursuant to
Rules 424(b)(3) and
424(c) of the Securities
Act of 1933 Registration
No. 333-18781
Prospectus Supplement
---------------------
Supplement to Prospectus
dated
January 10, 1997
TREX MEDICAL CORPORATION
300,000
Common Stock
This prospectus supplement relates to 300,000 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.
____________________________________
May 22, 1997
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
-----------------------------
TREX MEDICAL CORPORATION
Consolidated Balance Sheet
(Unaudited)
Assets
March 29, September 28,
(In thousands) 1997 1996
Current Assets:
Cash and cash equivalents $ 36,292 $ 33,966
Accounts receivable, less allowances
of $1,215 and $1,264 33,215 29,104
Inventories:
Raw materials and supplies 25,560 20,513
Work in process 11,493 9,218
Finished goods 4,030 3,279
Prepaid expenses 797 1,316
Prepaid income taxes 5,712 5,712
-------- --------
117,099 103,108
-------- --------
Property, Plant, and Equipment, at Cost 20,289 17,259
Less: Accumulated depreciation and
amortization 4,745 3,489
-------- --------
15,544 13,770
-------- --------
Cost in Excess of Net Assets of Acquired
Companies 82,952 83,972
-------- --------
$215,595 $200,850
======== ========
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Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
March 29, September 28,
(In thousands except share amounts) 1997 1996
Current Liabilities:
Accounts payable $ 14,327 $ 12,598
Accrued payroll and employee benefits 2,945 4,616
Accrued income taxes 7,704 2,010
Accrued warranty costs 5,822 5,344
Customer deposits 3,517 3,414
Accrued commissions 2,797 1,938
Other accrued expenses 9,563 10,265
Due to affiliated companies 597 3,089
-------- --------
47,272 43,274
-------- --------
Deferred Income Taxes 170 170
-------- --------
Long-term Obligations:
4.2% Subordinated convertible note, due to
parent company 8,000 8,000
Other 85 109
-------- --------
8,085 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 15,996 9,344
-------- --------
160,068 149,297
-------- --------
$215,595 $200,850
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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Consolidated Statement of Income
(Unaudited)
Three Months Ended
------------------------
March 29, March 30,
(In thousands except per share amounts) 1997 1996
Revenues (includes $3,971 and $1,962 from
affiliated companies; Note 2) $58,642 $34,320
------- -------
Costs and Operating Expenses:
Cost of revenues (includes $2,464 and
$919 for affiliated companies
revenues; Note 2) 36,904 19,344
Selling, general, and administrative
expenses 9,849 6,827
Research and development expenses (Note 2) 6,138 4,072
------- -------
52,891 30,243
------- -------
Operating Income 5,751 4,077
Interest Income 509 315
Interest Expense, Related Party (84) (441)
Other Income, Net 136 (4)
------- ------
Income Before Provision for Income Taxes 6,312 3,947
Provision for Income Taxes 2,946 1,839
------- -------
Net Income $ 3,366 $ 2,108
======= =======
Earnings per Share:
Primary $ .12 $ .10
======= =======
Fully Diluted $ .12 $ .09
======= =======
Weighted Average Shares:
Primary 28,893 22,100
======= =======
Fully Diluted 28,893 25,643
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
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Consolidated Statement of Income
(Unaudited)
Six Months Ended
------------------------
March 29, March 30,
(In thousands except per share amounts) 1997 1996
Revenues (includes $7,851 and $2,512 from
affiliated companies; Note 2) $113,557 $ 66,829
-------- --------
Costs and Operating Expenses:
Cost of revenues (includes $4,890 and
$1,182 for affiliated companies
revenues; Note 2) 70,354 37,592
Selling, general, and administrative
expenses 19,464 13,695
Research and development expenses (Note 2) 12,344 8,170
-------- --------
102,162 59,457
-------- --------
Operating Income 11,395 7,372
Interest Income 995 440
Interest Expense, Related Party (168) (872)
Other Income, Net 214 35
-------- --------
Income Before Provision for Income Taxes 12,436 6,975
Provision for Income Taxes 5,784 3,241
-------- --------
Net Income $ 6,652 $ 3,734
======== ========
Earnings per Share $ .23 $ .17
======== ========
Weighted Average Shares 28,759 21,547
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
----------------------
March 29, March 30,
(In thousands) 1997 1996
Operating Activities:
Net income $ 6,652 $ 3,734
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,376 1,463
Provision for losses on accounts receivable 53 51
Other noncash items 6 (82)
Changes in current accounts:
Accounts receivable (4,164) (4,050)
Inventories (8,073) (1,948)
Other current assets 519 (771)
Accounts payable 1,729 290
Other current liabilities 2,269 3,138
Other (73) -
-------- --------
Net cash provided by operating activities 1,294 1,825
-------- --------
Investing Activities:
Purchases of property, plant, and equipment (3,063) (1,505)
Proceeds from sale of property, plant, and
equipment - 35
-------- --------
Net cash used in investing activities (3,063) (1,470)
-------- --------
Financing Activities:
Net proceeds from issuance of Company
common stock (Note 3) 4,119 18,688
Other (24) -
-------- --------
Net cash provided by financing activities 4,095 18,688
-------- --------
Increase in Cash and Cash Equivalents 2,326 19,043
Cash and Cash Equivalents at Beginning of
Period 33,966 202
-------- --------
Cash and Cash Equivalents at End of Period $ 36,292 $ 19,245
======== ========
Noncash Activities:
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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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 March
29, 1997, the results of operations for the three- and six-month periods
ended March 29, 1997, and March 30, 1996, and the cash flows for the
six-month periods ended March 29, 1997, and March 30, 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,
as amended, 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 $3,950,000 and $7,830,000 during the three- and six-month
periods ended March 29, 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
six-month periods ended March 30, 1996, the Company sold laser systems to
ThermoLase for aggregate revenues of $1,890,000 and $2,240,000,
respectively.
The Company was charged $500,000 and $1,000,000 by ThermoTrex in the
three- and six-month periods ended March 29, 1997, respectively, for
research and development services provided under a license agreement. The
Company was charged $450,000 and $900,000 under this agreement in the
three- and six-month periods ended March 30, 1996, respectively.
During the three- and six-month periods ended March 29, 1997, the
Company purchased high-transmission cellular grids valued at $239,000 and
$482,000, respectively, from the Tecomet division of Thermo Electron
Corporation, the majority owner of ThermoTrex, under a design and
production arrangement. No such purchases were made during the six months
ended March 30, 1996.
3. Sale of Common Stock
In December 1996, the Company issued 300,000 shares of its common stock
in a private placement at $14.50 per share, for net proceeds of
approximately $4,119,000. Following the private placement, ThermoTrex owned
79% of the Company's outstanding common stock.
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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, as amended, 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
Second Quarter Fiscal 1997 Compared With Second Quarter Fiscal 1996
-------------------------------------------------------------------
Revenues increased 71% to $58.6 million in the second quarter of fiscal
1997 from $34.3 million in the second quarter of fiscal 1996, primarily due
to the inclusion of $17.6 million in revenues from Continental, acquired in
September 1996, and XRE, acquired in May 1996. Revenues at Lorad increased
23% to $27.7 million in fiscal 1997 from $22.5 million in fiscal 1996 as a
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Second Quarter Fiscal 1997 Compared With Second Quarter Fiscal 1996
-------------------------------------------------------------------
(continued)
result of increased sales of higher-priced mammography systems, as well as
lasers sold to ThermoLase Corporation, a majority-owned subsidiary of
ThermoTrex Corporation.
The gross profit margin declined to 37% in the second quarter of fiscal
1997 from 44% in the second quarter of fiscal 1996, primarily due to the
mix of products sold at Lorad and Bennett, as well as the inclusion of
lower-margin revenues at Continental.
Selling, general, and administrative expenses as a percentage of
revenues decreased to 17% in the second quarter of fiscal 1997 from 20% in
the second quarter of fiscal 1996, primarily due to increased revenues at
Lorad and, to a lesser extent, Bennett. Research and development expenses
of $6.1 million in fiscal 1997, compared with $4.1 million in fiscal 1996,
reflect the inclusion of $2.0 million of expense at XRE and Continental and
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 second quarter of fiscal 1997 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 in fiscal 1996.
The effective tax rate was 47% in the second 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 Six Months Fiscal 1997 Compared With First Six Months Fiscal 1996
-----------------------------------------------------------------------
Revenues increased 70% to $113.6 million in the first six months of
fiscal 1997 from $66.8 million in the first six months of fiscal 1996,
primarily due to the inclusion of $34.1 million in revenues from
Continental, acquired in September 1996, and XRE, acquired in May 1996.
Revenues at Lorad increased 25% to $54.7 million in fiscal 1997 from $43.8
million in fiscal 1996 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 38% in the first six months of
fiscal 1997 from 44% in the first six months of fiscal 1996, primarily due
to the mix of products sold at Lorad and Bennett, as well as the inclusion
of lower-margin revenues at Continental.
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First Six Months Fiscal 1997 Compared With First Six Months Fiscal 1996
-----------------------------------------------------------------------
(continued)
Selling, general, and administrative expenses as a percentage of
revenues decreased to 17% in the first six months of fiscal 1997 from 20%
in the first six months of fiscal 1996, primarily due to increased revenues
at Lorad and, to a lesser extent, lower advertising and other selling
expenses at Bennett. Research and development expenses of $12.3 million in
fiscal 1997, compared with $8.2 million in fiscal 1996, reflect the
inclusion of $3.7 million of expense at XRE and Continental and 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 six months of fiscal 1997 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 in fiscal 1996.
The effective tax rate was 46.5% in the first six 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 $69.8 million at March 29, 1997,
compared with $59.8 million at September 28, 1996. Included in working
capital are cash and cash equivalents of $36.3 million at March 29, 1997,
compared with $34.0 million at September 28, 1996.
Net cash provided by operating activities was $1.3 million in the first
six months of fiscal 1997. During this period, $8.1 million and $4.2
million of cash was used to fund increases in inventories and accounts
receivable, respectively. The increase in inventories primarily represents
materials required for commitments under an OEM agreement and higher
inventory levels in support of the Company's increased sales. The Company
began shipping products under the OEM agreement in March 1997 and expects
to continue to ship under this agreement throughout fiscal 1997. The
increase in accounts receivable results primarily from the timing of second
quarter shipments at XRE.
The Company expended $3.1 million for property, plant, and equipment in
the first six months of fiscal 1997 and expects to make capital
expenditures of approximately $2.8 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 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.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
On March 12, 1997, at the Annual Meeting of Stockholders, the
stockholders elected ten incumbent directors to a one-year term expiring in
1998. The Directors elected at the meeting were: Dr. Elias P. Gyftopoulos,
Mr. Robert C. Howard, Mr. Hal Kirshner, Mr. Earl R. Lewis, Mr. James W. May
Jr., Ms. Hutham S. Olayan, Mr. Anthony J. Pellegrino, Mr. Firooz Rufeh, Dr.
Kenneth Y. Tang, and Mr. Gary S. Weinstein. Each director received
25,819,309 shares voted in favor of his or her election and 16,839 shares
voted against. No abstentions or broker nonvotes were recorded on the
election of directors.
At the Annual Meeting of Stockholders, the stockholders also approved a
proposal to adopt an employees' stock purchase plan and to reserve 100,000
shares of the Company's common stock for issuance thereunder as follows:
25,791,512 shares voted in favor of the proposal, 36,243 shares voted
against the proposal, and 8,393 shares abstained. No broker nonvotes were
recorded on the proposal.
AA971420011
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