SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------------------------
FORM 10-Q
(mark one)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarter Ended January 3, 1998.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Commission File Number 1-11827
TREX MEDICAL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 06-1439626
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
36 Apple Ridge Road
Danbury, Connecticut 06810
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 622-1000
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of Common Stock, as of the latest
practicable date.
Class Outstanding at January 30, 1998
---------------------------- -------------------------------
Common Stock, $.01 par value 28,894,630
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
TREX MEDICAL CORPORATION
Consolidated Balance Sheet
(Unaudited)
Assets
January 3, September 27,
(In thousands) 1998 1997
------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 22,817 $ 36,490
Accounts receivable, less allowances
of $1,429 and $1,298 53,987 44,774
Inventories:
Raw materials and supplies 25,363 25,691
Work in process 14,591 12,755
Finished goods 5,298 4,895
Prepaid expenses 2,272 971
Prepaid income taxes 6,147 6,147
-------- --------
130,475 131,723
-------- --------
Property, Plant, and Equipment, at Cost 23,890 22,687
Less: Accumulated depreciation and
amortization 7,120 6,272
-------- --------
16,770 16,415
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Note 4) 87,739 81,299
-------- --------
$234,984 $229,437
======== ========
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TREX MEDICAL CORPORATION
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
January 3, September 27,
(In thousands except share amounts) 1998 1997
------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 15,854 $ 13,900
Accrued payroll and employee benefits 3,298 4,494
Accrued income taxes (includes $1,594 and
$7,458 due to parent company) 7,350 10,835
Accrued warranty costs 5,781 5,740
Accrued commissions 4,745 3,721
Customer deposits 2,648 3,074
Other accrued expenses 11,413 8,998
Due to affiliated companies 2,186 1,312
-------- --------
53,275 52,074
-------- --------
Deferred Income Taxes 222 222
-------- --------
Long-term Obligations:
4.2% Subordinated convertible note, due to
parent company 8,000 8,000
Other 32 47
-------- --------
8,032 8,047
-------- --------
Shareholders' Investment:
Common stock, $.01 par value, 50,000,000
shares authorized; 28,894,630 shares
issued and outstanding 289 289
Capital in excess of par value 144,787 144,787
Retained earnings 28,379 24,018
-------- --------
173,455 169,094
-------- --------
$234,984 $229,437
======== ========
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
-------------------------
January 3, December 28,
(In thousands except per share amounts) 1998 1996
-----------------------------------------------------------------------
Revenues (includes $489 and $3,880 to
affiliated companies; Note 2) $64,121 $54,915
------- -------
Costs and Operating Expenses:
Cost of revenues (includes $219 and $2,426
for affiliated companies revenues; Note 2) 37,110 33,450
Selling, general, and administrative
expenses 12,350 9,615
Research and development expenses (Note 2) 7,503 6,206
------- -------
56,963 49,271
------- -------
Operating Income 7,158 5,644
Interest Income 446 486
Interest Expense, Related Party (84) (84)
Other Income, Net - 78
------- ------
Income Before Provision for Income Taxes 7,520 6,124
Provision for Income Taxes 3,159 2,838
------- -------
Net Income $ 4,361 $ 3,286
======= =======
Basic and Diluted Earnings per Share (Note 3) $ .15 $ .11
======= =======
Weighted Average Shares (Note 3):
Basic 28,895 28,626
======= =======
Diluted 29,741 29,594
======= =======
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)
Three Months Ended
------------------------
January 3, December 28,
(In thousands) 1998 1996
-----------------------------------------------------------------------
Operating Activities:
Net income $ 4,361 $ 3,286
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,491 1,146
Provision for losses on accounts receivable 127 96
Other noncash items - 6
Changes in current accounts, excluding the
effects of acquisition:
Accounts receivable (9,079) (1,276)
Inventories (1,601) (5,767)
Other current assets (1,271) 251
Accounts payable 1,954 1,382
Other current liabilities (1,365) 2,411
-------- --------
Net cash provided by (used in) operating
activities (5,383) 1,535
-------- --------
Investing Activities:
Acquisition, net of cash acquired (Note 4) (7,174) -
Purchases of property, plant, and equipment (1,101) (1,431)
-------- --------
Net cash used in investing activities (8,275) (1,431)
-------- --------
Financing Activities:
Net proceeds from issuance of Company
common stock - 4,119
Other (15) (10)
-------- --------
Net cash provided by (used in) financing
activities (15) 4,109
-------- --------
Increase (Decrease) in Cash and Cash
Equivalents (13,673) 4,213
Cash and Cash Equivalents at Beginning of
Period 36,490 33,966
-------- --------
Cash and Cash Equivalents at End of Period $ 22,817 $ 38,179
======== ========
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TREX MEDICAL CORPORATION
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Three Months Ended
--------------------------
January 3, December 28,
(In thousands) 1998 1996
-----------------------------------------------------------------------
Noncash Activities:
Fair value of assets of acquired company $ 7,787 $ -
Cash paid for acquired company (7,176) -
-------- --------
Liabilities assumed of acquired company $ 611 $ -
======== ========
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
January 3, 1998, and the results of operations and cash flows for the
three-month periods ended January 3, 1998, and December 28, 1996. The
Company's results of operations for the three-month periods ended January
3, 1998, and December 28, 1996, include 14 weeks and 13 weeks,
respectively. Interim results are not necessarily indicative of results
for a full year.
The consolidated balance sheet presented as of September 27, 1997,
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 27, 1997, filed
with the Securities and Exchange Commission.
2. Transactions with Affiliated Companies
Revenues from affiliated companies in the accompanying statement of
income includes $441,000 and $3,880,000 during the three-month periods
ended January 3, 1998, and December 28, 1996, respectively, for sales of
laser systems and components to ThermoLase Corporation, a majority-owned
subsidiary of ThermoTrex Corporation, the majority owner of the Company.
The Company was charged $550,000 and $500,000 by ThermoTrex in the
three-month periods ended January 3, 1998, and December 28, 1996,
respectively, for research and development services provided under a
license agreement.
During the three-month periods ended January 3, 1998, and
December 28, 1996, the Company purchased high-transmission cellular (HTC)
grids valued at $119,000 and $243,000, respectively, from the Tecomet
division of Thermo Electron Corporation, the majority owner of
ThermoTrex, under a design and production arrangement.
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TREX MEDICAL CORPORATION
3. Earnings per Share
During the first quarter of fiscal 1998, the Company adopted
Statement of Financial Accounting Standards No. 128, "Earnings per
Share." As a result, all previously reported earnings per share have been
restated; however, basic and diluted earnings per share equals the
Company's previously reported earnings per share for the fiscal 1997
period. Basic earnings per share have been computed by dividing net
income by the weighted average number of shares outstanding during the
period. Diluted earnings per share have been computed assuming the
conversion of the Company's convertible note and the elimination of the
related interest expense, and the exercise of stock options, as well as
their related income tax effects. Basic and diluted earnings per share
were calculated as follows:
Three Months Ended
-------------------------
January 3, December 28,
(In thousands except per share amounts) 1998 1996
-----------------------------------------------------------------------
Basic
Net income $ 4,361 $ 3,286
------- -------
Weighted average shares 28,895 28,626
------- -------
Basic earnings per share $ .15 $ .11
======= =======
Diluted
Net income $ 4,361 $ 3,286
Effect of convertible note 50 50
------- -------
Income available to common shareholders,
as adjusted $ 4,411 $ 3,336
------- -------
Weighted average shares 28,895 28,626
Effect of:
Convertible note 679 679
Stock options 167 289
------- -------
Weighted average shares, as adjusted 29,741 29,594
------- -------
Diluted earnings per share $ .15 $ .11
======= =======
The computation of diluted earnings per share excludes the effect of
assuming the exercise of certain outstanding stock options because the
effect would be antidilutive. As of January 3, 1998, there were 351,000
of such options outstanding, with exercise prices ranging from $14.20 to
$17.40 per share.
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TREX MEDICAL CORPORATION
4. Acquisition
In October 1997, the Company's XRE subsidiary acquired substantially
all of the assets, subject to certain liabilities, of Digitec
Corporation, a North Carolina-based manufacturer of physiological-
monitoring equipment and digital-image archiving and networking systems
used in cardiac catheterization procedures, for approximately $7.2
million in cash, subject to a post-closing adjustment. To date, no
information has been gathered that would cause the Company to believe
that such post-closing adjustment will be material. The cost of this
acquisition exceeded the estimated fair value of the acquired net assets
by $7.1 million, which is being amortized over 15 years.
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 heading "Forward-looking Statements"
in Exhibit 13 to the Company's Annual Report on Form 10-K for the fiscal
year ended September 27, 1997, filed with the Securities and Exchange
Commission.
Overview
The Company designs, manufactures, and markets mammography equipment
and minimally invasive digital breast-biopsy systems, general-purpose
X-ray equipment, and specialized X-ray equipment, including imaging
systems used during diagnostic and interventional vascular and cardiac
procedures such as balloon angioplasty. The Company sells its systems
worldwide principally through a network of independent dealers. In
addition, the Company manufactures breast-biopsy and X-ray systems as an
original equipment manufacturer (OEM) for other medical equipment
companies such as United States Surgical Corporation and General Electric
Company. The Company has four operating units: Lorad, a manufacturer of
mammography and digital 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 worldwide. The Company anticipates
that an increasing amount of its revenues will be from export sales.
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TREX MEDICAL CORPORATION
Overview (continued)
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
First Quarter Fiscal 1998 Compared With First Quarter Fiscal 1997
Revenues increased 17% to $64.1 million in the first quarter of
fiscal 1998 from $54.9 million in the first quarter of fiscal 1997.
Revenues increased $1.5 million as a result of the acquisition of Digitec
Corporation in October 1997 (Note 4). Revenues increased 14% in fiscal
1998 due to increased sales at all of the Company's existing operations.
Increased revenues at Lorad resulting from increased demand for
breast-biopsy systems, mammography system upgrade components, and mobile
X-ray systems were offset in part by a decline in sales of its laser
systems and components to ThermoLase Corporation, a majority-owned
subsidiary of ThermoTrex Corporation. Revenues also increased due to
increased demand for XRE's catheterization labs and Bennett's mammography
systems.
The gross profit margin increased to 42% in the first quarter of
fiscal 1998 from 39% in the first quarter of fiscal 1997, primarily due
to an increase in higher-margin direct sales at XRE and margin
improvements on certain products at Lorad. To a lesser extent, the gross
profit margin increased due to the inclusion of higher-margin revenues at
Digitec and margin improvements at Continental and Bennett.
Selling, general, and administrative expenses as a percentage of
revenues increased to 19% in the first quarter of fiscal 1998 from 18% in
the first quarter of fiscal 1997, primarily due to increased advertising
and other selling expenses at Bennett. Research and development expenses
increased to $7.5 million in fiscal 1998 from $6.2 million in fiscal
1997. Research and development expenses increased primarily at XRE and
Lorad and reflect the Company's continued efforts to develop and
commercialize new products, including the full-field digital mammography
system and direct-detection X-ray sensor, as well as enhancements of
existing systems.
Interest income decreased slightly to $446,000 in the first quarter
of fiscal 1998 from $486,000 in the first quarter of fiscal 1997.
Interest expense, related party, represents interest associated with the
4.2% subordinated convertible note issued to ThermoTrex.
The effective tax rate decreased to 42% in the first quarter of
fiscal 1998 from 46% in the first quarter of fiscal 1997. The effective
tax rate decreased primarily due to the smaller relative impact of
nondeductible expenses as a percentage of pretax income. 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.
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TREX MEDICAL CORPORATION
Liquidity and Capital Resources
Consolidated working capital was $77.2 million at January 3, 1998,
compared with $79.6 million at September 27, 1997. Included in working
capital are cash and cash equivalents of $22.8 million at January 3,
1998, compared with $36.5 million at September 27, 1997. Net cash used in
operating activities was $5.4 million in the first three months of fiscal
1998. The Company used $9.1 million of cash during the period to fund an
increase in accounts receivable, primarily due to increased sales.
Accounts receivable increased to a lesser extent due to longer customer
payment patterns as a result of increased export sales at Bennett and a
shift from OEM sales to direct sales at XRE.
In October 1997, the Company's XRE subsidiary acquired substantially
all of the assets, subject to certain liabilities, of Digitec
Corporation, a North Carolina-based manufacturer of physiological-
monitoring equipment and digital-image archiving and networking systems
used in cardiac catheterization procedures, for approximately
$7.2 million in cash, subject to a post-closing adjustment. To date, no
information has been gathered that would cause the Company to believe
that such post-closing adjustment will be material.
The Company expended $1.1 million for purchases of property, plant,
and equipment in the first three months of fiscal 1998 and expects to
make capital expenditures of approximately $5.9 million during the
remainder of the fiscal year.
In January 1998, the Company filed a registration statement under the
Securities Act of 1933 with the Securities and Exchange Commission for a
public offering by the Company of 4,500,000 shares of common stock. In
addition, the underwriters are expected to be granted a 30-day
over-allotment option to purchase an additional 675,000 shares of common
stock. There can be no assurance that such offering will be completed.
In December 1997, the Company signed a nonbinding letter of intent to
acquire Trophy Radiologie (Trophy), a Paris, France-based manufacturer of
dental X-ray systems specializing in digital technology. The proposed
acquisition is subject to certain conditions including completion of due
diligence and approval by the boards of directors of the Company and
Trophy. The final terms of such acquisition have not been determined and
there can be no assurance that it will be completed. The Company expects
to use a portion of the net proceeds of the public offering described
above to acquire Trophy. In the event that such offering is not
completed, ThermoTrex has indicated a willingness to lend sufficient
funds to the Company to enable it to acquire Trophy.
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.
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TREX MEDICAL CORPORATION
PART II - OTHER INFORMATION
Item 6 - Exhibits
-----------------
See Exhibit Index on the page immediately preceding exhibits.
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TREX MEDICAL CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized as of the 4th day of February
1998.
TREX MEDICAL CORPORATION
Paul F. Kelleher
---------------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
---------------------------
John N. Hatsopoulos
Chief Financial Officer and
Senior Vice President
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TREX MEDICAL CORPORATION
EXHIBIT INDEX
Exhibit
Number Description
------------------------------------------------------------------------
10.1 Amended and Restated Master Guarantee Reimbursement and
Loan Agreement dated December 12, 1997, between the
Registrant and Thermo Electron Corporation.
10.2 Amended and Restated Master Guarantee Reimbursement and
Loan Agreement dated December 12, 1997, between the
Registrant and ThermoTrex Corporation.
27 Financial Data Schedule.
EXHIBIT 10.1
AMENDED AND RESTATED MASTER GUARANTEE REIMBURSEMENT
AND LOAN AGREEMENT
This AGREEMENT is entered into as of the 12th day of
December, 1997, by and among Thermo Electron Corporation (the
"Parent") and those of its subsidiaries that join in this
Agreement by executing the signature page hereto (the "Majority
Owned Subsidiaries").
WITNESSETH:
WHEREAS, the Majority Owned Subsidiaries and their
wholly-owned subsidiaries wish to enter into various financial
transactions, such as convertible or nonconvertible debt, loans,
and equity offerings, and other contractual arrangements with
third parties (the "Underlying Obligations") and may provide
credit support to, on behalf of or for the benefit of, other
subsidiaries of the Parent ("Credit Support Obligations");
WHEREAS, the Majority Owned Subsidiaries and the Parent
acknowledge that the Majority Owned Subsidiaries and their
wholly-owned subsidiaries may be unable to enter into many kinds
of Underlying Obligations without a guarantee of their
performance thereunder from the Parent (a "Parent Guarantee") or
without obtaining Credit Support Obligations from other Majority
Owned Subsidiaries;
WHEREAS, the Majority Owned Subsidiaries and their
wholly-owned subsidiaries may borrow funds from the Parent, and
the Parent may loan funds or provide credit to the Majority Owned
Subsidiaries and their wholly-owned subsidiaries, on a short-term
and unsecured basis;
WHEREAS, certain Majority Owned Subsidiaries ("Second Tier
Majority Owned Subsidiaries ") may themselves be majority owned
subsidiaries of other Majority Owned Subsidiaries ("First Tier
Majority Owned Subsidiaries");
WHEREAS, for various reasons, Parent Guarantees of a Second
Tier Majority Owned Subsidiary's Underlying Obligations may be
demanded and given without the respective First Tier Majority
Owned Subsidiary also issuing a guarantee of such Underlying
Obligation;
WHEREAS, the Parent may itself make a loan or provide other
credit to a Second Tier Majority Owned Subsidiary or its
wholly-owned subsidiaries under circumstances where the
applicable First Tier Majority Owned Subsidiary does not provide
such credit; and
WHEREAS, the Parent is willing to consider continuing to
issue Parent Guarantees and providing credit, and the Majority
Owned Subsidiaries are willing to consider continuing to provide
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Credit Support Obligations and to borrow funds, on the terms and
conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by each party hereto, the parties
agree as follows:
1. If the Parent provides a Parent Guarantee of an Underlying
Obligation, and the beneficiary(ies) of the Parent Guarantee
enforce the Parent Guarantee, or the Parent performs under
the Parent Guarantee for any other reason, then the Majority
Owned Subsidiary that is obligated, either directly or
indirectly through a wholly-owned subsidiary, under such
Underlying Obligation shall indemnify and save harmless the
Parent from any liability, cost, expense or damage
(including reasonable attorneys' fees) suffered by the
Parent as a result of the Parent Guarantee. If the
Underlying Obligation is issued by a Second Tier Majority
Owned Subsidiary or a wholly-owned subsidiary thereof, and
such Second Tier Majority Owned Subsidiary is unable to
fully indemnify the Parent (because of the poor financial
condition of such Second Tier Majority Owned Subsidiary, or
for any other reason), then the First Tier Majority Owned
Subsidiary that owns the majority of the stock of such
Second Tier Majority Owned Subsidiary shall indemnify and
save harmless the Parent from any remaining liability, cost,
expense or damage (including reasonable attorneys' fees)
suffered by the Parent as a result of the Parent Guarantee.
If a Majority Owned Subsidiary or a wholly-owned subsidiary
thereof provides a Credit Support Obligation for any
subsidiary of the Parent, other than a subsidiary of such
Majority Owned Subsidiary, and the beneficiary(ies) of the
Credit Support Obligation enforce the Credit Support
Obligation, or the Majority Owned Subsidiary or its
wholly-owned subsidiary performs under the Credit Support
Obligation for any other reason, then the Parent shall
indemnify and save harmless the Majority Owned Subsidiary or
its wholly-owned subsidiary, as applicable, from any
liability, cost, expense or damage (including reasonable
attorneys' fees) suffered by the Majority Owned Subsidiary
or its wholly-owned subsidiary, as applicable, as a result
of the Credit Support Obligation. Without limiting the
foregoing, Credit Support Obligations include the deposit of
funds by a Majority Owned Subsidiary or a wholly-owned
subsidiary thereof in a credit arrangement with a banking
facility whereby such funds are available to the banking
facility as collateral for overdraft obligations of other
Majority Owned Subsidiaries or their subsidiaries also
participating in the credit arrangement with such banking
facility.
2. For purposes of this Agreement, the term "guarantee" shall
include not only a formal guarantee of an obligation, but
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also any other arrangement where the Parent is liable for
the obligations of a Majority Owned Subsidiary or its
wholly-owned subsidiaries. Such other arrangements include
(a) representations, warranties and/or covenants or other
obligations joined in by the Parent, whether on a joint or
joint and several basis, for the benefit of the Majority
Owned Subsidiary or its wholly-owned subsidiaries and (b)
responsibility of the Parent by operation of law for the
acts and omissions of the Majority Owned Subsidiary or its
wholly-owned subsidiaries, including controlling person
liability under securities and other laws.
3. Promptly after the Parent receives notice that a beneficiary
of a Parent Guarantee is seeking to enforce such Parent
Guarantee, the Parent shall notify the Majority Owned
Subsidiary(s) obligated, either directly or indirectly
through a wholly-owned subsidiary, under the relevant
Underlying Obligation. Such Majority Owned Subsidiary(s) or
wholly-owned subsidiary thereof, as applicable, shall have
the right, at its own expense, to contest the claim of such
beneficiary. If a Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is contesting the claim
of such beneficiary, the Parent will not perform under the
relevant Parent Guarantee unless and until, in the Parent's
reasonable judgment, the Parent is obligated under the terms
of such Parent Guarantee to perform. Subject to the
foregoing, any dispute between a Majority Owned Subsidiary
or wholly-owned subsidiary thereof, as applicable, and a
beneficiary of a Parent Guarantee shall not affect such
Majority Owned Subsidiary's obligation to promptly indemnify
the Parent hereunder. Promptly after a Majority Owned
Subsidiary or wholly-owned subsidiary thereof, as
applicable, receives notice that a beneficiary of a Credit
Support Obligation is seeking to enforce such Credit Support
Obligation, the Majority Owned Subsidiary shall notify the
Parent. The Parent shall have the right, at its own
expense, to contest the claim of such beneficiary. If the
Parent or the subsidiary of the Parent on whose behalf the
Credit Support Obligation is given is contesting the claim
of such beneficiary, the Majority Owned Subsidiary or
wholly-owned subsidiary thereof, as applicable, will not
perform under the relevant Credit Support Obligation unless
and until, in the Majority Owned Subsidiary's reasonable
judgment, the Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is obligated under the
terms of such Credit Support Obligation to perform. Subject
to the foregoing, any dispute between the Parent or the
subsidiary of the Parent on whose behalf the Credit Support
Obligation was given, on the one hand, and a beneficiary of
a Credit Support Obligation, on the other, shall not affect
the Parent's obligation to promptly indemnify the Majority
Owned Subsidiary or its wholly-owned subsidiary, as
applicable, hereunder.
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4. Upon the request of a Majority Owned Subsidiary, the Parent
may make loans and advances to the Majority Owned Subsidiary
or its wholly-owned subsidiaries on a short-term, revolving
credit basis, from time to time in such amounts as mutually
determined by the Parent and the Majority Owned Subsidiary.
The aggregate principal amount of such loans and advances
shall be reflected on the books and records of the Majority
Owned Subsidiary (or wholly-owned subsidiary, as applicable)
and the Parent. All such loans and advances shall be on an
unsecured basis unless specifically provided otherwise in
loan documents executed at that time. The Majority Owned
Subsidiary or its wholly-owned subsidiaries, as applicable,
shall pay interest on the aggregate unpaid principal amount
of such loans from time to time outstanding at a rate
("Interest Rate") equal to the rate of the Commercial Paper
Composite Rate for 90-day maturities as reported by Merrill
Lynch Capital Markets, as an average of the last five
business days of such Majority Owned Subsidiary's latest
fiscal quarter then ended, plus twenty-five (25) basis
points. The Interest Rate shall be adjusted on the first
business day of each fiscal quarter of such Majority Owned
Subsidiary pursuant to the Interest Rate formula contained
in the preceding sentence and shall be in effect for the
entirety of such fiscal quarter. Interest shall be computed
on a 360-day basis. The aggregate principal amount
outstanding and accrued interest thereon shall be payable on
demand. The principal and accrued interest may be paid by
the Majority Owned Subsidiaries or their wholly-owned
subsidiaries, as applicable, at any time or from time to
time, in whole or in part, without premium or penalty. All
payments shall be applied first to accrued interest and then
to principal. Principal and interest shall be payable in
lawful money of the United States of America, in immediately
available funds, at the principal office of the Parent or at
such other place as the Parent may designate from time to
time in writing to the Majority Owned Subsidiary. The
unpaid principal amount of any such borrowings, and accrued
interest thereon, shall become immediately due and payable,
without demand, upon the failure of the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, to
pay its debts as they become due, the insolvency of the
Majority Owned Subsidiary or its wholly-owned subsidiary, as
applicable, the filing by or against the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
any petition under the U.S. Bankruptcy Code (or the filing
of any similar petition under the insolvency law of any
jurisdiction), or the making by the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
an assignment or trust mortgage for the benefit of creditors
or the appointment of a receiver, custodian or similar agent
with respect to, or the taking by any such person of
possession of, any property of the Majority Owned Subsidiary
or its wholly-owned subsidiary, as applicable. In case any
payments of principal and interest shall not be paid when
PAGE
<PAGE>
due, the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, further promises to pay all cost
of collection, including reasonable attorneys' fees.
5. If the Parent makes a loan or provides other credit ("Credit
Extension") to a Second Tier Majority Owned Subsidiary, the
First Tier Majority Owned Subsidiary that owns the majority
of the stock of such Second Tier Majority Owned Subsidiary
hereby guarantees the Second Tier Majority Owned
Subsidiary's obligations to the Parent thereunder. Such
guaranty shall be enforced only after the Parent, in its
reasonable judgment, determines that the Second Tier
Majority Owned Subsidiary is unable to fully perform its
obligations under the Credit Extension. If the Parent
provides Credit Extension to a wholly-owned subsidiary of a
Second Tier Majority Owned Subsidiary, the Second Tier
Majority Owned Subsidiary hereby guarantees it wholly-owned
subsidiary's obligations to the Parent thereunder and the
First Tier Majority Owned Subsidiary that owns the majority
of the stock of such Second Tier Majority Owned Subsidiary
hereby guarantees the Second Tier Majority Owned
Subsidiary's obligations to the Parent hereunder. Such
guaranty by the First Tier Majority Owned Subsidiary shall
be enforced only after the Parent, in its reasonable
judgment, determines that the Second Tier Majority Owned
Subsidiary is unable to fully perform its guaranty
obligation hereunder.
6. All payments required to be made by a Majority Owned
Subsidiary or its wholly-owned subsidiaries, as applicable,
shall be made within two days after receipt of notice from
the Parent. All payments required to be made by the Parent
shall be made within two days after receipt of notice from
the Majority Owned Subsidiary.
7. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of
Massachusetts applicable to contracts made and performed
therein.
PAGE
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their duly authorized officers as of the date
first above written.
THERMO ELECTRON CORPORATION
By: /s/ Melissa F. Riordan
Title: Treasurer
TREX MEDICAL CORPORATION
By: /s/ Hal Kirshner
Title: President
EXHIBIT 10.2
AMENDED AND RESTATED MASTER GUARANTEE REIMBURSEMENT
AND LOAN AGREEMENT
This AGREEMENT is entered into as of the 12th day of
December, 1997, by and among ThermoTrex Corporation (the
"Parent") and those of its subsidiaries that join in this
Agreement by executing the signature page hereto (the "Majority
Owned Subsidiaries").
WITNESSETH:
WHEREAS, the Majority Owned Subsidiaries and their
wholly-owned subsidiaries wish to enter into various financial
transactions, such as convertible or nonconvertible debt, loans,
and equity offerings, and other contractual arrangements with
third parties (the "Underlying Obligations") and may provide
credit support to, on behalf of or for the benefit of, other
subsidiaries of the Parent ("Credit Support Obligations");
WHEREAS, the Majority Owned Subsidiaries and the Parent
acknowledge that the Majority Owned Subsidiaries and their
wholly-owned subsidiaries may be unable to enter into many kinds
of Underlying Obligations without a guarantee of their
performance thereunder from the Parent (a "Parent Guarantee") or
without obtaining Credit Support Obligations from other Majority
Owned Subsidiaries;
WHEREAS, the Majority Owned Subsidiaries and their
wholly-owned subsidiaries may borrow funds from the Parent, and
the Parent may loan funds or provide credit to the Majority Owned
Subsidiaries and their wholly-owned subsidiaries, on a short-term
and unsecured basis; and
WHEREAS, the Parent is willing to consider continuing to
issue Parent Guarantees and providing credit, and the Majority
Owned Subsidiaries are willing to consider continuing to provide
Credit Support Obligations and to borrow funds, on the terms and
conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by each party hereto, the parties
agree as follows:
1. If the Parent provides a Parent Guarantee of an Underlying
Obligation, and the beneficiary(ies) of the Parent Guarantee
enforce the Parent Guarantee, or the Parent performs under
the Parent Guarantee for any other reason, then the Majority
Owned Subsidiary that is obligated, either directly or
indirectly through a wholly-owned subsidiary, under such
Underlying Obligation shall indemnify and save harmless the
Parent from any liability, cost, expense or damage
(including reasonable attorneys' fees) suffered by the
PAGE
<PAGE>
Parent as a result of the Parent Guarantee. If a Majority
Owned Subsidiary or a wholly-owned subsidiary thereof
provides a Credit Support Obligation for any subsidiary of
the Parent, other than a subsidiary of such Majority Owned
Subsidiary, and the beneficiary(ies) of the Credit Support
Obligation enforce the Credit Support Obligation, or the
Majority Owned Subsidiary or its wholly-owned subsidiary
performs under the Credit Support Obligation for any other
reason, then the Parent shall indemnify and save harmless
the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, from any liability, cost, expense
or damage (including reasonable attorneys' fees) suffered by
the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, as a result of the Credit Support
Obligation. Without limiting the foregoing, Credit Support
Obligations include the deposit of funds by a Majority Owned
Subsidiary or a wholly-owned subsidiary thereof in a credit
arrangement with a banking facility whereby such funds are
available to the banking facility as collateral for
overdraft obligations of other Majority Owned Subsidiaries
or their subsidiaries also participating in the credit
arrangement with such banking facility.
2. For purposes of this Agreement, the term "guarantee" shall
include not only a formal guarantee of an obligation, but
also any other arrangement where the Parent is liable for
the obligations of a Majority Owned Subsidiary or its
wholly-owned subsidiaries. Such other arrangements include
(a) representations, warranties and/or covenants or other
obligations joined in by the Parent, whether on a joint or
joint and several basis, for the benefit of the Majority
Owned Subsidiary or its wholly-owned subsidiaries and (b)
responsibility of the Parent by operation of law for the
acts and omissions of the Majority Owned Subsidiary or its
wholly-owned subsidiaries, including controlling person
liability under securities and other laws.
3. Promptly after the Parent receives notice that a beneficiary
of a Parent Guarantee is seeking to enforce such Parent
Guarantee, the Parent shall notify the Majority Owned
Subsidiary(s) obligated, either directly or indirectly
through a wholly-owned subsidiary, under the relevant
Underlying Obligation. Such Majority Owned Subsidiary(s) or
wholly-owned subsidiary thereof, as applicable, shall have
the right, at its own expense, to contest the claim of such
beneficiary. If a Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is contesting the claim
of such beneficiary, the Parent will not perform under the
relevant Parent Guarantee unless and until, in the Parent's
reasonable judgment, the Parent is obligated under the terms
of such Parent Guarantee to perform. Subject to the
foregoing, any dispute between a Majority Owned Subsidiary
or wholly-owned subsidiary thereof, as applicable, and a
beneficiary of a Parent Guarantee shall not affect such
PAGE
<PAGE>
Majority Owned Subsidiary's obligation to promptly indemnify
the Parent hereunder. Promptly after a Majority Owned
Subsidiary or wholly-owned subsidiary thereof, as
applicable, receives notice that a beneficiary of a Credit
Support Obligation is seeking to enforce such Credit Support
Obligation, the Majority Owned Subsidiary shall notify the
Parent. The Parent shall have the right, at its own
expense, to contest the claim of such beneficiary. If the
Parent or the subsidiary of the Parent on whose behalf the
Credit Support Obligation is given is contesting the claim
of such beneficiary, the Majority Owned Subsidiary or
wholly-owned subsidiary thereof, as applicable, will not
perform under the relevant Credit Support Obligation unless
and until, in the Majority Owned Subsidiary's reasonable
judgment, the Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is obligated under the
terms of such Credit Support Obligation to perform. Subject
to the foregoing, any dispute between the Parent or the
subsidiary of the Parent on whose behalf the Credit Support
Obligation was given, on the one hand, and a beneficiary of
a Credit Support Obligation, on the other, shall not affect
the Parent's obligation to promptly indemnify the Majority
Owned Subsidiary or its wholly-owned subsidiary, as
applicable, hereunder.
4. Upon the request of a Majority Owned Subsidiary, the Parent
may make loans and advances to the Majority Owned Subsidiary
or its wholly-owned subsidiaries on a short-term, revolving
credit basis, from time to time in such amounts as mutually
determined by the Parent and the Majority Owned Subsidiary.
The aggregate principal amount of such loans and advances
shall be reflected on the books and records of the Majority
Owned Subsidiary (or wholly-owned subsidiary, as applicable)
and the Parent. All such loans and advances shall be on an
unsecured basis unless specifically provided otherwise in
loan documents executed at that time. The Majority Owned
Subsidiary or its wholly-owned subsidiaries, as applicable,
shall pay interest on the aggregate unpaid principal amount
of such loans from time to time outstanding at a rate
("Interest Rate") equal to the rate of the Commercial Paper
Composite Rate for 90-day maturities as reported by Merrill
Lynch Capital Markets, as an average of the last five
business days of such Majority Owned Subsidiary's latest
fiscal quarter then ended, plus twenty-five (25) basis
points. The Interest Rate shall be adjusted on the first
business day of each fiscal quarter of such Majority Owned
Subsidiary pursuant to the Interest Rate formula contained
in the preceding sentence and shall be in effect for the
entirety of such fiscal quarter. Interest shall be computed
on a 360-day basis. The aggregate principal amount
outstanding and accrued interest thereon shall be payable on
demand. The principal and accrued interest may be paid by
the Majority Owned Subsidiaries or their wholly-owned
subsidiaries, as applicable, at any time or from time to
PAGE
<PAGE>
time, in whole or in part, without premium or penalty. All
payments shall be applied first to accrued interest and then
to principal. Principal and interest shall be payable in
lawful money of the United States of America, in immediately
available funds, at the principal office of the Parent or at
such other place as the Parent may designate from time to
time in writing to the Majority Owned Subsidiary. The
unpaid principal amount of any such borrowings, and accrued
interest thereon, shall become immediately due and payable,
without demand, upon the failure of the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, to
pay its debts as they become due, the insolvency of the
Majority Owned Subsidiary or its wholly-owned subsidiary, as
applicable, the filing by or against the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
any petition under the U.S. Bankruptcy Code (or the filing
of any similar petition under the insolvency law of any
jurisdiction), or the making by the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
an assignment or trust mortgage for the benefit of creditors
or the appointment of a receiver, custodian or similar agent
with respect to, or the taking by any such person of
possession of, any property of the Majority Owned Subsidiary
or its wholly-owned subsidiary, as applicable. In case any
payments of principal and interest shall not be paid when
due, the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, further promises to pay all cost
of collection, including reasonable attorneys' fees.
5. All payments required to be made by a Majority Owned
Subsidiary or its wholly-owned subsidiaries, as applicable,
shall be made within two days after receipt of notice from
the Parent. All payments required to be made by the Parent
shall be made within two days after receipt of notice from
the Majority Owned Subsidiary.
6. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of
Massachusetts applicable to contracts made and performed
therein.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their duly authorized officers as of the date
first above written.
THERMOTREX CORPORATION
By: /s/ Gary S. Weinstein
Title: President
PAGE
<PAGE>
TREX MEDICAL CORPORATION
By: /s/ Hal Kirshner
Title: President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TREX MEDICAL
CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JANUARY 3,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-03-1998
<PERIOD-END> JAN-03-1998
<CASH> 22,817
<SECURITIES> 0
<RECEIVABLES> 55,416
<ALLOWANCES> 1,429
<INVENTORY> 45,252
<CURRENT-ASSETS> 130,475
<PP&E> 23,890
<DEPRECIATION> 7,120
<TOTAL-ASSETS> 234,984
<CURRENT-LIABILITIES> 53,275
<BONDS> 32
0
0
<COMMON> 289
<OTHER-SE> 173,166
<TOTAL-LIABILITY-AND-EQUITY> 234,984
<SALES> 64,121
<TOTAL-REVENUES> 64,121
<CGS> 37,110
<TOTAL-COSTS> 37,110
<OTHER-EXPENSES> 7,503
<LOSS-PROVISION> 127
<INTEREST-EXPENSE> 84
<INCOME-PRETAX> 7,520
<INCOME-TAX> 3,159
<INCOME-CONTINUING> 4,361
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,361
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
