Filed Pursuant to
Rules 424(b)(3) and
424(c) of the Securities
Act of 1933 Registration
No. 333-16017
Prospectus Supplement
---------------------
Supplement to Prospectus
dated
May 9, 1997
THERMO OPTEK CORPORATION
6,481,481 Shares of
Common Stock
This prospectus supplement relates to 6,481,481 shares of Common
Stock, par value $.01 per share, of Thermo Optek 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 23, 1997
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Consolidated Balance Sheet
(Unaudited)
Assets
March 29, December 28,
(In thousands) 1997 1996
Current Assets:
Cash and cash equivalents $ 61,500 $ 63,641
Accounts receivable, less allowances of
$4,526 and $4,436 81,901 79,568
Inventories:
Raw materials and supplies 29,907 27,865
Work in process 11,673 10,353
Finished goods 21,900 24,466
Prepaid expenses 7,467 5,961
Prepaid income taxes 15,223 15,254
Due from affiliated companies 1,376 11,919
-------- --------
230,947 239,027
-------- --------
Property, Plant, and Equipment, at Cost 75,306 75,607
Less: Accumulated depreciation and
amortization 23,236 22,021
-------- --------
52,070 53,586
-------- --------
Patents and Other Assets 9,825 10,232
-------- --------
Cost in Excess of Net Assets of Acquired
Companies 199,979 195,513
-------- --------
$492,821 $498,358
======== ========
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Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
March 29, December 28,
(In thousands except share amounts) 1997 1996
Current Liabilities:
Notes payable and current maturities of
long-term obligations $ 20,116 $ 27,736
Accounts payable 21,606 23,101
Accrued payroll and employee benefits 11,038 11,494
Accrued commissions 5,965 6,377
Accrued installation and warranty expenses 12,828 11,953
Accrued income taxes 10,929 12,425
Deferred revenue 19,362 14,568
Other accrued expenses (Note 2) 26,423 27,484
-------- --------
128,267 135,138
-------- --------
Deferred Income Taxes 13,741 13,865
-------- --------
Other Deferred Items 3,323 3,413
-------- --------
Long-term Obligations:
5% Subordinated convertible debentures 96,250 96,250
Other 495 528
-------- --------
96,745 96,778
-------- --------
Shareholders' Investment:
Common stock, $.01 par value, 100,000,000
shares authorized; 48,450,000 shares
issued and outstanding 485 485
Capital in excess of par value 222,123 222,123
Retained earnings 35,412 28,663
Cumulative translation adjustment (7,275) (2,107)
-------- --------
250,745 249,164
-------- --------
$492,821 $498,358
======== ========
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 $ 88,754 $ 69,668
-------- --------
Costs and Operating Expenses:
Cost of revenues 46,483 35,760
Selling, general, and administrative
expenses 24,406 21,326
Research and development expenses 5,433 4,934
-------- --------
76,322 62,020
-------- --------
Operating Income 12,432 7,648
Interest Income 888 1,541
Interest Expense (1,683) (1,591)
-------- --------
Income Before Provision for Income Taxes 11,637 7,598
Provision for Income Taxes 4,888 3,302
-------- --------
Net Income $ 6,749 $ 4,296
======== ========
Earnings per Share $ .14 $ .10
======== ========
Weighted Average Shares 48,450 45,157
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
-------------------------
March 29, March 30,
(In thousands) 1997 1996
Operating Activities:
Net income $ 6,749 $ 4,296
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,191 2,239
Provision for losses on accounts
receivable 77 642
Other noncash expenses 415 501
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable (3,579) 2,128
Inventories (5,547) (1,388)
Other current assets 7,629 334
Accounts payable (1,470) (4,182)
Other current liabilities 2,563 6,171
Other 89 110
-------- --------
Net cash provided by operating activities 10,117 10,851
-------- --------
Investing Activities:
Acquisitions, net of cash acquired (2,571) (15,477)
Purchases of property, plant, and equipment (1,828) (1,595)
Other 94 91
-------- --------
Net cash used in investing activities (4,305) (16,981)
-------- --------
Financing Activities:
Decrease in short-term obligations, net (7,452) (693)
Repayment of long-term obligations (115) (90)
-------- --------
Net cash used in financing activities (7,567) (783)
-------- --------
Exchange Rate Effect on Cash (386) (188)
-------- --------
Decrease in Cash and Cash Equivalents (2,141) (7,101)
Cash and Cash Equivalents at Beginning
of Period 63,641 116,890
-------- --------
Cash and Cash Equivalents at End of Period $ 61,500 $109,789
======== ========
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Consolidated Statement of Cash Flows (continued)
(Unaudited)
Three Months Ended
-------------------------
March 29, March 30,
(In thousands) 1997 1996
Noncash Activities:
Fair value of assets of acquired companies $ 6,067 $133,312
Cash paid for acquired companies (3,017) (16,869)
Amount due to parent company for
acquisitions - (55,196)
-------- --------
Liabilities assumed of acquired companies $ 3,050 $ 61,247
======== ========
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 Thermo Optek 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-month periods ended March
29, 1997, and March 30, 1996, and the cash flows for the three-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 December 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 December 28, 1996, filed with the
Securities and Exchange Commission.
2. Restructuring Activities
In connection with the acquisitions of A.R.L. Applied Research
Laboratories S.A. (ARL) and VG Elemental, effective March 1996, and the
Mattson Instruments and Unicam divisions of ATI, effective December 1995,
the Company had undertaken a restructuring of the acquired businesses.
During 1997, the Company expended $681,000 at its Mattson and Unicam
subsidiaries and $1,654,000 at its ARL and VG Elemental subsidiaries for
restructuring costs. These expenditures consisted primarily of severance
and abandoned facility payments. The Company finalized its restructuring
plans for Mattson and Unicam in 1996 and for ARL and VG Elemental in 1997.
In connection with finalizing its restructuring plan for ARL and VG
Elemental, the Company recorded an additional $1,396,000 of acquisition
reserves in 1997, primarily for severance, termination fees to former
distribution agents, and abandonment of excess facilities. This amount was
recorded as an increase in cost in excess of net assets of acquired
companies. The remaining reserve balance of $5,267,000 for all of these
acquired businesses is for ongoing severance and abandoned facility
payments. As of March 29, 1997, the Company had accrued a total of
$6,787,000 for restructuring costs for all of its acquisitions, including
those discussed above. These reserves are included in other accrued
expenses in the accompanying balance sheet.
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.
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Item 2 - Management's Discussion and Analysis of Financial Condition and
------------------------------------------------------------------------
Results of Operations (continued)
---------------------
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 December 28, 1996, filed with the Securities and Exchange
Commission.
Overview
Prior to 1996, the Company's principal operating units included Thermo
Jarrell Ash Corporation (TJA), a manufacturer and distributor of atomic
absorption (AA) and atomic emission (AE) spectrometry products based in
Franklin, Massachusetts, and Nicolet Instrument Corporation (Nicolet), a
manufacturer and distributor of Fourier Transform Infrared (FT-IR) and
FT-Raman spectrometry products based in Madison, Wisconsin. During 1996,
the Company acquired five additional companies, summarized below,
significantly increasing its operations.
The Company's strategy is to supplement its internal growth with the
acquisition of businesses and technologies that complement and augment its
existing product lines. Effective December 1, 1995, the Company acquired
Mattson Instruments, a manufacturer of FT-IR spectroscopy instruments, and
Unicam, a manufacturer of AA and ultraviolet/visible spectroscopy
instruments, from Thermo Instrument Systems Inc., the majority owner of the
Company. In February 1996, the Company acquired Oriel Corporation, a
manufacturer and distributor of electro-optical instruments and components,
and Corion Corporation, a manufacturer of commercial optical filters.
Effective March 29, 1996, the Company acquired A.R.L. Applied Research
Laboratories S.A., a manufacturer of wavelength-dispersive X-ray
fluorescence instruments and arc/spark atomic emission spectrometers, and
VG Elemental, a manufacturer of inductively coupled plasma/mass
spectrometers, from Thermo Instrument.
Through its Thermo Vision Corporation subsidiary, the Company addresses
the photonics marketplace for optical components, imaging systems,
analytical instruments, and lasers. Thermo Vision is pursuing applications
of the Company's technologies for cost-effective, application-specific
instruments and for optical components, systems, and subassemblies for
analytical instrumentation and other applications. In September 1996, the
Company announced its intent to spin out Thermo Vision through a
distribution of 100 percent of its outstanding capital stock in the form of
a dividend to the Company's shareholders. The Company anticipates
completing the spinout in 1997. The Company is seeking a Letter Ruling from
the Internal Revenue Service stating that this proposed spinout would have
no current tax effect on the Company or its shareholders. The Company would
distribute the shares upon receipt of the Letter Ruling and satisfaction of
other conditions, including the listing of the Thermo Vision shares on the
American Stock Exchange.
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Overview (continued)
Thermo Vision, which includes Oriel and Corion, had revenues of $30.5
million in 1996.
The Company sells its products on a worldwide basis. Although the
Company seeks to charge its customers in the same currency as its operating
costs, the Company's financial performance and competitive position can be
affected by currency exchange rate fluctuations. Where appropriate, the
Company uses forward contracts to reduce its exposure to currency
fluctuations.
Results of Operations
First Quarter 1997 Compared With First Quarter 1996
---------------------------------------------------
Revenues increased 27% to $88.8 million in the first quarter of 1997
from $69.7 million in the first quarter of 1996 due to the acquisitions of
ARL and VG Elemental, effective March 29, 1996, and Oriel and Corion in
February 1996. Acquisitions added revenues of $25.5 million in 1997. This
increase was offset in part by the inclusion in 1996 of several large
non-recurring sales to the Chinese and Japanese governments and the
elimination of certain unprofitable Unicam product lines. In addition,
revenues decreased $1.4 million due to the unfavorable effects of currency
translation as a result of the strengthening in value of the U.S. dollar
relative to currencies in foreign countries in which the Company operates.
The gross profit margin decreased to 48% in the first quarter of 1997
from 49% in the first quarter of 1996, primarily due to the inclusion of
lower-margin revenues from ARL and VG Elemental.
Selling, general, and administrative expenses as a percentage of
revenues decreased to 27% in the first quarter of 1997 from 31% in the
first quarter of 1996, primarily due to efforts to reduce selling and
administrative costs at Mattson and Unicam and the integration of ARL and
VG Elemental products into the Company's existing North American and
European distribution channels.
Research and development expenses as a percentage of revenues decreased
to 6% in the first quarter of 1997 from 7% in the first quarter of 1996
primarily due to the completion of certain research projects at TJA and
Unicam.
Interest income decreased to $0.9 million in the first quarter of 1997
from $1.5 million in the first quarter of 1996 due to lower invested cash
balances as a result of cash used to fund acquisitions. Interest expense
was $1.7 million in 1997, compared with $1.6 million in 1996, and primarily
represents interest on the Company's 5% subordinated convertible
debentures.
The effective tax rate was 42% in the first quarter of 1997, compared
with 43% in the first quarter of 1996. The effective tax rates exceeded the
statutory federal income tax rate primarily due to the impact of
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First Quarter 1997 Compared With First Quarter 1996 (continued)
---------------------------------------------------
state income taxes, the nondeductible amortization of cost in excess of net
assets of acquired companies, and the inability to provide a tax benefit on
foreign losses, offset in part by the tax benefit associated with a foreign
sales corporation.
Liquidity and Capital Resources
Consolidated working capital was $102.7 million at March 29, 1997,
compared with $103.9 million at December 28, 1996. Included in working
capital are cash and cash equivalents of $61.5 million at March 29, 1997,
compared with $63.6 million at December 28, 1996. Cash provided by
operating activities was $10.1 million for the first three months of 1997.
During this period, the Company used $5.5 million of cash to fund an
increase in inventories, primarily to support the distribution of ARL and
VG Elemental products through certain of the Company's existing
distribution channels. This change in distribution channels also
contributed to a reduction in amounts due from affiliated companies of $7.6
million and an increase in accounts receivable of $3.6 million.
The Company's investing activities used $4.3 million of cash in the
first three months of 1997. During this period, the Company used $2.6
million of cash for acquisitions, net of cash acquired. The Company
expended $1.8 million for the purchase of property, plant, and equipment
and plans to expend an additional $4.0 million for such purchases in the
remainder of 1997.
The Company used $7.6 million of cash in the first three months of 1997
for the repayment of short- and long-term borrowings.
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 complementary businesses. The Company expects that
it will finance any such acquisitions through a combination of internal
funds, additional debt or equity financing from capital markets, or
short-term borrowings from Thermo Instrument or Thermo Electron
Corporation, although it has no agreement with these companies to ensure
that 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.
