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 July 4, 1998.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number 1-12745
THERMEDICS DETECTION INC.
(Exact name of Registrant as specified in its charter)
Massachusetts 04-3106698
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
220 Mill Road
Chelmsford, Massachusetts 01824-4178
(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 July 31, 1998
---------------------------- ----------------------------
Common Stock, $.10 par value 13,355,459 Actual
19,316,684 Pro Forma
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMEDICS DETECTION INC.
Consolidated Balance Sheet
(Unaudited)
Assets
July 4, January 3,
(In thousands) 1998 1998
- --------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents (includes $21,311 and
$40,043 under repurchase agreement with
affiliated company) $ 29,684 $ 46,352
Accounts receivable, less allowances of $1,016
and $1,127 16,826 18,223
Inventories:
Raw materials 10,412 9,698
Work in process and finished goods 8,628 7,957
Prepaid and refundable income taxes 3,589 3,595
Prepaid expenses 1,349 1,439
-------- --------
70,488 87,264
-------- --------
Property, Plant, and Equipment, at Cost 11,603 10,697
Less: Accumulated depreciation and amortization 7,373 6,686
-------- --------
4,230 4,011
-------- --------
Other Assets 1,194 1,198
-------- --------
Cost in Excess of Net Assets of Acquired Companies 55,045 55,792
-------- --------
$130,957 $148,265
======== ========
2
<PAGE>
THERMEDICS DETECTION INC.
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
July 4, January 3,
(In thousands except share amounts) 1998 1998
- --------------------------------------------------------------------------
Current Liabilities:
Promissory note to parent company $ - $ 21,200
Accounts payable 4,214 3,868
Accrued payroll and employee benefits 2,820 3,852
Accrued income taxes 2,316 2,331
Accrued installation and warranty expenses 1,129 1,154
Deferred revenue 1,606 1,689
Other accrued expenses 4,422 5,410
Due to parent company and affiliated companies 1,793 1,415
-------- --------
18,300 40,919
-------- --------
Shareholders' Investment:
Common stock, $.10 par value, 50,000,000
shares authorized; 19,316,684 pro forma
shares issued and outstanding 1,932 1,932
Capital in excess of par value 94,781 93,755
Retained earnings 17,491 13,206
Accumulated other comprehensive items (Note 3) (1,547) (1,547)
-------- --------
112,657 107,346
-------- --------
$130,957 $148,265
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
THERMEDICS DETECTION INC.
Consolidated Statement of Income
(Unaudited)
Three Months Ended
------------------
July 4, June 28,
(In thousands except per share amounts) 1998 1997
- --------------------------------------------------------------------------
Revenues:
Product revenues $19,915 $21,643
Service revenues 4,042 3,996
------- -------
23,957 25,639
------- -------
Costs and Operating Expenses:
Cost of product revenues 8,603 9,221
Cost of service revenues 2,137 2,076
Selling, general, and administrative expenses 7,405 6,971
Research and development expenses 2,378 2,665
------- -------
20,523 20,933
------- -------
Operating Income 3,434 4,706
Interest Income 287 656
Interest Expense, Related Party - (317)
Other Income (Expense), Net 1 (3)
------- -------
Income Before Provision for Income Taxes 3,722 5,042
Provision for Income Taxes 1,487 2,017
------- -------
Net Income $ 2,235 $ 3,025
======= =======
Basic and Diluted Earnings Per Share (Note 2) $ .12 $ .16
======= =======
Weighted Average Shares (Note 2):
Basic 19,317 19,316
======= =======
Diluted 19,317 19,327
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
THERMEDICS DETECTION INC.
Consolidated Statement of Income
(Unaudited)
Six Months Ended
------------------
July 4, June 28,
(In thousands except per share amounts) 1998 1997
- --------------------------------------------------------------------------
Revenues:
Product revenues $39,366 $43,437
Service revenues 8,298 7,734
------- -------
47,664 51,171
------- -------
Costs and Operating Expenses:
Cost of product revenues 17,613 19,147
Cost of service revenues 4,126 3,655
Selling, general, and administrative expenses 14,357 15,032
Research and development expenses 5,065 4,788
------- -------
41,161 42,622
------- -------
Operating Income 6,503 8,549
Interest Income 878 859
Interest Expense, Related Party (303) (623)
Other Income (Expense), Net 5 (7)
------- -------
Income Before Provision for Income Taxes 7,083 8,778
Provision for Income Taxes 2,798 3,511
------- -------
Net Income $ 4,285 $ 5,267
======= =======
Basic and Diluted Earnings per Share (Note 2) $ .22 $ .29
======= =======
Weighted Average Shares (Note 2):
Basic 19,317 18,127
======= =======
Diluted 19,321 18,139
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
THERMEDICS DETECTION INC.
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
------------------
July 4, June 28,
(In thousands) 1998 1997
- --------------------------------------------------------------------------
Operating Activities:
Net income $ 4,285 $ 5,267
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,641 1,613
Provision for losses on accounts receivable 150 98
Other noncash expenses 768 524
Changes in current accounts:
Accounts receivable 1,232 826
Inventories (2,049) (3,791)
Other current assets 94 (51)
Accounts payable 347 397
Other current liabilities (1,957) 2,222
-------- --------
Net cash provided by operating activities 4,511 7,105
-------- --------
Investing Activities:
Purchases of property, plant, and equipment (1,148) (1,070)
Proceeds from sale of property, plant, and
equipment 99 -
Other - 80
-------- --------
Net cash used in investing activities (1,049) (990)
-------- --------
Financing Activities:
Net proceeds from issuance of Company common stock - 28,121
Orion Research net transfers (to) from parent
company 1,026 (1,835)
Repayment of promissory note to parent company (21,200) -
Other (35)
-------- --------
Net cash provided by (used in) financing activities (20,174) 26,251
-------- --------
Exchange Rate Effect on Cash 44 30
-------- --------
Increase (Decrease) in Cash and Cash Equivalents (16,668) 32,396
Cash and Cash Equivalents at Beginning of Period 46,352 14,264
-------- --------
Cash and Cash Equivalents at End of Period $ 29,684 $ 46,660
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
THERMEDICS DETECTION INC.
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been prepared
by Thermedics Detection Inc. (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 July 4, 1998, the results of
operations for the three- and six-month periods ended July 4, 1998, and June 28,
1997, and the cash flows for the six-month periods ended July 4, 1998, and June
28, 1997. Interim results are not necessarily indicative of results for a full
year.
Historical financial results have been restated to include Orion Research
Inc., which was acquired in a transaction accounted for in a manner similar to a
pooling of interests (Note 4). 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 consolidated financial statements and notes included in the
Company's Annual Report on Form 10-K for the fiscal year ended January 3, 1998,
and with the Company's July 20, 1998 Current Report on Form 8-K/A, filed with
the Securities and Exchange Commission.
2. Earnings per Share
Basic and diluted earnings per share were calculated as follows:
Three Months Ended Six Months Ended
------------------ ------------------
(In thousands except July 4, June 28, July 4, June 28,
per share amounts) 1998 1997 1998 1997
- --------------------------------------------------------------------------
Basic
Net income $ 2,235 $ 3,025 $ 4,285 $ 5,267
------- ------- ------- -------
Weighted average shares 13,356 13,355 13,356 12,166
Shares issuable in connection
with the acquisition of
Orion Research Inc. 5,961 5,961 5,961 5,961
------- ------- ------- -------
Pro forma weighted average
shares, as adjusted 19,317 19,316 19,317 18,127
------- ------- ------- -------
Basic earnings per share $ .12 $ .16 $ .22 $ .29
======= ======= ======= =======
Diluted
Net income $ 2,235 $ 3,025 $ 4,285 $ 5,267
------- ------- ------- -------
Basic weighted average shares 19,317 19,316 19,317 18,127
Effect of stock options - 11 4 12
------- ------- ------- -------
Pro forma weighted average
shares, as adjusted 19,317 19,327 19,321 18,139
------- ------- ------- -------
Diluted earnings per share $ .12 $ .16 $ .22 $ .29
======= ======= ======= =======
7
<PAGE>
2. Earnings per Share (continued)
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 July 4, 1998, there were 967,000 of such options
outstanding, with exercise prices ranging from $9.75 to $12.46 per share.
3. Comprehensive Income
During the first quarter of 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." This
pronouncement sets forth requirements for disclosure of the Company's
comprehensive income and accumulated other comprehensive items. In general,
comprehensive income combines net income and "other comprehensive items", which
represents foreign currency translation adjustments, reported as a component of
shareholders' investment in the accompanying balance sheet. During the second
quarter of 1998 and 1997, the Company's comprehensive income totaled $2,404,000
and $2,774,000, respectively. During the first six months of 1998 and 1997, the
Company's comprehensive income totaled $4,285,000 and $4,360,000, respectively.
4. Acquisition
On April 14, 1998, the Company announced its intention to acquire Orion
Research Inc., a wholly owned subsidiary of Thermedics Inc., in a merger in
which 5,961,225 shares of the Company's common stock would be issued in exchange
for all of the outstanding shares of Orion Research. On May 6, 1998, the
transaction was completed, subject to shareholder approval of the issuance of
the shares of Company common stock to Thermedics in the merger. Orion Research
manufactures electrode-based chemical-measurement products that determine the
quality of a wide variety of substances by measuring components, such as pH,
ions, dissolved oxygen, and conductivity. These products are used primarily in
the environmental, biomedical research, food, chemical, and pharmaceutical
industries. In 1997, Orion Research's revenues and net income were $53,054,000
and $6,437,000, respectively.
Because the Company and Orion Research were deemed for accounting purposes
to be under control of their common majority owner, Thermedics, the transaction
has been accounted for at historical cost in a manner similar to a pooling of
interests. Accordingly, all historical financial information presented has been
restated to include the acquisition of Orion Research. The 5,961,225 shares of
the Company's common stock issuable in the merger will not be issued until the
listing of such shares for trading upon the American Stock Exchange has been
approved by the Company's shareholders. Because Thermedics is the majority
shareholder and intends to vote its shares in favor of such listing, the
approval is assured and, therefore, the shares are considered to be outstanding
as of December 29, 1996, for purposes of computing weighted
8
<PAGE>
4. Acquisition (continued)
average shares. Revenues and net income as previously reported for the separate
entities prior to the acquisition and as restated for the combined Company are
as follows:
Three Months Ended Six Months Ended
(In thousands) June 28, 1997 June 28, 1997
- -------------------------------------------------------------------------
Revenues:
Historical $12,397 $24,826
Orion Research 13,242 26,345
------- -------
$25,639 $51,171
======= =======
Net Income:
Historical $ 1,415 $ 2,439
Orion Research 1,610 2,828
------- -------
$ 3,025 $ 5,267
======= =======
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" included in the Company's Current Report on Form 8-K/A dated May 6,
1998, filed with the Securities and Exchange Commission on July 20, 1998.
Overview
The Company develops, manufactures, and markets high-speed detection and
measurement systems used in on-line industrial process applications, laboratory
analysis, and security.
The Company's industrial process instruments use ultratrace chemical
detectors, X-ray imaging, near-infrared spectroscopy, and other technologies for
quality assurance of in-process or finished products, primarily in the food,
beverage, pharmaceutical, forest products, chemical, and other consumer products
industries. The Company's Alexus(R) systems detect trace amounts of contaminants
in refillable plastic bottles for the beverage industry. The Company's InScan(R)
systems use
9
<PAGE>
Overview (continued)
high-speed X-ray imaging to determine accurate fill volume, net volume, package
integrity, and other quality measures for a variety of products in cans,
bottles, boxes, and other containers. In addition, the Company's moisture
analyzers measure moisture and other product constituents, such as fats,
proteins, oils, flavorings, solvents, adhesives, and coatings, in a broad range
of products as they move along manufacturing lines.
The Company's laboratory products use high-speed gas chromatography,
electrochemistry, and other technologies for quality assurance and regulatory
compliance, primarily in the environmental, food, beverage, chemical,
pharmaceutical, and biomedical research industries. The Company's Flash-GC(TM)
gas chromatograph provides -- at speeds 20 to 50 times faster -- the same
information that conventional gas chromatographs provide on the chemical
composition of a wide range of substances, including pharmaceuticals, chemicals,
food, beverages, soil, and water. An offshoot of the Flash-GC, the Company's EZ
Flash(TM) system is an upgrade kit that can be integrated with almost any
conventional gas chromatograph to enable it to conduct chemical analysis up to
30 times faster. The Company's recently acquired Orion Research Inc. subsidiary
(Note 4) is a worldwide leading manufacturer of electrode-based,
chemical-measurement products that determine the quality of various substances,
from food and pharmaceuticals to water and wastewater, by measuring their pH,
ions, dissolved oxygen, and conductivity.
In addition, the Company makes explosives-detection equipment that uses
simultaneous trace particle- and vapor-detection techniques based on its
proprietary chemiluminescence and high-speed gas chromatography technologies.
Customers use these explosives-detection systems to detect plastic and other
explosives at airports and border crossings, for other high-security screening
applications, and for forensics and search applications.
The Company also performs contract research and development services for
government and industry customers and earns service revenues through long-term
contracts.
Results of Operations
Second Quarter 1998 Compared With Second Quarter 1997
Revenues in the second quarter of 1998 decreased to $24.0 million from $25.6
million in the second quarter of 1997. Product revenues decreased to $19.9
million in 1998 from $21.6 million in 1997, while service revenues remained
unchanged at $4.0 million in 1998 and 1997. Revenues from the Company's
industrial process instruments and related services decreased to $8.1 million in
1998 from $8.5 million in 1997, primarily due to a decrease in Alexus-related
revenues, offset in part by an increase in InScan product sales. Revenues in the
second quarter of 1997 included $1.9 million from a mandated Alexus product-line
10
<PAGE>
Second Quarter 1998 Compared With Second Quarter 1997 (continued)
upgrade of The Coca-Cola Company's existing installed base. This upgrade was
completed in 1997. Revenues from the Company's laboratory products instruments
and related services decreased to $13.3 million in 1998 from $13.6 million in
1997, primarily due to a decline in the Company's domestic distributor sales and
the effect in the 1997 period of the initial deployment of the Flash-GC.
Revenues from the Company's EGIS(R) explosives-detection systems and related
services decreased to $2.2 million in 1998 from $3.1 million in 1997, primarily
due to a decline in international demand.
The gross profit margin decreased slightly to 55% in the second quarter of
1998 from 56% in the second quarter of 1997. The gross profit margin on product
revenues remained consistent at 57% in 1998 and 1997. The gross profit margin on
service revenues decreased to 47% in 1998 from 48% in 1997, primarily due to a
decrease in higher-margin Alexus service revenues.
Selling, general, and administrative expenses as a percentage of revenues
increased to 31% in the second quarter of 1998 from 27% in the second quarter of
1997, primarily due to a decrease in revenues. Research and development expenses
decreased to $2.4 million in 1998 from $2.7 million in 1997, primarily due to a
shift in resources to fulfill commitments under third-party contracts.
Interest income decreased to $0.3 million in the second quarter of 1998 from
$0.7 million in the second quarter of 1997, primarily due to the repayment of
the Company's promissory note to Thermedics in March 1998. Interest expense,
related party, of $0.3 million in the second quarter of 1997 relates to the
promissory note to Thermedics.
The effective tax rate was 40% in the second quarter of 1998 and 1997. The
effective tax rate exceeded the statutory federal income tax rate primarily due
to the impact of state income taxes.
The Company is currently assessing the potential impact of the year 2000 on
the processing of date-sensitive information by the Company's computerized
information systems and on products sold as well as products purchased by the
Company. The Company believes that its internal information systems and current
products are either year 2000 compliant or will be so prior to the year 2000
without incurring material costs. There can be no assurance, however, that the
Company will not experience unexpected costs and delays in achieving year 2000
compliance for its internal information systems and current products, which
could result in a material adverse effect on the Company's future results of
operations.
The Company is presently assessing the effect that the year 2000 issue may
have on its previously sold products. The Company is also assessing whether its
key suppliers are adequately addressing this issue and the effect this might
have on the Company. The Company has not completed its analysis and is unable to
conclude at this time that the year 2000 issue as it relates to its previously
sold products and products purchased from key suppliers is not reasonably likely
to have a material adverse effect on the Company's future results of operations.
11
<PAGE>
First Six Months 1998 Compared With First Six Months 1997
Revenues in the first six months of 1998 decreased to $47.7 million from
$51.2 million in the first six months of 1997. Product revenues decreased to
$39.4 million in 1998 from $43.4 million in 1997, while service revenues
increased to $8.3 million in 1998 from $7.7 million in 1997. Revenues from the
Company's industrial process instruments and related services decreased to $15.2
million in 1998 from $19.2 million in 1997, primarily due to a decrease in
Alexus-related revenues, offset in part by an increase in InScan product sales.
Revenues in the first six months of 1997 included $4.1 million from a mandated
Alexus product-line upgrade of The Coca-Cola Company's existing installed base.
Revenues from industrial process instruments also declined as a result of a $0.8
million decrease in revenues from moisture analyzers, primarily due to a
slowdown in product demand in North America. Revenues from the Company's
laboratory products instruments and related services increased to $27.5 million
in 1998 from $26.9 million in 1997. Revenues from the Company's EGIS
explosives-detection systems and related services increased to $4.6 million in
1998 from $4.2 million in 1997, primarily due to $1.1 million of shipments under
a contract with the U.S. Federal Aviation Administration (FAA). Product
shipments under this contract were completed in the first quarter of 1998.
The gross profit margin decreased to 54% in the first six months of 1998
from 55% in the first six months of 1997. The gross profit margin on product
revenues decreased slightly to 55% in 1998 from 56% in 1997. The gross profit
margin on service revenues decreased to 50% in 1998 from 53% in 1997, primarily
due to a decrease in higher-margin Alexus service revenues, as well as higher
costs relating to the Company's contract with the FAA.
Selling, general, and administrative expenses as a percentage of revenues
increased to 30% in the first six months of 1998 from 29% in the first six
months of 1997, primarily due to a decrease in revenues. Research and
development expenses increased to $5.1 million in 1998 from $4.8 million in
1997, primarily due to costs associated with developing a low-cost portable
security detection device, improving and expanding the product lines of the
Company's moisture systems and laboratory products businesses, and development
costs associated with the EZ Flash, which was introduced in May 1998.
Interest income remained consistent at $0.9 million in the first six months
of 1998 and 1997. Interest expense, related party, of $0.3 million and $0.6
million in the first six months of 1998 and 1997, respectively, relates to a
promissory note issued to Thermedics, which was repaid in March 1998.
The effective tax rate was 40% in the first six months of 1998 and 1997. The
effective tax rate exceeded the statutory federal income tax rate primarily due
to the impact of state income taxes.
12
<PAGE>
Liquidity and Capital Resources
Consolidated working capital was $52.2 million at July 4, 1998, compared
with $46.3 million at January 3, 1998. Included in working capital are cash and
cash equivalents of $29.7 million at July 4, 1998, compared with $46.4 million
at January 3, 1998.
During the first six months of 1998, $4.5 million of cash was provided by
operating activities. During this period, $1.2 million of cash was provided by a
decrease in accounts receivable. This source of cash was offset in part by $2.0
million of cash used to reduce other current liabilities, including $1.0 million
of accrued payroll and employee benefits. In addition, cash of $2.0 million was
used to fund an increase in inventories, primarily relating to purchases for the
production of the EZ Flash, which began in May 1998.
During the first six months of 1998, the Company expended $1.1 million on
purchases of property, plant, and equipment. During the remainder of 1998, the
Company expects to make capital expenditures of approximately $1.2 million.
In March 1998, the Company repaid its $21.2 million promissory note to
Thermedics.
Although the Company expects to have positive cash flow from its existing
operations, the Company anticipates it will require significant amounts of cash
for the possible acquisition of complementary businesses and technologies. While
the Company currently has no agreement to make an acquisition, except as
discussed in Note 4 to the consolidated financial statements, it expects that it
would finance any acquisition through a combination of internal funds, and/or
short-term borrowings from Thermedics 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 that its existing resources
are sufficient to meet the capital requirements of its existing businesses for
the foreseeable future.
PART II - OTHER INFORMATION
Item 2 - Use of Proceeds
The Company sold 2,671,292 shares of common stock, par value $.10 per share,
pursuant to a Registration Statement on Form S-1 (File No. 333-19199), which was
declared effective by the Securities and Exchange Commission on February 21,
1997. The managing underwriters of the offering were NatWest Securities Limited
and Lehman Brothers. The aggregate gross proceeds of the offering were
$30,720,000. The Company's total expenses in connection with the offering were
$2,642,000, of which $1,718,000 was for underwriting discounts and commissions,
$878,000 was for other expenses paid to persons other than directors or officers
of the Company, persons owning more than 10 percent of any class of equity
securities of the Company or affiliates of the Company (collectively,
Affiliates), and $46,000 was paid to Thermo Electron for certain services
rendered in connection with the offering. The Company's net proceeds from
13
<PAGE>
Item 2 - Use of Proceeds (continued)
the offering were $28,078,000. As of July 4, 1998, the Company had expended
$1,792,000 of such net proceeds for the purchase of property, plant, and
equipment, $9,046,000 for research and development, and $10,803,000 for working
capital needs. In addition, the balance was used to repay indebtedness to
Thermedics. As of July 4, 1998, the Company had $29,684,000 of cash and cash
equivalents.
Item 4 - Submission of Matters to a Vote of Security Holders
On June 1, 1998, at the Annual Meeting of Shareholders, the
shareholders elected five incumbent directors to a one-year term expiring
in 1999. The directors elected at the meeting were: Mr. James Barbookles,
Mr. Morton Collins, Mr. John T. Keiser, Mr. Matthew C. Weisman, and Mr.
John W. Wood Jr. Each director, except Mr. Barbookles, received
12,341,880 shares voted in favor of his election and 17,102 shares voted
against. Mr. Barbookles received 12,341,763 shares voted in favor of his
election and 17,219 shares voted against. No abstentions or broker
nonvotes were recorded on the election of directors.
At the Annual Meeting, the shareholders also approved a proposal to adopt an
employees' stock purchase plan and to reserve 50,000 shares for issuance
thereunder as follows: 12,314,685 shares were voted in favor of the proposal,
33,885 shares were voted against and 10,412 shares abstained. No broker nonvotes
were recorded on the proposal.
Item 5 - Other Information
Pursuant to recent amendments to the rules relating to proxy statements
under the Securities Exchange Act of 1934, as amended (the Exchange Act),
shareholders of the Company are hereby notified that any shareholder proposal
not included in the Company's proxy materials for its 1999 Annual Meeting of
Shareholders (the Annual Meeting) in accordance with Rule 14a-8 under the
Exchange Act will be considered untimely for the purposes of Rules 14a-4 and
14a-5 under the Exchange Act if notice thereof is received by the Company after
March 15, 1999. Management proxies will be authorized to exercise discretionary
voting authority with respect to any shareholder proposal not included in the
Company's proxy materials for the Annual Meeting unless (a) the Company receives
notice of such proposal by March 15, 1999, and (b) the conditions set forth in
Rule 14a-4(c)(2)(i)-(iii) under the Exchange Act are met.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated May 6, 1998, pertaining
to the acquisition of Orion Research Inc. from Thermedics Inc. in exchange for
the right to receive 5,961,225 shares of the Company's common stock. On July 20,
1998, the Company filed an amendment on Form 8-K/A, the purpose of which was to
file the financial information related to this acquisition required by Form 8-K.
14
<PAGE>
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 7th day of August 1998.
THERMEDICS DETECTION INC.
Paul F. Kelleher
----------------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
----------------------------
John N. Hatsopoulos
Chief Financial Officer and
Senior Vice President
15
<PAGE>
THERMEDICS DETECTION INC.
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ---------------------------------------------------------------------------
27.1 Financial Data Schedule for the Quarter Ended July 4, 1998.
27.2 Financial Data Schedule for the Quarter Ended March 29, 1997
(restated for the Orion pooling).
27.3 Financial Data Schedule for the Quarter Ended June 28, 1997
(restated for the Orion pooling).
16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMEDICS
DETECTION INC.'S REPORT ON FORM 10-Q FOR THE PERIOD ENDED JULY 4, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-END> JUL-04-1998
<CASH> 29,684
<SECURITIES> 0
<RECEIVABLES> 17,842
<ALLOWANCES> 1,016
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<PP&E> 11,603
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0
0
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY RESTATED FINANCIAL INFORMATION FROM
THERMEDICS DETECTION INC.'S
FOR THE PERIOD ENDED MARCH 29, 1997
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
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<PERIOD-END> MAR-29-1997
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<BONDS> 0
0
0
<COMMON> 1,932
<OTHER-SE> 102,404
<TOTAL-LIABILITY-AND-EQUITY> 148,022
<SALES> 21,794
<TOTAL-REVENUES> 25,532
<CGS> 9,926
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<LOSS-PROVISION> 33
<INTEREST-EXPENSE> 306
<INCOME-PRETAX> 3,736
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<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY RESTATED FINANCIAL INFORMATION FROM
THERMEDICS DETECTION INC.'S FOR THE PERIOD ENDED JUNE 28, 1997
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> JUN-28-1997
<CASH> 46,660
<SECURITIES> 0
<RECEIVABLES> 17,892
<ALLOWANCES> 1,463
<INVENTORY> 17,614
<CURRENT-ASSETS> 86,130
<PP&E> 10,043
<DEPRECIATION> 5,853
<TOTAL-ASSETS> 149,245
<CURRENT-LIABILITIES> 43,105
<BONDS> 0
0
0
<COMMON> 1,932
<OTHER-SE> 104,168
<TOTAL-LIABILITY-AND-EQUITY> 149,245
<SALES> 43,437
<TOTAL-REVENUES> 51,171
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<INCOME-TAX> 3,511
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<EPS-PRIMARY> 0.29
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</TABLE>
