<PAGE>
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 1, 1995.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number 1-10574
THERMO VOLTEK CORP.
(Exact name of Registrant as specified in its charter)
Delaware 13-1946800
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
470 Wildwood Street, P.O. Box 2878
Woburn, Massachusetts 01888-1578
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 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 28, 1995
---------------------------- -----------------------------
Common Stock, $.05 par value 4,277,425
PAGE
<PAGE>
FORM 10-Q
July 1, 1995
THERMO VOLTEK CORP.
PART I - Financial Information
Item 1 - Financial Statements
(a) Consolidated Balance Sheet - Assets as of July 1, 1995 and
December 31, 1994 (In thousands)
July 1, December 31,
1995 1994
------- ------------
Current Assets:
Cash and cash equivalents $ 4,954 $ 8,955
Available-for-sale investments, at quoted market
value (amortized cost of $28,804 and $28,589)
(includes $1,582 and $299 of related
party investments) 29,068 28,105
Accounts receivable, less allowances of $425
and $343 6,898 6,161
Unbilled contract costs and fees 649 273
Inventories:
Raw materials 2,570 1,996
Work in process 2,770 1,541
Finished goods 2,679 1,939
Prepaid income taxes 185 441
Other current assets 324 331
------- -------
50,097 49,742
------- -------
Property, Plant and Equipment, at Cost 6,440 5,689
Less: Accumulated depreciation and amortization 4,059 3,583
------- -------
2,381 2,106
------- -------
Other Assets 947 980
------- -------
Cost in Excess of Net Assets of Acquired
Companies (Note 2) 12,649 9,396
------- -------
$66,074 $62,224
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
2PAGE
<PAGE>
FORM 10-Q
July 1, 1995
THERMO VOLTEK CORP.
(a) Consolidated Balance Sheet - Liabilities and Shareholders' Equity as of
July 1, 1995 and December 31, 1994 (In thousands except share amounts)
July 1, December 31,
1995 1994
------- ------------
Current Liabilities:
Notes payable $ 1,160 $ 781
Accounts payable 3,437 2,698
Accrued payroll and employee benefits 939 879
Accrued commissions 495 329
Customer deposits 942 489
Accrued and current deferred income taxes 760 270
Other accrued expenses 1,468 926
Due to parent company and Thermo
Electron Corporation 612 1,380
------- -------
9,813 7,752
------- -------
Subordinated Convertible Obligations, Including
$11,500 Due to Parent Company 44,851 46,000
------- -------
Shareholders' Equity:
Common stock, $.05 par value, 10,000,000 shares
authorized; 4,155,545 and 4,038,445
shares issued 208 202
Capital in excess of par value 12,323 11,237
Accumulated deficit (1,839) (2,857)
Treasury stock at cost, 5,954 and 6,000 shares (51) (50)
Cumulative translation adjustment 611 260
Net unrealized gain (loss) on available-for-sale
investments 158 (320)
------- -------
11,410 8,472
------- -------
$66,074 $62,224
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
3PAGE
<PAGE>
FORM 10-Q
July 1, 1995
THERMO VOLTEK CORP.
(b) Consolidated Statement of Income for the three months ended
July 1, 1995 and July 2, 1994 (In thousands except per share amounts)
Three Months Ended
---------------------
July 1, July 2,
1995 1994
------- --------
Revenues $ 8,554 $ 5,476
------- -------
Costs and Operating Expenses:
Cost of revenues 4,512 2,765
Selling, general and administrative
expenses 2,648 1,834
Research and development expenses 592 386
------- -------
7,752 4,985
------- -------
Operating Income 802 491
Interest Income 495 389
Interest Expense (includes $177 for notes
to related party in 1995 and 1994) (570) (546)
------- -------
Income Before Provision for Income Taxes 727 334
Provision for Income Taxes 124 66
------- -------
Net Income $ 603 $ 268
======= =======
Earnings per Share:
Primary $ .14 $ .07
======= =======
Fully diluted $ .10 $ .06
======= =======
Weighted Average Shares:
Primary 4,250 3,987
======= =======
Fully diluted 9,019 4,795
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
4PAGE
<PAGE>
FORM 10-Q
July 1, 1995
THERMO VOLTEK CORP.
(b) Consolidated Statement of Income for the six months ended
July 1, 1995 and July 2, 1994 (In thousands except per share amounts)
Six Months Ended
---------------------
July 1, July 2,
1995 1994
------- --------
Revenues $15,862 $10,404
------- -------
Costs and Operating Expenses:
Cost of revenues 8,332 5,274
Selling, general and administrative
expenses 5,090 3,472
Research and development expenses 1,046 739
------- -------
14,468 9,485
------- -------
Operating Income 1,394 919
Interest Income 1,033 743
Interest Expense (includes $354 for notes
to related party in 1995 and 1994) (1,134) (1,090)
Other Income 14 -
------- -------
Income Before Provision for Income Taxes 1,307 572
Provision for Income Taxes 289 106
------- -------
Net Income $ 1,018 $ 466
======= =======
Earnings per Share:
Primary $ .25 $ .12
======= =======
Fully diluted $ .18 $ .11
======= =======
Weighted Average Shares:
Primary 4,077 3,976
======= =======
Fully diluted 9,013 4,794
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
5PAGE
<PAGE>
FORM 10-Q
July 1, 1995
THERMO VOLTEK CORP.
(c) Consolidated Statement of Cash Flows for the six months ended
July 1, 1995 and July 2, 1994 (In thousands)
Six Months Ended
---------------------
July 1, July 2,
1995 1994
------- -------
Operating Activities:
Net income $ 1,018 $ 466
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 720 437
Provision for losses on accounts receivable 70 24
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable 471 24
Inventories and unbilled contract
costs and fees (1,919) 213
Other current assets 125 (113)
Accounts payable 374 38
Other current liabilities (224) 187
Other (11) 27
------- -------
Net cash provided by operating
activities 624 1,303
------- -------
Investing Activities:
Acquisitions, net of cash acquired (Note 2) (4,000) -
Purchases of available-for-sale investments (7,500) (5,294)
Proceeds from sale and maturities of
available-for-sale investments 7,000 -
Purchases of property, plant and equipment (494) (349)
Other 334 (133)
------- -------
Net cash used in investing
activities (4,660) (5,776)
------- -------
Financing Activities:
Issuance of short-term obligations 273 -
Repurchase of long-term obligations (132) -
Net proceeds from issuance of Company
common stock 117 150
Repayment of note receivable - 48
------- -------
Net cash provided by financing
activities $ 258 $ 198
------- -------
6PAGE
<PAGE>
FORM 10-Q
July 1, 1995
THERMO VOLTEK CORP.
(c) Consolidated Statement of Cash Flows for the six months ended
July 1, 1995 and July 2, 1994 (In thousands) (continued)
Six Months Ended
---------------------
July 1, July 2,
1995 1994
------- -------
Exchange Rate Effect on Cash $ (223) (26)
------- ------
$
Decrease in Cash and Cash Equivalents (4,001) (4,301)
Cash and Cash Equivalents at Beginning of Period 8,955 21,458
------- -------
Cash and Cash Equivalents at End of Period $ 4,954 $17,157
======= =======
Cash Paid For:
Interest $ 1,049 $ 994
Income taxes $ 72 $ 59
Noncash Financing Activities:
Conversions of convertible obligations $ 1,000 $ -
The accompanying notes are an integral part of these consolidated financial
statements.
7PAGE
<PAGE>
FORM 10-Q
July 1, 1995
THERMO VOLTEK CORP.
(d) Notes to Consolidated Financial Statements - July 1, 1995
1. General
The interim consolidated financial statements presented have been
prepared by Thermo Voltek Corp. (the Company) without audit and, in the
opinion of management, reflect all adjustments of a normal recurring nature
necessary for a fair statement of (a) the results of operations for the
three- and six-month periods ended July 1, 1995 and July 2, 1994, (b) the
financial position at July 1, 1995, and (c) the cash flows for the
six-month periods ended July 1, 1995 and July 2, 1994. Interim results are
not necessarily indicative of results for a full year.
The consolidated balance sheet presented as of December 31, 1994, 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 December 31, 1994, filed with the Securities and
Exchange Commission.
2. Acquisition
On March 1, 1995, the Company acquired substantially all of the
assets, subject to certain liabilities, of Kalmus Engineering Incorporated
and R. F. Power Labs, Incorporated (collectively, Kalmus) for approximately
$3.6 million in cash. The Company paid an additional $160,000 in purchase
price on August 2, 1995 as a post-closing adjustment based on the value of
the net assets acquired from Kalmus. Kalmus is a manufacturer of radio
frequency power amplifiers and systems used to test products for immunity
to radiated or conducted radio frequency interference and for medical
imaging and telecommunications applications. The acquisition has been
accounted for using the purchase method of accounting, and Kalmus' results
of operations have been included in the accompanying financial statements
from the date of acquisition. The cost of this acquisition exceeded the
estimated fair value of the acquired net assets by $3.0 million, which is
being amortized over 40 years. Allocation of the purchase price for this
acquisition was based on an estimate of the fair value of the net assets
acquired and is subject to adjustment.
8PAGE
<PAGE>
FORM 10-Q
July 1, 1995
THERMO VOLTEK CORP.
(d) Notes to Consolidated Financial Statements - July 1, 1995 (continued)
2. Acquisition (continued)
Based on unaudited data, the following table presents selected
financial information for the Company and Kalmus on a pro forma basis,
assuming the companies had been combined since the beginning of 1994.
Three Months Ended Six Months Ended
------------------ --------------------
(In thousands except July 2, July 1, July 2,
per share amounts) 1994 1995 1994
-----------------------------------------------------------------------
Revenues $ 6,227 $16,587 $12,262
Net income 312 1,220 672
Earnings per share:
Primary .08 .30 .17
Fully diluted .07 .20 .15
The pro forma results are not necessarily indicative of future
operations or the actual results that would have occurred had the
acquisition of Kalmus been made at the beginning of 1994.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Description of Business
The Company designs, manufactures, and markets instruments that test
electronic and electrical systems and components for immunity to pulsed
electromagnetic interference (pulsed EMI) through its KeyTek Instrument
division (KeyTek), and designs, manufactures, and markets high-voltage
power conversion systems, modulators, fast-response protection systems, and
related high-voltage equipment for industrial, medical, and environmental
processes, and for defense and scientific research applications, through
its Universal Voltronics division. Through its Comtest Instrumentation B.V.
and Comtest Limited subsidiaries (collectively, Comtest), the Company
provides electromagnetic compatibility (EMC) consulting and
systems-integration services, distributes a range of EMC-related products,
and manufactures and markets specialized power supplies for
telecommunications equipment. In July 1994, Comtest acquired Verifier
Systems Limited (Verifier), which manufactures a line of electrostatic
discharge test equipment that performs electrical stress tests for
semiconductor devices. In March 1995, the Company acquired Kalmus
Engineering Incorporated and R. F. Power Labs, Incorporated (collectively,
Kalmus), which manufacture radio frequency power amplifiers and systems
used to test products for immunity to radiated or conducted radio frequency
interference and for medical imaging and telecommunications applications.
9PAGE
<PAGE>
FORM 10-Q
July 1, 1995
THERMO VOLTEK CORP.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Results of Operations
Second Quarter 1995 Compared With Second Quarter 1994
Revenues increased 56% to $8,554,000 in the second quarter of 1995
from $5,476,000 in the second quarter of 1994, due primarily to the
inclusion of $1,350,000 in revenues from Kalmus, which was acquired on
March 1, 1995, the inclusion of $800,000 in revenues from Verifier, which
was acquired in July 1994, and an increase of $445,000 in revenues from
Comtest that resulted primarily from the favorable effects of currency
translation due to a weaker U.S. dollar in 1995. The balance of the
increase in sales resulted from greater demand at KeyTek and, to a lesser
extent, Universal Voltronics.
The gross profit margin decreased to 47% in the second quarter of 1995
from 50% in the second quarter of 1994, due primarily to higher European
sales in one of KeyTek's product lines in 1995, which have lower margins
due to competitive pricing pressure and, to a lesser extent, higher costs
associated with the introduction of a new product by Universal Voltronics.
These decreases were offset in part by the inclusion of higher-margin
Verifier revenues.
Selling, general and administrative expenses as a percentage of
revenues decreased to 31% in the second quarter of 1995 from 33% in the
second quarter of 1994 due primarily to a decline in operating costs at
KeyTek and Universal Voltronics on a higher revenue base. Research and
development expenses as a percentage of revenues remained relatively
unchanged at 6.9% in the second quarter of 1995, compared with 7.0% in the
second quarter of 1994.
Interest income increased to $495,000 in the second quarter of 1995
from $389,000 in the first quarter of 1994, due primarily to higher
prevailing interest rates in 1995. Interest expense increased to $570,000
in the second quarter of 1995 from $546,000 in the second quarter of 1994,
due primarily to the inclusion of interest expense associated with
borrowings under Comtest's outstanding line of credit.
The effective tax rates in 1995 and 1994 were below the statutory
federal income tax rate due to the utilization of tax net operating loss
carryforwards.
First Six Months 1995 Compared With First Six Months 1994
Revenues increased 52% to $15,862,000 in the first six months of 1995
from $10,404,000 in the first six months of 1994, due primarily to the
inclusion of $1,644,000 in revenues from Kalmus, the inclusion of
$1,550,000 in revenues from Verifier, and an increase of $1,078,000 in
revenues from Comtest that resulted from the favorable effects of currency
translation due to a weaker U.S. dollar in 1995 and, to a lesser extent,
greater demand. The balance of the increase in sales resulted from greater
demand at KeyTek and, to a lesser extent, Universal Voltronics.
10PAGE
<PAGE>
FORM 10-Q
July 1, 1995
THERMO VOLTEK CORP.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
First Six Months 1995 Compared With First Six Months 1994 (continued)
The gross profit margin decreased to 47% in the first six months of
1995 from 49% in the first six months of 1994, due primarily to higher
European sales in one of KeyTek's product lines in 1995, which have lower
margins due to competitive pricing pressure and, to a lesser extent, higher
costs associated with an upgraded product at KeyTek. These decreases were
offset in part by the inclusion of higher-margin Verifier revenues.
Selling, general and administrative expenses as a percentage of
revenues decreased to 32% in the first six months of 1995 from 33% in the
first six months of 1994. Research and development expenses as a percentage
of revenues decreased to 6.6% in the first six months of 1995 from 7.1% in
the first six months of 1994. The decreases in selling, general and
administrative expenses and in research and development expenses as a
percentage of revenues are due to an increase in total revenues.
Interest income increased to $1,033,000 in the first six months of
1995 from $743,000 in the first six months of 1994. Interest expense
increased to $1,134,000 in the first six months of 1995 from $1,090,000 in
the first six months of 1994. The reasons for these increases are the same
as those discussed in the results of operations for the second quarter.
The effective tax rates in 1995 and 1994 were below the statutory
federal income tax rate due to the utilization of tax net operating loss
carryforwards.
Financial Condition
Liquidity and Capital Resources
Working capital was $40,284,000 at July 1, 1995, compared with
$41,990,000 at December 31, 1994. Included in working capital are cash,
cash equivalents, and available-for-sale investments of $34,022,000 at July
1, 1995, compared with $37,060,000 at December 31, 1994. During the first
six months of 1995, $624,000 of cash was provided by operating activities.
In March 1995, the Company acquired substantially all of the assets,
subject to certain liabilities, of Kalmus for approximately $3.6 million in
cash. The Company paid an additional $160,000 in purchase price on August
2, 1995 as a post-closing adjustment based on the value of the net assets
acquired from Kalmus (Note 2).
PART II - Other Information
Item 4 - Submission of Matters to a Vote of Security Holders
On May 22, 1995, at the Annual Meeting of Shareholders, the
shareholders elected six incumbent directors to a one-year term expiring in
1996. The directors reelected at the meeting were: Elias P. Gyftopoulos,
William W. Hoover, Sandra L. Lambert, Theo Melas-Kyriazi, Peter Richman,
and John W. Wood Jr. Each nominee for director received 3,596,291 shares
voted in favor of election and 2,972 shares voted against. No broker
nonvotes were recorded on the election of directors.
11PAGE
<PAGE>
FORM 10-Q
July 1, 1995
THERMO VOLTEK CORP.
PART II - Other Information (continued)
Item 4 - Submission of Matters to a Vote of Security Holders (continued)
The shareholders also approved a proposal to amend the directors stock
option plan to change the formula for the award of stock options to
purchase common stock of the Company to its outside Directors as follows:
3,570,426 shares voted in favor, 20,460 shares voted against, and 8,377
shares abstained. No broker nonvotes were recorded on this proposal. A
proposal to adopt an equity incentive plan and to reserve 200,000 shares
for issuance thereunder was also approved by the shareholders as follows:
3,567,151 shares voted in favor, 17,784 shares voted against, and 14,328
shares abstained. No broker nonvotes were recorded on this proposal.
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
On April 27, 1995, the Company filed certain historical financial
statements of Kalmus Engineering Incorporated and R. F. Power Labs,
Incorporated (collectively, Kalmus) and pro forma combined condensed
financial statements as part of an amendment to the Form 8-K that was filed
on March 16, 1995, pertaining to the acquisition of Kalmus.
12PAGE
<PAGE>
FORM 10-Q
July 1, 1995
THERMO VOLTEK CORP.
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 August 1995.
THERMO VOLTEK CORP.
Paul F. Kelleher
------------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
------------------------
John N. Hatsopoulos
Chief Financial Officer
13PAGE
<PAGE>
FORM 10-Q
July 1, 1995
THERMO VOLTEK CORP.
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
------- ----------------------------------------------------- ----
11 Statement re: Computation of earnings per share.
27 Financial Data Schedule.
<PAGE>
Exhibit 11
THERMO VOLTEK CORP.
Computation of Earnings per Share
Three Months Ended Six Months Ended
----------------------- ----------------------
July 1, July 2, July 1, July 2,
1995 1994 1995 1994
---------- ---------- ---------- ----------
Computation of Primary
Earnings per Share:
Net income (a) $ 603,000 $ 268,000 $1,018,000 $ 466,000
---------- ---------- ---------- ----------
Shares:
Weighted average shares
outstanding 4,108,204 3,987,055 4,076,562 3,975,661
Add: Shares issuable
from assumed exercise
of options (as
determined by the
application of the
treasury stock method) 141,713 - - -
---------- ---------- ---------- ----------
Weighted average shares
outstanding, as
adjusted (b) 4,249,917 3,987,055 4,076,562 3,975,661
---------- ---------- ---------- ----------
Primary Earnings per
Share (a) / (b) $ .14 $ .07 $ .25 $ .12
========== ========== ========== ==========
PAGE
<PAGE>
Exhibit 11
THERMO VOLTEK CORP.
Computation of Earnings per Share (continued)
Three Months Ended Six Months Ended
----------------------- ----------------------
July 1, July 2, July 1, July 2,
1995 1994 1995 1994
---------- ---------- ---------- ----------
Computation of Fully
Diluted Earnings per Share:
Income:
Net income $ 603,000 $ 268,000 $1,018,000 $ 466,000
Add: Convertible debt
interest, net of tax 296,000 30,000 596,000 60,000
---------- ---------- ---------- ----------
Income applicable to
common stock assuming
full dilution (a) $ 899,000 $ 298,000 $1,614,000 $ 526,000
---------- ---------- ---------- ----------
Shares:
Weighted average shares
outstanding 4,108,204 3,987,055 4,076,562 3,975,661
Add: Shares issuable from
assumed conversion
of subordinated
convertible obligations 4,755,004 705,467 4,780,357 705,467
Shares issuable
from assumed exercise
of options (as
determined by the
application of the
treasury stock method) 155,863 102,415 155,863 112,730
---------- ---------- ---------- ----------
Weighted average shares
outstanding, as
adjusted (b) 9,019,071 4,794,937 9,012,782 4,793,858
---------- ---------- ---------- ----------
Fully Diluted Earnings per
Share (a) / (b) $ .10 $ .06 $ .18 $ .11
========== ========== ========== ==========
PAGE
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
VOLTEK CORP.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JULY 1, 1995
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> DEC-30-1995
<PERIOD-END> JUL-01-1995
<CASH> 4,954
<SECURITIES> 29,068
<RECEIVABLES> 6,898
<ALLOWANCES> 425
<INVENTORY> 8,019
<CURRENT-ASSETS> 50,097
<PP&E> 6,440
<DEPRECIATION> 4,059
<TOTAL-ASSETS> 66,074
<CURRENT-LIABILITIES> 9,813
<BONDS> 33,351
<COMMON> 208
0
0
<OTHER-SE> 11,202
<TOTAL-LIABILITY-AND-EQUITY> 66,074
<SALES> 15,862
<TOTAL-REVENUES> 15,862
<CGS> 8,332
<TOTAL-COSTS> 8,332
<OTHER-EXPENSES> 1,046
<LOSS-PROVISION> 70
<INTEREST-EXPENSE> 1,134
<INCOME-PRETAX> 1,307
<INCOME-TAX> 289
<INCOME-CONTINUING> 1,018
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,018
<EPS-PRIMARY> .25
<EPS-DILUTED> .18
</TABLE>
