SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------------------------------
AMENDMENT NO. 1 ON FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported):
December 1, 1995
________________________________________
THERMEDICS INC.
(Exact name of Registrant as specified in its charter)
Massachusetts 1-9567 04-2788806
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification Number)
incorporation or
organization)
470 Wildwood Street
P.O. Box 2999
Woburn, Massachusetts 01888-1799
(Address of principal executive offices) (Zip Code)
(617) 622-1000
(Registrant's telephone number
including area code)
PAGE
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FORM 8-K/A
Item 2. Acquisition or Disposition of Assets
On December 1, 1995, Thermedics Inc. (the "Company") acquired all of
the outstanding capital stock of Analytical Technology, Inc. ("ATI")
pursuant to a merger (the "Merger").
In a separate transaction consummated immediately prior to the
effectiveness of the Merger, Thermo Instrument Systems Inc. ("Thermo
Instrument"), which is an affiliate of the Company, purchased ATI's
analytical instruments business (the "Thermo Instrument Acquisition") in
exchange for Thermo Instrument's demand promissory note in the principal
amount of $34,933,000 (the "Thermo Instrument Note"). Consequently, at the
effective time of the Merger, ATI's assets consisted principally of its
Orion Laboratory Products Division ("Orion") and the Thermo Instrument
Note. Orion, based in Boston, Massachusetts, is a provider of
electrochemistry, microweighing and other instruments to detect the
chemical composition of foods, beverages and pharmaceuticals.
The base purchase price of the capital stock of ATI acquired in the
Merger (the "Aggregate Purchase Price") was $79,284,000 in cash, plus the
assumption of approximately $15,600,000 in bank indebtedness existing as of
the closing of the Merger. Of these amounts, $34,933,000 was paid to the
former ATI shareholders by Thermo Instrument at the direction of the
Company in exchange for the cancellation of the Thermo Instrument Note, and
Thermo Instrument assumed approximately $7,000,000 of such bank
indebtedness. As a result, the effective base purchase price paid by the
Company for Orion (the "Orion Purchase Price") was $44,351,000 in cash,
plus assumed bank indebtedness of approximately $8,600,000, which was
repaid shortly after closing. As of February 13, 1996, Thermo Instrument
and the Company have reached a preliminary agreement between themselves
resulting in a reduction of the Orion Purchase Price to $52,198,000,
including approximately $8,600,000 million indebtedness referred to above.
The Aggregate Purchase Price is subject to a post-closing adjustment,
and will either be (i) increased by the amount by which ATI's net tangible
equity as of the closing (without taking into account the Thermo Instrument
Acquisition) exceeds a deficit of $1,989,000; or (ii) decreased by the
amount by which a deficit of $1,989,000 exceeds such net tangible equity.
The Company and Thermo Instrument have agreed that, in the event that the
Aggregate Purchase Price is so adjusted, then the portion of such
adjustment that is attributable to the operations of the businesses
acquired by Thermo Instrument will be paid to, or by, Thermo Instrument, as
the case may be.
The Merger was effected pursuant to an Agreement and Plan of Merger
executed as of November 29, 1995, by and among the Company, ATI Merger
Corp. (a wholly owned subsidiary of the Company), ATI and, for certain
limited purposes, Thermo Instrument. The Orion Purchase Price was based on
the Company's determination of the fair market value of Orion's business,
and the terms of the merger agreement were determined by arms' length
negotiation among the parties.
2PAGE
<PAGE>
FORM 8-K/A
The Company expects to move Orion's headquarters and certain of its
manufacturing operations upon the expiration of certain lease commitments.
Otherwise, the Company has no present intention to use Orion's plant,
equipment or other assets for purposes materially different from the
purposes for which such assets were used prior to the acquisition. However,
the Company will review Orion's business and assets, corporate structure,
capitalization, operations, properties, policies, management and personnel
and, upon completion of this review, may develop alternative plans or
proposals, including mergers, transfers of a material amount of assets or
other transactions or changes relating to such business.
Of the Orion Purchase Price, $38,000,000 was borrowed from Thermo
Electron Corporation ("Thermo Electron") pursuant to a promissory note due
December 9, 1996 and bearing interest at a rate per annum equal to the rate
of the Commercial Paper Composite Rate as reported by Merrill Lynch Capital
Markets, as an average of the last five business days of each fiscal
quarter, plus 25 basis points, and the balance was funded from the
Company's working capital.
3PAGE
<PAGE>
FORM 8-K/A
Item 7. Financial Statements, Pro Forma Combined Condensed Financial
Information and Exhibits
(a) Financial Statements of Business Acquired
Attached hereto.
4PAGE
<PAGE>
Report of Independent Public Accountants
To the Orion Lab Products Division of Analytical Technology, Inc.:
We have audited the accompanying consolidated balance sheets of the Orion
Lab Products Division of Analytical Technology, Inc. and subsidiaries as of
December 31, 1994 and January 1, 1994, and the related consolidated
statements of income, stockholders' investment, and cash flows for each of
the two years in the period ended December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Orion Lab Products Division of Analytical Technology, Inc. and subsidiaries
as of December 31, 1994 and January 1, 1994 and the results of their
operations and their cash flows for each of the two years in the period
ended December 31, 1994, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Boston, Massachusetts
January 8, 1996
1PAGE
<PAGE>
Orion Lab Products Division of Analytical Technology, Inc.
Consolidated Balance Sheet
September 30, December 31, January 1,
(In thousands) 1995 1994 1994
--------------------------------------------------------------------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 210 $ - $ 117
Accounts receivable, less
allowance for doubtful
accounts of $168, $278,
and $319 7,296 6,605 7,229
Due from parent company 1,051 1,731 766
Inventories:
Raw materials 3,073 2,613 2,354
Work-in-process 344 162 243
Finished goods 1,430 1,269 1,559
------- ------- -------
Total inventories 4,847 4,044 4,156
Prepaid taxes 1,273 824 1,213
Prepaid expenses and other
current assets 343 457 329
------- ------- -------
Total current assets 15,020 13,661 13,810
Equipment and improvements:
Production and research equipment 3,458 3,894 3,779
Office furniture and equipment 1,515 1,502 1,399
Leased property 369 368 368
Buildings and improvements 3,414 3,407 3,392
------- ------- -------
8,756 9,171 8,938
Less accumulated depreciation
and amortization (5,736) (4,887) (3,808)
------- ------- -------
Equipment and improvements, net 3,020 4,284 5,130
Cost in excess of net assets acquired 6,862 7,242 7,599
Other assets 60 - -
------- ------- -------
Total assets $24,962 $25,187 $26,539
======= ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
2PAGE
<PAGE>
Orion Lab Products Division of Analytical Technology, Inc.
Consolidated Balance Sheet (continued)
September 30, December 31, January 1,
(In thousands) 1995 1994 1994
--------------------------------------------------------------------------
(Unaudited)
Liabilities and Stockholders'
Investment
Current liabilities:
Accounts payable $ 3,069 $ 2,577 $ 2,784
Accrued salaries and benefits 1,106 640 1,295
Accrued other 1,929 1,958 2,207
Current portion of long-term debt
and capital lease obligations 225 218 201
------- ------- -------
Total current liabilities 6,329 5,393 6,487
Long-term debt 390 400 457
Capital lease obligations 41 160 312
Deferred income taxes 274 410 592
Commitments
Stockholders' investment:
Parent company investment 17,975 18,890 18,843
Cumulative translation adjustment (47) (66) (152)
------- ------- -------
Total stockholders' investment 17,928 18,824 18,691
------- ------- -------
Total liabilities and stockholders'
investment $24,962 $25,187 $26,539
======= ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
3PAGE
<PAGE>
Orion Lab Products Division of Analytical Technology, Inc.
Consolidated Statement of Income
Nine Months Ending Year Ended
------------------------- ------------------------
September 30, October 1, December 31, January 1,
(In thousands) 1995 1994 1994 1994
--------------------------------------------------------------------------
(Unaudited)
Net sales:
Products $34,370 $33,043 $44,690 $46,054
Service 1,094 1,207 1,575 1,644
------- ------- ------- -------
35,464 34,250 46,265 47,698
------- ------- ------- -------
Cost of sales:
Products 15,355 14,605 19,788 19,239
Service 522 577 761 757
------- ------- ------- -------
15,877 15,182 20,549 19,996
------- ------- ------- -------
Gross profit 19,587 19,068 25,716 27,702
Operating expenses:
Selling, general and
administrative 10,385 10,009 13,309 14,494
Research and development 2,665 2,686 3,511 3,994
Restructuring - - - 1,460
------- ------- ------- -------
13,050 12,695 16,820 19,948
------- ------- ------- -------
Operating income 6,537 6,373 8,896 7,754
Interest expense (39) (46) (60) (529)
------- ------- ------- -------
Income before income
taxes 6,498 6,327 8,836 7,225
Provision for income
taxes 2,420 2,290 3,199 2,532
------- ------- ------- -------
Net income $ 4,078 $ 4,037 $ 5,637 $ 4,693
======= ======= ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
4PAGE
<PAGE>
Orion Lab Products Division of Analytical Technology, Inc.
Statement of Stockholders' Investment
Cumulative
Parent Company Translation
(In thousands) Investment Adjustment Total
-------------------------------------------------------------------------
Balance at January 2, 1993 $22,217 $ (118) $22,099
Net income 4,693 - 4,693
Increase in advances to ATI (8,067) - (8,067)
Currency translation adjustment - (34) (34)
------- ------- -------
Balance at January 1, 1994 18,843 (152) 18,691
Net income 5,637 - 5,637
Increase in advances to ATI (5,590) - (5,590)
Currency translation adjustment - 86 86
------- ------- -------
Balance at December 31, 1994 18,890 (66) 18,824
(Unaudited)
Net income 4,078 - 4,078
Increase in advances to ATI (4,993) - (4,993)
Currency translation adjustment - 19 19
------- ------- -------
Balance at September 30, 1995 $17,975 $ (47) $17,928
======= ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
5PAGE
<PAGE>
Orion Lab Products Division of Analytical Technology, Inc.
Consolidated Statement of Cash Flows
Nine Months Ended Years Ended
------------------------- ------------------------
September 30, October 1, December 31, January 1,
(In thousands) 1995 1994 1994 1994
- -------------------------------------------------------------------------------
(Unaudited)
Operating Activities
Net income $ 4,078 $ 4,037 $ 5,637 $ 4,693
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization
of equipment and improvements 942 942 1,300 1,186
Amortization of intangible
assets 380 380 506 560
Write-off of goodwill and
other intangibles - - - 451
Loss on disposal of equipment
and improvements 491 82 110 802
Deferred income taxes (136) - (182) 242
Change in operating assets
and liabilities:
Accounts receivable (692) 755 624 (323)
Inventories (802) (769) 112 (165)
Prepaid expenses 336 59 262 (1,190)
Accounts payable 492 6 (206) 996
Accrued expenses-other
current liabilities (439) (1,225) (1,055) (480)
------- ------- ------- -------
Net cash provided by
operating activities 4,650 4,267 7,108 6,772
------- ------- ------- -------
Investing Activities
Additions to equipment and
improvements (162) (458) (544) (1,114)
Purchase of other assets (60) - - -
------- ------- ------- -------
Net cash used in
investing activities $ (222) $ (458) $ (544) $(1,114)
6PAGE
<PAGE>
Orion Lab Products Division of Analytical Technology, Inc.
Consolidated Statement of Cash Flows (continued)
Nine Months Ended Years Ended
------------------------- ------------------------
September 30, October 1, December 31, January 1,
(In thousands) 1995 1994 1994 1994
- -------------------------------------------------------------------------------
(Unaudited)
Financing Activities
Payments of long-term debt $ (132) $ (104) $ (212) $ (162)
Proceeds from long-term
borrowing - - - 539
(Increase)/decrease in due
from parent company 886 4,215 (965) 2,003
(Increase)/decrease in advances
to ATI (4,993) (7,976) (5,590) (8,067)
------- ------- ------- -------
Net cash used in
financing activities (4,239) (3,865) (6,767) (5,687)
Effect of exchange rate changes
on cash 21 87 86 (20)
------- ------- ------- -------
Net increase (decrease)
in cash and cash
equivalents 210 31 (117) (49)
Cash and cash equivalents at
beginning of period - 117 117 166
------- ------- ------- -------
Cash and cash equivalents at
end of period $ 210 $ 148 $ - $ 117
======= ======= ======= =======
Supplemental cash flow
information:
Cash paid for interest $ 34 $ 41 $ 61 $ 564
======= ======= ======= =======
Cash paid for income taxes $ 481 $ 470 $ 557 $ 1,043
======= ======= ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
7PAGE
<PAGE>
Orion Lab Products Division of Analytical Technology, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Basis of Presentation
Orion Lab Products Division (the "Company") was a wholly owned division of
Analytical Technology, Inc. ("ATI"). On December 1, 1995, all of the
outstanding capital stock of ATI was purchased by Thermedics Inc.
(Thermedics), a 51%-owned subsidiary of Thermo Electron Corporation for a
purchase price of approximately $52.2 million in cash, including the
repayment of approximately $8.6 million in debt. No adjustment has been
made to the consolidated financial statements due to or as a result of this
transaction.
In a separate transaction consummated immediately prior to the Thermedics
purchase, ATI sold its analytical instruments business to Thermo Instrument
Systems Inc., an affiliate of Thermedics.
Principles of Consolidation
The accompany financial statements include the accounts of the company and
its wholly owned subsidiaries, Orion Research Puerto Rico and Russell pH
Ltd. All material intercompany accounts and transactions have been
eliminated.
Fiscal Year
The Company's fiscal year is the 52-53 week period ending on the Saturday
nearest to December 31. References to 1994 and 1993 are for the fiscal
years ended December 31, 1994 and January 1, 1994, respectively.
Revenue Recognition
The Company recognizes revenues upon shipment of its products. The Company
provides a reserve for its estimate of warranty and installation costs at
time of shipment. Revenues billed in advance for annual service contracts
are recorded as revenue over the 12-month period in which the related
services are rendered.
Income Taxes
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes" effective the beginning of 1993. The
Standard, more fully described in Note 4, requires the liability method to
be used in accounting for income taxes.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. Cash
equivalents are valued at cost which approximates market.
8PAGE
<PAGE>
Orion Lab Products Division of Analytical Technology, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (continued)
Inventories
Inventories are stated at the lower of cost, determined by the first in,
first out (FIFO) method or market value and include material, labor, and
manufacturing overhead.
Equipment and Improvements
Equipment and improvements are carried at cost. The Company provides for
depreciation and amortization on the straight-line method using the
following lives:
Production and research equipment 3-5 years
Office furniture and equipment 3-5 years
Leased property 3 years
Buildings and improvements Life of lease or asset
Cost in Excess of Net Assets Acquired
The Company accounts for cost in excess of net assets acquired (goodwill)
at the lower of amortized cost or fair value. On an ongoing basis,
management reviews the value and period of amortization of goodwill. During
this review, the Company reevaluates the significant assumption used in
determining the original cost of acquired businesses and related goodwill.
Although the assumptions used may vary from transaction to transaction,
they generally include revenue growth, operating results, cash flows and
other indicators of value. Management then determines whether there has
been a permanent impairment of the value of goodwill based upon events or
circumstances which have occurred since acquisition.
Goodwill is being amortized on a straight-line basis over 25 years.
Accumulated amortization at December 31, 1994 and January 1, 1994 was
$2,209,000 and $1,852,000, respectively.
Other Assets
Other assets are amortized over the appropriate life of the asset and
include the following as of December 31, 1994 and January 1, 1994:
Amortization
Period
(In thousands) 1994 1993 (Years)
-------------------------------------------------------------------------
Favorable lease $ 970 $ 970 7.5
Less Accumulated amortization (776) (647)
----- -----
$ 194 $ 323
===== =====
9PAGE
<PAGE>
Orion Lab Products Division of Analytical Technology, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (continued)
Foreign Currency Translation
In accordance with SFAS No. 52, assets and liabilities of such subsidiaries
are translated at the rate of exchange in effect at year-end and revenues
and expenses are translated at the average exchange rates during the year
Gains and losses from translation are credited or charged to the cumulative.
translation adjustment included in stockholder's equity. Foreign currency
transaction gains and losses are included in the accompanying consolidated
statement of income and are not material for the years presented.
Interim Financial Statements
The financial statements as of September 30, 1995 and for the nine-month
periods ended September 30, 1995 and October 1, 1994 are unaudited but, in
the opinion of management, reflect all adjustments of a normal recurring
nature necessary for a fair presentation of results for these interim
periods. The results of operations for the nine-month period ended
September 30, 1995 are not necessarily indicative of the results to be
expected for the entire year.
2. Commitments
The Company leases equipment and facilities under operating leases and
certain equipment under capital leases. These leases require the following
minimum payments:
Capital Operating
(In thousands) Leases Leases
-----------------------------------------------------------------------
1995 $ 166 $1,367
1996 165 758
1997 - 167
1998 - 115
1999 - 23
------ ------
Total minimum lease payments 331 $2,430
======
Less amount representing interest 20
------
Present value of minimum lease payments 311
Less current portion 151
------
Long-term capital lease obligations $ 160
======
10PAGE
<PAGE>
Orion Lab Products Division of Analytical Technology, Inc.
Notes to Consolidated Financial Statements
2. Commitments (continued)
The minimum payments exclude real estate taxes, insurance, and operating
costs. Certain of the above leases contain renewal options. Total rental
expense incurred for all operating leases was $1,436,000 and $1,467,000 in
1994 and 1993, respectively. The consolidated balance sheets, as of
December 31, 1994 include $123,000 of accumulated amortization related to
leased property. There was no such amount on the January 1, 1994 balance
sheet.
3. Long-Term Debt - Other
Long-term debt consists of the following:
December 31, January 1,
(In thousands) 1994 1994
-------------------------------------------------------------------------
Industrial development revenue bond,
due in annual installments of $45,000
through September 2000, interest at
approximately 86% of prime is due
quarterly. $270 $315
Russell pH mortgage, due in monthly
installments through June 2003, interest
floating 3% over Banks' Base rate
(with a floor of 8%). 197 201
---- ----
467 516
Current portion of long-term debt 67 59
---- ----
Long-term debt $400 $457
==== ====
Current portion of long-term debt $ 67 $ 59
Current portion of capital leases 151 142
---- ----
Current portion of long-term debt
and capital lease obligations $218 $201
==== ====
The holder of the industrial development revenue bonds can require payment
of the outstanding balance. If the prepayment were to occur, the prepayment
would be funded by amounts drawn from the parent revolving credit
agreements; accordingly, the bonds have been classified as noncurrent in
the consolidated balance sheet. The industrial development revenue bond
agreement contains affirmative and negative covenants including the
maintenance of certain levels of working capital, net worth, cash flows,
and certain financial ratios. The mortgage is secured by land and buildings
at the facility in Scotland.
11PAGE
<PAGE>
Orion Lab Products Division of Analytical Technology, Inc.
Notes to Consolidated Financial Statements
4. Income Taxes
Effective January 3, 1993, the Company adopted SFAS No. 109, "Accounting
for Income Taxes." Under SFAS No. 109, the liability method is used in
accounting for income taxes. Under this method, deferred tax assets and
liabilities are determined based on differences between financial reporting
and tax bases of assets and liabilities and are measured using the enacted
tax rates and laws that will be in effect when the differences are expected
to reverse. Prior to the adoption of SFAS No. 109, income tax expense was
determined using the liability method prescribed by SFAS No. 96, which is
superseded by SFAS No. 109.
The components of income before income taxes are as follows:
(In thousands) 1994 1993
-----------------------------------------------------------------------
Domestic $8,246 $7,084
Foreign 590 141
------ ------
$8,836 $7,225
====== ======
The components of the income tax provision (benefit) are as follows:
(In thousands) 1994 1993
-----------------------------------------------------------------------
Currently payable:
Federal $1,913 $2,119
Puerto Rican 368 347
State 516 616
Foreign 195 47
------ ------
2,992 3,129
------ ------
Net deferred (prepaid):
Federal 160 (463)
State 47 (134)
------ ------
207 (597)
------ ------
$3,199 $2,532
====== ======
12PAGE
<PAGE>
Orion Lab Products Division of Analytical Technology, Inc.
Notes to Consolidated Financial Statements
4. Income Taxes (continued)
Provision for income taxes in the accompanying statement of income differs
from the provision calculated by applying the statutory federal tax rate of
35% to income before provision for income taxes due to the following:
(In thousands) 1994 1993
-----------------------------------------------------------------------
Provision (benefit) for income
taxes at statutory rate $3,093 $2,529
Increases/decreases resulting
from:
State income taxes, net of
federal tax 366 313
Foreign tax rate and tax law
differential (12) (2)
Puerto Rican tax benefit (383) (438)
Amortization of cost in excess
of net assets acquired 125 125
Other, net 10 5
------ ------
$3,199 $2,532
------ ------
The components of prepaid income taxes and deferred income taxes in the
accompanying balance sheet consist of the following:
(In thousands) 1994 1993
-----------------------------------------------------------------------
Deferred income taxes:
Depreciation $ 410 $ 592
------ ------
Prepaid income taxes:
Reserves and accruals $ 429 $ 612
Inventory basis 395 601
------ ------
$ 824 $1,213
------ ------
A provision has not been made for U.S. or additional foreign taxes on $1
million of undistributed earnings of foreign subsidiaries that could be
subject to taxation if remitted to the U.S. because the Company plans to
keep such earnings permanently reinvested overseas. The Company believes
that any additional tax liability due upon remittance would be immaterial.
The Company has a wholly owned Puerto Rican subsidiary. The earnings of
this subsidiary are substantially exempt from federal income taxes and 75%
of the earnings of this subsidiary are exempt from Puerto Rican income
taxes through 1998. Dividends paid by this subsidiary are subject to a
Puerto Rican tollgate withholding tax of up to 5%.
13PAGE
<PAGE>
Orion Lab Products Division of Analytical Technology, Inc.
Notes to Consolidated Financial Statements
5. Restructuring
During 1993, the Company initiated a restructuring of its operations. As a
result, the Company provided $1,460,000 for restructuring costs in 1993,
for severance and the write-down and disposal of various operating assets.
As a result of this restructuring, at January 1, 1994, the Company had an
accrued severance and restructuring balance of $250,000, which consisted
primarily of severance costs and costs associated with the discontinuance
of product lines and disposal of certain operating assets.
During 1994, the Company charged $9,000 against accrued severance and
restructuring. As of December 31, 1994, the balance of accrued severance
and restructuring costs are $241,000.
6. Employee Retirement Plans
Employee Tax Deferred Savings Plan
The Company participates in ATI's tax deferred employee benefit plan for
its U.S. employees under the provisions of Internal Revenue Code section
401(k). The Company, at its discretion, can match up to 50% or more of
employee contributions up to 6% of the employee's salary. Matching
contributions are 100% vested immediately. The cost of the plan, including
matching and administrative fees, was $292,000 and $153,000 in 1994 and
1993, respectively.
7. Related Party Transactions
The Company participates in the Analytical Technology, Inc. cash management
system.
14PAGE
<PAGE>
Orion Lab Products Division of Analytical Technology, Inc.
Notes to Consolidated Financial Statements
8. Industry Segment and Geographic Information
The company operates primarily in the lab product industry.
Operations by geographic area are as follows:
For the year ended December 31, 1994:
United
(In thousands) States International Total
-------------------------------------------------------------------------
Revenues:
Unaffiliated customers $44,397 $ 1,697 $46,094
Affiliates 16 155 171
------- ------- -------
Total Revenues $44,413 $ 1,852 $46,265
------- ------- -------
Operating income $ 8,594 $ 608 $ 8,896
------- ------- -------
Identifiable assets $25,938 $ 1,393 $23,507
------- ------- -------
Export sales included in U.S.
revenues above $14,214
-------
For the year ended January 1, 1994:
United
(In thousands) States International Total
-------------------------------------------------------------------------
Revenues:
Unaffiliated customers $46,103 $ 1,317 $47,420
Affiliates 86 192 278
------- ------- -------
Total revenues $46,189 $ 1,509 $47,698
------- ------- -------
Operating income $ 7,603 $ 151 $ 7,754
------- ------- -------
Identifiable assets $25,785 $ 1,338 $25,790
------- ------- -------
Export sales included in U.S.
revenues above $13,054
-------
One customer's revenues represented 12% and 13% of total revenues for 1994
and 1993, respectively, and a second customer represented 11% and 10% of
total revenues for 1994 and 1993, respectively.
Identifiable assets are those assets that are used by the Company's
operations in each of the geographic areas.
15PAGE
<PAGE>
FORM 8-K/A
Item 7. Financial Statements, Pro Forma Combined Condensed Financial
------------------------------------------------------------
Information and Exhibits
------------------------
(b) Pro Forma Combined Condensed Financial Information
The following unaudited pro forma combined condensed financial
statements set forth the results of operations for the year ended December
31, 1994 and for the nine months ended September 30, 1995, as if the
acquisition of Orion by Thermedics had occurred at the beginning of fiscal
1994, and the financial position as of September 30, 1995, as if the
acquisition had occurred as of that date.
The acquisition has been accounted for using the purchase method of
accounting. The pro forma results of operations are not necessarily
indicative of future operations or the actual results that would have
occurred had the acquisition of Orion been consummated at the beginning of
fiscal 1994. The financial statements filed under part (a) of this item
should be read in conjunction with these pro forma combined condensed
financial statements.
5PAGE
<PAGE>
FORM 8-K/A
THERMEDICS INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
Year Ended December 31, 1994
(Unaudited)
Historical Pro Forma
---------------------- ----------------------
Thermedics Orion Adjustments Combined
---------- -------- ----------- --------
(In thousands except per share amounts)
Revenues $155,111 $ 46,265 $ - $201,376
-------- -------- -------- --------
Costs and Operating
Expenses:
Cost of revenues 87,597 20,549 580 108,726
Selling, general and
administrative expenses 42,734 13,309 1,512 57,555
Expenses for research and
development 10,445 3,511 - 13,956
-------- -------- -------- --------
140,776 37,369 2,092 180,237
-------- -------- -------- --------
Operating Income 14,335 8,896 (2,092) 21,139
Interest Income 7,273 - (668) 6,605
Interest Expense (3,206) (60) (1,725) (4,991)
Other Income 922 - - 922
-------- -------- -------- --------
Income Before Provision for
Income Taxes and Minority
Interest 19,324 8,836 (4,485) 23,675
Provision for Income Taxes 7,334 3,199 (1,420) 9,113
Minority Interest Expense 1,153 - - 1,153
-------- -------- -------- --------
Net Income $ 10,837 $ 5,637 $ (3,065) $ 13,409
======== ======== ======== ========
Earnings per Share $ .33 $ .41
======== ========
Weighted Average Shares 32,878 32,878
======== ========
See notes to pro forma combined condensed financial statements.
6PAGE
<PAGE>
FORM 8-K/A
THERMEDICS INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
Nine Months Ended September 30, 1995
(Unaudited)
Historical Pro Forma
--------------------- ----------------------
Thermedics Orion Adjustments Combined
---------- ------- ----------- --------
(In thousands except per share amounts)
Revenues $128,350 $ 35,464 $ - $163,814
-------- -------- -------- --------
Costs and Operating
Expenses:
Cost of revenues 71,630 15,877 - 87,507
Selling, general and
administrative expenses 34,680 10,385 1,127 46,192
Expenses for research and
development 7,822 2,665 - 10,487
-------- -------- -------- --------
114,132 28,927 1,127 144,186
-------- -------- -------- --------
Operating Income 14,218 6,537 (1,127) 19,628
Interest Income 6,670 - (703) 5,967
Interest Expense (2,629) (39) (1,815) (4,483)
Gain on Issuance of Stock
by Subsidiary 2,293 - - 2,293
Other Income 51 - - 51
-------- -------- -------- --------
Income Before Provision for
Income Taxes and Minority
Interest 20,603 6,498 (3,645) 23,456
Provision for Income Taxes 6,720 2,420 (1,178) 7,962
Minority Interest Expense 2,938 - - 2,938
-------- -------- -------- --------
Net Income $ 10,945 $ 4,078 $ (2,467) $ 12,556
======== ======== ======== ========
Earnings per Share $ .33 $ .37
======== ========
Weighted Average Shares 33,564 33,564
======== ========
See notes to pro forma combined condensed financial statements.
7PAGE
<PAGE>
FORM 8-K/A
THERMEDICS INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
September 30, 1995
(Unaudited)
Historical Pro Forma
--------------------- ----------------------
Thermedics Orion Adjustments Combined
---------- -------- ----------- --------
(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 34,204 $ 210 $ (14,723) $ 19,691
Short-term available-for-
sale investments 73,426 - - 73,426
Accounts receivable, net 36,234 7,296 - 43,530
Unbilled contract costs
and fees 3,690 - - 3,690
Inventories 34,230 4,847 580 39,657
Prepaid income taxes and
expenses 4,645 1,616 680 6,941
Due from parent company - 1,051 (1,051) -
-------- -------- ---------- --------
186,429 15,020 (14,514) 186,935
-------- -------- ---------- --------
Property, Plant and
Equipment, at Cost, Net 11,354 3,020 (1,655) 12,719
-------- -------- ---------- --------
Long-term Available-for-
sale Investments 48,551 - - 48,551
-------- -------- ---------- --------
Other Assets 4,347 60 - 4,407
-------- -------- ---------- --------
Cost in Excess of Net
Assets of Acquired
Companies 57,735 6,862 37,360 101,957
-------- -------- ---------- --------
$308,416 $ 24,962 $ 21,191 $354,569
======== ======== ========== ========
See notes to pro forma combined condensed financial statements.
8PAGE
<PAGE>
FORM 8-K/A
THERMEDICS INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET (continued)
September 30, 1995
(Unaudited)
Historical Pro Forma
--------------------- ----------------------
Thermedics Orion Adjustments Combined
---------- -------- ----------- --------
(In thousands)
LIABILITIES AND
SHAREHOLDERS' INVESTMENT
Current Liabilities:
Notes payable and current
maturities of long-term
obligations $ 9,097 $ 225 $ - $ 9,322
Accounts payable 12,515 3,069 - 15,584
Deferred revenue 1,407 - - 1,407
Customer deposits 2,456 - - 2,456
Accrued payroll and
employee benefits 6,746 1,106 - 7,852
Other accrued expenses 15,567 1,929 1,119 18,615
Due to parent company 1,318 - 38,000 39,318
-------- -------- -------- --------
49,106 6,329 39,119 94,554
-------- -------- -------- --------
Deferred Income Taxes and
Other Items 1,660 274 - 1,934
-------- -------- -------- --------
Long-term Obligations 60,816 431 - 61,247
-------- -------- -------- --------
Minority Interest 43,241 - - 43,241
-------- -------- -------- --------
Shareholders' Investment:
Common stock 3,378 - - 3,378
Capital in excess of par
value 111,362 - - 111,362
Retained earnings 38,011 - - 38,011
Treasury stock at cost (288) - - (288)
Parent company investment - 17,975 (17,975) -
Cumulative translation
adjustment 208 (47) 47 208
Net unrealized gain on
available-for-sale
investments 922 - - 922
-------- -------- -------- --------
153,593 17,928 (17,928) 153,593
-------- -------- -------- --------
$308,416 $ 24,962 $ 21,191 $354,569
======== ======== ======== ========
See notes to pro forma combined condensed financial statements.
9PAGE
<PAGE>
FORM 8-K/A
THERMEDICS INC.
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
The allocation of the purchase price is based on an estimate of the
fair market value of the net assets acquired and is subject to adjustment.
To date, no information has been gathered that would cause the Company to
believe that the final allocation of the purchase price will be materially
different than the preliminary estimate.
Note 2 - Pro Forma Adjustments to Pro Forma Combined Condensed
Statement of Income (In thousands, except in text)
Nine Months
Year Ended Ended
December 31, September 30,
1994 1995
------------ ------------
Debit (Credit)
Cost of Revenues
Increase in the finished goods
inventory of Orion to the estimated
selling price, less the sum of the
costs of disposal and a reasonable
profit allowance for the Company's
selling efforts $ 580 $ -
Selling, General and
Administrative Expenses
Service fee of 1.25% and 1.20% of
the revenues of Orion for the year
ended December 31, 1994 and the nine
months ended September 30, 1995,
respectively, for services provided
under a services agreement between
the Company and Thermo Electron 578 426
Amortization over 40 years of cost in
excess of net assets of acquired
companies created by the acquisition
of Orion 934 701
------ ------
1,512 1,127
------ ------
10PAGE
<PAGE>
FORM 8-K/A
THERMEDICS INC.
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (continued)
(Unaudited)
Note 2 - Pro Forma Adjustments to Pro Forma Combined Condensed
Statement of Income (In thousands, except in text)
(continued)
Nine Months
Year Ended Ended
December 31, September 30,
1994 1995
------------ ------------
Debit (Credit)
Interest Income
Decrease in interest income earned
attributable to the lower cash
position as a result of the total cash
payments of $14,723,000 to acquire Orion
calculated using the Commercial Paper
Composite Rate plus 25 basis point, or 4.54%
for the year ended December 31, 1994, and
6.37% for the nine months ended
September 30, 1995 $ 668 $ 703
Interest Expense
Increase in interest expense as a result
of the issuance of a $38,000,000
promissory note to Thermo Electron to
finance the acquisition of Orion,
calculated using the Commercial Paper
Composite Rate plus 25 basis point, or
4.54% for the year ended December 31,
1994, and 6.37% for the nine months
ended September 30, 1995 1,725 1,815
Provision for Income Taxes
Income tax benefit associated with the
adjustments above, (excluding
amortization of cost in excess of net
assets of acquired companies), calculated
at the Company's statutory income tax
rate of 40% (1,420) (1,178)
11PAGE
<PAGE>
FORM 8-K/A
THERMEDICS INC.
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (continued)
(Unaudited)
Note 3 - Pro Forma Adjustments to Pro Forma Combined Condensed
Balance Sheet (In thousands, except in text)
September 30, 1995
------------------
Debit (Credit)
Cash and Cash Equivalents
Cash payment to acquire Orion, including
estimated post-closing purchase price
adjustment and closing costs $(44,139)
Payment of bank indebtedness at closing date (8,584)
Proceeds from promissory note issued to
Thermo Electron 38,000
--------
(14,723)
--------
Inventories
Increase in the finished goods inventory of Orion
to the estimated selling price, less the sum of
the costs of disposal and a reasonable profit
allowance for the Company's selling efforts 580
Prepaid Income Taxes and Expenses
Record tax effect of pro forma adjustments 680
Due from Parent Company
Elimination of amounts due from Analytical
Technology, Inc. group office that will not be
collected (1,051)
Property, Plant and Equipment
Write-off of leasehold improvements due to
planned abandonment of location (1,655)
Cost in Excess of Net Assets of Acquired Companies
Adjust balance of cost in excess of net assets of
acquired companies to excess of cost over fair value
of the net assets acquired of Orion 37,360
Other Accrued Expenses
Estimated severance, legal, and other
acquisition reserves (1,119)
Due to Parent Company
Promissory note, due December 9, 1996, issued to
Thermo Electron to partially finance the
acquisition of Orion (38,000)
Shareholders' Investment
Elimination of Orion's equity accounts 17,928
12PAGE
<PAGE>
FORM 8-K/A
Item 7. Financial Statements, Pro Forma Combined Condensed Financial
Information and Exhibits
(c) Exhibits
23 Consent of Arthur Andersen LLP
13PAGE
<PAGE>
FORM 8-K/A
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, on this 14th day of February
1996.
THERMEDICS INC.
Paul F. Kelleher
------------------------
Paul F. Kelleher
Chief Accounting Officer
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of
the Thermedics Inc.'s Current Report on Form 8-K/A.
Arthur Andersen LLP
Boston, Massachusetts
