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
October 1, 1994.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Commission File Number 1-9786
THERMO INSTRUMENT SYSTEMS INC.
(Exact name of Registrant as specified in its charter)
Delaware 04-2925809
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
504 Airport Road
Post Office Box 2108
Santa Fe, New Mexico 87504-2108
(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 October 28, 1994
---------------------------- -------------------------------
Common Stock, $.10 par value 47,289,753PAGE
<PAGE>
FORM 10-Q
October 1, 1994
THERMO INSTRUMENT SYSTEMS INC.
PART I - Financial Information
Item 1 - Financial Statements
(a) Consolidated Balance Sheet - Assets as of October 1, 1994 and
January 1, 1994 (In thousands)
Oct. 1, Jan. 1,
1994 1994
-------- --------
Current Assets:
Cash and cash equivalents $104,590 $177,442
Available-for-sale investments, at quoted
market value (amortized cost of $15,865)
(includes $3,401 of related party
debentures) (Note 3) 16,956 -
Short-term investments in related party
debentures - 6,145
Accounts receivable, less allowances of $8,647
and $8,456 153,401 129,184
Unbilled contract costs and fees 6,922 6,907
Inventories:
Raw materials and supplies 70,485 53,322
Work in process and finished goods 61,225 44,230
Prepaid expenses 5,343 5,131
Prepaid income taxes 32,364 24,212
-------- --------
451,286 446,573
-------- --------
Property, Plant and Equipment, at Cost 169,406 160,472
Less: Accumulated depreciation and
amortization 42,458 39,185
-------- --------
126,948 121,287
-------- --------
Investment in Thermo Terra Tech Joint
Venture (Note 4) 33,238 -
-------- --------
Patents and Other Assets 24,776 27,820
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Note 2) 334,308 295,461
-------- --------
$970,556 $891,141
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
2PAGE
<PAGE>
FORM 10-Q
October 1, 1994
THERMO INSTRUMENT SYSTEMS INC.
(a) Consolidated Balance Sheet - Liabilities and Shareholders'
Investment as of October 1, 1994 and January 1, 1994 (In thousands
except share amounts)
Oct. 1, Jan. 1,
1994 1994
-------- --------
Current Liabilities:
Notes payable $ 46,218 $ 37,516
Accounts payable 33,841 29,658
Accrued payroll and employee benefits 27,394 22,737
Accrued and current deferred income taxes 24,381 18,653
Customer deposits 7,850 9,699
Accrued installation and warranty expenses 15,909 14,111
Other accrued expenses 76,916 70,079
Due to parent company 9,965 6,067
-------- --------
242,474 208,520
-------- --------
Deferred Income Taxes 19,693 19,542
-------- --------
Other Deferred Items 19,790 18,863
-------- --------
Long-term Obligations:
Senior obligations, including $140,000 due
to parent company 210,000 210,000
Subordinated obligations, including $1,684
and $2,734 due to parent company 39,961 52,303
Other 16,122 23,858
-------- --------
266,083 286,161
-------- --------
Minority Interest 3,245 -
-------- --------
Shareholders' Investment:
Common stock, $.10 par value, 125,000,000
shares authorized; 47,996,879 and 47,078,660
shares issued 4,800 4,708
Capital in excess of par value 230,685 219,703
Retained earnings 194,404 152,364
Treasury stock at cost, 763,518 and
867,087 shares (14,174) (15,850)
Cumulative translation adjustment 2,869 (2,870)
Net unrealized gain on available-for-sale
investments (Note 3) 687 -
-------- --------
419,271 358,055
-------- --------
$970,556 $891,141
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
3PAGE
<PAGE>
FORM 10-Q
October 1, 1994
THERMO INSTRUMENT SYSTEMS INC.
(b) Consolidated Statement of Income for the three months ended
October 1, 1994 and October 2, 1993 (In thousands except per share
amounts)
Three Months Ended
------------------
Oct. 1, Oct. 2,
1994 1993
-------- --------
Revenues:
Instruments $161,580 $123,213
Services - 13,298
-------- --------
161,580 136,511
-------- --------
Costs and Expenses:
Cost of instrument revenues 84,015 63,068
Cost of service revenues - 10,290
Selling, general and administrative expenses 44,013 33,797
Research and development expenses 10,998 8,136
-------- --------
139,026 115,291
-------- --------
Operating Income 22,554 21,220
Interest Income 1,467 1,400
Interest Expense (includes $1,344 and $1,583
related to notes to parent company) (3,833) (3,276)
Gain on Issuance of Stock by Subsidiary (Note 5) 3,284 -
Equity in Income of Unconsolidated
Subsidiaries, Net (includes $1,040 of income in
related party investment in 1994) (Note 4) 728 2
-------- --------
Income Before Provision for Income Taxes 24,200 19,346
Provision for Income Taxes 9,085 8,123
Minority Interest Expense 11 -
-------- --------
Net Income $ 15,104 $ 11,223
======== ========
Earnings per Share:
Primary $ .32 $ .25
======== ========
Fully diluted $ .29 $ .24
======== ========
Weighted Average Shares:
Primary 47,154 45,104
======== ========
Fully diluted 56,587 51,310
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
4PAGE
<PAGE>
FORM 10-Q
October 1, 1994
THERMO INSTRUMENT SYSTEMS INC.
(b) Consolidated Statement of Income for the nine months ended October
1, 1994 and October 2, 1993 (In thousands except per share
amounts)
Nine Months Ended
------------------
Oct. 1, Oct. 2,
1994 1993
-------- --------
Revenues:
Instruments $471,782 $385,473
Services 12,195 41,201
-------- --------
483,977 426,674
-------- --------
Costs and Expenses:
Cost of instrument revenues 242,760 197,287
Cost of service revenues 9,493 31,819
Selling, general and administrative expenses 127,775 107,736
Research and development expenses 31,418 26,721
-------- --------
411,446 363,563
-------- --------
Operating Income 72,531 63,111
Interest Income 4,205 2,048
Interest Expense (includes $4,048 and $2,964
related to notes to parent company) (11,923) (10,211)
Gain on Issuance of Stock by Subsidiary (Note 5) 3,284 -
Gain on Sale of Related Party Investments 2,000 -
Equity in Income of Unconsolidated
Subsidiaries, Net (includes $1,937 of income in
related party investment in 1994) (Note 4) 1,764 110
-------- --------
Income Before Provision for Income Taxes 71,861 55,058
Provision for Income Taxes 29,810 23,480
Minority Interest Expense 11 -
-------- --------
Net Income $ 42,040 $ 31,578
======== ========
Earnings per Share:
Primary $ .90 $ .71
======== ========
Fully diluted $ .83 $ .68
======== ========
Weighted Average Shares:
Primary 46,899 44,541
======== ========
Fully diluted 56,577 50,233
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
5PAGE
<PAGE>
FORM 10-Q
October 1, 1994
THERMO INSTRUMENT SYSTEMS INC.
(c) Consolidated Statement of Cash Flows for the nine months ended
October 1, 1994 and October 2, 1993 (In thousands)
Nine Months Ended
------------------
Oct. 1, Oct. 2,
1994 1993
-------- --------
Operating Activities:
Net income $ 42,040 $ 31,578
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 17,653 16,266
Provision for losses on accounts receivable 363 262
Decrease in deferred income taxes (3) (680)
Gain on issuance of stock by subsidiary
(Note 5) (3,284) -
Gain on sale of related party investments (2,000) -
Equity in income of unconsolidated
subsidiaries, net (1,764) (110)
Other noncash expenses 2,360 2,911
Changes in current accounts, excluding the
effects of acquisitions:
Accounts receivable 5,330 (13,901)
Inventories (3,305) 2,247
Other current assets (341) 5,161
Accounts payable 28 (9,784)
Other current liabilities (18,480) (18,032)
Other (94) 55
--------- ---------
Net cash provided by operating activities 38,503 15,973
--------- ---------
Investing Activities:
Acquisitions, net of cash acquired (Note 2) (100,940) (89,654)
Sale of Nicolet Biomedical - 67,900
Purchases of available-for-sale investments (18,250) -
Proceeds from sale and maturities of
available-for-sale investments 11,000 -
Purchases of property, plant and equipment (5,544) (7,023)
Other 1,915 (1,869)
--------- ---------
Net cash used in investing activities (111,819) (30,646)
--------- ---------
Financing Activities:
Proceeds from issuance of obligations to
parent company - 229,000
Repayment of obligations to parent company - (157,485)
Proceeds from issuance of long-term
obligations - 68,065
Repayment and repurchase of long-term
obligations (7,632) (4,093)
Proceeds from issuance of Company and
subsidiary common stock 7,175 921
Purchases of Company common stock - (836)
-------- ---------
Net cash provided by (used in) financing
activities $ (457) $ 135,572
-------- ---------
6PAGE
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FORM 10-Q
October 1, 1994
THERMO INSTRUMENT SYSTEMS INC.
(c) Consolidated Statement of Cash Flows for the nine months ended
October 1, 1994 and October 2, 1993 (continued) (In thousands)
Nine Months Ended
------------------
Oct. 1, Oct. 2,
1994 1993
-------- --------
Exchange Rate Effect on Cash $ 921 $ 735
-------- --------
Increase (Decrease) in Cash and Cash Equivalents (72,852) 121,634
Cash and Cash Equivalents at Beginning of Period 177,442 25,939
-------- --------
Cash and Cash Equivalents at End of Period $104,590 $147,573
======== ========
Cash Paid For:
Interest $ 13,626 $ 12,140
Income taxes $ 20,930 $ 6,654
Noncash Financing Activities:
Conversions of convertible obligations $ 11,292 $ 26,040
The accompanying notes are an integral part of these consolidated
financial statements.
7PAGE
<PAGE>
FORM 10-Q
October 1, 1994
THERMO INSTRUMENT SYSTEMS INC.
(d) Notes to Consolidated Financial Statements - October 1, 1994
1. General
The interim consolidated financial statements presented have been
prepared by Thermo Instrument Systems 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 (a) the results of
operations for the three- and nine-month periods ended October 1, 1994
and October 2, 1993, (b) the financial position at October 1, 1994,
and (c) the cash flows for the nine-month periods ended October 1,
1994 and October 2, 1993. Interim results are not necessarily
indicative of results for a full year.
The consolidated balance sheet presented as of January 1, 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
January 1, 1994, filed with the Securities and Exchange Commission.
2. Acquisitions
On March 16, 1994, the Company completed the acquisition of several
businesses within the EnviroTech Measurements & Controls group of
Baker Hughes Incorporated (Baker Hughes) for a purchase price of
approximately $89.7 million in cash. The Company acquired the
EnviroTech Controls, NORAN Instruments (NORAN), TN Technologies, and
Tremetrics businesses, which collectively design, manufacture, and
market a variety of process control, process measurement, and
laboratory analytical products for use in a wide range of industrial,
energy, environmental, and research applications.
On September 21, 1994, the Company completed the acquisition of the
assets of IRT Corporation (IRT) for approximately $7.3 million in
cash. IRT manufactures automated X-ray inspection systems for discrete
manufacturing processes, including the examination of printed circuit
boards for solder joint integrity and the placement of components. IRT
also manufactures industrial inspection systems as well as systems for
weapons and contraband detection, and provides irradiation services to
third parties in the sterile medical and gemstone markets.
The Company has contributed the assets acquired and the liabilities
assumed from NORAN and IRT to the Company's ThermoSpectra Corporation
subsidiary (ThermoSpectra) (Note 5).
These acquisitions have been accounted for using the purchase
method of accounting and their results of operations have been
included in the accompanying financial statements from their
respective dates of acquisition. The aggregate cost of these
8PAGE
<PAGE>
FORM 10-Q
October 1, 1994
THERMO INSTRUMENT SYSTEMS INC.
(d) Notes to Consolidated Financial Statements - October 1, 1994
(continued)
2. Acquisitions (continued)
acquisitions exceeded the estimated fair value of the acquired net
assets by $59.1 million, which is being amortized over 40 years.
Allocation of the purchase price for these acquisitions was based on
estimates of the fair value of the net assets acquired and is subject
to adjustment.
Based on unaudited data, the following table presents selected
financial information for the Company and the EnviroTech Measurements
& Controls group of Baker Hughes on a pro forma basis, assuming the
companies had been combined since the beginning of 1993. The pro forma
data below exclude the effect of the acquisition of IRT since this
acquisition was not material to the Company's results of operations.
Three
Months
Ended Nine Months Ended
------- -------------------
Oct. 2, Oct. 1, Oct. 2,
(In thousands except per share amounts) 1993 1994 1993
---------------------------------------------------------------------
Revenues $167,136 $505,661 $524,965
Net income 12,072 40,265 30,645
Earnings per share:
Primary .27 .86 .69
Fully diluted .25 .80 .66
The pro forma results include the Company's historical statements,
which include the environmental services businesses that comprised the
Company's Services segment. Effective April 4, 1994, the environmental
services businesses are no longer consolidated with the Company's
results of operations (Note 4). The pro forma results are not
necessarily indicative of future operations or the actual results that
would have occurred had the acquisition of the businesses within the
EnviroTech Measurements & Controls group of Baker Hughes been made at
the beginning of 1993.
3. Available-for-sale Investments
Effective January 2, 1994, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." In accordance with SFAS
No. 115, the Company's debt and marketable equity securities are
considered "Available-for-sale investments" in the accompanying
balance sheet and are carried at market value, with the difference
between cost and market value, net of related tax effects, recorded
currently as a component of shareholders' investment titled "Net
unrealized gain on available-for-sale investments." "Net unrealized
gain on available-for-sale investments" consists of (1) an unrealized
gain, net of related tax effects, of $1,885,000 that was recorded as a
9PAGE
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FORM 10-Q
October 1, 1994
THERMO INSTRUMENT SYSTEMS INC.
(d) Notes to Consolidated Financial Statements - October 1, 1994
(continued)
3. Available-for-sale Investments (continued)
cumulative effect of change in accounting principle adjustment and
(2) an unrealized loss, net of related tax effects, of $1,198,000
relating to the decline in market value of available-for-sale
investments for the nine-month period ended October 1, 1994.
Available-for-sale investments in the accompanying balance sheet at
October 1, 1994, represent investments in corporate bonds of
$13,555,000 with contractual maturities of one year or less and
$3,401,000 with contractual maturities of over one year through five
years. Expected maturities, as classified in the accompanying balance
sheet, may differ from contractual maturities as a result of the
Company's intent to sell these securities prior to maturity and as a
result of put and call options that enable either the Company and/or
the issuer to redeem these securities at an earlier date. The
difference between the market value and the cost basis of available-
for-sale investments at October 1, 1994 was $1,091,000, which
represents gross unrealized gains of $1,147,000 and gross unrealized
losses of $56,000 on those investments.
The cost of available-for-sale investments that were sold was based
on specific identification in determining realized gains recorded in
the accompanying statement of income. "Gain on sale of related party
investments" in the accompanying statement of income for the
nine-month period ended October 1, 1994, resulted from gross realized
gains relating to the sale of available-for-sale investments.
4. Joint Venture
Effective April 4, 1994, the Company formed an environmental
services joint venture with Thermo Process Systems Inc. (Thermo
Process), another public subsidiary of Thermo Electron Corporation.
The joint venture operates under the name Thermo Terra Tech. The
Company contributed the analytical laboratories and the nuclear health
physics and environmental science and engineering services businesses
that comprised its Services segment. Thermo Process contributed its
recently acquired environmental laboratory business, which specializes
in fast-response testing of petroleum-contaminated soils and
groundwater, and approximately $31 million in cash and short-term
investments.
The Company owns 49% of Thermo Terra Tech and accounts for its
interest in the joint venture using the equity method. Under the terms
of the joint venture agreement, 66.67% of income earned by the joint
venture after April 4, 1994, will be allocated to the Company until
the first to occur of (a) the joint venture has accumulated $5.1
million in net profits, (b) April 1, 1995, or (c) the date on which at
least 70% of Thermo Process' cash contribution to the joint venture is
first invested in one or more additional businesses. Thereafter, the
Company's share of the joint venture's income will be 49%. The
10PAGE
<PAGE>
FORM 10-Q
October 1, 1994
THERMO INSTRUMENT SYSTEMS INC.
(d) Notes to Consolidated Financial Statements - October 1, 1994
(continued)
4. Joint Venture (continued)
Company's environmental services businesses had revenues of $55.2
million and $12.2 million for the year ended January 1, 1994, and the
three-month period ended April 2, 1994, respectively.
5. Transactions in Stock of Subsidiary
On September 1, 1994, the Company's wholly owned ThermoSpectra
subsidiary completed a private placement of 700,000 shares of its
common stock at $10.00 per share. Net proceeds from the sale were $6.5
million, resulting in a gain of $3.3 million. ThermoSpectra's business
focuses on developing, manufacturing, and marketing precision imaging
inspection, and test instrumentation that use high-speed data
acquisition and digital processing technologies.
On October 13, 1994, the Company's ThermoSpectra subsidiary sold
600,000 shares of its common stock in a private placement at $10.00
per share for net proceeds of approximately $5.6 million. Following
the private placements, the Company owned 87% of ThermoSpectra's
outstanding common stock.
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Third Quarter 1994 Compared With Third Quarter 1993
Revenues for the third quarter of 1994 increased 18% to $161.6
million from $136.5 million in 1993. Instruments segment revenues
increased $38.4 million, or 31%, to $161.6 million in the third
quarter of 1994 from $123.2 million in 1993. The increase was due to
acquisitions which include the radiation safety measurement products
and radiometry process control divisions of FAG Kugelfischer Georg
Shafer AG in October 1993 and several businesses within the EnviroTech
Measurements & Controls group of Baker Hughes Incorporated (Baker
Hughes) in March 1994. There were no revenues for the Services segment
in the third quarter of 1994, compared with $13.3 million in 1993.
Effective April 4, 1994, the Company contributed the businesses that
comprised its Services segment to Thermo Terra Tech in exchange for a
49% ownership interest in that joint venture. As a result, the
Services segment operations are no longer consolidated in the
Company's financial statements (see Note 4 to Consolidated Financial
Statements).
The Company's gross profit margin increased to 48% in the third
quarter of 1994 from 46% for the same period in 1993. Gross profit
margin for the Instruments segment decreased to 48% in the third
11PAGE
<PAGE>
FORM 10-Q
October 1, 1994
THERMO INSTRUMENT SYSTEMS INC.
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Third Quarter 1994 Compared With Third Quarter 1993 (continued)
quarter of 1994 from 49% in 1993 due to changes in product mix. Gross
profit margin for the Services segment was 23% in 1993.
Selling, general and administrative expenses as a percentage of
revenues increased to 27% in the third quarter of 1994 from 25% for
the same period in 1993 as a result of higher costs as a percentage of
revenues at acquired businesses. Research and development expenses
remained relatively unchanged at 6.8% of Instruments segment revenues
in the third quarter of 1994, compared with 6.6% in 1993.
Interest income remained relatively unchanged at $1.5 million in
the third quarter of 1994, compared with $1.4 million for the same
period in 1993. Interest expense increased to $3.8 million in 1994
from $3.3 million in 1993, due primarily to the issuance of 3 3/4%
senior convertible obligations in September 1993, offset in part by
the reduction in interest expense as a result of the repayment in the
third quarter of 1993 of debt incurred in connection with
acquisitions.
As a result of the sale of stock by its ThermoSpectra Corporation
subsidiary (ThermoSpectra), the Company recorded a gain of $3.3
million in the third quarter of 1994. The gain represents an increase
in the Company's proportionate share of the subsidiary's equity and is
classified as "Gain on issuance of stock by subsidiary" in the
accompanying statement of income (see Note 5 to Consolidated Financial
Statements).
First Nine Months 1994 Compared With First Nine Months 1993
Revenues for the first nine months of 1994 increased 13% to $484.0
million from $426.7 million for the same period in 1993. Instruments
segment revenues increased $86.3 million, or 22%, to $471.8 million in
1994 from $385.5 million in 1993 due to the acquisitions discussed in
the results of operations for the third quarter, as well as the
acquisition of Spectra-Physics Analytical in February 1993. The 1993
results include $12.6 million in revenues from the biomedical
instruments business of the Company's Nicolet Instrument Corporation
subsidiary (Nicolet Biomedical), which was sold to Thermo Electron
Corporation (Thermo Electron) effective April 5, 1993. Services
segment revenues were $12.2 million for the three-month period ended
April 2, 1994, and $41.2 million for the first nine months of 1993.
This reduction reflects the formation of the Thermo Terra Tech joint
venture, effective April 4, 1994.
The Company's gross profit margin increased to 48% for the first
nine months of 1994 from 46% for the same period in 1993. Gross profit
margin for the Instruments segment remained unchanged at 49% in the
first nine months of both 1994 and 1993. Gross profit margin for the
12PAGE
<PAGE>
FORM 10-Q
October 1, 1994
THERMO INSTRUMENT SYSTEMS INC.
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
First Nine Months 1994 Compared With First Nine Months 1993
(continued)
Services segment was relatively unchanged at 22.2% in the first nine
months of 1994, compared with 22.8% in 1993.
Selling, general and administrative expenses as a percentage of
revenues remained relatively unchanged at 26% in the first nine months
of 1994, compared with 25% in 1993. Research and development expenses
remained relatively unchanged at 6.7% of Instruments segment revenues
in 1994, compared with 6.9% in 1993.
Interest income increased to $4.2 million in the first nine months
of 1994 from $2.0 million for the same period in 1993, primarily as a
result of interest income earned on the net proceeds from the issuance
of 3 3/4% senior convertible obligations in September 1993, offset in
part by the cash used to purchase several businesses within the
EnviroTech Measurements & Controls group of Baker Hughes in the first
quarter of 1994. Interest expense increased to $11.9 million in 1994
from $10.2 million in 1993, due primarily to the reasons discussed in
the results of operations for the third quarter. The Company recorded
a gain of $2.0 million in 1994 on the sale of part of its investment
in Thermedics Inc. (Thermedics) convertible debentures. Thermedics is
a majority-owned subsidiary of Thermo Electron.
"Equity in income of unconsolidated subsidiaries, net" in the first
nine months of 1994 primarily represents the Company's portion of the
results of Thermo Terra Tech (see Note 4 to Consolidated Financial
Statements).
The effective tax rate was 41.5% and 42.6% in the first nine months
of 1994 and 1993, respectively. These rates exceeded the statutory
federal income tax rate primarily due to nondeductible amortization of
cost in excess of net assets of acquired companies, the inability to
provide a tax benefit on losses incurred at certain subsidiaries, and
the impact of state income taxes. The effective tax rate decreased in
1994 due to the nontaxable gain on issuance of stock by subsidiary,
which is discussed in the results of operations for the third quarter.
Financial Condition
Liquidity and Capital Resources
Consolidated working capital at October 1, 1994, was $208.8
million, compared with $238.1 million at January 1, 1994, a decrease
of $29.2 million. Included in working capital are cash, cash
equivalents, and short-term investments of $121.5 million at October
1, 1994, and $183.6 million at January 1, 1994. Of the $121.5 million
balance at October 1, 1994, $8.1 million was held by the Company's
ThermoSpectra subsidiary and $113.4 million by the Company and its
wholly owned subsidiaries. During the first nine months of 1994, the
13PAGE
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FORM 10-Q
October 1, 1994
THERMO INSTRUMENT SYSTEMS INC.
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Liquidity and Capital Resources (continued)
Company expended $100.9 million, net of cash acquired, for
acquisitions (see Note 2 to Consolidated Financial Statements). In
September and October 1994, the Company's ThermoSpectra subsidiary
completed private placements of an aggregate of 1,300,000 shares of
its common stock at $10.00 per share for net proceeds of approximately
$12.1 million.
During the remainder of 1994, the Company plans to make
expenditures of approximately $2.8 million for property, plant and
equipment. The Company plans to make these expenditures from working
capital. The Company has also signed a letter of intent to acquire the
assets of the Analytical Instruments Division of Baird Corporation for
approximately $13.5 million. The Company believes that the remainder
of its existing resources are sufficient to meet the capital
requirements of its existing operations for the foreseeable future.
PART II - Other Information
Item 6 - Exhibits
See Exhibit Index on the page immediately preceding exhibits.
14PAGE
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FORM 10-Q
October 1, 1994
THERMO INSTRUMENT SYSTEMS INC.
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 8th day
of November 1994.
THERMO INSTRUMENT SYSTEMS INC.
Paul F. Kelleher
-------------------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
-------------------------------
John N. Hatsopoulos
Chief Financial Officer
15PAGE
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EXHIBIT INDEX
Exhibit
Number Document Page
-------- -------- ----
11 Statement re: Computation of earnings per share.
27 Financial Data Schedule.
16<PAGE>
Exhibit 11
THERMO INSTRUMENT SYSTEMS INC.
Computation of Earnings per Share
Three Months Ended Nine Months Ended
----------------------- -----------------------
Oct. 1, Oct. 2, Oct. 1, Oct. 2,
1994 1993 1994 1993
----------- ----------- ------------ ----------
Computation of Fully
Diluted Earnings
per Share:
Income:
Net income $15,104,000 $11,223,000 $42,040,000 $31,578,000
Add: Convertible
obligation
interest, net
of tax 1,562,000 946,000 4,773,000 2,537,000
----------- ----------- ----------- -----------
Income applicable
to common stock
assuming full
dilution (a) $16,666,000 $12,169,000 $46,813,000 $34,115,000
----------- ----------- ----------- -----------
Shares:
Weighted average
shares outstanding 47,153,703 45,104,232 46,898,977 44,540,644
Add: Shares issuable
from assumed
conversion of
convertible
obligations 9,240,107 5,922,023 9,457,067 5,388,246
Shares issuable
from assumed
exercise of
options (as
determined by
the application
of the treasury
stock method) 193,277 283,360 220,817 303,948
----------- ----------- ----------- -----------
Weighted average
shares outstanding,
as adjusted (b) 56,587,087 51,309,615 56,576,861 50,232,838
----------- ----------- ----------- -----------
Fully Diluted
Earnings per Share
(a) / (b) $ .29 $ .24 $ .83 $ .68
=========== =========== =========== ===========
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
INSTRUMENT SYSTEMS INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
OCTOBER 1, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> OCT-01-1994
<CASH> 104,590
<SECURITIES> 16,956
<RECEIVABLES> 153,401
<ALLOWANCES> 8,647
<INVENTORY> 131,710
<CURRENT-ASSETS> 451,286
<PP&E> 169,406
<DEPRECIATION> 42,458
<TOTAL-ASSETS> 970,556
<CURRENT-LIABILITIES> 242,474
<BONDS> 124,399
<COMMON> 4,800
0
0
<OTHER-SE> 414,471
<TOTAL-LIABILITY-AND-EQUITY> 970,556
<SALES> 471,782
<TOTAL-REVENUES> 483,977
<CGS> 242,760
<TOTAL-COSTS> 252,253
<OTHER-EXPENSES> 31,418
<LOSS-PROVISION> 363
<INTEREST-EXPENSE> 11,923
<INCOME-PRETAX> 71,861
<INCOME-TAX> 29,810
<INCOME-CONTINUING> 42,040
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,040
<EPS-PRIMARY> .90
<EPS-DILUTED> .83
</TABLE>
