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 June 29, 1996.
[ ] 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.)
1275 Hammerwood Avenue
Sunnyvale, California 94089
(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 26, 1996
---------------------------- ----------------------------
Common Stock, $.10 par value 96,615,930
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMO INSTRUMENT SYSTEMS INC.
Consolidated Balance Sheet
(Unaudited)
Assets
June 29, December 30,
(In thousands) 1996 1995
--------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 360,938 $ 395,233
Available-for-sale investments, at quoted
market value (amortized cost of $4,756) 4,758 -
Accounts receivable, less allowances
of $21,330 and $12,569 288,757 211,906
Unbilled contract costs and fees 5,237 3,800
Inventories:
Raw materials and supplies 137,126 80,959
Work in process 57,571 40,851
Finished goods 54,154 33,104
Prepaid expenses 16,238 9,450
Prepaid income taxes 46,776 31,233
---------- ----------
971,555 806,536
---------- ----------
Property, Plant and Equipment, at Cost 260,650 189,085
Less: Accumulated depreciation and
amortization 63,639 55,408
---------- ----------
197,011 133,677
---------- ----------
Patents and Other Assets 30,926 29,611
---------- ----------
Cost in Excess of Net Assets of Acquired
Companies (Note 2) 563,735 402,989
---------- ----------
$1,763,227 $1,372,813
========== ==========
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THERMO INSTRUMENT SYSTEMS INC.
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
June 29, December 30,
(In thousands except share amounts) 1996 1995
--------------------------------------------------------------------------
Current Liabilities:
Notes payable, including $95,000 due to
parent company in 1996 (Note 2) $ 191,594 $ 55,822
Accounts payable 82,309 55,626
Accrued payroll and employee benefits 48,569 33,025
Accrued income taxes 32,681 25,875
Accrued installation and warranty expenses 41,229 17,962
Deferred revenue 36,534 20,759
Accrued acquisition expenses (Note 2) 50,173 20,687
Other accrued expenses 103,172 73,966
Due to parent company 11,760 12,919
---------- ----------
598,021 316,641
---------- ----------
Deferred Income Taxes 22,658 20,168
---------- ----------
Other Deferred Items 30,221 23,718
---------- ----------
Long-term Obligations:
Senior convertible obligations, including
$140,000 due to parent company 169,909 207,600
Subordinated convertible obligations (Note 4) 192,500 214,775
Other 16,421 18,659
---------- ----------
378,830 441,034
---------- ----------
Minority Interest 63,906 28,547
---------- ----------
Shareholders' Investment:
Common stock, $.10 par value, 250,000,000
shares authorized; 97,167,445 and
92,566,341 shares issued 9,717 9,257
Capital in excess of par value 308,775 248,468
Retained earnings 361,229 291,890
Treasury stock at cost, 823,041 and
917,985 shares (8,990) (9,724)
Cumulative translation adjustment (1,142) 2,814
Net unrealized gain on available-for-sale
investments 2 -
---------- ----------
669,591 542,705
---------- ----------
$1,763,227 $1,372,813
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMO INSTRUMENT SYSTEMS INC.
Consolidated Statement of Income
(Unaudited)
Three Months Ended
----------------------
June 29, July 1,
(In thousands except per share amounts) 1996 1995
--------------------------------------------------------------------------
Revenues $321,552 $185,744
-------- --------
Costs and Expenses:
Cost of revenues 177,028 94,828
Selling, general and administrative expenses 95,056 51,887
Research and development expenses 23,223 13,711
-------- --------
295,307 160,426
-------- --------
Operating Income 26,245 25,318
Interest Income 4,239 2,952
Interest Expense (includes $2,523 and $1,451
to parent company) (7,227) (3,872)
Gain on Issuance of Stock by Subsidiaries (Note 3) 25,526 4,831
-------- --------
Income Before Provision for Income Taxes
and Minority Interest Expense 48,783 29,229
Provision for Income Taxes 12,383 10,280
Minority Interest Expense 1,104 276
-------- --------
Net Income $ 35,296 $ 18,673
======== ========
Earnings per Share:
Primary $ .37 $ .21
======== ========
Fully diluted $ .34 $ .19
======== ========
Weighted Average Shares:
Primary 95,074 90,332
======== ========
Fully diluted 107,402 106,579
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMO INSTRUMENT SYSTEMS INC.
Consolidated Statement of Income
(Unaudited)
Six Months Ended
----------------------
June 29, July 1,
(In thousands except per share amounts) 1996 1995
--------------------------------------------------------------------------
Revenues $547,123 $358,688
-------- --------
Costs and Expenses:
Cost of revenues 295,235 182,858
Selling, general and administrative expenses 160,765 101,485
Research and development expenses 39,772 26,190
Write-off of acquired technology (Note 2) 3,500 -
-------- --------
499,272 310,533
-------- --------
Operating Income 47,851 48,155
Interest Income 9,350 5,254
Interest Expense (includes $4,060 and $2,781
to parent company) (13,517) (7,697)
Gain on Issuance of Stock by Subsidiaries (Note 3) 49,783 9,545
-------- --------
Income from Continuing Operations Before Provision
for Income Taxes and Minority Interest Expense 93,467 55,257
Provision for Income Taxes 22,456 19,254
Minority Interest Expense 1,672 416
-------- --------
Income from Continuing Operations 69,339 35,587
Income from Discontinued Operations - 2
-------- --------
Net Income $ 69,339 $ 35,589
======== ========
Earnings per Share from Continuing Operations:
Primary $ .74 $ .40
======== ========
Fully diluted $ .67 $ .36
======== ========
Earnings per Share:
Primary $ .74 $ .40
======== ========
Fully diluted $ .67 $ .36
======== ========
Weighted Average Shares:
Primary 93,474 89,848
======== ========
Fully diluted 107,385 106,550
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMO INSTRUMENT SYSTEMS INC.
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
----------------------
June 29, July 1,
(In thousands) 1996 1995
--------------------------------------------------------------------------
Operating Activities:
Net income $ 69,339 $ 35,589
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 22,256 11,765
Provision for losses on accounts receivable 1,283 937
Gain on issuance of stock by
subsidiaries (Note 3) (49,783) (9,545)
Minority interest expense 1,672 416
Increase (decrease) in deferred income taxes (109) 233
Other noncash expenses 5,850 1,466
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable 19,264 7,021
Inventories (7,653) (5,973)
Other current assets 271 (317)
Accounts payable (9,177) (5,286)
Other current liabilities (6,332) (749)
Other 170 -
--------- ---------
Net cash provided by
operating activities 47,051 35,557
--------- ---------
Investing Activities:
Acquisitions, net of cash acquired (Note 2) (249,460) (38,016)
Purchases of available-for-sale investments (4,650) -
Purchases of property, plant and equipment (9,730) (4,559)
Proceeds from sale of services businesses - 34,267
Proceeds from sale and maturities
of available-for-sale investments - 13,000
Proceeds from sale of long-term investments - 981
Other 1,380 1,040
--------- ---------
Net cash provided by (used in)
investing activities (262,460) 6,713
--------- ---------
Financing Activities:
Net proceeds from issuance of Company and
subsidiaries' common stock (Note 3) 85,719 15,344
Issuance of notes payable to parent
company (Note 2) 95,000 -
Repayment of long-term obligations (409) (853)
--------- ---------
Net cash provided by
financing activities $ 180,310 $ 14,491
--------- ---------
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THERMO INSTRUMENT SYSTEMS INC.
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Six Months Ended
----------------------
June 29, July 1,
(In thousands) 1996 1995
--------------------------------------------------------------------------
Exchange Rate Effect on Cash $ 804 $ 1,458
--------- ---------
Increase (Decrease) in Cash and Cash Equivalents (34,295) 58,219
Cash and Cash Equivalents at Beginning of Period 395,233 152,933
--------- ---------
Cash and Cash Equivalents at End of Period $ 360,938 $ 211,152
========= =========
Noncash Activities:
Conversions of convertible obligations (Note 4) $ 59,966 $ 11,380
========= =========
Fair value of assets of acquired companies $ 465,479 $ 68,499
Cash paid for acquired companies (252,088) (41,024)
--------- ---------
Liabilities assumed of acquired companies $ 213,391 $ 27,475
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMO INSTRUMENT SYSTEMS INC.
Notes to Consolidated Financial Statements
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 the financial position at June 29,
1996, the results of operations for the three- and six-month periods ended
June 29, 1996 and July 1, 1995, and the cash flows for the six-month
periods ended June 29, 1996 and July 1, 1995. Interim results are not
necessarily indicative of results for a full year.
The consolidated balance sheet presented as of December 30, 1995, 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 30, 1995, filed with the Securities and
Exchange Commission.
2. Acquisitions
On March 29, 1996, the Company completed the acquisition of a
substantial portion of the businesses comprising the Scientific Instruments
Division of Fisons plc (Fisons), a wholly owned subsidiary of Rhone-Poulenc
Rorer Inc., for approximately 123 million British pounds sterling in cash
(approximately $187 million) and the assumption of approximately 24 million
British pounds sterling of indebtedness (approximately $36 million). The
purchase price is subject to post-closing adjustments equal to the amounts
by which the net tangible assets and net debt of the acquired businesses on
the closing date are greater or less than certain target amounts agreed to
by the parties. The Company and Fisons are attempting to agree on the
required adjustment to the purchase price. The Company is seeking a
reduction in the purchase price based on its calculation of the net
tangible assets of the acquired businesses. If the parties are unable to
reach agreement, a firm of independent public accountants will be appointed
to determine the adjustment. Although there can be no assurance that the
Company will receive a reduction in the purchase price from Fisons, any
such adjustment would affect the purchase price allocation including the
amount allocated to cost in excess of net assets acquired.
To finance the acquisition of a substantial portion of the businesses
comprising the Scientific Instruments Division of Fisons, the Company used
available cash in addition to borrowings of $89 million from Thermo
Electron Corporation (Thermo Electron). On April 12, 1996, the Company
repaid a portion of the borrowings from Thermo Electron and issued a $65
million promissory note for the remaining indebtedness. The promissory note
is due April 1997 and bears interest at the 90-day Commercial Paper
Composite Rate plus 25 basis points, set at the beginning of each quarter.
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THERMO INSTRUMENT SYSTEMS INC.
2. Acquisitions (continued)
In the first quarter of 1996, the Company wrote off $3.5 million of
acquired technology in connection with this acquisition. The businesses
acquired are involved in the research, development, manufacture, and sale
of analytical instruments to industrial and research laboratories
worldwide.
During the first six months of 1996, the Company made several other
acquisitions for approximately $63 million in cash, subject to post-closing
adjustments. To partially finance one of the acquisitions, the Company's
Thermo BioAnalysis Corporation subsidiary borrowed $30 million from Thermo
Electron pursuant to a promissory note, which was repaid in July 1996.
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 cost of the acquisitions exceeded the estimated fair value
of the acquired net assets by $172 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 upon finalization of the purchase price allocation.
Based on unaudited data, the following table presents selected
financial information for the Company and the businesses acquired from
Fisons on a pro forma basis, assuming the companies had been combined since
the beginning of 1995. The effect of the acquisitions not included in the
pro forma data was not material to the Company's results of operations and
financial position.
Three Six
Months Ended Months Ended
------------ ------------------
July 1, June 29, July 1,
(In thousands except per share amounts) 1995 1996 1995
--------------------------------------------------------------------------
Revenues $263,504 $616,585 $502,176
Income from continuing operations 14,019 48,010 12,237
Earnings per share from continuing
operations:
Primary .16 .51 .14
Fully diluted .15 .47 .14
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 from Fisons been made at the beginning of
1995.
In connection with the acquisition of a substantial portion of the
businesses comprising the Scientific Instruments Division of Fisons, the
Company established reserves totaling $34 million for estimated severance,
excess facilities, and other exit costs associated with the acquisition,
$3 million of which was expended during the first six months of 1996. The
Company expects to substantially complete its review and restructuring of
these businesses over the one-year period following the acquisition. Any
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THERMO INSTRUMENT SYSTEMS INC.
2. Acquisitions (continued)
changes in estimates of these costs will be recorded as adjustments to cost
in excess of net assets of acquired companies.
3. Issuance of Stock by Subsidiaries
In March and April 1996, the Company's wholly owned ThermoQuest
Corporation (ThermoQuest) subsidiary sold 3,450,000 shares of its common
stock in an initial public offering at $15.00 per share for net proceeds of
approximately $48 million, resulting in a gain of approximately $27
million. Following the initial public offering, the Company owned 93% of
ThermoQuest's outstanding common stock.
In June 1996, the Company's wholly owned Thermo Optek Corporation
(Thermo Optek) subsidiary sold 3,000,000 shares of its common stock at
$13.50 per share for net proceeds of approximately $37 million, resulting
in a gain of approximately $23 million. Subsequent to the end of the
quarter, the underwriters of Thermo Optek's initial public offering
exercised their over-allotment option to purchase an additional 450,000
shares of Thermo Optek common stock for net proceeds of approximately
$6 million. Following the initial public offering and the exercise of the
over-allotment option, the Company owned 93% of Thermo Optek's outstanding
common stock.
4. Redemption of Convertible Debentures
In April 1996, the Company called for redemption on May 9, 1996 all of
the outstanding principal amount of its 6 5/8% subordinated convertible
debentures due 2001. During the three months ended June 29, 1996, the
entire principal amount of the debentures outstanding at March 30, 1996 was
converted into the Company's common stock.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Second Quarter 1996 Compared With Second Quarter 1995
Revenues increased $135.8 million, or 73%, to $321.6 million in the
second quarter of 1996 from $185.7 million in the second quarter of 1995
primarily due to acquisitions, which included a substantial portion of the
businesses comprising the Scientific Instruments Division of Fisons plc
(Fisons) in March 1996 (Note 2), the analytical instrument division of
Analytical Technology, Inc. (ATI) in December 1995, Dynatech Laboratories
Worldwide (DLW) in February 1996, and Gould Instrument Systems, Inc. in May
1995. Acquisitions added revenues of $130 million in the second quarter of
1996. The remainder of the increase in revenues resulted primarily from
greater demand experienced by the Company's mass spectrometry and Fourier
transform infrared businesses as a result of recently introduced products.
These increases were offset in part by a decrease of $7.9 million in
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THERMO INSTRUMENT SYSTEMS INC.
Second Quarter 1996 Compared With Second Quarter 1995 (continued)
revenues due to the unfavorable effects of currency translation as a result
of the strengthening of the U.S. dollar relative to foreign currencies in
countries in which the Company operates.
The gross profit margin decreased to 45% in the second quarter of 1996
from 49% in the second quarter of 1995 primarily due to lower margins at
acquired businesses, including the businesses acquired from Fisons. The
businesses acquired from Fisons were marginally profitable in the second
quarter of 1996.
Selling, general and administrative expenses as a percentage of
revenues increased to 30% in the second quarter of 1996 from 28% in the
second quarter of 1995 primarily due to higher costs as a percentage of
revenues at acquired businesses. Research and development expenses as a
percentage of revenues remained relatively unchanged at 7.2% in 1996,
compared with 7.4% in 1995.
Interest income increased to $4.2 million in the second quarter of
1996 from $3.0 million in the second quarter of 1995 primarily due to
interest income earned on invested proceeds from the issuance of $192.5
million aggregate principal amount of 5% subordinated convertible
debentures by the Company's ThermoQuest Corporation (ThermoQuest) and
Thermo Optek Corporation (Thermo Optek) subsidiaries in August 1995 and
October 1995, respectively and, to a lesser extent, from the issuance of
common stock by ThermoQuest in the first quarter of 1996. The increase in
interest income was offset in part by a reduction in cash as a result of
the acquisitions of a substantial portion of the businesses comprising the
Scientific Instruments Division of Fisons in March 1996 and DLW in February
1996. Interest expense increased to $7.2 million in 1996 from $3.9 million
in 1995 primarily due to the issuance of the 5% subordinated convertible
debentures by ThermoQuest and Thermo Optek and, to a lesser extent, the
issuance by the Company of a $65 million promissory note to Thermo Electron
Corporation (Thermo Electron) to partially finance the acquisition of the
businesses from Fisons and the issuance by the Company's Thermo BioAnalysis
Corporation (Thermo BioAnalysis) subsidiary of a $30 million promissory
note to Thermo Electron, which was repaid in July 1996. These increases
were offset in part by the conversion of a portion of the Company's
convertible obligations into common stock of the Company.
The Company has adopted a strategy of spinning out certain of its
businesses into separate subsidiaries and having these subsidiaries sell a
minority interest to outside investors. The Company believes that this
strategy provides additional motivation and incentives for the management
of the subsidiaries through the establishment of subsidiary-level stock
option incentive programs, as well as capital to support the subsidiaries'
growth. As a result of the sale of stock by subsidiaries, the Company
recorded gains of approximately $26 million in the second quarter of 1996
and $4.8 million in the second quarter of 1995 (Note 3). The size and
timing of these transactions are dependent on market and other conditions
that are beyond the Company's control. Accordingly, there can be no
assurance that the Company will be able to realize gains from such
transactions in the future.
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THERMO INSTRUMENT SYSTEMS INC.
Second Quarter 1996 Compared With Second Quarter 1995 (continued)
The effective tax rate decreased to 25% in the second quarter of 1996
from 35% in the second quarter of 1995 primarily due to a higher nontaxable
gain on issuance of stock by subsidiaries in 1996 compared with 1995.
Excluding the impact of the gain on issuance of stock by subsidiaries in
1996 and 1995, the effective tax rates in 1996 and 1995 exceeded the
statutory federal income tax rate 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 foreign subsidiaries, and the
impact of state income taxes.
First Six Months 1996 Compared With First Six Months 1995
Revenues increased $188.4 million, or 53%, to $547.1 million in the
first six months of 1996 from $358.7 million in the first six months of
1995 primarily due to acquisitions, which included the acquisitions
discussed in the results of operations for the second quarter. Acquisitions
added revenues of $171 million in the first six months of 1996. The
remainder of the increase in revenues resulted from greater demand at the
Company's existing businesses as discussed in the results of operations for
the second quarter. These increases were offset in part by a decrease of
$10.0 million in revenues due to the unfavorable effects of currency
translation as a result of the strengthening of the U.S. dollar relative to
foreign currencies in countries in which the Company operates.
The gross profit margin decreased to 46% in the first six months of
1996 from 49% in the first six months of 1995 primarily due to lower
margins at acquired businesses.
Selling, general and administrative expenses as a percentage of
revenues increased to 29% in the first six months of 1996 from 28% in the
first six months of 1995 primarily due to higher costs as a percentage of
revenues at acquired businesses. Research and development expenses as a
percentage of revenues remained unchanged at 7.3% in 1996 and 1995.
In the first quarter of 1996, the Company wrote off $3.5 million of
acquired technology in connection with the acquisition of the businesses
from Fisons (Note 2).
Interest income increased to $9.4 million in the first six months of
1996 from $5.3 million in the first six months of 1995. Interest expense
increased to $13.5 million in 1996 from $7.7 million in 1995. The reasons
for these increases are the same as those discussed in the results of
operations for the second quarter.
As a result of the sale of stock by subsidiaries, the Company recorded
gains of approximately $50 million in the first six months of 1996 and $9.5
million in the first six months of 1995 (Note 3).
The effective tax rate decreased to 24% in the first six months of
1996 from 35% in the first six months of 1995 primarily due to a higher
nontaxable gain on issuance of stock by subsidiaries in 1996 compared with
1995. Excluding the impact of the gain on issuance of stock by subsidiaries
in 1996 and 1995, the effective tax rates in 1996 and 1995 exceeded the
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THERMO INSTRUMENT SYSTEMS INC.
First Six Months 1996 Compared With First Six Months 1995 (continued)
statutory federal income tax rate due to nondeductible amortization of cost
in excess of net assets of acquired companies, the write-off of acquired
technology in connection with the acquisition of the businesses from Fisons
in the first quarter of 1996, the inability to provide a tax benefit on
losses incurred at certain foreign subsidiaries, and the impact of state
income taxes.
Liquidity and Capital Resources
Consolidated working capital was $373.5 million at June 29, 1996,
compared with $489.9 million at December 30, 1995, a decrease of $116.4
million. Included in working capital are cash, cash equivalents, and
available-for-sale investments of $365.7 million at June 29, 1996 and
$395.2 million at December 30, 1995. Of the $365.7 million balance at June
29, 1996, $184.1 million was held by ThermoQuest, $106.3 million by Thermo
Optek, $20.5 million by ThermoSpectra, $12.2 million by Thermo BioAnalysis,
and $42.6 million by the Company and its wholly owned subsidiaries. The
Company's operating activities provided $47.1 million of cash in the first
six months of 1996. Accounts receivable decreased $19.3 million in the
first six months of 1996, due in large part to improved collections at one
of ThermoQuest's foreign subsidiaries.
The Company's investing activities used $262.5 million of cash in the
first six months of 1996. The Company expended $249.5 million for
acquisitions, including the acquisition of a substantial portion of the
businesses comprising the Scientific Instruments Division of Fisons
(Note 2), and $9.7 million for the purchase of property, plant and
equipment.
The Company's financing activities provided $180.3 million of cash in
the first six months of 1996. In March and April 1996, ThermoQuest sold
shares of its common stock in an initial public offering for net proceeds
of approximately $48 million. In June 1996, Thermo Optek sold shares of its
common stock in an initial public offering for net proceeds of
approximately $37 million. In February 1996, to partially finance the
acquisition of DLW, Thermo BioAnalysis borrowed $30 million from Thermo
Electron pursuant to a promissory note, which was repaid in July 1996
(Note 2). In March 1996, to partially finance the acquisition of the
businesses from Fisons, the Company borrowed $89 million from Thermo
Electron. In April 1996, the Company repaid a portion of the borrowings
from Thermo Electron and issued a $65 million promissory note due April
1997 for the remaining indebtedness (Note 2).
In July 1996, the underwriters of Thermo Optek's initial public
offering exercised their over-allotment option to purchase additional
shares of Thermo Optek's common stock for net proceeds of approximately
$6 million (Note 3).
In July 1996, Thermo BioAnalysis filed a registration statement under
the Securities Act of 1933 with the Securities and Exchange Commission
covering shares of common stock to be offered in its initial public
offering.
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THERMO INSTRUMENT SYSTEMS INC.
Liquidity and Capital Resources (continued)
During the remainder of 1996, the Company plans to make expenditures
of approximately $11 million for property, plant and equipment. The Company
believes that its existing resources are sufficient to meet the capital
requirements of its existing operations for the foreseeable future. The
Company has historically complemented internal development with
acquisitions of businesses or technologies that extend the Company's
presence in current markets or provide opportunities to enter and compete
effectively in new markets. The Company will consider making acquisitions
of such businesses or technologies that are consistent with its plans for
strategic growth.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
On May 19, 1996, at the Annual Meeting of Shareholders, the
shareholders elected five directors to a one-year term expiring in 1997.
The directors elected at the meeting were: Frank Borman, Dr. George N.
Hatsopoulos, John N. Hatsopoulos, Arvin H. Smith, and Polyvias C.
Vintiadis. Mr. Borman received 83,711,211 shares voted in favor of his
election and 106,888 shares voted against. Dr. G. Hatsopoulos and Messrs.
J. Hatsopoulos, Smith, and Vintiadis each received 83,711,315 shares voted
in favor of his election and 106,784 shares voted against. No broker
nonvotes were recorded on the election of directors.
The shareholders also approved a proposal to amend the Company's
Restated Certificate of Incorporation to increase the Company's authorized
common stock, $.10 par value per share, from 125 million shares to 250
million shares as follows: 83,279,649 shares voted in favor, 189,751 shares
voted against, 11,956 shares abstained, and 336,743 broker nonvotes were
recorded on the 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 12, 1996, the Company filed a Current Report on Form 8-K
pertaining to its acquisition of a substantial portion of the businesses
comprising the Scientific Instruments Division of Fisons plc on March 29,
1996. On June 12, 1996, the Company filed an amendment on Form 8-K/A, the
purpose of which was to file the financial information required by Form 8-K
concerning this acquisition.
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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 7th day of August 1996.
THERMO INSTRUMENT SYSTEMS INC.
Paul F. Kelleher
--------------------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
--------------------------------
John N. Hatsopoulos
Chief Financial Officer
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THERMO INSTRUMENT SYSTEMS INC.
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------------------------------------------------------------------------
3(i) Amendment to Restated Certificate of Incorporation
of the Registrant.
11 Statement re: Computation of earnings per share.
27 Financial Data Schedule.
Exhibit 3(i)
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
THERMO INSTRUMENT SYSTEMS INC.
Thermo Instrument Systems Inc. (the "Corporation"), a
corporation organized and existing under the laws of the State of
Delaware, hereby certifies as follows, pursuant to Section 242 of
the General Corporation Law of the State of Delaware:
1. That Article FOURTH of the Restated Certificate of
Incorporation of the Corporation, as restated on March 1, 1994,
is hereby amended to increase the number of authorized shares of
the Corporation's Common Stock, $.10 par value per share, from
125 million shares to 250 million shares and that such amendment
is hereby effected by deleting said Article in its entirety and
inserting the following in substitution therefor:
"FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is:
Two Hundred Fifty Million (250,000,000) shares,
and the par value of each such share in Ten Cents
($.10)."
2. That the Board of Directors of the Corporation at a
meeting held on March 13, 1996, duly adopted the following
resolutions:
RESOLVED, that it is in the best interests of the
Corporation that the authorized common stock of
the Corporation, $.10 par value, be increased to
250 million shares, and that, upon the approval of
such increase by the Corporation's Stockholders,
the proper officers of the Corporation be, and
each of them hereby are, authorized, empowered and
directed to execute on behalf of the Corporation a
Certificate of Amendment to the Corporation's
Restated Certificate of Incorporation to reflect
such increase, and to file, or cause to be filed,
such Certificate of Amendment with the Secretary
of State of the State of Delaware.
RESOLVED, that the Board of Directors recommend to the
Stockholders for approval at the Annual Meeting
the increase in authorized shares of the
Corporation's common stock to 250 million shares
as previously approved by the Directors.
3. That on May 19, 1996, at the Corporation's Annual
Meeting of Stockholders, the Amendment to the Corporation's
Restated Certificate of Incorporation was duly adopted by the
affirmative vote of Stockholders of the Corporation holding a
PAGE
<PAGE>
majority of the shares of Common Stock, $.10 par value per share,
of the Corporation in accordance with the provisions of Section
242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this Certificate of Amendment has been
executed on behalf of the undersigned corporation by its duly
authorized officer and attested to by its duly authorized
Secretary this _____ day of May, 1996.
THERMO INSTRUMENT SYSTEMS INC.
By: /s/ Arvin H. Smith
-------------------------
Arvin H. Smith
President and
Chief Executive Officer
ATTEST:
By: /s/ Sandra L. Lambert
-----------------------------
Sandra L. Lambert
Secretary
Exhibit 11
THERMO INSTRUMENT SYSTEMS INC.
Computation of Earnings per Share
Three Months Ended
----------------------------
June 29, July 1,
1996 1995
--------------------------------------------------------------------------
Computation of Fully Diluted Earnings
per Share:
Income:
Net income $ 35,296,000 $ 18,673,000
Add: Convertible obligation interest,
net of tax 1,055,000 1,443,000
------------ ------------
Income applicable to common stock
assuming full dilution (a) $ 36,351,000 $ 20,116,000
------------ ------------
Shares:
Weighted average shares outstanding 95,073,737 90,332,213
Add: Shares issuable from assumed
conversion of convertible
obligations 11,281,008 15,672,274
Shares issuable from assumed
exercise of options (as determined
by the application of the treasury
stock method) 1,047,598 574,586
------------ ------------
Weighted average shares outstanding,
as adjusted (b) 107,402,343 106,579,073
------------ ------------
Fully Diluted Earnings per Share (a)/(b)
$ .34 $ .19
============ ============
PAGE
<PAGE>
Exhibit 11
THERMO INSTRUMENT SYSTEMS INC.
Computation of Earnings per Share (continued)
Six Months Ended
----------------------------
June 29, July 1,
1996 1995
--------------------------------------------------------------------------
Computation of Fully Diluted Earnings
per Share from Continuing Operations:
Income:
Income from continuing operations $ 69,339,000 $ 35,587,000
Add: Convertible obligation interest,
net of tax 2,404,000 2,960,000
------------ ------------
Income applicable to common stock
assuming full dilution (a) $ 71,743,000 $ 38,547,000
------------ ------------
Shares:
Weighted average shares outstanding 93,474,351 89,848,430
Add: Shares issuable from assumed
conversion of convertible
obligations 12,863,360 16,126,486
Shares issuable from assumed
exercise of options (as determined
by the application of the treasury
stock method) 1,047,598 574,587
------------ ------------
Weighted average shares outstanding,
as adjusted (b) 107,385,309 106,549,503
------------ ------------
Fully Diluted Earnings per Share
from Continuing Operations (a)/(b) $ .67 $ .36
============ ============
PAGE
<PAGE>
Exhibit 11
THERMO INSTRUMENT SYSTEMS INC.
Computation of Earnings per Share (continued)
Six Months Ended
----------------------------
June 29, July 1,
1996 1995
--------------------------------------------------------------------------
Computation of Fully Diluted Earnings
per Share:
Income:
Net income $ 69,339,000 $ 35,589,000
Add: Convertible obligation interest,
net of tax 2,404,000 2,960,000
------------ ------------
Income applicable to common stock
assuming full dilution (a) $ 71,743,000 $ 38,549,000
------------ ------------
Shares:
Weighted average shares outstanding 93,474,351 89,848,430
Add: Shares issuable from assumed
conversion of convertible
obligations 12,863,360 16,126,486
Shares issuable from assumed
exercise of options (as determined
by the application of the treasury
stock method) 1,047,598 574,587
------------ ------------
Weighted average shares outstanding,
as adjusted (b) 107,385,309 106,549,503
------------ ------------
Fully Diluted Earnings per Share (a)/(b) $ .67 $ .36
============ ============
<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
JUNE 29, 1996 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-28-1996
<PERIOD-END> JUN-29-1996
<CASH> 360,938
<SECURITIES> 4,758
<RECEIVABLES> 310,087
<ALLOWANCES> 21,330
<INVENTORY> 248,851
<CURRENT-ASSETS> 971,555
<PP&E> 260,650
<DEPRECIATION> 63,639
<TOTAL-ASSETS> 1,763,227
<CURRENT-LIABILITIES> 598,021
<BONDS> 238,830
0
0
<COMMON> 9,717
<OTHER-SE> 659,874
<TOTAL-LIABILITY-AND-EQUITY> 1,763,227
<SALES> 547,123
<TOTAL-REVENUES> 547,123
<CGS> 295,235
<TOTAL-COSTS> 295,235
<OTHER-EXPENSES> 43,272
<LOSS-PROVISION> 1,283
<INTEREST-EXPENSE> 13,517
<INCOME-PRETAX> 93,467
<INCOME-TAX> 22,456
<INCOME-CONTINUING> 69,339
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,339
<EPS-PRIMARY> .74
<EPS-DILUTED> .67
</TABLE>
