SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported):
October 6, 1997
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THERMO TERRATECH INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-9549 04-2925807
(State or other (Commission) (I.R.S. Employer
jurisdiction of File Number) Identification Number)
incorporation or
organization)
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02254-9046
(Address of principal executive offices) (Zip Code)
(617) 622-1000
(Registrant's telephone number including area code)
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FORM 8-K
Item 2. Acquisition or Disposition of Assets
On October 6, 1997 (the "Closing Date"), Thermo Remediation Inc.
("Thermo Remediation"), a majority-owned subsidiary of Thermo TerraTech
Inc. (the "Company"), sold its 50% limited liability company interest in
RETEC/TETRA, L.C., a Texas limited liability company (the "Joint
Venture"), to TETRA Thermal, Inc. (the "Buyer"). Prior to this sale, the
Buyer held the other 50% limited liability company interest in the Joint
Venture. The Joint Venture, established in August 1992, engages in the
business of installing and operating systems to process hazardous and
nonhazardous wastes at petroleum refineries located primarily in the Gulf
Coast region of the United States.
The selling price for Thermo Remediation's interest in the Joint
Venture was $8,825,000 in cash. The selling price is subject to
post-closing adjustments in the event of certain further sales of
interests in the Joint Venture or its assets within six months after the
Closing Date. Under the terms of the agreement originally establishing
the Joint Venture, either party to the agreement had the right to propose
a value for a 50% interest in the Joint Venture (the "Proposing Party")
and to cause the other party (the "Electing Party") either to (i) buy the
Proposing Party's interest in the Joint Venture at such price or (ii)
sell the Electing Party's interest in the Joint Venture to the Proposing
Party at such price. The selling price was proposed by the Buyer and
Thermo Remediation elected to sell the Buyer its interest in the Joint
Venture at such selling price.
The disposition was made pursuant to a Purchase and Sale Agreement
(the "Agreement") executed on October 6, 1997, by and among Thermo
Remediation's Remediation Technologies, Inc. and RETEC Thermal, Inc.
subsidiaries, as well as the Buyer and its TETRA Technologies, Inc.
affiliate. In the Agreement, the Buyer and its affiliate agreed, subject
to certain exceptions, to indemnify Thermo Remediation and its
subsidiaries against claims arising out of the operations, debts and
liabilities of the Joint Venture arising both before and after the
Closing Date. The terms of the Agreement were determined by arms' length
negotiation among the parties.
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FORM 8-K
Item 7. Financial Statements, Pro Forma Condensed Financial
Information and Exhibits
(a) Financial Statements
Not applicable.
(b) Pro Forma Condensed Financial Information
The following unaudited pro forma condensed statement of income sets
forth the results of operations for the fiscal year ended March 29, 1997,
and the three months ended June 28, 1997, as if the sale of the Company's
investment in the Joint Venture had occurred at the beginning of fiscal
1997. The unaudited pro forma condensed balance sheet sets forth the
financial position as of June 28, 1997, as if the sale of the Company's
investment in the Joint Venture had occurred as of that date.
The pro forma results of operations are not necessarily indicative
of future operations or the actual results that would have occurred had
the sale of the Company's investment in the Joint Venture been
consummated at the beginning of fiscal 1997. These statements should be
read in conjunction with the accompanying notes herein and the historical
consolidated financial statements and related notes of the Company
included in its Annual Report on Form 10-K for the fiscal year ended
March 29, 1997, and Quarterly Report on Form 10-Q for the three months
ended June 28, 1997.
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FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONDENSED STATEMENT OF INCOME (Unaudited)
Fiscal Year Ended March 29, 1997
Thermo Pro Forma
TerraTech Adjustments Pro Forma
--------- ----------- ---------
(In thousands except per share amounts)
Revenues $278,503 $ - $278,503
-------- -------- --------
Costs and Operating Expenses:
Cost of revenues 230,080 - 230,080
Selling, general, and
administrative expenses 35,466 - 35,466
Product and new business
development expenses 1,046 - 1,046
Nonrecurring costs 7,800 - 7,800
-------- -------- --------
274,392 - 274,392
-------- -------- --------
Operating Income 4,111 - 4,111
Interest Income 7,253 - 7,253
Interest Expense (includes $2,492
to parent company) (12,914) - (12,914)
Gain on Issuance of Stock by
Subsidiary 1,475 - 1,475
Loss on Sale of Assets (1,482) - (1,482)
Equity in Earnings of Unconsolidated
Subsidiary 865 (865) -
Other Income, Net 401 - 401
-------- -------- --------
Loss Before Income Taxes and
Minority Interest (291) (865) (1,156)
Income Tax Provision (1,705) 346 (1,359)
Minority Interest Income 1,834 163 1,997
-------- -------- --------
Net Loss $ (162) $ (356) $ (518)
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Loss per Share $ (.01) $ (.03)
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Weighted Average Shares 18,090 18,090
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FORM 8-K
THERMO TERRATECH INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (Unaudited)
Three Months Ended June 28, 1997
Thermo Pro Forma
TerraTech Adjustments Pro Forma
--------- ----------- ---------
(In thousands except per share amounts)
Revenues $72,519 $ - $72,519
------- ------- -------
Costs and Operating Expenses:
Cost of revenues 57,951 - 57,951
Selling, general, and
administrative expenses 9,938 - 9,938
Product and new business
development expenses 222 - 222
------- ------- -------
68,111 - 68,111
------- ------- -------
Operating Income 4,408 - 4,408
Interest Income 1,403 - 1,403
Interest Expense (includes $1,164
to parent company) (3,133) - (3,133)
Equity in Earnings of Unconsolidated
Subsidiary 118 (118) -
Other Income, Net 204 - 204
------- ------- -------
Income Before Income Taxes and
Minority Interest 3,000 (118) 2,882
Income Tax Provision (1,399) 47 (1,352)
Minority Interest Expense (269) 21 (248)
------- ------- -------
Net Income $ 1,332 $ (50) $ 1,282
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Earnings per Share $ .08 $ .07
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Weighted Average Shares 17,646 17,646
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FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONDENSED BALANCE SHEET (Unaudited)
As of June 28, 1997
Thermo Pro Forma
TerraTech Adjustments Pro Forma
--------- ----------- ---------
(In thousands)
ASSETS
Current Assets:
Cash and short-term investments $ 45,973 $ 8,825 $ 54,798
Accounts receivable, net 53,238 - 53,238
Unbilled contract costs and fees 40,447 - 40,447
Inventories 2,447 - 2,447
Prepaid income taxes 7,484 - 7,484
Prepaid expenses 5,457 - 5,457
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155,046 8,825 163,871
-------- ------- --------
Property, Plant, and Equipment,
at Cost, Net 86,519 - 86,519
-------- ------- --------
Other Assets 20,344 (5,768) 14,576
-------- ------- --------
Cost in Excess of Net Assets
of Acquired Companies 95,550 - 95,550
-------- ------- --------
$357,459 $ 3,057 $360,516
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FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONDENSED BALANCE SHEET (Unaudited) (continued)
As of June 28, 1997
Thermo Pro Forma
TerraTech Adjustments Pro Forma
--------- ----------- ---------
(In thousands)
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Notes payable and current maturities
of long-term obligations $ 44,351 $ - $ 44,351
Accounts payable 13,735 - 13,735
Accrued payroll and employee benefits 11,363 - 11,363
Billings in excess of revenues earned 5,306 - 5,306
Other accrued expenses 9,651 1,223 10,874
Due to parent company 2,843 - 2,843
-------- ------- --------
87,249 1,223 88,472
-------- ------- --------
Deferred Income Taxes 5,297 - 5,297
-------- ------- --------
Other Deferred Items 1,009 - 1,009
-------- ------- --------
Long-term Obligations 152,994 - 152,994
-------- ------- --------
Minority Interest 29,635 551 30,186
-------- ------- --------
Shareholders' Investment:
Common stock 1,830 - 1,830
Capital in excess of par value 62,426 - 62,426
Retained earnings 25,378 1,283 26,661
Treasury stock, at cost (6,937) - (6,937)
Cumulative translation adjustment (1,431) - (1,431)
Net unrealized gain on available-
for-sale investments 9 - 9
-------- ------- --------
81,275 1,283 82,558
-------- ------- --------
$357,459 $ 3,057 $360,516
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FORM 8-K
THERMO TERRATECH INC.
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
As described in Item 2 of this Form 8-K, the selling price is based on an
estimate of the fair market value of the net assets sold and is subject to
adjustment. To date, no information has been gathered that would cause the
Company to believe that the final selling price will be materially different
than the preliminary estimate.
Note 2 - Pro Forma Adjustments to Pro Forma Condensed Statement of
Income
Equity in Earnings of Unconsolidated Subsidiary
Represents the reversal of the Company's proportionate share of income
from its investment in the Joint Venture.
Income Tax Provision
Represents a decrease in income taxes associated with the pro forma
adjustment above, calculated at the Company's statutory income tax rate of
40%.
Minority Interest Income (Expense)
Represents Thermo Remediation's minority shareholders' interest in the
pro forma adjustments above.
Note 3 - Pro Forma Adjustments to Pro Forma Condensed Balance Sheet
Cash and Short-term Investments
Represents the proceeds from the sale of the Joint Venture.
Other Assets
Represents the Company's sale of its investment in the Joint Venture.
Other Accrued Expenses
Represents the tax effect related to the excess of the proceeds received
by Thermo Remediation from the sale of its investment in the Joint Venture
over the carrying value of its investment, calculated at the Company's
statutory income tax rate of 40%.
Minority Interest
Represents the minority interest in the excess of the proceeds received
by Thermo Remediation from the sale of its investment in the Joint Venture
over the carrying value of the investment.
Retained Earnings
Represents the Company's share of the excess of the proceeds received by
Thermo Remediation from the sale of its investment in the Joint Venture over
the carrying value of the investment.
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FORM 8-K
Item 7. Financial Statements, Pro Forma Condensed Financial
Information and Exhibits (continued)
(c)Exhibits
2.1 Purchase and Sale Agreement executed October 6, 1997,
by and among Remediation Technologies, Inc., RETEC
Thermal, Inc., TETRA Thermal, Inc. and TETRA
Technologies, Inc. (schedules and exhibits to the
agreement are omitted in reliance on Rule 601(b)(2)
of Regulation S-K. The Registrant hereby undertakes
to furnish such schedules and exhibits to the
Commission supplementally upon request). (Filed on
October 21, 1997 as Exhibit 2.1 to Thermo Remediation
Inc.'s Current Report on Form 8-K dated October 6,
1997 [File No. 1-12636] and incorporated herein by
reference.)
2.2 Assignment and Assumption Agreement executed October
6, 1997 by and among Remediation Technologies, Inc.,
RETEC Thermal, Inc., TETRA Thermal, Inc. and TETRA
Technologies, Inc. (schedules and exhibits to the
agreement are omitted in reliance on Rule 601(b)(2)
of Regulation S-K. The Registrant hereby undertakes
to furnish such schedules and exhibits to the
Commission supplementally upon request). (Filed on
October 21, 1997 as Exhibit 2.2 to Thermo Remediation
Inc.'s Current Report on Form 8-K dated October 6,
1997 [File No. 1-12636] and incorporated herein by
reference.)
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FORM 8-K
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 21st day of October
1997.
THERMO TERRATECH INC.
Paul F. Kelleher
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Paul F. Kelleher
Chief Accounting Officer
