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):
January 28, 2000
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THERMO TERRATECH INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-9549 04-2925807
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02454-9046
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (781) 622-1000
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FORM 8-K
THERMO TERRATECH INC.
Item 2. Disposition of Assets
On January 28, 2000, Thermo TerraTech Inc., through its The Randers Killam
Group Inc. majority-owned subsidiary, (collectively referred to as the
"Company") sold substantially all of the assets and liabilities of its Randers
division, exclusive of certain real estate and certain ongoing litigation, to
RGI Muskegon, Inc. The purchaser is a newly formed Michigan corporation that is
owned and managed by the former management team of the Randers division, which
includes Thomas Eurich, a Vice President and a Director of the Company until the
closing of the transaction. The Randers division provides engineering and
construction services.
The purchase price for the assets of the Randers Division consisted of a
promissory note in the principal amount of $538,000 bearing interest at the rate
of 8.0% per annum and payable in 36 equal monthly installments of principal and
interest commencing March 1, 2000. The assets sold include all of the Randers
division's operating assets, active contracts and projects, and the real
property located at 570 Seminole Road in Muskegon, Michigan. The liabilities
assumed by the purchaser include all balance sheet liabilities, all lease
obligations, and all liabilities and obligations under the active contracts and
projects. Title to the real estate will be transferred to the purchaser as soon
as practicable after the closing. Upon delivery of the deed by the Company, the
purchaser will deliver to the Company a second mortgage on the real estate to
secure the promissory note.
The purchase price of the assets was determined by the parties in
arms-length negotiations. In agreeing to the purchase price, the Company
considered the additional costs that would be incurred by the Company if the
Randers division were shut down instead of sold.
The Company incurred a loss on the sale of approximately $2.2 million,
which was included in restructuring costs for the third quarter ended January 1,
2000.
2
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FORM 8-K
THERMO TERRATECH INC.
Item 7. Financial Statements, Pro Forma Condensed Financial Information and
Exhibits
(a) Financial Statements
Not applicable.
(b) Pro Forma Condensed Financial Statements
The following unaudited pro forma condensed statements of operations set
forth the results of operations for the fiscal year ended April 3, 1999, and the
nine months ended January 1, 2000, as if the disposition of the Randers division
had occurred at the beginning of fiscal 1999. The unaudited pro forma condensed
balance sheet sets forth the financial position as of January 1, 2000, as if the
disposition 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 Randers division been consummated at the beginning of fiscal 1999. 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, as amended, for the fiscal
year ended April 3, 1999, and Quarterly Report on Form 10-Q for the nine months
ended January 1, 2000.
3
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FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
Fiscal Year Ended April 3, 1999
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Less:
Thermo Randers Pro Forma
TerraTech Division Adjustments Pro Forma
--------- -------- ----------- ---------
(In thousands except per share amounts)
Revenues $ 310,039 $ 18,342 $ - $ 291,697
--------- -------- -------- ---------
Costs and Operating Expenses:
Cost of revenues 247,610 15,558 - 232,052
Selling, general, and administrative expenses 46,224 2,201 - 44,023
Restructuring costs 10,217 - - 10,217
--------- -------- -------- ---------
304,051 17,759 - 286,292
--------- -------- -------- ---------
Operating Income 5,988 583 - 5,405
Interest Income 2,185 9 43 2,219
Interest Expense (8,981) (77) - (8,904)
--------- -------- -------- ---------
Loss Before Provision for Income Taxes and (808) 515 43 (1,280)
Minority Interest
Provision for Income Taxes 1,786 225 15 1,576
Minority Interest Income (1,173) - (14) (1,187)
--------- -------- -------- ---------
Net Loss $ (1,421) $ 290 $ 42 $ (1,669)
========= ======== ======== =========
Basic and Diluted Loss per Share $ (.07) $ (.09)
========= ========
Basic and Diluted Weighted Average Shares 19,402 19,402
========= =========
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FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
Nine Months Ended January 1, 2000
(Unaudited)
Less:
Thermo Randers Pro Forma
TerraTech Division Adjustments Pro Forma
--------- -------- ----------- ---------
(In thousands except per share amounts)
Revenues $ 234,790 $ 6,844 $ - $ 227,946
--------- -------- -------- ---------
Costs and Operating Expenses:
Cost of revenues 185,059 6,468 - 178,591
Selling, general, and administrative expenses 34,439 1,284 - 33,155
Restructuring costs 56,524 5,777 - 50,747
--------- -------- -------- ---------
276,022 13,529 - 262,493
--------- -------- -------- ---------
Operating Loss (41,232) (6,685) - (34,547)
Interest Income 2,037 2 32 2,067
Interest Expense (6,678) (50) - (6,628)
--------- -------- --------- ---------
Loss Before Income Taxes, Minority Interest, (45,873) (6,733) 32 (39,108)
and Extraordinary Item
Provision for Income Taxes 1,244 (750) 11 2,005
Minority Interest Income (3,316) - 312 (3,004)
--------- -------- -------- ---------
Loss Before Extraordinary Item (43,801) (5,983) (291) (38,109)
Extraordinary Item, Net of Provision for 96 - - 96
Income Taxes of $64
--------- -------- -------- ---------
Net Loss $ (43,705) $ (5,983) $ (291) $ (38,013)
========= ======== ======== =========
Basic and Diluted Loss per Share $ (2.29) $ (1.99)
========= =========
Basic and Diluted Weighted Average Shares 19,066 19,066
========= =========
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</TABLE>
<TABLE>
<CAPTION>
FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONDENSED BALANCE SHEET
As of January 1, 2000
(Unaudited)
<S> <C> <C> <C>
Less:
Thermo Randers
TerraTech Division Pro Forma
--------- -------- ---------
(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 4,905 $ 1,180 $ 3,725
Advance to affiliate 49,436 - 49,436
Accounts receivable, net 52,330 1,283 51,047
Unbilled contract costs and fees 26,950 378 26,572
Inventories 2,452 - 2,452
Deferred tax assets 6,668 - 6,668
Other current assets 3,685 - 3,685
-------- -------- ---------
146,426 2,841 143,585
-------- -------- ---------
Property, Plant, and Equipment, at Cost, Net 70,357 - 70,357
-------- -------- ---------
Other Assets 9,623 - 9,623
-------- -------- ---------
Cost in Excess of Net Assets of Acquired Companies 88,865 - 88,865
-------- -------- ---------
$315,271 $ 2,841 $ 312,430
======== ======== =========
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<PAGE>
FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONDENSED BALANCE SHEET (continued)
As of January 1, 2000
(Unaudited)
Less:
Thermo Randers
TerraTech Division Pro Forma
--------- -------- ---------
(In thousands)
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term obligations and current maturities of long-term $ 19,549 $ - $ 19,549
obligations
Subordinated convertible debentures 37,950 - 37,950
Accounts payable 20,939 650 20,289
Accrued payroll and employee benefits 12,223 168 12,055
Accrued restructuring costs 8,660 986 7,674
Deferred revenue 4,169 - 4,169
Other accrued expenses 13,347 1,037 12,310
Due to parent company and affiliated companies 2,140 - 2,140
-------- -------- ---------
118,977 2,841 116,136
-------- -------- ---------
Deferred Income Taxes 685 - 685
-------- -------- ---------
Other Deferred Items 1,097 - 1,097
-------- -------- ---------
Long-term Obligations 118,241 - 118,241
-------- -------- ---------
Minority Interest 24,785 - 24,785
-------- -------- ---------
Shareholders' Investment:
Common stock 1,959 - 1,959
Capital in excess of par value 70,993 - 70,993
Accumulated deficit (17,807) - (17,807)
Treasury stock, at cost (3,846) - (3,846)
Deferred compensation (216) - (216)
Accumulated other comprehensive items 403 - 403
-------- -------- ---------
51,486 - 51,486
-------- -------- ---------
$315,271 $ 2,841 $ 312,430
======== ======== =========
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FORM 8-K
</TABLE>
<TABLE>
<CAPTION>
THERMO TERRATECH INC.
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Pro Forma Adjustments to Pro Forma Condensed Statements of Operations (In thousands)
<S> <C> <C>
Fiscal Year Ended Nine Months Ended
April 3, 1999 January 1, 2000
----------------- -----------------
Debit (Credit)
Interest Income
Increase in interest income earned on the $538,000
note receivable issued to the Company by the
acquirer at an interest rate of 8% $ 43 $ 32
---- ----
Provision for Income Taxes
Increase in the income tax provision as a result of
an increase in interest income calculated at the
federal income tax rate of 34% $ 15 $ 11
---- ----
Minority Interest Income
(Increase) decrease in minority interest income as a
result of the sale of the Randers division $(14) $312
---- ----
Note 2 - Pro Forma Adjustments to Pro Forma Condensed Balance Sheet
The sales price of the Randers division consisted of a $538,000 promissory
note issued to the Company, secured by certain real estate. In addition, the
acquirer assumed $776,000 of mortgage debt. Due to the fact that the Company
received no consideration at the time of sale, the sale of the real estate is
being accounted for under the deposit method. Under the deposit method, the
Company did not record the note receivable and continues to report the property
that was sold as well as the existing mortgage debt in the accompanying pro
forma condensed balance sheet. Cash received from the acquirer will be reported
as a deposit on the contract. As a result, there are no pro forma adjustments to
the pro forma condensed balance sheet as of January 1, 2000.
8
<PAGE>
FORM 8-K
THERMO TERRATECH INC.
Item 7. Financial Statements, Pro Forma Condensed Financial Information and
Exhibits (continued)
(c) Exhibits
2.1 Asset Purchase Agreement by and among RGI Muskegon, Inc. (as Buyer),
Randers Engineering, Inc., Redeco, Inc., Viridian Technology, Inc., and
Randers Group Property Corporation (as Sellers), and The Randers Killam
Group Inc. (as Sellers' Parent) dated January 28, 2000 (incorporated by
reference to Exhibit 2.1 to The Randers Killam Group Inc.'s Current
Report on Form 8-K filed February 11, 2000).
</TABLE>
9
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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 11th day of February 2000.
THERMO TERRATECH INC.
By: /s/ Paul F. Kelleher
Paul F. Kelleher
Chief Accounting Officer
