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):
March 6, 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 March 6, 2000, TPST Soil Recyclers of California, Inc. ("TPST"), an
indirect, wholly owned subsidiary of ThermoRetec Corporation, a majority-owned
subsidiary of Thermo TerraTech Inc. (the "Company"), sold all of the assets of
its soil-remediation facility located at the West Contra Costa Sanitary Landfill
in Contra Costa County, California (the "Facility") to Nove Investments I, LLC,
a California limited liability company (the "Buyer"). The Facility is in the
business of providing soil-remediation services.
The assets sold in the transaction include all rights under certain
contracts, the permits possessed by the Facility and fixed assets and equipment
used at the Facility. The Buyer assumed all liabilities and obligations under
the assumed contracts and all liabilities and obligations relating to the land
and building where the Facility operates, including all environmental
liabilities.
The purchase price for the assets was $400,000 in cash, of which $250,000
was placed in escrow. The release of the escrowed funds to TPST is contingent
upon the satisfaction of certain post-closing conditions, primarily the
achievement of fuel efficiency targets for certain equipment. If certain of the
post-closing conditions are not satisfied, some or all of the escrowed funds
will be returned to the Buyer. The purchase price of the assets was determined
by the parties in arms-length negotiations.
In connection with the transaction, the Operating Agreement by and among
TPST, West County Landfill and West Contra Costa County Sanitary Landfill
relating to the operation of the Facility was terminated and the Company was
released from its guaranty of TPST's performance obligations under the Operating
Agreement. TPST will, however, continue to operate the Facility on the Buyer's
behalf for a period not to exceed three months after the closing under a
management agreement pursuant to which TPST will be reimbursed by the Buyer for
its "Allowable Costs" as that term is defined in the agreement.
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 by the Company of the
Facility 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 Facility 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
<PAGE>
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>
Thermo Pro Forma
TerraTech Less: Facility Adjustments Pro Forma
(In thousands except per share amounts)
Revenues $310,039 $ 3,358 $ - $306,681
-------- -------- -------- --------
Costs and Operating Expenses:
Cost of revenues 247,610 2,720 - 244,890
Selling, general, and administrative expenses 46,224 395 - 45,829
Restructuring costs 10,217 6,846 - 3,371
-------- -------- -------- --------
304,051 9,961 - 294,090
-------- -------- -------- --------
Operating Income (Loss) 5,988 (6,603) - 12,591
Interest Income 2,185 - 18 2,203
Interest Expense (8,981) - - (8,981)
-------- -------- -------- --------
Income (Loss) Before Income Taxes and (808) (6,603) 18 5,813
Minority Interest
Income Tax (Provision) Benefit (1,786) 2,311 (7) (4,104)
Minority Interest Income (Expense) 1,173 - (1,325) (152)
-------- -------- -------- --------
Net Income (Loss) $ (1,421) $ (4,292) $ (1,314) $ 1,557
======== ======== ======== ========
Basic and Diluted Earnings (Loss) per Share $ (.07) $ .08
======== ========
Weighted Average Shares:
Basic 19,402 19,402
======== ========
Diluted 19,402 455 19,857
======== ======== ========
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<PAGE>
FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
Nine Months Ended January 1, 2000
(Unaudited)
Thermo Pro Forma
TerraTech Less: Facility Adjustments Pro Forma
(In thousands except per share amounts)
Revenues $234,790 $ 1,499 $ - $233,291
-------- -------- -------- --------
Costs and Operating Expenses:
Cost of revenues 185,059 1,489 - 183,570
Selling, general, and administrative expenses 34,439 222 - 34,217
Restructuring costs 56,524 9 - 56,515
-------- -------- -------- --------
276,022 1,720 - 274,302
-------- -------- -------- --------
Operating Loss (41,232) (221) - (41,011)
Interest Income 2,037 - 14 2,051
Interest Expense (6,678) - - (6,678)
-------- -------- -------- --------
Loss Before Income Taxes, Minority (45,873) (221) 14 (45,638)
Interest, and Extraordinary Item
Income Tax (Provision) Benefit (1,244) 80 (5) (1,329)
Minority Interest Income 3,316 - (45) 3,271
-------- -------- -------- --------
Loss Before Extraordinary Item (43,801) (141) (36) (43,696)
Extraordinary Item, Net of Income Tax 96 - - 96
Provision of $64 -------- -------- -------- --------
Net Loss $(43,705) $ (141) $ (36) $(43,600)
======== ======== ======== ========
Basic and Diluted Loss per Share $ (2.29) $ (2.29)
======== =======
Basic and Diluted Weighted Average Shares 19,066 19,066
======== ========
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<PAGE>
FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONDENSED BALANCE SHEET
As of January 1, 2000
(Unaudited)
Thermo Pro Forma
TerraTech Less: Facility Adjustments Pro Forma
(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 4,905 $ - $ 400 $ 5,305
Advance to affiliate 49,436 - - 49,436
Accounts receivable, net 52,330 613 - 51,717
Unbilled contract costs and fees 26,950 33 - 26,917
Inventory 2,452 - - 2,452
Deferred tax asset 6,668 - - 6,668
Other current assets 3,685 61 - 3,624
-------- -------- -------- ---------
146,426 707 400 146,119
-------- -------- -------- ---------
Property, Plant, and Equipment, at Cost, Net 70,357 775 - 69,582
-------- -------- -------- ---------
Other Assets 9,623 (620) - 10,243
-------- -------- -------- ---------
Cost in Excess of Net Assets of 88,865 - - 88,865
Acquired Companies -------- -------- -------- ---------
$315,271 $ 862 $ 400 $ 314,809
======== ======== ======== =========
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<PAGE>
FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONDENSED BALANCE SHEET (continued)
As of January 1, 2000
(Unaudited)
Thermo Pro Forma
TerraTech Less: Facility Adjustments Pro Forma
(In thousands)
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term obligations and current $ 19,549 $ - $ - $ 19,549
maturities of long-term obligations
Subordinated convertible debentures 37,950 - - 37,950
Accounts payable 20,939 115 - 20,824
Accrued payroll and employee benefits 12,223 117 - 12,106
Accrued restructuring costs 8,660 697 - 7,963
Deferred revenue 4,169 23 - 4,146
Other accrued expenses 13,347 (620) 75 14,042
Due to parent company and affiliated 2,140 - - 2,140
companies -------- -------- --------- --------
118,977 332 75 118,720
-------- -------- --------- --------
Deferred Income Taxes 685 - - 685
-------- -------- --------- --------
Other Deferred Items 1,097 - - 1,097
-------- -------- --------- --------
Long-term Obligations 118,241 - - 118,241
-------- -------- --------- --------
Minority Interest 24,785 - (62) 24,723
-------- -------- --------- --------
Shareholders' Investment:
Common stock 1,959 - - 1,959
Capital in excess of par value 70,993 - - 70,993
Accumulated deficit (17,807) - (143) (17,950)
Treasury stock at cost (3,846) - - (3,846)
Deferred compensation (216) - - (216)
Accumulated other comprehensive items 403 - - 403
Parent company investment - 530 530 -
-------- -------- --------- --------
51,486 530 387 51,343
-------- -------- --------- --------
$315,271 $ 862 $ 400 $314,809
======== ======== ========= ========
</TABLE>
7
<PAGE>
FORM 8-K
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, except in text)
<TABLE>
<CAPTION>
<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 $325,000 of $ (18) $ (14)
net cash paid to the Company by the acquirer, which ------ ------
includes $250,000 of cash in escrow, calculated
using the 30-day Commercial Paper Composite Rate
plus 50 basis points, or 5.46% in fiscal 1999 and
5.58% in the first nine months of fiscal 2000
Income Tax Provision
Increase in the income tax provision as a result of $ 7 $ 5
an increase in interest income calculated at an ------ ------
effective income tax rate of 37%
Minority Interest Income
Decrease in minority interest income as a result of the $1,325 $ 45
sale of the Facility ------ ------
Diluted Weighted Average Shares
Increase in weighted average shares for the dilutive 455 -
effect of stock options, which were previously ------ ------
antidilutive, as a result of the pro forma adjustments
</TABLE>
Note 2 - Pro Forma Adjustments to Pro Forma Condensed Balance Sheet
(In thousands)
<TABLE>
<CAPTION>
<S> <C>
January 1, 2000
Debit (Credit)
Cash and Cash Equivalents
Cash received for sale of assets of the Facility $ 400
------
Other Accrued Expenses
Estimated accrued transaction costs, including legal fees and other costs $ (75)
------
Minority Interest
Decrease in minority interest related to excess of $ 62
parent company investment in the Facility over proceeds
from sale ------
Shareholders' Investment
Elimination of the Facility equity account and excess $ (387)
of parent company investment in the Facility over
proceeds from sale ------
</TABLE>
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 dated March 6, 2000, by and among TPST Soil
Recyclers of California, Inc. and Nove Investments I, LLC (filed as
Exhibit 2.1 to ThermoRetec Corporation's Form 8-K dated as of March
21, 2000 [File No. 1-12636] and incorporated herein by reference).
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 21st day of March 2000.
THERMO TERRATECH INC.
By: /s/ Paul F. Kelleher
Paul F. Kelleher
Chief Accounting Officer
