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):
June 27, 1999
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THERMOTREX CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 1-10791 52-1711436
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
10455 Pacific Center Court
San Diego, California 92121-4339
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (781) 622-1000
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FORM 8-K
Item 2. Disposition of Assets
Effective June 27, 1999, ThermoTrex Corporation's (the "Company")
ThermoLase subsidiary sold all of the shares of The Greenhouse Spa, Inc. to TGH,
LLC, a Pennsylvania limited liability company which is wholly owned by the
Stuart Michael Katzoff Trust (the "Trust"). Gerald Katzoff, the President of The
Greenhouse Spa, Inc. prior to and after the sale of the shares and the President
of ThermoLase's Spa Division until the completion of the transactions described
herein, is the sole trustee of the Trust. The Greenhouse Spa, Inc. is the owner
of a luxury destination spa in Arlington, Texas, at which spa services are
provided to women during week long stays at the Greenhouse Spa.
The purchase price for the shares of The Greenhouse Spa, Inc. consisted of
a promissory note by TGH, LLC in the amount of $10 million, payable in full,
together with interest at the rate of 10% per year, on June 27, 2000. The $10
million promissory note may be extended for an additional six months if the
outstanding principal balance of the note is reduced to $6 million on or before
June 27, 2000, and provided that a variety of other conditions have been
satisfied. The $10 million promissory note is secured by all of the assets of
TGH, LLC and by a guaranty by The Greenhouse Spa, Inc. secured by all of the
assets of The Greenhouse Spa, Inc. including the real estate on which the
Greenhouse Spa in Arlington, Texas, is located. ThermoLase paid TGH, LLC
$300,000 to cover the cost of certain renovation work at the Greenhouse Spa in
Arlington, Texas.
Also effective June 27, 1999, ThermoLase sold the assets of its Greenhouse
day spas to GH Day Spas, Inc., a Pennsylvania corporation that is also wholly
owned by the Trust. The Greenhouse day spas provide cosmetic spa services and
laser-based hair-removal and skin-resurfacing services. GH Day Spas, Inc.
acquired the assets and will continue to operate day spas at nine facilities
previously operated by ThermoLase. GH Day Spas, Inc. also acquired certain of
ThermoLase's assets that are located at five closed day spas. The facilities
that GH Day Spas, Inc. will continue to operate are located in Beverly Hills and
Newport Beach, California; Denver, Colorado; Greenwich, Connecticut; Troy,
Michigan; Edina, Minnesota; Manhasset, New York; and Dallas and Houston, Texas.
The purchase price for the assets of the day spas consisted of a
promissory note in the amount of $2.5 million, payable in full together with
interest at the rate of 10% per year, on June 27, 2000. The $2.5 million
promissory note may be extended for an additional six months if the outstanding
principal balance of the $10 million note by TGH, LLC is reduced to $6 million
on or before June 27, 2000, and provided that a variety of other conditions have
been satisfied. The $2.5 million promissory note is secured by all of the assets
of GH Day Spas, Inc.
The sale prices of each of (i) the shares of The Greenhouse Spa, Inc. and
(ii) the assets of ThermoLase's day spas were determined by the parties in
arms-length negotiations based on, among other things, a third-party appraisal
of the Greenhouse Spa in Arlington, Texas.
GH Day Spas, Inc. agreed to offer employment to all employees of the
continuing day spas on substantially the same terms and conditions as their
employment with ThermoLase. GH Day Spas, Inc. also agreed to assume certain
continuing obligations of ThermoLase under contracts relating primarily to the
continuing day spas.
In connection with the sale of the Greenhouse day spas, GH Day Spas, Inc.
agreed to assume all liability for performing services and/or providing goods in
satisfaction of all outstanding gift certificates and customer deposits, and for
customer prepayments for multiple treatment packages with respect to services
not yet performed. ThermoLase agreed to continue to pay the lease payments at
the nine day spa locations that GH Day Spas, Inc. will continue to operate until
such time as ThermoLase has paid $1.5 million of such lease payments. GH Day
Spas, Inc. will be responsible for the balance of the lease payments at these
day spas for the period through December 31, 2000, and has the right but is not
obligated to renew all of the leases for the balance of the terms thereof.
ThermoLase has also provided GH Day Spas, Inc. with working capital in the
amount of $500,000.
ThermoLase has incurred a loss on the sale and closure of the spas of
approximately $31 million, including losses on ongoing lease obligations. This
amount will be recorded in the Company's quarter ended July 3, 1999, together
with charges for other restructuring actions.
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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 October 3, 1998, and
the six months ended April 3, 1999, as if the disposition by the Company's
ThermoLase Corporation subsidiary of the Greenhouse Spa in Arlington, Texas, and
all of the day spas, including those closed by ThermoLase in fiscal 1999 (the
"Spa Business"), had occurred at the beginning of fiscal 1998. The unaudited pro
forma condensed balance sheet sets forth the financial position as of April 3,
1999, as if the dispositions 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
disposition of the Spa Business been consummated at the beginning of fiscal
1998, due to other restructuring actions being undertaken unrelated to the
disposition of this business. 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 October 3, 1998, and Quarterly
Report on Form 10-Q for the six months ended April 3, 1999.
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THERMOTREX CORPORATION
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
Fiscal Year Ended October 3, 1998
(Unaudited)
<S> <C> <C> <C>
Pro Forma
Adjustments:
Results of
ThermoTrex Spa Business Pro Forma
(In thousands except per share amounts)
Revenues:
Product revenues $294,310 $ - $294,310
Other revenues 47,548 (10,108) 37,440
-------- ------- --------
341,858 (10,108) 331,750
-------- ------- --------
Costs and Operating Expenses:
Cost of product revenues 165,688 - 165,688
Cost of other revenues 44,628 (19,860) 24,768
Selling, general, and administrative expenses 91,028 (1,035) 89,993
Research and development expenses 39,826 - 39,826
Restructuring and nonrecurring costs 10,155 (4,638) 5,517
-------- ------- --------
351,325 (25,533) 325,792
-------- ------- --------
Operating Income (Loss) (9,467) 15,425 5,958
Interest Income 12,942 - 12,942
Interest Expense (9,479) - (9,479)
Gain on Issuance of Stock by Subsidiaries 23,798 - 23,798
Equity in Losses of Joint Ventures (1,203) - (1,203)
-------- ------- --------
Income Before Provision for Income Taxes, Minority 16,591 15,425 32,016
Interest, and Extraordinary Item
Provision for Income Taxes (17,463) - (17,463)
Minority Interest Expense (4,750) - (4,750)
-------- ------- --------
Income (Loss) Before Extraordinary Item (5,622) 15,425 9,803
Extraordinary Item, Net of Income Taxes 3,009 - 3,009
-------- ------- --------
Net Income (Loss) $ (2,613) $15,425 $ 12,812
======== ======= ========
Earnings (Loss) per Share:
Basic $ (.14) $ .68
======== ========
Diluted $ (.14) $ .65
======== ========
Weighted Average Shares:
Basic 18,704 18,704
======== ========
Diluted 18,704 4,217 22,921
======== ======= ========
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THERMOTREX CORPORATION
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
Six Months Ended April 3, 1999
(Unaudited)
Pro Forma
Adjustments:
Results of
ThermoTrex Spa Business Pro Forma
(In thousands except per share amounts)
Revenues:
Product revenues $154,520 $ (380) $ 154,140
Other revenues 19,012 (5,339) 13,673
-------- -------- ---------
173,532 (5,719) 167,813
-------- -------- ---------
Costs and Operating Expenses:
Cost of product revenues 98,151 (191) 97,960
Cost of other revenues 23,896 (12,665) 11,231
Selling, general, and administrative expenses 54,616 (221) 54,395
Research and development expenses 20,668 - 20,668
Restructuring costs 1,115 - 1,115
-------- -------- ---------
198,446 (13,077) 185,369
-------- -------- ---------
Operating Income (Loss) (24,914) 7,358 (17,556)
Interest Income 3,081 (6) 3,075
Interest Expense (4,225) 5 (4,220)
Equity in Losses of Joint Ventures (200) - (200)
-------- -------- ---------
Income (Loss) Before Income Taxes and Minority Interest (26,258) 7,357 (18,901)
Income Tax Benefit 2,883 - 2,883
Minority Interest Income 1,796 - 1,796
-------- -------- ---------
Net Income (Loss) $(21,579) $ 7,357 $ (14,222)
======== ======== =========
Basic and Diluted Loss per Share $ (1.16) $ (.76)
======== =========
Basic and Diluted Weighted Average Shares 18,660 18,660
======== =========
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THERMOTREX CORPORATION
PRO FORMA CONDENSED BALANCE SHEET
As of April 3, 1999
(Unaudited)
Pro Forma Adjustments
Accounts of Spa Business
ThermoTrex Spa Business Adjustments Pro Forma
(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 94,716 $ (10) $ (800) $ 93,906
Accounts receivable, net 71,484 (571) - 70,913
Notes receivable, net - - 4,000 4,000
Unbilled contract costs and fees 18,087 - - 18,087
Inventories 98,125 (143) - 97,982
Prepaid expenses and other assets 4,470 (422) - 4,048
Prepaid and refundable income taxes 19,995 - - 19,995
--------- -------- -------- ---------
306,877 (1,146) 3,200 308,931
--------- -------- -------- ---------
Property, Plant, and Equipment, at Cost, Net 62,512 (23,958) - 38,554
--------- -------- -------- ---------
Other Assets 15,075 (2) 3,000 18,073
--------- -------- -------- ---------
Cost in Excess of Net Assets of Acquired 159,247 (7,554) - 151,693
--------- -------- -------- ---------
Companies
$ 543,711 $(32,660) $ 6,200 $ 517,251
========= ======== ======== =========
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THERMOTREX CORPORATION
PRO FORMA CONDENSED BALANCE SHEET (continued)
As of April 3, 1999
(Unaudited)
Pro Forma Adjustments
Accounts of Spa Business
ThermoTrex Spa Business Adjustments Pro Forma
(In thousands)
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Current maturities of long-term obligations $ 417 $ - $ - $ 417
Accounts payable 26,633 - - 26,633
Accrued payroll and employee benefits 12,028 - - 12,028
Accrued warranty costs 7,935 - - 7,935
Customer deposits 4,510 (2,299) - 2,211
Accrued commissions 6,310 - - 6,310
Other accrued expenses 39,827 (1,001) 12,032 50,858
Due to parent company and affiliated 4,351 28 - 4,379
--------- -------- -------- ---------
companies
102,011 (3,272) 12,032 110,771
--------- -------- -------- ---------
Deferred Lease Liability and Other Deferred Items 7,932 (1,010) - 6,922
--------- -------- -------- ---------
Long-term Obligations 204,516 (54) - 204,462
--------- -------- -------- ---------
Common Stock Subject to Redemption 40,500 - - 40,500
--------- -------- -------- ---------
Minority Interest 71,355 - - 71,355
--------- -------- -------- ---------
Shareholders' Investment:
Common stock 196 - - 196
Capital in excess of par value 66,667 - - 66,667
Retained earnings 73,405 - (34,156) 39,249
Treasury stock at cost (20,953) - - (20,953)
Accumulated other comprehensive items (1,918) - - (1,918)
Parent company investment - (28,324) 28,324 -
--------- -------- -------- ---------
117,397 (28,324) (5,832) 83,241
--------- -------- -------- ---------
$ 543,711 $(32,660) $ 6,200 $ 517,251
========= ======== ======== =========
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THERMOTREX CORPORATION
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Pro Forma Adjustments to Pro Forma Condensed Statements of Operations
All pro forma adjustments to the pro forma condensed statements of
operations for the fiscal year ended October 3, 1998, and the six months ended
April 3, 1999, represent the results of the spas sold and closed. The change in
diluted weighted average shares for the fiscal year ended October 3, 1998 is due
to the effect of common stock equivalents no longer being antidilutive.
Note 2 - Pro Forma Adjustments to Pro Forma Condensed Balance Sheet (In thousands)
All pro forma adjustments to the pro forma condensed balance sheet as of
April 3, 1999, captioned "Accounts of Spa Business," represent the assets and
liabilities of the spas sold and closed.
The following pro forma adjustments to the pro forma condensed balance
sheet as of April 3, 1999, are related to the sale of the spas:
Spa Business
Adjustments
Debit (Credit)
Cash and Cash Equivalents
Cash paid by ThermoLase to the acquirers for certain renovations $ (800)
and initial working capital requirements
---------
Notes Receivable, Net
Current portion of notes receivable issued to ThermoLase by the acquirers 4,000
---------
Other Assets
Long-term notes receivable issued to ThermoLase by the acquirers, at 3,000
their estimated fair market value
---------
Other Accrued Expenses
Remaining lease obligations for all spas, net of estimated sublease receipts (12,032)
---------
Retained Earnings
Excess of the net book value of the spas over the estimated fair 34,156
market value of consideration received
---------
Parent Company Investment
Elimination of the spa business' equity accounts (28,324)
---------
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THERMOTREX CORPORATION
Item 7. Financial Statements, Pro Forma Combined Condensed Financial Information and Exhibits
(c) Exhibits
2.1 Stock Purchase Agreement between ThermoLase Corporation and TGH, LLC,
dated June 27, 1999 (incorporated by reference to Exhibit 2.1 to
ThermoLase Corporation's Current Report on Form 8-K filed July 12, 1999).
2.2 Asset Purchase Agreement between ThermoLase Corporation and GH Day Spas,
Inc., dated June 27, 1999 (incorporated by reference to Exhibit 2.2 to
ThermoLase Corporation's Current Report on Form 8-K filed July 12, 1999).
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 12th day of July, 1999.
THERMOTREX CORPORATION
By: /s/ Paul F. Kelleher
Paul F. Kelleher
Chief Accounting Officer
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