SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------------------------------
AMENDMENT NO. 2 ON FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported):
May 22, 1997
________________________________________
THERMO FIBERTEK INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-11406 52-1762325
(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)
PAGE
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FORM 8-K/A
Item 2. Acquisition or Disposition of Assets
On May 22, 1997, Thermo Fibertek Inc. (the "Company") acquired the
stock-preparation business (the "Stock-preparation Business") of the
Black Clawson Company and Subsidiaries ("Black Clawson") for $107,750,000
in cash. The purchase price is subject to a post-closing adjustment equal
to the amount by which the net tangible assets of the Stock-preparation
Business as of the closing date are greater or less than, as the case may
be, certain target amounts set forth in the Asset Purchase Agreement
dated as of May 22, 1997 between the Company, and certain of its
affiliates, and Black Clawson, and certain of its affiliates (the
"Agreement"). The purchase price includes $3.9 million in cash held in
escrow by a third party for the subsequent acquisition of Black Clawson's
French subsidiary. The Company has entered into a definitive agreement to
acquire the French subsidiary and the parties to the agreement have taken
all actions required to effect such acquisition except for certain
procedural matters in France related to the transfer of the consideration
for the business. Because these remaining matters are within the control
of the Company, the financial statements filed with this Form 8-K/A
include the French subsidiary. Such matters are expected to be completed
in August 1997.
The purchase price was based upon the Company's determination of the
fair value of the Stock-preparation Business, and the terms of the
Agreement were determined by arms-length negotiation among the parties.
To finance the acquisition, the Company borrowed $110 million from Thermo
Electron Corporation ("Thermo Electron"), the Company's majority
stockholder. The indebtedness to Thermo Electron bears interest at a rate
equal to the 90-day Commercial Paper Composite Rate plus 25 basis points,
set at the beginning of each quarter, and is due January 5, 1999. The
note was repaid in July 1997 with the net proceeds from the sale of $153
million principal amount of 4 1/2% subordinated convertible debentures
due 2004.
The Company has no present intention to use the plant, equipment or
other physical property acquired for purposes materially different from
the purposes for which such assets were used prior to the acquisition.
However, the Company will review the Stock-preparation Business and its
assets, corporate structure, capitalization, operations, properties,
policies, management and personnel. After completion of this review, the
Company may develop alternative plans or proposals, including mergers,
transfers of a material amount of assets or other transactions or changes
relating to the Stock-preparation Business.
2PAGE
<PAGE>
FORM 8-K/A
Item 7. Financial Statements, Pro Forma Combined Condensed Financial
Information and Exhibits
(a) Consolidated Financial Statements of Business Acquired
Attached hereto.
3PAGE
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STOCK-PREPARATION BUSINESS OF BLACK CLAWSON COMPANY AND SUBSIDIARIES
Consolidated Financial Statements
For the Years Ended March 31, 1997 and 1996
1PAGE
<PAGE>
Report of Independent Public Accountants
To the Board of Directors of Black Clawson Company and Subsidiaries:
We have audited the accompanying consolidated balance sheet of the
stock-preparation business of Black Clawson Company and Subsidiaries
(collectively referred to as the Company) as of March 31, 1997 and 1996,
and the related consolidated statements of income, shareholders'
investment, and cash flows for each of the two years in the period ended
March 31, 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
the stock-preparation business of Black Clawson Company and Subsidiaries
as of March 31, 1997 and 1996, and the results of their operations and
their cash flows for each of the two years in the period ended March 31,
1997, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
August 4, 1997
2PAGE
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Stock-preparation Business of Black Clawson Company and Subsidiaries
Consolidated Statement of Income
Year Ended March 31,
--------------------
(In thousands) 1997 1996
------------------------------------------------------------------------
Revenues $ 98,427 $103,728
-------- --------
Costs and Operating Expenses:
Cost of revenues 71,720 77,568
Selling, general, and administrative
expenses (Note 5) 22,383 20,327
Research and development expenses 2,109 2,116
-------- --------
96,212 100,011
-------- --------
Operating Income 2,215 3,717
Interest Income 125 83
Interest Expense (251) (340)
Other Income, Net 292 247
-------- --------
Income Before Provision for Income Taxes 2,381 3,707
Provision for Income Taxes (Note 3) 863 1,520
-------- --------
Net Income $ 1,518 $ 2,187
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
3PAGE
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Stock-preparation Business of Black Clawson Company and Subsidiaries
Consolidated Balance Sheet
March 31, March 31,
(In thousands) 1997 1996
------------------------------------------------------------------------
Assets
Current Assets:
Cash $ 695 $ 1,896
Accounts receivable, less allowances of
$1,462 and $1,157 19,686 21,183
Unbilled contract costs and fees 3,536 264
Inventories 13,082 13,339
Prepaid income taxes (Note 3) 2,084 1,766
Other current assets 702 799
-------- --------
39,785 39,247
-------- --------
Property, Plant, and Equipment, at Cost, Net 5,048 5,235
-------- --------
Other Assets 840 1,678
-------- --------
$ 45,673 $ 46,160
======== ========
Liabilities and Shareholder's Investment
Current Liabilities:
Current maturities of long-term obligations
(Note 4) $ 1,051 $ 1,329
Accounts payable 14,979 20,044
Accrued payroll and employee benefits 1,038 1,140
Billings in excess of contract costs and fees 676 787
Customer deposits 3,353 3,204
Accrued warranty costs 1,447 1,835
Other accrued expenses 2,650 3,582
-------- --------
25,194 31,921
-------- --------
Deferred Income Taxes and Other Deferred
Items (Note 3) 652 584
-------- --------
Long-term Obligations (Note 4) 3,445 4,773
-------- --------
Commitments (Note 6)
Shareholder's Investment (Note 9):
Parent company investment 15,733 9,076
Cumulative translation adjustment 649 (194)
-------- --------
16,382 8,882
-------- --------
$ 45,673 $ 46,160
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
4PAGE
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Stock-preparation Business of Black Clawson Company and Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31,
--------------------
(In thousands) 1997 1996
-----------------------------------------------------------------------
Operating Activities:
Net income $ 1,518 $ 2,187
Adjustments to reconcile net
income to net cash provided
by (used in) operating activities:
Depreciation and amortization 1,008 853
Provision for losses on
accounts receivable 305 768
Deferred income tax benefit (162) (196)
Other noncash items 250 285
Changes in current accounts:
Accounts receivable 1,719 (6,523)
Inventories and unbilled
contract costs and fees (2,604) (1,258)
Other current assets (219) (634)
Accounts payable (5,116) 8,452
Other current liabilities (1,676) 4,356
-------- --------
Net cash provided by (used in) operating
activities (4,977) 8,290
-------- --------
Investing Activities:
Purchases of property, plant, and
equipment (748) (1,521)
Other 644 245
-------- --------
Net cash used in investing activities (104) (1,276)
-------- --------
Financing Activities:
Transfers from (to) parent company 5,139 (2,493)
Repayment of long-term obligations (1,082) (2,809)
-------- --------
Net cash provided by (used in) financing
activities 4,057 (5,302)
-------- --------
Exchange Rate Effect on Cash (177) 156
-------- --------
Increase (Decrease) in Cash (1,201) 1,868
Cash at Beginning of Year 1,896 28
-------- --------
Cash at End of Year $ 695 $ 1,896
======== ========
Cash Paid For:
Interest $ 45 $ 97
Income taxes $ 1,054 $ 1,686
The accompanying notes are an integral part of these consolidated
financial statements.
5PAGE
<PAGE>
Stock-preparation Business of Black Clawson Company and Subsidiaries
Consolidated Statement of Shareholder's Investment
Year Ended March 31,
--------------------
(In thousands) 1997 1996
-----------------------------------------------------------------------
Net Parent Company Investment
Balance at beginning of year $ 9,076 $ 9,382
Net income 1,518 2,187
Transfers from (to) parent company 5,139 (2,493)
------- -------
Balance at end of year 15,733 9,076
------- -------
Cumulative Translation Adjustment
Balance at beginning of year (194) -
Translation adjustment 843 (194)
------- -------
Balance at end of year 649 (194)
------- -------
Total Shareholder's Investment $16,382 $ 8,882
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
6PAGE
<PAGE>
Stock-preparation Business of Black Clawson Company and Subsidiaries
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
Basis of Presentation and Nature of Operations
The Stock-preparation Business (the Company) consisted of four wholly
owned subsidiaries and one division of the Black Clawson Company and
Subsidiaries (Black Clawson). The Company's principal products include
recycling equipment used in processing fiber for the manufacture of
"brown paper" such as that used for corrugated boxes.
On May 22, 1997, Thermo Fibertek Inc. (Thermo Fibertek), an 86%-owned
subsidiary of Thermo Electron Corporation (Thermo Electron), purchased
the assets, subject to certain liabilities, of the Company for $107.8
million in cash, subject to a post-closing adjustment (Note 9). The
purchase price includes $3.9 million in cash held in escrow by a third
party for the subsequent acquisition of Black Clawson's French
subsidiary. The Company has entered into a definitive agreement to
acquire the French subsidiary and the parties to the agreement have taken
all actions required to effect such acquisition except for certain
procedural matters in France related to the transfer of the consideration
for the business. Because these remaining matters are within the control
of the Company, the financial statements filed with this Form 8-K/A
include the French subsidiary. Such matters are expected to be completed
in August 1997.
Principles of Consolidation
The accompanying financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Fiscal Year
The Company's fiscal year end is March 31. References to 1997 and
1996 are for the fiscal years ended March 31, 1997 and 1996. The
Company's European operations, which include operations in the United
Kingdom and France, have fiscal years ending on December 31 to allow for
sufficient time for the Company to receive financial statements.
7PAGE
<PAGE>
Stock-preparation Business of Black Clawson Company and Subsidiaries
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Revenue Recognition
The Company generally recognizes revenues upon shipment of its
products. The Company provides a reserve for its estimate of warranty
costs at the time of shipment. Revenues and profits on long-term
contracts are recognized using the percentage-of-completion method.
Revenues recorded under the percentage-of-completion method were
$30,792,000 in 1997 and $32,571,000 in 1996. The percentage of completion
is determined by relating the actual costs incurred to date to
management's estimate of total costs to be incurred on each contract. If
a loss is indicated on any contract in process, a provision is made
currently for the entire loss. The Company's contracts generally provide
for billing of customers upon the attainment of certain milestones
specified in each contract. Revenues earned on contracts in process in
excess of billings are classified as unbilled contract costs and fees,
and amounts billed in excess of revenues are classified as billings in
excess of contract costs and fees in the accompanying balance sheet.
There are no significant amounts included in the accompanying balance
sheet that are not expected to be recovered from existing contracts at
one year, including amounts that are billed but not paid under retainage
provisions.
Income Taxes
The Company's domestic operations are included in the consolidated
income tax returns filed by Black Clawson.
In accordance with Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," the Company recognizes deferred
income taxes based on the expected future tax consequences of differences
between the financial statement basis and the tax basis of assets and
liabilities calculated using enacted tax rates in effect for the year in
which the differences are expected to be reflected in the tax return.
Inventories
Work-in-process inventory is stated on a first-in, first-out basis,
which approximates actual cost, and is not in excess of market. All other
inventories are stated at the lower of average cost or market value and
include materials, labor, and manufacturing overhead. The components of
inventories are as follows:
(In thousands) 1997 1996
-----------------------------------------------------------------------
Raw materials and supplies $ 2,024 $ 2,471
Work in process 4,190 4,760
Finished goods 6,868 6,108
------- -------
$13,082 $13,339
======= =======
8PAGE
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Stock-preparation Business of Black Clawson Company and Subsidiaries
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Property, Plant, and Equipment
The costs of additions and improvements are capitalized, while
maintenance and repairs are charged to expense as incurred. The Company
provides for depreciation and amortization using the straight-line and
declining balance methods over the estimated useful lives of the property
as follows: buildings, 15 to 30 years; machinery and equipment, 3 to 10
years; and drawings and patterns, 5 to 7 years. Property, plant, and
equipment consists of the following:
(In thousands) 1997 1996
----------------------------------------------------------------------
Land and buildings $ 3,671 $ 3,773
Machinery and equipment 8,507 7,965
Drawings and patterns 1,988 1,190
Construction in progress - 815
------- -------
14,166 13,743
Less: Accumulated depreciation and amortization 9,118 8,508
------- -------
$ 5,048 $ 5,235
======= =======
Other Assets
Other assets in the accompanying balance sheet includes the cost of
patents that are amortized using the straight-line method over an
estimated useful life of 10 years. These assets were $523,000 and
$685,000, net of accumulated amortization of $1,383,000 and $1,256,000,
at year-end 1997 and 1996, respectively.
Foreign Currency
All assets and liabilities of the Company's foreign subsidiaries are
translated at year-end exchange rates, and revenues and expenses are
translated at average exchange rates for the year, in accordance with
SFAS No. 52, "Foreign Currency Translation." Resulting translation
adjustments are reflected as a separate component of shareholder's
investment titled "Cumulative translation adjustment." Foreign currency
transaction gains and losses are included in the accompanying statement
of income and are not material for the two years presented.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
9PAGE
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Stock-preparation Business of Black Clawson Company and Subsidiaries
Notes to Consolidated Financial Statements
2. Employee Benefit Plans
Defined Benefit Pension Plan and Postretirement Benefit Plan
The Company participates in a Black Clawson-sponsored defined
benefit retirement plan covering substantially all non-union employees.
Additionally, substantially all union employees are covered either by one
of these plans or a plan not controlled or administered by Black Clawson
or the Company. Benefits are based on years of service and average final
compensation. For these plans, the Company was charged $363,000 and
$349,000 in 1997 and 1996, respectively.
In addition, the Company participates in a domestic postretirement
benefit plan of Black Clawson that provides postretirement medical and
other retirement benefits to current retirees and their spouses, as well
as certain current full time employees and their spouses upon their
retirement. In most cases, employees must have at least 10 years of
service prior to retirement in order to be eligible to participate in the
plan at age 65. In addition to medical coverage, the plan provides
dental, vision, and drug benefits as well as life insurance to a small
group of retirees. The plan provides the retiree and spouse with a fixed
sum of money per month with which to purchase postretirement medical
insurance. For this plan, the Company was charged $389,000 and $419,000
in 1997 and 1996, respectively.
10PAGE
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Stock-preparation Business of Black Clawson Company and Subsidiaries
Notes to Consolidated Financial Statements
3. Income Taxes
The components of income before provision for income taxes in the
accompanying statement of income are as follows:
(In thousands) 1997 1996
----------------------------------------------------------------------
Domestic $ (841) $2,186
Foreign 3,222 1,521
------ ------
$2,381 $3,707
====== ======
The components of the provision for income taxes in the accompanying
statement of income are as follows:
(In thousands) 1997 1996
----------------------------------------------------------------------
Currently payable (receivable):
Federal $ (129) $ 911
Foreign 1,110 424
State 44 381
------ ------
1,025 1,716
------ ------
Prepaid, net:
Federal (126) (152)
State (36) (44)
------ ------
(162) (196)
------ ------
$ 863 $1,520
====== ======
The provision for income taxes in the accompanying statement of
income differs from the provision calculated by applying the statutory
federal income tax rate of 34% to income before provision for income
taxes due to the following:
(In thousands) 1997 1996
----------------------------------------------------------------------
Provision for income taxes at
statutory rate $ 810 $1,260
Increases resulting from:
State income taxes, net of federal tax 5 222
Foreign tax rate differential 14 3
Nondeductible expenses 34 35
------ ------
$ 863 $1,520
====== ======
11PAGE
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Stock-preparation Business of Black Clawson Company and Subsidiaries
Notes to Consolidated Financial Statements
3. Income Taxes (continued)
Prepaid income taxes and deferred income taxes in the accompanying
balance sheet consist of the following:
(In thousands) 1997 1996
----------------------------------------------------------------------
Prepaid income taxes:
Reserves and accruals $ 433 $ 531
Inventory reserves and basis difference 1,555 1,136
Accrued compensation 96 99
------ ------
$2,084 $1,766
====== ======
Deferred income taxes, net:
Depreciation $ 392 $ 304
====== ======
A provision has not been made for U.S. or additional foreign taxes on
$8 million of undistributed earnings of foreign subsidiaries that could
be subject to tax if remitted to the U.S. because the Company currently
plans to keep these amounts permanently reinvested overseas. The Company
believes that any additional U.S. tax liability due upon remittance of
such earnings would be immaterial due to available U.S. foreign tax
credits.
4. Short- and Long-term Obligations
The Company's French subsidiary, Black Clawson - Europe, filed for
protection under French bankruptcy statutes in August 1990. A formal plan
of reorganization was accepted by a French court in May 1991, under which
creditors accepting the plan of reorganization were to be paid 70% of the
amount owed to them over a seven-year period commencing March 1, 1992 and
ending March 1, 1998, and creditors rejecting the plan were to be paid
the full amount owed to them over a seven-year period commencing March 1,
1993 and ending March 1, 1999. Amounts included in the accompanying
balance sheet related to these obligations were current maturities of
long-term obligations of $1,051,000 and $972,000 in 1997 and 1996,
respectively, and long-term obligations of $3,445,000 and $4,773,000 in
1997 and 1996, respectively. In connection with the acquisition of the
Company on May 22, 1997, all remaining liabilities under this plan of
reorganization were paid to the Company's creditors, and Black Clawson -
Europe emerged from bankruptcy.
12PAGE
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Stock-preparation Business of Black Clawson Company and Subsidiaries
Notes to Consolidated Financial Statements
4. Short- and Long-term Obligations (continued)
In December 1988, the Company borrowed 14 million French Francs from
a syndication of banks. This debt had a maturity date of December 1996,
and accrued interest at the Paris interbank offering rate plus 2%. The
amount outstanding under this borrowing at March 31, 1996 was $357,000
and was included in current maturities of long-term obligations in the
accompanying balance sheet. The Company repaid this obligation in fiscal
1997.
A significant portion of the Company's accounts receivable and
inventory was used to collateralize the debt of Black Clawson in both
1997 and 1996 based upon a formula established by Black Clawson's bank.
5. Related Party Transactions
Black Clawson provides certain services to the Company, which include
legal advice and services, risk management, personnel administration, tax
advice and preparation of tax returns, and certain financial and other
services. For these services, the Company was charged $3,757,000 and
$3,415,000 in 1997 and 1996, respectively. For additional items such as
employee benefit plans, insurance coverage, and other identifiable costs,
Black Clawson charged the Company based upon costs attributable to the
Company.
The Company had revenues from SBCCS Constructors Joint Venture, a
25%-owned general partnership interest of Black Clawson, of $14,718,000
in 1996. The Company had no revenues from this joint venture in 1997.
6. Commitments
Operating Leases
The Company leases portions of its office and operating facilities
under various noncancellable operating lease arrangements expiring at
various dates through 2000. The accompanying statement of income includes
expenses from operating leases of $1,422,000 and $1,593,000 in 1997 and
1996, respectively. The future minimum payments due under noncancellable
operating leases as of March 31, 1997, are $960,000 in 1998; $214,000 in
1999; and $50,000 in 2000. Total future minimum lease payments are
$1,224,000.
13PAGE
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Stock-preparation Business of Black Clawson Company and Subsidiaries
Notes to Consolidated Financial Statements
7. Fair Value of Financial Instruments
The Company's financial instruments consist mainly of cash and cash
equivalents, accounts receivable, current maturities of long-term
obligations, accounts payable, long-term obligations, and forward
exchange contracts. The carrying amount of these financial instruments,
with the exception of current maturities of long-term obligations,
long-term obligations, and forward exchange contracts, approximate fair
value due to their short-term nature.
The Company's current maturities of long-term obligations and
long-term obligations are obligations of the Company's French subsidiary
which was operating under a formal plan of reorganization under French
bankruptcy statutes during 1997 and 1996 (Note 4). Since the Company was
unable to borrow funds from a third party in an arms-length transaction,
the fair value of these obligations is not estimable. On May 22, 1997,
all long-term obligations were repaid by the Company.
The Company enters into forward exchange contracts to hedge certain
firm purchase and sale commitments denominated in currencies other than
its subsidiaries' local currencies, principally U.S. dollars, British
pounds sterling, and French francs. The purpose of the Company's foreign
currency hedging activities is to protect the Company's local currency
cash flows related to these commitments from fluctuations in foreign
exchange rates. The amounts of such forward exchange contracts at
year-end 1997 and 1996 were $215,000 and $1,120,000, respectively.
The fair value of the Company's forward exchange contracts was a
receivable of $195,000 and $1,113,000 in 1997 and 1996, respectively. The
fair value of forward exchange contracts is the estimated amount that the
Company would receive upon termination of the contract, taking into
account the change in foreign exchange rates.
14PAGE
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Stock-preparation Business of Black Clawson Company and Subsidiaries
Notes to Consolidated Financial Statements
8. Geographical Information
The Company is engaged in one business segment: the design and
manufacture of processing machinery for paper-recycling.
The following table shows data for the Company by geographic area.
(In thousands) 1997 1996
------------------------------------------------------------------------
Revenues:
United States $ 61,213 $ 68,059
United Kingdom 24,304 23,073
France 18,685 15,555
Other 213 -
Transfers among geographic areas (a) (5,988) (2,959)
-------- --------
$ 98,427 $103,728
======== ========
Income before provision for income taxes:
United States $ (24) $ 3,360
United Kingdom 2,490 1,097
France 655 434
Other (906) (1,174)
-------- --------
Operating income 2,215 3,717
Interest and other income (expense), net 166 (10)
-------- --------
$ 2,381 $ 3,707
======== ========
Identifiable assets:
United States $ 25,082 $ 24,900
United Kingdom 13,467 10,935
France 6,693 10,325
Other 431 -
-------- --------
$ 45,673 $ 46,160
======== ========
Export revenues included in United States
revenues above (b) $ 14,269 $ 5,517
======== ========
(a) Transfers among geographic areas are accounted for at prices that are
representative of transactions with unaffiliated parties.
(b) In general, export sales are denominated in U.S. dollars.
15PAGE
<PAGE>
Stock-preparation Business of Black Clawson Company and Subsidiaries
Notes to Consolidated Financial Statements
9. Subsequent Event
On May 22, 1997, Thermo Fibertek Inc. acquired the assets, subject to
certain liabilities, of the Company for $107.8 million in cash, subject
to a post-closing adjustment. The purchase price includes $3.9 million in
cash held in escrow by a third party for the subsequent acquisition of
the Company's French subsidiary. The Company has entered into a
definitive agreement to acquire the French subsidiary and the parties to
the agreement have taken all actions required to effect such acquisition
except for certain procedural matters in France related to the transfer
of the consideration for the business. Because these remaining matters
are within the control of the Company, the financial statements filed
with this Form 8-K/A include the French subsidiary. Such matters are
expected to be completed in August 1997.
16PAGE
<PAGE>
FORM 8-K/A
Item 7. Financial Statements, Pro Forma Combined Condensed Financial
Information and Exhibits
(b) Pro Forma Combined Condensed Financial Information
The following unaudited pro forma combined condensed financial
statements set forth the results of operations for the year ended
December 28, 1996, and the three-month period ended March 29, 1997, as if
the acquisition of the stock-preparation business (Stock-preparation
Business) of Black Clawson Company and Subsidiaries (Black Clawson) by
the Company had occurred at the beginning of 1996, and assuming there is
no post-closing purchase price adjustment. The pro forma combined
condensed statement of income for the year ended December 28, 1996,
includes the results of operations of the Company for the year ended
December 28, 1996, and of the Stock-preparation Business for the fiscal
year ended March 31, 1997. The European operations of the
Stock-preparation Business, which includes operations in the United
Kingdom and France, have a fiscal year ending December 31, and results
for this period are included in the consolidated results of operations of
the Stock-preparation Business for fiscal years ending March 31. The pro
forma combined condensed statement of income for the three-month period
ended March 29, 1997, includes the results of operations of the Company
for the three-month period ended March 29, 1997, and of the European and
U.S. operations of the Stock-preparation Business for the three-month
period ended March 31, 1997. The results of operations for the
three-month period ended March 31, 1997 for the U.S. operations of the
Stock-preparation Business are included in the pro forma combined
condensed statements of income for both the twelve months ended December
28, 1996 and the three months ended March 29, 1997.
The acquisition has been accounted for using the purchase method of
accounting. The pro forma results of operations are not necessarily
indicative of future operations or the actual results that would have
occurred had the acquisition of the Stock-preparation Business been
consummated at the beginning of 1996. The consolidated financial
statements filed under part (a) of this item should be read in
conjunction with the pro forma combined condensed financial statements.
PAGE
<PAGE>
FORM 8-K/A
THERMO FIBERTEK INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
Year Ended December 28, 1996
(Unaudited)
Historical Pro Forma
---------------------- ----------------------
Stock-
Thermo preparation
Fibertek Business Adjustments Combined
---------- ----------- ----------- ---------
(In thousands except per share amounts)
Revenues $ 192,209 $ 98,427 $ - $ 290,636
---------- ---------- ---------- ----------
Costs and Operating
Expenses:
Cost of revenues 109,537 71,720 755 182,012
Selling, general,
and administrative
expenses 47,093 22,383 (220) 69,256
Research and
development expenses 5,460 2,109 - 7,569
---------- ---------- ---------- ----------
162,090 96,212 535 258,837
---------- ---------- ---------- ----------
Operating Income 30,119 2,215 (535) 31,799
Interest and Other Income
(Expense), Net 2,905 166 (6,196) (3,125)
---------- ---------- ---------- ----------
Income Before Income Taxes
and Minority Interest 33,024 2,381 (6,731) 28,674
Provision for Income Taxes 12,684 863 (2,692) 10,855
Minority Interest Expense 446 - - 446
---------- ---------- ---------- ----------
Net Income $ 19,894 $ 1,518 $ (4,039) $ 17,373
========== ========== ========== ==========
Earnings per Share:
Primary $ .33 $ .28
========== ==========
Fully diluted $ .31 $ .27
========== ==========
Weighted Average Shares:
Primary 61,040 61,040
========== ==========
Fully diluted 64,343 64,343
========== ==========
See notes to pro forma combined condensed statement of income.
5PAGE
<PAGE>
FORM 8-K/A
THERMO FIBERTEK INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
Three Months Ended March 29, 1997
(Unaudited)
Historical Pro Forma
---------------------- ----------------------
Stock-
Thermo preparation
Fibertek Business Adjustments Combined
---------- ----------- ----------- ---------
(In thousands except per share amounts)
Revenues $ 44,667 $ 23,612 $ - $ 68,279
---------- ---------- ---------- ----------
Costs and Operating
Expenses:
Cost of revenues 25,536 17,129 - 42,665
Selling, general,
and administrative
expenses 12,975 5,906 (104) 18,777
Research and
development expenses 1,276 - - 1,276
---------- ---------- ---------- ----------
39,787 23,035 (104) 62,718
---------- ---------- ---------- ----------
Operating Income 4,880 577 104 5,561
Interest and Other Income
(Expense), Net 1,281 197 (1,557) (79)
---------- ---------- ---------- ---------
Income Before Income Taxes
and Minority Interest 6,161 774 (1,453) 5,482
Provision for Income Taxes 2,317 280 (581) 2,016
Minority Interest Expense 384 - - 384
---------- ---------- ---------- ----------
Net Income $ 3,460 $ 494 $ (872) $ 3,082
========== ========== ========== ==========
Earnings per Share:
Primary $ .06 $ .05
========== ==========
Fully diluted $ .06 $ .05
========== ==========
Weighted Average Shares:
Primary 61,140 61,140
========== ==========
Fully diluted 64,189 64,189
========== ==========
See notes to pro forma combined condensed statement of income.
6PAGE
<PAGE>
FORM 8-K/A
THERMO FIBERTEK INC.
NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(Unaudited)
Note 1 - Basis of Presentation
The allocation of the purchase price is based on an estimate of the
fair market value of the net assets acquired and is subject to adjustment.
To date, no information has been gathered that would cause the Company to
believe that the final allocation of the purchase price will be materially
different than the preliminary estimate.
Note 2 - Pro Forma Adjustments to Pro Forma Combined Condensed
Statement of Income (In thousands, except in text)
Year Ended Three Months
December 28, Ended
1996 March 29, 1997
------------ --------------
Debit (Credit)
Cost of Revenues
Increase in the finished goods inventory
of the Stock-preparation Business to
the estimated selling price, less the
sum of the costs of disposal and a
reasonable profit allowance for the
Company's selling efforts $ 755 $ -
------- -------
Selling, General, and
Administrative Expenses
Elimination of service fee charged
to the Stock-preparation Business
by Black Clawson (3,757) (978)
Service fee of 1.0% of the revenues
of the Stock-preparation Business for
the fiscal year ended March 31, 1997,
and the three-month period ended
March 31, 1997, for services that
would have been provided under a
services agreement between the Company
and Thermo Electron 984 236
Amortization over 40 years of $90,108,000
of cost in excess of net assets of
acquired companies created by the
acquisition of the Stock-preparation
Business 2,253 563
Amortization over 10 years of a $3,000,000
non-compete agreement entered into in
connection with the acquisition of the
Stock-preparation Business 300 75
------- -------
(220) (104)
------- -------
7PAGE
<PAGE>
FORM 8-K/A
THERMO FIBERTEK INC.
NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (continued)
(Unaudited)
Note 2 - Pro Forma Adjustments to Pro Forma Combined Condensed
Statement of Income (In thousands, except in text) (continued)
Year Ended Three Months
December 28, Ended
1996 March 29, 1997
------------ --------------
Debit (Credit)
Interest Expense
Increase in interest expense as a result
of the issuance of a promissory note to
Thermo Electron to finance the
$107,750,000 purchase price for the
acquisition of the Stock-preparation
Business, calculated using the 90-day
Commercial Paper Composite Rate plus
25 basis points, or 5.75% for the year
ended December 28, 1996, and 5.78% for
the three-month period ended
March 29, 1997 $ 6,196 $ 1,557
------- -------
Provision for Income Taxes
Income tax benefit associated with the
adjustments above (2,692) (581)
------- -------
8PAGE
<PAGE>
FORM 8-K/A
THERMO FIBERTEK INC.
NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (continued)
(Unaudited)
Item 7. Financial Statements, Pro Forma Combined Condensed Financial
Information and Exhibits
(c) Exhibits
23 Consent of Arthur Andersen LLP
9PAGE
<PAGE>
FORM 8-K/A
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 5th day of August
1997.
THERMO FIBERTEK INC.
Paul F. Kelleher
--------------------
Paul F. Kelleher
Chief Accounting Officer
10
Exhibit 23
Consent of Independent Public Accountants
-----------------------------------------
To Thermo Fibertek Inc.:
As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of
this Form 8-K.
Arthur Andersen LLP
Boston, Massachusetts
August 4, 1997
