<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
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): December 10, 1996
MOLTEN METAL TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-21042 52-1659959
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
400-2 Totten Pond Road, Waltham, Massachusetts 02154
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (617) 487-9700
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
During the third quarter of 1996, Molten Metal Technology, Inc. (the
"Company") signed a letter of intent to become the full owner of the Quantum
Catalytic Extraction Processing ("Q-CEP[Trademark]") facility it had jointly
owned with The Scientific Ecology Group, Inc. ("SEG") in Oak Ridge, Tennessee
(the "Q-CEP Facility") and to acquire certain assets used for handling and
processing radioactive "wet waste." SEG is a wholly-owned subsidiary of
Westinghouse Electric Corporation ("Westinghouse"). The Q-CEP Facility is
designed to process radioactive ion exchange resins from nuclear power plants.
On December 10, 1996, the Company, MMT of Tennessee Inc., a wholly-owned
subsidiary of the Company ("MMT Tennessee"), SEG and Westinghouse executed
definitive agreements with respect to such acquisition. Pursuant to those
agreements, MMT Tennessee acquired SEG's interest in the Q-CEP Facility and
certain assets of SEG and Westinghouse used in the "wet waste" business. These
assets include contracts, equipment, services and personnel for processing
radioactive waste streams at the Q-CEP Facility. MMT Tennessee will own and
operate the Q-CEP Facility and the "wet waste" business.
The purchase price for these assets was $31 million in cash, which
was based on the parties' mutual agreement as to the fair market value of the
assets being acquired. Payment of the purchase price was funded from the
Company's working capital.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired
The financial statements set forth in the list below are filed as part
of this report on pages F-1 through F-6.
Report of Independent Accountants
Statement of Assets Acquired and Liabilities Assumed as of December 31,
1995 and as of September 30, 1996
Statement of Revenue and Direct Operating Expenses for the years ended
December 31, 1995 and 1994 and for the nine months ended September 30, 1996 and
1995
Notes to Financial Statements
(b) Pro Forma Financial Information
The pro forma financial information set forth in the list below is
filed as part of this report on pages F-7 through F-10.
Pro Forma Combined Balance Sheet as of September 30, 1996
Pro Forma Combined Statement of Operations for the year ended December
31, 1995 and the nine months ended September 30, 1996
<PAGE> 3
(c) Exhibits. The following are filed as exhibits to this Report:
Exhibit 10.1* Asset Purchase Agreement dated as of December 10, 1996 between
the Company, MMT of Tennessee Inc., Westinghouse Electric
Corporation and The Scientific Ecology Group, Inc.
Exhibit 10.2* Press Release dated December 11, 1996 issued by the Company.
Exhibit 23.1 Consent of Price Waterhouse LLP.
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* Previously filed.
2
<PAGE> 4
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 hereunto duly authorized.
MOLTEN METAL TECHNOLOGY, INC.
Date: February 20, 1997 By: /s/ Benjamin T. Downs
----------------------------------------
Benjamin T. Downs
Executive Vice President of Finance
and Administration
3
<PAGE> 5
WET WASTE BUSINESS OF
SCIENTIFIC ECOLOGY GROUP
STATEMENTS OF ASSETS ACQUIRED AND
LIABILITIES ASSUMED AND OF REVENUE AND
DIRECT OPERATING EXPENSES
F-1
<PAGE> 6
Report of Independent Accountants
The Board of Directors and Stockholders of
Molten Metal Technology, Inc.
We have audited the accompanying statement of assets acquired and liabilities
assumed of the Wet Waste Business of Scientific Ecology Group as of December 31,
1995 and the related statement of revenue and direct operating expenses for the
years ended December 31, 1995 and 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these 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 financial statements audited by us present fairly, in all
material respects, the assets acquired and liabilities assumed of the Wet Waste
Business of Scientific Ecology Group at December 31, 1995 and the revenue and
direct operating expenses for the years ended December 31, 1995 and 1994, in
conformity with generally accepted accounting principles.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 8, 1997
F-2
<PAGE> 7
Wet Waste Business of Scientific Ecology Group
Statement of Assets Acquired and Liabilities Assumed
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<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
---- (unaudited)
-----------
<S> <C> <C>
ASSETS
Cash $ 314,000 $ 1,345,000
Accounts receivable 279,000 283,000
Inventories 477,000 482,000
Property, plant and equipment, net 14,475,000 17,117,000
---------- ----------
$15,545,000 $19,227,000
=========== ===========
LIABILITIES
Deferred revenue $ 593,000 $ 1,628,000
=========== ============
</TABLE>
F-3
The accompanying notes are an integral part of these financial statements.
<PAGE> 8
Wet Waste Business of Scientific Ecology Group
Statement of Revenue and Direct Operating Expenses
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, September 30,
------------ -------------
1995 1994 1996 1995
---- ---- ---- ----
(unaudited) (unaudited)
----------- -----------
<S> <C> <C> <C> <C>
Revenue $9,047,000 $7,737,000 $7,730,000 $6,667,000
Direct operating expenses 7,276,000 4,858,000 5,699,000 5,331,000
--------- --------- ---------- ---------
Excess of revenue over direct
operating expenses $1,771,000 $2,879,000 $2,031,000 $1,336,000
========== ========== ========== ==========
</TABLE>
F-4
The accompanying notes are an integral part of these financial statements.
<PAGE> 9
Wet Waste Business of Scientific Ecology Group
Notes to Financial Statements
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1. Business
On December 10, 1996, Molten Metal Technology, Inc. ("MMT") acquired the
Wet Waste Business of Scientific Ecology Group ("SEG"), a wholly-owned
subsidiary of Westinghouse Electric Corporation ("WEC"). In general, the
Wet Waste Business involves the handling, processing, transportation and
disposal of low-level radioactive water and other liquids and low-level
radioactive sludges and similar materials generated primarily by the
commercial nuclear power industry.
Under the terms of the asset purchase agreement, MMT acquired certain
intellectual property, rights under certain SEG and WEC customer contracts,
inventories, property, plant and equipment and the rights to certain
equipment leases related to the wet waste business. Additionally, MMT
assumed SEG's obligation to process certain customer wastes that had been
delivered to SEG prior to the consummation of the acquisition.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying statement of assets acquired and liabilities assumed as of
December 31, 1995 and the related statement of revenue and direct operating
expenses for the years ended December 31, 1995 and 1994 were prepared from
the books and records maintained by SEG using the historical cost method,
of which the Wet Waste Business represents a specific business unit. The
Wet Waste Business has never operated as a separate business entity or
division of SEG but rather has been an integrated part of SEG's
consolidated business. The statement of revenue and direct operating
expenses does not include charges for selling, general, administrative,
interest and income tax expense since such items are considered to be SEG
corporate expenses and are not allocable to individual business units.
Similarly, costs related to Westinghouse corporate overhead allocations,
which historically have been allocated to SEG by WEC, have not been
included in the statement of revenue and direct operating expenses since
they are considered to be corporate expenses that are not allocable to
individual business units. Such expenses included costs for WEC executive
management, information systems support, corporate accounting and treasury
functions, corporate legal matters, and costs related to WEC's Science and
Technology Center.
The statement of revenue and direct operating expenses includes the revenue
and identifiable costs that relate directly to the Wet Waste Business.
Direct operating expenses include salaries and wages, fringe benefits,
materials, travel, living and transportation cost directly associated with
revenue generating activities.
Inventories
Inventories consist primarily of waste containers which are specifically
identified and are valued at the lower of acquisition cost or market.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation on equipment
is calculated on a straight-line basis over the estimated useful lives of
the related assets. Repairs and maintenance costs are charged to expense as
incurred.
Revenue Recognition
Revenue on service contracts is recognized as the services are performed.
Revenue on equipment sales is recognized when the equipment is shipped to
the customer. Billings and cash receipts in excess of amounts recognized as
revenue are recorded as deferred revenue.
F-5
<PAGE> 10
Wet Waste Business of Scientific Ecology Group
Notes to Financial Statements
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Interim Financial Information
The financial information as of September 30, 1996 and for the nine months
ended September 30, 1996 and 1995 is unaudited and reflects all adjustments
(consisting of only normal, recurring adjustments) which, in the opinion of
management, are necessary for a fair presentation of the financial position
and results of operations for the interim periods.
3. Property, Plant and Equipment
<TABLE>
Property, plant and equipment at December 31, 1995 consist of the following:
<S> <C>
Land $ 76,000
Machinery and equipment 4,098,000
Construction in progress 12,669,000
-----------
16,843,000
Less: accumulated depreciation 2,368,000
-----------
$14,475,000
-----------
</TABLE>
Construction in progress relates to costs incurred for the engineering and
construction of the Quantum Catalytic Extraction Processing facility in Oak
Ridge, Tennessee.
Depreciation expense for the years ended December 31, 1995 and 1994 was
$274,000 in each year.
4. Sales Concentration
For the year ended December 31, 1995, one customer accounted for
approximately 24% of revenue. For the year ended December 31, 1994, one
customer accounted for approximately 14% of revenue.
F-6
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The unaudited pro forma combined balance sheet of the Company as of
September 30, 1996 assumes that the acquisition of certain assets and
assumption of certain liabilities of SEG's "wet waste" business had occurred
on that date.
The unaudited pro forma combined statements of operations for the
year-ended December 31, 1995 and the nine months ended September 30, 1996
present the results of operations of the Company assuming the acquisition of
SEG's "wet waste" business had been consummated as of the beginning of the
periods indicated.
The unaudited pro forma combined financial statements have been
prepared by the Company and all calculations have been made based upon
assumptions deemed appropriate. Included in these assumptions is the presumption
that no additional selling, general and administrative costs are required
because the current infrastructure is deemed sufficient to support the
additional activities anticipated from the acquisition. The unaudited pro forma
combined financial statements were prepared utilizing the accounting policies of
the Company. The preliminary allocations of the purchase price, which may be
subject to certain adjustments as the Company finalizes the allocation of the
purchase price in accordance with generally accepted accounting principles, are
included in the unaudited pro forma combined financial statements. The purchase
price has been allocated based upon the estimated fair values of the assets
acquired and liabilities assumed. The excess of the purchase price over the
estimated fair value of the net assets acquired at the acquisition date has been
recorded as goodwill in accordance with Accounting Principles Board Opinion No.
16.
The unaudited pro forma combined financial information does not
purport to be indicative of the results of operations or the financial position
which would have actually been obtained if the acquisition had been consummated
on the dates indicated. In addition, the unaudited pro forma combined financial
information does not purport to be indicative of the results of operations or
financial position which may be achieved in the future.
The unaudited pro forma combined financial information should be read
in conjunction with the Company's historical consolidated financial statements
and notes thereto contained in the 1995 Annual Report on Form 10-K, as amended,
and Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, as
amended, June 30, 1996, as amended, and September 30, 1996, and the Statement
of Assets Acquired and Liabilities Assumed and of Revenue and Direct Operating
Expenses of the Wet Waste Business of Scientific Ecology Group presented herein.
F-7
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Molten Metal Technology, Inc. and Subsidiaries
<TABLE>
Pro Forma Combined Balance
Sheet
As of September 30, 1996
(Unaudited)
<CAPTION>
Historical
----------------------------
SEG
Wet Waste Pro forma Pro forma
MMT Business Adjustments Combined
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 39,841,000 $ 1,345,000 $(31,270,000) a. $ 9,916,000
Short-term investments 147,362,000 147,362,000
Accounts receivable 6,120,000 283,000 6,403,000
Accounts receivable from affiliate 27,244,000 27,244,000
Prepaid expenses and other current assets 6,218,000 482,000 6,700,000
------------ ----------- ------------ ------------
Total current assets 226,785,000 2,110,000 (31,270,000) $197,625,000
Restricted cash and investments 2,337,000 2,337,000
Fixed assets, net 57,491,000 17,117,000 2,277,000 b. 76,885,000
Goodwill and other intangible assets, net 4,846,000 11,394,000 c. 16,240,000
Investment in affiliate 16,099,000 16,099,000
Other assets 6,034,000 6,034,000
------------ ----------- ------------ ------------
$313,592,000 $19,227,000 $(17,599,000) $315,220,000
============ =========== ============ ============
Current Liabilities:
Current portion of long-term debt $ 176,000 $ - $ - $ 176,000
Accounts payable, accrued expenses
and other current liabilities 16,893,000 1,628,000 18,521,000
------------ ----------- ------------ ------------
Total current liabilities 17,069,000 1,628,000 - 18,697,000
Long-term debt, less current portion 166,509,000 166,509,000
Due to related parties 1,386,000 1,386,000
Deferred income from affiliate 6,895,000 6,895,000
Stockholders' Equity:
Common Stock 235,000 235,000
Additional paid-in capital 159,922,000 159,922,000
Valuation allowance for short-term investments (777,000) (777,000)
Accumulated deficit (37,647,000) (37,647,000)
------------ ----------- ------------ ------------
Total stockholders' equity 121,733,000 - - 121,733,000
------------ ----------- ------------ ------------
$313,592,000 $ 1,628,000 $ - $315,220,000
============ =========== ============ ============
<FN>
Note 1
The proforma balance sheet has been prepared to reflect the acquisition of the SEG assets for an aggregate price of
$31,270,000, including acquisition costs, paid in cash. Pro forma adjustments are made to reflect:
a. The payment of the purchase
price and acquisition costs.
b. The estimated fair value of fixed assets purchased at the
acquisition date.
c. The estimated fair value of intangible assets acquired and the excess of acquisition cost over the fair value
of the assets acquired (goodwill).
</TABLE>
F-8
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Molten Metal Technology, Inc. and Subsidiaries
<TABLE>
Pro Forma Combined Statement of Operations
Nine Months Ended September 30, 1996
(Unaudited)
<CAPTION>
Historical
------------------------------
SEG
Wet Waste
MMT Business
Nine Months Nine Months Pro forma Pro forma
Ended 9/30/96 Ended 9/30/96 Adjustments Combined
------------- ------------- ----------- --------
<S> <C> <C> <C> <C>
Revenue:
Research and development ("R&D") $ 8,231,000 $ 8,231,000
Processing revenue - 7,730,000 7,730,000
Construction, R&D and consulting from affiliate 37,063,000 37,063,000
Technology transfer and success fees from affiliate 13,083,000 13,083,000
----------- --------- ---------- -----------
58,377,000 7,730,000 - 66,107,000
Operating expenses:
Cost of Revenue-R&D 8,091,000 8,091,000
Cost of Revenue-processing - 5,699,000 2,163,000 a.,b. 7,862,000
Cost of Revenue-construction, R&D, consulting,
technology transfer and success fees from affiliate 34,452,000 34,452,000
R&D 14,191,000 14,191,000
Selling, general and administrative ("SG&A") 10,202,000 10,202,000
----------- --------- ---------- -----------
66,936,000 5,699,000 2,163,000 74,795,000
Equity income from affiliate 5,494,000 5,494,000
----------- --------- ---------- -----------
Income (loss) from operations (3,065,000) 2,031,000 (2,163,000) (3,197,000)
Other income (expense), net 2,056,000 - (1,290,000) c. 766,000
=========== ========= ========== ===========
Net income (loss) $(1,009,000) 2,031,000 (3,453,000) $(2,431,000)
=========== ========= ========== ===========
Net income (loss) per share $ (0.04) $ (0.10)
=========== ===========
Weighted average common and common equivalent
shares outstanding 23,230,000 23,230,000
<FN>
Note 1
The above statement gives effect to the following pro forma adjustments necessary to reflect the acquisition outlined in Note
1 to the pro forma balance sheet.
a. Additional depreciation resulting from increased basis of property and equipment acquired based on useful lives ranging
from 7 to 25 years.
b. Amortization of intangible assets, including goodwill, on a straight-line basis over estimated useful lives ranging from 2
to 10 years.
c. Reduction in interest income resulting from the payment of the purchase price and acquisition costs.
</TABLE>
F-9
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<TABLE>
Molten Metal Technology, Inc. and Subsidiaries
Pro Forma Combined Statement of Operations
Fiscal Year Ended December 31, 1995
(Unaudited)
<CAPTION>
Historical
--------------------------------
SEG
Wet Waste
MMT Business
Year Ended Year Ended Pro forma Pro forma
12/31/95 12/31/95 Adjustments Combined
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Revenue:
Research and development ("R&D") $13,613,000 $13,613,000
Processing revenue - 9,047,000 9,047,000
Construction, R&D and consulting from affiliate 21,568,000 21,568,000
Technology transfer and success fees from affiliate 9,000,000 9,000,000
----------- --------- ---------- -----------
44,181,000 9,047,000 - 53,228,000
Operating expenses:
Cost of Revenue-R&D 13,699,000 13,699,000
Cost of Revenue-processing - 7,276,000 2,884,000 a.,b. 10,160,000
Cost of Revenue-construction, R&D, consulting,
technology transfer and success fees from affiliate 21,203,000 21,203,000
R&D 10,986,000 10,986,000
Selling, general and administrative ("SG&A") 2,877,000 2,877,000
----------- --------- ---------- -----------
48,765,000 7,276,000 2,884,000 58,925,000
Equity income from affiliate 834,000 - 834,000
----------- --------- ---------- -----------
Income (loss) from operations (3,750,000) 1,771,000 (2,884,000) (4,863,000)
Other income (expense), net 4,105,000 - (1,720,000) 2,385,000
----------- --------- ---------- -----------
Net income (loss) $ 355,000 1,771,000 (4,604,000) $(2,478,000)
=========== ========= ========== ===========
Net income (loss) per share $ 0.01 $ (0.10)
=========== ===========
Weighted average common and common equivalent
shares outstanding 24,710,000 24,710,000
<FN>
NOTE 1
The above statement gives effect to the following pro forma adjustments necessary to reflect the acquisition outlined in
Note 1 to the pro forma balance sheet.
a. Additional depreciation resulting from increased basis of property and equipment acquired based on useful lives ranging
from 7 to 25 years.
b. Amortization of intangible assets, including goodwill, on a straight-line basis over estimated useful lives ranging from 2
to 10 years.
c. Reduction of interest income resulting from the payment of the purchase price and acquisition costs.
</TABLE>
F-10
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INDEX TO EXHIBITS
Exhibit No. Exhibit
- ------- --- -------
Exhibit 10.1* Asset Purchase Agreement dated as of December 10, 1996 between
the Company, MMT of Tennessee Inc., Westinghouse Electric
Corporation and The Scientific Ecology Group, Inc.
Exhibit 10.2* Press Release dated December 11, 1996 issued by the Company.
Exhibit 23.1 Consent of Price Waterhouse LLP.
- -------------------
* Previously filed.
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-65688 and 33-98852) and in the Prospectus
constituting part of the Registration Statements on Form S-3 (Nos. 333-10949
and 333-12435) of Molten Metal Technology, Inc. of our report dated January 8,
1997 relating to the statements of assets acquired and liabilities assumed and
of revenue and direct operating expenses of the Wet Waste Business of
Scientific Ecology Group, appearing in this current report on Form 8-K/A of
Molten Metal Technology, Inc. dated February 21, 1997.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
February 21, 1997
