Filed Pursuant to
Rules 424(b)(3) and
424(c) of the Securities
Act of 1933 Registration
No. 33-99110
Prospectus Supplement
---------------------
Supplement to Prospectus
dated
April 25, 1996
and Supplemented on June 6, 1996
THERMOSPECTRA CORPORATION
1,707,000
Common Stock
This prospectus supplement relates to 1,707,000 shares of Common
Stock, par value $.01 per share, of ThermoSpectra Corporation (the
"Company").
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
No dealer, salesman or any other person has been authorized to give
any information or to make any representations in connection with this
offering other than those contained in this Prospectus and, if given or
made, such information or representation must not be relied upon as having
been authorized by the company or by any other person. All information
contained in this Prospectus is as of the date of this Prospectus. This
Prospectus does not constitute any offer to sell or a solicitation of any
offer to buy any security other than the securities covered by this
Prospectus, nor does it constitute an offer to or solicitation of any
person in any jurisdiction in which such offer or solicitation may not be
lawfully made. Neither the delivery of this Prospectus nor any sale or
distribution made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company
since the date hereof.
____________________________________
September 11, 1996
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THERMOSPECTRA CORPORATION
Consolidated Balance Sheet
(Unaudited)
Assets
June 29, December 30,
(In thousands) 1996 1995
--------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 17,461 $ 20,306
Available-for-sale investments, at quoted
market value (amortized cost of $3,006) 3,006 -
Accounts receivable, less allowances of
$1,339 and $1,095 29,269 23,653
Inventories:
Raw materials and supplies 10,732 7,973
Work in process 6,051 3,949
Finished goods 5,831 6,350
Prepaid income taxes 5,110 4,376
Other current assets 1,498 1,015
-------- --------
78,958 67,622
-------- --------
Property, Plant and Equipment, at Cost 26,689 19,496
Less: Accumulated depreciation and
amortization 5,591 4,148
-------- --------
21,098 15,348
-------- --------
Patents, Trademarks and Other Assets 5,351 4,571
-------- --------
Equity Investment in Joint Venture 2,480 2,429
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Note 2) 43,494 32,947
-------- --------
$151,381 $122,917
======== ========
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THERMOSPECTRA CORPORATION
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
June 29, December 30,
(In thousands except share amounts) 1996 1995
--------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 10,182 $ 7,719
Accrued payroll and employee benefits 4,380 3,627
Accrued installation and warranty expenses 2,457 2,310
Deferred revenue 4,071 2,216
Accrued income taxes 2,580 2,120
Other accrued expenses 10,912 11,368
Due to parent company (Note 2) 22,736 2,301
-------- --------
57,318 31,661
-------- --------
Deferred Income Taxes and Other Deferred Items 1,500 1,431
-------- --------
Long-term Obligation, Due to Parent Company 7,300 7,300
-------- --------
Shareholders' Investment:
Common stock, $.01 par value, 25,000,000 shares
authorized; 12,437,400 and 12,432,000 shares
issued 124 124
Capital in excess of par value 77,009 76,955
Retained earnings 8,726 5,728
Treasury stock at cost, 157 shares (3) -
Cumulative translation adjustment (593) (282)
-------- --------
85,263 82,525
-------- --------
$151,381 $122,917
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMOSPECTRA CORPORATION
Consolidated Statement of Income
(Unaudited)
Three Months Ended
--------------------
June 29, July 1,
(In thousands except per share amounts) 1996 1995
------------------------------------------------------------------------
Revenues $31,281 $22,193
------- -------
Costs and Operating Expenses:
Cost of revenues 16,201 11,421
Selling, general and administrative expenses 9,255 6,858
Research and development expenses 3,319 2,196
------- -------
28,775 20,475
------- -------
Operating Income 2,506 1,718
Interest Income 239 171
Interest Expense, Related Party (102) (260)
Other Income - 184
------- -------
Income Before Provision for Income Taxes 2,643 1,813
Provision for Income Taxes 1,081 780
------- -------
Net Income $ 1,562 $ 1,033
======= =======
Earnings per Share $ .13 $ .10
======= =======
Weighted Average Shares 12,436 10,505
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMOSPECTRA CORPORATION
Consolidated Statement of Income
(Unaudited)
Six Months Ended
--------------------
June 29, July 1,
(In thousands except per share amounts) 1996 1995
-------------------------------------------------------------------------
Revenues $58,208 $36,642
------- -------
Costs and Operating Expenses:
Cost of revenues 30,340 18,562
Selling, general and administrative expenses 17,076 11,254
Research and development expenses 6,075 3,635
------- -------
53,491 33,451
------- -------
Operating Income 4,717 3,191
Interest Income 512 418
Interest Expense, Related Party (209) (380)
Other Income - 184
------- -------
Income Before Provision for Income Taxes 5,020 3,413
Provision for Income Taxes 2,022 1,468
------- -------
Net Income $ 2,998 $ 1,945
======= =======
Earnings per Share $ .24 $ .18
======= =======
Weighted Average Shares 12,435 10,547
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMOSPECTRA CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
------------------
June 29, July 1,
(In thousands) 1996 1995
-------------------------------------------------------------------------
Operating Activities:
Net income $ 2,998 $ 1,945
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,158 1,353
Provision for losses on accounts receivable 146 79
Other noncash expenses 293 203
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable (100) 118
Inventories 964 (1,761)
Other current assets (307) 551
Accounts payable 939 249
Due to parent company (1,092) 1,118
Other current liabilities (2,838) (1,084)
------- -------
Net cash provided by operating activities 3,161 2,771
------- -------
Investing Activities:
Acquisitions, net of cash acquired (Note 2) (994) (26,086)
Purchases of available-for-sale investments (3,000) -
Proceeds from sale of available-for-sale investments - 4,855
Purchases of property, plant and equipment (1,940) (441)
Proceeds from sale of property, plant and equipment 55 452
Other (89) (101)
------- -------
Net cash used in investing activities (5,968) (21,321)
------- -------
Financing Activities:
Proceeds from issuance of obligation to Thermo
Electron Corporation - 15,000
Net proceeds from issuance of Company common stock 51 -
------- -------
Net cash provided by financing activities 51 15,000
------- -------
Exchange Rate Effect on Cash (89) (181)
------- -------
Decrease in Cash and Cash Equivalents (2,845) (3,731)
Cash and Cash Equivalents at Beginning of Period 20,306 14,439
------- -------
Cash and Cash Equivalents at End of Period $17,461 $10,708
======= =======
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THERMOSPECTRA CORPORATION
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Six Months Ended
------------------
June 29, July 1,
(In thousands) 1996 1995
-------------------------------------------------------------------------
Noncash Activities:
Fair value of assets of acquired companies $30,178 $48,570
Due to parent company for acquisition (Note 2) (21,527) -
Cash paid for acquired companies (998) (28,043)
------- -------
Liabilities assumed of acquired companies $ 7,653 $20,527
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMOSPECTRA CORPORATION
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been
prepared by ThermoSpectra Corporation (the Company) without audit and, in
the opinion of management, reflect all adjustments of a normal recurring
nature necessary for a fair statement of the financial position at June 29,
1996, the results of operations for the three- and six-month periods ended
June 29, 1996, and July 1, 1995, and the cash flows for the six-month
periods ended June 29, 1996, and July 1, 1995. Interim results are not
necessarily indicative of results for a full year.
The consolidated balance sheet presented as of December 30, 1995, has
been derived from the consolidated financial statements that have been
audited by the Company's independent public accountants. The consolidated
financial statements and notes are presented as permitted by Form 10-Q and
do not contain certain information included in the annual financial
statements and notes of the Company. The consolidated financial statements
and notes included herein should be read in conjunction with the financial
statements and notes included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 30, 1995, filed with the Securities and
Exchange Commission.
2. Acquisition
On March 29, 1996, Thermo Instrument Systems Inc. (Thermo Instrument)
acquired a substantial portion of the businesses comprising the Scientific
Instruments Division of Fisons, plc (Fisons), a wholly owned subsidiary of
Rhone-Poulenc Rorer, Inc. Pursuant to an agreement executed on August 5,
1996, the Company acquired Kevex Instruments, a manufacturer of X-ray
microanalyzers and X-ray microfluorescence instruments, and Kevex X-Ray, a
manufacturer of microfocus X-ray tubes, (the Kevex businesses) from Thermo
Instrument for $21.5 million, subject to a post-closing adjustment to be
negotiated with Fisons by Thermo Instrument. To partially finance the
acquisition, the Company borrowed $15.0 million from Thermo Electron
Corporation (Thermo Electron). The purchase price was determined based on
the net book value of the Kevex businesses at March 29, 1996, and a pro
rata allocation of Thermo Instrument's total cost in excess of the net
assets recorded in connection with the acquisition of the Fisons
businesses. As of March 29, 1996, the Company and the Kevex businesses were
deemed for accounting purposes to be under control of their common majority
owner, Thermo Instrument, and, as a result, the accompanying 1996 financial
information includes the results of operations of the Kevex businesses from
March 29, 1996. Because the Company had not disbursed the funds in
connection with the acquisition of the Kevex businesses as of June 29,
1996, the purchase price for these businesses has been included in due to
parent company in the accompanying 1996 balance sheet.
The cost of the acquisition of the Kevex businesses exceeded the
estimated fair value of the acquired net assets by $10.2 million, which is
being amortized over 40 years.
8
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THERMOSPECTRA CORPORATION
2. Acquisition (continued)
Based on unaudited data, the following table presents selected
financial information for the Company and the Kevex businesses on a pro
forma basis, assuming the companies had been combined since the beginning
of 1995.
Three Six
Months Ended Months Ended
------------ -------------------
(In thousands except per July 1, June 29, July 1,
share amounts) 1995 1996 1995
--------------------------------------------------------------------------
Revenues $27,959 $64,199 $49,064
Net income (loss) (48) 755 (61)
Earnings (loss) per share - .06 (.01)
The pro forma results are not necessarily indicative of future
operations or the actual results that would have occurred had the
acquisition of the Kevex businesses been made at the beginning of 1995.
Item 2 - Management's Discussion and Analysis of Financial Condition and
------------------------------------------------------------------------
Results of Operations
---------------------
Overview
The Company develops, manufactures, and markets precision imaging,
inspection, and measurement instruments based on high-speed data
acquisition and digital processing technologies. These instruments are
generally combined with proprietary operations and analysis software to
provide industrial and research customers with integrated systems that
address their specific needs. The Company's products include digital
oscillographic recorders that continuously measure and monitor signals from
various sensors; digital storage oscilloscopes (DSOs) that are capable of
taking hundreds of millions of measurements per second of transient signals
or short bursts of data; data acquisition systems that combine the
attributes of DSOs and digital oscillographic recorders; X-ray
microanalyzers used as accessories to electron microscopes to provide
elemental materials analysis as a supplement to the microscope's imaging
capabilities; non-destructive X-ray inspection systems for process
monitoring and quality control applications; specialty X-ray tubes for
industrial and medical applications; and confocal laser scanning
microscopes that use laser light to generate precise optical images
primarily for life-science applications. The Company's growth strategy
includes acquiring complementary businesses, developing new applications
for its technology to address related market segments, and strengthening
its presence in selected geographic markets.
The acquisitions that the Company has historically made have generally
been businesses with strong technologies and a good reputation and presence
in the markets they compete in, but relatively poor profitability because
of high manufacturing and operating expenses. The Company's goal has been
to gradually reduce these expenses and thereby improve the acquired
companies' profitability. Businesses that the Company may acquire in the
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THERMOSPECTRA CORPORATION
Overview (continued)
future are likely to have these same financial characteristics. To realize
an attractive return on its investment in such future acquisitions, the
Company will likely need to successfully reduce those acquired companies'
expenses. Since the Company competes primarily on the basis of its
technology, the Company will also need to continually improve the
technology underlying the products of any company it acquires.
The Company conducts all of its manufacturing operations in the United
States, except for the production of certain DSOs, which are manufactured
in England. The Company sells its products on a worldwide basis. The
Company anticipates that a majority of its revenues will be from sales to
customers outside the United States. The Company's business activities
outside the United States are conducted through sales and service
subsidiaries and through third-party representatives and distributors. The
results of the Company's international operations are subject to foreign
currency fluctuations, and the exchange rate value of the dollar may have a
significant impact on both revenues and earnings. Where appropriate, the
Company uses forward contracts to reduce its exposure to currency
fluctuations.
Results of Operations
Second Quarter 1996 Compared With Second Quarter 1995
-----------------------------------------------------
Revenues were $31.3 million in the second quarter of 1996, compared
with $22.2 million in the second quarter of 1995, an increase of 41%. The
increase in revenues resulted primarily from the inclusion of $6.1 million
of revenues from Kevex Instruments and Kevex X-Ray (the Kevex businesses),
which, for accounting purposes, were deemed to be acquired as of March 29,
1996 (Note 2), and the inclusion of $10.8 million of revenues from Gould
Instrument Systems, Inc. (GIS) for the full second quarter of 1996,
compared with $7.8 million of revenues for GIS for the partial second
quarter of 1995. GIS, a manufacturer of digital oscillographic recorders,
DSO's, and data acquisition systems, was acquired on May 10, 1995. Revenues
from existing operations increased approximately 3% in the second quarter
of 1996 from the second quarter of 1995 principally due to an increase in
demand, particularly in the Pacific Rim, for X-ray microanalyzers
manufactured by the Company's NORAN Instruments, Inc. (NORAN) subsidiary.
Revenues were negatively affected by approximately $0.6 million in the
second quarter of 1996 due to the strengthening in the value of the U.S.
dollar relative to the Japanese yen and other foreign currencies in
countries where the Company operates.
The Company's gross profit margin was relatively unchanged at 48.2% in
the second quarter of 1996 compared with 48.5% in the second quarter of
1995. An increase in the gross profit margin at GIS to 46% in the second
quarter of 1996 from 42% in the second quarter of 1995 due to changes in
product mix and manufacturing efficiencies was offset by the inclusion of
lower-margin revenues at the Kevex businesses. The gross profit margin for
the Kevex businesses was 39%. The Company's goal is to continue to increase
the gross profit margin at GIS and the Kevex businesses by improvements in
product mix and manufacturing efficiencies, although there can be no
assurance that the Company will be successful in these efforts.
10
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THERMOSPECTRA CORPORATION
Second Quarter 1996 Compared With Second Quarter 1995 (continued)
-----------------------------------------------------
Selling, general and administrative expenses as a percentage of
revenues decreased to 30% in the second quarter of 1996 from 31% in the
second quarter of 1995 due principally to lower selling expenses as a
percentage of revenues at the acquired Kevex businesses. The Company
intends to increase selling efforts at Kevex X-Ray in an attempt to
increase sales to foreign and medical markets.
Research and development expenses as a percentage of revenues
increased to 11% in the second quarter of 1996 from 10% in the second
quarter of 1995. This increase is due to higher research and development
expenditures at NORAN as a result of development efforts on a confocal
microscope, which was released in the second quarter of 1996, in addition
to the inclusion of higher research and development expenses as a
percentage of revenues at Kevex X-Ray resulting from development efforts on
several new products scheduled to be introduced in 1996 and 1997.
The effective tax rate was 41% in the second quarter of 1996, compared
with 43% in the second quarter of 1995. The effective tax rates exceed the
statutory federal income tax rate due primarily to the impact of state
income taxes, nondeductible amortization of cost in excess of net assets of
acquired companies for certain of the Company's acquisitions and, in the
second quarter of 1995, the anticipated inability to provide a tax benefit
on losses incurred at certain foreign subsidiaries.
First Six Months 1996 Compared With First Six Months 1995
---------------------------------------------------------
Revenues were $58.2 million in the first six months of 1996, compared
with $36.6 million in the first six months of 1995, an increase of 59%.
Revenues for the first six months of 1996 included $6.1 million of revenues
from the acquisition of the Kevex businesses and approximately $13.6
million of additional revenues from the acquisition of GIS. Revenues from
existing operations increased approximately 7% in the first six months of
1996 from the first six months of 1995 due primarily to the inclusion of
approximately $1.5 million of revenues related to unusually large shipments
of air bag inspection systems in the first quarter of 1996 at the Company's
Nicolet Imaging Systems (NIS) business and an increase in demand,
particularly in the Pacific Rim, for confocal laser scanning microscopes
and X-ray microanalyzers manufactured by NORAN. Revenues were negatively
affected by approximately $0.8 million in the first six months of 1996 due
to the strengthening in the value of the U.S. dollar relative to the
Japanese yen and other foreign currencies in countries where the Company
operates.
The gross profit margin decreased to 48% in the first six months of
1996 from 49% in the first six months of 1995. Higher gross profit margins
at the Company's Nicolet Instrument Technologies Inc. (NIT) subsidiary, a
manufacturer of DSOs, resulting from manufacturing efficiencies was more
than offset by the inclusion of lower-margin air bag inspection systems
shipped in the first quarter of 1996 and the inclusion of lower-margin
revenues at acquired companies.
11
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THERMOSPECTRA CORPORATION
First Six Months 1996 Compared With First Six Months 1995 (continued)
---------------------------------------------------------
Selling, general and administrative expenses as a percentage of
revenues decreased to 29% in the first six months of 1996 from 31% in the
first six months of 1995 due principally to higher revenues at the
Company's existing operations and the inclusion of lower selling expenses
as a percentage of revenues at the acquired Kevex businesses, offset in
part by the inclusion of higher selling, general and administrative
expenses as a percentage of revenues at GIS.
Research and development expenses as a percentage of revenues were 10%
in both the first six months of 1996 and 1995. Higher research and
development expenditures at NORAN and NIT for products released in the
second quarter of 1996 and higher research and development expenditures as
a percentage of revenues at the acquired Kevex businesses were offset by
lower expenditures as a percentage of revenues at NIS.
Interest income increased to $0.5 million in the first six months of
1996 from $0.4 million in the first six months of 1995 principally due to
higher cash balances in 1996. Interest expense, related party, in the first
six months of 1996 and 1995 represents interest expense associated with a
$7.3 million promissory note issued to Thermo Instrument Systems Inc.
(Thermo Instrument) in 1994 and, in the first six months of 1995, interest
expense associated with a $15.0 million promissory note issued to Thermo
Electron Corporation (Thermo Electron) in May 1995. The $15.0 million note
was repaid in the third quarter of 1995.
The effective tax rate was 40% in the first six months of 1996,
compared with 43% in the first six months of 1995. The effective tax rates
exceed the statutory federal income tax rate due primarily to the impact of
state income taxes, nondeductible amortization of cost in excess of net
assets of acquired companies for certain of the Company's acquisitions and,
in 1995, the anticipated inability to provide a tax benefit on losses
incurred at certain foreign subsidiaries.
Liquidity and Capital Resources
Consolidated working capital was $21.6 million at June 29, 1996,
compared with $36.0 million at December 30, 1995. Included in working
capital are cash, cash equivalents, and available-for-sale investments of
$20.5 million at June 29, 1996, compared with $20.3 million at December 30,
1995. Cash provided by operating activities was $3.2 million in the first
six months of 1996, compared with $2.8 million in the first six months of
1995. Due to parent company included in the net cash provided by operating
activities section in the accompanying 1996 statement of cash flows
includes a receivable of $0.8 million from Thermo Instrument representing
the positive cash flow of the Kevex businesses in the second quarter of
1996.
Pursuant to an agreement executed on August 5, 1996, the Company
acquired the Kevex businesses from Thermo Instrument (Note 2) for $21.5
million, subject to a post-closing adjustment to be negotiated with Fisons
by Thermo Instrument. Due to parent company in the accompanying 1996
balance sheet includes a payable of $21.5 million for the acquisition of
12
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THERMOSPECTRA CORPORATION
Liquidity and Capital Resources (continued)
the Kevex businesses. Subsequent to the end of the quarter, the Company
paid the liability, net of the $0.8 million receivable described above, to
Thermo Instrument. In connection with the payment to Thermo Instrument, the
Company borrowed $15.0 million from Thermo Electron pursuant to a
promissory note due 1998 and bearing interest at the 90-day Commercial
Paper Composite Rate plus 25 basis points, set at the beginning of each
quarter.
The Company expended $1.9 million during the first six months of 1996
for property, plant and equipment, including $1.3 million to purchase a
building previously leased by NIS. The Company plans to expend
approximately $1.0 million during the remainder of 1996 for the purchase of
property, plant and equipment.
Although the Company expects to have positive cash flow from its
operations, the Company anticipates it may require significant amounts of
cash to pursue the acquisition of complementary businesses. The Company
expects that it would seek to finance any such acquisitions through a
combination of internal funds, additional equity financing or convertible
debt financing from the capital markets and/or short-term borrowings from
Thermo Instrument or Thermo Electron. The Company believes that its
existing resources and cash provided by operations are sufficient to meet
the capital requirements of its existing businesses for the foreseeable
future.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
On May 19, 1996, at the Annual Meeting of Shareholders, the
shareholders elected five directors to a one-year term expiring in 1997.
The directors reelected at the meeting were Dr. Elias P. Gyftopoulos, Earl
R. Lewis, Theo Melas-Kyriazi, Arvin H. Smith, and Michael P. Stansky. Each
nominee for director received 10,574,174 shares voted in favor of his
election and 3,600 shares voted against. No abstentions or broker non-votes
were recorded on the election of directors.
The shareholders also approved a proposal to adopt an employees' stock
purchase plan and to reserve 50,000 shares of the Company's common stock
for issuance thereunder as follows: 10,568,074 shares voted in favor, 6,700
shares voted against, and 3,000 shares abstained. No broker non-votes were
recorded on the proposal.
Item 6 - Exhibits
-----------------
See Exhibit Index on the page immediately preceding exhibits.
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THERMOSPECTRA CORPORATION
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 as of the 6th day of August 1996.
THERMOSPECTRA CORPORATION
/s/ Paul F. Kelleher
-------------------------
Paul F. Kelleher
Chief Accounting Officer
/s/ John N. Hatsopoulos
-------------------------
John N. Hatsopoulos
Chief Financial Officer
AA962550026
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