SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------------------------------
AMENDMENT NO. 1 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):
July 30, 1997
THERMOSPECTRA CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 1-13876 04-3242970
(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
<PAGE>
FORM 8-K/A
Item 2. Acquisition or Disposition of Assets
On July 30, 1997, ThermoSpectra Corporation (the "Company") entered
into an agreement to acquire NESLAB Instruments, Inc. and its related
sales and service entity, NESLAB Instruments Europa B.V. in the
Netherlands (together "NESLAB"), from the Life Sciences International PLC
subsidiary ("LSI") of Thermo Instrument Systems Inc. ("Thermo
Instrument"), the Company's majority owner. In March 1997, Thermo
Instrument acquired approximately 95% of the outstanding shares of LSI, a
London Stock Exchange-listed company. Subsequently, Thermo Instrument
acquired the remaining shares of LSI capital stock. NESLAB, based in New
Hampshire, is a global supplier of temperature-control products.
The purchase price for NESLAB is $77.4 million, and represents the
sum of the net tangible book value of the acquired business at June 28,
1997, plus a percentage of Thermo Instrument's total goodwill associated
with its acquisition of LSI, based on the 1996 revenues of NESLAB
relative to LSI's 1996 consolidated revenues. The purchase price is
subject to a post-closing adjustment based on final determination of the
net tangible book value of the acquired business and a final calculation
of Thermo Instrument's total goodwill associated with the acquisition of
LSI.
The acquisition will be made pursuant to a Share Purchase Agreement
dated as of July 30, 1997 (the "Agreement"), among the Company and Thermo
Instrument. The purchase price of $77.4 million will be paid through the
issuance of 2,869,717 shares of the Company's common stock (valued at
$32.6 million) and the assumption of debt to Thermo Instrument totaling
$44.8 million. The closing of the transaction will take place as soon as
the shares of common stock to be issued in connection with the
acquisition are listed for trading upon the American Stock Exchange (the
"Exchange"). The Exchange requires that the listing be approved by the
holders of a majority of the Company's outstanding shares present and
voting at a shareholders' meeting. The meeting is expected to be held
before the end of 1997. Thermo Instrument has agreed to vote all of the
shares of the Company's common stock held by it as of the record date of
the meeting in favor of the listing of the Company's shares and all
matters related thereto. Therefore, approval of the listing is assured.
As of September 27, 1997, before giving effect to the issuance of the
shares to be issued pursuant to the Agreement, Thermo Instrument owned
approximately 71.9% of the outstanding common stock of the Company.
Giving effect to the issuance of such shares, Thermo Instrument would own
approximately 77.1% of such outstanding common stock as of such date.
Because the Company and NESLAB were deemed for accounting purposes
to be under control of their common majority owner, Thermo Instrument,
the transaction has been accounted for in a manner similar to a pooling
of interests. Accordingly, the Company's financial statements (including
the financial statements included as part of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 28, 1997) include the
results of NESLAB from March 12, 1997, the date the business was acquired
by Thermo Instrument, and the shares issuable subject to listing on the
Exchange have been deemed outstanding from that date.
The Company has no present intention to use the assets of NESLAB for
purposes materially different from the purposes for which such assets
were used prior to the acquisition. However, the Company will continue to
review such business' assets, corporate structures, capitalizations,
operations, properties, policies, managements and personnel and, upon
completion of this review, may develop additional or alternative plans or
proposals, including mergers, transfers of a material amount of assets or
other additional transactions or changes relating to such business.
2PAGE
<PAGE>
FORM 8-K/A
Item 7. Financial Statements, Pro Forma Combined Condensed Financial
Information and Exhibits
(a) Financial Statements of Business Acquired
Attached hereto.
3PAGE
<PAGE>
NESLAB Instruments, Inc. and NESLAB Instruments Europa B.V.
Combined Financial Statements
For the Three Years Ended December 31, 1996
PAGE
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To NESLAB Instruments, Inc. and NESLAB Instruments Europa B.V.
(the NESLAB businesses):
We have audited the accompanying combined balance sheet of the
NESLAB businesses as of December 31, 1995 and 1996, and the related
combined statements of income, shareholder's investment, and cash flows
for each of the years in the three-year period ended December 31, 1996.
These combined financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these combined 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 combined financial statements referred to above
present fairly, in all material respects, the financial position of the
NESLAB businesses at December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the years in the three-year
period ended December 31, 1996, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
February 4, 1997, except as to Note 7,
which is as of July 30, 1997
2PAGE
<PAGE>
NESLAB Instruments, INC. and NESLAB Instruments Europa B.V.
Combined Balance Sheet
(In thousands)
December 31,
--------------------------
1995 1996
-----------------------------------------------------------------------
Assets
Current Assets:
Cash $ 798 $ 2,103
Accounts receivable, less allowances of
$146 and $178 10,556 8,839
Accounts receivable, affiliates 5,379 9,775
Inventories 8,027 8,957
Other current assets (Note 4) 1,218 1,491
------- -------
25,978 31,165
------- -------
Property and Equipment, Net 3,560 4,755
------- -------
Notes Receivable, Due From Affiliates
(Note 5) 5,602 3,350
------- -------
Intangible Assets 27,759 26,604
------- -------
$62,899 $65,874
======= =======
Liabilities and Shareholder's Investment
Current Liabilities:
Accounts payable $ 2,197 $ 2,001
Accounts payable, affiliates 9,066 13,314
Accrued payroll and employee benefits 2,237 1,546
Accrued warranty expenses 201 509
Income taxes payable 864 56
Accrued interest expense 502 11
Other accrued expenses 342 747
------- -------
15,409 18,184
------- -------
Deferred Income Taxes (Note 4) 103 233
------- -------
Long-term Notes Payable, Due to Affiliates
(Note 5) 44,580 44,580
------- -------
Commitments (Notes 3 and 5)
Shareholder's Investment:
Common stock NESLAB Instruments, Inc.,
no par value, 300 shares authorized,
100 shares issued and outstanding 1,000 1,000
Common stock NESLAB Instruments
Europa B.V., 400 shares issued and
outstanding 20 20
Retained earnings 1,703 1,769
Cumulative translation adjustment 84 88
------- -------
2,807 2,877
------- -------
$62,899 $65,874
======= =======
The accompanying notes are an integral part of these combined financial
statements.
3PAGE
<PAGE>
NESLAB Instruments, INC. and NESLAB Instruments Europa B.V.
Combined Statement of Income
(In thousands)
For the Year Ended
December 31,
-------------------------------
1994 1995 1996
-----------------------------------------------------------------------
Revenues (Notes 5 and 6) $37,238 $55,451 $61,032
------- ------- -------
Costs and Operating Expenses:
Cost of revenues (Note 5) 21,682 35,249 41,657
Selling, general, and
administrative expenses (Note 5) 10,128 11,252 12,018
Research and development expenses 2,118 3,003 4,151
------- ------- -------
33,928 49,504 57,826
------- ------- -------
Operating Income 3,310 5,947 3,206
Interest Income 298 317 311
Interest Expense, Related Party (2,801) (2,968) (2,871)
------- ------- -------
Income Before Provision for
Income Taxes 807 3,296 646
Provision for Income Taxes (Note 4) 637 1,663 580
------- ------- -------
Net Income $ 170 $ 1,633 $ 66
======= ======= =======
The accompanying notes are an integral part of these combined financial
statements.
4PAGE
<PAGE>
NESLAB Instruments, INC. and NESLAB Instruments Europa B.V.
Combined Statement of Cash Flows
(In thousands)
For the Year Ended
December 31,
----------------------------
1994 1995 1996
---------------------------------------------------------------------
Operating Activities:
Net Income $ 170 $ 1,633 $ 66
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 690 809 887
Amortization 2,822 1,989 1,155
Provision for losses on accounts
receivable 1 36 62
Deferred income tax expense 75 28 130
Provision for warranty costs - - 325
Provision for inventory
obsolescence 50 - 200
Loss on sale of property and
equipment - - 5
Changes in current accounts:
Accounts receivable (1,143) (4,387) 1,655
Accounts receivable, affiliates (2,241) (617) (4,396)
Inventories (1,382) (2,351) (1,130)
Other assets (149) (816) (274)
Accounts payable 159 516 (196)
Accounts payable, affiliates 1,160 2,146 4,248
Other current liabilities 719 1,467 (1,601)
------- ------- -------
Net cash provided by operating
activities 931 453 1,136
------- ------- -------
Investing Activities:
Purchases of property and equipment (1,022) (1,973) (2,113)
Disposals of property and equipment - - 26
------- ------- -------
Net cash used in investing activities (1,022) (1,973) (2,087)
------- ------- -------
Financing Activities:
Notes payable, affiliates - 3,000 -
Notes receivable, affiliates (258) (1,654) 2,252
------- ------- -------
Net cash provided by (used in)
financing activities (258) 1,346 2,252
------- ------- -------
Effect of exchange rate changes on
cash 23 11 4
------- ------- -------
Increase (Decrease) in Cash (326) (163) 1,305
Cash at Beginning of Year 1,287 961 798
------- ------- -------
Cash at End of Year $ 961 $ 798 $2,103
======= ======= =======
Cash Paid For:
Interest $ 2,655 $ 2,632 $ 3,414
Income taxes $ 174 $ 1,230 $ 1,442
Noncash Investing Activity:
Transfer of property and equipment
to affiliate $ 240 $ - $ -
Issuance of note receivable from
affiliate for transferred
property and equipment $ (240) $ - $ -
The accompanying notes are an integral part of these combined financial
statements.
5PAGE
<PAGE>
NESLAB Instruments, INC. and NESLAB Instruments Europa B.V.
Combined Statement of Shareholder's Investment
(In thousands)
For the Year Ended
December 31,
-------------------------------
1994 1995 1996
-----------------------------------------------------------------------
Common Stock NESLAB Instruments, Inc. $ 1,000 $ 1,000 $ 1,000
------- ------- -------
Common Stock NESLAB Instruments
Europa B.V. 20 20 20
------- ------- -------
Retained Earnings
Balance at beginning of year (100) 70 1,703
Net income 170 1,633 66
------- ------- -------
Balance at end of year 70 1,703 1,769
------- ------- -------
Cumulative Translation Adjustment
Balance at beginning of year 50 73 84
Translation adjustment 23 11 4
------- ------- -------
Balance at end of year 73 84 88
------- ------- -------
Total Shareholder's Investment $ 1,163 $ 2,807 $ 2,877
======= ======= =======
The accompanying notes are an integral part of these combined financial
statements.
6PAGE
<PAGE>
NESLAB Instruments, INC. and NESLAB Instruments Europa B.V.
Notes to Combined Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
The accompanying combined financial statements include the accounts
of NESLAB Instruments, Inc. and NESLAB Instruments Europa B.V. (the
NESLAB businesses). NESLAB Instruments, Inc. manufactures and markets
precision temperature control liquid systems for analytical, laboratory,
industrial research and development, laser, and semiconductor
applications. NESLAB Instruments Europa B.V. markets and distributes the
Company's products in Europe.
The NESLAB businesses were wholly owned subsidiaries of Life
Sciences International, PLC (Life Sciences) through March 12, 1997 (Note
7).
Principles of Combination
The accompanying combined financial statements include the accounts
of the NESLAB businesses. All material intercompany accounts and
transactions have been eliminated.
Revenue Recognition
The NESLAB businesses recognize product revenue upon shipment. The
NESLAB businesses maintain a reserve for the estimate of warranty costs.
Income Taxes
The NESLAB businesses' operations are included in groups that file
consolidated or combined income tax returns with other Life Sciences
operations. Life Sciences' intercompany tax allocation policy has been
based on the income taxes calculated on a separate return basis for each
subsidiary.
In accordance with Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes," the NESLAB businesses
recognize deferred income taxes based upon 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 on the tax returns.
Inventories
Inventories are stated at the lower of cost (on a first-in,
first-out basis) or market value and includes materials, labor, and
manufacturing overhead. The components of inventories are as follows:
(In thousands) 1995 1996
-------------------------------------------------------------------
Raw materials and supplies $4,958 $4,440
Work in process 1,367 1,710
Finished goods 1,702 2,807
------ ------
$8,027 $8,957
====== ======
7PAGE
<PAGE>
NESLAB Instruments, INC. and NESLAB Instruments Europa B.V.
Notes to Combined Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Property and Equipment
The costs of additions and improvements are capitalized, while
maintenance and repairs are charged to expense as incurred. Effective
January 1, 1995, the NESLAB businesses changed the estimated useful lives
of property and equipment as follows: machinery and equipment increased
from 5 to 10 years, computer equipment decreased from 5 to 3 years, and
leasehold improvements increased from 10 to 40 years, or the life of the
asset, if shorter. The effect of the change was a reduction in
depreciation expense of $176,000 in 1995. The NESLAB businesses provide
for depreciation using the straight-line method over the estimated useful
lives of the property as follows: machinery and equipment, 5 to 10 years;
leasehold improvements, 40 years; and furniture and fixtures, 3 to 5
years. Property and equipment consist of the following:
(In thousands) 1995 1996
--------------------------------------------------------------------
Machinery and equipment $4,033 $5,408
Furniture and fixtures 2,605 3,070
Leasehold improvements 661 884
------ ------
7,299 9,362
Less: Accumulated depreciation 3,739 4,607
------ ------
$3,560 $4,755
====== ======
Intangible Assets
The excess of cost over the fair value of net assets of acquired
company represents the effect of push-down accounting whereby NESLAB
Instruments, Inc. recorded in its financial statements certain assets
associated with the purchase in 1991 of NESLAB Instruments, Inc. by Life
Sciences. These certain assets comprise the following:
(In thousands) 1995 1996
--------------------------------------------------------------------
Customer list $25,000 $25,000
Goodwill 7,959 7,959
------- -------
32,959 32,959
Less: Accumulated amortization 5,200 6,355
------- -------
$27,759 $26,604
======= =======
The customer list and goodwill are being amortized using the
straight-line method over 40 years and 15 years, respectively. The
customer list was valued based upon an independent appraisal at the time
of the acquisition in 1991. The NESLAB businesses assess the future
useful life of these assets whenever events or changes in circumstances
indicate that the current useful life has diminished. The NESLAB
8PAGE
<PAGE>
NESLAB Instruments, INC. and NESLAB Instruments Europa B.V.
Notes to Combined Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
businesses consider the future undiscounted cash flows for the acquired
businesses in assessing the recoverability of these assets. If impairment
occurs, any excess of carrying value over fair value is recorded as a
loss.
Foreign Currency
All assets and liabilities of NESLAB Instruments Europa B.V. 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 translation gains
and losses are included in the accompanying combined statement of income
and are not material for the three years presented.
Fair Value of Financial Instruments
The NESLAB businesses' financial instruments consist mainly of cash,
receivables, accounts payable, and accrued expenses. The carrying amounts
of the NESLAB businesses' cash, receivables, accounts payable, and
accrued expenses approximate their fair value due to the short-term
nature of these instruments.
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
and 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.
2. Employee Benefit Plans
Substantially all of NESLAB Instruments, Inc.'s full-time
employees are eligible to participate in a 401(k) savings plan sponsored
by NESLAB Instruments, Inc. Contributions to the 401(k) savings
plan are made by both the employee and NESLAB Instruments, Inc. NESLAB
Instruments, Inc.'s. contributions are based upon the level of employee
contributions. In connection with this plan, NESLAB Instruments, Inc.
contributed and charged to expense $307,000, $382,000, and $540,000 in
1994, 1995, and 1996, respectively.
3. Commitments
The NESLAB businesses lease office and operating facilities under
various operating lease arrangements. The accompanying combined statement
of income includes expenses from operating leases of $307,000, $335,000,
and $343,000 in 1994, 1995, and 1996, respectively. Future minimum lease
payments under noncancellable operating leases at December 31, 1996, are
$304,000 in 1997; $293,000 in 1998; $243,000 in 1999; $236,000 in 2000;
$182,000 in 2001; and $424,000 in 2002 and thereafter.
9PAGE
<PAGE>
NESLAB Instruments, INC. and NESLAB Instruments Europa B.V.
Notes to Combined Financial Statements
3. Commitments (continued)
The NESLAB businesses also have an operating lease arrangement with a
related party as discussed in Note 5.
4. Income Taxes
The components of income before provision for income taxes are as
follows:
(In thousands) 1994 1995 1996
-----------------------------------------------------------------------
Domestic $ 974 $3,265 $ 572
Foreign (167) 31 74
------ ------ ------
$ 807 $3,296 $ 646
====== ====== ======
The components of the provision for income taxes are as follows:
(In thousands) 1994 1995 1996
-----------------------------------------------------------------------
Current tax expense:
Federal $ 544 $1,559 $ 346
Foreign (58) 11 26
State 132 369 83
------ ------ ------
618 1,939 455
------ ------ ------
Deferred (prepaid) tax expense:
Federal 16 (223) 101
State 3 (53) 24
------ ------ ------
19 (276) 125
------ ------ ------
$ 637 $1,663 $ 580
====== ====== ======
The provision for income taxes differs from the provision calculated
by applying the statutory federal income tax rate of 35% to income before
provision for income taxes due to the following:
(In thousands) 1994 1995 1996
-----------------------------------------------------------------------
Income tax provision at
statutory rate $ 282 $1,154 $ 226
Increases resulting from:
State income taxes, net of
federal tax 87 205 70
Amortization of cost in excess of
net assets of acquired company 259 259 259
Nondeductible expenses 9 45 25
------ ------ ------
$ 637 $1,663 $ 580
====== ====== ======
10PAGE
<PAGE>
NESLAB Instruments, INC. and NESLAB Instruments Europa B.V.
Notes to Combined Financial Statements
4. Income Taxes (continued)
Prepaid income taxes and deferred income taxes in the accompanying
combined balance sheet consist of the following:
(In thousands) 1995 1996
--------------------------------------------------------------------
Depreciation $178 $371
Deferred compensation (75) (138)
---- ----
Total long-term deferred tax liability $103 $233
==== ====
Other reserves and accruals $254 $173
Inventory basis difference 38 130
Accrued compensation 96 116
Other, net (1) (26)
---- ----
Total current deferred tax asset $387 $393
==== ====
5. Related-party Transactions
Operating Leases
NESLAB Instruments, Inc. leases certain office and manufacturing
space from Shandon, Inc., a Life Sciences affiliated company, on an as-
needed basis. The accompanying combined statement of income includes
expenses from this operating lease of $445,000, $614,000, and $723,000 in
1994, 1995, and 1996, respectively.
Other Related-party Transactions
The NESLAB businesses purchase and sell products and services in the
ordinary course of business with other Life Sciences businesses. Sales of
products to such affiliated companies totaled $2,300,000, $4,092,000, and
$4,489,000 in 1994, 1995, and 1996, respectively. Purchases of products
and services from such affiliated companies totaled $509,000, $1,177,000,
and $4,304,000 in 1994, 1995, and 1996, respectively.
NESLAB Instruments, Inc. pays Life Sciences annual management fees
in return for certain administrative services, including risk management,
certain employee benefit administration, tax advice and preparation of
tax returns, and certain financial and other services. The accompanying
combined statement of income includes such management fees of $269,000,
$264,000, and $380,000 in 1994, 1995, and 1996, respectively.
11PAGE
<PAGE>
NESLAB Instruments, INC. and NESLAB Instruments Europa B.V.
Notes to Combined Financial Statements
5. Related-party Transactions (continued)
Notes Receivable and Payable
The accompanying combined balance sheet includes notes receivable
from and notes payable to Life Sciences affiliated companies as follows:
(In thousands) 1995 1996
--------------------------------------------------------------------
Notes Receivable:
Shandon Inc. $ 4,200 $ 2,000
LSI North America Services, Inc. 1,402 1,350
------- -------
$ 5,602 $ 3,350
======= =======
Notes Payable:
Life Sciences International, PLC $39,000 $39,000
International Equipment Corp. (IEC) 3,952 3,952
Forma Scientific, Inc. (Forma) 1,628 1,628
------- -------
$44,580 $44,580
======= =======
The Life Sciences International, PLC note payable resulted from the
1991 acquisition of NESLAB Instruments, Inc. by Life Sciences. Interest
on this note accrues at rates which vary with LIBOR, and averaged 6.5%
and 6.7% in 1995 and 1996, respectively. The note receivable from Shandon
Inc. and notes payable to IEC and Forma bear interest at a rate set
annually, and were 6.5% and 7.0% for 1995 and 1996, respectively. The
note receivable for LSI North America Service, Inc. is noninterest
bearing.
6. Significant Customer, Geographical Information, and Export Sales
The Company is involved in one business segment: manufacturing and
marketing precision temperature control liquid systems for analytical,
laboratory, industrial research and development, laser, and semiconductor
applications. Sales to one customer accounted for 11%, 15%, and 14% of
revenues in 1994, 1995, and 1996, respectively. The Company's revenues
are principally United States sourced. Export revenues included in United
States-sourced revenues are:
(In thousands) 1994 1995 1996
------------------------------------------------------------------------
Europe $ 3,681 $ 5,860 $ 8,190
Far East and Australia 2,883 5,360 7,378
Other 1,454 1,890 1,166
------- ------- -------
$ 8,018 $13,110 $16,734
======= ======= =======
12PAGE
<PAGE>
NESLAB Instruments, INC. and NESLAB Instruments Europa B.V.
Notes to Combined Financial Statements
7. Subsequent Event
On March 12, 1997, Life Sciences was acquired by Thermo Instrument
Systems Inc. (Thermo Instrument). Pursuant to an agreement executed on
July 30, 1997, ThermoSpectra Corporation, a majority-owned subsidiary of
Thermo Instrument, agreed to acquire the NESLAB businesses from Thermo
Instrument for shares of ThermoSpectra common stock valued at $32.6
million and the assumption of approximately $44.2 million of amounts
owed to affiliates.
13PAGE
<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
statement sets forth the results of operations for the year ended
December 28, 1996, as if the acquisition of NESLAB by the Company had
occurred at the beginning of 1996 and assuming there are no post-closing
purchase price adjustments.
Because the Company and NESLAB were deemed for accounting purposes
to be under control of their common majority owner, Thermo Instrument,
the transaction has been accounted for in a manner similar to a pooling
of interests. Accordingly, the Company's financial statements (including
the financial statements included as part of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 28, 1997) include the
results of NESLAB from March 12, 1997, the date NESLAB was acquired by
Thermo Instrument, and the shares issuable subject to listing on the
Exchange have been deemed outstanding from that date. As a result, pro
forma information has not been provided as of and for the six months
ended June 28, 1997.
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 NESLAB been consummated at the beginning of 1996. The
financial statements of NESLAB filed under part (a) of this item should
be read in conjunction with these pro forma combined condensed financial
statements.
4PAGE
<PAGE>
FORM 8-K/A
THERMOSPECTRA CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
Year Ended December 28, 1996
Historical Pro Forma
------------------------ ----------------------
ThermoSpectra NESLAB Adjustments Combined
------------- -------- ----------- --------
(In thousands except per share amounts)
Revenues $123,199 $ 61,032 $ - $184,231
-------- -------- -------- --------
Costs and Operating
Expenses:
Cost of revenues 62,900 41,657 449 105,006
Selling, general, and
administrative
expenses 36,493 12,018 575 49,086
Research and
development expenses 12,910 4,151 - 17,061
Other nonrecurring
expense, net 171 - - 171
-------- -------- -------- --------
112,474 57,826 1,024 171,324
-------- -------- -------- --------
Operating Income 10,725 3,206 (1,024) 12,907
Interest Income 935 311 - 1,246
Interest Expense,
Related Party (773) (2,871) - (3,644)
-------- -------- -------- --------
Income Before Provision
for Income Taxes 10,887 646 (1,024) 10,509
Provision for Income
Taxes 4,270 580 (265) 4,585
-------- -------- -------- --------
Net Income $ 6,617 $ 66 $ (759) $ 5,924
======== ======== ======== ========
Earnings per Share $ .53 $ .39
======== ========
Weighted Average Shares 12,437 2,870 15,307
======== ======== ========
See notes to pro forma combined condensed financial statements.
5PAGE
<PAGE>
FORM 8-K/A
THERMOSPECTRA CORPORATION
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(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
December 28,
1996
------------
Debit (Credit)
Cost of Revenues
Increase in the work-in-process and finished
goods inventory of NESLAB to the estimated
selling price, less the sum of the costs of
disposal and a reasonable profit allowance for
the Company's manufacturing and
selling efforts $ 449
-------
Selling, General, and
Administrative Expenses
Reversal of service fee charged to NESLAB
by LSI in 1996 (380)
Service fee of 1.0% of the revenues of NESLAB for
the year ended December 28, 1996, for services
provided under a services agreement between the
Company and Thermo Electron Corporation 610
Amortization over 40 years of $59,181,000 of cost
in excess of net assets of acquired companies
created by the acquisition of NESLAB 1,480
Reversal of amortization recorded in the
historical financial statements of NESLAB (1,135)
-------
$ 575
-------
6PAGE
<PAGE>
FORM 8-K/A
THERMOSPECTRA CORPORATION
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 2 - Pro Forma Adjustments to Pro Forma Combined Condensed
Statement of Income (In thousands, except in text)
(continued)
Year Ended
December 28,
1996
------------
Debit (Credit)
Provision for Income Taxes
Income tax benefit associated with the adjustments
above (excluding the amortization of cost in
excess of net assets of acquired companies),
calculated at NESLAB's statutory rate of 39% $ (265)
-------
Weighted Average Shares
Increase in weighted average shares outstanding
due to the assumed issuance of 2,869,717 shares
of the Company's common stock related to the
acquisition of NESLAB
7PAGE
<PAGE>
FORM 8-K/A
THERMOSPECTRA CORPORATION
Item 7. Financial Statements, Pro Forma Combined Condensed Financial
Information and Exhibits
(c) Exhibits
23 Consent of KPMG Peat Marwick LLP
8PAGE
<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 14th day of October
1997.
THERMOSPECTRA CORPORATION
Paul F. Kelleher
-------------------------
Paul F. Kelleher
Chief Accounting Officer
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement (No. 33-99110) on Form S-3 and registration statements (No.
33-80759 and No. 333-24649) on Form S-8 of ThermoSpectra Corporation of
our report dated February 4, 1997, except as to Note 7, which is as of
July 30, 1997, with respect to the combined balance sheet of NESLAB
Instruments, Inc. and NESLAB Instruments Europa B.V. as of December 31,
1996 and 1995, and the related combined statements of income,
shareholder's investment, and cash flows for each of the years in the
three-year period ended December 31, 1996, which report appears in the
Form 8-K of ThermoSpectra Corporation dated October 14, 1997.
KPMG Peat Marwick LLP
Boston, Massachusetts
October 14, 1997
