SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------------------------
AMENDMENT NO. 1 ON FORM 10-Q/A
(mark one)
[ X ]Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarter Ended March 30, 1996.
[ ]Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number 1-8002
THERMO ELECTRON CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 04-2209186
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02254-9046
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 622-1000
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date.
Class Outstanding at April 26, 1996
----------------------------- -----------------------------
Common Stock, $1.00 par value 93,061,153
PAGE
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMO ELECTRON CORPORATION
Consolidated Balance Sheet
(Unaudited)
Assets
March 30, December 30,
(In thousands) 1996 1995
------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 774,805 $ 462,861
Short-term available-for-sale
investments, at quoted market value
(amortized cost of $671,161 and $588,471) 675,752 593,802
Accounts receivable, less allowances
of $29,769 and $29,318 602,708 493,313
Unbilled contract costs and fees 69,580 74,941
Inventories:
Raw materials and supplies 221,880 175,346
Work in process 98,175 72,768
Finished goods 117,314 84,672
Prepaid income taxes 89,053 75,685
Prepaid expenses 48,626 23,204
---------- ----------
2,697,893 2,056,592
---------- ----------
Property, Plant and Equipment, at Cost 1,062,938 977,816
Less: Accumulated depreciation and
amortization 276,666 262,228
---------- ----------
786,272 715,588
---------- ----------
Long-term Available-for-sale
Investments, at Quoted Market Value
(amortized cost of $56,932 and $60,780) 59,498 61,845
---------- ----------
Long-term Held-to-maturity Investments
(quoted market value of $24,963 and $24,942) 24,251 23,819
---------- ----------
Other Assets 111,543 101,138
---------- ----------
Cost in Excess of Net Assets of
Acquired Companies (Note 5) 995,590 827,357
---------- ----------
$4,675,047 $3,786,339
========== ==========
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THERMO ELECTRON CORPORATION
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
March 30, December 30,
(In thousands except share amounts) 1996 1995
-----------------------------------------------------------------------
Current Liabilities:
Notes payable and current maturities of
long-term obligations $ 172,660 $ 112,280
Accounts payable 193,380 172,823
Accrued payroll and employee benefits 101,146 93,930
Accrued income taxes 54,429 52,055
Accrued installation and warranty costs 57,131 41,548
Accrued acquisition expenses (Note 5) 94,170 32,557
Other accrued expenses 305,049 234,253
---------- ----------
977,965 739,446
---------- ----------
Deferred Income Taxes and Other Deferred Items 132,071 129,926
---------- ----------
Long-term Obligations:
Senior convertible obligations 383,122 458,925
Subordinated convertible obligations (Note 4) 944,946 343,076
Tax-exempt obligations 127,639 128,567
Nonrecourse tax-exempt obligations 78,700 94,700
Other 83,240 92,809
---------- ----------
1,617,647 1,118,077
---------- ----------
Minority Interest 513,948 471,648
---------- ----------
Common Stock of Subsidiary Subject to
Redemption ($18,450 redemption value) 17,591 17,513
---------- ----------
Shareholders' Investment (Note 6):
Preferred stock, $100 par value,
50,000 shares authorized; none issued
Common stock, $1 par value, 175,000,000
shares authorized; 91,858,778 and
89,006,032 shares issued 91,859 89,006
Capital in excess of par value 682,753 614,363
Retained earnings 645,519 604,496
Treasury stock at cost, 55,861 and
11,574 shares (3,321) (536)
Cumulative translation adjustment (3,307) 608
Deferred compensation (2,185) (2,271)
Net unrealized gain on available-
for-sale investments 4,507 4,063
---------- ----------
1,415,825 1,309,729
---------- ----------
$4,675,047 $3,786,339
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO ELECTRON CORPORATION
Consolidated Statement of Income
(Unaudited)
Three Months Ended
----------------------
March 30, April 1,
(In thousands except per share amounts) 1996 1995
-----------------------------------------------------------------------
Revenues:
Product revenues $550,678 $402,654
Service revenues 59,214 43,908
Research and development contract revenues 42,493 46,612
-------- --------
652,385 493,174
-------- --------
Costs and Expenses:
Cost of products 329,340 235,009
Cost of services 42,805 30,571
Expenses for research and development and
new lines of business (a) 68,322 64,046
Selling, general and administrative expenses 155,135 115,705
Write-off of acquired technology (Note 5) 3,500 -
Restructuring and other nonrecurring costs - 1,522
-------- --------
599,102 446,853
-------- --------
Operating Income 53,283 46,321
Gain on Issuance of Stock by Subsidiaries (Note 2) 28,892 12,883
Other Expense, Net (Note 3) (5,915) (3,553)
-------- --------
Income Before Income Taxes and Minority Interest 76,260 55,651
Provision for Income Taxes 22,676 18,563
Minority Interest Expense 12,561 7,404
-------- --------
Net Income $ 41,023 $ 29,684
======== ========
Earnings per Share:
Primary $ .31 $ .24
======== ========
Fully diluted $ .27 $ .22
======== ========
Weighted Average Shares:
Primary 133,635 122,016
======== ========
Fully diluted 175,464 157,796
======== ========
(a) Includes costs of:
Research and development contracts $ 35,858 $ 40,803
Internally funded research and development 31,908 22,435
Other expenses for new lines of business 556 808
-------- --------
$ 68,322 $ 64,046
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO ELECTRON CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
----------------------
March 30, April 1,
(In thousands) 1996 1995
-----------------------------------------------------------------------
Operating Activities:
Net cash provided by operating activities $ 41,984 $ 3,521
--------- ---------
Investing Activities:
Acquisitions, net of cash acquired (Note 5) (265,203) (49,467)
Purchases of available-for-sale investments (278,094) (104,765)
Purchases of long-term held-to-maturity
investments - (22,300)
Proceeds from sale and maturities of
available-for-sale investments 199,963 207,146
Purchases of property, plant and equipment (24,728) (13,116)
Proceeds from sale of property, plant and
equipment 1,183 1,225
Other (999) (660)
--------- ---------
Net cash provided by (used in) investing
activities (367,878) 18,063
--------- ---------
Financing Activities:
Net proceeds from issuance of long-term
obligations (Note 4) 609,049 313
Repayment and repurchase of long-term
obligations (3,487) (6,931)
Proceeds from issuance of Company and
subsidiary common stock (Note 2) 44,676 51,272
Purchases of subsidiary common stock (12,789) (44,257)
Increase (decrease) in short-term notes
payable (625) 345
Other 713 (521)
--------- ---------
Net cash provided by financing activities 637,537 221
--------- ---------
Exchange Rate Effect on Cash 301 1,775
--------- ---------
Increase in Cash and Cash Equivalents 311,944 23,580
Cash and Cash Equivalents at Beginning of Period 462,861 383,005
--------- ---------
Cash and Cash Equivalents at End of Period $ 774,805 $ 406,585
========= =========
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THERMO ELECTRON CORPORATION
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Three Months Ended
----------------------
March 30, April 1,
(In thousands) 1996 1995
-----------------------------------------------------------------------
Supplemental Cash Flow Information:
Provision for losses on accounts receivable $ 318 $ 1,627
========= =========
Noncash activities:
Conversions of Company and subsidiaries'
convertible obligations $ 95,933 $ 41,115
========= =========
Fair value of assets of acquired companies $ 523,392 $ 106,579
Cash paid for acquired companies (278,789) (51,899)
Issuance of Company and subsidiaries'
common stock and stock options for
acquired companies - (7,780)
Issuance of long-term obligations for
acquired company - (22,300)
--------- ---------
Liabilities assumed of acquired companies $ 244,603 $ 24,600
========= =========
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO ELECTRON CORPORATION
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been
prepared by Thermo Electron 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 March 30, 1996, the results of operations for the three-month periods
ended March 30, 1996 and April 1, 1995, and the cash flows for the
three-month periods ended March 30, 1996 and April 1, 1995, as restated
to reflect the acquisition of SensorMedics Corporation (SensorMedics),
which has been accounted for under the pooling-of-interests method
(Note 6). Interim results are not necessarily indicative of results for a
full year.
The consolidated balance sheet presented as of December 30, 1995,
has been restated to reflect the acquisition of SensorMedics (Note 6).
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. Issuance of Stock by Subsidiaries
Gain on issuance of stock by subsidiaries in the accompanying
statement of income for the three-month period ended March 30, 1996,
resulted primarily from the following:
Initial public offering of 3,000,000 shares of ThermoQuest
Corporation common stock in March 1996 at $15.00 per share
for net proceeds of $41.6 million resulted in a gain of
$24.4 million that was recorded by the Company's Thermo
Instrument Systems Inc. subsidiary.
Private placement of 300,000 shares of Thermedics Detection
Inc. common stock in March 1996 at $10.00 per share for net
proceeds of $3.0 million resulted in a gain of $2.5 million
that was recorded by the Company's Thermedics Inc.
subsidiary.
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THERMO ELECTRON CORPORATION
3. Other Expense, Net
The components of other expense, net, in the accompanying statement
of income are as follows:
Three Months Ended
--------------------
March 30, April 1,
(In thousands) 1996 1995
----------------------------------------------------------------------
Interest income $ 21,988 $ 14,514
Interest expense (27,636) (18,624)
Equity in income (loss) of unconsolidated
subsidiaries (341) 5
Gain on sale of investments 270 -
Other expense, net (196) 552
-------- --------
$ (5,915) $ (3,553)
======== ========
4. Debenture Offering
In January 1996, the Company issued and sold $585 million principal
amount of 4 1/4% subordinated convertible debentures due 2003. The
debentures are convertible into shares of the Company's common stock at a
price of $37.80 per share.
5. Acquisitions
On March 29, 1996, the Company's Thermo Instrument subsidiary
completed the acquisition of a substantial portion of the businesses
comprising the Scientific Instruments Division of Fisons plc (Fisons), a
wholly owned subsidiary of Rhone-Poulenc Rorer Inc., for approximately
123 million British pounds sterling in cash (approximately $187 million)
and the assumption of approximately 24 million British pounds sterling of
indebtedness (approximately $36 million). The purchase price is subject
to post-closing adjustments equal to the amounts by which the net
tangible assets and net debt of the acquired businesses on the closing
date are greater or less than certain target amounts agreed to by the
parties. Thermo Instrument and Fisons are attempting to agree on the
required adjustment to the purchase price. Thermo Instrument is seeking a
reduction in the purchase price based on its calculation of the net
tangible assets of the acquired businesses. If the parties are unable to
reach agreement, a firm of independent public accountants will be
appointed to determine the adjustment. Although there can be no assurance
that Thermo Instrument will receive a reduction in the purchase price
from Fisons, any such adjustment would affect the purchase price
allocation, including the amount allocated to cost in excess of net
assets acquired. In the first quarter of 1996, Thermo Instrument wrote
off $3.5 million of acquired technology in connection with this
acquisition. The businesses acquired are involved in the research,
development, manufacture, and sale of analytical instruments to
industrial and research laboratories worldwide. During the first quarter
of 1996, the Company's majority-owned subsidiaries made several other
acquisitions for $88.9 million in cash subject to post-closing
adjustments.
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THERMO ELECTRON CORPORATION
5. Acquisitions (continued)
These acquisitions have been accounted for using the purchase method
of accounting and the results of their operations have been included in
the accompanying financial statements from their respective dates of
acquisition. The cost of the acquisitions exceeded the estimated fair
value of the acquired net assets by $179.6 million, which is being
amortized principally over 40 years. Allocation of the purchase price for
these acquisitions was based on estimates of the fair value of the net
assets acquired and is subject to adjustment upon finalization of the
purchase price allocation. Pro forma data is not presented since the
acquisitions were not material to the Company's results of operations.
In connection with the acquisition of certain businesses comprising
the Scientific Instruments Division of Fisons, Thermo Instrument has
undertaken a restructuring of the acquired businesses. In accordance with
the requirements of Emerging Issues Task Force Pronouncement 95-3 (EITF
95-3), Thermo Instrument is in the process of developing a plan that is
expected to include reductions in staffing levels, abandonment of excess
facilities and possible other costs associated with exiting certain
activities of the acquired businesses. As part of the cost of the
acquisition, Thermo Instrument established reserves totaling $34 million
for estimated severance, excess facilities, and other exit costs
associated with the acquisition, none of which was expended during the
first quarter of 1996. Having completed the acquisition on March 29,
1996, unresolved issues existing at March 30, 1996 included identifying
specific employees for termination and locations to be abandoned or
consolidated, among other decisions concerning the integration of the
acquired businesses into Thermo Instrument. In accordance with EITF 95-3,
finalization of Thermo Instrument's plan for restructuring the acquired
businesses will not occur beyond one year from the date of the
acquisition. Any changes in estimates of these costs prior to such
finalization will be recorded as adjustments to cost in excess of net
assets of acquired companies.
6. Subsequent Events
Stock Split
In March 1996, the Company declared a three-for-two stock split in
the form of a 50% stock dividend, payable on June 5, 1996, to
shareholders of record as of May 22, 1996. All share and per share
information, except for share information in the accompanying balance
sheet, has been restated to reflect the stock split.
Acquisition
In June 1996, the Company acquired SensorMedics in exchange for
1,133,191 shares of Company common stock, in addition to 156,590 shares
reserved for issuance upon exercise of stock options and warrants.
SensorMedics provides systems for pulmonary function and sleep disorder
diagnosis, as well as high-frequency ventilation for pediatric and
neonatal care. SensorMedics also manufactures and markets respiratory gas
analyzers, physiological testing equipment and recorders, and pulse
9PAGE
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THERMO ELECTRON CORPORATION
6. Subsequent Events (continued)
oximeters. The acquisition has been accounted for under the
pooling-of-interests method. Historical information for 1995 and 1996 has
been restated to include the results of SensorMedics.
Revenues and net income as previously reported by the separate
entities prior to the acquisition and as restated for the combined
Company, are as follows:
Three Months Ended
----------------------
March 30, April 1,
(In thousands) 1996 1995
---------------------------------------------------------------------
Revenues:
Previously reported $635,094 $478,545
SensorMedics 17,291 14,629
-------- --------
$652,385 $493,174
======== ========
Net Income:
Previously reported $ 40,442 $ 29,548
SensorMedics 581 136
-------- --------
$ 41,023 $ 29,684
======== ========
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
First Quarter 1996 Compared With First Quarter 1995
Sales for the first quarter of 1996 were a record $652.4 million, an
increase of $159.2 million, or 32%, over the first quarter of 1995.
Segment income was $60.4 million, compared with $53.3 million in 1995, an
increase of 14%. (Segment income is income before corporate general and
administrative expenses, other income and expense, minority interest
expense, and income taxes.) Operating income was $53.1 million, compared
with $46.3 million in 1995, an increase of 15%. Financial results for
1995 and 1996 have been restated to include SensorMedics Corporation,
which was acquired in a pooling-of-interests transaction in June 1996
(Note 6).
Sales from the Instruments segment were $225.6 million in 1996, an
increase of $52.6 million, or 30%, over 1995. Sales increased primarily
due to acquisitions made by Thermo Instrument Systems Inc., which added
$40 million to sales in 1996. The remaining increase resulted from higher
revenues from existing businesses, primarily due to greater demand for
the Company's analytical instruments, offset in part by the unfavorable
effects of currency translation due to the strengthening of the U.S.
10PAGE
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THERMO ELECTRON CORPORATION
First Quarter 1996 Compared With First Quarter 1995 (continued)
dollar in 1996. Segment income margin (segment income margin is segment
income as a percentage of sales) was 10.6% in 1996, compared with 14.4%
in 1995. Segment income margin declined due in part to a $3.5 million
purchase accounting write-off of acquired technology resulting from the
March 1996 acquisition of a substantial portion of the businesses
comprising the Scientific Instruments Division of Fisons plc, which was
acquired at the end of the first quarter of 1996, and due to lower
margins at acquired businesses. The acquisition of the businesses from
Fisons is expected to negatively impact segment income margins at Thermo
Instrument due to lower margins at these businesses.
Sales from the Alternative-energy Systems segment were $81.5 million
in 1996, an increase of $7.4 million, or 10%, over 1995. Within this
segment, revenues from Thermo Ecotek Corporation, which consist of
revenues from biomass power plant operations, were $33.5 million in 1996,
compared with $31.0 million in 1995. This increase results from higher
contractual energy rates at all of the Company's facilities, except the
Hemphill plant, as well as fewer days of scheduled and unscheduled
outages at the Delano plants in California, offset in part by higher
curtailment of power output at the Mendota and Woodland plants, also in
California. Continued curtailment of power output at these plants is
expected during the remainder of 1996. Revenues from the Company's
waste-recycling facility in southern California were $4.9 million in
1996, compared with $6.7 million in 1995. Although this facility ceased
processing waste and the Company wrote off its net investment in the
facility in 1995, the customer is continuing to pay a portion of its
obligation under the service agreement. The customer remains in default
on the service agreement and continues to pursue the purchase of the
facility from the Company. Sales at Peter Brotherhood Ltd. increased to
$13.4 million in 1996 from $11.5 million in 1995 as a result of increased
demand for steam turbines and, to a lesser extent, increased demand for
special-purpose machinery. Sales from Thermo Power Corporation were $29.8
million in 1996, compared with $24.9 million in 1995. This increase
resulted primarily from greater demand for gas-fueled cooling systems and
gasoline and natural gas TecoDrive engines and the inclusion of revenues
from lift-truck engines.
Segment income from the Alternative-energy Systems segment was $6.3
million in 1996, compared with $6.1 million in 1995. Thermo Ecotek had
segment income of $4.5 million in 1996, compared with $3.4 million in
1995. This improvement results from higher revenues and lower fuel and
other operating costs at two of Thermo Ecotek's California plants, offset
in part by higher expenses for new business development. Segment income
from the Company's waste-recycling facility was $2.3 million in 1996,
compared with $1.2 million in 1995. This change results from lower
depreciation expense as a result of the write-down of the Company's net
investment in 1995. Results for this facility, net of related interest
expense, were at a breakeven level for the first quarter of 1996. Peter
Brotherhood incurred a segment loss of $0.5 million in 1996, compared
with income of $0.2 million in 1995. This decline results from increased
costs to complete jobs in process and competitive pricing pressures.
Segment income at Thermo Power declined by $1.3 million due to lower
prices for industrial refrigeration products resulting from competitive
11PAGE
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THERMO ELECTRON CORPORATION
First Quarter 1996 Compared With First Quarter 1995 (continued)
pricing pressures, lower manufacturing efficiencies, including lost
production time during severe winter storms and, to a lesser extent,
higher warranty expenses. Thermo Power expects that a cost increase in
one of the major components of its industrial refrigeration packages will
adversely affect the gross profit margin contributed from this product
starting in the second quarter of 1996.
Sales in the Process Equipment segment were $93.3 million in 1996,
compared with $57.5 million in 1995. Sales from Thermo Fibertek Inc.
increased $5.2 million to $49.0 million in 1995. This increase results
primarily from an increase in demand for papermaking accessory products.
Sales of $35.0 million in 1996 and $4.5 million in 1995 were recorded by
a wholly owned subsidiary of the Company for construction of an office
wastepaper de-inking facility in Menominee, Michigan. This facility is
expected to be completed by the end of 1996. Sales of Thermo TerraTech
Inc.'s thermal-processing equipment increased $2.5 million from depressed
1995 levels, while sales from Napco's automated electroplating equipment
business declined $2.4 million. Segment income margin was 10.3% in 1996,
compared with 10.8% in 1995. This decline results primarily from lower
margins on sales recorded by the Company on the Michigan project due to a
higher proportion of pass-through costs.
Sales in the Biomedical Products segment were $103.0 million in
1996, an increase of $34.2 million, or 50%, over 1995, primarily due to
the inclusion of $26.1 million in sales from Bird Medical Technologies,
Inc. and Bennett X-Ray Corporation, which were acquired in the third
quarter of 1995, and increased demand for a number of the Company's
biomedical products. Sales of ThermoTrex Corporation's mammography and
needle-biopsy systems increased 17% to $22.4 million; sales of Thermo
Cardiosystems Inc.'s implantable left ventricular-assist system (LVAS)
increased 52% to $6.7 million; neurodiagnostic monitoring equipment sold
by the Company's wholly owned Nicolet Biomedical Inc. subsidiary
increased 8% to $14.2 million; sales of blood coagulation-monitoring
products and skin-incision devices sold by the Company's wholly owned
International Technidyne Corporation subsidiary increased 11% to $8.7
million; and sales of systems for pulmonary function and sleep disorder
diagnosis and high-frequency ventilation by the Company's wholly owned
SensorMedics subsidiary increased 18% to $17.3 million. Segment income
margin improved to 12.3% in 1996 from 10.2% in 1995 as a result of
increased sales and, to a lesser extent, price increases for Thermo
Cardiosystems' air-driven LVAS, and higher margins at SensorMedics due to
a new product introduced in the second quarter of 1995 as well as a
change in sales mix.
Sales in the Environmental Services segment were $59.2 million in
1996, an increase of $15.3 million, or 35%, over 1995, due to sales from
acquired businesses. Within this segment, sales from Thermo Remediation
Inc. were $23.0 million in 1996, compared with $13.5 million in 1995.
Thermo Remediation's revenues increased due to the inclusion of revenues
from acquired businesses, offset in part by lower revenues from
soil-remediation and fluids-recycling services resulting from competitive
pricing pressures and a decline in the volume of soil processed as a
result of ongoing regulatory uncertainties at two sites. Thermo
12PAGE
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THERMO ELECTRON CORPORATION
First Quarter 1996 Compared With First Quarter 1995 (continued)
Remediation's nuclear service sales also declined primarily due to a
decline in radiochemistry laboratory work, reflecting reduced spending at
the U.S. Department of Energy and increased competition. Sales of
metallurgical services declined $1.8 million due to the impact of closing
a small plant in 1995 and, to a lesser extent, competitive pricing
pressures. Segment income was $3.3 million in 1996, compared with $3.8
million in 1995. This decline primarily results from a loss of $2.0
million incurred at Thermo TerraTech's EuroTech operation. The loss at
EuroTech resulted from the settlement of several contract disputes, as
well as severe winter weather, which impacted all phases of EuroTech's
business.
Sales from the Advanced Technologies segment were $91.3 million in
1996, compared with $77.3 million in 1995. Sales increased $16.1 million
due to the inclusion of revenues from the former Orion laboratory
products division of Analytical Technology, Inc., which was acquired in
December 1995, and Moisture Systems Corporation and Rutter & Co., which
were acquired in January 1996. Sales at Thermo Voltek Corp. increased
$3.3 million due to an increase of $1.7 million in revenues at Comtest,
primarily due to increased demand and the introduction of new products.
Thermo Voltek's revenues also increased $1.1 million due to the
acquisition in March 1995 of Kalmus Engineering Inc. Sales of Thermedics
Detection Corporation's process-detection instruments to the beverage
industry declined $3.5 million to $2.9 million in 1996, primarily due to
lower demand from its principal customer, which has substantially
completed its deployment of these systems. Sales of Thermedics Inc.'s
EGIS explosives-detection systems increased $1.4 million to $2.9 million
as a result of an order received from the U.S. government to provide
Israel with counterterrorism support. Sales at Coleman Research
Corporation declined 10% to $35.9 million as a result of lower U.S.
government contract funding. Segment income margin declined to 5.1% in
1996 from 6.8% in 1995, primarily resulting from lower sales of
Thermedics Detection process-detection instruments to the beverage
industry and, to a lesser extent, increased expenses incurred by
ThermoLase to develop and commercialize its laser-based hair-removal
process.
The Company has adopted a strategy of spinning out certain of its
businesses into separate subsidiaries and having these subsidiaries sell
a minority interest to outside investors. The Company believes that this
strategy provides additional motivation and incentives for the management
of the subsidiary through the establishment of subsidiary-level stock
option incentive programs, as well as capital to support the subsidiary's
growth. As a result of the sale of stock by subsidiaries, the issuance of
stock by subsidiaries upon conversion of convertible debentures, and
similar transactions, the Company recorded gains of $28.9 million in 1996
and $12.9 million in 1995 (Note 2). Minority interest expense increased
to $12.6 million in 1996 from $7.4 million in 1995. Minority interest
expense includes $5.6 million in 1996 and $0.7 million in 1995 relating
to gains recorded by the Company's majority-owned subsidiaries as a
result of the sale of stock and the issuance of stock upon conversion of
indebtedness by their subsidiaries.
13PAGE
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THERMO ELECTRON CORPORATION
Liquidity and Capital Resources
Consolidated working capital was $1,719.9 million at March 30, 1996,
compared with $1,317.1 million at December 30, 1995. Included in working
capital were cash, cash equivalents, and short-term available-for-sale
investments of $1,450.6 million at March 30, 1996, compared with $1,056.7
million at December 30, 1995. In addition, at March 30, 1996, the Company
had $59.5 million of long-term available-for-sale investments and $24.3
million of long-term held-to-maturity investments, compared with $61.8
million of long-term available-for-sale investments and $23.8 million of
long-term held-to-maturity investments at December 30, 1995. Of the
$1,534.4 million of cash, cash equivalents, short- and long-term
available-for-sale investments, and long-term held-to-maturity
investments at March 29, 1996, $859.0 million was held by the Company's
majority-owned subsidiaries, and the remainder by the Company and its
wholly owned subsidiaries. Net proceeds from the issuance of Company and
subsidiary common stock totaled $44.7 million in the first three months
of 1996. In January 1996, the Company issued and sold $585 million
principal amount of 4 1/4% subordinated convertible debentures due 2003
(Note 4).
During the first three months of 1996, the Company expended $609.0
million for acquisitions and $24.7 million for purchases of property,
plant and equipment. The Company has agreements or letters of intent to
expend approximately $101 million on the acquisition of new businesses.
These transactions are subject to various conditions to closing, and
there can be no assurance that all of the transactions will be
consummated. In the remainder of 1996, the Company plans to make capital
expenditures of approximately $125 million.
During the first three months of 1996, the Company expended $12.8
million to purchase the common stock of certain of its subsidiaries. The
Company expects that these purchases will continue, although the amount
of purchases in a given reporting period may vary significantly.
PART II - OTHER INFORMATION
Item 6 - Exhibits
(a) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
14PAGE
<PAGE>
THERMO ELECTRON 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 5th day of September
1996.
THERMO ELECTRON CORPORATION
Paul F. Kelleher
-----------------------
Paul F. Kelleher
Vice President, Finance and
Administration
15PAGE
<PAGE>
THERMO ELECTRON CORPORATION
EXHIBIT INDEX
Exhibit
Number Document Description Page
-----------------------------------------------------------------------
2.1 Amended and Restated Asset and Stock Purchase
Agreement dated March 29, 1996 among the Registrant,
Thermo Instrument Systems Inc. and Fisons plc (filed
as Exhibit 2.1 to the Form 8-K of Thermo Instrument
Systems Inc. with respect to events occurring March
29, 1996 [File no. 1-9786] and incorporated herein by
reference).
11 Statement re: Computation of earnings per share.
27 Financial Data Schedule.
Exhibit 11
THERMO ELECTRON CORPORATION
Computation Of Earnings Per Share
Three Months Ended
----------------------------
March 30, April 1,
1996 1995
-----------------------------------------------------------------------
Computation of Fully Diluted Earnings per
Share:
Income:
Net income $ 41,023,000 $ 29,684,000
Add: Convertible debenture
interest, net of tax 6,836,000 4,304,000
------------ ------------
Income applicable to common stock
assuming full dilution (a) $ 47,859,000 $ 33,988,000
------------ ------------
Shares:
Weighted average shares outstanding 133,635,211 122,015,515
Add: Shares issuable from assumed
conversion of convertible
debentures 39,251,282 34,221,771
Shares issuable from assumed
exercise of options (as
determined by the application
of the treasury stock method) 2,577,058 1,559,007
------------ ------------
Weighted average shares outstanding,
as adjusted (b) 175,463,551 157,796,293
------------ ------------
Fully Diluted Earnings per Share (a) / (b) $ .27 $ .22
============ ============
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIL INFORMATION EXTRACTED FROM THERMO
ELECTRON CORPORATION'S QUARTERLY REPORT ON FORM 10-Q/A FOR THE QUARTER ENDED
MARCH 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> MAR-30-1996
<CASH> 774,805
<SECURITIES> 675,752
<RECEIVABLES> 632,477
<ALLOWANCES> 29,769
<INVENTORY> 437,369
<CURRENT-ASSETS> 2,697,893
<PP&E> 1,062,938
<DEPRECIATION> 276,666
<TOTAL-ASSETS> 4,675,047
<CURRENT-LIABILITIES> 977,965
<BONDS> 1,617,647
0
0
<COMMON> 91,859
<OTHER-SE> 1,323,966
<TOTAL-LIABILITY-AND-EQUITY> 4,675,047
<SALES> 550,678
<TOTAL-REVENUES> 652,385
<CGS> 329,340
<TOTAL-COSTS> 408,003<F1>
<OTHER-EXPENSES> 35,964<F2>
<LOSS-PROVISION> 318
<INTEREST-EXPENSE> 27,636
<INCOME-PRETAX> 76,260
<INCOME-TAX> 22,676
<INCOME-CONTINUING> 41,023
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,023
<EPS-PRIMARY> .31
<EPS-DILUTED> .27
<FN>
<F1>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COST OF
PRODUCTS", "COST OF SERVICES", AND "RESEARCH AND DEVELOPMENT CONTRACTS".
<F2>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COSTS
ASSOCIATED WITH DIVISIONAL AND PRODUCT RESTRUCTURING", "INTERNALLY FUNDED
RESEARCH AND DEVELOPMENT" AND "OTHER EXPENSES FOR NEW LINES OF BUSINESS".
</FN>
</TABLE>
