SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------------------------
FORM 10-Q
(mark one)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarter Ended September 30, 1995.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number 1-10574
THERMO VOLTEK CORP.
(Exact name of Registrant as specified in its charter)
Delaware 13-1946800
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
470 Wildwood Street, P.O. Box 2878
Woburn, Massachusetts 01888-1578
(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 October 27, 1995
---------------------------- --------------------------------
Common Stock, $.05 par value 4,870,369
PAGE
FORM 10-Q
September 30, 1995
THERMO VOLTEK CORP.
PART I - Financial Information
Item 1 - Financial Statements
(a) Consolidated Balance Sheet - Assets as of September 30, 1995 and
December 31, 1994 (In thousands) (Unaudited)
September 30, December 31,
1995 1994
------------- ------------
Current Assets:
Cash and cash equivalents $ 5,998 $ 8,955
Available-for-sale investments, at quoted
market value (amortized cost of $27,688
and $28,589) (includes $1,542 and $299 of
related party investments) 27,928 28,105
Accounts receivable, less allowances of $445
and $343 7,132 6,161
Unbilled contract costs and fees 754 273
Inventories:
Raw materials 3,118 1,996
Work in process 2,869 1,541
Finished goods 2,847 1,939
Prepaid income taxes 118 441
Other current assets 230 331
------- -------
50,994 49,742
------- -------
Property, Plant and Equipment, at Cost 6,834 5,689
Less: Accumulated depreciation and
amortization 4,290 3,583
------- -------
2,544 2,106
------- -------
Other Assets 784 980
------- -------
Cost in Excess of Net Assets of Acquired
Companies (Note 2) 12,576 9,396
------- -------
$66,898 $62,224
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
2PAGE
FORM 10-Q
September 30, 1995
THERMO VOLTEK CORP.
(a) Consolidated Balance Sheet - Liabilities and Shareholders' Equity as of
September 30, 1995 and December 31, 1994 (In thousands except share
amounts) (Unaudited)
September 30, December 31,
1995 1994
------------- ------------
Current Liabilities:
Notes payable $ 1,272 $ 781
Accounts payable 3,342 2,698
Accrued payroll and employee benefits 934 879
Accrued commissions 392 329
Customer deposits 935 489
Accrued and current deferred income taxes 739 270
Other accrued expenses 1,760 926
Due to parent company and Thermo
Electron Corporation 799 1,380
------- -------
10,173 7,752
------- -------
Subordinated Convertible Obligations,
Including $11,500 Due to Parent Company 40,205 46,000
------- -------
Shareholders' Equity:
Common stock, $.05 par value, 10,000,000
shares authorized; 4,575,635 and 4,038,445
shares issued 229 202
Capital in excess of par value 16,945 11,237
Accumulated deficit (1,095) (2,857)
Treasury stock at cost, 3,779 and 6,000 shares (33) (50)
Cumulative translation adjustment 330 260
Net unrealized gain (loss) on available-for-sale
investments 144 (320)
------- -------
16,520 8,472
------- -------
$66,898 $62,224
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
3PAGE
FORM 10-Q
September 30, 1995
THERMO VOLTEK CORP.
(b) Consolidated Statement of Income for the three months ended
September 30, 1995 and October 1, 1994 (In thousands except per share
amounts) (Unaudited)
Three Months Ended
---------------------------
September 30, October 1,
1995 1994
------------- ----------
Revenues $ 9,442 $ 5,789
------- -------
Costs and Operating Expenses:
Cost of revenues 4,783 2,794
Selling, general and administrative
expenses 3,136 2,122
Research and development expenses 626 326
------- -------
8,545 5,242
------- -------
Operating Income 897 547
Interest Income 514 464
Interest Expense (includes $176 for notes
to related party in 1995 and 1994) (509) (566)
------- -------
Income Before Provision for Income Taxes 902 445
Provision for Income Taxes 158 120
------- -------
Net Income $ 744 $ 325
======= =======
Earnings per Share:
Primary $ .16 $ .08
======= =======
Fully diluted $ .11 $ .07
======= =======
Weighted Average Shares:
Primary 4,574 4,007
======= =======
Fully diluted 9,036 8,917
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
4PAGE
FORM 10-Q
September 30, 1995
THERMO VOLTEK CORP.
(b) Consolidated Statement of Income for the nine months ended
September 30, 1995 and October 1, 1994 (In thousands except per
share amounts) (Unaudited)
Nine Months Ended
---------------------------
September 30, October 1,
1995 1994
------------- ----------
Revenues $25,304 $16,193
------- -------
Costs and Operating Expenses:
Cost of revenues 13,115 8,068
Selling, general and administrative
expenses 8,226 5,594
Research and development expenses 1,672 1,065
------- -------
23,013 14,727
------- -------
Operating Income 2,291 1,466
Interest Income 1,547 1,207
Interest Expense (includes $530 for notes
to related party in 1995 and 1994) (1,643) (1,656)
Other Income 14 -
------- -------
Income Before Provision for Income Taxes 2,209 1,017
Provision for Income Taxes 447 226
------- -------
Net Income $ 1,762 $ 791
======= =======
Earnings per Share:
Primary $ .42 $ .20
======= =======
Fully diluted $ .29 $ .19
======= =======
Weighted Average Shares:
Primary 4,190 3,986
======= =======
Fully diluted 9,022 8,907
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
5PAGE
FORM 10-Q
September 30, 1995
THERMO VOLTEK CORP.
(c) Consolidated Statement of Cash Flows for the nine months ended
September 30, 1995 and October 1, 1994 (In thousands) (Unaudited)
Nine Months Ended
---------------------------
September 30, October 1,
1995 1994
------------- ----------
Operating Activities:
Net income $ 1,762 $ 791
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,105 690
Provision for losses on accounts receivable 108 58
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable 101 (151)
Inventories and unbilled contract
costs and fees (2,914) 57
Other current assets 281 (35)
Accounts payable 325 1
Other current liabilities 183 989
Other (9) 16
-------- --------
Net cash provided by operating
activities 942 2,416
-------- --------
Investing Activities:
Acquisitions, net of cash acquired (Note 2) (4,127) (1,269)
Purchases of available-for-sale investments (7,500) (17,300)
Proceeds from sale and maturities of
available-for-sale investments 8,000 -
Purchases of property, plant and equipment (962) (683)
Other 495 (232)
-------- --------
Net cash used in investing
activities (4,094) (19,484)
-------- --------
Financing Activities:
Issuance of short-term obligations 415 551
Repurchase of long-term obligations (132) -
Net proceeds from issuance of Company
common stock 247 186
Repayment of note receivable - 48
Other - (145)
-------- --------
Net cash provided by financing
activities $ 530 $ 640
-------- --------
6PAGE
FORM 10-Q
September 30, 1995
THERMO VOLTEK CORP.
(c) Consolidated Statement of Cash Flows for the nine months ended
September 30, 1995 and October 1, 1994 (In thousands) (Unaudited)
(continued)
Nine Months Ended
---------------------------
September 30, October 1,
1995 1994
------------- ----------
Exchange Rate Effect on Cash $ (335) $ 72
-------- --------
Decrease in Cash and Cash Equivalents (2,957) (16,356)
Cash and Cash Equivalents at Beginning of Period 8,955 21,458
-------- --------
Cash and Cash Equivalents at End of Period $ 5,998 $ 5,102
======== ========
Cash Paid For:
Interest $ 1,210 $ 1,130
Income taxes $ 167 $ 103
Noncash Financing Activities:
Conversions of convertible obligations $ 5,646 $ -
The accompanying notes are an integral part of these consolidated financial
statements.
7PAGE
FORM 10-Q
September 30, 1995
THERMO VOLTEK CORP.
(d) Notes to Consolidated Financial Statements - September 30, 1995
1. General
The interim consolidated financial statements presented have been
prepared by Thermo Voltek Corp. (the Company) without audit and, in the
opinion of management, reflect all adjustments of a normal recurring nature
necessary for a fair statement of (a) the results of operations for the
three- and nine-month periods ended September 30, 1995 and October 1, 1994,
(b) the financial position at September 30, 1995, and (c) the cash flows
for the nine-month periods ended September 30, 1995 and October 1, 1994.
Interim results are not necessarily indicative of results for a full year.
The consolidated balance sheet presented as of December 31, 1994, 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 31, 1994, filed with the Securities and
Exchange Commission.
2. Acquisition
On March 1, 1995, the Company acquired substantially all of the
assets, subject to certain liabilities, of Kalmus Engineering Incorporated
and R. F. Power Labs, Incorporated (collectively, Kalmus) for $3.8 million
in cash. Kalmus is a manufacturer of radio frequency power amplifiers and
systems used to test products for immunity to radiated or conducted radio
frequency interference and for medical imaging and telecommunications
applications. The acquisition has been accounted for using the purchase
method of accounting, and Kalmus' results of operations have been included
in the accompanying financial statements from the date of acquisition. The
cost of this acquisition exceeded the estimated fair value of the acquired
net assets by $3.1 million, which is being amortized over 40 years.
Allocation of the purchase price for this acquisition was based on an
estimate of the fair value of the net assets acquired and is subject to
adjustment.
8PAGE
FORM 10-Q
September 30, 1995
THERMO VOLTEK CORP.
(d) Notes to Consolidated Financial Statements - September 30, 1995
(continued)
2. Acquisition (continued)
Based on unaudited data, the following table presents selected
financial information for the Company and Kalmus on a pro forma basis,
assuming the companies had been combined since the beginning of 1994.
Three Months Ended Nine Months Ended
------------------ ---------------------------
(In thousands except October 1, September 30, October 1,
per share amounts) 1994 1995 1994
--------------------------------------------------------------------------
Revenues $ 6,831 $26,029 $19,093
Net income 222 1,964 894
Earnings per share:
Primary .06 .47 .22
Fully diluted .06 .31 .20
The pro forma results are not necessarily indicative of future
operations or the actual results that would have occurred had the
acquisition of Kalmus been made at the beginning of 1994.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Description of Business
The Company designs, manufactures, and markets instruments that test
electronic and electrical systems and components for immunity to pulsed
electromagnetic interference (pulsed EMI) through its KeyTek Instrument
division (KeyTek), and designs, manufactures, and markets high-voltage
power-conversion systems, modulators, fast-response protection systems, and
related high-voltage equipment for industrial, medical, and environmental
processes, and for defense and scientific research applications, through
its Universal Voltronics division. Through its Comtest Instrumentation B.V.
and Comtest Limited subsidiaries (collectively, Comtest), the Company
provides electromagnetic compatibility (EMC) consulting and
systems-integration services, distributes a range of EMC-related products,
and manufactures and markets specialized power supplies for
telecommunications equipment. In July 1994, Comtest acquired Verifier
Systems Limited (Verifier), which manufactures a line of electrostatic
discharge test equipment that performs electrical stress tests for
semiconductor devices. In March 1995, the Company acquired Kalmus
Engineering Incorporated and R. F. Power Labs, Incorporated (collectively,
Kalmus), which manufacture radio frequency power amplifiers and systems
used to test products for immunity to radiated or conducted radio frequency
interference and for medical imaging and telecommunications applications.
9PAGE
FORM 10-Q
September 30, 1995
THERMO VOLTEK CORP.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Results of Operations
Third Quarter 1995 Compared With Third Quarter 1994
---------------------------------------------------
Revenues increased 63% to $9,442,000 in the third quarter of 1995 from
$5,789,000 in the third quarter of 1994, due primarily to an increase of
$1,741,000 in revenues from Comtest and, to a lesser extent, the inclusion
of $1,407,000 in revenues from Kalmus, which was acquired on March 1, 1995.
The increase in revenues at Comtest resulted primarily from the
introduction in 1995 of a new radio frequency interference immunity tester
product line and, to a lesser extent, the favorable effects of currency
translation due to a weaker U.S. dollar in 1995. The balance of the
increase in sales resulted from greater demand at KeyTek and, to a lesser
extent, Universal Voltronics.
The gross profit margin decreased to 49% in the third quarter of 1995
from 52% in the third quarter of 1994, due primarily to higher European
sales in one of KeyTek's product lines in 1995, which have lower margins
due to competitive pricing pressure. This decrease was offset in part by
improved margins on Verifier revenues.
Selling, general and administrative expenses as a percentage of
revenues decreased to 33% in the third quarter of 1995 from 37% in the
third quarter of 1994. The decrease is due primarily to lower costs as a
percentage of revenues at KeyTek and Universal Voltronics as a result of
higher sales volume in 1995, and lower selling, general and administrative
expenditures as a percentage of revenues at Kalmus. Research and
development expenses as a percentage of revenues increased to 6.6% in
1995 from 5.6% in 1994 due to higher research and development expenditures
as a percentage of revenues at Kalmus and Verifier.
Interest income increased to $514,000 in the third quarter of 1995
from $464,000 in the third quarter of 1994, due primarily to higher
prevailing interest rates in 1995. Interest expense decreased to $509,000
in 1995 from $566,000 in 1994 due to the conversion of $5,646,000 principal
amount of the Company's subordinated convertible obligations during 1995.
The effective tax rates in the third quarter of 1995 and 1994 were
below the statutory federal income tax rate due to the utilization of tax
net operating loss carryforwards.
10PAGE
FORM 10-Q
September 30, 1995
THERMO VOLTEK CORP.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
First Nine Months 1995 Compared With First Nine Months 1994
-----------------------------------------------------------
Revenues increased 56% to $25,304,000 in the first nine months of 1995
from $16,193,000 in the first nine months of 1994. The increase in revenues
is primarily the result of the inclusion of $3,051,000 in revenues from
Kalmus, an increase of $2,819,000 in revenues from Comtest, and an increase
of $1,408,000 in revenues due to the inclusion of revenues for the full
nine months of 1995 from Verifier, which was acquired in July 1994. The
increase in revenues from Comtest is due to the reasons discussed in the
results of operations for the third quarter. The balance of the increase in
sales resulted from greater demand at KeyTek and, to a lesser extent,
Universal Voltronics.
The gross profit margin decreased to 48% in the first nine months of
1995 from 50% in the first nine months of 1994, due primarily to higher
European sales in one of KeyTek's product lines in 1995, which have lower
margins due to competitive pricing pressure and, to a lesser extent, higher
costs associated with an upgraded product at KeyTek. These decreases were
offset in part by the inclusion of higher-margin Verifier revenues for the
full nine months of 1995.
Selling, general and administrative expenses as a percentage of
revenues decreased to 33% in the first nine months of 1995 from 35% in the
first nine months of 1994, due primarily to lower costs as a percentage of
revenues at KeyTek and Universal Voltronics as a result of higher sales
volume in 1995, and lower selling, general and administrative
expenditures as a percentage of revenues at Kalmus. Research and
development expenses as a percentage of revenues remained unchanged at 6.6%
in 1995 and 1994.
Interest income increased to $1,547,000 in the first nine months of
1995 from $1,207,000 in the first nine months of 1994, due primarily to
higher prevailing interest rates in 1995. Interest expense was $1,643,000
in 1995, compared with $1,656,000 in 1994. The decrease in interest expense
as a result of the conversion of $5,646,000 principal amount of the
Company's subordinated convertible obligations during 1995 was
substantially offset by the inclusion interest expense associated with
increased borrowings under Comtest's outstanding line of credit.
The effective tax rates in 1995 and 1994 were below the statutory
federal income tax rate due to the utilization of tax net operating loss
carryforwards.
11PAGE
FORM 10-Q
September 30, 1995
THERMO VOLTEK CORP.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Financial Condition
Liquidity and Capital Resources
-------------------------------
Working capital was $40,821,000 at September 30, 1995, compared with
$41,990,000 at December 31, 1994. Included in working capital are cash,
cash equivalents, and available-for-sale investments of $33,926,000 at
September 30, 1995, compared with $37,060,000 at December 31, 1994. During
the first nine months of 1995, $942,000 of cash was provided by operating
activities. In March 1995, the Company acquired substantially all of the
assets, subject to certain liabilities, of Kalmus for $3.8 million in cash
(Note 2). During the first nine months of 1995, the Company expended
$962,000 for purchases of property, plant and equipment. The Company
expects to expend approximately $200,000 during the remainder of 1995 on
purchases of property, plant and equipment.
PART II - Other Information
Item 6 - Exhibits
(a) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
12PAGE
FORM 10-Q
September 30, 1995
THERMO VOLTEK CORP.
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 3rd day of November
1995.
THERMO VOLTEK CORP.
Paul F. Kelleher
------------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
------------------------
John N. Hatsopoulos
Chief Financial Officer
13PAGE
FORM 10-Q
September 30, 1995
THERMO VOLTEK CORP.
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
------- ----------------------------------------------------- ----
11 Statement re: Computation of earnings per share.
27 Financial Data Schedule.