SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported):
June 1, 2000
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THERMO TERRATECH INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-9549 04-2925807
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02454-9046
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (781) 622-1000
FORM 8-K
THERMO TERRATECH INC.
Item 2. Disposition of Assets
On June 1, 2000, Thermo TerraTech (the "Company") sold substantially all
of the assets and liabilities of its metal treating business (the "Metal
Treating Business"), which includes the Company's Metallurgical, Inc., Cal-Doran
Metallurgical Services, Inc., and Metal Treating Inc. subsidiaries, to Lindberg
Corporation (the "Buyer") for $15.7 million in cash, subject to adjustment as
described below. The purchase price includes $1.1 million of real estate leased
by the Metal Treating Business that was owned by Thermo Electron Corporation,
the Company's parent. The Asset Purchase Agreement provides that within 30 days
of the closing date of the sale, the Buyer will determine the net book value of
the Metal Treating Business as of the closing date. If the net book value,
including the real estate owned by Thermo Electron, is more than $8,323,000, the
purchase price will be increased dollar for dollar by the amount of the
increase. Alternatively, if the net book value is less than $8,323,000, the
purchase price will be reduced dollar for dollar by the amount of the shortfall.
The assets sold in the transaction include all contracts, accounts
receivable, inventories, prepaid expenses, fixed assets (plant and equipment),
and proprietary rights (including the "Cal-Doran National City," "Cal-Doran,"
"Metallurgical Services, Inc.," "Metal Treating Inc.," "Metallurgical
Incorporated," and "SCAT" tradenames) of the Metal Treating Business. The Buyer
assumed all operating liabilities of the Metal Treating Business including
liabilities and obligations under the purchased contracts and all liabilities
and obligations relating to the purchased real property.
The Buyer also assumed all environmental liabilities arising from the
Company's operation of the Metal Treating Business except for environmental
liabilities arising from or relating to certain sites and activities as
described in the Asset Purchase Agreement. In the event that after the closing,
the Buyer incurs greater than $1 million in expenses resulting from such
environmental liabilities, the Company has agreed to indemnify the Buyer for
reasonable environmental expenses in excess of $1,000,000, but not to exceed
$3,500,000. The Company's indemnity obligation pertains only to those
environmental liabilities arising from conditions identified by the Buyer
between June 1, 2000, and June 1, 2002. The Company has not recorded a liability
in connection with this indemnity because the amount that would likely be paid
by the Company, if any, cannot be reasonably estimated.
FORM 8-K
THERMO TERRATECH INC.
Item 7. Financial Statements, Pro Forma Condensed Financial Information and
Exhibits
(a) Financial Statements
Not applicable.
(b) Pro Forma Condensed Financial Statements
The following unaudited pro forma consolidated condensed statements of
operations set forth the results of operations for the fiscal year ended April
3, 1999, and the nine months ended January 1, 2000, as if the disposition by the
Company of the Metal Treating Business had occurred at the beginning of fiscal
1999. The unaudited pro forma consolidated condensed balance sheet sets forth
the financial position as of January 1, 2000, as if the disposition had occurred
as of that date.
The pro forma results of operations are not necessarily indicative of
future operations or the actual results that would have occurred had the sale of
the Metal Treating Business been consummated at the beginning of fiscal 1999.
These statements should be read in conjunction with the accompanying notes
herein and the historical consolidated financial statements and related notes of
the Company included in its Annual Report on Form 10-K, as amended, for the
fiscal year ended April 3, 1999, and Quarterly Report on Form 10-Q for the nine
months ended January 1, 2000.
2
FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
Fiscal Year Ended April 3, 1999
(Unaudited)
Thermo Less:
TerraTech Metal Treating Pro Forma
(In thousands except per share amounts)
Revenues $310,039 $ 19,274 $290,765
-------- -------- --------
Costs and Operating Expenses:
Cost of revenues 247,610 14,586 233,024
Selling, general, and administrative expenses 46,224 2,349 43,875
Restructuring costs 10,217 - 10,217
-------- -------- --------
304,051 16,935 287,116
-------- -------- --------
Operating Income 5,988 2,339 3,649
Interest Income 2,185 - 2,185
Interest Expense (8,981) - (8,981)
-------- -------- --------
Income (Loss) Before Income Taxes and Minority Interest (808) 2,339 (3,147)
Provision for Income Taxes (1,786) (902) (884)
Minority Interest Income 1,173 - 1,173
-------- -------- --------
Net Income (Loss) $ (1,421) $ 1,437 $ (2,858)
======== ======== ========
Basic and Diluted Loss per Share $ (.07) $ (.15)
======== ========
Basic and Diluted Weighted Average Shares 19,402 19,402
======== ========
3
FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
Nine Months Ended January 1, 2000
(Unaudited)
Thermo Less:
TerraTech Metal Treating Pro Forma
(In thousands except per share amounts)
Revenues $234,790 $ 12,551 $222,239
-------- -------- --------
Costs and Operating Expenses:
Cost of revenues 185,059 9,858 175,201
Selling, general, and administrative expenses 34,439 1,700 32,739
Restructuring costs 56,524 - 56,524
-------- -------- --------
276,022 11,558 264,464
-------- -------- --------
Operating Income (Loss) (41,232) 993 (42,225)
Interest Income 2,037 - 2,037
Interest Expense (6,678) - (6,678)
-------- -------- --------
Income (Loss) Before Income Taxes, Minority Interest, and (45,873) 993 (46,866)
Extraordinary Item
Provision for Income Taxes (1,244) (398) (846)
Minority Interest Income 3,316 - 3,316
-------- -------- --------
Income (Loss) Before Extraordinary Item (43,801) 595 (44,396)
Extraordinary Item, Net of Income Tax Provision of $64 96 - 96
-------- -------- --------
Net Income (Loss) $(43,705) $ 595 $(44,300)
======== ======== ========
Basic and Diluted Loss per Share $ (2.29) $ (2.32)
======== ========
Basic and Diluted Weighted Average Shares 19,066 19,066
======== ========
4
FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
As of January 1, 2000
(Unaudited)
Thermo Less: Pro Forma
TerraTech Metal Treating Adjustments Pro Forma
(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 4,905 $ - $ 14,608 $ 19,513
Advance to affiliate 49,436 - - 49,436
Accounts receivable, net 52,330 2,296 - 50,034
Unbilled contract costs and fees 26,950 - - 26,950
Inventories 2,452 15 - 2,437
Deferred tax asset 6,668 - - 6,668
Other current assets 3,685 568 - 3,117
-------- -------- -------- ---------
146,426 2,879 14,608 158,155
-------- -------- -------- ---------
Property, Plant, and Equipment, at 70,357 6,055 - 64,302
Cost, Net -------- -------- -------- ---------
Other Assets 9,623 - - 9,623
-------- -------- -------- ---------
Cost in Excess of Net Assets of 88,865 2,526 - 86,339
Acquired Companies -------- -------- -------- ---------
$315,271 $ 11,460 $ 14,608 $ 318,419
======== ======== ======== =========
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FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET (continued)
As of January 1, 2000
(Unaudited)
Thermo Less: Pro Forma
TerraTech Metal Treating Adjustments Pro Forma
(In thousands)
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term obligations and current $ 19,549 $ - $ - $ 19,549
maturities of long-term obligations
Subordinated convertible debentures 37,950 - - 37,950
Accounts payable 20,939 300 - 20,639
Accrued payroll and employee benefits 12,223 602 - 11,621
Accrued restructuring costs 8,660 - - 8,660
Deferred revenue 4,169 - - 4,169
Other accrued expenses 13,347 298 800 13,849
Due to parent company and affiliated 2,140 - - 2,140
companies -------- -------- --------- --------
118,977 1,200 800 118,577
-------- -------- --------- --------
Deferred Income Taxes 685 - - 685
-------- -------- --------- --------
Other Deferred Items 1,097 - - 1,097
-------- -------- --------- --------
Long-term Obligations 118,241 - - 118,241
-------- -------- --------- --------
Minority Interest 24,785 - - 24,785
-------- -------- --------- --------
Shareholders' Investment:
Common stock 1,959 - - 1,959
Capital in excess of par value 70,993 - - 70,993
Accumulated deficit (17,807) - 3,548 (14,259)
Treasury stock at cost (3,846) - - (3,846)
Deferred compensation (216) - - (216)
Accumulated other comprehensive items 403 - - 403
Parent company investment - 10,260 10,260 -
-------- -------- --------- --------
51,486 10,260 13,808 55,034
-------- -------- --------- --------
$315,271 $ 11,460 $ 14,608 $318,419
======== ======== ========= ========
6
FORM 8-K
THERMO TERRATECH INC.
NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Pro Forma Adjustments to Pro Forma Consolidated Condensed Balance Sheet
(In thousands)
January 1, 2000
Debit (Credit)
Cash and Cash Equivalents
Cash received for sale of net assets of the Metal Treating $ 14,608
Business (excluding proceeds received for certain fixed
assets owned by Thermo Electron) --------
Other Accrued Expenses
Estimated accrued transaction costs, including legal fees and other costs $ (800)
--------
Shareholders' Investment
Elimination of the Metal Treating Business equity account $(13,808)
and excess of proceeds from sale over parent company
investment in the Metal Treating Business --------
The Company recognized a gain of $3,548,000 on the sale of the Metal
Treating Business. This gain has not been included in the pro forma results of
operations.
7
FORM 8-K
THERMO TERRATECH INC.
Item 7. Financial Statements, Pro Forma Condensed Financial Information and Exhibits (continued)
(c) Exhibits
2.1 Asset Purchase Agreement by and among Thermo TerraTech Inc.,
Metallurgical, Inc., Cal-Doran Metallurgical Services, Inc., and Metal
Treating Inc. (as Sellers) and Lindberg Corporation (as Buyer), dated
as of May 31, 2000.
8
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 15th day of June 2000.
THERMO TERRATECH INC.
/s/ Theo Melas-Kyriazi
Theo Melas-Kyriazi
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)