SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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):
May 9, 1995
________________________________________
THERMO PROCESS SYSTEMS INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-9549 04-2925807
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or File Number) Identification Number)
organization)
12068 Market Street
Livonia, Michigan 48150
(Address of principal executive offices) (Zip Code)
(617) 622-1000
(Registrant's telephone number
including area code)
PAGE
FORM 8-K
Item 2. Acquisition or Disposition of Assets
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On May 9, 1995, Thermo Process Systems Inc. ("Thermo Process" or the
"Company") and Thermo Instrument Systems Inc. ("Thermo Instrument") agreed
to dissolve their Thermo Terra Tech joint venture (the "Joint Venture") by
distributing to the partners the businesses and other assets that had
originally been contributed to the Joint Venture, together with businesses
and assets acquired by the Joint Venture from third parties. Thermo Process
further agreed to purchase the businesses that are to be distributed to
Thermo Instrument for $34,267,000 in cash. As a result of this transaction,
Thermo Process increased its ownership in the Joint Venture from 51% to
100%. Thermo Process and Thermo Instrument are both majority-owned,
publicly traded subsidiaries of Thermo Electron Corporation ("Thermo
Electron"). The Joint Venture was originally established pursuant to a
general partnership agreement dated May 16, 1994 among wholly owned
subsidiaries of Thermo Process and Thermo Instrument.
The terms of the acquisition were determined by negotiation between
the management of Thermo Process and the management of Thermo Instrument,
based on the valuation methodology employed in connection with the
formation of the joint venture. The funds for the purchase price were
provided from the proceeds of a $35,000,000 promissory note issued to
Thermo Electron that bears interest at the Commercial Paper Composite Rate
plus 25 basis points and is due May 13, 1997.
Thermo Process has managed the Joint Venture since its inception.
Thermo Process has no present intention to operate the businesses formerly
conducted by the Joint Venture in any manner materially different from the
manner in which such businesses were operated prior to the dissolution of
the Joint Venture and the purchase of such businesses from Thermo
Instrument.
2PAGE
FORM 8-K
Item 7. Financial Statements, Pro Forma Combined Condensed Financial
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Information and Exhibits
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(b) Pro Forma Combined Condensed Financial Information
The following unaudited pro forma combined condensed
financial statements set forth the results of operations for the
nine months ended December 31, 1994, and for the year ended April
2, 1994, as if the acquisition by the Company of the businesses
distributed to Thermo Instrument as a result of the dissolution
of the Joint Venture had occurred at the beginning of fiscal
1994, and the financial position as of December 31, 1994, as if
the acquisition had occurred as of that date.
3PAGE
FORM 8-K
THERMO PROCESS SYSTEMS INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
Nine Months Ended December 31, 1994
(Unaudited)
Historical Pro Forma
----------- -----------------------
Thermo
Process Adjustments Combined
----------- ----------- --------
(In thousands except per share amounts)
Revenues $ 94,550 $ - $ 94,550
-------- -------- --------
Costs and Operating Expenses:
Cost of revenues 70,666 - 70,666
Selling, general and administrative
expenses 16,769 - 16,769
New business development expenses 643 - 643
-------- -------- --------
88,078 - 88,078
-------- -------- --------
Operating Income 6,472 - 6,472
Gain on Issuance of Stock by Subsidiary 1,058 - 1,058
Interest Income 2,203 27 2,230
Interest Expense (includes $480 for
note to parent company in fiscal 1995) (1,519) (1,680) (3,199)
Gain on Sale of Investments (includes
$746 on sale of related party
debentures in fiscal 1995) 749 - 749
-------- -------- --------
Income Before Income Taxes and
Minority Interest 8,963 (1,653) 7,310
Income Tax Provision (1,978) (525) (2,503)
Minority Interest Expense (3,934) 2,965 (969)
-------- -------- --------
Net Income $ 3,051 $ 787 $ 3,838
======== ======== ========
Earnings per Share $ .18 $ .22
======== ========
Weighted Average Shares 17,099 17,099
======== ========
See notes to pro forma combined condensed financial statements.
4PAGE
FORM 8-K
THERMO PROCESS SYSTEMS INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
Year Ended April 2, 1994
(Unaudited)
Historical Pro Forma
----------- -----------------------
Thermo
Process Adjustments Combined
----------- ----------- --------
(In thousands except per share amounts)
Revenues $110,131 $ - $110,131
-------- -------- --------
Costs and Operating Expenses:
Cost of revenues 84,142 - 84,142
Selling, general and administrative
expenses 21,195 - 21,195
New business development expenses 447 - 447
Costs associated with divisional
restructuring 2,661 - 2,661
-------- -------- --------
108,445 - 108,445
-------- -------- --------
Operating Income 1,686 - 1,686
Gain on Issuance of Stock by Subsidiary 4,488 - 4,488
Interest Income 1,955 25 1,980
Interest Expense (1,387) (2,240) (3,627)
Gain on Sale of Investments 645 - 645
-------- -------- --------
Income Before Income Taxes, Minority
Interest, and Cumulative Effect of
Change in Accounting Principle 7,387 (2,215) 5,172
Income Tax (Provision) Benefit 40 (532) (492)
Minority Interest Expense (4,018) 3,545 (473)
-------- -------- --------
Income Before Cumulative Effect of
Change in Accounting Principle $ 3,409 $ 798 $ 4,207
======== ======== ========
Earnings per Share Before Cumulative
Effect of Change in Accounting
Principle $ .20 $ .25
======== ========
Weighted Average Shares 16,863 16,863
======== ========
See notes to pro forma combined condensed financial statements.
5PAGE
FORM 8-K
THERMO PROCESS SYSTEMS INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
December 31, 1994
(Unaudited)
Historical Pro Forma
----------- -----------------------
Thermo
Process Adjustments Combined
----------- ----------- --------
(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 43,564 $ 733 $ 44,297
Short-term available-for-sale
investments, at quoted market value 5,992 - 5,992
Accounts receivable, net 21,273 - 21,273
Unbilled contract costs and fees 9,811 - 9,811
Inventories 2,388 - 2,388
Prepaid expenses 3,405 - 3,405
Prepaid and refundable income taxes 2,283 - 2,283
-------- -------- --------
88,716 733 89,449
-------- -------- --------
Property, Plant and Equipment, at Cost 74,424 - 74,424
Less: Accumulated depreciation
and amortization 32,806 - 32,806
-------- -------- --------
41,618 - 41,618
-------- -------- --------
Long-term Available-for-sale
Investments, at Quoted Market Value 10,390 - 10,390
-------- -------- --------
Other Assets 11,545 - 11,545
-------- -------- --------
Cost in Excess of Net Assets of
Acquired Companies 37,689 - 37,689
-------- -------- --------
$189,958 $ 733 $190,691
======== ======== ========
See notes to pro forma combined condensed financial statements.
6PAGE
FORM 8-K
THERMO PROCESS SYSTEMS INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
December 31, 1994
(Unaudited)
Historical Pro Forma
----------- -----------------------
Thermo
Process Adjustments Combined
----------- ----------- --------
(In thousands)
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current Liabilities:
Accounts payable $ 7,912 $ - $ 7,912
Other accrued liabilities 20,728 - 20,728
Due to parent company and Thermo
Electron Corporation 3,440 - 3,440
-------- -------- --------
32,080 - 32,080
-------- -------- --------
Deferred Income Taxes 1,882 - 1,882
-------- -------- --------
Long-term Obligations:
Due to parent company 15,000 35,000 50,000
Other 19,085 - 19,085
-------- -------- --------
34,085 35,000 69,085
-------- -------- --------
Minority Interest 55,643 (34,267) 21,376
-------- -------- --------
Shareholders' Investment:
Common stock 1,741 - 1,741
Capital in excess of par value 46,923 - 46,923
Retained earnings 20,663 - 20,663
Treasury stock (3,030) - (3,030)
Cumulative translation adjustment 55 - 55
Net unrealized loss on
available-for-sale investments (84) - (84)
-------- -------- --------
66,268 - 66,268
-------- -------- --------
$189,958 $ 733 $190,691
======== ======== ========
See notes to pro forma combined condensed financial statements.
7PAGE
FORM 8-K
THERMO PROCESS SYSTEMS INC.
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 -Pro Forma Adjustments to Pro Forma Combined Condensed Statements
of Income
The pro forma adjustment to "Interest income" represents an estimate
of the increase in interest income earned due to the Company's higher cash
position as a result of the net cash proceeds of $733,000 (Note 2),
calculated using an average interest rate of 4.88% for the nine months
ended December 31, 1994, and 3.46% for the year ended April 2, 1994.
The pro forma adjustment to "Interest expense" represents interest on
a $35,000,000 promissory note due to Thermo Electron (Note 2), calculated
using the Commercial Paper Composite Rate plus 25 basis points, or 6.40%,
which was the rate of interest in effect at the time the promissory note
was issued. The interest rate on the promissory note will be adjusted
quarterly to reflect changes in the Commercial Paper Composite Rate.
The pro forma adjustment to "Provision for income taxes" represents a
reduction in income taxes associated with the adjustments in the
accompanying pro forma statements of income, calculated at the Company's
statutory income tax rate of 40%.
The pro forma adjustment to "Minority interest expense" represents the
elimination of the actual minority interest expense recorded for Thermo
Instrument's ownership in the Joint Venture.
Note 2 -Pro Forma Adjustments to Pro Forma Combined Condensed Balance
Sheet
The pro forma adjustment to "Cash and cash equivalents" includes
$34,267,000 of cash expended by the Company to purchase the businesses
distributed to Thermo Instrument as a result of the dissolution of the
Joint Venture, offset by the proceeds from the $35,000,000 promissory note
issued to Thermo Electron.
The pro forma adjustment to "Long-term obligations, due to parent
company" represents a promissory note due May 13, 1997, that was issued to
Thermo Electron to finance the acquisition of the businesses distributed to
Thermo Instrument as a result of the dissolution of the Joint Venture.
The pro forma adjustment to "Minority interest" represents the
elimination of the actual minority interest recorded for Thermo
Instrument's ownership in the Joint Venture.
8PAGE
FORM 8-K
Item 7. Financial Statements, Pro Forma Combined Condensed Financial
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Information and Exhibits
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(c) Exhibits
2.1 Agreement of Dissolution of Partnership dated May 9,
1995 among Thermo Terra Tech (the Partnership), Terra
Tech Labs Inc. (a wholly owned subsidiary of Thermo
Process Systems Inc.) and Eberline Analytical
Corporation, Skinner & Sherman, Inc., TMA/NORCAL Inc.,
Normandeau Associates Inc., Bettigole Andrews & Clark
Inc., Fellows, Read & Associates Inc. and Thermo
Consulting Engineers Inc. (each a wholly owned
subsidiary of Thermo Instrument Systems Inc.).
2.2 Stock Purchase Agreement dated May 9, 1995 between
Thermo Process Systems Inc. and Thermo Instrument
Systems Inc.
2.3 Note dated May 17, 1995 from Thermo Process Systems Inc.
to Thermo Electron Corporation.
9PAGE
FORM 8-K
SIGNATURES
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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 24th day of May 1995.
THERMO PROCESS SYSTEMS INC.
Paul F. Kelleher
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Paul F. Kelleher
Chief Accounting Officer