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 June 28, 1997.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number 1-11757
THERMO OPTEK CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 04-3283973
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8E Forge Parkway
Franklin, Massachusetts 02038
(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 July 25, 1997
---------------------------- ----------------------------
Common Stock, $.01 par value 48,450,638
PAGE
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMO OPTEK CORPORATION
Consolidated Balance Sheet
(Unaudited)
Assets
June 28, December 28,
(In thousands) 1997 1996
-----------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 81,771 $ 66,292
Accounts receivable, less allowances of
$5,793 and $4,997 95,062 88,559
Inventories:
Raw materials and supplies 39,955 34,381
Work in process 15,194 13,557
Finished goods 27,534 26,354
Prepaid expenses 6,909 6,371
Prepaid income taxes 15,238 15,254
-------- --------
281,663 250,768
-------- --------
Property, Plant, and Equipment, at Cost 90,161 83,296
Less: Accumulated depreciation and
amortization 27,267 23,271
-------- --------
62,894 60,025
-------- --------
Patents and Other Assets 9,412 10,232
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Note 2) 263,340 234,447
-------- --------
$617,309 $555,472
======== ========
2PAGE
THERMO OPTEK CORPORATION
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
June 28, December 28,
(In thousands except share amounts) 1997 1996
------------------------------------------------------------------------
Current Liabilities:
Notes payable and current maturities of
long-term obligations $ 21,178 $ 27,736
Accounts payable 26,277 28,920
Accrued payroll and employee benefits 11,930 12,809
Accrued installation and warranty expenses 21,034 21,088
Accrued income taxes 18,801 14,379
Deferred revenue 19,921 15,331
Other accrued expenses (Note 2) 36,828 45,379
Due to affiliated companies (Note 2) 85,197 28,167
-------- --------
241,166 193,809
-------- --------
Deferred Income Taxes 13,805 13,865
-------- --------
Other Deferred Items 3,233 3,413
-------- --------
Long-term Obligations:
5% Subordinated convertible debentures 96,250 96,250
Other 1,792 528
-------- --------
98,042 96,778
-------- --------
Shareholders' Investment:
Common stock, $.01 par value, 100,000,000
shares authorized; 48,450,000 shares
issued and outstanding 485 485
Capital in excess of par value 222,123 222,123
Retained earnings (Note 2) 41,688 24,773
Cumulative translation adjustment (3,233) 226
-------- --------
261,063 247,607
-------- --------
$617,309 $555,472
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
3PAGE
THERMO OPTEK CORPORATION
Consolidated Statement of Income
(Unaudited)
Three Months Ended
-----------------------
June 28, June 29,
(In thousands except per share amounts) 1997 1996
------------------------------------------------------------------------
Revenues $117,017 $107,888
-------- --------
Costs and Operating Expenses:
Cost of revenues 63,159 62,053
Selling, general, and administrative
expenses 28,649 28,334
Research and development expenses 6,568 6,779
-------- --------
98,376 97,166
-------- --------
Operating Income 18,641 10,722
Interest Income 912 1,143
Interest Expense (2,091) (1,718)
-------- --------
Income Before Provision for Income Taxes 17,462 10,147
Provision for Income Taxes 7,683 4,090
-------- --------
Net Income $ 9,779 $ 6,057
======== ========
Earnings per Share:
Primary $ .20 $ .13
======== ========
Fully diluted $ .19 $ .13
======== ========
Weighted Average Shares:
Primary 48,450 45,758
======== ========
Fully diluted 54,949 45,758
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
4PAGE
THERMO OPTEK CORPORATION
Consolidated Statement of Income
(Unaudited)
Six Months Ended
-----------------------
June 28, June 29,
(In thousands except per share amounts) 1997 1996
------------------------------------------------------------------------
Revenues $223,192 $177,556
-------- --------
Costs and Operating Expenses:
Cost of revenues 119,943 97,813
Selling, general, and administrative
expenses 55,428 49,660
Research and development expenses 12,975 11,713
-------- --------
188,346 159,186
-------- --------
Operating Income 34,846 18,370
Interest Income 1,805 2,684
Interest Expense (3,884) (3,309)
-------- --------
Income Before Provision for Income Taxes 32,767 17,745
Provision for Income Taxes 14,090 7,392
-------- --------
Net Income $ 18,677 $ 10,353
======== ========
Earnings per Share:
Primary $ .39 $ .23
======== ========
Fully diluted $ .37 $ .23
======== ========
Weighted Average Shares:
Primary 48,450 45,458
======== ========
Fully diluted 54,983 45,458
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
5PAGE
THERMO OPTEK CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
----------------------
June 28, June 29,
(In thousands) 1997 1996
------------------------------------------------------------------------
Operating Activities:
Net income $ 18,677 $ 10,353
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 7,947 6,006
Provision for losses on accounts
receivable 114 781
Other noncash expenses 827 979
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable (5,260) 4,789
Inventories (8,036) 503
Other current assets 4 (339)
Accounts payable (4,535) (7,960)
Due to affiliated companies 17,738 (5,322)
Other current liabilities 540 925
Other 264 233
-------- --------
Net cash provided by operating activities 28,280 10,948
-------- --------
Investing Activities:
Acquisitions, net of cash acquired (2,161) (12,074)
Purchases of property, plant, and equipment (3,624) (3,005)
Cash payment to parent company for
acquisition of Mattson and Unicam - (36,558)
Other (136) (40)
-------- --------
Net cash used in investing activities (5,921) (51,677)
-------- --------
Financing Activities:
Net proceeds from issuance of Company
common stock - 37,255
Decrease in short-term obligations, net (6,620) (5,639)
Repayment of long-term obligations (210) (386)
-------- --------
Net cash provided by (used in) financing
activities (6,830) 31,230
-------- --------
Exchange Rate Effect on Cash (50) (405)
-------- --------
Increase (Decrease) in Cash and Cash Equivalents 15,479 (9,904)
Cash and Cash Equivalents at Beginning of
Period 66,292 116,890
-------- --------
Cash and Cash Equivalents at End of Period $ 81,771 $106,986
======== ========
6PAGE
THERMO OPTEK CORPORATION
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Six Months Ended
----------------------
June 28, June 29,
(In thousands) 1997 1996
------------------------------------------------------------------------
Noncash Activities:
Fair value of assets of acquired companies $ 46,659 $186,889
Cash paid for acquired companies (3,017) (16,869)
Due to affiliated company for
acquired companies (40,319) (100,742)
-------- --------
Liabilities assumed of acquired companies $ 3,323 $ 69,278
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
7PAGE
THERMO OPTEK CORPORATION
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been
prepared by Thermo Optek 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 June
28, 1997, the results of operations for the three- and six-month periods
ended June 28, 1997, and June 29, 1996, and the cash flows for the
six-month periods ended June 28, 1997, and June 29, 1996. Interim results
are not necessarily indicative of results for a full year.
Historical financial results have been restated to include VG Systems
Limited (VG Systems) and Spectronic Instruments Inc. (Spectronic), which
were acquired in transactions similar to poolings of interests (Note 2).
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 28, 1996, filed with the Securities and Exchange Commission.
2. Acquisitions
On March 29, 1996, Thermo Instrument Systems Inc. (Thermo
Instrument), the Company's majority shareholder, acquired a substantial
portion of the businesses comprising the Scientific Instruments Division
of Fisons plc (Fisons), a wholly owned subsidiary of Rhone-Poulenc Rorer,
Inc. In July 1997, the Company agreed to acquire VG Systems, a business
formerly part of Fisons, from Thermo Instrument for $45,546,000 in cash,
subject to a post-closing adjustment. The purchase price was determined
based on the net tangible book value of VG Systems and a pro rata
allocation of Thermo Instrument's total cost in excess of net assets of
acquired companies recorded in connection with the acquisition of the
Fisons businesses. VG Systems manufactures instrumentation and equipment
for material and surface science analysis. This U.K.-based company
consists of four major operating divisions: VG Scientific (analytical
instruments for elemental, chemical, and spatial analysis), VG Semicon
(molecular beam epitaxy systems for semiconductor production), VG
Microtech (ultrahigh-vacuum surface science instruments), and Vacuum
Generators (vacuum components and systems). In addition to these four
divisions, VG Systems includes VG Broadcast, a supplier of teletext
systems for closed-caption television applications. VG Systems reported
1996 revenues of $62 million.
Because the Company and VG Systems 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 historical financial
statements have been restated to include the results of VG Systems from
March 29, 1996, the date the business was acquired by Thermo Instrument.
The purchase price included $6,902,000 for the increase in net book value
8PAGE
THERMO OPTEK CORPORATION
2. Acquisitions (continued)
from the date the business was acquired by Thermo Instrument to June 28,
1997. This amount was recorded as a reduction in retained earnings as of
December 28, 1996. The cost of this acquisition exceeded the estimated
fair value of the acquired net assets by $36,353,000, which is being
amortized over 40 years.
In March 1997, Thermo Instrument acquired approximately 95% of the
outstanding shares of Life Sciences International PLC (LSI), a London
Stock Exchange-listed company. Subsequently, Thermo Instrument acquired
the remaining shares of LSI capital stock. In July 1997, the Company
agreed to acquire Spectronic, a former LSI subsidiary, from Thermo
Instrument. Spectronic is a Rochester, New York-based supplier of UV/VIS
spectrophotometers and accessories, fluorescence instruments, and
precision-ruled and holographic gratings for industrial and educational
markets worldwide, and had 1996 revenues of approximately $30 million.
The purchase price for Spectronic consists of $20,760,000 in cash and the
assumption of $19,559,000 in debt, subject to a post-closing adjustment.
The purchase price represents the sum of the net tangible book value of
Spectronic as of June 28, 1997, plus a percentage of Thermo Instrument's
total cost in excess of net assets acquired associated with its
acquisition of LSI, based on the aggregate 1996 revenues of Spectronic
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 cost in excess of net assets acquired
associated with the acquisition of LSI.
Because the Company and Spectronic 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 accompanying financial
statements include the results of Spectronic from March 12, 1997, the
date the business was acquired by Thermo Instrument. The purchase price
included $1,762,000 for the increase in net book value from the date the
business was acquired by Thermo Instrument to June 28, 1997. This amount
was recorded as a reduction in retained earnings. The cost of this
acquisition exceeded the estimated fair value of the acquired net assets
by $28,507,000, which is being amortized over 40 years.
Due to affiliated companies in the accompanying 1997 balance sheet
includes $85.9 million payable to Thermo Instrument for the acquistion of
VG Systems and Spectronic. The Company expects to repay this debt, with
interest, in the third quarter of 1997. In August 1997, the Company
borrowed $40.0 million from Thermo Electron Corporation (Thermo Electron)
pursuant to a promissory note due July 1998 and bearing interest at the
90-day Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter. The Company will use the proceeds from the
note and available cash to pay Thermo Instrument for the acquisitions.
During 1997, the Company acquired two additional companies, for an
aggregate $2,161,000 in cash, net of cash acquired, which were accounted
for using the purchase method of accounting. Allocation of the purchase
9PAGE
THERMO OPTEK CORPORATION
2. Acquisitions (continued)
price for these acquisitions was based on an estimate of the fair value
of the net assets acquired.
Based on unaudited data, the following table presents selected
financial information of the Company, VG Systems, and Spectronic on a pro
forma basis, assuming the companies had been combined since the beginning
of 1996. The effect of the acquisitions not included in the pro forma
data was not material to the Company's results of operations.
Three Months Six Months
Ended Ended
------------ -------------------
June 29, June 28, June 29,
(In thousands except per share amounts) 1996 1997 1996
-----------------------------------------------------------------------
Revenues $115,669 $227,838 $204,857
Net income 6,041 16,928 7,176
Earnings per share:
Primary .13 .35 .16
Fully diluted .13 .33 .16
The pro forma results are not necessarily indicative of future
operations or the actual results that would have occurred had the
acquisitions of VG Systems and Spectronic been made at the beginning of
1996.
During 1996, the Company undertook a restructuring in connection with
its acquisitions of VG Systems, A.R.L. Applied Research Laboratories S.A.
(ARL), and VG Elemental, effective March 1996, and the Mattson
Instruments and Unicam divisions of ATI, effective December 1995. During
the first six months of 1997, the Company expended $1,249,000 at its
Mattson and Unicam subsidiaries and $3,027,000 at its VG Systems, ARL,
and VG Elemental subsidiaries for restructuring costs. These expenditures
consisted primarily of severance and abandoned-facility payments. The
Company finalized its restructuring plans for Mattson and Unicam in 1996
and for VG Systems, ARL, and VG Elemental in the first quarter of 1997.
In connection with finalizing its restructuring plan for VG Systems, ARL,
and VG Elemental, the Company reduced acquisition reserves by $1,073,000
in 1997. This amount was recorded as a decrease in cost in excess of net
assets of acquired companies. The remaining reserve balance as of June
28, 1997, of $5,872,000 for all of the businesses referred to above is
for ongoing severance and abandoned facility payments. As of June 28,
1997, the Company had accrued a total of $7,041,000 for restructuring
costs for all of its acquisitions, including those discussed above. These
reserves are included in other accrued expenses in the accompanying 1997
balance sheet.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations.
For this purpose, any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements.
10PAGE
THERMO OPTEK CORPORATION
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," "seeks," "estimates," and similar expressions are
intended to identify forward-looking statements. There are a number of
important factors that could cause the results of the Company to differ
materially from those indicated by such forward-looking statements,
including those detailed under the caption "Forward-looking Statements"
in Exhibit 13 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 28, 1996, filed with the Securities and Exchange
Commission.
Overview
Prior to 1996, the Company's principal operating units included
Thermo Jarrell Ash Corporation (TJA), a manufacturer and distributor of
atomic absorption (AA) and atomic emission (AE) spectrometry products
based in Franklin, Massachusetts, and Nicolet Instrument Corporation
(Nicolet), a manufacturer and distributor of Fourier Transform Infrared
(FT-IR) and FT-Raman spectrometry products based in Madison, Wisconsin.
During 1996 and 1997, the Company acquired several companies, summarized
below, which significantly increased its operations.
The Company's strategy is to supplement its internal growth with the
acquisition of businesses and technologies that complement and augment
its existing product lines. In February 1996, the Company acquired Oriel
Corporation, a manufacturer and distributor of electro-optical
instruments and components, and Corion Corporation, a manufacturer of
commercial optical filters. Effective March 29, 1996, the Company
acquired A.R.L. Applied Research Laboratories S.A. (ARL), a manufacturer
of wavelength-dispersive X-ray fluorescence instruments and arc/spark
atomic emission spectrometers; VG Elemental, a manufacturer of
inductively coupled plasma/mass spectrometers; and VG Systems Limited (VG
Systems), a manufacturer of instrumentation and equipment for material
and surface science analysis, from Thermo Instrument Systems Inc. (Note
2). Effective March 12, 1997, the Company acquired Spectronic Instruments
Inc. (Spectronic), a supplier of UV/VIS spectrophotometers and
accessories, fluorescence instruments, and precision-ruled and
holographic gratings, from Thermo Instrument (Note 2).
Through its Thermo Vision Corporation subsidiary, the Company
addresses the photonics marketplace for optical components, imaging
systems, analytical instruments, and lasers. Thermo Vision is pursuing
applications of the Company's technologies for cost-effective,
application-specific instruments and for optical components, systems, and
subassemblies for analytical instrumentation and other applications. In
1996, the Company announced its intent to spin out Thermo Vision through
a distribution of 100 percent of its outstanding capital stock in the
form of a dividend to the Company's shareholders. The Company anticipates
completing the spinout in 1997. The Company is seeking a Letter Ruling
from the Internal Revenue Service stating that this proposed spinout
would have no current tax effect on the Company or its shareholders. The
Company would distribute the shares upon receipt of the Letter Ruling and
satisfaction of other conditions, including the listing of the Thermo
11PAGE
THERMO OPTEK CORPORATION
Overview (continued)
Vision shares on the American Stock Exchange. Thermo Vision, which
includes Oriel and Corion, had revenues of $30.4 million in 1996.
The Company sells its products on a worldwide basis. Although the
Company seeks to charge its customers in the same currency as its
operating costs, the Company's financial performance and competitive
position can be affected by currency exchange rate fluctuations. Where
appropriate, the Company uses forward contracts to reduce its exposure to
currency fluctuations.
Results of Operations
Second Quarter 1997 Compared With Second Quarter 1996
Revenues increased 8% to $117.0 million in the second quarter of 1997
from $107.9 million in the second quarter of 1996, primarily due to the
acquisition of Spectronic, effective March 12, 1997 (Note 2).
Acquisitions added revenues of $13.8 million in 1997. This increase was
offset in part by a $2.4 million decrease, due to the unfavorable effects
of currency translation as a result of the strengthening in value of the
U.S. dollar relative to currencies in foreign countries in which the
Company operates, and a $2.3 million decrease, primarily due to the
elimination of certain unprofitable product lines at companies acquired
in late 1995 and 1996.
The gross profit margin increased to 46% in the second quarter of
1997 from 42% in the second quarter of 1996, primarily due to margin
improvements at ARL and VG Systems and the inclusion of higher-margin
Spectronic revenues, specifically from its gratings products.
Selling, general, and administrative expenses as a percentage of
revenues decreased to 24% in the second quarter of 1997 from 26% in the
second quarter of 1996, primarily due to efforts to reduce selling and
administrative costs at Mattson and Unicam and the integration of ARL and
VG Elemental products into the Company's existing North American and
European distribution channels.
Research and development expenses as a percentage of revenues were
unchanged at 6% in the second quarter of 1997 and 1996.
Interest income decreased to $0.9 million in the second quarter of
1997 from $1.1 million in the second quarter of 1996 due to lower
balances as a result of cash used to fund acquisitions. Interest expense
increased to $2.1 million in 1997, from $1.7 million in 1996, due to the
inclusion of interest on short- and long-term borrowings at acquired
businesses. Interest income will decrease and interest expense will
increase as a result of the cash payment the Company expects to make and
the short-term borrowings the Company made in August 1997 in connection
with the acquisitions of VG Systems and Spectronic (Note 2).
12PAGE
THERMO OPTEK CORPORATION
Second Quarter 1997 Compared With Second Quarter 1996 (continued)
The effective tax rate was 44% in the second quarter of 1997,
compared with 40% in the second quarter of 1996. The effective tax rates
exceeded the statutory federal income tax rate primarily due to the
impact of state income taxes, nondeductible amortization of cost in
excess of net assets of acquired companies, and the inability to provide
a tax benefit on foreign losses, offset in part by the tax benefit
associated with a foreign sales corporation. The increase in the
effective rate in 1997 was primarily due to higher nondeductible
amortization of cost in excess of net assets of acquired companies.
First Six Months 1997 Compared With First Six Months 1996
Revenues increased 26% to $223.2 million in the first six months of
1997 from $177.6 million in the first six months of 1996, primarily due
to the acquisitions of ARL, VG Elemental, and VG Systems, effective March
29, 1996, and Spectronic, effective March 12, 1997 (Note 2). Acquisitions
added revenues of $56.7 million in 1997. This increase was offset in part
by the inclusion in 1996 of several large nonrecurring sales to the
Chinese and Japanese governments and the elimination of certain
unprofitable product lines at companies acquired in late 1995 and 1996.
In addition, revenues decreased $3.8 million due to the unfavorable
effects of currency translation as a result of the strengthening in value
of the U.S. dollar relative to currencies in foreign countries in which
the Company operates.
The gross profit margin increased to 46% in the first six months of
1997 from 45% in the first six months of 1996, primarily due to the
reasons discussed in the results of operations for the second quarter.
Selling, general, and administrative expenses as a percentage of
revenues decreased to 25% in the first six months of 1997 from 28% in the
first six months of 1996, primarily due to the reasons discussed in the
results of operations for the second quarter.
Research and development expenses as a percentage of revenues
decreased to 6% in the first six months of 1997 from 7% in the first six
months of 1996, primarily due to the completion of certain research
projects at TJA and Unicam.
Interest income decreased to $1.8 million in the first six months of
1997 from $2.7 million in the first six months of 1996 due to lower
invested balances as a result of cash used to fund acquisitions. Interest
expense increased to $3.9 million in 1997, from $3.3 million in 1996, due
to the inclusion of interest on short- and long-term borrowings at
acquired businesses.
The effective tax rate was 43% in the first six months of 1997,
compared with 42% in the first six months of 1996. The effective tax
rates exceeded the statutory federal income tax rate primarily due to the
impact of state income taxes, nondeductible amortization of cost in
excess of net assets of acquired companies, and the inability to provide
a tax benefit on foreign losses, offset in part by the tax benefit
associated with a foreign sales corporation.
13PAGE
THERMO OPTEK CORPORATION
Liquidity and Capital Resources
Consolidated working capital was $40.5 million at June 28, 1997,
compared with $57.0 million at December 28, 1996. Included in working
capital are cash and cash equivalents of $81.8 million at June 28, 1997,
compared with $66.3 million at December 28, 1996. Cash provided by
operating activities was $28.3 million for the first six months of 1997.
During this period, the Company used $8.0 million of cash to fund an
increase in inventories, primarily to support the distribution of ARL and
VG Elemental products through certain of the Company's existing
distribution channels. This change in distribution channels also
contributed to a reduction in amounts due from affiliated companies of
$17.8 million and an increase in accounts receivable of $5.3 million. The
Company's investing activities used $5.9 million of cash in the first six
months of 1997. During this period, the Company used $2.2 million of cash
for acquisitions, net of cash acquired. The Company expended $3.6 million
for the purchase of property, plant, and equipment and plans to expend an
additional $4.0 million for such purchases in the remainder of 1997.
In July 1997, the Company agreed to purchase two businesses from
Thermo Instrument, VG Systems for $45.5 million in cash, and Spectronic
for $20.8 million in cash and the assumption of $19.6 million in debt
(Note 2). Due to affiliated companies in the accompanying 1997 balance
sheet includes $85.9 million payable to Thermo Instrument for these
acquired companies. The Company expects to repay this debt, with
interest, in the third quarter of 1997. In August 1997, the Company
borrowed $40.0 million from Thermo Electron pursuant to a promissory note
due July 1998 and bearing interest at the 90-day Commercial Paper
Composite Rate plus 25 basis points, set at the beginning of each
quarter. The Company will use the proceeds from the note and available
cash to pay Thermo Instrument for the acquisitions.
The Company used $6.8 million of cash in the first six months of 1997
for the repayment of short- and long-term borrowings.
Although the Company expects to have positive cash flow from its
existing operations, the Company may require significant amounts of cash
for any acquisition of complementary businesses. The Company expects that
it will finance any such acquisitions through a combination of internal
funds, additional debt or equity financing from capital markets, or
short-term borrowings from Thermo Instrument or Thermo Electron, although
it has no agreement with these companies to ensure that funds will be
available on acceptable terms or at all, except as described above. The
Company believes its existing resources are sufficient to meet the
capital requirements of its existing operations for the foreseeable
future.
14PAGE
THERMO OPTEK CORPORATION
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
On June 2, 1997, at the Annual Meeting of Stockholders, the
Stockholders elected five incumbent directors to a one-year term expiring
in 1998. The Directors elected at the meeting were: Dr. George N.
Hatsopoulos, Mr. Stephen R. Levy, Mr. Earl R. Lewis, Mr. Robert A.
McCabe, and Mr. Arvin H. Smith. Dr. Hatsopoulos, Mr. Lewis, and Mr. Smith
each received 47,485,658 shares voted in favor of his election and 3,600
shares voted against. Mr. Levy and Mr. McCabe each received 47,486,158
shares voted in favor of his election and 3,100 shares voted against. No
abstentions or broker nonvotes were recorded on the election of
directors.
At the Annual Meeting of Stockholders, the Stockholders also approved
a proposal to adopt an employees' stock purchase plan and to reserve
100,000 shares of the Company's common stock for issuance thereunder as
follows: 47,458,708 shares voted in favor of the proposal, 6,200 shares
voted against the proposal, and 24,350 shares abstained. No broker
nonvotes were recorded on the proposal.
Item 6 - Exhibits
See Exhibit Index on the page immediately preceding exhibits.
15PAGE
THERMO OPTEK 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 6th day of August
1997.
THERMO OPTEK CORPORATION
Paul F. Kelleher
--------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
--------------------
John N. Hatsopoulos
Vice President and Chief
Financial Officer
16PAGE
THERMO OPTEK CORPORATION
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
2 Share purchase agreement dated as of July 30, 1997,
between the Company and Thermo Instrument Systems Inc.
10 $40,000,000 Promissory Note dated as of August 5, 1997,
issued by the Company to Thermo Electron Corporation.
11 Statement re: Computation of Earnings per Share.
27 Financial Data Schedule.