<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 7, 1996
REGISTRATION NO. 333-2924
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
--------------
TREX MEDICAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------
DELAWARE 3844 06-1439632
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
--------------
36 APPLE RIDGE ROAD, DANBURY, CONNECTICUT 06810
(203)-790-1188
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------
SANDRA L. LAMBERT, SECRETARY
TREX MEDICAL CORPORATION
C/O THERMO ELECTRON CORPORATION
81 WYMAN STREET
POST OFFICE BOX 9046
WALTHAM, MASSACHUSETTS 02254-9046
(617) 622-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
SETH H. HOOGASIAN, DAVID E. REDLICK, ESQUIRE EDWIN L. MILLER, JR.,
ESQUIRE HALE AND DORR ESQUIRE
GENERAL COUNSEL 60 STATE STREET TESTA, HURWITZ &
TREX MEDICAL CORPORATION BOSTON, MASSACHUSETTS 02109 THIBEAULT
C/O THERMO ELECTRON (617) 526-6000 125 HIGH STREET
CORPORATION BOSTON, MASSACHUSETTS
81 WYMAN STREET 02110
POST OFFICE BOX 9046 (617) 248-7000
WALTHAM, MASSACHUSETTS
02254-9046
(617) 622-1000
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement has become effective.
--------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
TREX MEDICAL CORPORATION
CROSS REFERENCE SHEET
BETWEEN ITEMS OF FORM S-1 AND PROSPECTUS
<TABLE>
<CAPTION>
ITEM LOCATION IN PROSPECTUS
---- ----------------------
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of
Prospectus............................ Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus................... Inside Front Cover Page; Outside
Back Cover Page; Additional
Information; Reports to Security
Holders
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges.... Prospectus Summary; Risk Factors;
The Company
4. Use of Proceeds........................ Prospectus Summary; Use of
Proceeds
5. Determination of Offering Price........ Outside Front Cover Page; The
Rights Offering
6. Dilution............................... Dilution
7. Selling Security Holders............... Not Applicable
8. Plan of Distribution................... Outside Front Cover Page; The
Rights Offering
9. Description of Securities to be
Registered............................ Outside Front Cover Page;
Capitalization; Description of
Capital Stock
10. Interests of Named Experts and
Counsel............................... Experts; Legal Opinions
11. Information With Respect to the
Registrant:
(a) Description of Business............ Business; Management's Discussion
and Analysis of Financial
Condition and Results of
Operations
(b) Description of Property............ Business--Facilities
(c) Legal Proceedings.................. Risk Factors--Risks Associated
With Pending and Threatened
Patent Litigation; Business--
Patents and Proprietary
Technology; Business--Legal
Proceedings
(d) Market Price of and Dividends on
the Registrant's Common Equity and
Related Stockholder Matters........ Outside Front Cover Page;
Dividend Policy; Executive
Compensation; Description of
Capital Stock; Shares Eligible
for Future Sale
(e) Financial Statements............... Consolidated Financial
Statements; Capitalization
(f) Selected Financial Data............ Selected Financial Information
(g) Supplementary Financial
Information........................ Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM LOCATION IN PROSPECTUS
---- ----------------------
<C> <S> <C>
(h) Management's Discussion and
Analysis of Financial Condition
and Results of Operations........ Management's Discussion and
Analysis of Financial Condition
and Results of Operations
(i) Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure............. Not Applicable
(j) Directors, Executive Officers,
Promoters and Control Persons.... Relationship and Potential
Conflicts of Interest with Thermo
Electron and ThermoTrex;
Management
(k) Executive Compensation........... Executive Compensation
(l) Security Ownership of Certain
Beneficial Owners and
Management....................... Security Ownership of Certain
Beneficial Owners and Management
(m) Certain Relationships and Related
Transactions..................... Relationship and Potential
Conflicts of Interest with Thermo
Electron and ThermoTrex;
Management--Certain Transactions
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities......................... Not Applicable
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION--DATED MAY 7, 1996
PROSPECTUS
1,250,000 Shares
TREX MEDICAL CORPORATION
Common Stock
All of the shares of Common Stock offered hereby (the "Rights Offering") are
being sold by Trex Medical Corporation (the "Company"), a majority-owned
subsidiary of ThermoTrex Corporation ("ThermoTrex"), which is a majority-owned
subsidiary of Thermo Electron Corporation ("Thermo Electron"). The Company is
issuing to holders of record of its Common Stock as of , 1996 (the "Record
Date") nontransferable subscription rights (the "Rights") to subscribe for and
purchase an additional 1,250,000 shares of Common Stock. Shareholders of record
of the Company, including ThermoTrex, will receive .10 non-transferable Rights
for every share of Common Stock held by them of record on the Record Date (or
one Right for every ten shares held). Shareholders of record of ThermoTrex will
receive .10 non-transferable Rights for every share of ThermoTrex Common Stock
held by them of record on the Record Date (or one Right for every ten shares
held). The subscription price per share of Common Stock is $16.00 per share
(the "Subscription Price"), subject to a refund of the amount, if any, by which
$16.00 exceeds the initial public offering price per share (the "Public
Offering Price") of Common Stock in the Underwritten Public Offering (defined
below). If the initial public offering price in the Underwritten Public
Offering is more than $16.00 per share, the Rights Offering will be terminated
and all amounts tendered by subscribers will be refunded. The closing of this
Rights Offering is conditioned upon the closing of the Underwritten Public
Offering. Any subscription funds received will be held in escrow pending the
closing of this Rights Offering. All subscriptions received by the Company or
its agent are irrevocable. The Rights Offering is not contingent on
subscriptions for a minimum number of shares of Common Stock.
Prior to this offering, there has been no public market for the Common Stock
of the Company. The Company has applied to have the Common Stock approved for
listing on the American Stock Exchange.
Subscriptions must be received by 5:00 p.m., Eastern time on , 1996 (the
"Expiration Time"). No subscription will be considered complete until received
by American Stock Transfer & Trust Company, the Company's subscription agent
(the "Subscription Agent") by the Expiration Time. See "The Rights Offering."
Concurrently with the offering of Common Stock hereby, the Company is
offering 2,400,000 shares of Common Stock in a firm commitment underwritten
offering to the public (the "Underwritten Public Offering" and, collectively
with the Rights Offering, the "Offerings"). A total of 3,650,000 shares of
Common Stock (or up to a total of 4,010,000 shares if the Underwriters' over-
allotment option is exercised in full) will be offered hereby and in the
Underwritten Public Offering. Following the Offerings, ThermoTrex will own
approximately 80% of the outstanding shares of Common Stock of the Company
(assuming no exercise of the Underwriters' over-allotment option in the
Underwritten Public Offering).
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.SEE "RISK
FACTORS" BEGINNING ON PAGE 9.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
UNDERWRITING
SUBSCRIPTION DISCOUNTS AND PROCEEDS TO
PRICE COMMISSIONS COMPANY (1)
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<S> <C> <C> <C>
Per Share............................... $16.00 None $16.00
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Total................................... $20,000,000 None $20,000,000
</TABLE>
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(1) Before deducting expenses payable by the Company estimated at $30,000.
Assumes all Rights (other than Rights distributed to Thermo Electron or to
be retained by ThermoTrex) are exercised and the Public Offering Price is
$16.00 per share.
The date of this Prospectus is , 1996.
<PAGE>
The Company's LORAD M-IV mammography system, which the Company expects to
begin shipping in mid-1996, features enhanced image quality as well as modular
upgrades. The Contour mammography system offers a patented tilt C-arm, which
permits the system to tilt toward or away from the patient for imaging of a
greater area of breast tissue.
The picture at the upper left-hand side of the page illustrates the
Company's Lorad M-IV Mammography System, which consists of a rectangular base or
platform standing upright on its side (for wall mounting) with an attached arm
which may be moved vertically up and down, and attached to the arm is a
rotatable X-ray stem.
The picture at the upper right-hand side of the page illustrates a
laboratory technician taking a mammographic image of a patient using the
Company's Console Mammography System. The patient's image is being taken by the
systems C-arm, which consists of a rotatable C-shape apparatus with X-ray
equipment mounted on both ends of the "C", and which apparatus is shown titled
toward the patient.
[PICTURES]
----------------
IN CONNECTION WITH THE UNDERWRITTEN PUBLIC OFFERING, THE UNDERWRITERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN
STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
FOR UNITED KINGDOM PURCHASERS: THE COMMON STOCK MAY NOT BE OFFERED FOR SALE
IN THE UNITED KINGDOM EXCEPT IN CIRCUMSTANCES THAT DO NOT CONSTITUTE AN OFFER
TO THE PUBLIC WITHIN THE MEANING OF THE COMPANIES ACT 1985 AND THEREFORE
OFFERS MAY NOT BE MADE OTHER THAN TO PERSONS WHO, AT THE DATE OF THIS
DOCUMENT, ARE (I) PERSONS WHOSE ORDINARY BUSINESS IS TO BUY OR SELL SHARES OR
DEBENTURES, WHETHER AS PRINCIPAL OR AGENT, (II) EXISTING REGISTERED HOLDERS OF
COMMON STOCK, OR (III) EXISTING REGISTERED HOLDERS OF THERMOTREX COMMON STOCK,
AND IN THE CASE OF (III), THAT SUCH PERSONS WILL ONLY BE ELIGIBLE TO SUBSCRIBE
FOR SUCH SHARES IF IN DOING SO THEY REPRESENT THAT THEY ARE SUBSCRIBING WITH A
VIEW TO HOLDING THE SHARES AS AN INVESTMENT AND THAT THEY HAVE NO IMMEDIATE
INTENTION TO RESELL THE SHARES.
THIS DOCUMENT MAY ONLY BE ISSUED OR PASSED ON TO ANY PERSON IN THE UNITED
KINGDOM IF THAT PERSON IS OF A KIND DESCRIBED IN ARTICLE 11(3) OF THE
FINANCIAL SERVICES ACT 1986 (INVESTMENT ADVERTISEMENTS) (EXEMPTIONS) ORDER
1995 OR WITHIN ARTICLE 8(1) OF THE FINANCIAL SERVICES ACT 1986 (INVESTMENT
ADVERTISEMENTS) (EXEMPTIONS) (NO. 2) ORDER 1995.
NO APPLICATION HAS BEEN MADE TO THE FRENCH COMMISSION DES OPERATIONS DE
BOURSE IN RESPECT OF THIS PROSPECTUS OR ANY PART HEREOF. THE COMPANY HEREBY
REPRESENTS AND AGREES, AND EACH FRENCH RECIPIENT, BY HIS ACCEPTANCE OF THIS
PROSPECTUS AGREES, THAT NEITHER THIS PROSPECTUS NOR ANY PART HEREOF
CONSTITUTES A PUBLIC OFFERING OF RIGHTS OR SHARES OF COMMON STOCK IN FRANCE.
THE COMPANY AND THERMOTREX FURTHER CONFIRM THAT THEY HAVE NOT, AND EACH FRENCH
RECIPIENT, BY HIS ACCEPTANCE OF THIS PROSPECTUS, CONFIRMS THAT SUCH RECIPIENT
HAS NEITHER OFFERED FOR SALE NOR SOLD NOR WILL OFFER FOR SALE OR SELL (WHETHER
BY USE OF THIS PROSPECTUS OR ANY PART HEREOF, ANY INFORMATION CONTAINED HEREIN
OR ANY CONNECTED OR RELATED DOCUMENT OR OTHERWISE) ANY OF THE RIGHTS OR SHARES
OF COMMON STOCK TO THE PUBLIC IN FRANCE.
----------------
LORAD, LORAD DSM, StereoLoc, StereoGuide and Contour are registered
trademarks, and Bennett is a trademark, of Trex Medical Corporation. All other
trademarks or tradenames referred to in this Prospectus are the property of
their respective owners.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and the Notes thereto
appearing elsewhere in this Prospectus. Except as otherwise indicated, all
information in this Prospectus assumes (i) the exercise of all subscription
rights distributed in the Rights Offering (other than subscription rights
distributed to Thermo Electron or to be retained by ThermoTrex) and (ii)
assumes no exercise of the Underwriters' over-allotment option in the
Underwritten Public Offering. Investors should carefully consider the
information set forth under the heading "Risk Factors."
THE COMPANY
The Company is a worldwide leader in the design, manufacture and marketing of
mammography equipment and minimally invasive stereotactic needle biopsy systems
used for the detection of breast cancer, as well as a leading designer and
manufacturer of general radiography (X-ray) equipment. A mammography system is
a dedicated radiographic system designed specifically to image breast tissue.
Stereotactic needle biopsy systems, which use a guided hollow needle to extract
a sample of tissues from the breast, offer a cost-effective, less invasive
alternative to open surgery for the biopsy of suspicious breast lesions. The
Company recently broadened its product base by acquiring Bennett X-Ray
Corporation ("Bennett"), a leading producer of specialty and general purpose
radiographic systems, including mammography systems.
The Company's mammography and stereotactic needle biopsy systems are used by
radiologists and physicians in offices, hospitals and dedicated breast-care
centers, and its general radiography systems are used by physicians and
radiologists, both in office and hospital settings, as well as by veterinarians
and chiropractors. The Company sells its systems worldwide principally through
a network of independent dealers. In addition, the Company manufactures
mammography and radiography systems and components as an original equipment
manufacturer for other medical equipment companies such as United States
Surgical Corporation ("U.S. Surgical"), the GE Medical Systems division of
General Electric Company, Inc. ("GE"), and the Philips Medical Systems North
America Company subsidiary of Philips N.V. ("Philips").
The Company's strategy includes maintaining its market position and expanding
into complementary markets through continued technological innovation and
strategic acquisitions. The Company recently introduced a proprietary High
Transmission Cellular ("HTC") grid for use with its mammography systems that
provides better image contrast than existing grids at lower radiation doses,
and a patented autoexposure tomography option to its general radiography
systems that reduces the need for multiple exposures during tomography
procedures, thereby reducing the radiation exposure to the patient. The Company
believes the most promising technological advances in the radiography field
will be derived from the substitution of electronic detectors for the film
currently used in substantially all radiographic systems. This digital imaging
technology is expected to be capable of higher image quality, permit the
enhancement of an X-ray image through software and allow near-real-time, off-
site analysis of the X-ray image by radiologists. The Company is currently
developing a full-view digital imaging mammography system and has working
prototypes at two clinical sites. The Company believes that the digital imaging
technology being developed for this system may be adaptable to general
radiography and cardiac diagnostic imaging systems, and the Company will seek
to develop applications in these markets.
The Company also intends to expand or augment its product line through the
acquisition of one or more additional companies or technologies. The Company's
strategy includes making acquisitions of companies that can benefit from the
Company's distribution channels and technology. In February 1996, the Company
signed a non-binding letter of intent to acquire XRE Corporation ("XRE"). XRE
designs, manufactures and markets X-ray imaging systems used for cardiac
catheterization and angiography. XRE manufactures systems and system components
as an original equipment manufacturer for other medical equipment companies
such as Philips and the Picker International, Inc. subsidiary of GEC, Inc.
("Picker International"). It also sells its systems in the United States
directly and through distributors. In April 1996, the Company signed a non-
binding letter of intent
3
<PAGE>
to acquire Continental X-Ray Corporation and certain of its affiliates
(collectively, "Continental"). Continental designs, manufactures and markets
radiographic/fluoroscopic products, general radiography systems,
electrophysiology products used in cardiac laboratories and dedicated
mammography systems. There can be no assurance that either the XRE or
Continental transactions will be successfully completed.
THE RIGHTS OFFERING
Rights...................... The Company is distributing to holders of Common
Stock of record at the close of business on ,
1996 (the "Record Date"), including ThermoTrex,
subscription rights (the "Rights") to subscribe
for and purchase additional shares of Common
Stock. The Rights are generally non-
transferrable, except that ThermoTrex may
distribute Rights to holders of its Common Stock
("ThermoTrex Common Stock"). Each holder of
Common Stock will receive one non-transferable
Right for every ten shares of Common Stock held
of record on the Record Date. Of the Rights
received by ThermoTrex, it will distribute to
each holder of ThermoTrex Common Stock on the
Record Date, including Thermo Electron, one Right
for every ten shares of ThermoTrex Common Stock
held by such holder and will retain the remaining
Rights. ThermoTrex has irrevocably elected not to
exercise the Rights which it does not distribute
to its shareholders and such Rights will expire
unexercised. The terms of the Rights further
provide that they may not be exercised by any
person holding a majority of the outstanding
shares of ThermoTrex Common Stock. As holder of a
majority of the outstanding shares of ThermoTrex
Common Stock, Thermo Electron will have no right
to exercise the Rights it receives from
ThermoTrex and such Rights will expire
unexercised. The number of Rights distributed by
the Company and ThermoTrex to each holder of
Common Stock or ThermoTrex Common Stock will be
rounded up to the nearest whole number. An
aggregate of approximately 1,250,000 Rights
(excluding those Rights to be distributed to
Thermo Electron or to be retained by Thermo Trex)
will be distributed pursuant to the Rights
Offering. Each Right will be exercisable for one
share of Common Stock. An aggregate of
approximately 1,250,000 shares of Common Stock
has been reserved for issuance upon exercise of
the Rights (the "Underlying Shares"). The
distribution of the Rights by the Company and
ThermoTrex and the sale of shares of Common Stock
upon the exercise of Rights are referred to
herein as the "Rights Offering." See "The Rights
Offering --The Rights."
Record Date................. , 1996
Expiration Date............. , 1996, 5:00 p.m., Eastern time, or such
later date to which the Company may extend the
expiration of the Rights. The Company will not,
in any event, extend the Expiration Date beyond
, 1996.
Subscription Privilege...... Rights holders are entitled to purchase for the
Subscription Price one share of Common Stock for
each whole Right held (the
4
<PAGE>
"Subscription Privilege"). There is no
oversubscription privilege or other right to
subscribe for Underlying Shares other than
pursuant to the Subscription Privilege. See "The
Rights Offering--Subscription Privilege."
Subscription Price..........
$16.00 in cash per share of Common Stock
subscribed for pursuant to the Subscription
Privilege (the "Subscription Price"). If the
Subscription Price is greater than the price per
share to the public of Common Stock in the
Underwritten Public Offering (the "Public
Offering Price"), the Company will refund to
holders exercising Rights an amount per share
equal to the amount by which the Subscription
Price exceeds the Public Offering Price. If the
Public Offering Price is more than $16.00, the
Rights Offering will be terminated, and the
Company will refund all amounts to holders who
tendered subscription amounts to the Subscription
Agent with no interest.
Common Stock Outstanding
after Rights Offering......
A maximum of 25,866,452 shares. This number
includes 2,400,000 shares issuable in connection
with the Underwritten Public Offering and
excludes 1,161,000 shares issuable at a weighted
average price of $10.96 per share pursuant to
stock options outstanding under the Company's
stock-based compensation plans at May 6, 1996,
but assumes the sale of all of the Underlying
Shares, other than Underlying Shares issuable
upon the exercise of Rights to be distributed to
Thermo Electron or to be retained by ThermoTrex.
See "The Rights Offering," "Capitalization,"
"Management" and "Security Ownership Of Certain
Beneficial Owners And Management."
Non-Transferability of
Rights and Common Stock....
The Rights are non-transferable and may not be
exercised by any person other than the holder to
which they were originally issued (except that
ThermoTrex may distribute its Rights to holders
of ThermoTrex Common Stock of record on the
Record Date). The Common Stock will be listed on
the American Stock Exchange ("AMEX"). See "The
Rights Offering--Exercise of Rights."
Procedure for Exercising The Subscription Privilege may be exercised by
Rights..................... properly completing the Subscription Certificate
evidencing the Rights (a "Subscription
Certificate") and forwarding such Subscription
Certificate, with payment of the Subscription
Price for each Underlying Share subscribed for
pursuant to the Subscription Privilege, to the
Subscription Agent on or prior to the Expiration
Date. If the mail is used to forward Subscription
Certificates, it is recommended that insured,
registered mail be used. Once a holder of Rights
has exercised the Subscription Privilege, such
exercise may not be revoked. See "The Rights
Offering--Exercise of Rights."
Procedure for Exercising
Rights by Foreign
Stockholders...............
Subscription Certificates will not be mailed to
holders of Common Stock or ThermoTrex Common
Stock whose addresses are outside
5
<PAGE>
the United States or who have an APO or FPO
address, but will be held by the Subscription
Agent for their account. To exercise the Rights
represented thereby, such holders must notify the
Subscription Agent by completing an International
Holder Subscription Form, which will be delivered
to such holders in lieu of a Subscription
Certificate, and sending it by mail or telecopy
to the Subscription Agent. Holders located in the
United Kingdom will not initially be provided
with an International Holder Subscription Form
and, if they are interested in participating in
the Rights Offering, should contact NatWest
Securities Limited, 135 Bishopsgate, London,
England EC2M 3UR, telephone 44-171-375-8726,
telecopier 44-171-375-6580, attention: Mr. Melvyn
Rowe. International Holder Subscription Forms
with payment of the Subscription Price for each
Underlying Share subscribed for pursuant to the
Subscription privilege must be returned to the
Subscription Agent at or prior to 11:00 a.m.,
Eastern time, on the date that is two AMEX
trading days prior to the Expiration Date.
Certain restrictions applicable to the exercise
of Rights by persons located outside of the
United States are set forth on the inside front
cover page of this Prospectus. See "The Rights
Offering--Foreign and Certain Other
Stockholders."
Persons Holding Shares, or
Wishing to Exercise
Rights, Through Others..... Persons holding Common Stock or ThermoTrex Common
Stock, and receiving the Rights distributable
with respect thereto through a broker, dealer,
commercial bank, trust company or other nominee,
as well as persons holding stock certificates
personally who would prefer to have such
institutions effect the exercise of the Rights on
their behalf, should contact the appropriate
institution or nominee and request it to effect
the exercise for them. Such holders should be
aware that brokers or other nominee holders may
establish deadlines for receiving instructions
from beneficial holders significantly in advance
of the Expiration Date. See "The Rights
Offering--Exercise of Rights."
Issuance of Common Stock.... The closing of the Rights Offering is conditioned
upon the closing of the Underwritten Public
Offering. Certificates representing shares of
Common Stock purchased pursuant to the exercise
of Rights will be delivered to subscribers as
soon as practicable after the closing of the
Underwritten Public Offering.
Use of Proceeds............. For acquisitions, to fund research and
development and for general corporate purposes.
See "Use Of Proceeds."
Subscription Agent.......... American Stock Transfer & Trust Company
American Stock Exchange
Symbol..................... TXM
6
<PAGE>
THE OFFERINGS
<TABLE>
<S> <C>
Common Stock Offered by the Company in the
Underwritten Public Offering.............. 2,400,000 shares
Common Stock Offered by the Company in the
Rights Offering........................... 1,250,000 shares
Common Stock to be Outstanding after the
Offerings (1)............................. 25,866,452 shares
Proposed AMEX Symbol....................... TXM
Use of Proceeds............................ For acquisitions, to fund research
and development and for general
corporate purposes
</TABLE>
- --------
(1) Does not include 1,925,000 shares of Common Stock reserved for issuance
under the Company's stock-based compensation plans and 3,307,888 shares of
Common Stock reserved for issuance upon the conversion of $39,000,000
principal amount of the Company's 4.2% Subordinated Convertible Note, due
to ThermoTrex (the "Convertible Note"). Options to purchase 1,161,000
shares of Common Stock had been granted and were outstanding under the
Company's stock-based compensation plans as of May 6, 1996. See
"Capitalization," "Dilution," "Management--Compensation of Directors,"
"Executive Compensation," "Relationship and Potential Conflicts of Interest
with Thermo Electron and ThermoTrex" and Note 9 of Notes to Consolidated
Financial Statements.
7
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA COMBINED (6)
------------------------
SIX MONTHS
FISCAL YEAR (1)(2) NINE MONTHS ENDED (1)(2) ENDED (1)(4) NINE MONTHS SIX MONTHS
------------------------------------ ------------------------ ------------------ ENDED ENDED
OCTOBER 1, SEPTEMBER 30, APRIL 1, MARCH 30, SEPTEMBER 30, MARCH 30,
1991 (4) 1992 (3)(4) 1993 1994 1994 (4) 1995 (5) 1995 1996 1995 1996
-------- ----------- ------ ------- ---------- ------------- -------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues........ $ -- $ 4,128 $37,519 $54,410 $39,196 $55,291 $31,315 $66,829 $126,185 $92,959
Gross Profit.... -- 1,964 18,930 26,616 19,542 27,111 15,190 29,237 47,783 38,622
Research and
Development
Expenses........ 313 1,683 7,182 10,662 7,320 8,595 6,270 8,170 13,918 10,825
Operating Income
(Loss).......... (313) (746) 1,960 2,682 2,428 6,342 1,803 7,372 4,277 7,952
Net Income
(Loss).......... (190) (544) 827 1,194 1,085 3,483 966 3,734 598 3,678
Earnings (Loss) per Share
(7)............. (.01) (.03) .04 .06 .05 .17 .05 .17 .02 .15
Weighted Average Shares
(7)............. 20,151 20,151 20,151 20,151 20,151 20,151 20,151 21,547 24,667 24,700
</TABLE>
<TABLE>
<CAPTION>
MARCH 30, 1996
----------------------------------------------
AS ADJUSTED,
PRO FORMA AS INCLUDING
COMBINED (8) ADJUSTED (9) RIGHTS OFFERING (10)
------------ ------------ --------------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working Capital................................ $ 10,626 $ 39,068 $ 55,318
Total Assets................................... 161,295 189,737 205,987
Long-term Obligations.......................... 39,236 39,236 39,236
Shareholders' Investment ...................... 63,432 91,874 108,124
</TABLE>
- ----
(1) All periods presented include ThermoTrex Corporation's ("ThermoTrex")
research and development business pertaining to its Sonic CT system.
(2) The Company's 1991, 1992, 1993 and 1994 fiscal years, set forth in this
table and referred to elsewhere in this Prospectus, ended on December 28,
1991, January 2, 1993, January 1, 1994, and December 31, 1994,
respectively. In September 1995, the Company changed its fiscal year-end
from the Saturday nearest December 31 to the Saturday nearest September
30. Accordingly, the Company's transition period from January 1, 1995 to
September 30, 1995 ("fiscal 1995") is presented. The unaudited data for
the nine months ended October 1, 1994 is presented for comparative
purposes only.
(3) Includes the results of Lorad Corporation ("Lorad") since its acquisition
by ThermoTrex on November 17, 1992.
(4) Derived from unaudited financial statements.
(5) Includes the results of Bennett X-Ray Corporation ("Bennett") since its
acquisition by ThermoTrex on September 15, 1995.
(6) The pro forma combined statement of income data was derived from the pro
forma combined condensed statements of income included elsewhere in this
Prospectus. The pro forma combined statement of income data sets forth the
results of operations for the nine months ended September 30, 1995 and the
six months ended March 30, 1996, as if the acquisitions of Bennett, XRE
Corporation ("XRE") and Continental X-Ray Corporation and certain of its
affiliates ("Continental") had occurred on January 1, 1995.
(7) Pursuant to Securities and Exchange Commission requirements, earnings
(loss) per share have been presented for all periods. Weighted average
shares for all periods include the 20,000,000 shares issued to ThermoTrex
in connection with the initial capitalization of the Company and the
effect of the assumed exercise of stock options issued within one year
prior to the Company's proposed initial public offering.
(8) The pro forma combined balance sheet data as of March 30, 1996 sets forth
the financial position of the Company as if the acquisitions of XRE and
Continental had occurred on March 30, 1996. See the pro forma combined
condensed balance sheet included elsewhere in this Prospectus.
(9) Adjusted to reflect the sale by the Company of 2,400,000 shares of Common
Stock offered in the Underwritten Public Offering at an assumed initial
public offering price of $13.00, after deducting estimated underwriting
discounts and commissions and offering expenses payable by the Company.
(10) Adjusted to reflect the sale by the Company of 2,400,000 shares of Common
Stock offered in the Underwritten Public Offering and 1,250,000 shares
offered in the Rights Offering at an assumed initial public offering
price of $13.00, after deducting estimated underwriting discounts and
commissions and offering expenses payable by the Company.
8
<PAGE>
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Accordingly, the following factors should be considered
carefully in evaluating the Company and its business before purchasing any of
such shares.
Technological Change and New Products. The market for the Company's products
is characterized by rapid and significant technological change, evolving
industry standards and new product introductions. Many of the Company's
products are technologically innovative, and require significant planning,
design, development and testing at the technological, product and
manufacturing process levels. These activities require significant capital
commitments and investment by the Company. The high cost of technological
innovation is matched by the rapid and significant change in the technologies
governing the products that are competitive in the Company's market, by
industry standards that may change on short notice and by the introduction of
new products and technologies such as magnetic resonance imaging and
ultrasound which may render existing products and technologies uncompetitive
or obsolete. There can be no assurance that the Company's products or
proprietary technologies will not become uncompetitive or obsolete.
Patents and Proprietary Rights. The Company places considerable importance
on obtaining patent and trade secret protection for significant new
technologies, products and processes because of the length of time and expense
associated with bringing new products through the development and regulatory
approval process and to the marketplace. The Company's success depends in part
on whether it can develop patentable products and obtain and enforce patent
protection for its products both in the United States and in other countries.
The Company has filed and intends to file applications as appropriate for
patents covering both its products and manufacturing processes. No assurance
can be given that patents will issue from any pending or future patent
applications owned by or licensed to the Company or that the claims allowed
under any issued patents will be sufficiently broad to protect the Company's
technology. In addition, no assurance can be given that any issued patents
owned by or licensed to the Company will not be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide competitive
advantages to the Company. The Company could incur substantial costs in
defending itself in suits brought against it or in suits in which the Company
may assert its patent rights against others. If the outcome of any such
litigation is unfavorable to the Company, the Company's business and results
of operations could be materially adversely affected.
The Company relies on trade secrets and proprietary know-how which it seeks
to protect, in part, by confidentiality agreements with its collaborators,
employees and consultants. There can be no assurance that these agreements
will not be breached, that the Company would have adequate remedies for any
breach or that the Company's trade secrets will not otherwise become known or
be independently developed by competitors. See "Business--Patents and
Proprietary Technology."
Risks Associated With Pending and Threatened Patent Litigation. In April
1992, Fischer Imaging Corporation ("Fischer") commenced a lawsuit in the
United States District Court, District of Colorado, against the Company's
Lorad division, alleging that the Lorad StereoGuide prone breast biopsy system
infringes a Fischer patent on a precision mammographic needle biopsy system.
As of September 30, 1995, the Company had sold 351 StereoGuide systems for
aggregate revenues of approximately $34.4 million. The suit requests a
permanent injunction, treble damages and attorneys' fees and expenses. If the
Company is unsuccessful in defending this lawsuit, it may be enjoined from
manufacturing and selling its StereoGuide system without a license from
Fischer. No assurance can be given that the Company will be able to obtain
such a license, if required, on commercially reasonable terms, if at all. In
addition, the Company may be subject to damages for past infringement. No
assurance can be given as to whether the Company will be subject to such
damages or, if so, the amount of damages which the Company may be required to
pay. The outcome of patent litigation, particularly in jury trials, is
inherently uncertain, and an unfavorable outcome in the Fischer litigation
could have a material adverse effect on the Company's business and results of
operations.
9
<PAGE>
The Company also is aware of a U.S. patent held by Nicola E. Yanaki which
has been asserted by him against certain automatic exposure control features
included in most of the Company's current mammography systems. The Company has
been informed by the holder of this patent that a competitor of the Company
has obtained a license for use of this patent. If Mr. Yanaki were successful
in enforcing such patent, the Company could be subject to damages for past
infringement and enjoined from manufacturing and selling imaging equipment
utilizing certain automatic exposure control features, which would have a
material adverse effect on the Company's business and results of operations.
The Company is also aware of an issued European patent with counterparts in
other non-U.S. countries applicable to imaging equipment utilizing certain
automatic exposure control features. The European patent is the subject of an
opposition proceeding before the European Patent Office. There can be no
assurance as to the outcome of such opposition.
In connection with the organization of the Company, ThermoTrex agreed to
indemnify the Company for any and all cash damages in connection with the
Fischer lawsuit and any potential claims by Mr. Yanaki with respect to sales
of the Company's products occurring prior to October 1995, when the businesses
of Lorad and Bennett were transferred to the Company. Notwithstanding this
indemnification, the Company would be required to report as an expense the
full amount, including any reimbursable amount, of any damages in excess of
the amount accrued ($2.3 million as of March 30, 1996), with any
indemnification payment it receives from ThermoTrex being treated as a
contribution to shareholders' investment. An unsuccessful outcome in any of
these matters may have a material adverse effect on the business of the
Company and on its results of operations for the period in which such outcome
occurs. See "Business--Patents and Proprietary Technology."
The Company is aware of two U.S. patents owned by a former employee which
have been asserted against the Company relating to its HTC grid to be used
with the Company's mammography systems. If the former employee were successful
in enforcing such patents, the Company could be subject to damages and
enjoined from manufacturing and selling the HTC grid.
The Company's competitors and other parties hold various patents and patent
applications in the fields in which the Company operates. There can be no
assurance that the Company will not be found to have infringed third-party
patents and, in the event of such infringement, the Company could be required
to alter its products or processes, pay licensing fees or cease making and
selling any infringing products and pay damages for past infringement.
No Assurance of Development and Commercialization of Products Under
Development. A number of the Company's potential products are currently under
development. There are a number of technological challenges that the Company
must successfully address to complete any of its development efforts. Product
development involves a high degree of risk, and returns to investors are
dependent upon successful development and commercialization of such products.
Proposed products based on the Company's technologies will require significant
additional research and development. There can be no assurance that any of the
products currently being developed by the Company, or those to be developed in
the future by the Company, will be technologically feasible or accepted by the
marketplace, or that any such development will be completed in any particular
timeframe.
Risks Associated with Acquisition Strategy. The Company's strategy includes
the acquisition of businesses and technologies that complement or augment the
Company's existing product lines. For example, in September 1995, the Company
acquired its Bennett subsidiary, in February 1996, the Company signed a non-
binding letter of intent to acquire XRE, a manufacturer of X-ray imaging
systems for cardiac catheterization and angiography, and in April 1996, the
Company signed a non-binding letter of intent to acquire Continental, a
manufacturer of radiographic/fluoroscopic products, general radiography
systems, electrophysiology products and dedicated mammography systems.
Promising acquisitions are difficult to identify and complete for a number of
reasons, including competition among prospective buyers and the need for
regulatory approvals, including antitrust
10
<PAGE>
approvals. There can be no assurance that the Company will be able to complete
future acquisitions or that the Company will be able to successfully integrate
any acquired businesses. In order to finance such acquisitions, it may be
necessary for the Company to raise additional funds through public or private
financings. Any equity or debt financing, if available at all, may be on terms
which are not favorable to the Company and, in the case of equity financing,
may result in dilution to the Company's stockholders.
Intense Competition. The Company encounters and expects to continue to
encounter intense competition in the sale of its products. The Company
believes that the principal competitive factors effecting the market for its
products include product features, product performance and reputation, price,
and service. The Company's competitors include large multinational
corporations and their operating units, including GE, Philips, the Siemens
Corporation subsidiary of Siemens AG ("Siemens"), Toshiba American Medical
Systems, Inc. and Toshiba America MRI, Inc. (collectively, "Toshiba"),
Shimadzu, and Picker International. These companies and certain of the
Company's other competitors have substantially greater financial, marketing
and other resources than the Company. As a result, they may be able to adapt
more quickly to new or emerging technologies and changes in customer
requirements, or to devote greater resources to the promotion and sale of
their products than the Company. Moreover, a significant portion of the
Company's sales are to GE and Philips through original equipment manufacturer
("OEM") arrangements. The products sold by such OEMs compete with products
offered by the Company and its independent dealers. Competition could increase
if new companies enter the market or if existing competitors expand their
product lines or intensify efforts within existing product lines. There can be
no assurance that the Company's current products, products under development
or ability to discover new technologies will be sufficient to enable it to
compete effectively with its competitors. See "Business--Competition."
Government Regulation; No Assurance of Regulatory Approval. The Company's
products are subject to regulation by the U.S. Food and Drug Administration
(the "FDA") and equivalent agencies in foreign countries. Failure to comply
with applicable regulatory requirements can result in, among other things,
civil and criminal fines, suspensions of approvals, recalls of products,
seizures, injunctions and criminal prosecutions.
To date, all of the Company's products have been classified by the FDA as
Class II medical devices and have been eligible for FDA marketing clearance
pursuant to the FDA's 510(k) premarket notification process, which is
generally shorter than the more involved premarket approval ("PMA") process.
The Company believes that most of its currently anticipated future products
and substantial modifications to existing products will be eligible for the
510(k) premarket notification process. However, the FDA has not yet classified
full-view digital imaging mammography systems like the one being developed by
the Company. If such systems are classified as Class III devices, the Company
would be required to file for FDA marketing clearance for its full-view
digital imaging mammography system under the PMA process, which would require
substantial additional clinical trials and would take a number of years. While
not classifying such systems, the FDA recently issued a preliminary protocol
for marketing clearance of full-view digital imaging mammography systems
suggesting that clearance may be obtained through an enhanced 510(k)
application with more extensive clinical trials. The preliminary protocol
calls for clinical trials on 400 subjects prior to applying to the FDA for
clearance to commercially market such a system and a multi-year, follow-up
study including comparative film and digital images on 12,000 subjects
following commercial introduction. If the preliminary protocol is adopted as
currently drafted, the Company believes this follow-up study will be
burdensome and may limit the commercialization of full-view digital imaging
mammography systems. The period for submitting comments to the preliminary
protocol has expired, and the Company can make no prediction as to when a
final protocol will be issued or if one will be issued at all. There can be no
assurance that the necessary clearances for any of the Company's products will
be obtained on a timely basis, if at all.
FDA regulations also require manufacturers of medical devices to adhere to
certain "Good Manufacturing Practices" ("GMP"), which include testing, quality
control and documentation procedures. The Company's manufacturing facilities
are subject to periodic inspection by the FDA. No assurances can be given that
the FDA
11
<PAGE>
will not in the future find the Company to be in violation of one or more such
regulations, which violation may adversely impact the operations of the
Company. See "Business--Government Regulation."
Healthcare Reform; Uncertainty of Patient Reimbursement. The Federal
government has in the past and may in the future consider, and certain state
and local as well as a number of foreign governments are considering or have
adopted, healthcare policies intended to curb rising healthcare costs. Such
policies include rationing of government-funded reimbursement for healthcare
services and imposing price controls upon providers of medical products and
services. The Company cannot predict what healthcare reform legislation or
regulation, if any, will be enacted in the United States or elsewhere.
Significant changes in the healthcare systems in the United States or
elsewhere are likely to have a significant impact over time on the manner in
which the Company conducts its business. Such changes could have a material
adverse effect on the Company. In addition, the Federal government regulates
reimbursement of fees for certain diagnostic examinations and capital
equipment acquisition costs connected with services to Medicare beneficiaries.
Recent legislation has limited Medicare reimbursement for diagnostic
examinations. These policies may have the effect of limiting the availability
or reimbursement for procedures, and as a result may inhibit or reduce demand
by healthcare providers for products in the markets in which the Company
competes. While the Company cannot predict what effect the policies of
government entities and other third party payors will have on future sales of
the Company's products, there can be no assurance that such policies would not
have an adverse impact on the operations of the Company. See "Business--
Reimbursement."
Dependence Upon Significant OEM Relationships. A significant portion of the
Company's sales are to GE and Philips through OEM arrangements. In fiscal
1995, sales to Philips accounted for 18% of the Company's net sales. Sales to
Philips accounted for 45% of XRE's sales in the 12 months ended December 31,
1995. The Company's sales depend, in part, on the continuation of these OEM
arrangements and the level of end-user sales by such OEMs. There can be no
assurance that the Company will be able to maintain its existing, or establish
new, OEM relationships and any failure to do so could have a material adverse
effect on its business. See "Business--Sales and Marketing--OEM Agreements."
Potential Product Liability. The Company's business exposes it to potential
product liability claims which are inherent in the manufacturing, marketing
and sale of medical devices, and as such the Company may face substantial
liability to patients for damages resulting from the faulty design or
manufacture of products. The Company currently maintains product liability
insurance, but there can be no assurance that this insurance will provide
sufficient coverage in the event of a claim, that the Company will be able to
maintain such coverage on acceptable terms, if at all, or that a product
liability claim would not materially adversely affect the business or
financial condition of the Company.
Dependence on Key Personnel. The Company is highly dependent on the members
of its senior management, research and engineering, manufacturing, marketing
and sales staff, the loss of one or more of whom could have a material adverse
effect on the Company. In particular, the Company's future performance is
dependent in part on the continued services of Anthony J. Pellegrino, the
Company's Vice Chairman, and Hal Kirshner, the Company's President and Chief
Executive Officer. The Company has no written employment agreements with
either Mr. Pellegrino or Mr. Kirshner. In addition, the Company believes that
its future success will depend in part on whether it can attract and retain
highly qualified engineering, management, manufacturing, marketing and sales
personnel, particularly as the Company expands its business activities. The
Company faces significant competition for the services of such personnel from
other companies. There can be no assurance that the Company will be able to
continue to attract and retain the personnel it requires for continued growth.
The failure to hire and retain such personnel could materially adversely
affect the Company.
Risks Associated With International Operations. International sales
accounted for 21% and 14% of the Company's revenues in fiscal 1995 and 1994,
respectively. The Company intends to continue to expand its presence in
international markets. International revenues are subject to a number of
risks, including the following: agreements may be difficult to enforce and
receivables difficult to collect through a foreign country's legal system;
foreign customers may have longer payment cycles; foreign countries may impose
additional
12
<PAGE>
withholding taxes or otherwise tax the Company's foreign income, impose
tariffs or adopt other restrictions on foreign trade; U.S. export licenses may
be difficult to obtain; and the protection of intellectual property in foreign
countries may be more difficult to enforce. There can be no assurance that any
of these factors will not have a material adverse impact on the Company's
business and results of operations.
Control by ThermoTrex. The Company's stockholders do not have the right to
cumulate votes for the election of directors. ThermoTrex, which will own
approximately 80% of the outstanding Common Stock of the Company after the
Offerings, has the power to elect the entire Board of Directors of the Company
and to approve or disapprove any corporate actions submitted to a vote of the
Company's stockholders. See "Relationship and Potential Conflicts of Interest
with Thermo Electron and ThermoTrex" and "Security Ownership of Certain
Beneficial Owners and Management."
Potential Conflicts of Interest. The Company may be subject to potential
conflicts of interest from time to time as a result of its relationship with
Thermo Electron and ThermoTrex. For example, conflicts may arise in the
development and licensing of digital detector technology by ThermoTrex to the
Company, the manufacture of digital detectors by ThermoTrex for sale to the
Company and the Company's manufacturing of lasers for sale to ThermoLase
Corporation. See "Relationship and Potential Conflicts of Interest with Thermo
Electron and ThermoTrex." Certain officers of the Company are also officers of
ThermoTrex, Thermo Electron and/or other subsidiaries of Thermo Electron, and
are full-time employees of ThermoTrex or Thermo Electron. Such officers will
devote only a portion of their working time to the affairs of the Company. For
financial reporting purposes, the Company's financial results are included in
the consolidated financial statements of ThermoTrex and Thermo Electron. The
members of the Board of Directors of the Company who are also affiliated with
Thermo Electron or ThermoTrex will consider not only the short-term and the
long-term impact of operating decisions on the Company, but also the impact of
such decisions on the consolidated financial results of ThermoTrex and Thermo
Electron. In some instances the impact of such decisions could be
disadvantageous to the Company while advantageous to ThermoTrex or Thermo
Electron, or vice versa. The Company is a party to various agreements with
Thermo Electron that may limit the Company's operating flexibility. See
"Relationship and Potential Conflicts of Interest with Thermo Electron and
ThermoTrex."
Significant Additional Shares Eligible for Sale After the Offerings. At the
conclusion of the 120-day period following the closing of the Offerings, the
Company will file a registration statement pursuant to the Securities Act
covering the resale of 1,962,000 shares of Common Stock held by existing
investors other than ThermoTrex. The 20,254,452 shares of Common Stock owned
by ThermoTrex will become eligible for resale under Rule 144 in October 1997.
In addition, as long as ThermoTrex is able to elect a majority of the
Company's Board of Directors, it will have the ability to cause the Company at
any time to register for resale all or a portion of the Common Stock owned by
ThermoTrex. ThermoTrex and the Company have agreed not to sell any shares of
Common Stock without the prior written consent of the Representatives of the
Underwriters for a 180-day period after the date of this Prospectus, other
than (i) shares of Common Stock to be sold to the Underwriters in the
Offerings, (ii) the grant of options to purchase shares of Common Stock
pursuant to existing stock-based compensation plans, (iii) shares of Common
Stock which may be sold to ThermoTrex, (iv) the issuance of shares of Common
Stock as consideration for the acquisition of one or more businesses (provided
that such Common Stock may not be resold prior to the expiration of the 180-
day period referenced above), and (v) shares of Common Stock to be sold in
connection with the Rights Offering.
Additional shares of Common Stock issuable upon exercise of options granted
under the Company's stock-based compensation plans will become available for
future sale in the public market at prescribed times. Sales of a significant
number of shares of Common Stock in the public market following the Offerings
could adversely affect the market price of the Common Stock. See "Relationship
and Potential Conflicts of Interest with Thermo Electron and ThermoTrex,"
"Shares Eligible for Future Sale" and "Underwriting."
Immediate and Substantial Dilution. Purchasers of the Common Stock in the
Offerings will incur an immediate and substantial dilution in the net tangible
book value per share of the Common Stock from the initial public offering
price of $12.47 per share, assuming the sale of no shares in the Rights
Offering, or $11.87 per
13
<PAGE>
share, assuming the maximum proceeds to the Company from the Rights Offering.
Additional dilution is likely to occur upon the exercise of outstanding stock
options. See "Dilution."
No Prior Public Market; Potential Volatility of Stock Price. Prior to the
Offerings, there has been no public market for the Common Stock, and there can
be no assurance that an active trading market will develop or be sustained
after the Offerings or that the market price of the Common Stock will not
decline below the initial public offering price. The initial public offering
price will be determined by negotiations among the Company and the
Representatives of the Underwriters. See "Underwriting" for a discussion of
the factors to be considered in determining the initial public offering price.
Factors such as fluctuations in the Company's operating results, announcements
of technological innovations or new contracts or products by the Company or
its competitors, government regulation and approvals, developments in patent
or other proprietary rights and market conditions for stocks of companies
similar to the Company could have a significant impact on the market price of
the Common Stock.
Lack of Dividends. The Company anticipates that for the foreseeable future
the Company's earnings, if any, will be retained for use in the business and
that no cash dividends will be paid on the Common Stock. Declaration of
dividends on the Common Stock will depend upon, among other things, future
earnings, the operating and financial condition of the Company, its capital
requirements and general business conditions. See "Dividend Policy."
14
<PAGE>
THE COMPANY
The Company was incorporated in Delaware in September 1995 as a wholly-owned
subsidiary of ThermoTrex. ThermoTrex acquired all of the outstanding shares of
capital stock of Bennett in September 1995 for approximately $42,000,000 in
cash. On October 2, 1995, the Company acquired all of the outstanding shares
of capital stock of Bennett from ThermoTrex in exchange for a $42,000,000
principal amount subordinated convertible note due 2000 (the "Convertible
Note"). The Convertible Note bears interest at a rate of 4.2% per annum and is
convertible into shares of Common Stock at a conversion price of $11.79 per
share. Subsequently, on October 16, 1995, ThermoTrex contributed all of the
assets and liabilities relating to its Lorad division ("Lorad") and the
development of its Sonic CT system to the Company in exchange for 20,000,000
shares of Common Stock of the Company.
Unless the context otherwise requires, references in this Prospectus to the
Company or Trex Medical Corporation refer to Trex Medical Corporation and its
subsidiaries. As of March 27, 1996, ThermoTrex beneficially owned 91% of the
Company's outstanding Common Stock, excluding the shares of Common Stock
issuable upon the conversion of the outstanding principal amount of the
Convertible Note. The Company's principal executive offices are located at 36
Apple Ridge Road, Danbury, Connecticut, and its telephone number is (203) 790-
1188.
THE RIGHTS OFFERING
THE RIGHTS
The Company is distributing non-transferable Rights, at no cost, to holders
of outstanding shares of Common Stock of record on the Record Date.
Stockholders of the Company will receive one Right for every ten shares of
Common Stock held by them of record on the Record Date. Each Right will be
exercisable for one share of Common Stock.
ThermoTrex, which currently owns approximately 91% of the outstanding Common
Stock (excluding shares of Common Stock issuable upon the conversion of the
Convertible Note), will not exercise the Rights it receives from the Company.
Of the Rights received by ThermoTrex, it will distribute to holders of
ThermoTrex Common Stock of record on the Record Date one Right for every ten
shares held by such holder and will retain the remaining Rights. ThermoTrex
has irrevocably elected not to exercise the Rights which it does not
distribute to its shareholders and such Rights will expire unexercised. Thermo
Electron, as the holder of a majority of the outstanding shares of ThermoTrex
Common Stock, will have no right to exercise the Rights it receives from
ThermoTrex, and such Rights will expire unexercised. Each whole Right will be
exercisable for one share of Common Stock. No fractional Rights or cash in
lieu thereof will be distributed or paid by the Company or ThermoTrex. The
number of Rights distributed by the Company and ThermoTrex to each holder of
Common Stock, other than ThermoTrex, and each holder of ThermoTrex Common
Stock (collectively the "Holders") will be rounded up to the nearest whole
number.
The purpose of the Rights Offering is to provide existing stockholders of
the Company and ThermoTrex with an opportunity to participate in the initial
public offering of the Company's Common Stock and to provide the Company with
the ability to raise additional capital in a cost-effective manner.
The Company has not engaged any underwriters, brokers or dealers in
connection with the Rights Offering, and will not pay any commission or
similar fees to any such person in connection with the Rights Offering.
EXPIRATION DATE
The Rights will expire at 5:00 p.m., Eastern time, on , 1996 unless
extended by the Company. The Company will not, in any event, extend the
Expiration Date beyond , 1996. After the Expiration Date, unexercised
Rights will be null and void. The Company will not be obligated to honor any
purported exercise of
15
<PAGE>
Rights received by the Subscription Agent after the Expiration Date,
regardless of when the documents relating to such exercise were sent, except
pursuant to the Guaranteed Delivery Procedures described below. Notice of any
extension of the Expiration Date will be made through a press release issued
by the Company.
SUBSCRIPTION PRIVILEGE
Each Right will entitle the holder thereof to receive, upon payment of the
Subscription Price, one share of Common Stock (the "Subscription Privilege").
Certificates representing shares of Common Stock purchased pursuant to the
Subscription Privilege will be delivered to subscribers as soon as practicable
after the closing of the Underwritten Public Offering.
EXERCISE OF RIGHTS
Rights may be exercised by delivering to American Stock Transfer & Trust
Company (the "Subscription Agent"), at or prior to 5:00 p.m., Eastern time, on
the Expiration Date, the properly completed and executed Subscription
Certificate evidencing such Rights with any required signatures guaranteed,
together with payment in full of the Subscription Price for each Underlying
Share subscribed for pursuant to the Subscription Privilege. Such payment in
full must be by (a) check or bank draft drawn upon a United States bank or
postal, telegraphic or express money order payable to American Stock Transfer
& Trust Company, as Subscription Agent, or (b) wire transfer of funds to the
account maintained by the Subscription Agent for such purpose at Chemical
Bank, 55 Water Street, New York, New York 10041, Account No. 323-294723; ABA
No. 021 000 128. Any wire transfer of funds should clearly indicate the
identity of the subscriber who is paying the Subscription Price by the wire
transfer. The Subscription Price will be deemed to have been received by the
Subscription Agent only upon (i) clearance of any uncertified check, (ii)
receipt by the Subscription Agent of any certified check or bank draft drawn
upon a United States bank or of any postal, telegraphic or express money
order, or (iii) receipt of good funds in the Subscription Agent's account
designated above. IF PAYING BY UNCERTIFIED PERSONAL CHECK, PLEASE NOTE THAT
THE FUNDS PAID THEREBY MAY TAKE UP TO FIVE BUSINESS DAYS TO CLEAR.
ACCORDINGLY, HOLDERS OF RIGHTS WHO WISH TO PAY THE SUBSCRIPTION PRICE BY MEANS
OF UNCERTIFIED PERSONAL CHECK ARE URGED TO MAKE PAYMENT SUFFICIENTLY IN
ADVANCE OF THE EXPIRATION DATE TO ENSURE THAT SUCH PAYMENT IS RECEIVED AND
CLEARS BY SUCH DATE AND ARE URGED TO CONSIDER PAYMENT BY MEANS OF CERTIFIED OR
CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
The address to which the Subscription certificates and payment of the
Subscription Price should be delivered is:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Telephone: (718) 921-8200
If a Rights holder wishes to exercise Rights, but time will not permit such
holder to cause the Subscription Certificate or Subscription Certificates
evidencing such Rights to reach the Subscription Agent on or prior to the
Expiration Date, such Rights may nevertheless be exercised if all of the
following conditions (the "Guaranteed Delivery Procedures") are met:
(i) such holder has caused payment in full of the Subscription Price for
each Underlying Share being subscribed for pursuant to the Subscription
Privilege to be received (in the manner set forth above) by the
Subscription Agent on or prior to the Expiration Date;
(ii) the Subscription Agent receives, on or prior to the Expiration Date,
a guarantee notice (a "Notice of Guaranteed Delivery"), substantially in
the form provided with the Instructions as to Use of Trex Medical
Corporation Subscription Certificates and International Holder Subscription
Forms (the "Instructions") distributed with the Subscription Certificates,
from a member firm of a registered national
16
<PAGE>
securities exchange or a member of the National Association of Securities
Dealers, Inc. (the "NASD"), or from a commercial bank or trust company
having an office or correspondent in the United States (each, an "Eligible
Institution"), stating the name of the exercising Rights holder, the number
of Rights represented by the Subscription Certificate or Subscription
Certificates held by such exercising Rights holder, the number of
Underlying Shares being subscribed for pursuant to the Subscription
Privilege and guaranteeing the delivery to the Subscription Agent of any
Subscription Certificate evidencing such Rights within three AMEX trading
days following the date of the Notice of Guaranteed Delivery; and
(iii) the properly completed Subscription Certificate evidencing the
Rights being exercised, with any required signatures guaranteed, is
received by the Subscription Agent within three AMEX trading days following
the date of the Notice of Guaranteed Delivery relating thereto. The Notice
of Guaranteed Delivery may be delivered to the Subscription Agent in the
same manner as Subscription Certificates at the address set forth above, or
may be transmitted to the Subscription Agent by telegram or facsimile
transmission (telecopy no. (718) 234-5001). Additional copies of the form
of Notice of Guaranteed Delivery are available upon request from the
Subscription Agent, at the address set forth above.
Unless a Subscription Certificate (i) provides that the shares of Common
Stock to be issued pursuant to the exercise of Rights represented thereby are
to be delivered to the record holder of such Rights or (ii) is submitted for
the account of an Eligible Institution, signatures on such Subscription
Certificate must be guaranteed by an Eligible Institution.
Holders who hold shares of Common Stock or ThermoTrex Common Stock for the
account of others, such as brokers, trustees or depositaries for securities,
should provide a copy of this Prospectus to the respective beneficial owners
of such shares as soon as possible, ascertain such beneficial owners'
intentions and obtain instructions with respect to the Rights. If the
beneficial owner so instructs, the record holder of such Rights should
complete Subscription Certificates and submit them to the Subscription Agent
with the proper payment. In addition, beneficial owners of Common Stock or
ThermoTrex Common Stock or Rights held through such a holder should contact
the holder and request the holder to effect transactions in accordance with
the beneficial owner's instructions. Beneficial holders should be aware that
brokers or other record holders may establish deadlines for receiving
instructions from beneficial holders significantly in advance of the
Expiration Date.
The instructions accompanying the Subscription Certificates should be read
carefully and followed in detail. DO NOT SEND SUBSCRIPTION CERTIFICATES TO THE
COMPANY OR TO THERMOTREX.
THE METHOD OF DELIVERY OF SUBSCRIPTION CERTIFICATES AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK
OF THE RIGHTS HOLDERS, BUT IF SENT BY MAIL IT IS RECOMMENDED THAT SUCH
CERTIFICATES AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO
ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT AT OR PRIOR
TO 5:00 P.M., EASTERN TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED,
PERSONAL CHECKS MAY TAKE UP TO FIVE BUSINESS DAYS TO CLEAR, HOLDERS OF RIGHTS
ARE STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR
CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
All questions concerning the timeliness, validity, form and eligibility of
any exercise of Rights will be determined by the Company, whose determinations
will be final and binding. The Company in its sole discretion may waive any
defect or irregularity, or permit a defect or irregularity to be corrected
within such time as it may determine, or reject the purported exercise of any
Right. Subscriptions will not be deemed to have been received or accepted
until all irregularities have been waived or cured within such time as the
Company determines in its sole discretion. The Company reserves the right to
reject any purchases not properly submitted or the acceptance of which would,
in the opinion of its counsel, be unlawful. Neither the Company nor the
Subscription Agent will be under any duty to give notification of any defect
or irregularity in connection with the submission of Subscription Certificates
or incur any liability for failure to give such notification.
17
<PAGE>
Any questions or requests for assistance concerning the method of exercising
Rights or requests for additional copies of this Prospectus, the Instructions
or the Notice of Guaranteed Delivery should be directed to the Subscription
Agent.
REFUND IF SUBSCRIPTION PRICE EXCEEDS PUBLIC OFFERING PRICE
If the Subscription Price is greater than the Public Offering Price, the
Company will cause the price upon exercise of the Rights to equal the Public
Offering Price and will promptly refund to holders exercising Rights an amount
per share equal to the amount by which the Subscription Price exceeds the
Public Offering Price.
TERMINATION OF OFFERING AND REFUND IF THE PUBLIC OFFERING PRICE IS MORE THAN
$16.00
If the Public Offering Price is more than $16.00, the Rights Offering will
be terminated because the Company intends to issue shares in the Underwritten
Public Offering and the Rights Offering at the same price and because
participants in the Rights Offering are only being asked to commit funds based
upon a maximum subscription price of $16.00 per share. The Company will refund
all amounts to holders who tendered subscription amounts to the Subscription
Agent without interest.
NO REVOCATION
ONCE A HOLDER OF RIGHTS HAS EXERCISED THE SUBSCRIPTION PRIVILEGE, SUCH
EXERCISE MAY NOT BE REVOKED.
FOREIGN AND CERTAIN OTHER STOCKHOLDERS
Subscription Certificates will not be mailed to Holders whose addresses are
outside the United States or who have an APO or FPO address, but will be held
by the Subscription Agent for their account. To exercise Rights, such Holders
must notify the Subscription Agent by completing an International Holder
Subscription Form, which will be delivered to such Holders (except those
located in the United Kingdom) in lieu of a Subscription Certificate, and
sending it by mail or telecopy to the Subscription Agent at the address and
telecopy number specified above. Holders located in the United Kingdom will
not initially be provided with International Holder Subscription Forms. Such
Holders who are interested in participating in the Rights Offering should
contact NatWest Securities Limited, 135 Bishopsgate, London, England EC2M 3UR,
telephone 44-171-375-8726, telecopier 44-171-375-6580, attention: Mr. Melvyn
Rowe. International Holder Subscription Forms must be returned to the
Subscription Agent at or prior to 5:00 p.m., Eastern time, on the Expiration
Date. Certain restrictions upon exercise of Rights by persons located outside
of the United States are set forth on the inside front cover page of this
Prospectus.
FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material United States federal income
tax considerations affecting holders of Common Stock and ThermoTrex Common
Stock receiving Rights in the Rights Offering. This summary is based upon
laws, regulations, rulings, and decisions currently in effect. This summary
does not discuss all aspects of federal taxation that may be relevant to a
particular investor or to certain types of investors subject to special
treatment under the federal tax laws (for example, banks, dealers in
securities, life insurance companies, tax-exempt organizations, and foreign
persons), nor does it discuss any aspect of state, local, or foreign tax laws.
HOLDERS OF COMMON STOCK AND THERMOTREX COMMON STOCK SHOULD CONSULT THEIR OWN
TAX ADVISORS CONCERNING THEIR INDIVIDUAL TAX SITUATIONS AND THE TAX
CONSEQUENCES OF THE RIGHTS OFFERING UNDER THE INTERNAL REVENUE CODE OF 1986
AND UNDER ANY APPLICABLE STATE, LOCAL, OR FOREIGN TAX LAWS.
Distribution of the Rights to Holders of Common Stock. A holder of Common
Stock will not recognize taxable income for federal income tax purposes as a
result of the issuance to such holder of Rights in respect of the Common
Stock. Except as provided in the following sentence, the basis of such Rights
will be zero. If either
18
<PAGE>
(i) the fair market value of the Rights on the date of distribution is 15% or
more of the fair market value of the Common Stock in respect of which they are
received on such date, or (ii) the stockholder elects, in the stockholder's
federal income tax return for the taxable year in which the Rights are
received, to allocate part of the basis of such Common Stock to the Rights,
then the stockholder's basis in such Common Stock will be allocated between
such Common Stock and such Rights in proportion to their respective fair
market values on the date of distribution. However, such an allocation of
basis is only allowable if the stockholder exercises his or her Rights. The
holding period of a stockholder with respect to Rights received as a
distribution on such stockholder's Common Stock will include the stockholder's
holding period for the Common Stock in respect of which the Rights were
issued.
Distribution of the Rights to Holders of ThermoTrex Common Stock. The
distribution of the Rights by ThermoTrex to holders of ThermoTrex Common Stock
will constitute a taxable distribution of property, and accordingly, each such
holder will be required to include as ordinary taxable income an amount equal
to the fair market value (if any) of the Rights as of the date of the
distribution (subject, to the extent available, to the dividends-received
deduction currently allowed to certain corporate stockholders). The tax basis
of the Rights in the hands of the recipient holder of ThermoTrex Common Stock
will be equal to the amount so included in income. The holding period of a
holder of ThermoTrex Common Stock with respect to Rights received as a
distribution on such stockholder's ThermoTrex Common Stock will begin on the
date of such distribution.
ThermoTrex is required annually to notify the holders of ThermoTrex Common
Stock, on Internal Revenue Service Form 1099, of the amount of all dividends
paid to such holders during the prior year, including, for 1996, the fair
market value of the Rights (if any) on the date of distribution. ThermoTrex
and the Company will determine the fair market value of the Rights on that
date. It is anticipated that the per share value of the Common Stock
represented by the Rights at the date of commencement of the Rights Offering
will approximate the Subscription Price, with the result that the Rights
should have nominal value for federal income tax purposes. Holders of
ThermoTrex Common Stock should be aware, however, that the Internal Revenue
Service will not be bound by ThermoTrex's and the Company's determination.
Exercise of Rights. A holder of Rights will not recognize gain or loss upon
the exercise of the Rights. A holder of Rights who receives shares of Common
Stock upon such exercise will acquire a tax basis in those shares equal to the
sum of the price paid on exercise and the holder's tax basis in the Rights.
The holding period of Common Stock received on exercise of the Rights will
begin on the date the Rights are exercised.
Lapse of Rights. A holder of Rights that fails to exercise the Rights prior
to the Expiration Date will be deemed to have sold his rights on that date for
an amount equal to zero. Accordingly, if such unexercised Rights were held as
capital assets, the holder would recognize a capital loss equal to the amount
of such holder's adjusted tax basis in the Rights. In the case of a
stockholder of the Company, no capital loss would be realized since the basis
of the Rights to a stockholder who does not exercise the Rights is zero. Such
a capital loss for a ThermoTrex stockholder will be a short-term capital loss.
19
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
in the Offerings are estimated to be $28,442,000 ($32,817,800 if the
Underwriters' over-allotment option is exercised in full) assuming no shares
are issued in the Rights Offering, and $44,692,000 ($49,067,800 if the
Underwriters' over-allotment option is exercised in full) if all 1,250,000
shares are issued in the Rights Offering, in each case assuming an initial
public offering price of $13.00 per share and after deducting estimated
underwriting discounts and commissions and offering expenses. The principal
purposes of the Offerings are to increase the Company's equity capital, to
create a public market for the Common Stock and to facilitate future access by
the Company to public equity markets.
The Company expects to use the net proceeds from the Offerings for the
acquisitions of XRE and Continental, the purchase prices of which are
currently expected to be approximately $17,000,000 and $18,200,000,
respectively. The Company expects to use any excess proceeds (none, assuming
no shares are issued in the Rights Offering, and approximately $9,492,000
($13,867,800 if the Underwriters' over-allotment option is exercised in full),
assuming all 1,250,000 shares are issued in the Rights Offering) to fund
research and development of future products, including the development of
full-view digital imaging mammography systems (currently estimated to be
approximately $4,700,000 in fiscal 1996), and for working capital and other
general corporate purposes, including the possible acquisition of one or more
businesses whose products are complementary with those offered by the Company.
However, except for XRE and Continental, the Company has no specific
agreements, commitments or understandings with respect to any acquisition that
would be material to the Company. There can be no assurance that the XRE and
Continental acquisitions will be consummated on the proposed terms, if at all.
Pending these uses, the Company expects to invest the net proceeds from the
Offerings primarily in investment grade interest bearing or dividend bearing
instruments, either directly by the Company or pursuant to a repurchase
agreement with Thermo Electron. See "Relationship and Potential Conflicts of
Interest with Thermo Electron and ThermoTrex--Miscellaneous."
DIVIDEND POLICY
The Company anticipates that for the foreseeable future the Company's
earnings, if any, will be retained for use in the business and that no cash
dividends will be paid on the Common Stock.
20
<PAGE>
CAPITALIZATION
The following table sets forth as of March 30, 1996 the capitalization of
the Company (i) stated on a pro forma basis to reflect the proposed
acquisitions of XRE and Continental, and assumed short-term borrowings from
Thermo Electron of $18.2 million, (ii) as adjusted to reflect the issuance and
sale by the Company of the 2,400,000 shares of Common Stock offered in the
Underwritten Public Offering and assuming no shares of Common Stock are sold
in the Rights Offering, and (iii) as adjusted to reflect the issuance and sale
of 3,650,000 shares of Common Stock in both the Underwritten Public Offering
and the Rights Offering, in each case at an assumed initial public offering
price of $13.00 per share and after deducting estimated underwriting discounts
and commissions and offering expenses payable by the Company.
<TABLE>
<CAPTION>
MARCH 30, 1996
------------------------------------------
AS ADJUSTED,
INCLUDING
PRO FORMA RIGHTS
COMBINED AS ADJUSTED OFFERING
------------ ------------ -------------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
Short-term Obligations:
<S> <C> <C> <C>
Note Payable to Thermo Electron.... $ 18,200 $ -- $ --
============ ============ ============
Long-term Obligations:
Subordinated Convertible Note, Due
to Parent Company................. $ 39,000 $ 39,000 $ 39,000
Other.............................. 236 236 236
------------ ------------ ------------
39,236 39,236 39,236
------------ ------------ ------------
Shareholders' Investment:
Common stock, $.01 par value,
50,000,000 shares authorized;
22,216,452 shares issued and
outstanding, 24,616,452 shares, as
adjusted and 25,866,452 shares, as
adjusted for the Rights Offering
(1)............................... 222 246 259
Capital in excess of par value..... 59,476 87,894 104,131
Retained earnings.................. 3,734 3,734 3,734
------------ ------------ ------------
Total Shareholders' Investment.... 63,432 91,874 108,124
------------ ------------ ------------
Total Capitalization (Long-term
Obligations and Shareholders'
Investment)..................... $102,668 $131,110 $147,360
============ ============ ============
</TABLE>
- --------
(1) Does not include 1,925,000 shares of Common Stock reserved for issuance
under the Company's stock-based compensation plans and 3,307,888 shares of
Common Stock reserved for issuance upon conversion of the outstanding
principal amount of the Convertible Note. Options to purchase 1,161,000
shares of Common Stock had been granted and were outstanding under the
Company's stock-based compensation plans as of May 6, 1996. See
"Management--Compensation of Directors" and "Executive Compensation" and
Note 9 of Notes to Consolidated Financial Statements.
21
<PAGE>
DILUTION
As of March 30, 1996, the Company had negative net tangible book value of
$15,337,000, or $.69 per share, stated on a pro forma basis to reflect the
acquisitions of XRE and Continental (see the pro forma combined condensed
balance sheet included elsewhere in this Prospectus). Negative net tangible
book value per share is determined by dividing negative net tangible book
value (total tangible assets less total liabilities) by the number of shares
of Common Stock outstanding. After giving effect to the sale by the Company of
2,400,000 shares of Common Stock in the Underwritten Public Offering (after
deducting the estimated underwriting discounts and commissions and offering
expenses), and assuming no shares are sold in the Rights Offering, the pro
forma net tangible book value of the Company as of March 30, 1996 would have
been $13,105,000 or $.53 per share. This represents an immediate increase in
pro forma net tangible book value of $1.22 per share to existing shareholders
and an immediate dilution in pro forma net tangible book value of $12.47 per
share to new investors purchasing Common Stock in the Underwritten Public
Offering. See "Risk Factors--Immediate and Substantial Dilution." The
following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed price to public....................................... $13.00
------
Pro forma negative net tangible book value per share as of
March 30, 1996, before the Underwritten Public Offering.... $(.69)
Increase in net tangible book value per share attributable
to the Underwritten Public Offering........................ 1.22
-----
Pro forma net tangible book value per share as of March 30,
1996, after the Underwritten Public Offering (1)(2).......... .53
------
Dilution per share to new investors (1)(2).................... $12.47
======
</TABLE>
- --------
(1) If the Underwriters' over-allotment option were exercised in full, the pro
forma net tangible book value per share after the Underwritten Public
Offering would be $.70, resulting in an immediate dilution of $12.30 per
share to investors purchasing shares in the Underwritten Public Offering.
See "Underwriting."
(2) If all options outstanding as of May 6, 1996 to purchase an aggregate of
1,161,000 shares of Common Stock were exercised in full, and the
$39,000,000 principal amount Convertible Note which was outstanding as of
May 6, 1996 was converted by ThermoTrex into 3,307,888 shares of the
Company's Common Stock, in addition to the Underwriters' exercise of the
over-allotment option, the pro forma net tangible book value per share
after the Underwritten Public Offering would be $2.35, resulting in an
immediate dilution of $10.65 per share to investors purchasing shares in
the Underwritten Public Offering.
The following table sets forth on a pro forma basis as of March 30, 1996,
the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price paid per share by
existing shareholders and by the investors purchasing shares of Common Stock
in the Underwritten Public Offering, assuming no shares are sold in the Rights
Offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------ ------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
ThermoTrex (1)............ 20,254,452 82.3% $41,010,000 44.4% $ 2.02
Other existing investors
(2)...................... 1,962,000 8.0 20,161,000 21.8 10.28
New investors............. 2,400,000 9.7 31,200,000 33.8 13.00
---------- ----- ----------- -----
Total................... 24,616,452 100.0% $92,371,000 100.0%
========== ===== =========== =====
</TABLE>
- --------
(1) Calculated on the basis of (i) the book value of net assets transferred by
ThermoTrex to the Company in exchange for 20,000,000 shares of the
Company's Common Stock and (ii) the conversion price of the shares issued
to ThermoTrex upon conversion of $3,000,000 principal amount of the
Convertible Note.
(2) Represents the price paid for shares of the Company's Common Stock
purchased for cash.
22
<PAGE>
After giving effect to the Rights Offering, which assumes the sale of
1,250,000 shares upon the exercise of Rights, the pro forma net tangible book
value of the Company as of March 30, 1996 would have been $29,355,000 or $1.13
per share. This represents an immediate increase in pro forma net tangible
book value of $1.82 per share to existing shareholders and an immediate
dilution in pro forma net tangible book value of $11.87 per share to new
investors purchasing Common Stock in the Offerings. See "Risk Factors--
Immediate and Substantial Dilution." The following table illustrates per share
dilution:
<TABLE>
<S> <C> <C>
Assumed price to public...................................... $13.00
------
Pro forma negative net tangible book value per share as of
March 30, 1996, before the Offerings...................... $(.69)
Increase in net tangible book value per share attributable
to the Offerings.......................................... 1.82
-----
Pro forma net tangible book value per share as of March 30,
1996, after the Offerings (1)(2)............................ 1.13
------
Dilution per share to new investors (1)(2)................... $11.87
======
</TABLE>
- --------
(1) If the Underwriters' over-allotment option were exercised in full, the pro
forma net tangible book value per share after the Offerings would be
$1.29, resulting in an immediate dilution of $11.71 per share to investors
purchasing shares in the Offerings. See "Underwriting."
(2) If all options outstanding as of May 6, 1996 to purchase an aggregate of
1,161,000 shares of Common Stock were exercised in full, and the
$39,000,000 principal amount Convertible Note which was outstanding as of
May 6, 1996 was converted by ThermoTrex into 3,307,888 shares of the
Company's Common Stock, in addition to the Underwriters' exercise of the
over-allotment option, the pro forma net tangible book value per share
after the Offerings would be $2.78, resulting in an immediate dilution of
$10.22 per share to investors purchasing shares in the Offerings.
The following table sets forth on a pro forma basis as of March 30, 1996,
the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price paid per share by
existing shareholders and by the investors purchasing shares of Common Stock
in the Offerings, assuming the maximum proceeds to the Company from the Rights
Offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------ -------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
ThermoTrex (1).............. 20,254,452 78.3% $ 41,010,000 37.8% $ 2.02
Other existing investors
(2)........................ 1,962,000 7.6 20,161,000 18.5 10.28
New investors............... 3,650,000 14.1 47,450,000 43.7 13.00
---------- ----- ------------ -----
Total....................... 25,866,452 100.0% $108,621,000 100.0%
========== ===== ============ =====
</TABLE>
- --------
(1) Calculated on the basis of (i) the book value of net assets transferred by
ThermoTrex to the Company in exchange for 20,000,000 shares of the
Company's Common Stock and (ii) the conversion price of the shares issued
to ThermoTrex upon conversion of $3,000,000 principal amount of the
Convertible Note.
(2) Represents the price paid for shares of Common Stock purchased for cash.
23
<PAGE>
SELECTED FINANCIAL INFORMATION
The selected financial information below as of and for the years ended
January 1, 1994 and December 31, 1994, and the nine months ended September 30,
1995 has been derived from the Company's Consolidated Financial Statements,
which have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report included elsewhere in this
Prospectus. The selected financial information for the fiscal years ended
December 28, 1991 and January 2, 1993, the nine months ended October 1, 1994
and the six month periods ended April 1, 1995 and March 30, 1996 has not been
audited but, in the opinion of the Company, includes all adjustments
(consisting only of normal, recurring adjustments) necessary to present fairly
such information in accordance with generally accepted accounting principles
applied on a consistent basis. The results of operations for the six months
ended March 30, 1996 are not necessarily indicative of results for the entire
year.
<TABLE>
<CAPTION>
PRO FORMA COMBINED (5)
------------------------
FISCAL YEAR (1) NINE MONTHS ENDED (1)(2) SIX MONTHS ENDED (1) NINE MONTHS SIX MONTHS
---------------------------------- ------------------------ ---------------------- ENDED ENDED
OCTOBER 1, SEPTEMBER 30, APRIL 1, MARCH 30, SEPTEMBER 30, MARCH 30,
1991 1992 (3) 1993 1994 1994 1995 (4) 1995 1996 (4) 1995 1996
------ -------- ------- ------- ---------- ------------- --------- ---------- ------------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
INCOME DATA:
Revenues......... $ -- $ 4,128 $37,519 $54,410 $39,196 $ 55,291 $ 31,315 $ 66,829 $126,185 $ 92,959
------ ------- ------- ------- ------- -------- --------- ---------- -------- --------
Costs and
Operating
Expenses:
Cost of
revenues........ -- 2,164 18,589 27,794 19,654 28,180 16,125 37,592 78,402 54,337
Selling, general
and
administrative
expenses........ -- 1,027 9,788 13,272 9,794 12,174 7,117 13,695 29,588 19,845
Research and
development
expenses........ 313 1,683 7,182 10,662 7,320 8,595 6,270 8,170 13,918 10,825
------ ------- ------- ------- ------- -------- --------- ---------- -------- --------
313 4,874 35,559 51,728 36,768 48,949 29,512 59,457 121,908 85,007
------ ------- ------- ------- ------- -------- --------- ---------- -------- --------
Operating Income
(Loss)........... (313) (746) 1,960 2,682 2,428 6,342 1,803 7,372 4,277 7,952
Interest and
Other Income
(Expense), Net... -- -- (158) (22) (11) 22 (2) (397) (1,809) (1,127)
------ ------- ------- ------- ------- -------- --------- ---------- -------- --------
Income (Loss)
Before Income
Taxes............ (313) (746) 1,802 2,660 2,417 6,364 1,801 6,975 2,468 6,825
Income Tax
Provision
(Benefit)........ (123) (202) 975 1,466 1,332 2,881 835 3,241 1,870 3,147
------ ------- ------- ------- ------- -------- --------- ---------- -------- --------
Net Income
(Loss)........... $ (190) $ (544) $ 827 $ 1,194 $ 1,085 $ 3,483 $ 966 $ 3,734 $ 598 $ 3,678
====== ======= ======= ======= ======= ======== ========= ========== ======== ========
Earnings (Loss)
per Share (6).... $ (.01) $ (.03) $ .04 $ .06 $ .05 $ .17 $ .05 $ .17 $ .02 $ .15
====== ======= ======= ======= ======= ======== ========= ========== ======== ========
Weighted Average
Shares (6)....... 20,151 20,151 20,151 20,151 20,151 20,151 20,151 21,547 24,667 24,700
====== ======= ======= ======= ======= ======== ========= ========== ======== ========
BALANCE SHEET
DATA (AT END OF
PERIOD):
Working Capital.. $ -- $ 4,410 $ 6,148 $ 8,584 $ 7,333 $ 13,171 $ 35,555 $ 10,626
Total Assets..... -- 35,004 44,553 48,000 47,465 102,374 129,575 161,295
Long-term
Obligations...... -- -- -- -- -- -- 39,000 39,236
Shareholders'
Investment....... (28) 28,636 36,694 37,033 37,471 80,010 63,432 63,432
</TABLE>
- ----
(1) All periods presented include ThermoTrex's research and development
business pertaining to its Sonic CT system.
(2) In September 1995, the Company changed its fiscal year-end from the
Saturday nearest December 31 to the Saturday nearest September 30.
Accordingly, the Company's transition period from January 1, 1995 to
September 30, 1995 ("fiscal 1995") is presented. The unaudited data for
the nine months ended October 1, 1994 is presented for comparative
purposes only.
(3) Includes the results of Lorad since its acquisition by ThermoTrex on
November 17, 1992.
(4) Includes the results of Bennett since its acquisition by ThermoTrex on
September 15, 1995.
(5) The pro forma combined statement of income data was derived from the pro
forma combined condensed statements of income included elsewhere in this
Prospectus. The pro forma combined statement of income data sets forth the
results of operations for the nine months ended September 30, 1995 and six
months ended March 30, 1996, as if the acquisitions of Bennett, XRE and
Continental had occurred on January 1, 1995. The pro forma combined
balance sheet data is derived from the pro forma combined condensed
balance sheet included elsewhere in this Prospectus, which was prepared as
if the acquisitions of XRE and Continental had occurred on March 30, 1996.
(6) Pursuant to Securities and Exchange Commission requirements, earnings
(loss) per share have been presented for all periods. Weighted average
shares for all periods include the 20,000,000 shares issued to ThermoTrex
in connection with the initial capitalization of the Company and the
effect of the assumed exercise of stock options issued within one year
prior to the Company's proposed initial public offering.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company designs, manufactures and markets mammography equipment and
minimally invasive stereotactic needle biopsy systems used for the detection
of breast cancer, and also designs, manufactures and markets general
radiography (X-ray) equipment. The Company sells its systems worldwide
principally through a network of independent dealers. In addition, the Company
manufactures mammography and radiography systems as an original equipment
manufacturer for other medical equipment companies such as U.S. Surgical, GE
and Philips. The Company has two operating units, Lorad, a manufacturer of
mammography and stereotactic biopsy systems, and Bennett, a manufacturer of
general radiography and mammography equipment.
The Company conducts all of its manufacturing operations in the United
States and sells its products on a worldwide basis. The Company anticipates
that an increasing percentage of its revenues will be from export sales. The
Company denominates its export sales in U.S. dollars and therefore, neither
its revenue nor earnings are significantly affected by exchange rate
fluctuations.
RESULTS OF OPERATIONS
In September 1995, the Company changed its fiscal year-end from the Saturday
nearest December 31 to the Saturday nearest September 30. Accordingly, the
results of operations for 1995 compares the nine months ended September 30,
1995 ("fiscal 1995") with the unaudited nine months ended October 1, 1994
("fiscal 1994").
Six Months Ended March 30, 1996 Compared With Six Months Ended April 1, 1995
Revenues increased 113% to $66.8 million in the six months ended March 30,
1996, from $31.3 million in the six months ended April 1, 1995, due primarily
to the inclusion of $23.3 million in revenues from Bennett, which was acquired
in September 1995. Revenues at Lorad increased 39% to $43.5 million in the six
months ended March 30, 1996 from $31.3 million in the six months ended April
1, 1995 as a result of increased demand for mammography and biopsy systems.
Under an OEM agreement with Philips, Lorad will receive minimum orders for two
models of imaging systems totaling $40 million over a five-year period that
began in January 1994, subject to certain conditions. As of March 30, 1996,
the Company had recognized cumulative revenue of $21.3 million under this
contract. Revenues from Philips were $7.4 million in the six months ended
March 30, 1996, compared with $4.7 million in the six months ended April 1,
1995. Export sales accounted for 28% of the Company's revenues in the six
months ended March 30, 1996, compared with 26% in the six months ended April
1, 1995.
The gross profit margin declined to 44% in the six months ended March 30,
1996, from 49% in the six months ended April 1, 1995, due to the inclusion of
lower-margin revenues at Bennett.
Selling, general and administrative expenses as a percentage of revenues
decreased to 20% in the six months ended March 30, 1996 from 23% in the six
months ended April 1, 1995, due to increased revenues at Lorad. Research and
development expenses increased to $8.2 million in the six months ended March
30, 1996 from $6.3 million in the six months ended April 1, 1995, reflecting
the Company's continued efforts to develop and commercialize new products
including the Company's M-IV mammography system, full-breast digital
mammography system, and direct-detection X-ray sensor, as well as enhancements
of existing systems. Under a license agreement between the Company and
ThermoTrex, the Company may elect to expend approximately $2 million each year
during fiscal 1996, 1997 and 1998 in order to expand the field of use in which
it is entitled to use the digital imaging detection technology. See
"Relationship and Potential Conflicts of Interest with Thermo Electron and
ThermoTrex."
Interest income in the six months ended March 30, 1996 represents interest
on the proceeds of the Company's private placements of Common Stock in
November 1995 and January 1996. Interest expense in the six months ended March
30, 1996 represents interest associated with the $42 million principal amount
Convertible Note issued to ThermoTrex in October 1995 in connection with the
Bennett acquisition.
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The effective tax rate was 46% in both periods. This tax rate differs from
the statutory federal income tax rate due to the impact of state income taxes
and nondeductible amortization of cost in excess of net assets of acquired
companies.
The Company is involved with certain patent litigation that arose at Lorad
prior to its acquisition by ThermoTrex. See Note 2 of Notes to Consolidated
Financial Statements. In addition, a third party has alleged that the
Company's mammography systems infringe a patent held by the third party. See
Note 8 of Notes to Consolidated Financial Statements. In another matter, a
former employee of the Company has asserted that a component of a newly
introduced product infringes two U.S. patents owned by the former employee.
See "Risk Factors--Risks Associated with Pending and Threatened Patent
Litigation" for a discussion of these matters.
Nine Months Ended September 30, 1995 ("Fiscal 1995") Compared With Nine
Months Ended October 1, 1994 ("Fiscal 1994")
Revenues increased 41% to $55.3 million in fiscal 1995 from $39.2 million in
fiscal 1994. The increase resulted from higher demand across all product
lines, with significant growth coming from international sales through the
Company's OEM agreement with Philips. Revenues from Philips were $9.8 million
in fiscal 1995, compared with $4.1 million in fiscal 1994. Export sales
accounted for 21% of the Company's revenues in fiscal 1995, compared with 11%
in fiscal 1994.
The gross profit margin declined to 49% in fiscal 1995 from 50% in fiscal
1994, due to an adjustment to expense of $0.3 million for inventory revalued
at the time of Bennett's acquisition.
Selling, general and administrative expenses as a percentage of revenues
decreased to 22% in fiscal 1995 from 25% in fiscal 1994, due primarily to
increased revenues. Research and development expenses increased to $8.6
million in fiscal 1995 from $7.3 million in fiscal 1994, reflecting the
Company's continued efforts to develop and commercialize the full-view digital
imaging mammography system, as well as efforts to enhance existing systems.
The effective tax rate was 45% in fiscal 1995, compared with 55% in fiscal
1994. These tax rates exceed the federal statutory federal income tax rate due
primarily to state income taxes and nondeductible amortization of cost in
excess of net assets of acquired companies. The decrease in the effective tax
rate in 1995 resulted from the lower relative impact of nondeductible
amortization of cost in excess of net assets of acquired companies and state
income taxes.
Twelve Months Ended December 31, 1994 Compared With Twelve Months Ended
January 1, 1994
Revenues increased 45% to $54.4 million in 1994 from $37.5 million in 1993.
The increase resulted from the initiation of OEM sales under the Philips
agreement, an increase in digital spot mammography sales and increased demand
for StereoGuide needle-biopsy, mammography and industrial imaging equipment
due to increased demand. Revenues from Philips were $5.8 million in 1994.
Export sales accounted for 14% of the Company's revenues in 1994, compared
with 10% of revenues in 1993.
The gross profit margin declined to 49% in 1994 from 50% in 1993, due to a
change in sales mix.
Selling, general and administrative expenses as a percentage of revenues
declined to 24% in 1994 from 26% in 1993, due primarily to an increase in
total revenues. Research and development expenses increased to $10.7 million
in 1994 from $7.2 million in 1993, reflecting the Company's continued efforts
to develop and commercialize the full-view digital imaging mammography system
and the Sonic CT system, and the development of the Philips OEM product.
The effective tax rate during 1994 was 55%, compared with 54% in 1993. These
rates exceed the statutory federal income tax rate due to nondeductible
amortization of cost in excess of net assets of acquired companies and the
impact of state income taxes.
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LIQUIDITY AND CAPITAL RESOURCES
Consolidated working capital was $35.6 million at March 30, 1996, compared
with $13.2 million at September 30, 1995. Included in working capital are cash
and cash equivalents of $19.2 million at March 30, 1996 and $0.2 million at
September 30, 1995. Cash provided by operating activities was $1.8 million in
the six months ended March 30, 1996. The Company used cash of $4.1 million and
$1.9 million to fund increases in accounts receivable and inventories,
respectively, during the first six months of fiscal 1996. The increase in
receivables resulted from higher sales while the inventory increase resulted
from business growth and a new product that will be shipped in the third
fiscal quarter. The Company expended $1.5 million on purchases of property,
plant and equipment during the first half of fiscal 1996. The Company expects
to expend approximately $1.4 million for additional purchases of property,
plant and equipment during the remainder of fiscal 1996.
In connection with the transfer of the outstanding shares of capital stock
of Bennett, the Company issued to ThermoTrex the $42,000,000 principal amount
Convertible Note. In March 1996, ThermoTrex converted $3,000,000 principal
amount of the Convertible Note into 254,452 shares of Common Stock. In
November 1995, the Company completed a private placement of 1,862,000 shares
of its Common Stock for net proceeds of approximately $17.6 million. In
January 1996, the Company sold 100,000 shares of its Common Stock in a private
placement for net proceeds of $1.1 million.
In February 1996, the Company signed a non-binding letter of intent to
acquire XRE, a Massachusetts company that designs, manufactures and markets X-
ray imaging systems used for cardiac catheterization and angiographs, for
approximately $17.0 million. The purchase price is subject to a post-closing
adjustment based on the net asset value of XRE as of the closing date. If the
acquisition is completed, the Company intends to finance the acquisition
through the proceeds of the Offerings or through its existing cash balances.
In April 1996, the Company signed a non-binding letter of intent to acquire
Continental, an Illinois company that designs, manufactures and markets
general purpose and specialty X-ray systems for approximately $18.2 million in
cash, including the repayment of $5.7 million in debt. The purchase price is
subject to a post-closing adjustment based on the net asset value of
Continental as of the closing date. If the acquisition is completed, the
Company intends to finance the acquisition through the proceeds of the
Offerings.
Working capital at March 30, 1996, on a pro forma basis assuming the
acquisitions of XRE and Continental, which are assumed to have been financed
through cash on hand and borrowings from Thermo Electron, had occurred on that
date, would have been $10.6 million. (See the pro forma combined condensed
balance sheet included elsewhere in this Prospectus.)
Although the Company expects to have positive cash flow from its existing
operations, the Company anticipates it will require significant amounts of
cash to pursue the acquisition of complementary businesses and technologies.
The Company expects that it will finance these acquisitions through a
combination of internal funds, the net proceeds of the Offerings, additional
debt or equity financing and/or short-term borrowings from ThermoTrex or
Thermo Electron, although it has no agreement with these companies to ensure
that funds will be available on acceptable terms or at all. The Company
believes that its existing resources are sufficient to meet the capital
requirements of its existing businesses for the foreseeable future, including
at least the next 24 months.
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BUSINESS
The Company is a worldwide leader in the design, manufacture and marketing
of mammography equipment and minimally invasive stereotactic needle biopsy
systems used for the detection of breast cancer, as well as a leading designer
and manufacturer of general radiography (X-ray) equipment. A mammography
system is a dedicated radiographic system designed specifically to image
breast tissue. Stereotactic needle biopsy systems, which use a guided hollow
needle to extract a sample of tissues from the breast, offer a cost-effective,
less invasive alternative to open surgery for the biopsy of suspicious breast
lesions. The Company recently broadened its product base by acquiring Bennett
X-Ray Corporation ("Bennett"), a leading producer of specialty and general
purpose radiographic systems, including mammography systems.
The Company believes the introduction of technologically innovative products
has made a significant contribution to the achievement of its leadership
position. In 1984, the Company introduced the first mammography system with a
high frequency generator, which improved image quality while reducing
radiation dosage. The Company's Bennett Contour mammography system is designed
with a patented tilt C-arm which permits imaging of breast tissue closer to
the chest wall and greater flexibility in the positioning of patients. The
Company's Lorad StereoGuide stereotactic needle biopsy system is one of two
dedicated prone systems sold in the world, and its LORAD DSM digital spot
mammography option was one of the first digital imaging systems available for
use with stereotactic needle biopsy. The Bennett high frequency generator,
introduced in 1989, was the first generator to offer 100 kHz high frequency
power for general radiographic systems, resulting in improved image quality
while reducing radiation dosage.
The Company's mammography and stereotactic needle biopsy systems are used by
radiologists and physicians in offices, hospitals and dedicated breast-care
centers, and its general radiography systems are used by physicians and
radiologists, both in office and hospital settings, as well as by
veterinarians and chiropractors. The Company sells its systems worldwide
principally through a network of independent dealers. In addition, the Company
manufactures mammography and radiography systems and components as an original
equipment manufacturer for other medical equipment companies such as United
States Surgical Corporation ("U.S. Surgical"), the GE Medical Systems division
of General Electric Company, Inc. ("GE") and the Philips Medical Systems North
America Company subsidiary of Philips N.V. ("Philips").
End-user sales of mammography systems in the United States in 1994 were
approximately $165 million. The Company believes that sales in this market
will be driven by acceptance of mammography as an effective cancer screening
tool and improvements in performance through technological innovation such as
full-view digital imaging. The Company estimates that worldwide end-user sales
of stereotactic needle biopsy systems in 1994 were approximately $65 million.
The Company believes that growth in this market will be driven by increasing
recognition in the medical community of the effectiveness of this procedure as
an alternative to more invasive procedures, as well as by general health-care
cost-containment trends. End-user sales of general radiographic systems in the
United States in 1994 were approximately $250 million. The Company believes
that sales in this market are driven primarily by replacement of older
systems. Since the Company sells its systems principally to dealers for resale
to end-users, the Company's revenues generally reflect sales at wholesale
prices.
The Company's strategy includes maintaining its market position and
expanding into complementary markets through continued technological
innovation and strategic acquisitions. The Company recently introduced a
proprietary High Transmission Cellular ("HTC") grid for use with its
mammography systems that provides better image contrast than existing grids at
lower radiation doses, and a patented autoexposure tomography option to its
general radiography systems that reduces the need for multiple exposures in
tomography procedures, thereby reducing the radiation exposure to the patient.
The Company believes the most promising technological advances in the
radiography field will be derived from the substitution of electronic
detectors for the film currently used in substantially all radiographic
systems. This digital imaging technology is expected to be capable of higher
image quality, to permit the enhancement of an X-ray image through software
and to allow near-real-time, off-site analysis of the X-ray image by
radiologists. The Company is currently developing a full-view digital imaging
mammography system and has working prototypes at two clinical sites. The
Company believes
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that the digital imaging technology being developed for this system may be
adaptable to general radiography and cardiac diagnostic imaging systems and
the Company will seek to develop applications in these markets.
The Company also intends to expand or to augment its product line through
the acquisition of one or more additional companies or technologies. The
Company's strategy includes making acquisitions of companies that can benefit
from the Company's distribution channels and technology. In February 1996, the
Company entered into a non-binding letter of intent for the acquisition of XRE
Corporation ("XRE"). XRE designs, manufactures and markets X-ray imaging
systems used for cardiac catheterization and angiography. XRE manufactures
systems and system components as an original equipment manufacturer for other
medical equipment companies such as Philips and the Picker International, Inc.
subsidiary of GEC, Inc. ("Picker International"). It also sells its systems in
the United States directly and through distributors. In April 1996, the
Company signed a non-binding letter of intent to acquire Continental X-Ray
Corporation and certain of its affiliates (collectively, "Continental").
Continental designs, manufactures and markets radiographic/fluoroscopic
products, general radiography systems, electrophysiology products used in
cardiac laboratories and dedicated mammography systems. There can be no
assurance that either the XRE or Continental transactions will be successfully
completed.
INTRODUCTION TO RADIOGRAPHY
Radiography involves the use of X-rays to produce images of matter beneath
an opaque surface. Radiography has been used as a medical diagnostic tool
since the turn of the century. A radiographic imaging system principally
consists of a generator, an X-ray tube and an image recording system, which is
usually film. The object to be imaged is placed between the X-ray tube and the
film. Typically, filters or grids are placed between the X-ray tube and the
object, or the object and the film, to reduce extraneous X-rays. Some
radiographic systems include a bucky, or moving grid, to increase image
contrast by reducing scattering X-rays.
X-rays, which are not reflected by opaque surfaces, pass through the object
and expose the film. However, if the object is comprised of areas of varying
densities or chemical compositions, X-rays will be absorbed by the denser
areas or areas of certain chemical compositions in proportion to the density
or chemical composition of the matter. As a result, the film will be exposed
to a varying degree, thereby producing an image of the density or chemical
variation within the object. For example, since bone has a greater density
than the surrounding tissue in the body, X-rays can be used to produce an
image of a skeleton.
Radiographic imaging systems are differentiated on the basis of the power
and frequency of the generator, the configuration of the X-ray tube relative
to the film and the software that controls the operation of the system. In
certain areas, the specialized requirements of the imaging procedure have
resulted in the development of dedicated systems. For example, mammography
systems, which are designed exclusively to image breast tissue, have the
ability to compress the breast, adjust X-ray power levels and use automated
software controls programmed to provide the best image of breast tissue.
BREAST CANCER DETECTION
Breast cancer is the second leading cause of cancer fatalities in women. The
incidence of breast cancer in American women has grown from one in 20 in 1940
to one in 11 in 1980 to one in eight in 1994. The American Cancer Society
("ACS") estimates that in 1996 over 184,000 new cases of breast cancer in
American women will be reported and approximately 44,000 American women will
die from the disease.
Successful treatment of breast cancer depends in large part on the early
detection of malignant lesions in the breast. Current detection procedures
typically include clinical and self examination, screening mammography and, if
necessary, a biopsy. Physical examination is only useful for detecting lesions
that can be felt, while mammography has the ability to reveal lesions that
have not advanced to that stage. If a suspicious lesion is discovered in a
screening mammogram, the woman typically will undergo a biopsy, which is a
procedure to physically remove cells from the lesion for testing in a
laboratory. If the cells are cancerous, the woman generally
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undergoes some form of cancer treatment. The Company designs, manufactures and
markets both mammography and biopsy systems.
Mammography Systems
Most experts agree that mammography is the best method for detecting breast
cancer. The ACS and eighteen other health organizations, including the
American Medical Association, recommend that women aged 40 to 49 undergo a
screening mammogram every one to two years and that women over the age of 50
undergo an annual screening mammogram. However, only approximately 40% of
women in the United States comply with the ACS guidelines. The National Cancer
Institute and the American College of Physicians currently only recommend
screening mammography for women over the age of 50.
Current mammography systems are limited in their ability to image dense
breast tissue, typically found in women under the age of 50. This is
significant since approximately one-quarter of the women diagnosed with breast
cancer are under the age of 50. In addition, women with a family history of
breast cancer are at a higher risk of getting the disease and are therefore
encouraged to start undergoing screening mammography at a younger age.
Successful imaging of dense breast tissue requires high contrast images. The
Company recently introduced a new proprietary HTC grid that, compared to
existing grids, reduces scattering X-rays, while blocking fewer primary X-
rays, resulting in higher contrast images with lower radiation doses. In
addition, the Company is developing a full-view digital imaging mammography
system designed to substantially increase image contrast without a significant
decrease in image resolution.
Demand in the market for mammography systems is driven primarily by
technological innovation that produces better image quality. End-user sales of
mammography systems in the United States in 1994 were approximately $165
million. Although growth of the installed base has slowed, demand for new
systems continues as older models are replaced with ones offering new
technological innovations. In addition, the Company believes that the market
outside the United States will grow as more countries adopt mammography
quality standards similar to those recently adopted in the United States.
The Company currently markets six different mammography systems. The
Company's systems are generally differentiated on the basis of price and
performance. The Company's high-end models are the recently introduced Lorad
M-IV and the Bennett Contour, which have retail list prices of approximately
$96,000 and $89,000, respectively. The Lorad M-IV offers enhanced image
quality and system features over the Lorad M-III, which has been Lorad's high-
end model for the last five years. Many of the Lorad M-IV's features were
developed in response to user demands, including upgradability and modular
systems. The Bennett Contour offers a patented tilt C-arm which permits the
system to tilt toward or away from the patient to aid in imaging breast
tissue. The Company's lower-priced models are the Lorad M-III and the Bennett
MF-150, which have retail list prices of approximately $82,500 and $48,000,
respectively. These models do not offer all of the features of the high-end
models and are marketed to more cost-conscious customers. In addition, the
Company offers the Lorad T-350 and the Bennett MD-5 mobile mammography
systems.
The Company is also developing a next generation mammography system which
replaces the film with a solid-state detector capable of directly recording
the X-ray image in an electronic format. The Company anticipates that this
digital imaging system will be able to record 4,000 different shades of grey
compared to only 200 shades of grey in conventional film-recorded images,
resulting in significantly greater image contrast. In addition, since the
image is recorded in electronic format, it can be enhanced and manipulated,
transmitted over telephone lines to remote locations, and stored on magnetic
or optical media.
The Company currently offers a DSM digital spot mammography option for use
primarily with stereotactic needle biopsy. However, this system is capable of
imaging only a small area of the breast. The Company currently has prototype
full-view digital imaging mammography systems in operation at Good Samaritan
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Hospital in New York and the University of Virginia. At the Radiology Society
of North America Conventions in 1994 and 1995, the Company displayed superior
images from its prototypes to radiologists. The Company expects to submit a
modified design of this prototype to the United States Food and Drug
Administration ("FDA") for clearance, which is required before the Company can
commercially market its full-view digital imaging mammography system. There
can be no assurance that the Company will receive all necessary FDA
clearances. See "Risk Factors--Government Regulation" and "Business--
Government Regulation."
Stereotactic Needle Biopsy Systems
Mammography is only one of the first steps in the diagnosis of breast
cancer. If a mammogram reveals a suspicious lesion that cannot be identified
as benign or malignant, the next step typically is to perform a biopsy to
remove cells from the suspicious lesion to determine whether or not they are
cancerous. Studies indicate that between 1% and 2% of women undergoing their
first screening mammography in the United States will have a biopsy. However,
only 20% to 40% of women biopsied will be diagnosed with breast cancer.
Traditionally, biopsies have been performed in open surgery under general
anesthetic. Surgical biopsies can be painful procedures, and surgeons
generally remove a large area of breast tissue, about the size of a golf ball,
to ensure the collection of tissue from the suspicious lesion. These surgeries
can leave visible scarring on the breast and scar tissue in the breast that
can make detecting cancers in future mammograms more difficult.
The Company offers a variety of needle biopsy systems that provide an
alternative to surgical biopsy. Stereotactic needle biopsy systems were
introduced to address the disadvantages of surgical biopsy. Stereotactic
needle biopsy procedures can be performed on an out-patient basis under local
anesthetic. These procedures generally remove only a small tissue sample,
resulting in minimal scarring both on and in the breast. Recent studies
indicate that stereotactic needle biopsy is equally effective compared to
surgical biopsy in determining whether a suspicious lesion is malignant. The
typical cost of a stereotactic needle biopsy procedure is approximately $1,000
compared to approximately $3,000 for a surgical biopsy. However, because this
procedure was only recently introduced and is still gaining acceptance by the
medical community, less than 10% of breast tissue biopsies performed in 1994
used a stereotactic needle biopsy procedure.
The basic principle of a stereotactic needle biopsy system is that a hollow
needle is inserted into the breast to remove cells from the suspicious lesion.
The needle is guided to the suspicious lesion by use of stereotactic images of
the breast. Stereotactic images are two images of the same fixed breast, one
taken at a 15 degree angle off true vertical in one direction and the other
taken at a 15 degree angle off true vertical in the other direction. The
stereotactic images are input into a computer and then used to plot the
coordinates of the lesion to aim a computer-controlled needle gun.
The Company offers upright, add-on systems, the StereoLoc II and MF-CYTO,
that can be attached to most of its mammography systems. Add-on systems are
principally comprised of a needle gun attachment that fits onto the
mammography system in place of the breast compression paddle. The stereotactic
images required to plot the location of the lesion are taken by the
mammography system. These systems enhance the functionality of a mammography
system and are beneficial to customers which have only periodic demand for
stereotactic needle biopsy procedures.
The Company also offers a dedicated prone table, the StereoGuide, for
customers with greater demand for biopsy procedures. With the dedicated prone
table, the patient lies down with her breast suspended through an aperture in
the table. The X-ray imaging equipment and needle gun are mounted below the
table. Patients on the prone table are more comfortable, increasing the
likelihood they will remain still during the procedure, and cannot see the
needle being inserted in their breast, reducing the chance of fainting. The
Company's Stereoguide system is the subject of a lawsuit by Fischer alleging
infringement of a Fischer patent. See "Risk Factors--Risks Associated With
Pending and Threatened Patent Litigation" and "Business--Patents and
Proprietary Technology."
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The Company offers a digital spot imaging option with all of its
stereotactic needle biopsy systems. Although not capable of imaging the entire
breast, digital spot imagers are capable of capturing an area large enough to
cover a suspicious lesion. The Company's digital spot imaging systems can
record and display an X-ray image in approximately ten seconds. Since the
image is recorded directly in electronic format, a computer can quickly plot
the location of the lesion and aim the needle gun once the lesion has been
located with a cursor on the computer screen. A stereotactic needle biopsy
procedure using digital spot imaging can be performed in as short a time as
ten minutes compared with a typical time of 45 minutes using a film-based
system. The retail list price for the StereoGuide table with the digital spot
imaging option is $234,000 and for the add-on system with the digital spot
imaging option ranges from $135,000 to $140,000.
The Company estimates that worldwide end-user sales of stereotactic needle
biopsy systems grew from their introduction in 1988 to approximately $65
million in 1994. The Company believes that this market will grow as the
procedure becomes more widely accepted by the medical community and as
pressures to contain health-care costs increase.
GENERAL RADIOGRAPHY
The Company is a leading designer and manufacturer of office-based
radiographic systems, which are basic systems generally used in medical
outpatient facilities, such as doctors' offices and surgi-care centers, as
well as by chiropractors and veterinarians. The Company has focused on this
segment of the market and achieved its leadership position by providing low-
cost, reliable systems. In 1993, the Company broadened its focus by offering
the more sophisticated and expensive radiographic systems typically used in
hospitals.
The Company entered the hospital market with systems based on its high
frequency generator, which permits shorter exposure times, resulting in lower
radiation doses and greater image contrast and resolution. The Company
believes this generator currently provides it with a technological advantage
over its competitors. In addition to this generator, the Company has also
developed an overhead tube crane and table targeted to the hospital market.
End-user sales of general radiographic equipment in the United States in
1994 were approximately $250 million, of which a significant portion can be
attributed to the sale of such systems to hospitals. The United States market
for general radiographic systems is stable and consists primarily of
replacement sales as customers upgrade older equipment. The Company believes
that the international market is substantially larger than the United States
market and that the installed base of systems is still growing, particularly
in developing countries. The Company has recently been expanding its
international sales efforts.
The Company recently introduced the first, and currently only, general
radiographic system to receive the World Health Organization ("WHO") World
Health Imaging System--Radiographic ("WHIS-RAD") certificate of approval. The
Company's WHIS-RAD system is a flexible and easy to use general purpose
radiographic system. WHO will subsidize purchases of WHIS-RAD-approved systems
by qualifying health care organizations in developing countries.
The Company's radiographic systems typically include a generator, a tube
stand and a table or bucky structure. For each of these components the Company
offers a variety of options and features that can be configured to create
systems with different price and performance characteristics. A high-end,
hospital-based system, which has a retail list price of approximately $80,000,
may be comprised of a 60 kilowatt, high frequency generator; a ceiling-mounted
overhead tube crane; a four-way floating, elevating table; and an upright
bucky stand. An office-based system, which has a retail list price of
approximately $30,000, may be comprised of a 25 kilowatt, high frequency
generator; a floor-mounted, free standing tube stand and an upright bucky
stand.
The Company recently introduced a tomography unit with a patented automatic
exposure option for use with its general radiographic systems. In a tomography
system, during the exposure the X-ray tube sweeps over the subject with the
film tray sweeping under the subject in the opposite direction. The resulting
image provides an
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unobstructed view at a desired plane within the subject's body. Prior to the
introduction of the Company's automatic exposure option, multiple exposures
were generally required to obtain a correctly exposed image. The Company
believes that for a number of applications its $80,000-$110,000 tomography
system may be a cost-effective alternative to CT scanners which can cost up to
$800,000.
The Company believes digital imaging will have significant application in
the general radiographic and radiographic/flouroscopy markets and that the
technology it develops for its full-view digital imaging mammography system
may be adaptable to these applications. In general radiographic applications,
the Company believes digital imaging will produce better quality images and
reduce operating costs by eliminating the need for film and processing
equipment and chemicals. In addition, digital imaging will permit the
electronic storage of images on magnetic or optical media, as well as the
transmission of images to multiple locations. Furthermore, the Company
believes digital imaging in radiographic/fluoroscopy systems will be able to
replace the image intensifier and spot film device, which are both large and
expensive components.
OTHER PRODUCTS
The Company uses its technological and manufacturing expertise to produce a
number of other products.
The Company's LPX-160 portable imaging system is based on the Company's
medical imaging technology. This system is designed to produce high-resolution
images of metals, composites and plastics. Customers for this system include
the United States Air Force and several commercial airlines, which use the
system to test for stress fractures and other defects in aircraft, and
Canadian and American utilities, which use the system to inspect pipelines and
turbines. The Company was recently awarded a $9.7 million contract for these
systems from the United States Air Force. Sales to the United States Air Force
were approximately $1.1 million or 2.1% of the Company's revenues for the nine
months ended September 30, 1995 and approximately $3.2 million or 4.8% of the
Company's revenues for the six months ended March 30, 1996.
The Company manufactures an X-ray source that is used as a component to a
fill-measuring device sold by Thermedics Inc., a publicly-traded majority-
owned subsidiary of Thermo Electron. Through February 1996, the Company has
sold approximately 98 such devices under this arrangement.
The Company also manufactures the laser used in ThermoLase Corporation's
hair removal process. ThermoLase Corporaton is a publicly-traded, majority-
owned subsidiary of ThermoTrex. The Company has sold 54 lasers to ThermoLase
under this arrangement and has committed to deliver 126 additional lasers.
CARDIAC CATHETERIZATION AND ANGIOGRAPHY
In February 1996, the Company entered into a non-binding letter of intent to
acquire XRE. XRE is a designer, manufacturer and marketer of complete cardiac
catheterization laboratories and positioners for cardiovascular imaging
systems. XRE systems consist of a mechanical positioner which is used to
position an X-ray source and, an image intensifier around a patient who lies
prone on an angiographic table. The entire system is designed to provide real
time images of the heart and coronary arteries for physicians performing
interventional procedures, such as a diagnostic angiogram or balloon
angioplasty.
Coronary artery disease is the leading cause of death in the United States
and represents an increasing health risk throughout the world. According to an
industry source, between 20 and 25 million individuals in the United States
suffer from some form of coronary artery disease, with an estimated cost to
the United States health care system of approximately $120 billion annually.
One of the most common forms of cardiovascular disease is atherosclerosis
which can lead to atheroma, or a narrowing of the arteries. In addition to the
coronary arteries, atherosclerosis can effect blood vessels in the brain, legs
and arteries throughout the body.
Traditionally, cardiac catheterization has been the tool of choice for
diagnosing atherosclerosis and certain other cardiovascular diseases because
it provides the clearest and most accurate depiction of the coronary arteries.
Cardiac catheterization involves X-ray imaging of the heart and large blood
vessels following the injection of a radio-opaque solution into the patient.
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Historically, the primary form of treatment for coronary artery disease has
been open-heart bypass surgery. However, in recent years significant advances
have been made in the treatment of atherosclerosis and other coronary artery
diseases without extensive surgery. A common alternative treatment is
angioplasty, a procedure in which a segment of a narrowed coronary artery is
stretched by the inflation of a balloon introduced into the affected artery. A
more recent development involves the permanent implantation of devices such as
a stent into the blood vessel in order to keep the restricted vessel open.
Angioplasty is less invasive than surgery and generally does not require a
lengthy hospitalization (typically no more than two days). The Company
believes vascular and cardiovascular surgeons will increasingly use balloon
angioplasty and these other less invasive techniques to treat vascular
diseases in a non-surgical setting. Each of these procedures is performed
under the guidance of X-ray imaging.
Founded more than twenty years ago, XRE's products include the Unicath C
cardiovascular imaging system, and the Unicath LP biplane cardiovascular
imaging system. XRE recently introduced the Unicath SP, its top of the line
single plane and cardiovascular system with enhanced features such as a larger
X-ray tube and advanced image intensifier. XRE also recently introduced the
Poly Cx, a lower-cost alternative it believes is ideally suited for suburban
and smaller hospitals, as well as the export market. XRE also designs,
manufactures and sells other specialized X-ray systems, such as the Unicath EP
electrophysiology laboratory.
XRE also offers a complete line of digital imaging products. XRE has
developed and introduced a high speed digital imaging system, DVFX, which is
capable of acquiring images which may be stored on a variety of media. This
system is capable of providing high resolution real-time digital images at 30
frames per second. DVFX employs a proprietary digital filtering system
developed expressly for use in interventional imaging. Its open system
architecture facilitates image transfer and storage using industry standard,
high speed networks.
XRE's products are sold worldwide under the Angiographic Devices tradename
through its own direct sales force and a network of independent dealers. As of
December 31, 1995, XRE employed a six person direct sales force and
approximately twenty-five dealers covering primarily North America, Eastern
Europe, Western Europe and the Pacific Rim.
XRE also manufactures gantries or "positioners" for Philips' PolyDiagnost C2
cardiovascular system and Picker International's Cardicon-L and Omnicon-L
cardiovascular systems. Sales to original equipment manufacturers ("OEMs")
represented approximately 50% of XRE's total revenues in 1995.
Many of XRE's positioners are based on its parallelogram-based design. This
design permits multi-angular views of the heart and coronary arteries while
the patient remains stationary on the table. As of December 31, 1995, over
4,000 cardiac catheterization and angiographic positioners and systems
manufactured by XRE had been installed throughout the world.
The market for cardiac catheterization and angiographic imaging equipment is
intensively competitive. The Company believes that competition in this market
is likely to increase as a result of health care cost-containment pressures
and the development of alternative diagnostic and interventional technologies.
XRE's competitors include large multinational corporations such as GE,
Philips, the Siemens Corporation subsidiary of Siemens AG ("Siemens"), Toshiba
and Picker International. XRE competes in these markets primarily on the basis
of product features, product performance and reputation as well as price and
service.
As of December 31, 1995, XRE held a number of United States patents and
certain foreign counterparts and employed over 180 individuals.
The Company's strategy is to increase sales of XRE products by marketing
them through the Company's dealer network and to incorporate the Company's
digital imaging technology into XRE's product offerings. In addition, the XRE
acquisition will permit the Company to broaden its product offerings and
leverage its sales and service organizations.
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The terms relating to the proposed acquisition of XRE by the Company are set
forth in a non-binding letter of intent between the parties. However, the
Company and XRE have yet to enter into a definitive purchase agreement, and
there can be no assurance that the final arrangements between the parties will
be as set forth in the letter of intent or that the parties will consummate
the transactions contemplated therein.
RADIOGRAPHIC/FLUOROSCOPY
In April 1996, the Company entered into a non-binding letter of intent to
acquire all of the assets of Continental. Continental designs, manufactures
and markets radiographic/fluoroscopic products, general radiography systems,
electrophysiology products used in cardiac laboratories and dedicated
mammography systems.
A radiographic/fluoroscopic ("R/F") system is able to record dynamic events
by capturing a series of images in a short period of time. For example, R/F
systems are used for various gastrointestinal procedures which image in real
time the progress of a radio-opaque ingested solution (typically barium)
throughout the body. According to an industry source, end-user sales of R/F
equipment in the United States in 1994 were approximately $440 million.
Founded more than 60 years ago, Continental produces R/F systems using
advanced high frequency generators that provide pulsed power, resulting in
substantially reduced radiation exposure to the patient. Continental's R/F
products include the DigiSpot 2000, a high speed digital imaging system that
directly records the image in electronic format, permitting the electronic
storage of images on magnetic or optical media and the transmission of images
to multiple locations with image quality comparable with film-based systems.
Continental also manufactures a line of general radiographic products
targeted to hospital and clinical customers. Its general radiography product
line features high frequency generators with anatomical programming and other
operator selected features. Continental recently introduced its PMT
radiographic/tomographic line of products, which has the flexibility both to
image particular isolated organs, such as kidneys, and to function as a
general purpose radiographic suite, permitting hospitals to contain costs by
reducing the amount of space occupied by radiographic equipment.
Continental's electrophysiology product line is used by hospitals in the
treatment of cardioarrythmia, which is characterized by the sudden wild
beating of the heart that can result in death. The EP 2000 system consists of
a positioner, an elevating/tilting table and a high frequency X-ray generator.
The system features variable pulsed power with high performance digital
imaging.
Continental also manufactures the MAM CP System, an advanced mammography
system using high frequency generators, a biased focused X-ray tube and
automatic exposure control.
Continental's products are sold worldwide through a network of independent
dealers. In addition, Continental sells electrophysiology products to GE,
Toshiba and Shimadzu through OEM arrangements. Continental recently entered
into a two-year agreement with Columbia/HCA Healthcare Corporation to be one
of its two exclusive providers of general radiographic imaging equipment.
Continental also has group purchasing agreements with AmeriNet and Health
Services Corporation of America which extend through late 1997. Continental
manufactures its products at its 150,000 square-foot manufacturing plant in
Broadview, Illinois.
The Company's strategy is to increase sales by merging the Company's and
Continental's products into a full line of X-ray imaging systems, thereby
enhancing their desirability to dealer networks and OEM customers. The Company
also believes that the ability to offer a full line of products will enable it
to compete more effectively for contracts with national hospital chains and
international customers. In addition, the Company believes that the companies'
respective digital technologies may have application to each others' products.
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The terms relating to the proposed acquisition of Continental by the Company
are set forth in a non-binding letter of intent between the parties. However,
the Company and Continental have yet to enter into a definitive purchase
agreement, and there can be no assurance that the final arrangements between
the parties will be as set forth in the letter of intent or that the parties
will consummate the transactions contemplated therein.
SALES AND MARKETING
Sales by Dealers and Distributors
The Company's products are sold worldwide under both the Lorad and Bennett
names through separate networks of independent dealers. Lorad systems are sold
domestically through a network of approximately 50 dealers managed by six
regional offices. Bennett systems are sold domestically to physicians, clinics
and hospitals through a network of approximately 50 dealers supported by three
Bennett regional sales managers and six direct sales people focused on
mammography. Overseas, Lorad systems are sold by approximately 40 distributors
covering 50 countries and Bennett systems are sold by approximately 100
distributors covering more than 75 countries. The Company and its network of
independent dealers maintain a staff of factory-trained service technicians to
support the Lorad and Bennett systems.
OEM Agreements
In addition to manufacturing and marketing its own systems, the Company
manufactures systems and system components as an OEM for other medical
equipment companies. In general, under the Company's OEM agreements, which
could expire between 1996 and 1998, the manufacturers are obligated to
purchase from the Company certain minimum quantities of systems, system
components and subsystems manufactured by the Company. There can be no
assurance that upon the expiration of these agreements they will be renewed or
that new OEM customers can be identified.
The Company is party to several agreements with Philips pursuant to which
the Company's Lorad division manufactures mammography systems based on Philips
and Lorad design criteria and a mobile general purpose X-ray system, both for
sale by Philips under the Philips nameplate. The agreement for the purchase of
the Lorad mammography systems has an initial term of five years expiring in
1998, and is renewable upon mutual agreement of the parties for successive 12-
month terms. The agreement requires Philips to purchase a minimum of 800 units
over the term of the agreement, in gradually increasing increments of between
76 and 200 per year. The agreement for the purchase of mobile general purpose
X-ray systems and is renewable upon mutual agreement of the parties for
successive 12-month terms. The agreement requires Philips to purchase a
minimum of 300 units over the term of the agreement, although this agreement
is cancellable by either party if Philips fails to purchase at least 200 units
in any calendar year beginning after December 31, 1995. Sales to Philips
accounted for 18% of the Company's total revenues in fiscal 1995. Sales to
Philips accounted for 45% of XRE's sales in the twelve months ended December
31, 1995.
The Company is party to an agreement with GE pursuant to which the Company's
Bennett subsidiary manufactures radiographic systems utilizing Bennett's high
frequency generators for sale by GE under the GE nameplate. The agreement with
GE is for an initial term of three years expiring December 31, 1997.
The Company is a party to an agreement with Philips Medizin Systeme
Unternehmensbereich der Philips GmbH ("Philips Germany") pursuant to which the
Company's Bennett subsidiary manufactures radiographic systems for sale by
Philips Germany outside of the United States and Canada under the Smit Rontgen
nameplate. The agreement is renewable upon mutual agreement of the parties for
successive 12-month terms. The agreement does not require Philips Germany to
purchase any minimum quantity of products, but Philips Germany is required to
provide Bennett with a 12-month non-binding rolling forecast of its purchasing
requirements.
In October 1995, the Company entered into an agreement with U.S. Surgical
pursuant to which the Company's Lorad division is manufacturing its
StereoGuide prone stereotactic biopsy table modified to accept a U.S. Surgical
biopsy device for sale by U.S. Surgical under the U.S. Surgical nameplate.
U.S. Surgical has agreed
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to purchase a minimum of 60 tables during the first year of this agreement and
certain minimum purchase requirements to maintain exclusivity thereafter.
RESEARCH AND DEVELOPMENT
The Company maintains active programs for the development of new mammography
and X-ray imaging systems. The Company's current development efforts are
focused on the development of a full-view digital imaging mammography system,
direct detection X-ray sensors and the enhancement of existing mammography
products. The Company believes that the digital imaging technology developed
for this system also will be readily adaptable to general radiographic and
cardiac diagnostic imaging systems. No assurance can be given that the
Company's development programs will be successfully completed.
One of the Company's long-term research and development programs is the
development of a Sonic CT (Computed Tomography) system that uses acoustic
waves to form high-resolution images of breast tissue. Sonic CT uses no
ionizing radiation, provides near real-time images and has the potential to
detect some of the masses that are undetectable using conventional X-ray
mammography. The Company is collecting patient data with a clinical test unit
in conjunction with radiologists at the University of California, San Diego.
The Company is developing products based upon digital imaging technology
developed by scientists at ThermoTrex. ThermoTrex has granted the Company a
fully-paid, exclusive, worldwide, perpetual license to use and sell such
technology in the fields of mammography and general radiography. Under the
terms of the license agreement with ThermoTrex, if the Company elects to fund
approximately $6 million of ThermoTrex's research and development over the
next three years, the Company's license will be extended to cover the fields
of radiographic/fluoroscopy, mobile C-arm fluoroscopy and
cardiology/angiography. The Company will purchase digital imaging detectors
from ThermoTrex. See "Relationship and Potential Conflicts of Interest with
Thermo Electron and ThermoTrex."
Research and development expenses of the Company were $7.2 million, $10.7
million and $8.6 million for 1993, 1994 and the nine months ended September
30, 1995, respectively.
COMPETITION
The health care industry in general, and the market for imaging products in
particular, is highly competitive. The Company competes with a number of
companies, many of which have substantially greater financial, marketing and
other resources than the Company. The Company's competitors include large
companies such as GE, Philips, Siemens, Toshiba American Medical Systems, Inc.
and Toshiba America MRI, Inc. (collectively, "Toshiba"), Shimadzu and Picker
International, which compete in most diagnostic imaging modalities, including
X-ray imaging. In addition, a significant portion of the Company's sales are
to GE and Philips through OEM arrangements. The products sold by such OEMs
compete with those offered by the Company and its independent dealers. The
Company's StereoLoc II, MF-CYTO and StereoGuide stereotactic needle biopsy
systems compete with products offered by GE, Fischer Imaging Corporation and
Philips and with conventional surgical biopsy procedures.
The Company competes in these markets primarily on the basis of product
features, product performance and reputation as well as price and service.
Although the Company believes that its products currently compete favorably
with respect to such factors, there can be no assurance that the Company can
maintain its competitive position against current and potential competitors,
especially those with greater financial, manufacturing, marketing, service,
support, technical and other competitive resources. Competition could increase
if new companies enter the market or if existing competitors expand their
product lines. See "Risk Factors--Competition" and "--Technological Change and
New Products."
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PATENTS AND PROPRIETARY TECHNOLOGY
The Company's policy is to protect its intellectual property rights and to
apply for patent protection when appropriate. The Company currently holds 13
issued United States patents expiring at various dates ranging from 2003 to
2014. The Company also has 7 applications pending for additional United States
patents and a number of foreign counterparts for its patents in various
foreign countries. In addition, the Company has registered or other
trademarks. Patent protection provides the Company with competitive advantages
with respect to certain systems. The Company believes, however, that technical
know-how and trade secrets are more important to its business than patent
protection.
Competitors of the Company and other third-parties hold issued patents and
pending patent applications relating to imaging and other related
technologies, and it is uncertain whether these patents and patent
applications will require the Company to alter its products or processes, pay
licensing fees or cease certain activities. See "Risk Factors--Patents and
Proprietary Rights" and "--Risks Associated With Pending and Threatened Patent
Litigation."
In April 1992, Fischer Imaging Corporation ("Fischer") commenced a lawsuit
in the United States District Court, District of Colorado, against the
Company's Lorad division, alleging that the Lorad StereoGuide prone breast
biopsy system infringes a Fischer patent on a precision mammographic needle
biopsy system. As of September 30, 1995 the Company had sold 351 StereoGuide
systems, for aggregate revenues of approximately $34.4 million. The suit
requests a permanent injunction, treble damages and attorneys' fees and
expenses. If the Company is unsuccessful in defending this lawsuit it may be
enjoined from manufacturing and selling its StereoGuide system without a
license from Fischer. No assurance can be given that the Company will be able
to obtain such a license, if required, on commercially reasonable terms, if at
all. In addition, the Company may be subject to damages for past infringement.
No assurance can be given as to the amount which the Company may eventually be
required to pay in expenses or in such damages. The outcome of patent
litigation, particularly in jury trials, is inherently uncertain, and an
unfavorable outcome in the Fischer litigation could have a material adverse
effect on the Company's business and results of operations.
The Company also is aware of a U.S. patent held by Nicola E. Yanaki which
has been asserted by him against certain automatic exposure control features
included in most of the Company's current mammography systems. The Company has
been informed by Mr. Yanaki that a competitor of the Company has obtained a
license for use of this patent. Although the Company believes that the
validity of this patent may be questionable and subject to a successful
challenge, if the patent holder were successful in enforcing such patent the
Company could be subject to damages for past infringement and enjoined from
manufacturing and selling imaging equipment utilizing certain automatic
exposure control features, which would have a material adverse effect on the
Company's financial condition and results of operations.
The Company is also aware of an issued European patent with counterparts in
other non-U.S. countries relating to imaging equipment utilizing certain
automatic exposure control features. The European patent is the subject of an
opposition proceeding before the European Patent Office. There can be no
assurance as to the outcome of such opposition.
In connection with the organization of the Company, ThermoTrex agreed to
indemnify the Company for any and all cash damages in connection with the
Fischer lawsuit and any potential claims by the holder of the automatic
exposure control patent described above, with respect to sales of the
Company's products occurring prior to October 1995, when the businesses of
Lorad and Bennett were transferred to the Company. Notwithstanding this
indemnification, the Company would be required to report as an expense in its
results of operations the full amount, including any reimbursable amount, of
any damages in excess of the amount accrued ($2.3 million as of March 30,
1996), with any indemnification payment it receives from ThermoTrex being
treated as a contribution to shareholders' investment. An unsuccessful outcome
of this litigation may have a material adverse effect on the business of the
Company and on the results of operations of the Company for the period in
which such outcome occurs.
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The Company is aware of two U.S. patents owned by a former employee which
have been asserted against the Company relating to its HTC grid to be used
with the Company's mammography systems. Although the Company believes that the
HTC grid does not infringe either of these patents, if the holder of the
patents were successful in enforcing such patents, the Company could be
subject to damages and enjoined from manufacturing and selling the HTC grid.
GOVERNMENT REGULATION
The Company's products and its research, development and manufacturing
activities are subject to regulation by numerous governmental authorities in
the United States and other countries. In the United States, medical devices
are subject to rigorous FDA review. The federal Food, Drug and Cosmetic Act,
the Public Health Services Act and other federal statutes and regulations
govern or influence the testing, manufacture, safety, labeling, storage,
record keeping, reporting, approval, advertising and promotion of products
such as those offered by the Company. Noncompliance with applicable
requirements can result in fines, recalls or seizures of products, total or
partial suspension of production and criminal prosecution.
Pursuant to the Medical Device Amendments of 1976 (the "1976 Amendments") to
the Federal Food, Drug and Cosmetic Act, and regulations promulgated
thereunder, medical devices intended for human use are classified into three
categories, Classes I, II and III, depending upon the degree of regulatory
control to which they will be subject. The Company believes its current
systems are classified as Class II devices.
If a new medical device, irrespective of whether it is a Class II or III
device, is substantially equivalent to an existing device that has been
continuously marketed since the effective date of the 1976 Amendments (May 28,
1976) (a "Substantially Equivalent Device"), FDA requirements may be satisfied
through a procedure known as a "510(k) Submission," under which the applicant
provides product information supporting its claim of substantial equivalence.
In a 510(k) Submission, the FDA may also require that it be provided with
clinical test results demonstrating the safety and efficacy of the device.
In connection with new product development, the Company from time to time
files 510(k) Submissions. While there can be no assurance in this regard, all
of the Company's X-ray components and products previously included in 510(k)
Submissions have received findings of substantial equivalence.
Class III medical devices (which consist of life support/life sustaining
devices, diagnostic or implanted devices) that are not Substantially
Equivalent Devices are subject to a more stringent and time-consuming FDA
approval process.
The Safe Medical Devices Act of 1990 substantially changed certain aspects
of the regulation of the sale of medical devices and, depending on how it is
interpreted and enforced, could make it substantially more difficult and time-
consuming to comply with pre-marketing clearance and approval processes.
Pursuant to this Act, the FDA is required to adopt implementing regulations,
which will require among other things that clinical test results supporting
the safety and efficacy of a medical device be included with a 510(k)
Submission. The regulations also provide that manufacturers of high-risk
medical devices (implantable devices, life sustaining/life support devices and
such other devices as the FDA may designate) must establish post-market
surveillance programs for devices that are first marketed after January 1,
1991.
The FDA has not yet classified full-view digital imaging mammography systems
like the one being developed by the Company. If such systems are classified as
Class III devices, the Company would be required to file for FDA marketing
clearance for its full-view digital imaging mammography system under the PMA
process, which would require substantial clinical trials and would take a
number of years. While not classifying such systems, the FDA recently issued a
preliminary protocol for marketing clearance of full-view digital imaging
mammography systems suggesting that clearance may be obtained through an
enhanced 510(k) application with more extensive clinical trials. The
preliminary protocol calls for clinical trials on 400 subjects
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prior to applying to the FDA for clearance to commercially market such a
system and a multi-year, follow-up study including comparative film and
digital images on 12,000 subjects following commercial introduction. If the
preliminary protocol is adopted as currently drafted, the Company believes
this follow-up study will be overburdensome and may limit the
commercialization of full-view digital imaging mammography systems. The period
for submitting comments to the preliminary protocol has expired and the
Company can make no prediction as to when the FDA will issue a final protocol
or if one will be issued at all.
The Company is also subject to periodic inspections by the FDA whose primary
purpose is to audit the Company's compliance with Good Manufacturing Practices
("GMP"). Enforcement of GMP regulations has increased significantly in the
last several years, and the FDA has publicly stated that compliance will be
more strictly scrutinized. In the event that the Company or any of its
facilities was determined to be in noncompliance, and to the extent that the
Company or such facility was unable to convince the FDA of the adequacy of its
compliance, the FDA has the power to assert penalties or remedies, including a
recall or temporary suspension of product shipment until compliance is
achieved. Such penalties or remedies could have a material adverse effect on
the Company's business and results of operations.
The Company is also regulated by the FDA under the Radiation Control for
Health and Safety Act of 1968 (Public Law 90-602) which specifically addresses
radiation emitting products. Under this law, the Company is responsible for
submitting initial reports on all new X-ray systems that require certification
to FDA performance standards. The Company must also submit a quality assurance
and test program for FDA review to ensure continued compliance with X-ray
performance standards.
Historically, the Company has been subject to recalls of certain of its
products from time to time under Public Law 90-602. Under this law, any
product which is not in compliance with the relevant performance standard must
be repaired, refurbished or returned at the manufacturer's expense.
The Company is also subject to regulation under the Occupational Safety and
Health Act, the Environmental Protection Act, the Toxic Substances Act, the
Federal Water Pollution Control Act, the National Environmental Policy Act and
other federal, state or local statutes and regulations. The Company believes
that it is in material compliance with these and other applicable federal,
state and foreign legal and regulatory requirements under which it operates.
However, there can be no assurance that such legal or regulatory requirements
will not be amended or that new legal or regulatory requirements will not be
adopted, any one of which could have a material adverse effect on the
Company's business or results of operations.
REIMBURSEMENT
Suppliers of health care products and services are affected by Medicare,
Medicaid and other government insurance programs, as well as by private
insurance reimbursement programs. Third party payors (Medicare, Medicaid,
private health insurance, health administration authorities in foreign
countries and other organizations) may affect the pricing or relative
attractiveness of the Company's products by regulating the maximum amount of
reimbursement provided for by such payors to the physicians, hospitals and
clinics utilizing the Company's products or by taking the position that such
reimbursement is not available at all.
Since 1983, Medicare reimbursement has been based on a fixed amount for
admitting a patient with a specific diagnosis. Hospital profit margins have
been reduced significantly since the introduction of Diagnosis Related Groups
("DRGs"). As DRG reimbursement is a fixed amount based on a specific
diagnosis, hospitals have incentives to use less costly treatment methods. If
a new technology is considered to be more cost effective, hospitals will
frequently make capital expenditures to provide cost savings. Frequently DRG
reimbursement is reduced to reflect the adoption of a new procedure or
technique, and as a result hospitals are generally willing to implement new
cost saving technologies before these downward adjustments in DRG rates take
effect.
The diagnostic procedures for which the Company's products are intended to
be used generally have been approved for Medicare reimbursement. Many of the
therapeutic procedures for which the Company's systems
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can be used have also been approved for Medicare reimbursement. In addition,
prior to 1991, hospitals received Medicare reimbursement for the cost of
capital equipment such as the Company's products as a "capital pass through,"
which provided for an 85% reimbursement of the Medicare utilization portion of
the equipment cost, pro rated over the depreciable life of the equipment.
In 1991, the Health Care Financing Administration of the U.S. Department of
Health and Human Services published rules to change the method of capital
reimbursement for hospitals. The rules changed capital reimbursement from a
system based on costs to one based on prospective payment. The rules provide
for a ten year transition and permit hospitals with unusually low or high
capital reimbursement methods to be reimbursed fairly. The Company believes
that the new capital reimbursement rules have impacted facilities expansion
more heavily than medical equipment purchases.
In early 1992, Medicare also began to phase in over a five-year period a new
system whereby reimbursement to physicians will be based on the lower of their
actual charges or a fee schedule amount based on "resource-based" relative
value "scale". This replaced a "charge-based" fee schedule, and is anticipated
to generally lower the reimbursements received by radiologists from the
previous method.
The Company believes, however, that since minimally invasive surgical
techniques are generally less expensive than open or conventional surgery,
stereotactic breast biopsy and other systems offered by the Company provide
hospitals the opportunity to save costs and, therefore, possibly benefit from
a revised reimbursement system.
BACKLOG
At both December 30, 1995 and March 30, 1996, the Company's backlog of firm
orders was approximately $53 million. The Company includes in backlog only
those orders for which it has received completed purchase orders and for which
delivery has been specified within twelve months. Most orders are subject to
cancellation by the customer. Because of the possibility of customer changes
in delivery schedules, cancellation of orders and potential delays in product
shipments, the Company's backlog as of any particular date may not be
representative of actual sales for any succeeding period.
FACILITIES
The Company operates from two facilities: a 63,500 square foot office and
manufacturing facility in Danbury, Connecticut owned by the Company and a
120,000 square foot office and manufacturing facility in Copiague, New York
leased by the Company pursuant to a lease expiring in 2005. As of December 30,
1995, the annual base rent for the Company's New York facility was
approximately $600,000. The Company has entered into a lease for a new 60,000
square foot building to be constructed adjacent to its existing facility in
Danbury, Connecticut. The lease will commence upon completion of the building,
which is expected to occur in late 1996, and has a term of ten years with an
initial annual base rent of $771,600.
PERSONNEL
As of February 24, 1996, the Company had 604 employees, of which 11 were
engaged in senior management, 37 were engaged in administration and
accounting, 94 in research and development, 55 in sales and marketing, 38 in
product support and 369 in manufacturing. None of the Company's employees are
represented by a labor union, and the Company considers its relations with its
employees to be good.
LEGAL PROCEEDINGS
Except as described above under "Business--Patents and Proprietary
Technology," "Risk Factors--Patents and Proprietary Rights" and "--Risks
Associated With Pending and Threatened Patent Litigation," the Company is not
a party to any litigation that it believes could reasonably be expected to
have a material adverse effect on the Company or its business.
41
<PAGE>
RELATIONSHIP AND POTENTIAL CONFLICTS OF INTEREST WITH THERMO ELECTRON AND
THERMOTREX
The Company was incorporated in September 1995 as a wholly-owned subsidiary
of ThermoTrex. ThermoTrex acquired all of the outstanding capital stock of
Bennett in September 1995 for approximately $42,000,000 in cash. On October 2,
1995, the Company acquired all of the outstanding shares of capital stock of
Bennett from ThermoTrex in exchange for the $42,000,000 principal amount
Convertible Note. Subsequently, on October 16, 1995, ThermoTrex contributed
all of the assets and liabilities relating to its Lorad division and the
development of its Sonic CT system to the Company in exchange for 20,000,000
shares of Common Stock of the Company.
Thermo Electron has adopted a strategy of selling a minority interest in
subsidiary companies to outside investors as an important tool in its future
development. As part of this strategy, Thermo Electron and certain of its
subsidiaries have created publicly and/or privately held majority-owned
subsidiaries. The Company and the other Thermo Electron subsidiaries are
referred to herein as the "Thermo Subsidiaries."
In October 1995, ThermoTrex granted to the Company an exclusive, paid-up,
royalty-free license for the use of certain technology relating to digital
imaging detectors in the fields of mammography and general radiography. Under
the license agreement, if the Company funds approximately $6 million of
ThermoTrex's research and development of the digital imaging technology in the
fields of radiographic/fluoroscopy, mobile C-arm fluoroscopy and
cardiology/angiography over the next three years, then ThermoTrex will be
obligated to grant the Company a fully-paid, exclusive, worldwide, perpetual
license to use and sell the digital imaging technology in these fields. The
license agreement provides that ThermoTrex will manufacture products based on
the digital imaging technology for the Company in the applicable fields.
ThermoTrex will sell the products to the Company at ThermoTrex's cost until
the Company has received an amount of Net Profit (as defined below) from the
resale of such products equal to amounts paid by the Company for research and
development as set forth above less any additional research and development
costs incurred by ThermoTrex with the prior written approval of the Company,
and thereafter at ThermoTrex's cost plus one-half of Net Profit. For purposes
of the preceding sentence, "Net Profit" means the difference between the
prices the Company receives upon resale of such products and the aggregate
costs of the Company and ThermoTrex relating to such sales.
The Company has an arrangement with ThermoTrex whereby ThermoTrex provides
certain research and development services to the Company and the Company pays
ThermoTrex its fully burdened cost of providing such services. For the nine
months ended September 30, 1995, the Company paid ThermoTrex approximately
$1,536,000 under this arrangement.
The Company has an arrangement with the Tecomet division of Thermo Electron
for the manufacture of the Company's proprietary HTC grid. Under this
arrangement Tecomet manufactures the grid for the Company pursuant to written
purchase orders. The Company owns the intellectual property rights to the
grid. For the nine months ended September 30, 1995, the Company paid Tecomet
$250,000 under this arrangement.
Under an arrangement with ThermoLase Corporation, a publicly-traded,
majority-owned subsidiary of ThermoTrex, the Company manufactures the laser
used in ThermoLase's hair-removal process. The Company manufactures these
lasers for ThermoLase pursuant to written purchase orders. The Company has
sold 54 lasers to ThermoLase under this arrangement for an aggregate purchase
price of approximately $3.8 million and has committed to deliver 126
additional lasers for an aggregate purchase price of approximately $6.7
million.
Under an arrangement with Thermedics Detection Inc., a subsidiary of
Thermedics, a publicly-traded, majority-owned subsidiary of Thermo Electron,
the Company manufactures an X- ray source that is used as a component to a
fill-measuring device produced by Thermedics Detection. The Company
manufactures these X-ray sources for Thermedics Detection pursuant to written
purchase orders. For the nine months ended September 30, 1995, Thermedics
Detection paid the Company $120,000 under this arrangement.
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<PAGE>
The Company believes that the arrangements set forth above are on terms
comparable to those the Company would receive from unaffiliated parties.
On October 2, 1995, in exchange for all of the outstanding shares of capital
stock of Bennett, the Company issued the $42,000,000 principal amount
Convertible Note to ThermoTrex. The Convertible Note has an interest rate of
4.2% per annum and is convertible into shares of the Company's Common Stock at
a conversion price of $11.79 per share. In March 1996, ThermoTrex converted
$3,000,000 principal amount of the Convertible Note into 254,452 shares of
Common Stock.
ThermoTrex develops advanced technologies, which it is incorporating into
commercial products for the personal-care and avionics industries. For the
nine months ended September 30, 1995, ThermoTrex had consolidated revenues of
$86,531,000 and consolidated net income of $36,341,000, including a gain on
the issuance of stock by a subsidiary of $34,721,000.
Thermo Electron and its subsidiaries develop, manufacture and market
environmental monitoring and analysis instruments, biomedical products
including heart-assist systems and respiratory care products, papermaking and
paper-recycling equipment, alternative-energy systems, industrial process
equipment and other specialized products. Thermo Electron and its subsidiaries
also provide environmental and metallurgical services and conduct advanced
technology research and development. For its fiscal year ended December 30,
1995, Thermo Electron had consolidated revenues of $2,207,417,000 and
consolidated net income of $140,080,000. See "Risk Factors--Potential
Conflicts of Interest" and "--Significant Additional Shares Eligible for Sale
After the Offerings."
THE THERMO ELECTRON CORPORATE CHARTER
Thermo Electron and the Thermo Subsidiaries, including the Company,
recognize that the benefits and support that derive from their affiliation are
essential elements of their individual performance. Accordingly, Thermo
Electron and each of the Thermo Subsidiaries, including the Company, have
adopted the Thermo Electron Corporate Charter (the "Charter") to define the
relationships and delineate the nature of such cooperation among themselves.
The purpose of the Charter is to ensure that (1) all of the companies and
their shareholders are treated consistently and fairly, (2) the scope and
nature of the cooperation among the companies, and each company's
responsibilities, are adequately defined, (3) each company has access to the
combined resources and financial, managerial and technological strengths of
the others, and (4) Thermo Electron and the Thermo Subsidiaries, in the
aggregate, are able to obtain the most favorable terms from outside parties.
To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members,
coordinating the access of Thermo Electron and the Thermo Subsidiaries (the
"Thermo Group") to external financing sources, ensuring compliance with
external financial covenants and internal financial policies, assisting in the
formulation of long-range planning and providing other banking and credit
services. Pursuant to the Charter, Thermo Electron may also provide guarantees
of debt obligations of the Thermo Subsidiaries or may obtain external
financing at the parent level for the benefit of the Thermo Subsidiaries. In
certain instances, the Thermo Subsidiaries may provide credit support to, or
on behalf of, the consolidated entity or may obtain financing directly from
external financing sources. Under the Charter, Thermo Electron is responsible
for ensuring that the Thermo Group remains in compliance with all covenants
imposed by external financing sources, including covenants related to
borrowings of Thermo Electron or other members of the Thermo Group, and for
apportioning such constraints within the Thermo Group. In addition, Thermo
Electron establishes certain internal policies and procedures applicable to
members of the Thermo Group. The cost of the services provided by Thermo
Electron to the Thermo Subsidiaries is covered under existing corporate
services agreements between Thermo Electron and each of the Thermo
Subsidiaries.
43
<PAGE>
The Charter presently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter
may be amended at any time by agreement of the participants. Any Thermo
Subsidiary, including the Company, may withdraw from participation in the
Charter upon 30 days' prior notice. In addition, Thermo Electron may terminate
a subsidiary's participation in the Charter in the event the subsidiary ceases
to be controlled by Thermo Electron or ceases to comply with the Charter or
the policies and procedures applicable to the Thermo Group. A withdrawal from
the Charter automatically terminates the corporate services agreement in
effect between the withdrawing company and Thermo Electron. The withdrawal
from participation does not terminate outstanding commitments to third parties
made by the withdrawing company, or by Thermo Electron or other members of the
Thermo Group, prior to the withdrawal. However, a withdrawing company is
required to continue to comply with all policies and procedures applicable to
the Thermo Group and to provide certain administrative functions mandated by
Thermo Electron so long as the withdrawing company is controlled by or
affiliated with Thermo Electron.
CORPORATE SERVICES AGREEMENT
As provided in the Charter, Thermo Electron and the Company have entered
into a Corporate Services Agreement (the "Services Agreement") under which
Thermo Electron's corporate staff provides certain administrative services,
including certain legal advice and services, risk management, certain employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and certain financial and other services to the Company. In
1994 and 1995, Thermo Electron assessed the Company an annual fee for these
services equal to 1.25% and 1.20%, respectively, of the Company's total
revenues. Effective January 1, 1996, the fee was reduced to 1.0% of the
Company's total revenues. The fee may be changed by mutual agreement of the
Company and Thermo Electron. During the nine months ended September 30, 1995,
Thermo Electron assessed the Company $663,000 in fees under the Services
Agreement. The Company believes that the charges under the Services Agreement
are representative of the expenses the Company would have incurred on a stand-
alone basis and that the terms of the Services Agreement are reasonable. For
additional items such as employee benefit plans, insurance coverage and other
identifiable costs, Thermo Electron charges the Company based upon costs
attributable to the Company. The Services Agreement automatically renews for
successive one-year terms, unless canceled by the Company upon 30 days' prior
notice. In addition, the Services Agreement terminates automatically in the
event the Company ceases to be a member of the Thermo Group or ceases to be a
participant in the Charter. In the event of a termination of the Services
Agreement, the Company will be required to pay a termination fee equal to the
fee that was paid by the Company for services under the Services Agreement for
the nine-month period prior to termination. Following termination, Thermo
Electron may provide certain administrative services on an as-requested basis
by the Company or as required in order to meet the Company's obligations under
Thermo Electron's policies and procedures. Thermo Electron will charge the
Company a fee equal to the market rate for comparable services if such
services are provided to the Company following termination.
TAX ALLOCATION AGREEMENT
The Tax Allocation Agreement between ThermoTrex and the Company outlines the
terms under which the Company is to be included in ThermoTrex's consolidated
federal and state income tax returns. Under current law, the Company will be
included in such tax returns so long as ThermoTrex owns at least 80% of the
outstanding Common Stock of the Company. In years in which the Company has
taxable income, it will pay to ThermoTrex amounts comparable to the taxes it
would have paid if it had filed its own separate corporate tax returns. If
ThermoTrex's equity ownership of the Company were to drop below 80%, then the
Company would file its own income tax returns.
MASTER GUARANTEE REIMBURSEMENT AGREEMENTS
The Company has entered into a Master Guarantee Reimbursement Agreement with
Thermo Electron which provides that the Company will reimburse Thermo Electron
for any costs it incurs in the event it is required to pay third parties
pursuant to any guarantees it issues on the Company's behalf. ThermoTrex has
entered into a
44
<PAGE>
similar agreement with Thermo Electron with regard to the Company's
obligations which are guaranteed by Thermo Electron. The Company has also
entered into a Master Guarantee Reimbursement Agreement with ThermoTrex which
provides that the Company will reimburse ThermoTrex for any costs it incurs in
the event that ThermoTrex is required to pay Thermo Electron or any other
party pursuant to any guarantees it issues on the Company's behalf.
MISCELLANEOUS
Currently, ThermoTrex beneficially owns 91% of the outstanding shares of
Common Stock (excluding shares of Common Stock issuable upon the conversion of
the Convertible Note). ThermoTrex presently intends to maintain at least an
80% interest in the Company. This may require ThermoTrex to convert additional
principal amounts of the Convertible Note or to purchase additional shares of
Common Stock from time to time as the number of outstanding shares issued by
the Company increases. These purchases may be made either in the open market
or directly from the Company. See "Risk Factors--Control by ThermoTrex."
The Company's cash equivalents may be invested from time to time pursuant to
a repurchase agreement with Thermo Electron. Under this agreement, the Company
in effect lends excess cash to Thermo Electron, which Thermo Electron
collateralizes with investments principally consisting of corporate notes,
United States government agency securities, money market funds, commercial
paper and other marketable securities, in the amount of at least 103% of such
obligation. The Company's funds subject to the repurchase agreement will be
readily convertible into cash by the Company and have an original maturity of
three months or less. The repurchase agreement earns a rate based on the
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter.
45
<PAGE>
MANAGEMENT
The directors and executive officers of the Company and their ages as of May
6, 1996 are as follows:
<TABLE>
<CAPTION>
AGE POSITION
NAME --- --------
<S> <C> <C>
Gary S. Weinstein.................... 38 Chairman of the Board and Director
Anthony J. Pellegrino................ 55 Vice Chairman of the Board and
Director
Hal Kirshner......................... 55 Chief Executive Officer, President and
Director
John N. Hatsopoulos.................. 61 Vice President, Chief Financial
Officer and Director
Paul F. Kelleher..................... 53 Chief Accounting Officer
Steven J. Kemper..................... 41 Vice President, Finance
Elias P. Gyftopoulos (2)............. 68 Director
Robert C. Howard..................... 65 Director
Earl R. Lewis........................ 52 Director
James W. May, Jr. (1)(2)............. 53 Director
Hutham S. Olayan (1)(2).............. 42 Director
Firooz Rufeh......................... 58 Director
Kenneth Y. Tang...................... 48 Director
</TABLE>
- --------
(1) Member of the Audit Committee.
(2) Member of the Human Resources Committee.
All of the Company's directors are elected annually by the shareholders and
hold office until their respective successors are duly elected and qualified.
Executive officers are elected annually by the Board of Directors and serve at
its discretion. Mr. Weinstein, Mr. Hatsopoulos, Mr. Kelleher, Mr. Kemper, Mr.
Howard, Mr. Lewis, Mr. Rufeh and Dr. Tang are full-time employees of Thermo
Electron, ThermoTrex or other subsidiaries of Thermo Electron, but these
individuals devote such time to the affairs of the Company as the Company's
needs reasonably require from time to time. Because each of these individuals
owes duties to each of the entities for which he serves as an officer or
director, there may be circumstances in which such individual has a conflict
of interest. See "Risk Factors--Potential Conflicts of Interest" and
"Relationship and Potential Conflicts of Interest with Thermo Electron and
ThermoTrex."
Mr. Weinstein has been Chairman of the Board and a Director of the
Corporation since February 1996. Mr. Weinstein has also been Chairman and
Chief Executive Officer of ThermoTrex and a Vice President of Thermo Electron
since February 1996. Mr. Weinstein was a Managing Director of Lehman Brothers
Inc. from 1992 until February 1996, serving most recently as Managing
Director, head of Global Syndicate and Equity Capital Markets since March
1995. Prior to that appointment, Mr. Weinstein served in various positions at
Lehman Brothers since joining the firm in 1988, including head of Equities in
Europe, head of Equity New Issues in North and South America and head of
Global Convertible Securities. Mr. Weinstein is also a Director of ThermoTrex
and ThermoLase Corporation.
Mr. Pellegrino has been Vice Chairman of the Board and a Director of the
Company since its inception in October 1995. Mr. Pellegrino has been a Senior
Vice President of ThermoTrex since July 1995 and was Chairman of Lorad for
more than five years prior to that time. Mr. Pellegrino is also a Director of
ThermoQuest Corporation and ThermoLase Corporation.
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<PAGE>
Mr. Kirshner has been Chief Executive Officer, President and a Director of
the Company since its inception in October 1995. Mr. Kirshner has been
President of Lorad since February 1991. Prior to that time, he served as Chief
Operating Officer and President of Electrolux Water Systems, Inc.
Mr. Hatsopoulos has been Vice President, Chief Financial Officer and a
Director of the Company since its inception in October 1995. Mr. Hatsopoulos
has been a Vice President and Chief Financial Officer of ThermoTrex since
1990, the Chief Financial Officer of Thermo Electron since 1988 and an
Executive Vice President of Thermo Electron since 1986. He is also a director
of Thermo Ecotek Corporation, Thermo Fibertek Inc., Thermo Instrument Systems
Inc., Thermo Power Corporation, Thermo TerraTech Inc., ThermoQuest
Corporation, Thermo Sentron Inc., ThermoTrex and Lehman Brothers Funds, Inc.,
an open-end investment management company.
Mr. Kelleher has been the Chief Accounting Officer of the Company since its
inception in October 1995. Mr. Kelleher has been Vice President, Finance of
Thermo Electron since 1987 and served as its Controller from 1982 to January
1996. He is a director of ThermoLase Corporation.
Mr. Kemper has been Vice President, Finance of the Company since its
inception in October 1995. Mr. Kemper has also been Vice President, Finance of
ThermoTrex since July 1995. Prior to joining ThermoTrex, Mr. Kemper was
controller for the Satellite Business unit of the communications division of
General Instrument Corporation, a cable television equipment manufacturer, for
more than five years.
Dr. Gyftopoulos has been a Director of the Company since its inception in
October 1995. Dr. Gyftopoulos has been the Ford Professor of Mechanical
Engineering and of Nuclear Engineering at the Massachusetts Institute of
Technology for more than five years. Dr. Gyftopoulos is also a director of
Thermo Cardiosystems Inc., Thermo Electron, ThermoLase Corporation, Thermo
Instrument Systems Inc., Thermo Remediation Inc., ThermoSpectra Corporation
and Thermo Voltek Corp.
Mr. Howard has been a Director of the Company since its inception in October
1995. Mr. Howard has been an Executive Vice President of Thermo Electron since
1986. He is also a Director of Thermedics Inc., Thermo Cardiosystems Inc.,
ThermoLase Corporation, Thermo Power Corporation, Thermo Instrument Systems
Inc. and ThermoTrex.
Mr. Lewis has been a Director of the Company since its inception in October
1995. Mr. Lewis has been Executive Vice President and Chief Operating Officer
of Thermo Instrument Systems Inc. since December 1995 and served as a Vice
President of that company from 1990 to 1995. He has also served as Chief
Executive Officer, President and a Director of Thermo Optek Corporation since
August 1995, and President of Thermo Jarrell Ash Corporation for more than
five years. Mr. Lewis is also Chairman of the Board and a Director of
ThermoSpectra Corporation.
Dr. May has been a Director of the Company since February 1996. He has been
Professor of Surgery at Harvard Medical School since 1994 and was Associate
Clinical Professor of Surgery for more than five years prior to that time.
Ms. Olayan has been a Director of the Company since February 1996. She has
served as President and a director of Olayan America Corporation since 1995
and Competrol Real Estate Limited since 1986, which are members of the Olayan
Group engaged in advisory services and private real estate investments,
respectively. Ms. Olayan also served as President and a director of Crescent
Diversified Limited, another member of the Olayan Group engaged in private
investments, from 1985 until 1994. Ms. Olayan is also a Director of Thermo
Electron.
Mr. Rufeh has been a Director of the Company since its inception in October
1995 and was its Chairman of the Board from October 1995 to February 1996. Mr.
Rufeh has been the President of ThermoTrex since 1988 and a Vice President of
Thermo Electron since January 1986. From 1985 to 1990, he was Chairman of the
Board of Thermo Power Corporation. He is also a Director of ThermoTrex.
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<PAGE>
Dr. Tang has been a Director of the Company since its inception in October
1995. Dr. Tang has been Senior Vice President of ThermoTrex for more than five
years and was President of ThermoLase Corporation from December 1992 to May
1995. He is also a director of ThermoLase Corporation.
The Vice President and General Manager of Bennett since January 1996 has
been Mr. Walter F. Schneider, who has been an employee of Bennett since 1986
and had previously served as its Vice President of Operations. He replaced Mr.
Calvin Kleinman, who left the Company.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company, Thermo Electron or any other
companies affiliated with Thermo Electron (also referred to as "outside
directors") receive an annual retainer of $2,000 and a fee of $1,000 per day
for attending regular meetings of the Board of Directors and $500 per day for
participating in meetings of the Board of Directors held by means of
conference telephone and for participating in certain meetings of committees
of the Board of Directors. Payment of director fees is made quarterly. Messrs.
Weinstein, Pellegrino, Kirshner, Hatsopoulos, Howard, Lewis and Rufeh and Dr.
Tang are employees of members of the Thermo Electron companies and do not
receive any cash compensation from the Company for their services as
directors. Directors are also reimbursed for reasonable out-of-pocket expenses
incurred in attending such meetings.
Directors Deferred Compensation Plan. Under the Company's Deferred
Compensation Plan for Directors (the "Deferred Compensation Plan"), a director
has the right to defer receipt of his or her fees until he or she ceases to
serve as a director, dies or retires from his or her principal occupation. In
the event of a change in control or proposed change in control of the Company
that is not approved by the Board of Directors, deferred amounts become
payable immediately. For purposes of the Deferred Compensation Plan, a change
of control is defined as: (a) the occurrence, without the prior approval of
the Board of Directors, of the acquisition, directly or indirectly, by any
person of 50% or more of the outstanding Common Stock or the outstanding
common stock of ThermoTrex or 25% or more of the outstanding common stock of
Thermo Electron or (b) the failure of the persons serving on the Board of
Directors immediately prior to any contested election of directors or any
exchange offer or tender offer for the Common Stock or the common stock of
ThermoTrex or Thermo Electron to constitute a majority of the Board of
Directors at any time within two years following any such event. Amounts
deferred pursuant to the Deferred Compensation Plan are valued at the end of
each quarter as units of Common Stock. When payable, amounts deferred may be
disbursed solely in shares of Common Stock accumulated under the Deferred
Compensation Plan. The Company has reserved 25,000 shares under this Plan. The
Deferred Compensation Plan will not become effective until completion of the
Offerings. As of the date of this Prospectus, no units had been accumulated
under the Deferred Compensation Plan.
Directors Stock Option Plan. The Company has adopted a directors stock
option plan (the "Plan") providing for the grant of stock options to purchase
shares of Common Stock to outside directors as additional compensation for
their service as directors. The Plan provides for the grant of stock options
upon a Director's initial appointment and, beginning in 2000, awards options
to purchase 1,000 shares annually to eligible directors, provided the Common
Stock is then publicly traded. A total of 200,000 shares of Common Stock have
been reserved for issuance under the Plan.
Under the Plan, each eligible director and each new outside director
initially joining the Board of Directors in 1996 will be granted an option to
purchase 40,000 shares of Common Stock upon the later of the adoption of the
plan or the director's appointment or election. The size of the award to new
directors appointed to the Board of Directors after 1996 will be reduced by
10,000 shares in each subsequent year. Directors initially joining the Board
of Directors after 1999 would not receive an option grant upon their
appointment or election to the Board of Directors, but would be eligible to
participate in the annual option awards described below. Options evidencing
initial grants to directors vest and are exercisable upon the fourth
anniversary of the date of grant, unless the Common Stock underlying the
option grant is registered under Section 12 ("Section 12 Registration") of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior to the
fourth anniversary of such grant. In the event that the effective date of
Section 12 Registration occurs prior to the fourth anniversary
48
<PAGE>
of the date of grant, then the option becomes exercisable (on the later of 90
days after Section 12 Registration or six months after the date of grant) and
the shares acquired upon exercise will be subject to restrictions on transfer
and the right of the Company to repurchase such shares at the exercise price
in the event the director ceases to serve as a director of the Company or any
other Thermo Electron company. In such event, the restrictions and repurchase
rights shall lapse or be deemed to have lapsed in annual installments of
10,000 shares per year, starting with the first anniversary of the date of
grant, provided the director has continuously served as a director of the
Company, Thermo Electron or any subsidiary of Thermo Electron since the grant
date. These options expire on the fifth anniversary of the grant date, unless
the director dies, ceases to be an eligible director or otherwise ceases to
serve as a director of the Company, Thermo Electron or any subsidiary of
Thermo Electron prior to that date.
Commencing in 2000, eligible directors will also receive an annual grant of
options to purchase 1,000 shares of Common Stock, provided the Common Stock is
then publicly traded. The annual grant would be made at the close of business
on the date of each annual meeting of shareholders of the Company to each
outside director then holding office, commencing with the annual meeting to be
held in 2000. Options evidencing annual grants may be exercised at any time
from and after the six-month anniversary of the date of grant and prior to the
expiration of the option on the third anniversary of the date of grant. Shares
acquired upon exercise of the options would be subject to repurchase by the
Company at the exercise price if the recipient ceased to serve as a director
of the Company or any other Thermo Electron company prior to the first
anniversary of the date of grant for any reason other than death.
The exercise price for options granted under the Plan will be determined by
the average of the closing prices reported by the American Stock Exchange (or
such other principal exchange on which the Common Stock is then traded) for
the five trading days immediately preceding and including the date the option
is granted or, if the shares underlying the option are not so traded, at the
last price paid per share by independent investors in an arms' length
transaction with the Company prior to the date of grant.
Grants of stock options to outside directors have consisted of 40,000 shares
granted in November 1995 at an exercise price of $10.25 per share and 80,000
shares granted in February 1996 at an exercise price of $10.75 per share.
CERTAIN TRANSACTIONS
On November 22, 1995, November 30, 1995 and January 31, 1996, the Company
completed private placements primarily to outside investors of minority
investments in its Common Stock at purchase prices of $10.25 per share in the
November 1995 private placements and $10.75 per share in the January 1996
private placement. Crescent Holding GmbH purchased an aggregate of 200,000
shares of the Common Stock of the Company in such private placements. Crescent
Holding GmbH is indirectly controlled by Suliman S. Olayan, the father of
Hutham S. Olayan, a Director of the Company. In addition, the following
directors and officers purchased the number of shares of the Company's Common
Stock set forth below in such private placements: Anthony J. Pellegrino, Vice
Chairman and Director, 20,000 shares; Hal Kirshner, Chief Executive Officer,
President and Director, 100,000 shares; Robert C. Howard, Director, 2,500
shares; Firooz Rufeh, Director, 19,600 shares; and Kenneth Y. Tang, Director,
1,200 shares.
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<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table summarizes compensation for services to the Company in
all capacities awarded to, earned by or paid to the Company's Chief Executive
Officer for the last full fiscal year ("fiscal 1994") and for the nine-month
period from January 1, 1995 to September 30, 1995 ("fiscal 1995"), reflecting
a change in the Corporation's fiscal year end to September 30. No other
executive officer of the Company met the definition of "highly compensated"
within the meaning of the Securities and Exchange Commission's executive
compensation disclosure rules during these periods.
The Company is required to appoint certain executive officers and full-time
employees of Thermo Electron as executive officers of the Company in
accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron.
The time and effort devoted by these individuals to the Company's affairs is
provided to the Company under the Services Agreement between the Company and
Thermo Electron. Accordingly, the compensation for these individuals is not
reported in the following table. See "Relationship and Potential Conflicts of
Interest with Thermo Electron and ThermoTrex."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
-------------------- ---------------------
FISCAL SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS UNDERLYING OPTIONS(2) COMPENSATION(3)
- --------------------------- ------ -------- -------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
Hal Kirshner
Chief Executive Officer
and President.......... 1995 $150,000(1) $200,000 150,000(TXM) $7,005
1994 200,000 180,000 15,000(TMO) 6,750
</TABLE>
- --------
(1) Compensation for executive officers is reviewed and determined annually at
the end of each calendar year. However, the salary data for fiscal 1995
reflects salary paid during the nine-month period from January 1, 1995 to
September 30, 1995, as a result of the change in the Company's fiscal
year-end.
(2) All options to purchase shares of the Company's Common Stock shown in the
table were granted after the end of fiscal 1995 but are included in the
table for clarity of presentation. In addition to receiving options to
purchase Common Stock (designated in the table as TXM), Mr. Kirshner was
granted options to purchase shares of the common stock of Thermo Electron
(designated in the table as TMO). Information with respect to options to
purchase the common stock of Thermo Electron reflect a three-for-two split
effected in May 1995.
(3) Represents the amount of matching contributions made by the individual's
employer on behalf of the Chief Executive Officer under the Thermo
Electron 401(k) plan.
50
<PAGE>
Stock Options Granted During Fiscal 1995
The following table sets forth certain information concerning grants of
stock options made during fiscal 1995 to the Chief Executive Officer. It has
not been the Company's policy in the past to grant stock appreciation rights,
and no such rights were granted during fiscal 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF STOCK PRICE
SHARES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES PRICE PER EXPIRATION ---------------------
NAME GRANTED(1) IN FISCAL YEAR SHARE DATE 5% 10%
---- ----------- -------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Hal Kirshner............ 150,000(TXM) 14.4% $11.00 3/26/08 $1,312,500 $3,528,000
</TABLE>
- --------
(l) All options to purchase shares of the Common Stock of the Company
(designated in the table as TXM) were granted after the end of fiscal 1995
to the Chief Executive Officer but are included in the table for clarity
of presentation. No other options to purchase Common Stock of Thermo
Electron or its subsidiaries were granted in fiscal 1995 to the Chief
Executive Officer. The options to purchase shares of the Common Stock of
the Company are not exercisable until the earlier of (i) 90 days after the
effective date of the registration of the Common Stock under Section 12 of
the Exchange Act and (ii) nine years after the grant date. In all cases,
the shares acquired upon exercise are subject to repurchase by the
granting corporation at the exercise price if the optionee ceases to be
employed by the granting corporation or another Thermo Electron company.
The granting corporation may exercise its repurchase rights within six
months after the termination of the optionee's employment. The repurchase
rights lapse in their entirety on the ninth anniversary of the grant date,
unless the company's common stock becomes publicly-traded before that
date, in which event the repurchase rights are deemed to have lapsed 20%
per year commencing on the fifth anniversary of the grant date. The
granting corporation may permit the holders of all options to exercise
options and satisfy tax withholding obligations by surrendering shares
equal in fair market value to the exercise price or withholding
obligation.
(2) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5%
and 10%, compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on the future performance of the Common Stock, the
optionholders' continued employment through the option period and the date
on which the options are exercised.
51
<PAGE>
Stock Options Exercised During Fiscal Year 1995 and Fiscal Year-End Option
Values
The following table sets forth certain information concerning each exercise
of a stock option during fiscal 1995 and outstanding stock options held at the
end of fiscal 1995 by the Chief Executive Officer. No stock appreciation
rights were exercised or outstanding during fiscal 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END YEAR-END
----------------- -----------------
NUMBER OF
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME COMPANY EXERCISE REALIZED UNEXERCISABLE(1) UNEXERCISABLE
---- ------- ----------- ---------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Hal Kirshner............ Trex Medical Corporation -- -- 0/150,000 $ --/300,000(2)
ThermoTrex 94,376 $1,953,583 149,500/0 3,541,613/--
ThermoLase -- -- 36,400/0 677,950/--
Thermo Electron -- -- 77,250/0(3) 1,857,192/--
</TABLE>
- --------
(l) Options to purchase shares of the Common Stock of the Company were granted
after the end of fiscal 1995 but are included in the table for clarity of
presentation. All of the options reported outstanding at the end of the
fiscal year were immediately exercisable, except the options to purchase
shares of the Company's Common Stock which are not exercisable until the
earlier of (i) 90 days after the effective date of the registration of
such company's Common Stock under Section 12 of the Exchange Act and (ii)
nine years after the grant date. In all cases, the shares acquired upon
exercise of the options reported in the table are subject to repurchase by
the granting corporation at the exercise price if the optionee ceases to
be employed by such corporation or another Thermo Electron company. The
granting corporation may exercise its repurchase rights within six months
after the termination of the optionee's employment. For companies whose
shares are not publicly traded, the repurchase rights lapse in their
entirety on the ninth anniversary of the grant date. For publicly traded
companies, the repurchase rights generally lapse ratably over a five to
ten year period, depending on the option term, which may vary from seven
to twelve years, provided that the optionee continues to be employed by
the granting corporation or another Thermo Electron company.
(2) No public market existed for the shares underlying the options as of
December 31, 1995. Accordingly, this value has been calculated on the
basis of an assumed market value of $13.00 per share, which is the mid-
point of the estimated public offering price range.
(3) Options to purchase 15,000 shares of the common stock of Thermo Electron
granted to Mr. Kirshner are subject to the same terms described in
footnote (1), except that the repurchase rights of the granting
corporation generally do not lapse until the tenth anniversary of the
grant date. In the event of the employee's death or involuntary
termination prior to the tenth anniversary of the grant date, the
repurchase rights of the granting corporation shall be deemed to have
lapsed ratably over a five-year period commencing with the fifth
anniversary of the grant date.
EMPLOYMENT AGREEMENTS
In connection with the acquisition of the LORAD Corporation ("LORAD") in
November 1992, the Company entered into an employment agreement with Mr. Hal
Kirshner. Mr. Kirshner's agreement called for Mr. Kirshner to serve as
President and Chief Operating Officer of LORAD until December 31, 1995, at a
base salary of $200,000 per year plus bonus.
52
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDER
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of May 6, 1996, and as
adjusted to reflect the sale of the shares of Common Stock offered in the
Offerings, by ThermoTrex, which is the only person or entity that owns
beneficially more than 5% of the outstanding shares of Common Stock. See "Risk
Factors--Control by ThermoTrex."
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS NUMBER OF SHARES OUTSTANDING SHARES
OF BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED
------------------- ------------------ ------------------
<S> <C> <C>
ThermoTrex Corporation(1)................. 23,562,340(2) 92.3%
10455 Pacific Center Court
San Diego, CA 92121
</TABLE>
- --------
(l) ThermoTrex is a majority-owned subsidiary of Thermo Electron and,
therefore, Thermo Electron may be deemed a beneficial owner of the shares
of Common Stock beneficially owned by ThermoTrex. Thermo Electron
disclaims beneficial ownership of these shares. After the sale of the
Common Stock in the Offerings, ThermoTrex will beneficially own
approximately 80% of the outstanding Common Stock.
(2) Includes 3,307,888 shares of Common Stock issuable upon conversion of the
Convertible Note.
ThermoTrex has adopted a stock option plan with respect to the Common Stock
that it beneficially owns. Under this plan, options to purchase up to 400,000
shares of such stock may be granted to any person within the discretion of the
human resources committee of the Board of Directors of ThermoTrex, including
officers and key employees of ThermoTrex.
MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of January 1, 1996 as well as
information regarding the beneficial ownership of the common stock of
ThermoTrex and Thermo Electron, as of January 1, 1996, with respect to (i)
each of the Company's directors, (ii) the Chief Executive Officer, and (iii)
all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
TREX MEDICAL THERMOTREX THERMO ELECTRON
NAME(1) CORPORATION(2) CORPORATION(3) CORPORATION(4)
- ------- -------------- -------------- ---------------
<S> <C> <C> <C>
Gary S. Weinstein............... 0 0 225
Anthony J. Pellegrino........... 20,000 1,179,621 77,250
Hal Kirshner.................... 100,000 151,177 77,973
Elias P. Gyftopoulos............ 0 4,500 46,380
John N. Hatsopoulos............. 0 33,194 478,355
Robert C. Howard................ 2,500 35,554 134,593
Earl L. Lewis................... 0 0 106,273
James W. May, Jr................ 0 0 0
Hutham S. Olayan................ 0 4,500 14,420
Firooz Rufeh.................... 19,600 101,788 88,076
Kenneth Y. Tang................. 1,200 79,203 30,399
All directors and executive
officers as a group (12
persons)....................... 143,300 1,589,537 942,314
</TABLE>
- --------
(l) Except as reflected in the footnotes to this table, shares of Common Stock
and common stock of ThermoTrex and Thermo Electron beneficially owned
consist of shares owned by the indicated person or by that person for the
benefit of minor children, and all share ownership involves sole voting
and investment power.
(2) Certain officers and directors have been granted options to purchase
496,000 shares of Common Stock; however, these options will not become
exercisable until 90 days after the Offerings. Shares beneficially owned
by Ms. Olayan do not include 100,000 shares owned by Crescent Holding
GmbH, a member of the
53
<PAGE>
Olayan Group. Crescent Holding GmbH is indirectly controlled by Suliman S.
Olayan, Ms. Olayan's father. Mr. Olayan disclaims beneficial ownership of
the shares owned by Crescent Holding GmbH. No director or executive officer
beneficially owned more than 1% of the Common Stock outstanding as of such
date, and all directors and executive officers as a group beneficially
owned less than 1% of the Common Stock outstanding as of such date.
(3) Shares of the common stock of ThermoTrex beneficially owned by Mr.
Pellegrino, Mr. Kirshner, Dr. Gyftopoulos, Mr. Hatsopoulos, Mr. Howard,
Ms. Olayan, Mr. Rufeh, Dr. Tang and by all directors and executive
officers as a group include 134,500, 149,500, 4,500, 24,000, 31,320,
4,500, 66,000, 63,318 and 477,638 shares, respectively, that such person
or group has the right to acquire within 60 days of March 1, 1996, through
the exercise of stock options. Shares beneficially owned by Mr. Pellegrino
include 10,408 shares held in a trust of which Mr. Pellegrino's spouse is
the trustee. No director or executive officer beneficially owned more than
1% of the common stock of ThermoTrex outstanding as of January 1, 1996,
other than Mr. Pellegrino, who beneficially owned approximately 6.2% of
such common stock; all directors and executive officers as a group
beneficially owned 8.1% of such common stock outstanding as of such date.
(4) The shares of common stock of Thermo Electron have been adjusted to
reflect a three-for-two stock split effected in May 1995, but do not
reflect a proposed three-for-two split of such stock to be effected in the
form of a 50% stock dividend on June 5, 1996 to stockholders of record on
May 22, 1996. Shares of the common stock of Thermo Electron beneficially
owned by Mr. Pellegrino, Mr. Kirshner, Dr. Gyftopoulos, Mr. Hatsopoulos,
Mr. Howard, Mr. Lewis, Ms. Olayan, Mr. Rufeh, Dr. Tang and by all
directors and executive officers as a group include 77,250, 77,250, 5,250,
297,880, 40,185, 103,750, 5,250, 57,975, 28,650 and 693,440 shares,
respectively, that such person or group has the right to acquire within 60
days of January 1, 1996, through the exercise of stock options. Shares
beneficially owned by Mr. Hatsopoulos, Mr. Howard, Mr. Lewis, Mr. Rufeh,
Dr. Tang and by all directors and executive officers as a group include
1,225, 1,963, 617, 1,142, 538 and 5,485 full shares, respectively,
allocated through January 1, 1996 to their respective accounts maintained
pursuant to Thermo Electron's Employee Stock Purchase Plan of which the
trustees who have investment power over its assets are executive officers
of Thermo Electron. Shares beneficially owned by Mr. Hatsopoulos include
112,500 shares held by a QTIP trust of which Mr. Hatsopoulos is a trustee.
Shares beneficially owned by Ms. Olayan do not include 3,266,400 shares
owned by Crescent Holding GmbH, a member of the Olayan Group. Crescent
Holding GmbH is indirectly controlled by Suliman S. Olayan, Ms. Olayan's
father. Ms. Olayan disclaims beneficial ownership of the shares owned by
Crescent Holding GmbH. No director or executive officer beneficially owned
more than 1% of the common stock of Thermo Electron outstanding as of
January 1, 1996; all directors and executive officers as a group
beneficially owned 1.1% of the common stock of Thermo Electron outstanding
as of January 1, 1996.
54
<PAGE>
DESCRIPTION OF CAPITAL STOCK
As of May 6, 1996, the Company had 50,000,000 shares of Common Stock
authorized for issuance, of which 22,216,452 were issued and outstanding. Each
share of Common Stock is entitled to pro rata participation in distributions
upon liquidation and to one vote on all matters submitted to a vote of
shareholders. Dividends may be paid to the holders of Common Stock when and if
declared by the Board of Directors out of funds legally available therefor.
Holders of Common Stock have no preemptive, subscription, redemption,
conversion or similar rights. The outstanding shares of Common Stock are, and
the shares offered hereby when issued will be, legally issued, fully paid and
nonassessable.
The shares of Common Stock have noncumulative voting rights. As a result,
the holders of more than 50% of the shares voting can elect all the directors
if they so choose, and in such event, the holders of the remaining shares
cannot elect any directors. Upon completion of the Offerings, ThermoTrex will
continue to beneficially own at least a majority of the outstanding Common
Stock, and will have the power to elect all of the members of the Company's
Board of Directors. ThermoTrex is a majority-owned subsidiary of Thermo
Electron and, therefore, Thermo Electron may be deemed a beneficial owner of
the shares of Common Stock beneficially owned by ThermoTrex. Thermo Electron
disclaims beneficial ownership of these shares.
The Company's Certificate of Incorporation contains certain provisions
permitted under the General Corporation Law of Delaware relating to the
liability of directors. These provisions eliminate a director's liability for
monetary damages for a breach of fiduciary duty, except in certain
circumstances involving wrongful acts, such as the breach of a director's duty
of loyalty or acts or omissions which involve intentional misconduct or a
knowing violation of law. The Company's By-Laws also contains provisions to
indemnify the directors and officers of the Company to the fullest extent
permitted by the General Corporation Law of Delaware. The Company believes
that these provisions will assist the Company in attracting and retaining
qualified individuals to serve as directors and officers.
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offerings, there will be 25,866,452 shares of Common
Stock of the Company outstanding (assuming no exercise of the Underwriters'
over-allotment option and the exercise of all Rights and other than those
distributed to Thermo Electron). The shares issued in the Offerings will be
freely tradable without restriction or further registration under the
Securities Act of 1933, as amended (the "Securities Act"), except that any
shares purchased in the Offerings by affiliates of the Company, as that term
is defined in Rule 144 under the Securities Act (an "Affiliate"), may
generally only be resold in compliance with applicable provisions of Rule 144.
The Company has agreed, pursuant to a Stock Purchase Agreement with the
shareholders of the Company other than ThermoTrex, to file a registration
statement under the Securities Act covering the sale of the 1,962,000 shares
of Common Stock owned by them (the "Registrable Shares") within 120 days of
the closing of the Underwritten Public Offering. All fees, costs and expenses
of the registration of the Registrable Shares will be paid by the Company. See
"Risk Factors--Significant Additional Shares Eligible for Sale After the
Offerings."
As of May 6, 1996, ThermoTrex owned 20,254,452 of the outstanding shares of
Common Stock. Thermo Electron, ThermoTrex and the Company have agreed, without
the prior written consent of the Representatives of Underwriters, not to
offer, sell or otherwise dispose of any shares of Common Stock within a 180-
day period after the date of this Prospectus, other than (i) shares of Common
Stock to be sold to Underwriters in the Offerings, (ii) the issuance of
options to purchase Common Stock pursuant to existing stock-based compensation
plans, (iii) shares of Common Stock which may be sold to ThermoTrex, (iv) the
issuances of shares of Common Stock in consideration for the acquisition of
one or more businesses (provided that such Common Stock may not
55
<PAGE>
be resold prior to the expiration of the 180-day period referenced above), and
(v) shares issued upon the closing of the Rights Offering. So long as
ThermoTrex is able to elect a majority of the Board of Directors it will be
able to cause the Company at any time to register under the Securities Act all
or a portion of the Common Stock owned by ThermoTrex or its affiliates, in
which case it would be able to sell such shares without restriction upon
effectiveness of the registration statement.
In general, under Rule 144 as currently in effect, beginning approximately
90 days after the effective date of the Registration Statement of which this
Prospectus is a part, a stockholder, including an Affiliate, who has
beneficially owned his or her restricted securities (as that term is defined
in Rule 144) for at least two years from the later of the date such securities
were acquired from the Company or (if applicable) the date they were acquired
from an Affiliate is entitled to sell, within any three-month period, a number
of such shares that does not exceed the greater of (i) 1% of the then
outstanding shares of Common Stock (approximately 258,664 after the Offerings)
or (ii) the average weekly trading volume in the Common Stock during the four
calendar weeks preceding the date on which notice of such sale was filed
pursuant to Rule 144 provided certain requirements concerning availability of
public information, manner of sale and notice of sale are satisfied. In
addition, under Rule 144(k), if a period of at least three years has elapsed
between the later of the date restricted securities were acquired from the
Company or (if applicable) the date they were acquired from an Affiliate of
the Company, a stockholder who is not an Affiliate of the Company at the time
of sale and has not been an Affiliate of the Company for at least three months
prior to the sale is entitled to sell the shares immediately without
compliance with the foregoing requirements under Rule 144. The Securities and
Exchange Commission has proposed an amendment to Rule 144 which would reduce
the holding period required for shares subject to Rule 144 to become eligible
for sale in the public market from two years to one year, and from three years
to two years in the case of Rule 144(k).
The Company has reserved 1,925,000 shares of Common Stock for grants under
its existing stock-based compensation plans. As of May 6, 1996 the Company had
options outstanding to purchase up to 1,161,000 shares of Common Stock to
certain of its officers and directors at a weighted average exercise price of
$10.96 per share. Ninety days after the completion of the Company's initial
public offering such options will become immediately exercisable, subject to
the right of the Company to repurchase shares at the exercise price if the
optionee ceases to be employed by the Company. This repurchase right lapses
ratably (on an annual basis) over a five to ten year period depending upon the
term of the option. As of May 6, 1996, the repurchase right had lapsed as to
no shares issuable upon exercise of outstanding options. The Company has
reserved 764,000 shares for future grant under plans. The Company intends to
file registration statements under the Securities Act to register all shares
of Common Stock issuable under such plans. Shares covered by these
registration statements that are not subject to transferability restrictions
will be eligible for sale in the public market immediately upon the filing of
such registration statements, subject to Rule 144 limitations applicable to
Affiliates as noted above.
Prior to the Offerings, there has been no public market for the Common Stock
of the Company, and no prediction can be made as to the effect, if any, that
market sales of shares of Common Stock or the availability of shares for sale
will have on the market price of the Common Stock prevailing from time to
time. Nevertheless, sales of significant numbers of shares of the Common Stock
in the public market could adversely affect the market price of the Common
Stock and could impair the Company's future ability to raise capital through
an offering of its equity securities. See "Risk Factors--Significant
Additional Shares Eligible for Sale After the Offerings."
56
<PAGE>
LEGAL OPINIONS
The validity of the issuance of the Common Stock offered in the Offerings
will be passed upon for the Company by Seth H. Hoogasian, Esq., General
Counsel of Thermo Electron, ThermoTrex and the Company, and certain legal
matters in connection with the Underwritten Public Offering will be passed
upon for the Underwriters by Testa, Hurwitz & Thibeault, Boston,
Massachusetts. Mr. Hoogasian owns or has the right to acquire 6,000 shares of
Common Stock, 7,800 shares of common stock of ThermoTrex and 82,385 shares of
common stock of Thermo Electron.
EXPERTS
The Consolidated Financial Statements of the Company, Bennett and XRE
included in this Prospectus and the financial statement schedule included in
the Registration Statement of which this Prospectus forms a part have been
audited by Arthur Andersen LLP, independent public accountants, to the extent
and for the periods as indicated in their reports with respect thereto, and
are included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
The Consolidated Financial Statements of Continental included in this
Prospectus have been audited by Topel Forman L.L.C., independent public
accountants, to the extent and for the periods as indicated in their reports
with respect thereto, and are included herein in reliance upon the authority
of said firm as experts in accounting and auditing in giving said reports.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (which term shall include all
amendments, exhibits and schedules thereto) on Form S-1 under the Securities
Act with respect to the shares of Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission, to which Registration Statement reference is
hereby made. Although statements made in this Prospectus as to the contents of
any contract, agreement or other document referred to set forth all material
elements of such documents, such statements are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement, although
setting forth all material elements of such documents, shall be deemed
qualified by such reference. The Registration Statement and the exhibits
thereto may be inspected and copied at prescribed rates at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at Seven World Trade Center, 13th Floor, New
York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661.
REPORTS TO SECURITY HOLDERS
The Company intends to furnish holders of the Common Stock offered hereby
with annual reports containing financial statements audited by an independent
public accounting firm and with quarterly reports containing unaudited summary
financial statements for each of the first three quarters of each fiscal year.
57
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
TREX MEDICAL CORPORATION
Report of Independent Public Accountants................................ F-2
Consolidated Statement of Income for the years ended January 1, 1994 and
December 31, 1994, for the nine months ended October 1, 1994 and Sep-
tember 30, 1995 and for the six months ended April 1, 1995 and March
30, 1996............................................................... F-3
Consolidated Balance Sheet as of December 31, 1994, September 30, 1995
and
March 30, 1996......................................................... F-4
Consolidated Statement of Cash Flows for the years ended January 1, 1994
and December 31, 1994, for the nine months ended October 1, 1994 and
September 30, 1995 and for the six months ended April 1, 1995 and March
30, 1996............................................................... F-5
Consolidated Statement of Shareholders' Investment for the years ended
January 1, 1994 and December 31, 1994, for the nine months ended
September 30, 1995 and for the six months ended March 30, 1996......... F-6
Notes to Consolidated Financial Statements.............................. F-7
BENNETT X-RAY CORPORATION
Report of Independent Public Accountants................................ F-15
Consolidated Statement of Operations for the fiscal years ended February
28, 1993, 1994 and 1995, for the six months ended August 31, 1994 and
for the period from March 1, 1995 through September 14, 1995........... F-16
Consolidated Balance Sheet as of February 28, 1994 and 1995 ............ F-17
Consolidated Statement of Cash Flows for the fiscal years ended February
28, 1993, 1994 and 1995, for the six months ended August 31, 1994 and
for the period from March 1, 1995 through September 14, 1995........... F-18
Consolidated Statement of Shareholders' Investment for the fiscal years
ended February 28, 1993, 1994 and 1995 and for the period from March 1,
1995 through September 14, 1995........................................ F-19
Notes to Consolidated Financial Statements.............................. F-20
XRE CORPORATION
Report of Independent Public Accountants................................ F-23
Consolidated Statement of Income for the year ended December 31, 1995
and for the three months ended April 1, 1995 and March 30, 1996........ F-24
Consolidated Balance Sheet as of December 31, 1995 and March 30, 1996... F-25
Consolidated Statement of Cash Flows for the year ended December 31,
1995 and for the three months ended April 1, 1995 and March 30, 1996... F-26
Consolidated Statement of Stockholders' Investment for the year ended
December 31, 1995 and for the three months ended March 30, 1996........ F-27
Notes to Consolidated Financial Statements.............................. F-28
CONTINENTAL GROUP
Report of Independent Public Accountants................................ F-32
Combined Statement of Income for the years ended December 31, 1994 and
1995 and for the three months ended March 31, 1995 and 1996............ F-33
Combined Balance Sheet as of December 31, 1994 and 1995 and March 31,
1996................................................................... F-34
Combined Statement of Cash Flows for the years ended December 31, 1994
and 1995 and for the three months ended March 31, 1995 and 1996........ F-35
Combined Statement of Stockholders' Equity for the years ended December
31, 1994 and 1995 and for the three months ended March 31, 1996........ F-36
Notes to Combined Financial Statements.................................. F-37
</TABLE>
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION OF TREX MEDICAL CORPORATION,
BENNETT X-RAY CORPORATION, XRE CORPORATION AND CONTINENTAL GROUP (UNAUDITED)
<TABLE>
<S> <C>
Pro Forma Combined Condensed Statement of Income for the nine months
ended
September 30, 1995..................................................... F-41
Pro Forma Combined Condensed Statement of Income for the six months
ended
March 30, 1996......................................................... F-42
Pro Forma Combined Condensed Balance Sheet as of March 30, 1996......... F-43
Notes to Pro Forma Combined Condensed Financial Statements.............. F-44
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trex Medical Corporation:
We have audited the accompanying consolidated balance sheet of Trex Medical
Corporation (a Delaware corporation and 100%-owned subsidiary of ThermoTrex
Corporation) and subsidiaries as of December 31, 1994 and September 30, 1995,
and the related consolidated statements of income, cash flows and
shareholders' investment for the years ended January 1, 1994 and December 31,
1994 and for the nine months ended September 30, 1995. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Trex
Medical Corporation and subsidiaries as of December 31, 1994 and September 30,
1995 and the results of their operations and their cash flows for the years
ended January 1, 1994 and December 31, 1994 and for the nine months ended
September 30, 1995, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Boston, Massachusetts
March 26, 1996 (except with respect
to certain matters discussed in Note
9, as to which the date is May 6,
1996)
F-2
<PAGE>
TREX MEDICAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SIX MONTHS ENDED
------------------------- -------------------
OCTOBER 1, SEPTEMBER 30, APRIL 1, MARCH 30,
1993 1994 1994 1995 1995 1996
------- ------- ----------- ------------- -------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Revenues (includes $350
and $2,240 to an af-
filiated company in
the nine months ended
September 30, 1995 and
the six months ended
March 30, 1996)
(Note 7).............. $37,519 $54,410 $39,196 $55,291 $31,315 $66,829
------- ------- ------- ------- ------- -------
Costs and Operating Ex-
penses:
Cost of revenues
(includes $175 and
$1,120 for
affiliated company
revenues in the nine
months ended
September 30, 1995
and the six months
ended March 30,
1996)............... 18,589 27,794 19,654 28,180 16,125 37,592
Selling, general and
administrative
expenses (Note 6)... 9,788 13,272 9,794 12,174 7,117 13,695
Research and develop-
ment
expenses (Note 6)... 7,182 10,662 7,320 8,595 6,270 8,170
------- ------- ------- ------- ------- -------
35,559 51,728 36,768 48,949 29,512 59,457
------- ------- ------- ------- ------- -------
Operating Income....... 1,960 2,682 2,428 6,342 1,803 7,372
Interest Income........ -- -- -- -- -- 440
Interest Expense, Re-
lated Party
(Note 1).............. -- -- -- -- -- (872)
Other Income (Expense),
Net................... (158) (22) (11) 22 (2) 35
------- ------- ------- ------- ------- -------
Income Before Provision
for
Income Taxes.......... 1,802 2,660 2,417 6,364 1,801 6,975
Provision for Income
Taxes (Note 4)........ 975 1,466 1,332 2,881 835 3,241
------- ------- ------- ------- ------- -------
Net Income............. $ 827 $ 1,194 $ 1,085 $ 3,483 $ 966 $ 3,734
======= ======= ======= ======= ======= =======
Earnings per Share..... $ .04 $ .06 $ .05 $ .17 $ .05 $ .17
======= ======= ======= ======= ======= =======
Weighted Average
Shares................ 20,151 20,151 20,151 20,151 20,151 21,547
======= ======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
TREX MEDICAL CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, MARCH 30,
1994 1995 1996
------------ ------------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............. $ -- $ 202 $ 19,245
Accounts receivable, less allowances
of $525, $870, and $921.............. 9,909 14,937 18,936
Inventories........................... 6,722 16,667 18,615
Prepaid expenses...................... 158 113 938
Due from Thermo Electron Corporation
and affiliated companies............. -- -- 1,401
Prepaid income taxes (Note 4)......... 2,649 3,474 3,474
-------- -------- --------
19,438 35,393 62,609
-------- -------- --------
Property, Plant and Equipment, at Cost,
Net.................................... 6,310 7,811 8,628
-------- -------- --------
Cost in Excess of Net Assets of Acquired
Companies (Note 2)..................... 22,252 59,170 58,338
-------- -------- --------
$ 48,000 $102,374 $129,575
======== ======== ========
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current Liabilities:
Accounts payable...................... $ 3,742 $ 7,381 $ 7,671
Accrued payroll and employee bene-
fits................................. 991 2,338 2,078
Accrued warranty costs................ 1,126 2,991 3,434
Customer deposits..................... 742 771 1,496
Accrued income taxes.................. -- -- 2,723
Other accrued expenses (Note 2)....... 4,210 8,245 9,652
Due to Thermo Electron Corporation and
affiliated companies................. 43 496 --
-------- -------- --------
10,854 22,222 27,054
-------- -------- --------
Deferred Income Taxes (Note 4).......... 113 142 89
-------- -------- --------
Subordinated Convertible Note, Due to
Parent Company (Notes 1 and 9)......... -- -- 39,000
-------- -------- --------
Commitments and Contingencies (Notes 2,
5, 6 and 8)
Shareholders' Investment:
Net parent company investment......... 37,033 80,010 --
Common stock, $.01 par value,
50,000,000 shares authorized;
22,216,452 shares issued and
outstanding.......................... -- -- 222
Capital in excess of par value........ -- -- 59,476
Retained earnings..................... -- -- 3,734
-------- -------- --------
37,033 80,010 63,432
-------- -------- --------
$ 48,000 $102,374 $129,575
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
TREX MEDICAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SIX MONTHS ENDED
------------------------- ------------------
OCTOBER 1, SEPTEMBER 30, APRIL 1, MARCH 30,
1993 1994 1994 1995 1995 1996
------- ------- ----------- ------------- -------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income............. $ 827 $ 1,194 $ 1,085 $ 3,483 $ 966 $ 3,734
Adjustments to
reconcile net income
to net cash provided
by (used in) operating
activities:
Depreciation and
amortization......... 1,207 1,491 1,104 1,315 809 1,463
Provision for losses
on accounts
receivable........... -- 175 125 25 50 51
Increase (decrease)
in deferred income
taxes................ (22) 32 -- 29 32 (53)
Other noncash items... 3 -- -- (15) -- (29)
Changes in current
accounts, excluding
the effects of
acquisition:
Accounts
receivable......... (2,132) (3,316) (2,704) (693) (1,793) (4,050)
Inventories......... (792) 153 (790) (1,476) (799) (1,948)
Other current as-
sets............... (150) 125 49 (82) (756) (771)
Accounts payable.... (802) 1,861 140 621 885 290
Other current lia-
bilities........... 85 411 1,994 444 (964) 3,138
------- ------- ------- ------- ------ -------
Net cash provided by
(used in)
operating
activities.......... (1,776) 2,126 1,003 3,651 (1,570) 1,825
------- ------- ------- ------- ------ -------
INVESTING ACTIVITIES:
Purchases of property,
plant and equipment... (1,754) (1,300) (724) (957) (893) (1,505)
Proceeds from sale of
property, plant and
equipment............. 27 29 29 14 31 35
------- ------- ------- ------- ------ -------
Net cash used in
investing
activities.......... (1,727) (1,271) (695) (943) (862) (1,470)
------- ------- ------- ------- ------ -------
FINANCING ACTIVITIES:
Net proceeds from
private placements of
Company common stock
(Note 9).............. -- -- -- -- -- 18,688
Net transfers (to) from
parent company ....... 3,503 (855) (308) (2,506) 2,432 --
------- ------- ------- ------- ------ -------
Net cash provided by
(used in)
financing
activities.......... 3,503 (855) (308) (2,506) 2,432 18,688
------- ------- ------- ------- ------ -------
Increase in Cash and
Cash Equivalents....... -- -- -- 202 -- 19,043
Cash and Cash 202
Equivalents at
Beginning of Period.... -- -- -- -- --
------- ------- ------- ------- ------ -------
Cash and Cash
Equivalents at End of
Period................. $ -- $ -- $ -- $ 202 $ -- $19,245
======= ======= ======= ======= ====== =======
CASH PAID FOR:
Interest............... $ -- $ -- $ -- $ -- $ -- $ 882
======= ======= ======= ======= ====== =======
Income taxes........... $ -- $ -- $ -- $ -- $ -- $ 279
======= ======= ======= ======= ====== =======
NONCASH ACTIVITIES:
Contribution of land
and building from
parent company........ $ 3,728 $ -- $ -- $ -- $ -- $ --
======= ======= ======= ======= ====== =======
Transfer of acquired
business from parent
company, net of cash
(Note 2).............. $ -- $ -- $ -- $42,000 $ -- $ --
======= ======= ======= ======= ====== =======
Issuance of subordi-
nated convertible note
to parent
company (Note 1)...... $ -- $ -- $ -- $ -- $ -- $42,000
======= ======= ======= ======= ====== =======
Conversion of subordi-
nated convertible note
by
parent company (Note
9).................... $ -- $ -- $ -- $ -- $ -- $ 3,000
======= ======= ======= ======= ====== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
TREX MEDICAL CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
(IN THOUSANDS)
<TABLE>
<CAPTION>
NET PARENT COMMON CAPITAL IN
COMPANY STOCK, $.01 EXCESS OF RETAINED
INVESTMENT PAR VALUE PAR VALUE EARNINGS
---------- ----------- ---------- --------
<S> <C> <C> <C> <C>
BALANCE JANUARY 2, 1993............ $ 28,636 $ -- $ -- $ --
Net income......................... 827 -- -- --
Contribution of land and building
from parent company............... 3,728 -- -- --
Net transfers from parent company.. 3,503 -- -- --
-------- ----- -------- ------
BALANCE JANUARY 1, 1994............ 36,694 -- -- --
Net income......................... 1,194 -- -- --
Net transfers to parent company.... (855) -- -- --
-------- ----- -------- ------
BALANCE DECEMBER 31, 1994.......... 37,033 -- -- --
Net income......................... 3,483 -- -- --
Net transfers to parent company.... (2,506) -- -- --
Transfer of acquired business from
parent company, net of cash (Note
2)................................ 42,000 -- -- --
-------- ----- -------- ------
BALANCE SEPTEMBER 30, 1995......... 80,010 -- -- --
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Issuance of subordinated
convertible note to parent company
(Note 1).......................... -- -- (42,000) --
Capitalization of Company.......... (80,010) 200 79,810 --
Net income......................... -- -- -- 3,734
Net proceeds from private
placements of Company common stock
(Note 9).......................... -- 19 18,669 --
Conversion of subordinated
convertible note by parent company
(Note 9).......................... -- 3 2,997 --
-------- ----- -------- ------
BALANCE MARCH 30, 1996............. $ -- $ 222 $ 59,476 $3,734
======== ===== ======== ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
TREX MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Trex Medical Corporation (the "Company") designs, manufactures and markets
mammography equipment and minimally invasive stereotactic needle biopsy
systems used in the detection of breast cancer. The Company also designs and
manufactures general X-ray equipment. The Company's mammography and
stereotactic needle biopsy systems are used by radiologists and physicians in
offices, hospitals and dedicated breast-care centers, and its general
radiography systems are used by physicians and radiologists, both in office
and hospital settings, as well as by veterinarians and chiropractors.
Relationship with ThermoTrex Corporation and Thermo Electron Corporation
The Company was incorporated in September 1995 as a wholly owned subsidiary
of ThermoTrex Corporation ("ThermoTrex"). On October 2, 1995, ThermoTrex
transferred to the Company all of the outstanding capital stock of Bennett X-
Ray Corporation ("Bennett"), in exchange for a $42,000,000 principal amount
4.2% subordinated convertible note, due 2000, convertible into shares of the
Company's common stock at $11.79 per share. On October 16, 1995, ThermoTrex
transferred to the Company the assets, liabilities and businesses of
ThermoTrex's Lorad division ("Lorad") and ThermoTrex's research and
development activities pertaining to its Sonic CT system, in exchange for
20,000,000 shares of the Company's common stock. ThermoTrex acquired Lorad and
Bennett in November 1992 and September 1995, respectively. As of September 30,
1995, ThermoTrex was a 51%-owned subsidiary of Thermo Electron Corporation
("Thermo Electron").
The accompanying financial statements include the assets, liabilities,
income and expenses of the Company as included in ThermoTrex's consolidated
financial statements.
Principles of Consolidation
The accompanying financial statements include the accounts of the Company
and its wholly owned subsidiaries. All material intercompany accounts and
transactions have been eliminated.
Fiscal Year
In September 1995, the Company changed its fiscal year-end from the Saturday
nearest December 31 to the Saturday nearest September 30. Accordingly, the
Company's transition period, which ended on September 30, 1995, is the 39-week
period from January 1, 1995 through September 30, 1995 (fiscal 1995), and
fiscal 1996 will be the 52-week period ending September 28, 1996. References
to 1993 and 1994 are for the fiscal years ended January 1, 1994 and December
31, 1994, respectively. Fiscal years 1993 and 1994 each included 52 weeks. The
unaudited statements of income and cash flows for the nine months ended
October 1, 1994 are presented for comparative purposes only and include 39
weeks.
Revenue Recognition
The Company recognizes revenues upon shipment of its products. The Company
provides a reserve for its estimate of warranty costs at the time of shipment.
Income Taxes
The Company and ThermoTrex have a tax allocation agreement under which the
Company is included in the consolidated income tax returns filed by
ThermoTrex. The agreement provides that in years in which the Company has
taxable income, it will pay to ThermoTrex amounts comparable to the taxes the
Company would have paid upon filing separate tax returns. If ThermoTrex's
equity ownership of the Company were to decrease below 80%, the Company would
file its own income tax returns.
F-7
<PAGE>
TREX MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes," the Company recognizes deferred income
taxes based on the expected future tax consequences of differences between the
financial statement basis and the tax basis of assets and liabilities,
calculated using enacted tax rates in effect for the year in which the
differences are expected to be reflected in the tax return.
Earnings per Share
Pursuant to Securities and Exchange Commission requirements, earnings per
share have been presented for all periods. Weighted average shares for all
periods include the 20,000,000 shares issued to ThermoTrex in connection with
the initial capitalization of the Company and the effect of the assumed
exercise of stock options issued within one year prior to the Company's
proposed initial public offering. Fully-diluted earnings per share have not
been presented as they do not materially differ from primary earnings per
share.
Cash and Cash Equivalents
Prior to its incorporation in September 1995, the Company's cash receipts
and disbursements were combined with other ThermoTrex corporate cash
transactions and balances. Therefore, cash is not included in the accompanying
balance sheet as of December 31, 1994.
Inventories
Inventories are stated at the lower of cost (on a first-in, first-out basis)
or market value and include materials, labor and manufacturing overhead. The
components of inventories are as follows:
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Raw materials and supplies.................................. $ 3,576 $ 9,414
Work in process............................................. 1,472 5,195
Finished goods.............................................. 1,674 2,058
------- -------
$ 6,722 $16,667
======= =======
</TABLE>
Property, Plant and Equipment
The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization principally using the straight-line method over
the estimated useful lives of the property as follows: building, 30 years;
machinery and equipment, 3 to 7 years; and leasehold improvements, the shorter
of the term of the lease or the life of the asset. Property, plant and
equipment consist of the following:
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land......................................................... $1,000 $1,000
Building..................................................... 2,728 2,728
Machinery, equipment and leasehold improvements.............. 4,000 6,211
------- -------
7,728 9,939
Less: Accumulated depreciation and amortization.............. 1,418 2,128
------- -------
$6,310 $7,811
======= =======
</TABLE>
F-8
<PAGE>
TREX MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Cost in Excess of Net Assets of Acquired Companies
The excess of cost over the fair value of net assets of acquired companies is
amortized using the straight-line method over 40 years. Accumulated
amortization was $1,357,000 and $1,935,000 as of December 31, 1994 and
September 30, 1995, respectively. The Company assesses the future useful life
of this asset whenever events or changes in circumstances indicate that the
current useful life has diminished. The Company considers the future
undiscounted cash flows of the acquired businesses in assessing the
recoverability of this asset.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Interim Financial Statements
The financial statements as of March 30, 1996, for the six-month periods
ended April 1, 1995 and March 30, 1996 and for the nine-month period ended
October 1, 1994, are unaudited but, in the opinion of management, reflect all
adjustments of a normal recurring nature necessary for a fair presentation of
results for these interim periods. The results of operations for the six-month
period ended March 30, 1996 are not necessarily indicative of the results to be
expected for the entire year.
2. Acquisitions
In September 1995, ThermoTrex acquired all of the outstanding capital stock
of Bennett for $42,865,000 in cash. Bennett is a manufacturer of high frequency
specialty and general purpose radiographic systems. This acquisition has been
accounted for using the purchase method of accounting, and Bennett's results of
operations have been included in the accompanying financial statements from the
date of acquisition. The cost of the acquisition exceeded the estimated fair
value of the acquired net assets by $37,496,000, which is being amortized over
40 years. Allocation of the purchase price 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. To date, no information has been gathered
that would cause the Company to believe that the final allocation of the
purchase price will be materially different than the preliminary estimate.
Based on unaudited data, the following table presents selected financial
information for the Company and Bennett on a pro forma basis, assuming the
companies had been combined since the beginning of 1994.
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
December 31, September 30,
1994 1995
------------ -----------------
(In thousands,
except per share amounts)
<S> <C> <C>
Revenues.................... $96,943 $85,749
Net income (loss)........... (1,236) 2,224
Earnings (loss) per share... (.06) .11
</TABLE>
F-9
<PAGE>
TREX MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The pro forma results are not necessarily indicative of future operations or
the actual results that would have occurred had the acquisition of Bennett
been made at the beginning of 1994. Additional pro forma information for the
Company and Bennett is included elsewhere in this Prospectus.
In November 1992, ThermoTrex acquired Lorad for $5.3 million in cash,
assumption of $6.7 million of pre-existing debt of Lorad, and shares of
ThermoTrex common stock and stock options valued at $12.3 million. In
addition, in March 1995, ThermoTrex made a cash payment of $2.3 million to the
holders of approximately 9.2% of Lorad's common stock who had earlier voted
against the acquisition, in exchange for their interest in Lorad.
Other accrued expenses in the accompanying balance sheet include $3.0
million as of December 31, 1994 and $4.0 million as of September 30, 1995, for
estimated reserves associated with acquisitions, including a reserve of $2.3
million at December 31, 1994 and September 30, 1995 for legal fees and other
costs associated with a patent infringement suit that existed prior to
ThermoTrex's acquisition of Lorad. This suit was brought by Fischer Imaging
Corporation ("Fischer"), which alleges that Lorad infringed a Fischer patent
on a precision mammographic needle-biopsy system. In connection with the
organization of the Company, ThermoTrex agreed to indemnify the Company for
any and all cash damages under this lawsuit, with respect to sales occurring
prior to October 16, 1995, the date Lorad was transferred to the Company. Any
payments received under such indemnity would be recorded as capital
contributions. While the Company believes that it has meritorious legal
defenses to the allegation, due to the inherent uncertainties of litigation,
the Company is unable to predict the outcome of this matter. Although an
unsuccessful resolution could have a material adverse effect on the Company's
results of operations, in the opinion of management any resolution will not
have a material adverse effect on the Company's financial position.
3. EMPLOYEE BENEFIT PLANS
Employee Stock Purchase Plan
Substantially all of the Company's full-time U.S. employees are eligible to
participate in an employee stock purchase plan sponsored by ThermoTrex. Prior
to the November 1995 plan year, shares of ThermoTrex's and Thermo Electron's
common stock could be purchased at the end of a 12-month plan year at 85% of
the fair market value at the beginning of the plan year, and the shares
purchased were subject to a one-year resale restriction. Effective November 1,
1995, the applicable shares of common stock may be purchased at 95% of the
fair market value at the beginning of the plan year, and the shares purchased
are subject to a six-month resale restriction. Shares are purchased through
payroll deductions of up to 10% of each participating employee's gross wages.
401(k) Savings Plan
The majority of the Company's full-time employees are eligible to
participate in Thermo Electron's 401(k) savings plan. Prior to 1994, the
Company's Lorad division participated in its own 401(k) savings plan.
Contributions to the Thermo Electron and the Lorad 401(k) savings plans are
made by both the employee and the Company. Company contributions are based
upon the level of employee contributions. The Company contributed and charged
to expense for these plans $111,000, $313,000 and $242,000 in 1993, 1994 and
fiscal 1995, respectively.
F-10
<PAGE>
TREX MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. INCOME TAXES
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
1993 1994 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Currently payable:
Federal............................................. $ 426 $1,119 $2,474
State............................................... 99 547 808
------ ------ ------
525 1,666 3,282
------ ------ ------
Net deferred (prepaid):
Federal............................................. 329 (146) (228)
State............................................... 121 (54) (173)
------ ------ ------
450 (200) (401)
------ ------ ------
$ 975 $1,466 $2,881
====== ====== ======
</TABLE>
The provision for income taxes in the accompanying statement of income
differs from the provision calculated by applying the statutory federal income
tax rate of 34% to income before provision for income taxes due to the
following:
<TABLE>
<CAPTION>
1993 1994 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Provision for income taxes at statutory rate............ $ 613 $ 904 $2,164
Increases resulting from:
State income taxes, net of federal tax................ 145 325 419
Amortization of cost in excess of net assets of
acquired companies................................... 209 228 197
Nondeductible expenses................................ 8 9 101
------ ------ ------
$ 975 $1,466 $2,881
====== ====== ======
</TABLE>
Prepaid income taxes and deferred income taxes in the accompanying balance
sheet consist of the following:
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Prepaid income taxes:
Reserves and accruals..................................... $1,777 $1,725
Allowance for doubtful accounts........................... 215 348
Inventory basis difference................................ 576 918
Accrued compensation...................................... 60 463
Other, net................................................ 21 20
------- -------
$2,649 $3,474
======= =======
Deferred income taxes:
Depreciation.............................................. $ 113 $ 142
======= =======
</TABLE>
F-11
<PAGE>
TREX MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. COMMITMENTS
The Company leases portions of its office and operating facilities under
various noncancelable operating lease arrangements expiring between fiscal
1997 and fiscal 2005. The accompanying statement of income includes expenses
from operating leases of $132,000, $40,000 and $44,000 in 1993, 1994 and
fiscal 1995, respectively. Future minimum payments due under noncancelable
operating leases at September 30, 1995, are $625,000 in fiscal 1996; $627,000
in fiscal 1997; $600,000 in each of fiscal 1998, 1999 and 2000; and $2,975,000
in fiscal 2001 and thereafter. Total future minimum lease payments are
$6,027,000.
6. RELATED PARTY TRANSACTIONS
Corporate Services Agreement
The Company and Thermo Electron have a corporate services agreement under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management,
certain employee benefit administration, tax advice and preparation of tax
returns, centralized cash management, and certain financial and other
services, for which the Company pays Thermo Electron annually an amount equal
to 1.20% of the Company's revenues. Prior to January 1, 1995, the Company paid
an annual fee equal to 1.25% of the Company's revenues. Effective December 31,
1995, the Company will pay an annual fee equal to 1.0% of the Company's
revenues. For these services, the Company was charged $469,000, $680,000 and
$663,000 in 1993, 1994 and fiscal 1995, respectively. The annual fee is
reviewed and adjusted annually by mutual agreement of the parties. Management
believes that the service fee charged by Thermo Electron is reasonable and
that such fees are representative of the expenses the Company would have
incurred on a stand-alone basis. The corporate services agreement is renewed
annually but can be terminated upon 30 days' prior notice by the Company or
upon the Company's withdrawal from the Thermo Electron Corporate Charter (the
Thermo Electron Corporate Charter defines the relationship among Thermo
Electron and its majority-owned subsidiaries). For additional items such as
employee benefit plans, insurance coverage and other identifiable costs,
Thermo Electron charges the Company based upon costs attributable to the
Company.
Other Related Party Services
ThermoTrex provides certain research and development contract services to
the Company, which are charged to the Company based on actual cost and usage.
For these services, the Company was charged $1,470,000, $2,816,000 and
$1,536,000 in 1993, 1994 and fiscal 1995, respectively.
Laser Manufacturing Agreement
ThermoLase Corporation ("ThermoLase"), a majority-owned subsidiary of
ThermoTrex, has engaged the Company to design and manufacture a laser to be
used in ThermoLase's laser-based hair-removal system. During fiscal 1995, the
Company recorded $350,000 of revenue under this agreement.
Vendor Agreement
During fiscal 1995, the Company placed an order for $2,500,000 for the
design and production of high-transmission cellular grids from the Tecomet
division of Thermo Electron, which will be received in fiscal 1996 and 1997.
In addition, the Company recorded expense of $250,000 during fiscal 1995
related to research and development funding provided to Tecomet.
F-12
<PAGE>
TREX MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. SIGNIFICANT CUSTOMER, EXPORT SALES AND CONCENTRATION OF CREDIT RISK
Sales to one customer accounted for 11%, 11% and 18% of the Company's total
revenues in 1993, 1994 and fiscal 1995, respectively. Export sales to Germany
accounted for 1%, 3% and 11% of the Company's total revenues in 1993, 1994 and
fiscal 1995, respectively. Other export sales accounted for 9%, 11% and 10% of
the Company's total revenues in 1993, 1994 and fiscal 1995, respectively. In
general, export sales are denominated in U.S. dollars. The Company sells its
products primarily to customers in the healthcare industry. The Company does
not normally require collateral or other security to support its accounts
receivable. Management does not believe that this concentration of credit risk
has or will have a significant negative impact on the Company.
8. CONTINGENCY
The owner of a U.S. patent related to automatic exposure control has claimed
that the Company's mammography systems infringe such patent. The patent owner
has offered a nonexclusive license under the patent on terms not acceptable to
the Company. Although the Company believes that the validity of the patent may
be questionable and subject to a successful challenge, if the patent holder
were successful in enforcing such patent the Company could be enjoined from
manufacturing and selling mammography systems. The Company will be indemnified
by ThermoTrex for any cash damages relating to sales of such systems occurring
prior to the dates on which ThermoTrex transferred certain businesses to the
Company, although any payments under such indemnity would be recorded as
capital contributions. Due to the inherent uncertainty of litigation,
management cannot predict the outcome of this matter. While an unfavorable
outcome could have a material adverse effect on the Company's results of
operations, in the opinion of management any resolution will not have a
material effect on the Company's financial position.
See Note 2 for a discussion of certain litigation.
9. SUBSEQUENT EVENTS
Private Placements of Common Stock
In November 1995, the Company issued 1,862,000 shares of its common stock in
a private placement at $10.25 per share for net proceeds of $17,618,000. In
January 1996, the Company issued 100,000 shares of its common stock in a
private placement at $10.75 per share for net proceeds of $1,070,000. Certain
officers and directors of the Company and a corporation affiliated with a
director of the Company purchased an aggregate of 343,300 shares of the
Company's common stock issued in these private placements.
Stock-based Compensation Plans
On November 1, 1995, the Company adopted a stock-based compensation plan for
its key employees, directors and others, which permits the grant of a variety
of stock and stock-based awards as determined by the human resources committee
of the Company's Board of Directors (the Board Committee), including
restricted stock, stock options, stock bonus shares or performance-based
shares. In March 1996, the Board Committee granted options to purchase
1,041,000 shares of the Company's common stock at $11.00 per share, which was
the fair market value on the date of grant. The option recipients and the
terms of options granted under this plan are determined by the Board
Committee. Options granted to date generally vest and become immediately
exercisable on the ninth anniversary of the grant date, unless the Company's
common stock becomes publicly traded prior to such date. In such an event,
options become exercisable 90 days after the Company becomes subject to the
Securities Exchange Act of 1934, but will be subject to certain transfer
restrictions and the right of the Company to repurchase shares issued upon
exercise of the options at the exercise price, upon certain events. The
restrictions and repurchase rights generally will be deemed to have lapsed
ratably over periods ranging from five to ten years after the first
anniversary of the grant date, depending on the term of the option, which will
generally range from ten to twelve years. Nonqualified stock options may be
granted at any price determined by the Board Committee, although incentive
stock options must be granted at not less than the fair market value of the
Company's common stock on the date of grant.
F-13
<PAGE>
TREX MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
The Company also has a directors' stock option plan, adopted on November 1,
1995, that provides for the grant of stock options, at fair market value, to
outside directors pursuant to a formula approved by the Company's
shareholders. Options granted under this plan will generally vest and become
immediately exercisable on the fourth anniversary of the grant date, unless
the Company's common stock becomes publicly traded prior to such date. In such
an event, options granted under this plan will have the same general terms as
options granted under the stock-based compensation plan described above,
except that the restrictions and repurchase rights generally will be deemed to
have lapsed ratably over a four-year period and the option term is five years.
In November 1995, pursuant to this plan, the Company granted options to
purchase 40,000 shares of the Company's common stock at $10.25 per share. In
February 1996, the Company granted options to purchase 80,000 shares of the
Company's common stock at $10.75 per share.
In addition to the Company's stock-based compensation plans, certain
officers and key employees may also participate in the stock-based
compensation plans of Thermo Electron or its majority-owned subsidiaries.
No accounting recognition is given to options granted at fair market value
until they are exercised. Upon exercise, net proceeds, including tax benefits
realized, are credited to equity.
Reserved Shares
As of May 6, 1996, the Company had reserved 5,232,888 unissued shares of its
common stock for possible issuance under stock-based compensation plans and
conversion of the Company's 4.2% subordinated convertible note.
Proposed Acquisitions
In February 1996, the Company signed a non-binding letter of intent to
acquire XRE Corporation ("XRE"), a Massachusetts company that designs,
manufactures and markets X-ray imaging systems used for cardiac
catheterization and angiography, for approximately $17,000,000 in cash.
In April 1996, the Company signed a non-binding letter of intent to acquire
Continental X-Ray Corporation and affiliates ("Continental"), an Illinois
company that designs, manufactures, and markets general purpose and specialty
X-ray systems for approximately $18,200,000 in cash, including the repayment
of approximately $5,700,000 in debt.
The completion of these acquisitions is subject to the satisfaction of
certain closing conditions, including negotiation of definitive agreements;
receipt of regulatory approvals, including clearance from the Federal Trade
Commission; due diligence; and approval of the boards of directors of the
Company, ThermoTrex, XRE, and Continental. The purchase price for both XRE and
Continental will be subject to post-closing adjustments based on the net asset
value of the respective companies as of the closing dates. These acquisitions
will be accounted for using the purchase method of accounting. Pro forma
information for the Company, XRE and Continental is available elsewhere in
this Prospectus.
Conversion of Subordinated Convertible Note
In March 1996, ThermoTrex converted $3,000,000 principal amount of the
Company's subordinated convertible note into 254,452 shares of the Company's
common stock. Subsequent to the conversion, ThermoTrex owned 91% of the
Company's outstanding common stock.
F-14
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Bennett X-Ray Corporation:
We have audited the accompanying consolidated balance sheet of Bennett X-Ray
Corporation (a New York corporation) and subsidiaries as of February 28, 1994
and 1995, and the related consolidated statements of operations, cash flows
and shareholders' investment for each of the three years in the period ended
February 28, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Bennett X-
Ray Corporation and subsidiaries as of February 28, 1994 and 1995 and the
results of their operations and their cash flows for each of the three years
in the period ended February 28, 1995, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
November 3, 1995
F-15
<PAGE>
BENNETT X-RAY CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS MARCH 1, 1995
FEBRUARY 28, ENDED THROUGH
---------------------------- AUGUST 31, SEPTEMBER 14,
1993 1994 1995 1994 1995
-------- --------- -------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................ $ 28,618 $ 32,501 $ 42,533 $ 21,267 $ 23,369
-------- --------- -------- -------- --------
Costs and Operating
Expenses:
Cost of revenues....... 17,919 21,760 26,622 13,311 14,941
Selling, general and
administrative
expenses.............. 7,678 8,271 11,913 5,957 6,653
Research and
development expenses.. 1,951 2,711 3,346 1,673 1,505
-------- --------- -------- -------- --------
27,548 32,742 41,881 20,941 23,099
-------- --------- -------- -------- --------
Operating Income
(Loss)................. 1,070 (241) 652 326 270
Other Income............ 321 74 93 47 74
-------- --------- -------- -------- --------
Income (Loss) Before In-
come Tax
Provision.............. 1,391 (167) 745 373 344
Income Tax Provision
(Note 3)............... 493 48 388 194 170
-------- --------- -------- -------- --------
Net Income (Loss)....... $ 898 $ (215) $ 357 $ 179 $ 174
======== ========= ======== ======== ========
Earnings (Loss) per
Share.................. $ 893.53 $ (213.93) $ 355.22 $ 178.11 $ 173.13
======== ========= ======== ======== ========
Shares Outstanding...... 1,005 1,005 1,005 1,005 1,005
======== ========= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-16
<PAGE>
BENNETT X-RAY CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
FEBRUARY 28,
---------------
1994 1995
------- -------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................................... $ 785 $ 397
Available-for-sale investments, at quoted market value (Note
2)........................................................... 812 844
Accounts receivable, less allowances of $231 and $464......... 3,494 3,101
Inventories................................................... 4,791 6,426
Prepaid expenses.............................................. 68 71
Prepaid income taxes (Note 3)................................. 208 422
------- -------
10,158 11,261
------- -------
Property and Equipment, at Cost, Net........................... 1,442 1,350
------- -------
$11,600 $12,611
======= =======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable.............................................. $ 1,564 $ 2,173
Accrued payroll and employee benefits......................... 993 1,058
Accrued warranty costs........................................ 1,195 1,370
Other accrued expenses........................................ 2,008 1,851
------- -------
5,760 6,452
------- -------
Deferred Income Taxes (Note 3)................................. 143 145
------- -------
Commitments and Contingency (Note 5)
Shareholders' Investment:
Common stock, no par value; 2,500 shares authorized;
1,005 shares issued and outstanding.......................... 21 21
Retained earnings............................................. 5,676 5,993
------- -------
5,697 6,014
------- -------
$11,600 $12,611
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-17
<PAGE>
BENNETT X-RAY CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS MARCH 1, 1995
FEBRUARY 28, ENDED THROUGH
------------------------- AUGUST 31, SEPTEMBER 14,
1993 1994 1995 1994 1995
------- ------- ------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating Activities:
Net income (loss)...... $ 898 $ (215) $ 357 $ 179 $ 174
Adjustments to
reconcile net income
(loss) to net cash
used in operating
activities:
Depreciation and
amortization........ 166 299 257 108 67
Increase (decrease)
in deferred
income taxes........ 186 (43) 2 (9) 855
Changes in current
accounts:
Accounts
receivable......... (466) (791) 393 254 (1,259)
Inventories......... (712) (608) (1,635) (983) (1,256)
Other current
assets............. (95) (52) (217) (111) 845
Accounts payable.... (1,091) 585 609 (180) 845
Other current
liabilities........ 552 647 83 517 (649)
------- ------- ------- ----- -------
Net cash used in
operating
activities......... (562) (178) (151) (225) (378)
------- ------- ------- ----- -------
Investing Activities:
Purchases of available-
for-sale investments.. -- (812) (32) -- --
Proceeds from sale and
maturities of
available-for-sale
investments........... -- -- -- -- 844
Purchases of property
and equipment......... (1,405) (151) (165) (67) --
------- ------- ------- ----- -------
Net cash provided by
(used in) investing
activities......... (1,405) (963) (197) (67) 844
------- ------- ------- ----- -------
Financing Activities:
Cash dividends paid.... (40) (40) (40) -- --
------- ------- ------- ----- -------
Increase (Decrease) in
Cash and Cash
Equivalents............ (2,007) (1,181) (388) (292) 466
Cash and Cash
Equivalents at
Beginning of Period.... 3,973 1,966 785 785 397
------- ------- ------- ----- -------
Cash and Cash
Equivalents at End of
Period................. $ 1,966 $ 785 $ 397 $ 493 $ 863
======= ======= ======= ===== =======
Supplemental Cash Flow
Information:
Cash paid during the
period for
income taxes......... $ 354 $ 76 $ 472 $ 232 $ 149
======= ======= ======= ===== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-18
<PAGE>
BENNETT X-RAY CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON
STOCK,
NO PAR RETAINED
VALUE EARNINGS
------ --------
<S> <C> <C>
BALANCE, FEBRUARY 28, 1992.................................. $ 21 $5,073
Net income................................................. -- 898
Payment of $40 per share cash dividend..................... -- (40)
---- ------
BALANCE, FEBRUARY 28, 1993.................................. 21 5,931
Net loss................................................... -- (215)
Payment of $40 per share cash dividend..................... -- (40)
---- ------
BALANCE, FEBRUARY 28, 1994.................................. 21 5,676
Net income................................................. -- 357
Payment of $40 per share cash dividend..................... -- (40)
---- ------
BALANCE, FEBRUARY 28, 1995.................................. 21 5,993
<CAPTION>
(UNAUDITED)
<S> <C> <C>
Net income................................................. -- 174
---- ------
BALANCE, SEPTEMBER 14, 1995................................. $ 21 $6,167
==== ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-19
<PAGE>
BENNETT X-RAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Bennett X-Ray Corporation was incorporated in 1967 and is engaged in the
manufacture of high frequency diagnostic radiographic (X-ray) equipment with a
focus on health care imaging products in the private office, clinic and
hospital markets.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Bennett X-Ray Corporation and its wholly owned subsidiaries, Bennett
International Corporation and Island X-Ray Incorporated (collectively referred
to as the "Company"). All significant intercompany accounts and transactions
have been eliminated in consolidation.
Fiscal Year
The Company has adopted a fiscal year ending February 28. References to
1993, 1994 and 1995 are for the fiscal years ended February 28, 1993, 1994 and
1995, respectively.
Revenue Recognition
The Company recognizes product revenues upon shipment of its products. The
Company provides a reserve for its estimate of warranty costs at the time of
shipment.
Cash and Cash Equivalents
The Company considers liquid investments with an original maturity of three
months or less when purchased to be cash equivalents.
Available-for-sale Investments
Pursuant to Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," the
Company's debt and marketable equity securities are accounted for at market
value (Note 2).
Inventories
Inventories are stated at the lower of cost (on a first-in, first-out basis)
or market value and include material, labor and manufacturing overhead. The
components of inventories are as follows:
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Raw material and supplies.................................... $2,511 $3,876
Work in process and finished goods........................... 2,280 2,550
------- -------
$4,791 $6,426
======= =======
</TABLE>
F-20
<PAGE>
BENNETT X-RAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Property and Equipment
The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the
estimated useful lives of the property as follows: machinery and equipment--3
to 7 years; automobiles--3 years; and leasehold improvements--the shorter of
the term of the lease or the life of the asset. Property and equipment consist
of the following:
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Leasehold
improvements...... $1,319 $ 1,447
Machinery and
equipment......... 648 535
Automobiles........ 211 156
------- -------
2,178 2,138
Less: Accumulated
depreciation and
amortization...... 736 788
------- -------
$ 1,442 $1,350
======= =======
</TABLE>
Income Taxes
In accordance with SFAS No. 109, "Accounting for Income Taxes," the Company
recognizes deferred income taxes based on the expected future tax consequences
of differences between the financial statement basis and the tax basis of
assets and liabilities calculated using enacted tax rates in effect for the
year in which the differences are expected to be reflected in the tax return.
Interim Financial Statements
The financial statements for the six-month period ended August 31, 1994 and
for the period from March 1, 1995 through September 14, 1995 are unaudited
but, in the opinion of management, reflect all adjustments of a normal
recurring nature necessary for a fair presentation of results for these
interim periods. The results of operations for the period from March 1, 1995
through September 14, 1995 are not necessarily indicative of the results to be
expected for the entire year.
2. AVAILABLE-FOR-SALE INVESTMENTS
In accordance with SFAS No. 115, the Company's debt and marketable equity
securities are considered available-for-sale investments in the accompanying
balance sheet and are carried at market value, with the difference between
cost and market value, net of related tax effects, recorded currently as a
component of shareholders' investment. Available-for-sale investments in the
accompanying 1994 and 1995 balance sheets represent investments in U.S.
Government securities with maturities of one year or less. There was no
difference between the market value and the cost basis of available-for-sale
investments at February 28, 1994 and 1995.
3. INCOME TAXES
The components of the income tax provision are as follows:
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
(IN THOUSANDS)
Currently payable:
Federal.................................................... $291 $190 $527
State...................................................... 35 37 73
---- ---- ----
326 227 600
---- ---- ----
Net deferred (prepaid):
Federal.................................................... 77 (142) (224)
State...................................................... 90 (37) 12
---- ---- ----
167 (179) (212)
---- ---- ----
$493 $ 48 $388
==== ==== ====
</TABLE>
F-21
<PAGE>
BENNETT X-RAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
The income tax provision in the accompanying statement of operations differs
from the amounts calculated by applying the statutory federal income tax rate
of 34% to income (loss) before income tax provision due to the following:
<TABLE>
<CAPTION>
1993 1994 1995
----- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Income tax provision
(benefit) at statutory
rate..................... $ 473 $ (57) $ 253
Differences resulting
from:
State income taxes, net
of federal tax......... 82 -- 56
Foreign sales corpora-
tion benefit........... (66) (43) (25)
Research and development
tax credit............. (171) -- --
Nondeductible expenses
and other.............. 175 148 104
----- ------- -------
$ 493 $ 48 $ 388
===== ======= =======
Prepaid income taxes and deferred income taxes in the accompanying balance
sheet consist of the following:
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Prepaid income taxes:
Reserves and accruals......... $ 208 $ 422
======= =======
Deferred income taxes:
Depreciation.................. $ 143 $ 145
======= =======
</TABLE>
4. EMPLOYEE BENEFIT PLAN
The Company has a noncontributory discretionary profit sharing plan covering
substantially all employees. Profit sharing expense amounted to $105,000,
$110,000 and $120,000 in fiscal 1993, 1994 and 1995, respectively.
5. RELATED PARTY LEASE AND CONTINGENCY
Facility Lease
The Company leases its main operating facility under a short-term operating
lease with a real estate trust, controlled by certain officers/shareholders of
the Company. The accompanying statement of operations includes expense from
this operating lease of $1,148,000, $1,224,000 and $1,318,000 in fiscal 1993,
1994 and 1995, respectively.
Guaranty
The Company guarantees a mortgage of its lessor. The amount outstanding
under this mortgage was $658,000 at February 28, 1995. This mortgage is also
secured by the underlying building and improvements.
6. SUBSEQUENT EVENT
In September 1995, all of the outstanding capital stock of the Company was
acquired by ThermoTrex Corporation, a majority-owned subsidiary of Thermo
Electron Corporation, for $42,865,000 in cash.
F-22
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To XRE Corporation:
We have audited the accompanying consolidated balance sheet of XRE
Corporation (a Massachusetts corporation) and subsidiary as of December 31,
1995 and the related consolidated statements of income, stockholders'
investment and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of XRE
Corporation and subsidiary as of December 31, 1995 and the results of their
operations and their cash flows for the year then ended, in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts February 20, 1996
F-23
<PAGE>
XRE CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
1995 APRIL 1, 1995 MARCH 30, 1996
------- ------------- --------------
(UNAUDITED)
<S> <C> <C> <C>
Revenues (Note 6):
Product revenues...................... $25,099 $7,247 $4,780
Service revenues...................... 4,207 854 813
------- ------ ------
29,306 8,101 5,593
------- ------ ------
Costs and Operating Expenses:
Cost of product revenues.............. 16,908 4,725 2,723
Cost of service revenues.............. 3,449 789 803
General and administrative expenses... 2,787 798 630
Research and development expenses..... 3,578 880 1,063
Selling and marketing expenses........ 2,029 706 845
------- ------ ------
28,751 7,898 6,064
------- ------ ------
Operating Income (Loss)................. 555 203 (471)
Interest Income......................... -- -- 5
Interest Expense........................ (132) (24) (10)
Other Income............................ -- -- 8
Minority Interest Income................ 31 -- --
------- ------ ------
Income Before Benefit for State Income
Taxes (Note 3)......................... 454 179 (468)
Provision (Benefit) for State Income
Taxes.................................. (80) 25 7
------- ------ ------
Net Income (Loss)....................... $ 534 $ 154 $ (475)
======= ====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-24
<PAGE>
XRE CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 30,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................... $ 320 $ 51
Accounts receivable, less allowance of $37 and $55.. 2,705 2,698
Inventories......................................... 6,600 8,511
Prepaid expenses.................................... 223 361
Deferred tax asset (Note 3) ........................ 156 156
------- -------
10,004 11,777
------- -------
Property and Equipment, at Cost, Net.................. 1,790 2,376
------- -------
Other Assets.......................................... 410 414
------- -------
$12,204 $14,567
======= =======
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current maturities of long-term obligations......... $ 108 $ 108
Due to affiliate (Note 8)........................... 442 32
Accounts and drafts payable......................... 1,389 3,227
Accrued expenses.................................... 2,412 2,622
Deferred revenue ................................... 2,415 3,805
------- -------
6,766 9,794
------- -------
Long-term Obligations (Note 2)........................ 266 236
------- -------
Minority Interest..................................... 21 21
------- -------
Commitment (Note 8)
Stockholders' Investment:
Common stock, no par value, 500 shares authorized;
240 shares issued.................................. 608 608
Capital in excess of par value...................... 3,783 3,783
Retained earnings................................... 1,126 491
Treasury stock at cost, 17 shares................... (366) (366)
------- -------
5,151 4,516
------- -------
$12,204 $14,567
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-25
<PAGE>
XRE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
1995 APRIL 1, 1995 MARCH 30, 1996
------- ------------- --------------
(UNAUDITED)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.............................. $ 534 $ 154 $ (475)
Adjustments to reconcile net income to
net cash
provided by operating activities:
Depreciation and amortization......... 546 123 109
Minority interest income.............. (31) -- --
Deferred tax benefit.................. (156) -- --
Provision for doubtful accounts....... 37 -- 18
Compensation expense.................. 76 58 (43)
Changes in current accounts:
Accounts receivable.................. 1,994 (190) (11)
Inventories.......................... 1,071 (637) (1,911)
Other current assets................. 8 (127) (137)
Accounts and drafts payable.......... (579) 618 1,839
Accrued expenses..................... 88 986 252
Deferred revenue..................... (345) (540) 1,390
------- ------- -------
Net cash provided by operating ac-
tivities........................... 3,243 445 1,031
------- ------- -------
INVESTING ACTIVITIES:
Purchases of property and equipment..... (977) (39) (695)
Increase in other assets................ (32) (8) (4)
------- ------- -------
Net cash used in investing
activities......................... (1,009) (47) (699)
------- ------- -------
FINANCING ACTIVITIES:
Net borrowing (repayments) under note
payable to a bank...................... (560) 827 --
Borrowings from affiliate............... 903 80 255
Repayment of borrowings from affiliate.. (2,616) (1,830) (665)
Borrowings under an equipment line of
credit................................. 205 -- --
Capital contribution by stockholders.... 600 600 --
S corporation cash distributions........ (407) (60) (160)
Repayment of long-term obligations...... (94) (24) (31)
------- ------- -------
Net cash used in financing activi-
ties............................... (1,969) (407) (601)
------- ------- -------
Increase (Decrease) in Cash and Cash
Equivalents............................. 265 (9) (269)
Cash and Cash Equivalents at Beginning of
Period.................................. 55 55 320
------- ------- -------
Cash and Cash Equivalents at End of Peri-
od...................................... $ 320 $ 46 $ 51
======= ======= =======
CASH PAID FOR:
Interest................................ $ 138 $ 16 $ 8
======= ======= =======
Income taxes............................ $ 18 $ 18 $ 36
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-26
<PAGE>
XRE CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK
---------------- ----------------
CAPITAL IN
NUMBER OF EXCESS OF RETAINED NUMBER OF
SHARES AMOUNT PAR VALUE EARNINGS SHARES AMOUNT
--------- ------ ---------- -------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31,
1994................... 240 $608 $3,183 $ 999 17 $(366)
S corporation cash dis-
tributions............. -- -- -- (407) -- --
Capital contribution by
stockholders........... -- -- 600 -- -- --
Net income.............. -- -- -- 534 -- --
--- ---- ------ ------ --- -----
BALANCE DECEMBER 31,
1995................... 240 $608 $3,783 $1,126 17 $(366)
=== ==== ====== ====== === =====
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
S corporation cash
distributions.......... -- -- -- (160) -- --
Net loss................ -- -- -- (475) -- --
--- ---- ------ ------ --- -----
BALANCE MARCH 30, 1996.. 240 $608 $3,783 $ 491 17 $(366)
=== ==== ====== ====== === =====
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-27
<PAGE>
XRE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
XRE Corporation (the "Company") designs, manufactures and sells specialized
X-ray systems used in the diagnosis and treatment of coronary artery disease
and other vascular conditions to OEM customers and hospitals.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The Company owns 51% of Angiographic Devices Corp. Ohio ("ADCO"), a
Massachusetts corporation which sells and services the Company's equipment.
The accompanying consolidated financial statements reflect the consolidation
of ADCO after elimination of all significant intercompany transactions. The
amount in minority interest at December 31, 1995 represents the 49% ownership
of ADCO's net book value held by the minority stockholders of ADCO. On April
30, 1996, the Company sold its 51% ownership in ADCO. This transaction had an
immaterial effect on the financial position of the Company. The estimated fair
value of the Company's financial instruments, which include cash equivalents,
accounts receivable and long-term debt, approximates their carrying value.
A real estate partnership of the principal officers/stockholders of the
Company owns the land and building in which the Company operates, as further
discussed in Note 8. The partnership's financial position and results of
operations are not included in these consolidated financial statements.
Interim Financial Statements
In the opinion of management, the unaudited interim consolidated financial
statements have been prepared on the same basis as the audited financial
statements and include all adjustments (consisting of normal recurring
adjustments) which management considers necessary for a fair presentation of
the results for such periods. The results of operations for the period ended
March 30, 1996 are not necessarily indicative of the results of operations for
the full year.
Revenue Recognition
The Company recognizes product revenues upon shipment and recognizes service
revenues upon completion of services rendered. Warranty costs related to
products are accrued at the date of shipment. The Company has recognized
approximately $313,000 of revenue in 1995 for a system that was completed and
ready to ship but which was physically being stored at the Company's facility
at the customer's request. This system will be shipped in 1996.
Cash and Cash Equivalents
The Company considers liquid investments with original maturities of three
months or less when purchased to be cash equivalents.
F-28
<PAGE>
XRE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Inventories
Inventories, which include material, labor and manufacturing overhead, are
stated at the lower of cost (on a last-in, first-out ("LIFO") basis) or
market. Inventories consist of the following at December 31, 1995 (In
thousands):
<TABLE>
<S> <C>
Raw materials...................................................... $4,378
Work-in-process and finished goods................................. 2,222
------
$6,600
======
</TABLE>
If the first-in, first-out ("FIFO") method of inventory costing had been
used instead of LIFO, inventory would have been reported as follows (In
thousands):
<TABLE>
<S> <C>
Inventory on FIFO basis............................................ $6,861
Less: LIFO reserve................................................. 261
------
Inventory on a LIFO basis........................................ $6,600
======
</TABLE>
Property and Equipment
The Company provides for depreciation and amortization using the straight-
line method to allocate the cost of property and equipment over their
estimated useful lives as follows (In thousands):
<TABLE>
<CAPTION>
ESTIMATED
CLASSIFICATION USEFUL LIFE
-------------- -----------
<S> <C> <C>
Equipment.............................................. 3-8 Years $8,326
Motor vehicles......................................... 3 Years 275
Leasehold improvements................................. 5 Years 565
------
9,166
Less: Accumulated depreciation and amortization........ 7,376
------
$1,790
======
</TABLE>
Accrued Expenses
At December 31, 1995, accrued expenses consist of the following (In
thousands):
<TABLE>
<S> <C>
Accrued warranty................................................... $1,115
Accrued payroll costs.............................................. 371
Accrued professional fees.......................................... 350
Accrued other...................................................... 576
------
$2,412
======
</TABLE>
2. LONG-TERM OBLIGATIONS AND OTHER FINANCING ARRANGEMENTS
In May 1995, the Company entered into a $1,000,000 equipment line of credit
agreement (the "Agreement") with a bank. Under the terms of the Agreement, the
Company may make borrowings from time to time for the sole purpose of
purchasing equipment. Each borrowing will be evidenced by a secured term note.
Borrowings bear interest at the prime rate (8.5% at December 31, 1995) plus 50
basis points. Principal is payable in 36 equal monthly installments.
Borrowings may not exceed 75% of the purchase price of the equipment. The
Company's ability to make additional borrowings under this equipment line of
credit expires on June 30, 1996. The Company had $176,000 outstanding under
the Agreement at December 31, 1995.
During 1994, the Company entered into three capital leases for the purchase
of certain equipment. Monthly payments are $5,879 including interest at
varying rates from 9.4% to 10.2%. There was approximately $192,000 outstanding
on these leases as of December 31, 1995. The leases are secured by the
equipment and expire through August 1999.
F-29
<PAGE>
XRE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Future minimum payments, as of December 31, 1995, under the equipment line
of credit and capital leases are as follows (In thousands):
<TABLE>
<S> <C>
1996................................................................... $ 145
1997................................................................... 139
1998................................................................... 110
1999................................................................... 31
-----
425
Less: Amount representing interest..................................... 51
-----
Long-term obligations and present value of minimum lease payments...... 374
Less: Current maturities of long-term obligations ..................... 108
-----
$ 266
=====
</TABLE>
The Company has a $5,000,000 revolving line of credit with a bank.
Borrowings are permitted up to 80% of qualified accounts receivable, as
defined, plus the lesser of $1,500,000 or 20% of the value of qualified
inventory, as defined, plus $899,000. The line bears interest at the prime
rate (8.5% at December 31, 1995) for borrowings up to $2,000,000, and prime
plus 50 basis points for borrowings in excess of $2,000,000. Borrowings are
secured by substantially all of the Company's assets and mature on June 30,
1996. In addition, the Company has approximately $450,000 outstanding under
letters of credit as of December 31, 1995. The revolving line of credit
contains certain covenants that, among other things, require certain financial
ratios and balances, limit the annual purchases of capital equipment and limit
additional indebtedness. As of December 31, 1995 and March 30, 1996 the
Company had received waivers or was in compliance with all covenants.
3. INCOME TAXES
The Company has elected to be taxed as an S corporation for federal and
state income tax purposes. As an S corporation, taxable income of the Company
is reported on the individual income tax returns of its stockholders, although
certain states require a corporate-level tax. The Company provides for state
income taxes in accordance with Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes."
Under SFAS No. 109, deferred tax assets or liabilities are computed based on
the differences between the financial reporting basis and income tax basis of
assets and liabilities as measured by the enacted tax laws and rates expected
to be applicable when the differences reverse.
The principal differences between assets and liabilities for financial
reporting and tax return purposes result primarily from depreciation and
expenses not currently deductible for tax return purposes.
The components of the benefit for state income taxes at December 31, 1995
are as follows (In thousands):
<TABLE>
<S> <C>
Current............................................................... $ 76
Deferred.............................................................. (156)
-----
$ (80)
=====
</TABLE>
Due to the uncertainty surrounding the timing of realizing the benefits of
its favorable tax attributes in future income tax returns, the Company had
placed a valuation allowance against its otherwise recognizable deferred tax
asset prior to 1995. During 1995, the management of the Company evaluated its
deferred tax asset in conjunction with its historical and projected operating
performance and determined that the deferred tax asset was fully realizable.
Accordingly, the Company reversed its tax valuation allowance during 1995.
4. STOCK REPURCHASE AGREEMENTS
Under the terms of an agreement with its stockholders, the Company must
purchase all of the shares owned by either stockholder upon the occurrence of
certain events, with payments to be made over a 10-year period.
F-30
<PAGE>
XRE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
The price to be paid under the agreement is book value per share, as defined.
To partially fund its obligations under this agreement, the Company has
purchased two life insurance policies, each in the amount of $1,000,000, on
the lives of each of the stockholders of the Company. The cash surrender
values of these life insurance policies, which total approximately $406,000 at
December 31, 1995, are included in other assets in the accompanying
consolidated balance sheet.
5. PROFIT SHARING PLAN
The Company has a qualified profit sharing plan that covers all employees
who meet certain employment requirements. The Company's contribution is
determined each year by the Board of Directors. In 1995, the Company
contributed and charged to expense $100,000 for the profit sharing plan.
6. SIGNIFICANT CUSTOMER
One customer, under an exclusive distributorship agreement with the Company,
accounted for approximately 45% of revenues in 1995. The Company's exclusive
distribution agreement expired at the end of 1995. The Company and this
customer are presently in negotiations to extend this contract.
7. PHANTOM STOCK PLAN
In November 1994, the Company adopted a Phantom Stock Plan (the "Plan") for
a key officer/employee of the Company. Under the terms of the Plan, this
officer/employee earns compensation equal to 5.26% of certain corporate
distributions, as well as for increases in the net book value of the Company.
Upon the occurrence of certain events, including the sale of the Company, the
Plan will be terminated and the officer/employee shall receive a final Plan
payment. The Company is accounting for the Plan in accordance with Financial
Accounting Standards Board Interpretation No. 28, "Accounting for Stock
Appreciation Rights and Other Variable Stock Option or Award Plans."
Accordingly, compensation is measured based on the increase in value as
determined under the Agreement. During 1995, approximately $76,000 in
compensation expense was recorded under this Plan based upon the increase in
the value due to the officer/employee.
8. RELATED PARTY TRANSACTION
On February 28, 1995, the Company entered into a 17-year facility lease with
an affiliated real estate partnership, Concord Associates ("Concord"), which
expires on February 28, 2012. Future minimum lease payments under this lease
are as follows (In thousands):
<TABLE>
<S> <C>
1996.............................................................. $ 631
1997.............................................................. 631
1998.............................................................. 631
1999.............................................................. 631
2000.............................................................. 631
2001 and thereafter............................................... 7,046
-------
$10,201
=======
</TABLE>
Rental expense paid to Concord was approximately $792,000 in 1995. Due to
affiliate in the accompanying consolidated balance sheet represents non-
interest-bearing advances from Concord.
9. PROPOSED SALE OF THE COMPANY
On February 16, 1996, the Company entered into a letter of intent with Trex
Medical Corporation ("Trex Medical") whereby Trex Medical will purchase assets
and assume certain liabilities from the Company for approximately $17.0
million.
F-31
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Continental Group Broadview, Illinois
We have audited the accompanying combined balance sheet of the Continental
Group as of December 31, 1994 and 1995, and the related combined statements of
income, cash flows and stockholders' equity for the years then ended. These
combined financial statements are the responsibility of the Group's
management. Our responsibility is to express an opinion on these combined
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Continental Group
as of December 31, 1994 and 1995 and the results of their operations and their
cash flows for the years then ended in conformity with generally accepted
accounting principles.
Topel Forman L.L.C.
Chicago, Illinois March 15, 1996
F-32
<PAGE>
CONTINENTAL GROUP
COMBINED STATEMENT OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------
MARCH 31, MARCH 31,
1994 1995 1995 1996
------- ------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Sales................................... $21,699 $25,037 $6,595 $6,630
------- ------- ------ ------
Costs and Operating Expenses:
Cost of sales......................... 15,558 17,913 4,453 4,375
Operating expenses.................... 5,621 5,670 1,647 1,798
------- ------- ------ ------
21,179 23,583 6,100 6,173
------- ------- ------ ------
Operating Income........................ 520 1,454 495 457
Interest Expense........................ (432) (513) (123) (128)
Other Income (Expense), Net............. 7 (302) (76) (76)
------- ------- ------ ------
Income Before Provision for Income
Taxes.................................. 95 639 296 253
Provision for Income Taxes.............. 4 11 7 6
------- ------- ------ ------
Net Income.............................. $ 91 $ 628 $ 289 $ 247
======= ======= ====== ======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-33
<PAGE>
CONTINENTAL GROUP
COMBINED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1995 MARCH 31, 1996
------- ------- --------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash.......................................... $ 163 $ 23 $ 36
Accounts receivable, less allowance of $36,
$36 and $36.................................. 3,265 4,378 4,335
Inventories................................... 5,353 5,974 5,910
Prepaid expenses.............................. 89 91 59
------- ------- -------
8,870 10,466 10,340
------- ------- -------
Property, Plant and Equipment, at Cost, Net..... 2,054 1,922 1,905
------- ------- -------
Other Assets.................................... 78 64 60
------- ------- -------
$11,002 $12,452 $12,305
======= ======= =======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Notes payable................................. $ 3,122 $ 3,991 $ 3,637
Current maturities of long-term obligations... 255 254 263
Accounts payable.............................. 2,655 2,878 2,838
Accrued expenses.............................. 518 625 631
------- ------- -------
6,550 7,748 7,369
------- ------- -------
Long-term Obligations, Net of Current
Maturities..................................... 2,029 1,780 1,773
------- ------- -------
Contingencies
Stockholders' Equity:
Common stock.................................. 416 1,093 1,093
Additional paid-in capital.................... 64 64 64
Retained earnings............................. 1,943 1,767 2,006
------- ------- -------
2,423 2,924 3,163
------- ------- -------
$11,002 $12,452 $12,305
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-34
<PAGE>
CONTINENTAL GROUP
COMBINED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------
MARCH 31, MARCH 31,
1994 1995 1995 1996
------- ------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.............................. $ 91 $ 628 $ 289 $ 247
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization.......... 316 298 78 71
Provision for losses on accounts
receivable............................ 4 -- -- --
Loss on sale of property, plant and
equipment............................. -- 12 -- --
Changes in current accounts:
Accounts receivable................... (2,663) (1,113) (564) 43
Inventories........................... (442) (621) (325) 64
Prepaid expenses...................... 98 (2) 56 32
Accounts payable...................... 2,525 223 226 (40)
Other current liabilities............. 85 107 125 6
------- ------- ----- -----
Net cash provided by (used in)
operating activities................ 14 (468) (115) 423
------- ------- ----- -----
INVESTING ACTIVITIES:
Purchases of property, plant and
equipment.............................. (149) (164) (24) (50)
------- ------- ----- -----
Net cash used in investing
activities.......................... (149) (164) (24) (50)
------- ------- ----- -----
FINANCING ACTIVITIES:
Net cash received (paid) under line of
credit................................. 249 705 42 (381)
Net cash received (paid) on notes
payable................................ (184) 164 16 27
Payments of long-term obligations....... (214) (250) (64) (62)
Proceeds from long-term obligations..... 400 -- -- 64
Dividends paid.......................... (29) (128) -- (8)
Decrease in cash overdraft.............. (86) -- -- --
Payment of loan fees.................... (9) -- -- --
Net proceeds from issuance of common
stock.................................. -- 1 -- --
------- ------- ----- -----
Net cash provided by (used in)
financing activities................ 127 492 (6) (360)
------- ------- ----- -----
Increase (Decrease) in Cash.............. (8) (140) (145) 13
Cash at Beginning of Period.............. 171 163 163 23
------- ------- ----- -----
Cash at End of Period.................... $ 163 $ 23 $ 18 $ 36
======= ======= ===== =====
CASH PAID FOR:
Interest................................ $ 446 $ 513 $ 115 $ 128
======= ======= ===== =====
Income taxes............................ $ 1 $ 5 $ 5 $ 10
======= ======= ===== =====
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-35
<PAGE>
CONTINENTAL GROUP
COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS
------ ---------- --------
<S> <C> <C> <C>
BALANCE DECEMBER 31, 1993.......................... $ 416 $64 $1,881
Net income......................................... -- -- 91
Dividends paid..................................... -- -- (29)
------ --- ------
BALANCE DECEMBER 31, 1994.......................... 416 64 1,943
Net income......................................... -- -- 628
Issuance of common stock........................... 1 -- --
Dividends paid..................................... -- -- (128)
Reclass of retained earnings upon merger of Allied
Fabrication Corporation into Continental X-Ray
Corporation....................................... 676 -- (676)
------ --- ------
BALANCE DECEMBER 31, 1995.......................... 1,093 64 1,767
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C>
Net income......................................... -- -- 247
Dividends paid..................................... -- -- (8)
------ --- ------
BALANCE MARCH 31, 1996............................. $1,093 $64 $2,006
====== === ======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-36
<PAGE>
CONTINENTAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination
The combined financial statements include the accounts of Continental X-Ray
Corporation ("Continental"), Allied Fabrication Corporation ("Allied"),
Alphatek Corporation ("Alphatek"), Broadview Manufacturing Corporation
("Broadview"), Haymarket Square Associates ("Haymarket"), Advanced Medical
Imaging, Inc. ("AMI") and Trans-Continental X-Ray Corporation ("Trans-
Continental"). The companies share common management. Certain stockholders of
Continental own 100% of the stock of Trans-Continental and AMI, 66.67% of the
stock of Alphatek, and 60% of the stock of Broadview. Haymarket is owned
66.67% by Continental and 33.33% by Alphatek.
Continental merged with Allied on March 31, 1995. The stockholders of
Continental owned 100% of the issued and outstanding stock of Allied.
Continental issued 1,727 shares of common stock for the net assets of Allied.
The net assets were recorded at historical book value at the date of the
merger. The accompanying financial statements are based on the assumption that
the companies were merged for the full year.
All intercompany transactions have been eliminated in combination.
Revenue Recognition
The Company recognizes revenues upon shipment of its products.
Income Taxes
The stockholders of Continental, Allied, Broadview, Alphatek and AMI have
elected to be treated as "S" Corporations under provisions of the Internal
Revenue Code. In addition, Haymarket is a partnership. Accordingly, each
stockholder and partner will report his pro-rata share of the taxable income
or loss of the companies and partnership on their respective individual or
corporate income tax returns. Income taxes represent Illinois Replacement Tax.
Advertising Costs
Advertising costs are charged to operations when incurred (when the
advertising first takes place). Advertising costs during the year ended
December 31, 1995 amounted to $124,000.
Inventories
Inventories are valued at the lower of cost (on a first-in, first-out basis)
or market.
Property, Plant and Equipment
The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line and accelerated methods
over the estimated useful lives of the property as follows: building and
building improvements, 19 years; office furniture and equipment, 5 years; and
equipment, 7 years.
F-37
<PAGE>
CONTINENTAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land........................................................ $ 194 $ 194
Building and building improvements.......................... 2,343 2,343
Office furniture and fixtures............................... 493 518
Equipment................................................... 2,572 2,683
------- -------
5,602 5,738
Less: Accumulated depreciation ............................. 3,548 3,816
------- -------
$ 2,054 $ 1,922
======= =======
</TABLE>
Depreciation expense was $302,000 and $284,000 for 1994 and 1995,
respectively.
Fair Value of Financial Instruments
Based upon the borrowing rates currently available for bank loans with
similar terms and average maturities, the fair value of the Company's notes
payable and long-term debt, inclusive of current maturities, approximated its
carrying value at December 31, 1994 and 1995.
Use of Estimates
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues and expenses. Such
estimates primarily relate to unsettled transactions and events as of the date
of the financial statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.
Interim Financial Statements
The financial statements as of and for the three-month periods ended March
31, 1995 and 1996 are unaudited but, in the opinion of management, reflect all
adjustments of a normal recurring nature necessary for a fair presentation of
results for these interim periods. The results of operations for the three-
month period ended March 31, 1996 are not necessarily indicative of the
results to be expected for the entire year.
2. NOTES PAYABLE
Notes payable consist of the following:
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Borrowings under lines of credit............................ $ 2,621 $ 3,326
Notes payable to officers and related individuals........... 501 665
------- -------
$ 3,122 $ 3,991
======= =======
</TABLE>
F-38
<PAGE>
CONTINENTAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Continental and Alphatek have established lines of credit providing for
borrowings of up to $3,250,000 and $350,000, respectively, with interest
computed at the prime rate plus 3/4%. At December 31, 1994, Continental and
Alphatek had borrowings outstanding of $2,541,000 and $80,000 respectively,
under these lines of credit. At December 31, 1995, Continental and Alphatek
had borrowings outstanding of $3,246,000 and $80,000 respectively, under these
lines of credit. Borrowings under the lines of credit are secured by
substantially all assets of the companies and are guaranteed by certain
officers of the companies.
Notes payable to officers and related individuals bear interest at the prime
rate plus 2%.
3. LONG-TERM OBLIGATIONS
Long-term obligations consist of the following:
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Note payable to bank, payable in monthly installments of
$1,933 plus interest at the prime rate plus 3/4%. (9.25% at
December 31, 1995). Final payment is due in December 1998.
The note is secured by substantially all assets of
Continental and is guaranteed by certain officers of
Continental.................................................. $ 93 $ 70
Note payable to bank, payable in monthly installments of
$3,333 plus interest at the prime rate plus 3/4%. Final pay-
ment is due in April 1997. The note is secured by substan-
tially all assets of Continental and is guaranteed by certain
officers of Continental...................................... 93 53
Note payable due October 2007, with interest payable monthly
at the rate of 12%........................................... 120 120
Note payable to bank, payable in monthly installments of
$3,833 plus interest at the prime rate plus 3/4%. Final pay-
ment is due in April 1997. The note is secured by substan-
tially all assets of Continental and is guaranteed by certain
officers of Continental...................................... 107 62
Note payable to bank, payable in monthly installments of
$5,000 plus interest at the prime rate plus 3/4%. Final pay-
ment is due in August 1999. The note is secured by substan-
tially all assets of Continental and is guaranteed by certain
officers of Continental...................................... 280 220
Mortgage payable in monthly payments of $6,667 plus interest
at 7.85%. Final payment in the amount of $1,280,000 is due in
December 1998. The mortgage is secured by real estate and is
guaranteed by Continental, Alphatek and certain officers of
the companies................................................ 1,520 1,440
Note payable in monthly installments of $463 including inter-
est at 10.5%. Final payment is due in March 1995. The note is
secured by the related automobile............................ 2 --
Present value of settlement agreement with former employee due
in monthly payments of $800 for remaining life expectancy.
Discounted at 10%............................................ 69 69
------- -------
2,284 2,034
Less: Current maturities...................................... 255 254
------- -------
$ 2,029 $ 1,780
======= =======
</TABLE>
F-39
<PAGE>
CONTINENTAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONCLUDED)
Maturities of long-term obligations, as of December 31, 1995, are as follows
(In thousands):
<TABLE>
<S> <C>
1996.................................................................. $ 254
1997.................................................................. 197
1998.................................................................. 1,369
1999.................................................................. 46
2000.................................................................. 6
Thereafter............................................................ 162
------
$2,034
======
</TABLE>
4. CONTINGENCIES
Continental Group is a party to various claims, legal actions and complaints
arising out of the normal course of business. Management is of the opinion that
the resolution of these matters will not have a significant effect on the
Group's financial position or results of operations.
F-40
<PAGE>
TREX MEDICAL CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(UNAUDITED)
On September 15, 1995, ThermoTrex Corporation ("ThermoTrex") acquired all of
the outstanding capital stock of Bennett X-Ray Corporation ("Bennett") for
$42.9 million in cash. On October 2, 1995, ThermoTrex transferred to the
Company all of the outstanding capital stock of Bennett in exchange for a
$42.0 million principal amount 4.2% subordinated convertible note, due 2000,
convertible into shares of the Company's common stock at $11.79 per share.
This acquisition has been accounted for using the purchase method of
accounting. Subsequent to September 30, 1995, ThermoTrex converted $3.0
million principal amount of the subordinated convertible note into 254,452
shares of the Company's common stock. On October 16, 1995, ThermoTrex
transferred to the Company the assets, liabilities and businesses of
ThermoTrex's Lorad division ("Lorad") and ThermoTrex's research and
development activities pertaining to its Sonic CT system, in exchange for
20,000,000 shares of the Company's common stock.
In February 1996, the Company signed a letter of intent to acquire XRE
Corporation ("XRE") for approximately $17.0 million in cash. If the
acquisition of XRE is completed, the Company assumes that the purchase price
will be funded from cash on hand. The Company will account for this
acquisition using the purchase method of accounting.
In April 1996, the Company signed a letter of intent to acquire Continental
X-Ray Corporation and affiliates ("Continental") for approximately $18.2
million in cash, including the repayment of $5.7 million in debt. If the
acquisition of Continental is completed, the Company assumes that the purchase
price will be funded with borrowings from Thermo Electron Corporaton ("Thermo
Electron") which are assumed to be repaid with the proceeds of the Company's
proposed Underwritten Public Offering. The Company will account for this
acquisition using the purchase method of accounting.
F-41
<PAGE>
TREX MEDICAL CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
Nine Months Ended September 30, 1995
(Unaudited)
The following unaudited pro forma combined condensed statement of income sets
forth the results of operations for the nine months ended September 30, 1995,
as if the issuance of 1,862,000 shares of the Company's common stock in its
November 1995 private placement, the acquisition of XRE, which is assumed to be
financed by the private placement proceeds, the acquisition of Continental,
which is assumed to be financed through borrowings of $18.2 million from Thermo
Electron, which are assumed to be repaid with the proceeds of the Company's
proposed Underwritten Public Offering, and the acquisition of Bennett had
occurred on January 1, 1995. Bennett, XRE and Continental have fiscal years
which differ from the Company's fiscal year-end. The historical results of
operations for Bennett, XRE and Continental presented below have been adjusted
to conform to the Company's fiscal year-end for purposes of the pro forma
combined condensed statement of income. The pro forma historical results of
operations for Bennett presented below include compensation expense and related
party rent expense in excess of amounts that will be paid in the future,
pursuant to agreements executed in connection with the acquisition, totaling
$2.5 million for the nine months ended September 30, 1995. The pro forma
results of operations are not necessarily indicative of future operations or
the actual results that would have occurred had the acquisitions of Bennett,
XRE and Continental been made on January 1, 1995. This statement should be read
in conjunction with the accompanying notes, the pro forma combined condensed
balance sheet and the respective historical financial statements and related
notes of the Company, Bennett, XRE and Continental appearing elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
Historical Pro Forma
----------------------------------------- ---------------------
Trex Medical Bennett XRE Continental Adjustments Combined
------------ ------- -------- ----------- ----------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Revenues............................ $55,291 $30,458 $21,900 $18,536 $- $126,185
------------ ------- -------- ----------- ----------- ---------
Costs and Operating Expenses:
Cost of revenues.................... 28,180 19,379 15,365 13,582 1,896 78,402
Selling, general and administrative
expenses............................ 12,174 8,638 3,390 3,488 1,898 29,588
Research and development expenses... 8,595 2,062 2,519 742 - 13,918
------------ ------- -------- ----------- ----------- ---------
48,949 30,079 21,274 17,812 3,794 121,908
------------ ------- -------- ----------- ----------- ---------
Operating Income.................... 6,342 379 626 724 (3,794) 4,277
Interest Income..................... - - - - - -
Interest Expense.................... - - (116) (368) (1,228) (1,712)
Other Income (Expense), Net......... 22 90 - (209) - (97)
------------ ------- -------- ----------- ----------- ---------
Income Before Income Taxes.......... 6,364 469 510 147 (5,022) 2,468
Income Tax Provision (Benefit)...... 2,881 236 76 4 (1,327) 1,870
------------ ------- -------- ----------- ----------- ---------
Net Income.......................... $3,483 $233 $434 $143 $(3,695) $598
============ ======= ======== =========== =========== =========
Earnings per Share.................. $.17 $.02
============ =========
Weighted Average Shares ............ 20,151 4,516 24,667
============ =========== =========
</TABLE>
F-42
<PAGE>
TREX MEDICAL CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
SIX MONTHS ENDED MARCH 30, 1996
(UNAUDITED)
The following unaudited pro forma combined condensed statement of income
sets forth the results of operations for the six months ended March 30, 1996,
as if the issuance of 1,862,000 shares of the Company's common stock in its
November 1995 private placement, the acquisition of XRE, which is assumed to
be financed by the private placement proceeds, the acquisition of Continental,
which is assumed to be financed through borrowings from Thermo Electron, which
borrowings are assumed to be repaid with the proceeds of the Company's
proposed Underwritten Public Offering, and the acquisition of Bennett had
occurred on January 1, 1995. XRE and Continental have fiscal years which
differ from the Company's fiscal year-end. The historical results of
operations for XRE and Continental presented below have been adjusted to
conform to the Company's fiscal year-end for purposes of the pro forma
combined condensed statement of income. The pro forma results of operations
are not necessarily indicative of future operations or the actual results that
would have occurred had the acquisitions of Bennett, XRE and Continental been
made on January 1, 1995. This statement should be read in conjunction with the
accompanying notes, the pro forma combined condensed balance sheet and the
respective historical financial statements and related notes of the Company,
XRE, and Continental appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
--------------------------------- --------------------
TREX MEDICAL XRE CONTINENTAL ADJUSTMENTS COMBINED
------------ ------- ----------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues................ $66,829 $12,999 $13,131 $ -- $92,959
------- ------- ------- ------ -------
Costs and Operating Ex-
penses:
Cost of revenues....... 37,592 8,518 8,706 (479) 54,337
Selling, general and
administrative ex-
penses................ 13,695 2,901 2,705 544 19,845
Research and develop-
ment expenses......... 8,170 2,122 533 -- 10,825
------- ------- ------- ------ -------
59,457 13,541 11,944 65 85,007
------- ------- ------- ------ -------
Operating Income
(Loss)................. 7,372 (542) 1,187 (65) 7,952
Interest Income......... 440 5 -- (369) 76
Interest Expense........ (872) (26) (273) 63 (1,108)
Other Income (Expense),
Net.................... 35 39 (169) -- (95)
------- ------- ------- ------ -------
Income (Loss) Before In-
come Taxes............. 6,975 (524) 745 (371) 6,825
Income Tax Provision
(Benefit) ............. 3,241 (149) 13 42 3,147
------- ------- ------- ------ -------
Net Income (Loss)....... $ 3,734 $ (375) $ 732 $ (413) $ 3,678
======= ======= ======= ====== =======
Earnings per Share...... $ .17 $ .15
======= =======
Weighted Average
Shares................. 21,547 3,153 24,700
======= ====== =======
</TABLE>
F-43
<PAGE>
TREX MEDICAL CORPORATION
PRO FORMA COMBINED CONDENSED BALANCE SHEET
MARCH 30, 1996
(UNAUDITED)
The following unaudited pro forma combined condensed balance sheet sets
forth the financial position as of March 30, 1996, to reflect the acquisitions
of XRE and Continental as if the acquisitions had occurred on March 30, 1996.
This statement should be read in conjunction with the accompanying notes, the
pro forma combined condensed statements of income and the respective
historical financial statements and related notes of the Company, XRE and
Continental appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
--------------------------------- --------------------
TREX MEDICAL XRE CONTINENTAL ADJUSTMENTS COMBINED
------------ ------- ----------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equiva-
lents................. $ 19,245 $ 51 $ 36 $(17,000) $ 2,332
Accounts receivable,
net................... 18,936 2,698 4,335 -- 25,969
Inventories............ 18,615 8,511 5,910 1,417 34,453
Other current assets... 5,813 517 59 -- 6,389
-------- ------- ------- -------- --------
62,609 11,777 10,340 (15,583) 69,143
-------- ------- ------- -------- --------
Property, Plant and
Equipment, at Cost,
Net.................... 8,628 2,376 1,905 -- 12,909
-------- ------- ------- -------- --------
Other Assets............ -- 414 60 -- 474
-------- ------- ------- -------- --------
Cost in Excess of Net
Assets of Acquired
Companies.............. 58,338 -- -- 20,431 78,769
-------- ------- ------- -------- --------
$129,575 $14,567 $12,305 $ 4,848 $161,295
======== ======= ======= ======== ========
LIABILITIES AND SHAREHOLDERS' INVEST-
MENT
Current Liabilities:
Notes payable.......... $ -- $ -- $ 3,637 $ (3,637) $ --
Note payable to Thermo
Electron Corpora-
tion ................. -- -- -- 18,200 18,200
Current maturities of
long-term obliga-
tions................. -- 108 263 (263) 108
Accounts payable....... 7,671 3,227 2,838 -- 13,736
Other accrued ex-
penses................ 19,383 2,622 631 -- 22,636
Due to affiliates...... -- 32 -- -- 32
Deferred revenue....... -- 3,805 -- -- 3,805
-------- ------- ------- -------- --------
27,054 9,794 7,369 14,300 58,517
-------- ------- ------- -------- --------
Deferred Income Taxes... 89 -- -- -- 89
-------- ------- ------- -------- --------
Long-term Obligations:
Subordinated
convertible note, due
to parent company..... 39,000 -- -- -- 39,000
Other.................. -- 236 1,773 (1,773) 236
-------- ------- ------- -------- --------
39,000 236 1,773 (1,773) 39,236
-------- ------- ------- -------- --------
Minority Interest....... -- 21 -- -- 21
-------- ------- ------- -------- --------
Shareholders' Invest-
ment:
Common stock........... 222 608 1,093 (1,701) 222
Capital in excess of
par value............. 59,476 3,783 64 (3,847) 59,476
Retained earnings...... 3,734 491 2,006 (2,497) 3,734
Treasury stock......... -- (366) -- 366 --
-------- ------- ------- -------- --------
63,432 4,516 3,163 (7,679) 63,432
-------- ------- ------- -------- --------
$129,575 $14,567 $12,305 $ 4,848 $161,295
======== ======= ======= ======== ========
</TABLE>
F-44
<PAGE>
TREX MEDICAL CORPORATION
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1--PRO FORMA ADJUSTMENTS TO PRO FORMA COMBINED CONDENSED STATEMENT OF
INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (IN THOUSANDS, EXCEPT
IN TEXT)
<TABLE>
<CAPTION>
DEBIT (CREDIT)
--------------
<S> <C>
COST OF REVENUES
Increase of $479,000, $1,150,000 and $267,000 in the work in
process and finished goods inventories of Bennett, XRE and
Continental, respectively, to the estimated selling price,
less the sum of the costs of disposal and a reasonable profit
allowance for the Company's selling efforts................... $ 1,896
-------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Service fee of 1.20% of the revenues of Bennett, XRE and Conti-
nental for services provided under a services agreement be-
tween the Company and Thermo Electron......................... 851
Amortization over 40 years of $37,496,000, $11,334,000 and
$9,097,000 of cost in excess of net assets of acquired compa-
nies created by the acquisitions of Bennett, XRE and Continen-
tal, respectively............................................. 1,047
-------
1,898
-------
INTEREST EXPENSE
Record interest expense on the $42,000,000 principal amount
4.2% subordinated convertible note issued to ThermoTrex, net
of $3,000,000 principal amount converted into common stock by
ThermoTrex.................................................... 1,228
-------
INCOME TAX PROVISION (BENEFIT)
Income tax benefit associated with the adjustments above
(excluding amortization of cost in excess of net assets of
acquired companies), calculated at the Company's statutory
income tax rate of 40%........................................ (1,590)
Income tax provision associated with XRE's and Continental's
earnings, calculated at the Company's statutory income tax
rate of 40%................................................... 263
-------
(1,327)
-------
WEIGHTED AVERAGE SHARES
Increase in weighted average shares outstanding due to the
assumed issuance on January 1, 1995 of 1,862,000, 2,400,000
and 254,452 shares of the Company's common stock from its
November 1995 private placement, its proposed Underwritten
Public Offering and the assumed conversion of $3,000,000
principal amount of the 4.2% subordinated convertible note by
ThermoTrex, respectively
</TABLE>
F-45
<PAGE>
TREX MEDICAL CORPORATION
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
NOTE 2--PRO FORMA ADJUSTMENTS TO PRO FORMA COMBINED CONDENSED STATEMENT OF
INCOME FOR THE SIX MONTHS ENDED MARCH 30, 1996 (IN THOUSANDS, EXCEPT IN
TEXT)
<TABLE>
<CAPTION>
DEBIT (CREDIT)
--------------
<S> <C>
COST OF REVENUES
Reversal of the adjustment to record Bennett's inventory at
estimated selling price, less the sum of the costs of disposal
and a reasonable profit allowance for the Company's selling
efforts....................................................... $(479)
-----
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Service fee of 1.20% for the three month period ended December
30, 1995 and 1.0% for the three month period ended March 30,
1996 of the revenues of XRE and Continental for services
provided under a services agreement between the Company and
Thermo Electron............................................... 289
Amortization over 40 years of cost in excess of net assets of
acquired companies created by the acquisitions of XRE and
Continental................................................... 255
-----
544
-----
INTEREST INCOME
Decrease in interest income due to the $17,000,000 cash payment
to acquire XRE, calculated at an average interest rate of
5.94%......................................................... 369
-----
INTEREST EXPENSE
Decrease in interest expense on the $42,000,000 principal
amount 4.2% subordinated convertible note issued to
ThermoTrex, due to the assumed conversion by ThermoTrex on
January 1, 1995 of $3,000,000 principal amount into common
stock......................................................... (63)
-----
INCOME TAX PROVISION (BENEFIT)
Income tax benefit associated with the adjustments above
(excluding amortization of cost in excess of net assets of
acquired companies), calculated at the Company's statutory
income tax rate of 40%........................................ (46)
Net income tax provision associated with XRE's loss and
Continental's earnings, calculated at the Company's statutory
income tax rate of 40%........................................ 88
-----
42
-----
WEIGHTED AVERAGE SHARES
Increase in weighted average shares outstanding due to the
assumed issuance on January 1,
1995 of 1,862,000, 2,400,000, and 254,452 shares of the
Company's common stock from
its November 1995 private placement, its proposed Underwritten
Public Offering and the
assumed conversion of $3,000,000 principal amount of the 4.2%
subordinated convertible
note by ThermoTrex, respectively
</TABLE>
F-46
<PAGE>
TREX MEDICAL CORPORATION
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS--(CONCLUDED)
(UNAUDITED)
NOTE 3--PRO FORMA ADJUSTMENTS TO PRO FORMA COMBINED CONDENSED BALANCE SHEET (IN
THOUSANDS, EXCEPT IN TEXT)
<TABLE>
<CAPTION>
DEBIT (CREDIT)
--------------
<S> <C>
CASH AND CASH EQUIVALENTS
Cash payments to acquire XRE and Continental.................... $(35,200)
Proceeds from the issuance of note payable to Thermo Electron
Corporation.................................................... 18,200
--------
(17,000)
--------
INVENTORIES
Increase of $1,150,000 and $267,000 in the work in process and
finished goods inventories of XRE and Continental,
respectively, to the estimated selling price, less the sum of
the costs of disposal and a reasonable profit allowance for the
Company's selling efforts...................................... 1,417
--------
COST IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES
Excess of $11,334,000 and $9,097,000 of cost over the fair value
of the net assets acquired of XRE and Continental, respective-
ly............................................................. 20,431
--------
NOTES PAYABLE
Decrease in notes payable due to the repayment of Continental
debt by the Company............................................ 3,637
--------
NOTE PAYABLE TO THERMO ELECTRON CORPORATION
Record note payable to Thermo Electron Corporation to finance
the acquisition of Continental................................. (18,200)
--------
CURRENT MATURITIES OF LONG-TERM OBLIGATIONS
Decrease in current maturities of long-term obligations due to
the repayment of Continental debt by the Company............... 263
--------
LONG-TERM OBLIGATIONS
Decrease in other long-term obligations due to the repayment of
Continental debt by the Company................................ 1,773
--------
SHAREHOLDERS' INVESTMENT
Elimination of XRE's and Continental's equity accounts.......... 7,679
--------
</TABLE>
F-47
<PAGE>
The picture at the upper right-hand side of the page illustrates two seated
laboratory technicians with their hands at the controls of the Company's Lorad
Sterotactic Needle Biopsy System, which consists of a vertical floor-mounted
platform supporting the rotatable needle-biopsy apparatus, as well as a
horizontal platform which sits above the apparatus, upon which a patient lays in
a prone position.
The picture at the middle left-hand side of the page illustrates two X-ray
systems that are attached to vertical, floor-mounted bases. A patient is
standing up against the X-ray apparatus on the left-hand side of the photograph,
and a patient table with the Bennett logo is shown in the foreground in front of
the X-ray apparatus on the right-hand side of the page.
The picture at the lower right-hand side of the page illustrates a patient
table, above which is a moveable, rotatable X-ray apparatus suspended from a
platform which is mounted to the ceiling. Two large, flexible tubes are shown
running from the X-ray apparatus toward the wall, and another system component
is shown between the patient table and the wall.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDIC-
TION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIV-
ERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUM-
STANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS COR-
RECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 9
The Company.............................................................. 15
The Rights Offering...................................................... 15
Use of Proceeds.......................................................... 20
Dividend Policy.......................................................... 20
Capitalization........................................................... 21
Dilution................................................................. 22
Selected Financial Information........................................... 24
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 25
Business................................................................. 28
Relationship and Potential Conflicts of Interest with Thermo Electron and
ThermoTrex.............................................................. 42
Management............................................................... 46
Security Ownership of Certain Beneficial Owners and Management........... 53
Description of Capital Stock............................................. 55
Shares Eligible for Future Sale.......................................... 55
Legal Opinions........................................................... 57
Experts.................................................................. 57
Additional Information................................................... 57
Reports to Security Holders.............................................. 57
Index to Consolidated Financial Statements............................... F-1
</TABLE>
----------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EF-
FECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDI-
TION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDER-
WRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1,250,000 Shares
TREX MEDICAL CORPORATION
Common Stock
----------------
PROSPECTUS
, 1996
----------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered. All amounts shown
are estimates except for the Securities and Exchange Commission (the
"Commission") registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................. $ 6,897
Legal fees and expenses............................................. 5,000
Accounting fees and expenses........................................ 1,000
Printing and engraving expenses..................................... 10,000
Subscription agent fees............................................. 5,000
Miscellaneous....................................................... 2,103
-------
Total............................................................. $30,000
=======
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law and the Registrant's Certificate of
Incorporation and By-Laws limit the monetary liability of directors to the
Registrant and to its shareholders and provide for indemnification of the
Registrant's officers and directors for liabilities and expenses that they may
incur in such capacities. In general, officers and directors are indemnified
with respect to actions taken in good faith in a manner reasonably believed to
be in, or not opposed to, the best interests of the Registrant and, with
respect to any criminal action or proceeding, actions that the indemnitee had
no reasonable cause to believe were unlawful. The Registrant also has
indemnification agreements with its directors and officers that provide for
the maximum indemnification allowed by law. Reference is made to the
Registrant's Certificate of Incorporation, By-Laws and form of Indemnification
Agreement for Officers and Directors incorporated by reference as Exhibits
3.1, 3.2 and 10.18 hereto, respectively.
Thermo Electron has an insurance policy which insures the directors and
officers of Thermo Electron and its subsidiaries, including the Registrant,
against certain liabilities which might be incurred in connection with the
performance of their duties.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On October 2, 1995, ThermoTrex transferred to the Registrant all outstanding
capital stock of its Bennett X-Ray Corporation subsidiary in exchange for a
$42,000,000 principal amount subordinated convertible note due 2000. Exemption
from registration for this transaction is claimed under Section 4(2) of the
Securities Act.
On October 16, 1995, ThermoTrex contributed all of the assets and
liabilities relating to its Lorad division and its Sonic CT system to the
Registrant in exchange for 20,000,000 shares of Common Stock. Exemption for
registration for this transaction is claimed under Section 4(2) of the
Securities Act.
On November 22, 1995 and November 30, 1995 the Registrant sold an aggregate
of 1,862,000 shares of Common Stock to 159 accredited investors pursuant to
Regulation D of the Commission promulgated under the Securities Act.
On January 31, 1996, the Registrant sold 100,000 shares of Common Stock to
an accredited investor pursuant to Regulation D of the Commission promulgated
under the Securities Act.
From September 27, 1995 (the date of the Registrant's incorporation) through
March 27, 1996, the Registrant granted options under its stock-based
compensation plans to purchase an aggregate of 1,161,000 shares of Common
Stock at a weighted average exercise price of $10.96 per share. None of these
options have been exercised. Exemption from registration for these grants is
claimed under Section 4(2) of the Securities Act.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<C> <S>
*3.1 Certificate of Incorporation, as amended, of the Registrant.
*3.2 By-Laws of the Registrant.
4.1 Specimen Common Stock Certificate.
*4.2 $42,000,000 Subordinated Convertible Note due 2000 of the
Registrant issued to ThermoTrex.
4.3 Specimen Rights Certificate.
5 Opinion of Seth H. Hoogasian, Esq. with respect to the validity of
the securities being offered.
*10.1 Corporate Services Agreement dated as of September 27, 1995
between Thermo Electron Corporation ("Thermo Electron") and the
Registrant.
10.2 Thermo Electron Corporate Charter, as amended and restated
effective January 3, 1993 (incorporated by reference herein form
Exhibit 10.1 to Thermo Electron's Annual Report on form 10-K for
the fiscal year ended January 2, 1993 (File No. 1-8002)).
*10.3 Tax Allocation Agreement dated as of September 27, 1995 between
Thermo Electron and the Registrant.
*10.4 Master Repurchase Agreement dated as of September 27, 1995 between
Thermo Electron and the Registrant.
*10.5 Master Guarantee Reimbursement Agreement dated as of September 27,
1995 between Thermo Electron and the Registrant.
*10.6 Master Guarantee Reimbursement Agreement dated as of September 27,
1995 between ThermoTrex and the Registrant.
*+10.7 OEM Agreement between Philips Medical Systems North American
Company and Lorad dated as of November 2, 1993.
*+10.8 OEM Agreement between Philips Medical Systems North American
Company and ThermoTrex dated November 17, 1993.
*+10.9 Purchase Agreement between General Electric Company and Bennett
dated November 17, 1994.
*+10.10 Agreement between Philips Medizin Systeme Unternehmensbereich der
Philips GmbH and Bennett dated February 12, 1992.
*+10.11 Distributor Agreement between ThermoTrex and US Surgical
Corporation dated October 20, 1995, as amended.
*10.12 Note Purchase and Sale Agreement dated as of October 2, 1995
between ThermoTrex and the Registrant.
10.13 Lease dated as of September 15, 1995, by and among ThermoTrex and
BK Realty Associates, L.P. and Calrob Realty Associates (filed as
Exhibit 10.26 to ThermoTrex's Annual Report on Form
10-K for the fiscal year ended September 30, 1995 [File No. 1-
10791] and incorporated herein by reference).
*10.14 Lease dated as of December 20, 1995, between Melvyn J. Powers and
Mary P. Powers D/B/A M&M Realty and Lorad, as amended.
*10.15 Equity Incentive Plan of the Registrant.
*10.16 Deferred Compensation Plan for Directors of the Registrant.
*10.17 Directors Stock Option Plan of the Registrant.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
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*10.18 Form of Indemnification Agreement for Officers and Directors.
In addition to the stock-based compensation plans of the
Registrant, the executive officers of the Registrant may be
granted awards under stock-based compensation plans of the
Registrant's parent, Thermo Electron Corporation, and its
subsidiaries, for services rendered to the Registrant or to such
affiliated corporations. Such plans are listed under Exhibits
10.19-10.74.
10.19 Thermo Electron Corporation Incentive Stock Option Plan (filed as
Exhibit 4(d) to Thermo Electron's Registration Statement on Form
S-8 [Reg. No. 33-8993] and incorporated herein by reference).
(Maximum number of shares issuable in the aggregate under this
plan and the Thermo Electron Nonqualified Stock Option Plan is
9,035,156 shares, after adjustment to reflect share increases
approved in 1984 and 1986, share decrease approved in 1989, and 3-
for-2 stock splits effected in October 1986, October 1993 and May
1995).
10.20 Thermo Electron Corporation Nonqualified Stock Option Plan (filed
as Exhibit 4(e) to Thermo Electron's Registration Statement on
Form S-8 [Reg. No. 33-8993] and incorporated herein by reference).
(Plan amended in 1984 to extend expiration date to December 14,
1994; maximum number of shares issuable in the aggregate under
this plan and the Thermo Electron Incentive Stock Option Plan is
9,035,156 shares, after adjustment to reflect share increases
approved in 1984 and 1986, share decrease approved in 1989, and 3-
for-2 stock splits effected in October 1986, October 1993 and May
1995).
10.21 Thermo Electron Corporation Equity Incentive Plan (filed as
Exhibit 10.1 to Thermo Electron's Quarterly Report on Form 10-Q
for the quarter ended July 2, 1994 [File No. 1-8002] and
incorporated herein by reference). (Plan amended in 1989 to
restrict exercise price for SEC reporting persons to not less than
50% of fair market value or par value; maximum number of shares
issuable is 7,050,000 shares, after adjustment to reflect 3-for-2
stock splits effected in October 1993 and May 1995 and share
increase approved in 1994).
10.22 Thermo Electron Corporation--Thermedics Inc. Nonqualified Stock
Option Plan (filed as Exhibit 4 to a Registration Statement on
Form S-8 of Thermedics [Reg. No. 2-93747] and incorporated herein
by reference). (Maximum number of shares issuable is 450,000
shares, after adjustment to reflect share increase approved in
1988, 5-for-4 stock split effected in January 1985, 4-for-3 stock
split effected in September 1985, and 3-for-2 stock splits
effected in October 1986 and November 1993).
10.23 Thermo Electron Corporation--Thermo Instrument Systems Inc.
(formerly Thermo Environmental Corporation) Nonqualified Stock
Option Plan (filed as Exhibit 4(c) to a Registration Statement on
Form S-8 of Thermo Instrument [Reg. No. 33-8034] and incorporated
herein by reference). (Maximum number of shares issuable is
421,875 shares, after adjustment to reflect 3-for-2 stock splits
effected in July 1993 and April 1995 and a 5-for-4 stock split
effected in December 1995).
10.24 Thermo Electron Corporation--Thermo Instrument Systems Inc.
(formerly Thermo Environmental Corporation) Nonqualified Stock
Option Plan (filed as Exhibit 10.12 to Thermo Electron's Annual
Report on Form 10-K for the fiscal year ended January 3, 1987
[File No. 1-8002] and incorporated herein by reference). (Maximum
number of shares issuable is 600,285 shares, after adjustment to
reflect share increase approved in 1988 and 3-for-2 stock splits
effected in January 1988, July 1993 and April 1995 and a 5-for-4
stock split effected in December 1995).
10.25 Thermo Electron Corporation--Thermo Terra Tech Inc. (formerly
Thermo Process Systems Inc.) Nonqualified Stock Option Plan (filed
as Exhibit 10.13 to Thermo Electron's Annual Report on Form 10-K
for the fiscal year ended January 3, 1987 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of shares
issuable is 108,000 shares, after adjustment to reflect 6-for-5
stock splits effected in July 1988 and March 1989, and 3-for-2
stock split effected in September 1989).
10.26 Thermo Electron Corporation--Thermo Power Corporation (formerly
Tecogen Inc.) Nonqualified Stock Option Plan (filed as Exhibit
10.14 to Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended January 3, 1987 [File No. 1-8002] and
incorporated herein by reference). (Amended in September 1995 to
extend the plan expiration date to December 31, 2005).
</TABLE>
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10.27 Thermo Electron Corporation--Thermo Cardiosystems Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.11 to Thermo
Electron's Annual Report on Form 10-K for the fiscal year ended
December 29, 1990 [File No. 1-8002] and incorporated herein by
reference). (Maximum number of shares issuable is 130,500 shares,
after adjustment to reflect share increases approved in 1990 and
1992, 3-for-2 stock split effected in January 1990, 5-for-4 stock
split effected in May 1990 and 2-for-1 stock split effected in
November 1993).
10.28 Thermo Electron Corporation--Thermo Ecotek Corporation (formerly
Thermo Energy Systems Corporation) Nonqualified Stock Option Plan
(filed as Exhibit 10.12 to Thermo Electron's Annual Report on Form
10-K for the fiscal year ended December 29, 1990 [File No. 1-8002]
and incorporated hereby by reference).
10.29 Thermo Electron Corporation--ThermoTrex Corporation (formerly
Thermo Electron Technologies Corporation) Nonqualified Stock
Option Plan (filed as Exhibit 10.13 to Thermo Electron's Annual
Report on Form 10-K for the fiscal year ended December 29, 1990
[File No. 1-8002] and incorporated herein by reference). (Maximum
number of shares issuable is 180,000 shares, after adjustment to
reflect 3-for-2 stock split effected in October 1993).
10.30 Thermo Electron Corporation--Thermo Fibertek Inc. Nonqualified
Stock Option Plan (filed as Exhibit 10.14 to Thermo Electron's
Annual Report on Form 10-K for the fiscal year ended December 28,
1991 [File No. 1-8002] and incorporated herein by reference).
(Maximum number of shares issuable is 600,000 shares, after
adjustment to reflect 2-for-1 stock split effected in September
1992 and 3-for-2 stock split effected in September 1995).
10.31 Thermo Electron Corporation--Thermo Voltek Corp. (formerly
Universal Voltronics Corp.) Nonqualified Stock Option Plan (filed
as Exhibit 10.17 to Thermo Electron's Annual Report on Form 10-K
for the fiscal year ended January 2, 1993 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of shares
issuable is 57,500 shares after adjustment to reflect 3-for-2
stock split effected in November 1993 and share increase approved
in September 1995).
10.32 Thermo Electron Corporation--Thermo BioAnalysis Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.31 to Thermo
Power's Annual Report on Form 10-K for the fiscal year ended
September 30, 1995 [File No. 1-10573] incorporated herein by
reference).
10.33 Thermo Electron Corporation--ThermoLyte Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.32 to Thermo Power's Annual
Report on Form 10-K for the fiscal year ended September 30, 1995
[File No. 1-10573] and incorporated herein by reference).
10.34 Thermo Electron Corporation--Thermo Remediation Inc. Nonqualified
Stock Option Plan (filed as Exhibit 10.33 to Thermo Power's Annual
Report on Form 10-K for the fiscal year ended September 30, 1995
[File No. 1-10573] and incorporated herein by reference).
10.35 Thermo Electron Corporation--ThermoSpectra Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.34 to Thermo
Power's Annual Report on Form 10-K for the fiscal year ended
September 30, 1995 [File No. 1-10573] and incorporated herein by
reference).
10.36 Thermo Electron Corporation--ThermoLase Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.35 to Thermo Power's Annual
Report on Form 10-K for the fiscal year ended September 30, 1995
[File No. 1-10573] and incorporated herein by reference).
10.37 Thermo Electron Corporation--ThermoQuest Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.41 to Thermo Cardiosystems'
Annual Report on Form 10-K for the fiscal year ended December 30,
1995 [File No. 1-10114] and incorporated herein by reference).
10.38 Thermo Electron Corporation--Thermo Optek Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.42 to Thermo Cardiosystems'
Annual Report on Form 10-K for the fiscal year ended December 30,
1995 [File No. 1-10114] and incorporated herein by reference).
</TABLE>
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EXHIBIT NO. DESCRIPTION OF EXHIBIT
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10.39 Thermo Electron Corporation--Thermo Sentron Inc. Nonqualified
Stock Option Plan (filed as Exhibit 10.43 to Thermo Cardiosystems'
Annual Report on Form 10-K for the fiscal year ended December 30,
1995 [File No. 1-10114] and incorporated herein by reference).
10.40 Thermo Electron Corporation--Trex Medical Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.44 to Thermo Cardiosystems'
Annual Report on Form 10-K for the fiscal year ended December 30,
1995 [File No. 1-10114] and incorporated herein by reference).
10.41 Thermo Ecotek Corporation (formerly Thermo Energy Systems
Corporation) Incentive Stock Option Plan (filed as Exhibit 10.18
to Thermo Electron's Annual Report on Form 10-K for the fiscal
year ended January 2, 1993 [File No. 1-8002] and incorporated
herein by reference). (Maximum number of shares issuable in the
aggregate under this plan and the Thermo Ecotek Nonqualified Stock
Option Plan is 900,000 shares, after adjustment to reflect share
increase approved in December 1993).
10.42 Thermo Ecotek Corporation (formerly Thermo Energy Systems
Corporation) Nonqualified Stock Option Plan (filed as Exhibit
10.19 to Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993 [File No. 1-8001] and
incorporated herein by reference). (Maximum number of shares
issuable in the aggregate under this plan and the Thermo Ecotek
Incentive Stock Option Plan is 900,000 shares, after adjustment to
reflect share increase approved in December 1993).
10.43 Thermo Ecotek Corporation (formerly Thermo Energy Systems
Corporation) Equity Incentive Plan (filed as Exhibit 10.39 to
Thermo Instrument's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 [File No. 1-9786] and incorporated herein
by reference).
10.44 Thermedics Inc. Incentive Stock Option Plan (filed as Exhibit
10(d) to Thermedics' Registration Statement on Form S-1 [Reg. No.
33-84380) and incorporated herein by reference). (Maximum number
of shares issuable in the aggregate under this plan and the
Thermedics Nonqualified Stock Option Plan is 1,931,923 shares,
after adjustment to reflect share increases approved in 1986 and
1992, 5-for-4 stock split effected in January 1985, 4-for-3 stock
split effected in September 1985, and 3-for-2 stock splits
effected in October 1986 and November 1993).
10.45 Thermedics Inc. Nonqualified Stock Option Plan (filed as Exhibit
10(e) to Thermedics' Registration Statement on Form S-1 [Reg. No.
33-84380) and incorporated herein by reference). (Maximum number
of shares issuable in the aggregate under this plan and the
Thermedics Incentive Stock Option Plan is 1,931,923 shares, after
adjustment to reflect share increases approved in 1986 and 1992,
5-for-4 stock split effected in January 1985, 4-for-3 stock split
effected in September 1985, and 3-for-2 stock splits effected in
October 1986 and November 1993).
10.46 Thermedics Inc. Equity Incentive Plan (filed as Appendix A to the
Proxy Statement dated May 10, 1993 of Thermedics [File No. 1-9567]
and incorporated herein by reference). (Maximum number of shares
issuable is 1,500,000, after adjustment to reflect 3-for-2 stock
split effected in November 1993).
10.47 Thermedics Inc.--Thermo Sentron Inc. Nonqualified Stock Option
Plan (filed as Exhibit 10.51 to Thermo Cardiosystems Annual Report
on Form 10-K for the fiscal year ended December 30, 1995 [File No.
1-10114] and incorporated herein by reference).
10.48 Thermedics Inc.--Thermedics Detection Inc. Nonqualified Stock
Option Plan (filed as Exhibit 10.20 to Thermo Electron's Annual
Report on Form 10-K for the fiscal year ended January 2, 1993
[File No. 1-8002] and incorporated herein by reference).
10.49 Thermedics Detection Inc.--Equity Incentive Plan (fiuled as
Exhibit 10.69 to Thermo Instrument's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 [File No. 1-9786] and
incorporated herein by reference).
</TABLE>
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EXHIBIT NO. DESCRIPTION OF EXHIBIT
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10.50 Thermo Cardiosystems Inc. Incentive Stock Option Plan (filed as
Exhibit 10(f) to Thermo Cardiosystems' Registration Statement on
Form S-1 [Reg. No. 33-25144] and incorporated herein by
reference). (Maximum number of shares issuable in the aggregate
under this plan and the Thermo Cardiosystems Nonqualified Stock
Option Plan is 1,143,750 shares, after adjustment to reflect share
increase approved in 1992, 3-for-2 stock split effected in January
1990, 5-for-4 stock split effected in May 1990 and 2-for-1 stock
split effected in November 1993).
10.51 Thermo Cardiosystems Inc. Nonqualified Stock Option Plan (filed as
Exhibit 10(g) to Thermo Cardiosystems' Registration Statement on
Form S-1 [Reg. No. 33-25144] and incorporated herein by
reference). (Maximum number of shares issuable in the aggregate
under this plan and the Thermo Cardiosystems Incentive Stock
Option Plan is 1,143,750 shares, after adjustment to reflect share
increase approved in 1992, 3-for-2 stock split effected in January
1990, 5-for-4 stock split effected in May 1990 and 2-for-1 stock
split effected in November 1993).
10.52 Thermo Cardiosystems Inc. Equity Incentive Plan (filed as Exhibit
10.46 to Thermo Instrument's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 [File No. 1-9786] and
incorporated herein by reference).
10.53 Thermo Voltek Corp. (formerly Universal Voltronics Corp.) 1985
Stock Option Plan (filed as Exhibit 10.14 to Thermo Voltek's
Annual Report on Form 10-K for the fiscal year ended June 30, 1985
[File No. 0-8245] and incorporated herein by reference). (Maximum
number of shares issuable is 200,000 shares, after adjustment to
reflect 1-for-3 reverse stock split effected in November 1992 and
3-for-2 stock split effected in November 1993).
10.54 Thermo Voltek Corp. (formerly Universal Voltronics Corp.) 1990
Stock Option Plan (filed as Exhibit 10.2 to Thermo Voltek's Annual
Report on Form 10-K for the fiscal year ended June 30, 1990 [File
No. 1-10574] and incorporated herein by reference). (Maximum
number of shares issuable is 400,000 shares, after adjustment to
reflect share increases in 1993 and 1994. 1-for-3 reverse stock
split effected in November 1992, and 3-for-2 stock split effected
in November 1993).
10.55 Thermo Voltek Corp. Equity Incentive Plan (filed as Exhibit 10.49
to Thermo Instrument's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 [File No. 1-9786] and incorporated
herein by reference).
10.56 Thermo Instrument Systems Inc. Incentive Stock Option Plan (filed
as Exhibit 10(c) to Thermo Instrument's Registration Statement on
Form S-1 [Reg. No. 33-6762] and incorporated herein by reference).
(Maximum number of shares issuable in the aggregate under this
plan and the Thermo Instrument Nonqualified Stock Option Plan is
2,812,500 shares, after adjustment to reflect share increase
approved in 1990 and 3-for-2 stock splits effected in January
1988, July 1993 and April 1995 and 5-for-4 stock split effected in
December 1995).
10.57 Thermo Instrument Systems Inc. Nonqualified Stock Option Plan
(filed as Exhibit 10(d) to Thermo Instrument's Registration
Statement on Form S-1 [Reg. No. 33-6762] and incorporated herein
by reference). (Maximum number of shares issuable in the aggregate
under this plan and the Thermo Instrument Incentive Stock Option
Plan is 2,812,500 shares, after adjustment to reflect share
increase approved in 1990 and 3-for-2 stock splits effected in
January 1988, July 1993 and April 1995 and 5-for-4 stock split
effected in December 1995).
10.58 Thermo Instrument Systems Inc. Equity Incentive Plan (filed as
Appendix A to the Proxy Statement dated April 27, 1993 of Thermo
Instrument [File No. 1-9786] and incorporated herein by
reference). (Maximum number of shares issuable is 4,031,250
shares, after adjustment to reflect share increase approved in
December 1993 and 3-for-2 stock split effected in July 1993 and
April 1995 and 5-for-4 stock split effected in December 1995).
</TABLE>
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EXHIBIT NO. DESCRIPTION OF EXHIBIT
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10.59 Thermo Instrument Systems Inc. (formerly Thermo Environmental
Corporation) Incentive Stock Option Plan (filed as Exhibit 10(d)
to Thermo Environmental's Registration Statement on Form S-1 [Reg.
No. 33-329] and incorporated herein by reference). (Maximum number
of shares issuable in the aggregate under this plan and the Thermo
Instrument (formerly Thermo Environmental Corporation)
Nonqualified Stock Option Plan is 1,160,156 shares, after
adjustment to reflect share increase approved in 1987 and 3-for-2
stock splits effected in July 1993 and April 1995 and 5-for-4
stock split effected in December 1995).
10.60 Thermo Instrument Systems Inc. (formerly Thermo Environmental
Corporation) Nonqualified Stock Option Plan (filed as Exhibit
10(e) to Thermo Environmental's Registration Statement on Form S-1
[Reg. No. 33-329] and incorporated herein by reference). (Maximum
number of shares issuable in the aggregate under this plan and the
Thermo Instrument (formerly Thermo Environmental Corporation)
Incentive Stock Option Plan is 1,160,156 shares, after adjustment
to reflect share increase approved in 1987 and 3-for-2 splits
effected in July 1993 and April 1995 and 5-for-4 stock split
effected in December 1995).
10.61 Thermo Instrument Systems Inc.--ThermoSpectra Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.51 to Thermo
Instrument's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 [File No. 1-9786] and incorporated herein by
reference).
10.62 Thermo Instrument Systems Inc.--Thermo BioAnalysis Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.64 to Thermo
Cardiosystems' Annual Report on Form 10-K for the fiscal year
ended December 30, 1995 [File No. 1-10114] and incorporated herein
by reference).
10.63 Thermo Instrument Systems Inc.--ThermoQuest Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.65 to Thermo
Cardiosystems' Annual Report on Form 10-K for the fiscal year
ended December 30, 1995 [File No. 1-10114] and incorporated herein
by reference).
10.64 ThermoSpectra Corporation Equity Incentive Plan (filed as Exhibit
10.52 to Thermo Instrument's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 [File No. 1-9786] and
incorporated herein by reference).
10.65 Thermo BioAnalysis Corporation Equity Incentive Plan (filed as
Exhibit 10.67 to Thermo Cardiosystems' Annual Report on Form 10-K
for the fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference).
10.66 Thermo Optek Corporation Equity Incentive Plan (filed as Exhibit
10.68 to Thermo Cardiosystems' Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference).
10.67 ThermoQuest Corporation Equity Incentive Plan (filed as Exhibit
10.69 to Thermo Cardiosystems' Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference).
10.68 ThermoTrex Corporation (formerly Thermo Electron Technologies
Corporation) Incentive Stock Option Plan (filed as Exhibit 10(h)
to ThermoTrex's Registration Statement on Form S-1 [Reg. No. 33-
40972] and incorporated herein by reference) (Maximum number of
shares issuable in the aggregate under this plan and the
ThermoTrex Nonqualified Stock Option Plan is 1,945,000 shares,
after adjustment to reflect share increases approved in 1992 and
1993 and 3-for-2 stock split effected in October 1993).
10.69 ThermoTrex Corporation (formerly Thermo Electron Technologies
Corporation) Nonqualified Stock Option Plan (filed as Exhibit
10(i) to ThermoTrex's Registration Statement on Form S-1 [Reg. No.
33-40972] and incorporated herein by reference) (Maximum number of
shares issuable in the aggregate under this plan and the
ThermoTrex Nonqualified Stock Option Plan is 1,945,000 shares,
after adjustment to reflect share increases approved in 1992 and
1993 and 3-for-2 stock split effected in October 1993).
</TABLE>
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EXHIBIT NO. DESCRIPTION OF EXHIBIT
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10.70 ThermoTrex Corporation-ThermoLase Corporation (formerly ThermoLase
Inc.) Nonqualified Stock Option Plan (filed on Exhibit 10.53 to
ThermoTrex Corporation's Annual Report on Form 10-K for the fiscal
year ended January 1, 1994 [File No. 1-10791] and incorporated
herein by reference.
10.71 ThermoTrex Corporation--Trex Medical Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.73 to Thermo Cardiosystems'
Annual Report on Form 10-K for the fiscal year ended December 30,
1995 [File No. 1-10114] and incorporated herein by reference).
10.72 ThermoLase Corporation (formerly ThermoLase Inc.) Nonqualified
Stock Option Plan (filed as Exhibit 10.54 to ThermoTrex's Annual
Report on Form 10-K for the fiscal year ended January 1, 1994
[File No. 1-10791] and incorporated herein by reference). (Maximum
number of shares issuable in the aggregate under this plan and the
ThermoLase Incentive Stock Option Plan is 2,800,000 shares, after
adjustment to reflect share increase approved in 1993 and 2-for-1
stock splits effected in March 1994 and June 1995).
10.73 ThermoLase Corporation (formerly ThermoLase Inc.) Incentive Stock
Option Plan (filed as Exhibit 10.55 to ThermoTrex Corporation's
Annual Report on Form 10-K for the fiscal year ended January 1,
1994 [File No. 1-10791] and incorporated herein by reference).
(Maximum number of shares issuable in the aggregate under this
plan and the ThermoLase Nonqualified Stock Option Plan is
2,800,000 shares, after adjustment to reflect share increase
approved in 1993 and 2-for-1 stock splits effected in March 1994
and June 1995).
10.74 ThermoLase Corporation Equity Incentive Plan (filed as Exhibit
10.81 to Thermo TerraTech's Annual Report on Form 10-K for the
fiscal year ended April 1, 1995 [File No. 1-9549] and incorporated
herein by reference).
10.75 Thermo Fibertek Inc. Incentive Stock Option Plan (filed as Exhibit
10(k) to Thermo Fibertek's Registration Statement on Form S-1
[Reg. No. 33-51172] and incorporated herein by reference.
10.76 Thermo Fibertek Inc. Nonqualified Stock Option Plan (filed as
Exhibit 10(l) to Thermo Fibertek's Registration Statement on Form
S-1 [Reg. No. 33-51172] and incorporated herein by reference.
10.77 Thermo Fibertek Inc. Equity Incentive Plan (filed as Exhibit 10.60
to Thermo Instrument's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 [File No. 1-9786] and incorporated
herein by reference.
10.78 Thermo Power Corporation (formerly Tecogen Inc.) Incentive Stock
Option Plan (filed as Exhibit 10(h) to Thermo Power's Quarterly
Report on Form 10-Q for the quarter ended April 3, 1993 [Reg. No.
33-10573] and incorporated herein by reference). (Maximum number
of shares issuable in the aggregate under this plan and the Thermo
Power Nonqualified Stock Option Plan is 950,000 shares, after
adjustment to reflect share increases approved in 1990, 1992 and
1993).
10.79 Thermo Power Corporation (formerly Tecogen Inc.) Nonqualified
Stock Option Plan (filed as Exhibit 10(i) to Thermo Power's
Quarterly Report on Form 10-Q for the quarter ended April 3, 1993
[Reg. No. 33-10573] and incorporated herein by reference).
(Maximum number of shares issuable in the aggregate under this
plan and the Thermo Power Incentive Stock Option Plan is 950,000
shares, after adjustment to reflect share increases approved in
1990, 1992 and 1993).
10.80 Thermo Power Corporation Equity Incentive Plan (filed as Exhibit
10.63 to Thermo Instrument's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 [File No. 1-9786] and
incorporated herein by reference).
10.81 Thermo Power Corporation--ThermoLyte Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.84 to Thermo Cardiosystems'
Annual Report on Form 10-K for the fiscal year ended December 30,
1995 [File No. 1-10114] and incorporated herein by reference).
</TABLE>
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10.82 ThermoLyte Corporation Equity Incentive Plan (filed as Exhibit
10.71 to Thermo Power's Annual Report on Form 10-K for the fiscal
year ended September 30, 1995 [File No. 1-10573] and incorporated
herein by reference).
10.83 Thermo TerraTech Inc. (formerly Thermo Process Systems Inc.)
Incentive Stock Option Plan (filed as Exhibit 10(h) to Thermo
Process' Registration Statement on Form S-1 [Reg. No. 33-6763] and
incorporated herein by reference). (Maximum number of shares
issuable in the aggregate under this plan and the Thermo TerraTech
Nonqualified Stock Option Plan is 1,850,000 shares, after
adjustment to reflect share increases approved in 1987, 1989 and
1992, 6-for-5 stock splits effected in July 1988 and March 1989
and 3-for-2 stock split effected in September 1989).
10.84 Thermo TerraTech Inc. (formerly Thermo Process Systems Inc.)
Nonqualified Stock Option Plan (filed as Exhibit 10(i) to Thermo
Process' Registration Statement on Form S-1 [Reg. No. 33-6763] and
incorporated herein by reference). (Maximum number of shares
issuable in the aggregate under this plan and the Thermo TerraTech
Incentive Stock Option Plan is 1,850,000 shares, after adjustment
to reflect share increases approved in 1987, 1989 and 1992, 6-for-
5 stock splits effected in July 1988 and March 1989 and 3-for-2
stock split effected in September 1989).
10.85 Thermo TerraTech Inc. (formerly Thermo Process Systems Inc.)
Equity Incentive Plan (filed as Exhibit 10.63 to Thermedics'
Annual Report on Form 10-K for the fiscal year ended January 1,
1994 [File No. 1-9567] and incorporated herein by reference).
(Maximum number of shares issuable is 1,750,000 shares, after
adjustment to reflect share increase approved in 1994).
10.86 Thermo TerraTech Inc. (formerly Thermo Process Systems Inc.)--
Thermo Remediation Inc. Nonqualified Stock Option Plan (filed as
Exhibit 10(l) to Thermo Process' Quarterly Report on Form 10-Q for
the fiscal quarter ended January 1, 1994 [File No. 1-9549] and
incorporated herein by reference).
10.87 Thermo Remediation Inc. Equity Incentive Plan (filed as Exhibit
10.7 to Thermo Remediation's Registration Statement on Form S-1
[Reg. No. 33-70544] and incorporated herein by reference).
11 Computation of Earnings per Share
*21 Subsidiaries of the Registrant
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Arthur Andersen LLP
23.4 Consent of Topel Forman L.L.C.
23.5 Consent of Seth H. Hoogasian, Esq. (included in Exhibit 5)
*24 Power of Attorney
27 Financial Data Schedule
99.1 Form of Subscription Agency Agreement.
99.2 Instructions as to use of Trex Medical Corporation Subscription
Certificates and International Holder Subscription Forms.
99.3 International Holder Subscription Form.
99.4 Form of Letter to Trex Medical stockholders.
99.5 Form of Letter to ThermoTrex stockholders.
</TABLE>
- --------
* Previously filed.
+ Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.
(B) FINANCIAL STATEMENT SCHEDULE
The financial Statement Schedule as of September 30, 1995 and the Report of
Independent Public Accountants on such schedule are included in this
Registration Statement. All other schedules are omitted because they are not
applicable or are not required under Regulation S-X.
II-9
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Nothwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions contained in the Certificate of
Incorporation and By-Laws of the Registrant and the laws of the State of
Delaware, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Danbury, Connecticut,
on this 7th day of May, 1996.
TREX MEDICAL CORPORATION
*
By:________________________________
Hal Kirshner
Chief Executive Officer,
President and Director
SIGNATURES
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Chief Executive
* Officer, President May 7, 1996
_____________________________________ and Director
HAL KIRSHNER (Principal
Executive Officer)
Vice President, Chief
* Accounting Officer May 7, 1996
_____________________________________ and Director
JOHN N. HATSOPOULOS (Principal
Financial Officer)
Chief Accounting
* Officer (Principal May 7, 1996
_____________________________________ Accounting Officer)
PAUL F. KELLEHER
Director
* May 7, 1996
_____________________________________
DR. ELIAS P. GYFTOPOULOS
Director
* May 7, 1996
_____________________________________
ROBERT C. HOWARD
</TABLE>
II-11
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Director
* May 7, 1996
_____________________________________
EARL R. LEWIS
Director
* May 7, 1996
_____________________________________
DR. JAMES W. MAY JR.
Director
* May 7, 1996
_____________________________________
HUTHAM S. OLAYAN
Director
* May 7, 1996
_____________________________________
ANTHONY J. PELLEGRINO
Director
* May 7, 1996
_____________________________________
FIROOZ RUFEH
Director
* May 7, 1996
_____________________________________
KENNETH Y. TANG
Director and
* Chairman of the May 7, 1996
_____________________________________ Board
GARY S. WEINSTEIN
/s/ Jonathan W. Painter
*By:____________________________
Jonathan W. Painter
Attorney-in-Fact
</TABLE>
II-12
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trex Medical Corporation:
We have audited in accordance with generally accepted auditing standards the
consolidated balance sheet of Trex Medical Corporation and subsidiaries as of
December 31, 1994 and September 30, 1995, and the related consolidated
statements of income, cash flows and shareholders' investment for the years
ended January 1, 1994 and December 31, 1994 and for the nine months ended
September 30, 1995. These financial statements have been included in Trex
Medical Corporation's Form S-1 and we have issued our report thereon dated
March 26, 1996 (except with respect to certain matters discussed in Note 9, as
to which the date is May 6, 1996). Our audits were made for the purpose of
forming an opinion on the basic consolidated financial statements taken as a
whole. Trex Medical Corporation's schedule of Valuation and Qualifying
Accounts, included in Schedule II on page S-2, is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in the audits of the basic consolidated financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
March 26, 1996
S-1
<PAGE>
SCHEDULE II
TREX MEDICAL CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGES TO BALANCE
BEGINNING COSTS AND AT END
OF PERIOD EXPENSES OTHER (A) OF PERIOD
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30, 1995
Allowance for Doubtful Accounts.... $525 $ 25 $320 $870
YEAR ENDED DECEMBER 31, 1994
Allowance for Doubtful Accounts.... $350 $175 $-- $525
YEAR ENDED JANUARY 1, 1994
Allowance for Doubtful Accounts.... $350 $-- $-- $350
</TABLE>
- --------
(a) Allowance of business acquired during the year as described in Note 2 to
Consolidated Financial Statements of the Company.
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE
----------- ---------------------- ----
<C> <S> <C>
*3.1 Certificate of Incorporation, as amended, of the
Registrant.................................................
*3.2 By-Laws of the Registrant..................................
4.1 Specimen Common Stock Certificate..........................
*4.2 $42,000,000 Subordinated Convertible Note due 2000 of the
Registrant issued to ThermoTrex............................
4.3 Specimen Rights Certificate................................
5 Opinion of Seth H. Hoogasian, Esq. with respect to the
validity of the securities being offered...................
*10.1 Corporate Services Agreement dated as of September 27, 1995
between Thermo Electron Corporation ("Thermo Electron") and
the Registrant.............................................
10.2 Thermo Electron Corporate Charter, as amended and restated
effective January 3, 1993 (incorporated by reference herein
form Exhibit 10.1 to Thermo Electron's Annual Report on
form 10-K for the fiscal year ended January 2, 1993 (File
No. 1-8002))...............................................
*10.3 Tax Allocation Agreement dated as of September 27, 1995
between Thermo Electron and the Registrant.................
*10.4 Master Repurchase Agreement dated as of September 27, 1995
between Thermo Electron and the Registrant.................
*10.5 Master Guarantee Reimbursement Agreement dated as of
September 27, 1995 between Thermo Electron and the
Registrant.................................................
*10.6 Master Guarantee Reimbursement Agreement dated as of
September 27, 1995 between ThermoTrex and the Registrant...
*+10.7 OEM Agreement between Philips Medical Systems North
American Company and Lorad dated as of November 2, 1993....
*+10.8 OEM Agreement between Philips Medical Systems North
American Company and ThermoTrex dated November 17, 1993....
*+10.9 Purchase Agreement between General Electric Company and
Bennett dated November 17, 1994............................
*+10.10 Agreement between Philips Medizin Systeme
Unternehmensbereich der Philips GmbH and Bennett dated
February 12, 1992..........................................
*+10.11 Distributor Agreement between ThermoTrex and US Surgical
Corporation dated October 20, 1995, as amended.............
*10.12 Note Purchase and Sale Agreement dated as of October 2,
1995 between ThermoTrex and the Registrant.................
10.13 Lease dated as of September 15, 1995, by and among
ThermoTrex and BK Realty Associates, L.P. and Calrob Realty
Associates (filed as Exhibit 10.26 to ThermoTrex's Annual
Report on Form 10-K for the fiscal year ended September 30,
1995 [File No. 1-10791] and incorporated herein by
reference).................................................
*10.14 Lease dated as of December 20, 1995, between Melvyn J.
Powers and Mary P. Powers D/B/A M&M Realty and Lorad, as
amended....................................................
*10.15 Equity Incentive Plan of the Registrant....................
*10.16 Deferred Compensation Plan for Directors of the
Registrant.................................................
*10.17 Directors Stock Option Plan of the Registrant..............
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE
----------- ---------------------- ----
<C> <S> <C>
*10.18 Form of Indemnification Agreement for Officers and
Directors.
In addition to the stock-based compensation plans of the
Registrant, the executive officers of the Registrant may be
granted awards under stock-based compensation plans of the
Registrant's parent, Thermo Electron Corporation, and its
subsidiaries, for services rendered to the Registrant or to
such affiliated corporations. Such plans are listed under
Exhibits 10.19-10.74 ......................................
10.19 Thermo Electron Corporation Incentive Stock Option Plan
(filed as Exhibit 4(d) to Thermo Electron's Registration
Statement on Form S-8 [Reg. No. 33-8993] and incorporated
herein by reference). (Maximum number of shares issuable in
the aggregate under this plan and the Thermo Electron
Nonqualified Stock Option Plan is 9,035,156 shares, after
adjustment to reflect share increases approved in 1984 and
1986, share decrease approved in 1989, and 3-for-2 stock
splits effected in October 1986, October 1993 and May
1995) .....................................................
10.20 Thermo Electron Corporation Nonqualified Stock Option Plan
(filed as Exhibit 4(e) to Thermo Electron's Registration
Statement on Form S-8 [Reg. No. 33-8993] and incorporated
herein by reference). (Plan amended in 1984 to extend
expiration date to December 14, 1994; maximum number of
shares issuable in the aggregate under this plan and the
Thermo Electron Incentive Stock Option Plan is 9,035,156
shares, after adjustment to reflect share increases
approved in 1984 and 1986, share decrease approved in 1989,
and 3-for-2 stock splits effected in October 1986, October
1993 and May 1995) ........................................
10.21 Thermo Electron Corporation Equity Incentive Plan (filed as
Exhibit 10.1 to Thermo Electron's Quarterly Report on Form
10-Q for the quarter ended July 2, 1994 [File No. 1-8002]
and incorporated herein by reference). (Plan amended in
1989 to restrict exercise price for SEC reporting persons
to not less than 50% of fair market value or par value;
maximum number of shares issuable is 7,050,000 shares,
after adjustment to reflect 3-for-2 stock splits effected
in October 1993 and May 1995 and share increase approved in
1994) .....................................................
10.22 Thermo Electron Corporation--Thermedics Inc. Nonqualified
Stock Option Plan (filed as Exhibit 4 to a Registration
Statement on Form S-8 of Thermedics [Reg. No. 2-93747] and
incorporated herein by reference). (Maximum number of
shares issuable is 450,000 shares, after adjustment to
reflect share increase approved in 1988, 5-for-4 stock
split effected in January 1985, 4-for-3 stock split
effected in September 1985, and 3-for-2 stock splits
effected in October 1986 and November 1993) ...............
10.23 Thermo Electron Corporation--Thermo Instrument Systems Inc.
(formerly Thermo Environmental Corporation) Nonqualified
Stock Option Plan (filed as Exhibit 4(c) to a Registration
Statement on Form S-8 of Thermo Instrument [Reg. No. 33-
8034] and incorporated herein by reference). (Maximum
number of shares issuable is 421,875 shares, after
adjustment to reflect 3-for-2 stock splits effected in July
1993 and April 1995 and a 5-for-4 stock split effected in
December 1995) ............................................
10.24 Thermo Electron Corporation--Thermo Instrument Systems Inc.
(formerly Thermo Environmental Corporation) Nonqualified
Stock Option Plan (filed as Exhibit 10.12 to Thermo
Electron's Annual Report on Form 10-K for the fiscal year
ended January 3, 1987 [File No. 1-8002] and incorporated
herein by reference). (Maximum number of shares issuable is
600,285 shares, after adjustment to reflect share increase
approved in 1988 and -for-2 stock splits effected in
January 1988, July 1993 and April 1995 and a 5-for-4 stock
split effected in December 1995)...........................
10.25 Thermo Electron Corporation--Thermo Terra Tech Inc.
(formerly Thermo Process Systems Inc.) Nonqualified Stock
Option Plan (filed as Exhibit 10.13 to Thermo Electron's
Annual Report on Form 10-K for the fiscal year ended
January 3, 1987 [File No. 1-8002] and incorporated herein
by reference). (Maximum number of shares issuable is
108,000 shares, after adjustment to reflect 6-for-5 stock
splits effected in July 1988 and March 1989, and 3-for-2
stock split effected in September 1989) ...................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE
----------- ---------------------- ----
<C> <S> <C>
10.26 Thermo Electron Corporation--Thermo Power Corporation
(formerly Tecogen Inc.) Nonqualified Stock Option Plan
(filed as Exhibit 10.14 to Thermo Electron's Annual Report
on Form 10-K for the fiscal year ended January 3, 1987
[File No. 1-8002] and incorporated herein by reference).
(Amended in September 1995 to extend the plan expiration
date to December 31, 2005) ................................
10.27 Thermo Electron Corporation--Thermo Cardiosystems Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.11 to
Thermo Electron's Annual Report on Form 10-K for the fiscal
year ended December 29, 1990 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of
shares issuable is 130,500 shares, after adjustment to
reflect share increases approved in 1990 and 1992, 3-for-2
stock split effected in January 1990, 5-for-4 stock split
effected in May 1990 and 2-for-1 stock split effected in
November 1993).............................................
10.28 Thermo Electron Corporation--Thermo Ecotek Corporation
(formerly Thermo Energy Systems Corporation) Nonqualified
Stock Option Plan (filed as Exhibit 10.12 to Thermo
Electron's Annual Report on Form 10-K for the fiscal year
ended December 29, 1990 [File No. 1-8002] and incorporated
hereby by reference) ......................................
10.29 Thermo Electron Corporation--ThermoTrex Corporation
(formerly Thermo Electron Technologies Corporation)
Nonqualified Stock Option Plan (filed as Exhibit 10.13 to
Thermo Electron's Annual Report on Form 10-K for the fiscal
year ended December 29, 1990 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of
shares issuable is 180,000 shares, after adjustment to
reflect 3-for-2 stock split effected in October 1993) .....
10.30 Thermo Electron Corporation--Thermo Fibertek Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.14 to
Thermo Electron's Annual Report on Form 10-K for the fiscal
year ended December 28, 1991 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of
shares issuable is 600,000 shares, after adjustment to
reflect 2-for-1 stock split effected in September 1992 and
3-for-2 stock split effected in September 1995) ...........
10.31 Thermo Electron Corporation--Thermo Voltek Corp. (formerly
Universal Voltronics Corp.) Nonqualified Stock Option Plan
(filed as Exhibit 10.17 to Thermo Electron's Annual Report
on Form 10-K for the fiscal year ended January 2, 1993
[File No. 1-8002] and incorporated herein by reference).
(Maximum number of shares issuable is 57,500 shares after
adjustment to reflect 3-for-2 stock split effected in
November 1993 and share increase approved in September
1995) .....................................................
10.32 Thermo Electron Corporation--Thermo BioAnalysis Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.31 to
Thermo Power's Annual Report on Form 10-K for the fiscal
year ended September 30, 1995 [File No. 1-10573]
incorporated herein by reference) .........................
10.33 Thermo Electron Corporation--ThermoLyte Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.32 to
Thermo Power's Annual Report on Form 10-K for the fiscal
year ended September 30, 1995 [File No. 1-10573] and
incorporated herein by reference) .........................
10.34 Thermo Electron Corporation--Thermo Remediation Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.33 to
Thermo Power's Annual Report on Form 10-K for the fiscal
year ended September 30, 1995 [File No. 1-10573] and
incorporated herein by reference) .........................
10.35 Thermo Electron Corporation--ThermoSpectra Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.34 to
Thermo Power's Annual Report on Form 10-K for the fiscal
year ended September 30, 1995 [File No. 1-10573] and
incorporated herein by reference) .........................
10.36 Thermo Electron Corporation--ThermoLase Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.35 to
Thermo Power's Annual Report on Form 10-K for the fiscal
year ended September 30, 1995 [File No. 1-10573] and
incorporated herein by reference) .........................
10.37 Thermo Electron Corporation--ThermoQuest Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.41 to
Thermo Cardiosystems' Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference) .........................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE
----------- ---------------------- ----
<C> <S> <C>
10.38 Thermo Electron Corporation--Thermo Optek Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.42 to
Thermo Cardiosystems' Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference) .........................
10.39 Thermo Electron Corporation--Thermo Sentron Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.43 to
Thermo Cardiosystems' Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference) .........................
10.40 Thermo Electron Corporation--Trex Medical Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.44 to
Thermo Cardiosystems' Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference) .........................
10.41 Thermo Ecotek Corporation (formerly Thermo Energy Systems
Corporation) Incentive Stock Option Plan (filed as Exhibit
10.18 to Thermo Electron's Annual Report on Form 10-K for
the fiscal year ended January 2, 1993 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
Thermo Ecotek Nonqualified Stock Option Plan is 900,000
shares, after adjustment to reflect share increase approved
in December 1993) .........................................
10.42 Thermo Ecotek Corporation (formerly Thermo Energy Systems
Corporation) Nonqualified Stock Option Plan (filed as
Exhibit 10.19 to Thermo Electron's Annual Report on Form
10-K for the fiscal year ended January 2, 1993 [File No. 1-
8001] and incorporated herein by reference). (Maximum
number of shares issuable in the aggregate under this plan
and the Thermo Ecotek Incentive Stock Option Plan is
900,000 shares, after adjustment to reflect share increase
approved in December 1993) ................................
10.43 Thermo Ecotek Corporation (formerly Thermo Energy Systems
Corporation) Equity Incentive Plan (filed as Exhibit 10.39
to Thermo Instrument's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 [File No. 1-9786] and
incorporated herein by reference) .........................
10.44 Thermedics Inc. Incentive Stock Option Plan (filed as
Exhibit 10(d) to Thermedics' Registration Statement on Form
S-1 [Reg. No. 33-84380) and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Thermedics Nonqualified
Stock Option Plan is 1,931,923 shares, after adjustment to
reflect share increases approved in 1986 and 1992, 5-for-4
stock split effected in January 1985, 4-for-3 stock split
effected in September 1985, and 3-for-2 stock splits
effected in October 1986 and November 1993) ...............
10.45 Thermedics Inc. Nonqualified Stock Option Plan (filed as
Exhibit 10(e) to Thermedics' Registration Statement on Form
S-1 [Reg. No. 33-84380) and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Thermedics Incentive
Stock Option Plan is 1,931,923 shares, after adjustment to
reflect share increases approved in 1986 and 1992, 5-for-4
stock split effected in January 1985, 4-for-3 stock split
effected in September 1985, and 3-for-2 stock splits
effected in October 1986 and November 1993) ...............
10.46 Thermedics Inc. Equity Incentive Plan (filed as Appendix A
to the Proxy Statement dated May 10, 1993 of Thermedics
[File No. 1-9567] and incorporated herein by reference).
(Maximum number of shares issuable is 1,500,000, after
adjustment to reflect 3-for-2 stock split effected in
November 1993) ............................................
10.47 Thermedics Inc.--Thermo Sentron Inc. Nonqualified Stock
Option Plan (filed as Exhibit 10.51 to Thermo Cardiosystems
Annual Report on Form 10-K for the fiscal year ended
December 30, 1995 [File No. 1-10114] and incorporated
herein by reference) ......................................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE
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<C> <S> <C>
10.48 Thermedics Inc.--Thermedics Detection Inc. Nonqualified
Stock Option Plan (filed as Exhibit 10.20 to Thermo
Electron's Annual Report on Form 10-K for the fiscal year
ended January 2, 1993 [File No. 1-8002] and incorporated
herein by reference) ......................................
10.49 Thermedics Detection Inc.--Equity Incentive Plan (fiuled as
Exhibit 10.69 to Thermo Instrument's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 [File No.
1-9786] and incorporated herein by reference) .............
10.50 Thermo Cardiosystems Inc. Incentive Stock Option Plan
(filed as Exhibit 10(f) to Thermo Cardiosystems'
Registration Statement on Form S-1 [Reg. No. 33-25144] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
Thermo Cardiosystems Nonqualified Stock Option Plan is
1,143,750 shares, after adjustment to reflect share
increase approved in 1992, 3-for-2 stock split effected in
January 1990, 5-for-4 stock split effected in May 1990 and
2-for-1 stock split effected in November 1993) ............
10.51 Thermo Cardiosystems Inc. Nonqualified Stock Option Plan
(filed as Exhibit 10(g) to Thermo Cardiosystems'
Registration Statement on Form S-1 [Reg. No. 33-25144] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
Thermo Cardiosystems Incentive Stock Option Plan is
1,143,750 shares, after adjustment to reflect share
increase approved in 1992, 3-for-2 stock split effected in
January 1990, 5-for-4 stock split effected in May 1990 and
2-for-1 stock split effected in November 1993) ............
10.52 Thermo Cardiosystems Inc. Equity Incentive Plan (filed as
Exhibit 10.46 to Thermo Instrument's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 [File No.
1-9786] and incorporated herein by reference) .............
10.53 Thermo Voltek Corp. (formerly Universal Voltronics Corp.)
1985 Stock Option Plan (filed as Exhibit 10.14 to Thermo
Voltek's Annual Report on Form 10-K for the fiscal year
ended June 30, 1985 [File No. 0-8245] and incorporated
herein by reference). (Maximum number of shares issuable is
200,000 shares, after adjustment to reflect 1-for-3 reverse
stock split effected in November 1992 and 3-for-2 stock
split effected in November 1993) ..........................
10.54 Thermo Voltek Corp. (formerly Universal Voltronics Corp.)
1990 Stock Option Plan (filed as Exhibit 10.2 to Thermo
Voltek's Annual Report on Form 10-K for the fiscal year
ended June 30, 1990 [File No. 1-10574] and incorporated
herein by reference). (Maximum number of shares issuable is
400,000 shares, after adjustment to reflect share increases
in 1993 and 1994. 1-for-3 reverse stock split effected in
November 1992, and 3-for-2 stock split effected in November
1993) .....................................................
10.55 Thermo Voltek Corp. Equity Incentive Plan (filed as Exhibit
10.49 to Thermo Instrument's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994 [File No. 1-9786]
and incorporated herein by reference) .....................
10.56 Thermo Instrument Systems Inc. Incentive Stock Option Plan
(filed as Exhibit 10(c) to Thermo Instrument's Registration
Statement on Form S-1 [Reg. No. 33-6762] and incorporated
herein by reference). (Maximum number of shares issuable in
the aggregate under this plan and the Thermo Instrument
Nonqualified Stock Option Plan is 2,812,500 shares, after
adjustment to reflect share increase approved in 1990 and
3-for-2 stock splits effected in January 1988, July 1993
and April 1995 and 5-for-4 stock split effected in December
1995) .....................................................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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<C> <S> <C>
10.57 Thermo Instrument Systems Inc. Nonqualified Stock Option
Plan (filed as Exhibit 10(d) to Thermo Instrument's
Registration Statement on Form S-1 [Reg. No. 33-6762] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
Thermo Instrument Incentive Stock Option Plan is 2,812,500
shares, after adjustment to reflect share increase approved
in 1990 and 3-for-2 stock splits effected in January 1988,
July 1993 and April 1995 and 5-for-4 stock split effected
in December 1995) .........................................
10.58 Thermo Instrument Systems Inc. Equity Incentive Plan (filed
as Appendix A to the Proxy Statement dated April 27, 1993
of Thermo Instrument [File No. 1-9786] and incorporated
herein by reference). (Maximum number of shares issuable is
4,031,250 shares, after adjustment to reflect share
increase approved in December 1993 and 3-for-2 stock split
effected in July 1993 and April 1995 and 5-for-4 stock
split effected in December 1995) ..........................
10.59 Thermo Instrument Systems Inc. (formerly Thermo
Environmental Corporation) Incentive Stock Option Plan
(filed as Exhibit 10(d) to Thermo Environmental's
Registration Statement on Form S-1 [Reg. No. 33-329] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
Thermo Instrument (formerly Thermo Environmental
Corporation) Nonqualified Stock Option Plan is 1,160,156
shares, after adjustment to reflect share increase approved
in 1987 and 3-for-2 stock splits effected in July 1993 and
April 1995 and 5-for-4 stock split effected in December
1995) .....................................................
10.60 Thermo Instrument Systems Inc. (formerly Thermo
Environmental Corporation) Nonqualified Stock Option Plan
(filed as Exhibit 10(e) to Thermo Environmental's
Registration Statement on Form S-1 [Reg. No. 33-329] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
Thermo Instrument (formerly Thermo Environmental
Corporation) Incentive Stock Option Plan is 1,160,156
shares, after adjustment to reflect share increase approved
in 1987 and 3-for-2 splits effected in July 1993 and April
1995 and 5-for-4 stock split effected in December 1995) ...
10.61 Thermo Instrument Systems Inc.--ThermoSpectra Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.51 to
Thermo Instrument's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 [File No. 1-9786] and
incorporated herein by reference) .........................
10.62 Thermo Instrument Systems Inc.--Thermo BioAnalysis
Corporation Nonqualified Stock Option Plan (filed as
Exhibit 10.64 to Thermo Cardiosystems' Annual Report on
Form 10-K for the fiscal year ended December 30, 1995 [File
No. 1-10114] and incorporated herein by reference) ........
10.63 Thermo Instrument Systems Inc.--ThermoQuest Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.65 to
Thermo Cardiosystems' Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference) .........................
10.64 ThermoSpectra Corporation Equity Incentive Plan (filed as
Exhibit 10.52 to Thermo Instrument's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 [File No.
1-9786] and incorporated herein by reference) .............
10.65 Thermo BioAnalysis Corporation Equity Incentive Plan (filed
as Exhibit 10.67 to Thermo Cardiosystems' Annual Report on
Form 10-K for the fiscal year ended December 30, 1995 [File
No. 1-10114] and incorporated herein by reference) ........
10.66 Thermo Optek Corporation Equity Incentive Plan (filed as
Exhibit 10.68 to Thermo Cardiosystems' Annual Report on
Form 10-K for the fiscal year ended December 30, 1995 [File
No. 1-10114] and incorporated herein by reference) ........
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE
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10.67 ThermoQuest Corporation Equity Incentive Plan (filed as
Exhibit 10.69 to Thermo Cardiosystems' Annual Report on
Form 10-K for the fiscal year ended December 30, 1995 [File
No. 1-10114] and incorporated herein by reference) ........
10.68 ThermoTrex Corporation (formerly Thermo Electron
Technologies Corporation) Incentive Stock Option Plan
(filed as Exhibit 10(h) to ThermoTrex's Registration
Statement on Form S-1 [Reg. No. 33-40972] and incorporated
herein by reference) (Maximum number of shares issuable in
the aggregate under this plan and the ThermoTrex
Nonqualified Stock Option Plan is 1,945,000 shares, after
adjustment to reflect share increases approved in 1992 and
1993 and 3-for-2 stock split effected in October 1993) ....
10.69 ThermoTrex Corporation (formerly Thermo Electron
Technologies Corporation) Nonqualified Stock Option Plan
(filed as Exhibit 10(i) to ThermoTrex's Registration
Statement on Form S-1 [Reg. No. 33-40972] and incorporated
herein by reference) (Maximum number of shares issuable in
the aggregate under this plan and the ThermoTrex
Nonqualified Stock Option Plan is 1,945,000 shares, after
adjustment to reflect share increases approved in 1992 and
1993 and 3-for-2 stock split effected in October 1993) ....
10.70 ThermoTrex Corporation-ThermoLase Corporation (formerly
ThermoLase Inc.) Nonqualified Stock Option Plan (filed on
Exhibit 10.53 to ThermoTrex Corporation's Annual Report on
Form 10-K for the fiscal year ended January 1, 1994 [File
No. 1-10791] and incorporated herein by reference .........
10.71 ThermoTrex Corporation--Trex Medical Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.73 to
Thermo Cardiosystems' Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference) .........................
10.72 ThermoLase Corporation (formerly ThermoLase Inc.)
Nonqualified Stock Option Plan (filed as Exhibit 10.54 to
ThermoTrex's Annual Report on Form 10-K for the fiscal year
ended January 1, 1994 [File No. 1-10791] and incorporated
herein by reference). (Maximum number of shares issuable in
the aggregate under this plan and the ThermoLase Incentive
Stock Option Plan is 2,800,000 shares, after adjustment to
reflect share increase approved in 1993 and 2-for-1 stock
splits effected in March 1994 and June 1995) ..............
10.73 ThermoLase Corporation (formerly ThermoLase Inc.) Incentive
Stock Option Plan (filed as Exhibit 10.55 to ThermoTrex
Corporation's Annual Report on Form 10-K for the fiscal
year ended January 1, 1994 [File No. 1-10791] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
ThermoLase Nonqualified Stock Option Plan is 2,800,000
shares, after adjustment to reflect share increase approved
in 1993 and 2-for-1 stock splits effected in March 1994 and
June 1995) ................................................
10.74 ThermoLase Corporation Equity Incentive Plan (filed as
Exhibit 10.81 to Thermo TerraTech's Annual Report on Form
10-K for the fiscal year ended April 1, 1995 [File No. 1-
9549] and incorporated herein by reference) ...............
10.75 Thermo Fibertek Inc. Incentive Stock Option Plan (filed as
Exhibit 10(k) to Thermo Fibertek's Registration Statement
on Form S-1 [Reg. No. 33-51172] and incorporated herein by
reference .................................................
10.76 Thermo Fibertek Inc. Nonqualified Stock Option Plan (filed
as Exhibit 10(l) to Thermo Fibertek's Registration
Statement on Form S-1 [Reg. No. 33-51172] and incorporated
herein by reference .......................................
10.77 Thermo Fibertek Inc. Equity Incentive Plan (filed as
Exhibit 10.60 to Thermo Instrument's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 [File No.
1-9786] and incorporated herein by reference ..............
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE
----------- ---------------------- ----
<C> <S> <C>
10.78 Thermo Power Corporation (formerly Tecogen Inc.) Incentive
Stock Option Plan (filed as Exhibit 10(h) to Thermo Power's
Quarterly Report on Form 10-Q for the quarter ended April
3, 1993 [Reg. No. 33-10573] and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Thermo Power Nonqualified
Stock Option Plan is 950,000 shares, after adjustment to
reflect share increases approved in 1990, 1992 and 1993) ..
10.79 Thermo Power Corporation (formerly Tecogen Inc.)
Nonqualified Stock Option Plan (filed as Exhibit 10(i) to
Thermo Power's Quarterly Report on Form 10-Q for the
quarter ended April 3, 1993 [Reg. No. 33-10573] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
Thermo Power Incentive Stock Option Plan is 950,000 shares,
after adjustment to reflect share increases approved in
1990, 1992 and 1993) ......................................
10.80 Thermo Power Corporation Equity Incentive Plan (filed as
Exhibit 10.63 to Thermo Instrument's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 [File No.
1-9786] and incorporated herein by reference) .............
10.81 Thermo Power Corporation--ThermoLyte Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.84 to
Thermo Cardiosystems' Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference) .........................
10.82 ThermoLyte Corporation Equity Incentive Plan (filed as
Exhibit 10.71 to Thermo Power's Annual Report on Form 10-K
for the fiscal year ended September 30, 1995 [File No. 1-
10573] and incorporated herein by reference) ..............
10.83 Thermo TerraTech Inc. (formerly Thermo Process Systems
Inc.) Incentive Stock Option Plan (filed as Exhibit 10(h)
to Thermo Process' Registration Statement on Form S-1 [Reg.
No. 33-6763] and incorporated herein by reference).
(Maximum number of shares issuable in the aggregate under
this plan and the Thermo TerraTech Nonqualified Stock
Option Plan is 1,850,000 shares, after adjustment to
reflect share increases approved in 1987, 1989 and 1992, 6-
for-5 stock splits effected in July 1988 and March 1989 and
3-for-2 stock split effected in September 1989) ...........
10.84 Thermo TerraTech Inc. (formerly Thermo Process Systems
Inc.) Nonqualified Stock Option Plan (filed as Exhibit
10(i) to Thermo Process' Registration Statement on Form S-1
[Reg. No. 33-6763] and incorporated herein by reference).
(Maximum number of shares issuable in the aggregate under
this plan and the Thermo TerraTech Incentive Stock Option
Plan is 1,850,000 shares, after adjustment to reflect share
increases approved in 1987, 1989 and 1992, 6-for-5 stock
splits effected in July 1988 and March 1989 and 3-for-2
stock split effected in September 1989) ...................
10.85 Thermo TerraTech Inc. (formerly Thermo Process Systems
Inc.) Equity Incentive Plan (filed as Exhibit 10.63 to
Thermedics' Annual Report on Form 10-K for the fiscal year
ended January 1, 1994 [File No. 1-9567] and incorporated
herein by reference). (Maximum number of shares issuable is
1,750,000 shares, after adjustment to reflect share
increase approved in 1994) ................................
10.86 Thermo TerraTech Inc. (formerly Thermo Process Systems
Inc.)--Thermo Remediation Inc. Nonqualified Stock Option
Plan (filed as Exhibit 10(l) to Thermo Process' Quarterly
Report on Form 10-Q for the fiscal quarter ended January 1,
1994 [File No. 1-9549] and incorporated herein by
reference) ................................................
10.87 Thermo Remediation Inc. Equity Incentive Plan (filed as
Exhibit 10.7 to Thermo Remediation's Registration Statement
on Form S-1 [Reg. No. 33-70544] and incorporated herein by
reference) ................................................
11 Computation of Earnings per Share..........................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE
----------- ---------------------- ----
<C> <S> <C>
*21 Subsidiaries of the Registrant..............................
23.1 Consent of Arthur Andersen LLP..............................
23.2 Consent of Arthur Andersen LLP..............................
23.3 Consent of Arthur Andersen LLP..............................
23.4 Consent of Topel Forman L.L.C. .............................
23.5 Consent of Seth H. Hoogasian, Esq. (included in Exhibit 5)..
*24 Power of Attorney...........................................
27 Financial Data Schedule.....................................
99.1 Form of Subscription Agency Agreement.......................
99.2 Instructions as to use of Trex Medical Corporation
Subscription Certificates and International Holder
Subscription Forms..........................................
99.3 International Holder Subscription Form......................
99.4 Form of Letter to Trex Medical stockholders.................
99.5 Form of Letter to ThermoTrex stockholders...................
</TABLE>
- --------
* Previously filed.
+ Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.
<PAGE>
[FRONT OF STOCK CERTIFICATE]
TREX
MEDICAL CORPORATION
TXM
COMMON STOCK PAR Incorporated under the laws of the COMMON STOCK
VALUE $.01 State of Delaware
CUSIP 89531R 10 1
SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
This certifies that
is the owner of
FULLY PAID AND NON-ACCESSABLE SHARES OF THE COMMON STOCK, $.01 PAR VALUE, OF
TREX MEDICAL CORPORATION
transferable on the books of the Corporation by the holder hereof in person
or by duly authorized attorney upon surrender of this Certificate properly
endorsed. The Certificate and the shares represented hereby are issued under
and shall be subject to the laws of the State of Delaware and all the provision
of the Certificate of Incorporation and the By-Laws of the Corporation, and all
the amendments from time to time made thereto. This Certificate is not valid
unless countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
[ Trex Medical Corporation ]
[ Corporate Seal ]
Secretary President and Chief Executive Officer
<PAGE>
[BACK OF STOCK CERTIFICATE]
TREX MEDICAL CORPORATION
This Corporation will furnish without charge to each stockholder who so
requests, a copy of the designations, powers, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof, and the qualifications, limitation or restrictions of such preferences
and/or rights. Any such requests may be addressed to the Secretary of the
Corporation.
The following abbreviations when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants UNIF GIFT MIN ACT - _________ Custodian ___________
in common (Cust) (Minor)
TEN ENT - as tenants by the entities under Uniform Gifts to Minors
JT TEN - as joint tenants with right of Act _______________________
survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
For value received, _________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
____________________________________________________________ Shares of the Stock
represented by the within Certificate, and do hereby irrevocably constitute
and appoint
--------------------------------------------------------------------
________________________________________________________________________________
Attorney to transfer the said Stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated ___________________________ ______________________________
Signature
_____________________________________
THE SIGNATURES TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE CERTIFICATE
IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATSOEVER.
<PAGE>
[FRONT OF SUBSCRIPTION CERTIFICATE]
TREX
MEDICAL CORPORATION
<TABLE>
<S> <C> <C>
CONTROL NUMBER SUBSCRIPTION
CERTIFICATE FOR
SUBSCRIPTION CERTIFICATE
REPRESENTING RIGHTS TO PURCHASE
SHARES OF COMMON STOCK, $.01 PAR
VALUE, OF TREX MEDICAL
CORPORATION ("COMMON STOCK").
VOID IF NOT EXERCISED BEFORE 5:00
P.M. EASTERN TIME ON JUNE __, 1996.
THE TERMS AND SHARES
CONDITIONS OF THE SUBSCRIPTION PRICE:
RIGHTS OFFERING ARE SET THIS SUBSCRIPTION CERTIFICATE U.S. $16.00 PER SHARE
FORTH IN THE COMPANY'S AND THE RIGHTS REPRESENTED
PROSPECTUS DATED MAY HEREBY ARE NON-TRANSFERABLE.
__, 1996 (THE "RIGHTS CUSIP 89531R 11 9
OFFERING PROSPECTUS")
AND ARE INCORPORATED
HEREIN BY REFERENCE.
COPIES OF THE RIGHTS
OFFERING PROSPECTUS
ARE AVAILABLE UPON
REQUEST FROM AMERICAN
STOCK TRANSFER & TRUST
COMPANY, THE
SUBSCRIPTION AGENT.
REGISTERED OWNER:
</TABLE>
The registered owner whose name is inscribed hereon is entitled to subscribe
for shares of Common Stock upon the terms and subject to the conditions set
forth in the Rights Offering Prospectus and instructions relating hereto. The
Rights represented by this Subscription Certificate may be exercised by duly
completing Form 1 (except that such Rights may not be exercised by any person
holding a majority of the outstanding shares of common stock of ThermoTrex
Corporation). Special delivery instructions may be specified by completing
Form 2. THE RIGHTS EVIDENCED BY THIS SUBSCRIPTION CERTIFICATE MAY NOT BE
EXERCISED UNLESS THE REVERSE SIDE HEREOF IS COMPLETED AND SIGNED, WITH A
SIGNATURE GUARANTEE, IF APPLICABLE. ANY SIGNATURE GUARANTEE MUST BE IN
ACCORDANCE WITH THE MEDALLION SIGNATURE GUARANTEE PROGRAM.
Date:
[ Trex Medical Corporation ]
[ Corporate Seal ]
Secretary President and Chief Executive Officer
<PAGE>
[BACK OF SUBSCRIPTION CERTIFICATE]
TREX MEDICAL CORPORATION
FORM 1 - EXERCISE AND SUBSCRIPTION: The undersigned irrevocably
------
exercises one or more Rights to subscribe for shares of Trex Medical Common
Stock as indicated below, on the terms and subject to the conditions specified
in the prospectus of Trex Medical Corporation dated May ___, 1996 (the "Rights
Offering Prospectus"), receipt of which is hereby acknowledged.
(a) Number of shares subscribed for pursuant to the Subscription
Privilege (one Right needed to subscribe for each full share):
_______________
(b) Total Subscription Price (total number of shares subscribed for
pursuant to the Subscription Privilege times the Subscription Price
of $16.00): _______________ (1)
METHOD OF PAYMENT (CHECK ONE)
[ ] CHECK OR BANK DRAFT DRAWN ON A U.S. BANK OR MONEY ORDER PAYABLE TO
AMERICAN STOCK TRANSFER & TRUST COMPANY.
[ ] WIRE TRANSFER DIRECTED TO THE ACCOUNT MAINTAINED BY AMERICAN STOCK
TRANSFER & TRUST COMPANY AT CHEMICAL BANK, 55 WATER STREET, NEW
YORK, NEW YORK 10041, ACCOUNT NO. 323-294723, ABA NO. 021 000 128.
(1) If the amount enclosed or transmitted is not sufficient to pay the
Subscription Price for all shares that are stated to be subscribed for,
or if the number of shares being subscribed for is not specified, the
number of shares subscribed for will be assumed to be the maximum number
that could be subscribed for upon payment of such amount. If the amount
enclosed or transmitted exceeds the Subscription Price for all shares
that the undersigned has the right to purchase pursuant to the
Subscription Privilege (the "Subscription Excess"), the Subscription
Agent shall return the Subscription Excess to the subscriber without
interest or deduction. In addition, the Subscription Price is subject to
the refund (the "Refund") of the amount, if any, by which $16.00 exceeds
the initial public offering price of the Company's common stock in the
Company's concurrent firm commitment offering to the public. The
Subscription Agent shall forward the Refund to the subscriber without
interest or deduction.
[ ] CHECK HERE IF RIGHTS ARE BEING EXERCISED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY DELIVERED TO THE SUBSCRIPTION AGENT PRIOR TO THE
DATE HEREOF AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s).................................
Window Ticket Number (if any)..................................
Date of Execution of Notice of Guaranteed Delivery.............
Name of Institution which Guaranteed Delivery..................
FORM 2 - DELIVERY INSTRUCTIONS: Name and/or address for mailing of any
------
stock, Subscription Excess or Refund, if other than shown on the reverse hereof.
Name:
.................................................
Address: PROVIDE GUARANTEE
.............................................. OF SIGNATATURE(S)
BELOW
.................................................
(Including Zip Code)
<PAGE>
[BACK OF SUBSCRIPTION CERTIFICATE CONTINUED]
<TABLE>
<S> <C>
IMPORTANT
RIGHTS HOLDERS SIGN HERE Area Code and
AND, IF RIGHTS ARE EXERCISED, Telephone Number
COMPLETE SUBSTITUTE FORM W-9 ................................
(Home)
....................................... ................................................
(Business)
.......................................
(Signature(s) of Holder(s)) Tax Identification or
Social Security No
Dated: ,1996 ..............................
............................ (Complete Substitute Form W-9)
</TABLE>
(Must be signed by the Rights holder(s) exactly as name(s) appear(s) on this
Subscription Certificate. If signature is by trustee(s), executor(s),
administrator(s), guardian(s), attorney(s)-in-fact, agent(s), officer(s) of a
corporation or another acting in a fiduciary or representative capacity, please
provide the following information. See instructions.)
<TABLE>
<S> <C>
Name(s) GUARANTEE OF SIGNATURE(S)
................................ Note: See Paragraph 3(c) of Instructions
....................................... Authorized Signature
(Please Print) ............................
Capacity Name
............................... ............................................
Address Title
................................ ...........................................
Name of Firm
....................................... ....................................
(Including Zip Code) Address
.........................................
Area Code and Telephone Number
...................
Dated
...................................., 1996
</TABLE>
<PAGE>
TREX Medical Corporation 36 Apple Ridge Road
Danbury, Connecticut 06810
Phone: (203) 790-1188
May 6, 1996 Fax: (203) 792-8220
Trex Medical Corporation
36 Apple Ridge Road
Danbury, Connecticut 06810
Re: Registration Statement on Form S-1 (Registration No. 333-2924) Relating to
1,250,000 Shares of the Common Stock, $.01 par value, of Trex Medical
Corporation and Subscription Rights to Purchase Such Shares
--------------------------------------------------------------------------
Ladies and Gentlemen:
I am General Counsel to Trex Medical Corporation, a Delaware corporation
(the "Company"), and have acted as counsel in connection with the registration
under the Securities Act of 1933, as amended (the "Securities Act"), on Form S-1
(Registration No. 333-2924) (the "Registration Statement"), of (i) 1,250,000
shares of the Company's Common Stock, $.01 par value per share (the "Shares")
and (ii) the non-transferable subscription rights to purchase the Shares (the
"Rights").
I or a member of my legal staff have reviewed the corporate proceedings
taken by the Company with respect to the authorization of the issuance of the
Shares and the Rights. I or a member of my legal staff have also examined and
relied upon originals or copies, certified or otherwise authenticated to my
satisfaction, of all corporate records, documents, agreements or other
instruments of the Company and have made all investigations of law and have
discussed with the Company's representatives all questions of fact that I have
deemed necessary or appropriate.
Based upon and subject to the foregoing, I am of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
corporate good standing under the laws of the State of Delaware.
2. The issuance of the Rights and the issuance and sale of the Shares
have been duly authorized by the Company.
3. The Shares and the Rights, when issued as contemplated in the
Registration Statement will be validly issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement.
Very truly yours,
[/s/ Signature Appears Here]
Seth H. Hoogasian
General Counsel
A subsidiary of ThermoTrex Corporation, a Thermo Electron company
<PAGE>
EXHIBIT 11
TREX MEDICAL CORPORATION
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
NINE MONTHS ENDED SIX MONTHS ENDED
------------------------- -----------------------
OCTOBER 1, SEPTEMBER 30, APRIL 1, MARCH 30,
1993 1994 1994 1995 1995 1996
----------- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
COMPUTATION OF PRIMARY
EARNINGS PER SHARE:
Net Income (a).......... $ 827,000 $ 1,194,000 $ 1,085,000 $ 3,483,000 $ 966,000 $ 3,734,000
----------- ----------- ----------- ----------- ----------- -----------
Shares:
Weighted average shares
outstanding........... 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 21,395,967
Add: Shares issuable
from assumed
exercise of options
(as determined by
the application of
the treasury stock
method)............. 151,414 151,414 151,414 151,414 151,414 151,414
----------- ----------- ----------- ----------- ----------- -----------
Weighted average
shares, as adjusted
(b)................... 20,151,414 20,151,414 20,151,414 20,151,414 20,151,414 21,547,381
----------- ----------- ----------- ----------- ----------- -----------
Primary Earnings per
Share
(a) / (b).............. $ .04 $ .06 $ .05 $ .17 $ .05 $ .17
=========== =========== =========== =========== =========== ===========
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trex Medical Corporation:
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
Registration Statement and related Prospectus of Trex Medical Corporation.
Arthur Andersen LLP
Boston, Massachusetts
May 6, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Bennett X-Ray Corporation:
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
Registration Statement and related Prospectus of Trex Medical Corporation.
Arthur Andersen LLP
Boston, Massachusetts
May 6, 1996
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To XRE Corporation:
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
Registration Statement and related Prospectus of Trex Medical Corporation.
Arthur Andersen LLP
Boston, Massachusetts
May 6, 1996
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Continental Group:
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
Registration Statement and related Prospectus of Trex Medical Corporation.
Topel Forman L.L.C.
Chicago, Illinois
May 6, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TREX MEDICAL
CORPORATION'S AMENDMENT NO. 1 TO FORM S-1 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 9-MOS
<FISCAL-YEAR-END> SEP-28-1996 SEP-30-1995
<PERIOD-END> MAR-30-1996 SEP-30-1995
<CASH> 19,245 202
<SECURITIES> 0 0
<RECEIVABLES> 19,857 15,807
<ALLOWANCES> 921 870
<INVENTORY> 18,615 16,667
<CURRENT-ASSETS> 62,609 35,393
<PP&E> 11,341 9,939
<DEPRECIATION> 2,686 2,128
<TOTAL-ASSETS> 129,575 102,374
<CURRENT-LIABILITIES> 27,054 22,222
<BONDS> 0 0
0 0
0 0
<COMMON> 222 0
<OTHER-SE> 63,210 80,010
<TOTAL-LIABILITY-AND-EQUITY> 129,575 102,374
<SALES> 66,829 55,291
<TOTAL-REVENUES> 66,829 55,291
<CGS> 37,592 28,180
<TOTAL-COSTS> 37,592 28,180
<OTHER-EXPENSES> 8,170 8,595
<LOSS-PROVISION> 51 25
<INTEREST-EXPENSE> 872 0
<INCOME-PRETAX> 6,975 6,364
<INCOME-TAX> 3,241 2,881
<INCOME-CONTINUING> 3,734 3,483
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,734 3,483
<EPS-PRIMARY> .17 .17
<EPS-DILUTED> 0 0
</TABLE>
<PAGE>
Draft of 5/6/96
---------------
TREX MEDICAL CORPORATION
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
______________________
SUBSCRIPTION AGENCY AGREEMENT
DATED AS OF MAY ___, 1996
<PAGE>
SUBSCRIPTION AGENCY AGREEMENT dated as of May ___, 1996 by and between
Trex Medical Corporation, a Delaware corporation (the "Company"), and American
Stock Transfer & Trust Company as Subscription Agent (the "Subscription Agent").
WHEREAS, the Company has caused a Registration Statement on Form S-1
(Registration No. 333-2924) under the Securities Act of 1933, as amended (the
"Act"), to be filed with the Securities and Exchange Commission (the
"Commission") relating to the distribution by the Company of subscription rights
(the "Rights") and sale of newly issued shares of the Company's common stock,
par value $.01 per share (the "Common Stock"), upon the exercise of such Rights
(such Registration Statement, in the form in which it first becomes effective
under the Act, and as it may thereafter be amended from time to time, is
referred to herein as the "Registration Statement"; the distribution of the
Rights and the sale of shares of Common Stock upon the exercise thereof as
contemplated by the Registration Statement is referred to herein as the "Rights
Offering");
WHEREAS, the Rights will be distributed to holders of record of shares of
Common Stock as of the close of business on May ___, 1996 (the " Record Date")
at a rate of .10 Rights for each share of Common Stock held on the Record Date;
WHEREAS, the Rights are non-transferable except that ThermoTrex
Corporation, a Delaware corporation ("ThermoTrex"), may redistribute the Rights
received by it to the holders of its common stock, par value $.01 per share
("ThermoTrex Common Stock");
WHEREAS, the portion of Rights distributed to ThermoTrex, as a holder of
record of Common Stock, will be redistributed by ThermoTrex to holders of record
of shares of ThermoTrex Common Stock on the Record Date at a rate of .10 Rights
for each share of ThermoTrex Common Stock held on the Record Date;
WHEREAS, the Company has reserved for issuance, and has authorized the
issuance of, an aggregate number of authorized and unissued or treasury shares
of Common Stock (the "Underlying Shares") equal to the aggregate number of
Rights to be distributed pursuant to the Rights Offering;
WHEREAS, concurrently with the Rights Offering, the Company is offering
2,400,000 shares of Common Stock in a firm commitment underwritten offering to
the public (the "Underwritten Public Offering");
WHEREAS, Rights holders will be entitled to subscribe to purchase, at a
per share price of $16.00 (the "Subscription Price"), subject to the refund (the
"Refund") of the amount, if any, by which $16.00 exceeds the initial public
offering price (the "Public Offering Price") of Common Stock in the Underwritten
Public Offering, one Underlying Share for each Right held (the "Subscription
Privilege"); and
2
<PAGE>
WHEREAS, the Company desires the Subscription Agent to act on its behalf
in connection with the Rights Offering as set forth herein, and the Subscription
Agent is willing so to act.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto hereby agree as follows:
SECTION 1. Appointment of Subscription Agent. The Company hereby appoints
---------------------------------
the Subscription Agent to act as agent for the Company in accordance with the
instructions set forth in this Agreement, and the Subscription Agent hereby
accepts such appointment. The Company may from time to time appoint such co-
subscription agents as it may deem necessary or desirable.
SECTION 2. Issue of Securities.
-------------------
(a) The Company has distributed or will distribute the Rights to
holders of record of shares of Common Stock as of the close of business on the
Record Date (certain of which Rights are to be distributed by ThermoTrex as
majority holder of Common Stock to holders of record shares of ThermoTrex Common
Stock as of the close of business on the Record Date). The Company will promptly
notify the Subscription Agent upon the effectiveness of the Registration
Statement. As transfer agent and registrar for the shares of Common Stock, the
Subscription Agent shall provide such assistance as the Company may require in
order to effect the distribution of the Rights to holders of record of shares of
Common Stock as of the close of business on the Record Date (or to holders of
record of shares of ThermoTrex Common Stock on the Record Date, as the case may
be) (it being understood that Subscription Certificates (as defined in Section
3(b) hereof) or International Holder Subscription Forms (as defined in Section
3(c) hereof), as the case may be, shall be mailed to record holders (except
those located in the United Kingdom, which holders must contact NatWest
Securities Limited) of (i) the Common Stock together with a copy of the
Prospectus no later than two business days following the Record Date and (ii)
ThermoTrex Common Stock together with a copy of the Prospectus no later than two
business days following the date upon which the Subscription Agent receives a
final list of record holders of ThermoTrex Common Stock as of the Record Date),
including assistance in determining the number of Rights to be distributed to
each such record holder and assistance in distributing the Subscription
Certificates evidencing the Rights or International Holder Subscription Forms,
as the case may be.
(b) The Company has authorized the issuance of and will hold in
reserve the Underlying Shares, and upon the valid exercise of Rights, the
Company will issue Underlying Shares to validly exercising Rights holders as set
forth in the Registration Statement.
SECTION 3. Subscription Privilege; Form of Subscription Certificates.
---------------------------------------------------------
(a) Each Right carries with it a Subscription Privilege, pursuant
to which the holder of such Right, upon the valid exercise of the Right pursuant
to Section 7 hereof, the right to purchase from the Company one Underlying Share
for the Subscription Price.
3
<PAGE>
(b) The Rights shall be evidenced by subscription certificates (the
"Subscription Certificates"). The Subscription Certificates (and the form of
election to exercise or transfer Rights to be printed on the reverse thereof)
shall be substantially in the form attached as Exhibit A hereto. Neither the
Subscription Certificates, nor the Rights represented thereby, shall be
transferable.
(c) Subscription Certificates will not be provided to holders of
record whose addresses are outside the United States or who have an APO or FPO
address, but will be held by the Subscription Agent for their account. To
exercise Rights, such international holders must notify the Subscription Agent
by completing an international holder subscription form (the "International
Holder Subscription Form") which will be delivered by the Subscription Agent to
such international holders (except those located in the United Kingdom ) in lieu
of a Subscription Certificate, and sending it by mail or telecopy to the
Subscription Agent. International holders located in the United Kingdom will not
initially be provided with International Holder Subscription Forms. These
international holders who are interested in participating in the Rights Offering
should contact NatWest Securities Limited.
SECTION 4. Signature and Registration.
--------------------------
(a) The Subscription Certificates shall be executed on behalf of
the Company by two of its executive officers. Any Subscription Certificate may
be signed on behalf of the Company by any person who, at the actual date of the
execution of such Subscription Certificate, shall be a proper officer of the
Company to sign such Subscription Certificate, even if at the date of the
execution of this Agreement or the date of the actual issuance of such
certificate any such person is not such an officer.
(b) The Subscription Agent will keep or cause to be kept, at its
principal offices in New York, books for registration and transfer of the Rights
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights and the number of Rights evidenced by each
outstanding Subscription Certificate.
SECTION 5. Mutilated, Destroyed, Lost or Stolen Subscription
-------------------------------------------------
Certificates. Upon receipt by the Company and the Subscription Agent of
- ------------
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Subscription Certificate, and, in case of loss, theft or
destruction, of indemnity and/or security satisfactory to them which may be in
the form of an open penalty bond, and reimbursement to the Company and the
Subscription Agent of all reasonable expenses incidental thereto, and upon
surrender and cancellation of the Subscription Certificate if mutilated, the
Company will make and deliver a new Subscription Certificate of like tenor to
the Subscription Agent for delivery to the registered owner in lieu of the
Subscription Certificate so lost, stolen, destroyed or mutilated. If required by
the Company or the Subscription Agent, an indemnity bond must be sufficient in
the judgment of both to protect the Company, the Subscription Agent or any agent
thereof from any loss which any of them may suffer if a Subscription Certificate
is replaced.
4
<PAGE>
SECTION 6. Subsequent Issue of Subscription Certificates. Subsequent to
---------------------------------------------
their original issuance, no Subscription Certificates shall be issued except
such Subscription Certificates issued in replacement of mutilated, destroyed,
lost or stolen Subscription Certificates pursuant to Section 5 hereof.
SECTION 7. Exercise of Rights; Exercise Price; Expiration Date.
---------------------------------------------------
(a) The holder of any Subscription Certificate may exercise some or
all of the Rights evidenced thereby (but not in amounts of less than one Right
or an integral multiple thereof) by delivering to the Subscription Agent, on or
prior to 5:00 p.m., Eastern time, on June ___, 1996 (the "Expiration Date"), a
properly completed and executed Subscription Certificate evidencing such Rights
(with signatures guaranteed by an eligible guarantor institution which is a
participant in a securities transfer association recognized program (each, an
"Eligible Guarantor") if the holder of such right has provided special delivery
instructions on Form 2 of the Subscription Certificate) together with payment of
the Subscription Price for each Underlying Share subscribed for pursuant to the
Subscription Privilege. In the case of holders of Rights that are held of record
through The Depository Trust Company ("DTC"), exercises of the Subscription
Privilege may be effected by instructing DTC to transfer Rights (such Rights
being "DTC Exercised Rights") from the DTC account of such holder to the DTC
account of the Subscription Agent, together with payment of the Subscription
Price for each Underlying Share subscribed for pursuant to the Basic
Subscription Privilege.
(b) If a holder wishes to exercise Rights, but time will not permit
such holder to cause the Subscription Certificate evidencing such Rights to
reach the Subscription Agent on or prior to the Expiration Date, such Rights may
nevertheless be exercised if all of the following conditions (the "Guaranteed
Delivery Procedures") are met:
(i) such holder has caused payment in full of the
Subscription Price for each Underlying Share being subscribed for pursuant to
the Subscription Privilege to be received (in the manner set forth in Section
7(d) hereof) by the Subscription Agent on or prior to the Expiration Date;
(ii) the Subscription Agent receives, on or prior to the
Expiration Date, a guarantee notice (a "Notice of Guaranteed Delivery"),
substantially in the form provided with the Instructions as to Use of Trex
Medical Corporation Subscription Certificates (the "Instructions") distributed
with the Subscription Certificates, from a commercial bank or trust company
having an office or correspondent in the United States or a member firm of a
national securities exchange or a member of the National Association of
Securities Dealers, Inc. (each, an "Eligible Institution"), stating the name of
the exercising Rights holder, the number of Rights represented by the
Subscription Certificate held by such exercising Rights holder and the number of
Underlying Shares being subscribed for pursuant to the Subscription Privilege,
and guaranteeing the delivery to the Subscription Agent of the Subscription
Certificate evidencing such Rights within three American Stock Exchange trading
days following the date of the Notice of Guaranteed Delivery; and
5
<PAGE>
(iii) the properly completed Subscription Certificate[s]
evidencing the Rights being exercised, with any required signatures guaranteed,
are received by the Subscription Agent, or such Rights are transferred into the
DTC account of the Subscription Agent, within three American Stock Exchange
trading days following the date of the Notice of Guaranteed Delivery relating
thereto. The Notice of Guaranteed Delivery may be delivered to the Subscription
Agent in the same manner as Subscription Certificates at the addresses set forth
above, or may be transmitted to the Subscription Agent by telegram or facsimile
transmission (telecopy no. 718-234-5001).
(c) The Rights shall expire at 5:00 p.m., Eastern time, on the
Expiration Date.
(d) The "Subscription Price" shall be $16.00 per share of Common
Stock subscribed for pursuant to the Subscription Privilege payable (in United
States dollars) (i) by check or bank draft drawn upon a U.S. bank or postal,
telegraphic or express money order payable to the Subscription Agent, or (ii) by
wire transfer of funds to the account maintained by the Subscription Agent for
such purpose at Chemical Bank, 55 Water Street, New York, New York 10041,
Account No. 323-294723; ABA No. 021 000 128. The Subscription Price shall be
deemed to have been received by the Subscription Agent only upon (i) clearance
of any uncertified check, (ii) receipt by the Subscription Agent of any
certified check or bank draft drawn upon a U.S. bank or of any postal,
telegraphic or express money order or (iii) receipt of good funds in the
Subscription Agent's account designated above, in payment of the Subscription
Price.
(e) If an exercising Rights holder has not indicated the number of
Rights being exercised, or if the Subscription Price payment forwarded by such
holder to the Subscription Agent is not sufficient to purchase the number of
shares subscribed for, the Rights holder will be deemed to have exercised the
Subscription Privilege with respect to the maximum number of whole Rights which
may be exercised for the Subscription Price delivered to the Subscription Agent
and, to the extent that the Subscription Price payment delivered by such holder
exceeds the Subscription Price multiplied by the number of Rights exercised
(such excess being the "Subscription Excess"), the Subscription Agent will
refund the Subscription Excess to such Rights holder without interest or
deduction.
(f) The Subscription Agent is authorized to accept only
Subscription Certificates (other than Subscription Certificates delivered in
accordance with the procedure for guaranteed delivery set forth in Section
7(b)), or transfers of Rights to its account at DTC, received prior to 5:00
p.m., Eastern time, on the Expiration Date.
(g) Once a holder of Rights has exercised a Right, such exercise
may not be revoked.
SECTION 8. Payment for Common Stock; Delivery of Stock Certificates,
---------------------------------------------------------
Refund and Subscription Excess.
- ------------------------------
(a) The closing of the sale of the Common Stock upon exercise of
the Rights (the "Closing") will take place at 10:00 a.m., Eastern time, on the
sixth business day following the
6
<PAGE>
Expiration Date, or at such other date and time as the closing of the
Underwritten Public Offering (such date and time being referred to herein as the
"Closing Date"). At the Closing, the Subscription Agent shall pay to the
Company, by wire transfer, certified or bank check or other method acceptable to
the Company, the amount of all funds received by the Subscription Agent in
payment of the Subscription Price for Underlying Shares subscribed for pursuant
to the Subscription Privilege less the aggregate Refund due to the Rights
holders who exercise Rights. Notwithstanding the foregoing, the closing shall
not occur if either (i) the closing of the Underwritten Public Offering does not
occur or (ii) the Public Offering Price exceeds $16.00 per share. If the Company
notifies the Subscription Agent that the Closing will not occur due to the
failure of either condition described in the preceding sentence, the
Subscription Agent, as soon as practicable after receipt of such notice, shall
mail to each Rights holder the Subscription Price paid by such holder in respect
of the number of shares that were subscribed for pursuant to the Subscription
Privilege, without interest or deduction.
(b) The Company shall deliver, or arrange to have delivered, at the
Closing the number of shares of Common Stock as are properly subscribed for
pursuant to the Rights Offering and as soon as practicable after the Closing,
the Subscription Agent shall deliver to each exercising Rights holder
certificate(s) representing the shares of Common Stock purchased pursuant to the
Subscription Privilege. In addition, the Subscription Agent will deliver to each
Rights holder who exercises Rights any Refund or Subscription Excess to which
such Rights holder is due without interest or deduction.
SECTION 9. Fractional Rights and Shares.
----------------------------
(a) The Company shall not issue fractions of Rights nor shall the
Subscription Agent distribute Subscription Certificates which evidence
fractional Rights. The number of Rights issued to each holder will be rounded up
to the nearest whole number.
(b) The Company shall not issue fractional shares of Common Stock
to exercising Rights holders upon exercise and acceptance of Rights.
SECTION 10. Transferability of Rights. The Rights are non-transferable
-------------------------
except that ThermoTrex may redistribute the Rights received by it to the
holders of ThermoTrex Common Stock.
SECTION 11. Foreign and Certain Other Stockholders. The Subscription
--------------------------------------
Agent shall not mail Subscription Certificates to holders of Common Stock whose
addresses are outside the U.S. and Canada or who have an APO or FPO address. The
Subscription Agent shall hold such Subscription Certificates for the account of
such holders and upon notice from such holders shall exercise the Rights on
their behalf. To so exercise such Rights, such stockholders must notify the
Subscription Agent not later than 5:00 p.m., Eastern time, on the Expiration
Date.
SECTION 12. Reports. The Subscription Agent shall notify both the Company
-------
and its designated representatives by telephone as requested during the period
commencing with the mailing of Subscription Certificates and ending on the
Expiration Date (and in the case of
7
<PAGE>
guaranteed deliveries pursuant to Section 7(b), the period ending three American
Stock Exchange trading days after the Expiration Date), which notice shall
thereafter be confirmed in writing, of (i) the number of Rights exercised on the
day of such request, (ii) the number of Underlying Shares subscribed for
pursuant to the Subscription Privilege and the number of such Rights for which
payment has been received, (iii) the number of Rights subject to guaranteed
delivery pursuant to Section 7(b) on such day, (iv) the number of Rights for
which defective exercises have been received on such day and (v) cumulative
totals derived from the information set forth in clauses (i) through (iv) above.
At or before 5:00 p.m., Eastern time, on the first American Stock Exchange
trading day following the Expiration Date, the Subscription Agent shall certify
in writing to the Company the cumulative totals through the Expiration Date
derived from the information set forth in clauses (i) through (iv) above. The
Subscription Agent shall also maintain and update a listing of holders who have
fully or partially exercised their Rights, their transferees and holders who
have not exercised their Rights. The Subscription Agent shall provide the
Company or its designated representatives with the information compiled pursuant
to this Section 12 as any of them shall request.
SECTION 13. Future Instructions and Interpretation.
--------------------------------------
(a) All questions as to the timeliness, validity, form and
eligibility of any exercise of Rights will be determined by the Company, whose
determinations shall be final and binding. The Company in its sole discretion
may waive any defect or irregularity, permit a defect or irregularity to be
corrected within such time Subscriptions will not be deemed to have been
received or accepted until all irregularities have been waived or cured within
such time as the Company determines in its sole discretion. Neither the Company
nor the Subscription Agent shall be under any duty to give notification of any
defect or irregularity in connection with the submission of Subscription
Certificates or incur any liability for failure to give such notification.
(b) The Subscription Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
an authorized officer of the Company, and to apply to such officers for advice
or instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.
SECTION 14. Payment of Taxes. The Company covenants and agrees that it
----------------
will pay when due and payable all documentary, stamp and other taxes, if any,
which may be payable in respect of the issuance or delivery of any Subscription
Certificate or of the Underlying Shares; provided, however, that the Company
shall not be liable for any tax liability arising out of any transaction which
results in, or is deemed to be, an exchange of Rights or shares or a
constructive dividend with respect to the Rights or shares and provided further
that the Company shall not be required to pay any tax or other governmental
charge which may be payable in respect of any delivery of any Subscription
Certificate or the issuance or delivery of certificates for shares of Common
Stock in a name other than that of the registered holder of such Subscription
Certificate evidencing the Rights exercised, and the Subscription Agent shall
not issue any such certificate until such tax or governmental charge, if
required, shall have been paid.
8
<PAGE>
SECTION 15. Cancellation and Destruction of Subscription Certificates.
---------------------------------------------------------
All Subscription Certificates surrendered for the purpose of exercise or
substitution shall be canceled by the Subscription Agent, and no Subscription
Certificates shall be issued in lieu thereof except as expressly permitted by
provisions of this Agreement. The Subscription Agent shall deliver all canceled
Subscription Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Subscription Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
SECTION 16. Right of Action. All rights of action in respect of this
---------------
Agreement are vested in the Company and the respective registered holders of the
Subscription Certificates; and any registered holder of any Subscription
Certificate, without the consent of the Subscription Agent or of the holder of
any other Subscription Certificate, may, on his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Subscription Certificate in the manner
provided in such Subscription Certificate and in this Agreement.
SECTION 17. Concerning the Subscription Agent.
---------------------------------
(a) The Company agrees to pay to the Subscription Agent
compensation in the amount of _____________________ dollars ($_______) for all
services rendered by it hereunder and, from time to time, on demand of the
Subscription Agent, its reasonable out-of-pocket expenses and disbursements for
mailing, postage and delivery. The Company also agrees to indemnify the
Subscription Agent for, and to hold it harmless against, any loss, liability, or
expense incurred without negligence or bad faith on the part of the Subscription
Agent for anything done or omitted by the Subscription Agent in connection with
the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises, provided
that the Subscription Agent shall have provided the Company with notice of any
such claim promptly after such claim became known to the Subscription Agent, and
provided further that the Company shall have the right to assume the defense of
any such claim upon receipt of written notice thereof from the Subscription
Agent. If the Company assumes the defense of any such claim, the Subscription
Agent shall be entitled to participate in (but not control) the defense of any
such claim at its own expense. The Company shall not indemnify the Subscription
Agent with respect to any claim or action settled without its consent, which
consent shall not be unreasonably withheld.
(b) The Subscription Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Subscription Certificate, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document reasonably believed by it to
be genuine and to be signed, executed and, where necessary, verified or
acknowledged by the proper person or persons.
9
<PAGE>
SECTION 18. Merger or Consolidation of Subscription Agent. Any corporation
---------------------------------------------
into which the Subscription Agent or any successor Subscription Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Subscription Agent or any successor
Subscription Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Subscription Agent or any successor Subscription
Agent, shall be the successor to the Subscription Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
SECTION 19. Duties of Subscription Agent. The Subscription Agent
----------------------------
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Subscription Certificates by their acceptance thereof shall be bound:
(a) The Subscription Agent may consult with legal counsel (who may
be, but is not required to be, legal counsel for the Company), and the opinion
of such counsel shall be full and complete authorization and protection to the
Subscription Agent as to any actions taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Subscription Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the President
or a Vice President (including any Senior or Executive Vice President) and by
the Treasurer or any Assistant Treasurer or the Secretary or any Assistant
Secretary of the Company and delivered to the Subscription Agent; and such
certificate shall be full authorization to the Subscription Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Subscription Agent shall be liable hereunder only for its
own negligence or willful misconduct.
(d) The Subscription Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Subscription Certificates or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the Company
only.
(e) The Subscription Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Subscription Agent) or in respect
of the validity or execution of any Subscription Certificate; nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Subscription Certificate; nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock to be issued pursuant
to this Agreement or any
10
<PAGE>
Subscription Certificate or as to whether any shares of Common Stock will, when
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Subscription Agent for the carrying out or performing by the
Subscription Agent of the provisions of this Agreement.
(g) Nothing herein shall preclude the Subscription Agent from
acting in any other capacity for the Company.
SECTION 20. Notices to the Company, Holders and Subscription Agent. All
------------------------------------------------------
notices and other communications provided for or permitted hereunder shall be
made by hand delivery, prepaid first-class mail, or telecopier:
(a) if to the Company, to:
Trex Medical Corporation
c/o Thermo Electron Corporation
81 Wyman Street
P.O. Box 9046
Waltham, MA 02254-9046
Attn: Seth H. Hoogasian, Esq.
Telecopier: 617-622-1283
(b) if to the Subscription Agent, to:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Telecopier: 718-234-5001
Attn: Herb Lemmer, Esq.
Paula Magno
(c) if to a registered holder, at the address shown on the
registry books of the Company.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; two business days after
being deposited in the mail, postage prepaid, if mailed as aforesaid; when
answered back if telexed; and when receipt is acknowledged, if telecopied.
SECTION 21. Supplements and Amendments. The Company and the Subscription
--------------------------
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Subscription Certificates in order to cure any
ambiguity or to correct or supplement any
11
<PAGE>
provision contained herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Subscription Agent may
deem necessary or desirable and which shall not materially adversely affect the
interests of the holders of the Subscription Certificates.
SECTION 22. Successors. All the covenants and provisions of this Agreement
----------
by or for the benefit of the Company or the Subscription Agent shall bind and
inure to the benefit of their respective successors and assigns hereunder.
SECTION 23. Termination. This Agreement shall terminate at 5:00 p.m.,
-----------
Eastern time, on the thirtieth day following the Expiration Date. Upon
termination of this Agreement, and provided that all shares of Common Stock for
Rights accepted for execution prior to such termination are issued and delivered
by the Company, the Company shall be discharged from all obligations under this
Agreement except for its obligations to the Subscription Agent under Sections 14
and 17 hereof and except with respect to the obligation of the Company to
provide instruction and direction to the Subscription Agent as may be provided
in this Agreement.
SECTION 24. Governing Law. This Agreement and each Subscription
-------------
Certificate shall be deemed to be a contract made under the laws of the
Commonwealth of Massachusetts and for all purposes shall be construed in
accordance with the internal laws of said State.
SECTION 25. Benefits of This Agreement. Nothing in this Agreement shall
--------------------------
be construed to give to any person or corporation other than the Company, the
Subscription Agent and the holders of the Subscription Certificates any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Subscription Agent and
the holders of the Subscription Certificates.
SECTION 26. Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
SECTION 27. Descriptive Headings. Descriptive headings of the several
--------------------
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
12
<PAGE>
IN WITNESS WHEREOF the undersigned have caused this Subscription Agency
Agreement to be executed by their duly authorized representative as of the date
first above written.
TREX MEDICAL CORPORATION
By:_______________________________
Name:
Title:
AMERICAN STOCK TRANSFER & TRUST
COMPANY
By:_______________________________
Name:
Title:
13
<PAGE>
Draft of 5/6/96
---------------
INSTRUCTIONS AS TO USE OF TREX MEDICAL CORPORATION
SUBSCRIPTION CERTIFICATES
AND
INTERNATIONAL HOLDER SUBSCRIPTION FORMS
________________
CONSULT THE SUBSCRIPTION AGENT, YOUR BANK OR BROKER
AS TO ANY QUESTIONS
The following instructions relate to a rights offering (the "Rights
Offering") by Trex Medical Corporation, a Delaware corporation (the "Company"),
to the holders of its Common Stock, par value $.01 per share (the "Trex Medical
Common Stock"), as described in the Company's Prospectus dated May ___, 1996
(the "Prospectus"). Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Prospectus. Holders of record of Trex Medical
Common Stock at the close of business on May ___, 1996 (the "Trex Medical Record
Date") are receiving 0.10 subscription rights (the "Rights") for each share of
Trex Medical Common Stock held by them on the Trex Medical Record Date. The
Rights are non - transferable except that ThermoTrex Corporation ("ThermoTrex"),
may redistribute the Rights received by it to the holders of its Common Stock,
par value $.01 per share (the "ThermoTrex Common Stock"). Holders of record of
ThermoTrex Common Stock are receiving 0.10 Rights for each share of ThermoTrex
Common Stock held by them on June ___, 1996 (the "ThermoTrex Record Date").
ThermoTrex will retain all Rights not so distributed and has irrevocably elected
not to exercise such Rights which will expire unexercised. The terms of the
Rights further provide that they may not be exercised by any person holding a
majority of the outstanding shares of ThermoTrex Common Stock. As holder of a
majority of the outstanding shares of ThermoTrex Common Stock, Thermo Electron
Corporation will have no right to exercise the Rights it receives from
ThermoTrex and such Rights will expire unexercised. An aggregate of
approximately 1,250,000 Rights exercisable to purchase an aggregate of
approximately 1,250,000 shares of Trex Medical Common Stock (the "Underlying
Shares") are being distributed in connection with the Rights Offering. Each
Right is exercisable to purchase one share of Trex Medical Common Stock (the
"Subscription Privilege") upon payment of $16.00 in cash (the "Subscription
Price") subject to the refund of the amount, if any, by which $16.00 exceeds the
initial public offering price of the Company's concurrent firm commitment
underwritten offering to the public of 2,400,000 shares of Trex Medical Common
Stock (the "Underwritten Public Offering").
No fractional Rights or cash in lieu thereof will be issued or paid. The
number of Rights distributed by the Company and ThermoTrex has been rounded up
to the nearest whole number in order to avoid issuing fractional rights.
The Rights will expire at 5:00 p.m., Eastern time, on June ___, 1996 (the
"Expiration Date").
The number of rights to which you are entitled is printed on the face of your
subscription certificate. You should indicate your wishes with regard to the
exercise of your Rights by completing the form on the back of your subscription
certificate and returning the certificate to the Subscription Agent in the
envelope provided. If you are located outside of the United States or have an
APO or FPO address, you have not been provided with a subscription certificate,
but have received an International Holder Subscription Form (unless you are
located in the United Kingdom). You should indicate your wishes with regard to
the exercise of your Rights by completing the International Holder Subscription
Form and returning it to the Subscription Agent by mail or by telecopy at the
address and telecopier number provided below. Holders located in the United
Kingdom who are interested in participating in the Rights Offering should
contact NatWest Securities Limited, 135 Bishopsgate, London, England EC2M 3UR,
telephone 011-44-71-375-5000, telecopier 011-44-71-375-6580, attention: Mr.
Melvyn Rowe.
<PAGE>
YOUR SUBSCRIPTION CERTIFICATE OR INTERNATIONAL HOLDER SUBSCRIPTION FORM AND
PAYMENT OF THE SUBSCRIPTION PRICE, INCLUDING FINAL CLEARANCE OF ANY CHECKS, MUST
BE RECEIVED BY THE SUBSCRIPTION AGENT, ON OR BEFORE 5:00 P.M., EASTERN TIME, ON
THE EXPIRATION DATE. YOU MAY NOT REVOKE ANY EXERCISE OF A RIGHT.
THE ISSUANCE OF SHARES UPON THE EXERCISE OF RIGHTS IS CONDITIONED UPON THE
CLOSING OF THE UNDERWRITTEN PUBLIC OFFERING DESCRIBED IN THE RELATED PROSPECTUS.
IF EITHER THE UNDERWRITTEN PUBLIC OFFERING FAILS TO CLOSE OR THE INITIAL PUBLIC
OFFERING PRICE IN THE UNDERWRITTEN PUBLIC OFFERING IS MORE THAN $16.00, THE
RIGHTS OFFERING WILL TERMINATE AND THE SUBSCRIPTION PRICE WILL BE RETURNED TO
YOU WITHOUT INTEREST OR DEDUCTION.
1. Subscription Privilege.
To exercise Rights, complete Form 1 of the subscription certificate and send
your properly completed and executed subscription certificate or, for holders
outside the United States or with APO or FPO addresses, an International Holder
Subscription Form, together with payment in full of the Subscription Price for
each Underlying Share subscribed for pursuant to the Subscription Privilege to
the Subscription Agent. An International Holder Subscription Form, but not a
subscription certificate, may be sent by telecopy to the Subscription Agent at
the number provided below. Payment of the Subscription Price must be made in
U.S. dollars for the full number of Underlying Shares being subscribed for (a)
by check or bank draft drawn upon a U.S. bank or postal, telegraphic or express
money order payable to American Stock Transfer & Trust Company as Subscription
Agent, or (b) by wire transfer of same day funds to the account maintained by
the Subscription Agent for such purpose at Chemical Bank, 55 Water Street, New
York, New York 10041, Account No. 323-294723, ABA No. 021 000 128. Any wire
transfer of funds should clearly indicate the identity of the subscriber who is
paying the Subscription Price by the wire transfer. The Subscription Price will
be deemed to have been received by the Subscription Agent only upon (i) the
clearance of any uncertified check, (ii) the receipt by the Subscription Agent
of any certified check or bank draft drawn upon a U.S. bank or any postal,
telegraphic or express money order or (iii) the receipt of good funds in the
Subscription Agent's account designated above. If paying by uncertified personal
check, please note that the funds paid thereby may take up to five business days
to clear. Accordingly, holders of Rights who wish to pay the Subscription Price
by means of uncertified personal check are urged to make payment sufficiently in
advance of the Expiration Date to ensure that such payment is received and
clears by such date and are urged to consider payment by means of certified or
cashier's check, money order or wire transfer of funds. Alternatively, you may
cause a written guarantee substantially in the form of Exhibit A to these
instructions (the "Notice of Guaranteed Delivery") from a member firm of a
registered national securities exchange or a member of the National Association
of Securities Dealers, Inc., or from a commercial bank or trust company having
an office or correspondent in the United States (each of the foregoing being an
"Eligible Institution"), to be received by the Subscription Agent at or prior to
the Expiration Date together with payment in full of the applicable Subscription
Price. Such Notice of Guaranteed Delivery must state your name, the number of
Rights represented by your subscription certificate and the number of Rights
being exercised pursuant to the Subscription Privilege, and will guarantee the
delivery to the Subscription Agent of your properly completed and executed
subscription certificates within three American Stock Exchange trading days
following the date of the Notice of Guaranteed Delivery. If this procedure is
followed, your subscription certificates must be received by the Subscription
Agent within three American Stock Exchange trading days of the Notice of
Guaranteed Delivery. Additional copies of the Notice of Guaranteed Delivery may
be obtained upon request from the Subscription Agent at the address, or by
calling the telephone number, indicated below.
The address, telephone and telecopier numbers of the Subscription Agent are
as follows:
If By Mail: If By Hand:
American Stock Transfer American Stock Transfer
& Trust Company & Trust Company
40 Wall Street 40 Wall Street, 46th Floor
New York, New York 10005 New York, New York 10005
2
<PAGE>
If By OverNight Courier or Telecopy:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Telephone and Telecopier Numbers:
Telephone: 718-921-8200
Telecopier: 718-234-5001
If you have not indicated the number of Rights being exercised, or if you
have not forwarded full payment of the Subscription Price for the number of
Rights that you have indicated are being exercised, you will be deemed to have
exercised the Subscription Privilege with respect to the maximum number of whole
Rights which may be exercised for the Subscription Price payment delivered by
you and, to the extent that the Subscription Price payment delivered by you
exceeds the product of the Subscription Price multiplied by the number of Rights
evidenced by the subscription certificates or International Holder Subscription
Forms delivered by you (such excess being the "Subscription Excess"), the
Subscription Agent will refund the Subscription Excess to you without interest
or deduction.
2. Delivery of Stock Certificates, Etc.
The issuance of shares of Trex Medical Common Stock purchased upon the
exercise of Rights is conditioned upon (i) the closing of the Underwritten
Public Offering and (ii) the public offering price of the Underwritten Public
Offering being less than or equal to $16.00 per share (together, the "Closing
Conditions"). If the Closing Conditions are satisfied, it is anticipated that
the closing of the sale of shares issuable upon exercise of the Rights (the
"Closing") will occur on or about the sixth business day following the
Expiration Date. The date upon which the Closing occurs is referred to herein as
the "Closing Date." If the Closing Conditions are not satisfied, the
Subscription Agent shall mail to you the aggregate Subscription Price delivered
by you for the exercise of Rights, without interest or deduction, as soon as
practicable after a determination has been made that the Closing will not occur.
If the Closing occurs, the following deliveries and payments will be made to the
address shown on the face of your subscription certificate or, in the case of
international holders or holders with APO or FPO addresses, the address shown on
the records of the Company or ThermoTrex, as the case may be, unless, in the
case of domestic holders, you provide instructions to the contrary on Form 2 of
your subscription Certificate.
(a) Basic Subscription Privilege. As soon as practicable after the Closing
Date, the Subscription Agent will mail to each exercising Rights holder
certificates representing shares of Trex Medical Common Stock purchased pursuant
to the Subscription Privilege.
(b) Cash Payments. As soon as practicable after the Closing Date, the
Subscription Agent will mail to each Rights holder who exercises Rights any
Subscription Excess and that amount equal to the number of Rights exercised
multiplied by the amount, if any, by which $16.00 exceeds the initial public
offering price per share of the Underwritten Public Offering.
3. Execution
(a) Execution by Registered Holder. The signature on the subscription
certificate or the International Holder Subscription Form must correspond with
the name of the registered holder exactly as it appears on the face of the
subscription certificate or, in the case of international holders or holders
with APO or FPO addresses, the name of the registered holder as shown on the
records of the Company or ThermoTrex, as the case may be, without any alteration
or change whatsoever. Persons who sign the subscription certificate or the
International Holder Subscription Form in a representative or other fiduciary
capacity must indicate their capacity when signing and, unless waived by the
Subscription Agent in its sole and absolute discretion, must present to the
Subscription Agent satisfactory evidence of their authority to so act.
3
<PAGE>
(b) Execution by Person Other than Registered Holder. If the subscription
certificate or the International Holder Subscription Form is executed by a
person other than the holder named on the face of the subscription certificate
or shown on the records of the Company or ThermoTrex, as the case may be, proper
evidence of authority of the person executing the subscription certificate or
the International Holder Subscription Form must accompany the same unless, for
good cause, the Subscription Agent dispenses with proof of authority.
(c) Signature Guarantees. Your signature must be guaranteed by an Eligible
Institution if you wish to specify special delivery instructions pursuant to
Form 2.
4. Method of Delivery.
The method of delivery of subscription certificates or International Holder
Subscription Forms and payment of the Exercise Price to the Subscription Agent
will be at the election and risk of the Rights holder, but, if sent by mail, it
is recommended that they be sent by registered mail, properly insured, with
return receipt requested, and that a sufficient number of days be allowed to
ensure delivery to the Subscription Agent and the clearance of any checks sent
in payment of the Exercise Price prior to 5:00 p.m., Eastern time, on the
Expiration Date.
5. Special Provisions Relating to the Delivery of Rights Through The
Depository Trust Company.
In the case of holders of Rights that are held of record through The
Depository Trust Company ("DTC"), exercises of the Subscription Privilege may be
effected by instructing DTC to transfer Rights from the DTC account of such
holder to the DTC account of the Subscription Agent, together with payment of
the Subscription Price for each Underlying Share subscribed for pursuant to the
Subscription Privilege.
6. Substitute Form W - 9.
Each Rights holder who elects either to exercise Rights should provide the
Subscription Agent with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W - 9, which is included as Exhibit A hereto. Additional copies
of Substitute Form W - 9 may be obtained upon request from the Subscription
Agent at the address or by calling the telephone number indicated above. Failure
to provide the information on the form may subject such holder to 31% federal
income tax withholding with respect to dividends that may be paid by the Company
on shares of Trex Medical Common Stock purchased upon the exercise of Rights
(for those holders exercising Rights).
4
<PAGE>
EXHIBIT A
TO INSTRUCTIONS
NOTICE OF GUARANTEED DELIVERY
for
SUBSCRIPTION CERTIFICATES
issued by
TREX MEDICAL CORPORATION
This form, or one substantially equivalent hereto, must be used to
exercise Rights pursuant to the Rights Offering described in the Prospectus
dated May ___, 1996 (the "Prospectus") of Trex Medical Corporation, a Delaware
corporation (the "Company"), if a holder of Rights cannot deliver the
subscription certificate(s) evidencing the Rights (the "Subscription
Certificate(s), to the Subscription Agent listed below (the "Subscription
Agent") at or prior to 5:00 p.m., Eastern time, on June ___, 1996 (the
"Expiration Date"). Such form must be delivered by hand or sent by facsimile
transmission or mail to the Subscription Agent, and must be received by the
Subscription Agent on or prior to the Expiration Date. See "The Rights Offering"
in the Prospectus. Payment of the Subscription Price of $16.00 per share for
each share of Trex Medical Common Stock subscribed for upon exercise of such
Right must be received by the Subscription Agent in the manner specified in the
Prospectus at or prior to 5:00 p.m., Eastern time, on the Expiration Date even
if the Subscription Certificate evidencing such Right is being delivered
pursuant to the procedure for guaranteed delivery thereof.
The Subscription Agent is:
American Stock Transfer & Trust Company
General Information:
1-718-921-8200
By Mail: Facsimile Transmission: By Hand:
American Stock Transfer 1-718-234-5001 American Stock Transfer
& Trust Company & Trust Company
40 Wall Street 40 Wall Street
New York, New York 10005 46th Floor
New York, New York 10005
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY.
GUARANTEE OF DELIVERY
(Not to be used for Subscription Certificate signature guarantee)
The undersigned, a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States, guarantees that the undersigned will deliver to the Subscription Agent
the certificates representing the Rights being exercised hereby, with any
required signature guarantees and any other required documents, all within three
American Stock Exchange trading days after the date hereof.
.................................... Dated: ............................, 1996
.................................... .........................................
(Name of Firm)
.................................... .........................................
(Address) (Authorized Signature)
....................................
(Area Code and Telephone Number)
The institution which this form must communicate the guarantee to the
Subscription Agent and must deliver the Subscription Certificate(s) to the
Subscription Agent within the time period shown herein. Failure to do so could
result in a financial loss to such institution.
A-1
<PAGE>
EXHIBIT A
TO INSTRUCTIONS
Gentlemen:
The undersigned hereby represents that he or she is the holder of
Subscription Certificate(s) representing __________ Rights and that such
Subscription Certificate(s) cannot be delivered to the Subscription Agent at or
before 5:00 p.m., Eastern time, on the Expiration Date. Upon the terms and
subject to the conditions set forth in the Prospectus, receipt of which is
hereby acknowledged, the undersigned hereby elects to exercise the Subscription
Privilege to subscribe for one share of Trex Medical Common Stock per Right with
respect to each of _________ Rights represented by such Subscription
Certificate. The undersigned understands that payment of the Subscription Price
of $16.00 per share for each share of Trex Medical Common Stock subscribed for
pursuant to the Subscription Privilege must be received by the Subscription
Agent at or before 5:00 p.m., Eastern time, on the Expiration Date and
represents that such payment, in the aggregate amount of $__________, either
(check appropriate box):
[_] is being delivered to the Subscription Agent herewith
or
[_] has been delivered separately to the Subscription Agent; and is or
was delivered in the manner set forth below (check appropriate box and complete
information relating thereto):
[_] wire transfer of funds
-- name of transferor institution............................
-- date of transfer..........................................
-- confirmation number (if available)........................
[_] uncertified check (Payment by uncertified check will not be deemed
to have been received by the Subscription Agent until such check has
cleared. Holders paying by such means are urged to make payment
sufficiently in advance of the Expiration Date to ensure that such
payment clears by such date.)
[_] certified check
[_] bank draft (cashier's check)
[_] money order
-- name of maker.............................................
-- date of check, draft or money order.......................
-- check, draft or money order number........................
-- bank on which check is drawn or issuer of money order.....
Signature(s)................... Address.......................
............................... ..............................
Name(s)........................ ..............................
............................... Area Code and Tel. (No(s).....
(Please type or print)
.................................
Subscription Certificate
No(s). (if available)..............................................
A-2
<PAGE>
EXHIBIT B
TO INSTRUCTIONS
IMPORTANT TAX INFORMATION
Under the federal income tax law, dividend payments that may be made by
the Company on shares of Common Stock issued upon the exercise of Rights may be
subject to backup withholding, and each Rights holder who exercises Rights
should provide the Subscription Agent (as the Company's agent, in respect of
exercised Rights) with such Rights holder's correct taxpayer identification
number on Substitute Form W-9 below. If such Rights holder is an individual, the
taxpayer identification number is his social security number. If the
Subscription Agent, which is also the transfer agent for the Company, is not
provided with the correct taxpayer identification number in connection with such
payments, the Rights holder may be subject to a $50 penalty imposed by the
Internal Revenue Service.
Certain Rights holders (including, among others, all corporation and
certain foreign individuals) are exempt from these backup withholding and
reporting requirements. In general, in order for a foreign individual to qualify
as an exempt recipient, that Rights holder must submit a statement, signed under
the penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Subscription Agent. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If backup withholding applies, the Company or the Subscription Agent, as
the case may be, will be required to withhold 31 percent of any such payments
made to the Rights holder. Backup withholding is not an additional tax. Rather,
the amount of backup withholding is treated, like other withheld amounts, as an
advance payment of the person's tax liability. If withholding results in an
overpayment of taxes, a refund may be obtained.
Purpose of Substitute Form W-9
To prevent backup withholding, the Rights holder is required to notify the
Subscription Agent of his correct taxpayer identification number by completing
the form below certifying that the taxpayer identification number provided on
Substitute Form W-9 is correct ( or that such Rights holder is awaiting a
taxpayer identification number).
What Number to Give the Subscription Agent
The Rights holder is required to give the Subscription Agent the social
security number or employer identification number of the record owner of the
Rights. If the Rights are in more than one name or are not in the name of the
actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on which
number to report.
B-1
<PAGE>
EXHIBIT B
TO INSTRUCTIONS
PAYER'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE PART I--Taxpayer Identification No. _________ Part II--For
Payees Exempt
from Backup
Withholding (see
Form W-9 enclosed Guidelines)
Department of the Treasury
Internal Revenue Service
Enter your taxpayer identification
number in the appropriate box. For
most individuals, this is your _____________________________
social security number. If you do Social Security No.
not have a number, see Obtaining OR
a Number in the enclosed
Guidelines.
Payer's Request for Taxpayer
Identification Number (TIN) Note: If the account is in more _____________________________
than on e name, see the chart on Employer Identification
page 2 of the enclosed Guidelines Number
to determine what number to give.
- --------------------------------------------------------------------------------------------------------
</TABLE>
Certification-Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding wither because I am exempt from
backup withholding, I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or the IRS has notified me
that I am no longer subject to backup withholding.
Certification Instructions - You must cross out item (2) above is you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received
another notification from the IRS that you are no longer subject to backup
withholding, do not cross out item (2).
SIGNATURE:______________________________________ DATE: ________________, 1996
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF
31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR
ADDITIONAL DETAILS.
B-2
<PAGE>
EXHIBIT B
TO INSTRUCTIONS
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer. Social Security numbers have nine digits separated by two hyphens, i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen, i.e., 000-00-000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Give the name and
SOCIAL SECURITY
For this Type of Account: number of--
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more individuals (joint account) The actual owner of the account, if
combined funds, the first individual
on the account(1)
3. Custodian account of a minor (Uniform Gift to Minors Act) The minor(2)
4. a. The usual revocable savings trust (grantor is also trustee) The grantor-trustee(1)
b. The so-called trust account that is not a legal or valid trust The actual owner(1)
under State law.
5. Sole proprietorship The owner(3)
- ------------------------------------------------------------------------------------------------------------------
Give the name and
EMPLOYER IDENTIFICATION
For this Type of Account: number of
- ------------------------------------------------------------------------------------------------------------------
6. A valid trust, estate or pension trust Legal entity (do not furnish the
identification number of the
personal representative or trustee
unless the legal entity itself is not
designated in the account title)(4)
- ------------------------------------------------------------------------------------------------------------------
7. Corporation The corporation
- ------------------------------------------------------------------------------------------------------------------
8. Association, club, religious, charitable, educational or other The organization
exempt organization
- ------------------------------------------------------------------------------------------------------------------
9. PartnershipThe partnership
- ------------------------------------------------------------------------------------------------------------------
10. A broker or registered nominee The broker or nominee
- ------------------------------------------------------------------------------------------------------------------
11. Account with the Department of Agriculture in the name of a The public entity
public entity (such as a State or local government, school district,
or prison) that receives agricultural program payments
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
B-3
<PAGE>
(3) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your Social Security
Number or your Employer Identification Number.
(4) List first and circle the name of the legal trust, estate or pension
trust.
Note: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
Payees Exempt from Backup Withholding
Certain payees are exempt from backup withholding. For interest and
dividends, the following payees are exempt:
. A corporation.
. An organization exempt from tax under section 501(a), or an
individual retirement account, or a custodial account under
section 403(b)(7).
. The United States or any of its agencies and instrumentalities.
. A State, the District of Columbia, a possession of the United
States or any of their political subdivisions or instrumentalities.
. A foreign government or any of its political subdivisions, agencies
or instrumentalities.
. An international organization or any of its agencies or
instrumentalities.
. A foreign central bank of issue.
. A dealer in securities or commodities required to register in the
United States or a possession of the United States.
. A real estate investment trust.
. An entity registered at all times under the Investment Company Act
of 1940.
. A common trust fund operated by a bank under section 584(a).
. A financial institution.
. A middleman known in the investment community as a nominee or
listed in the most recent publication of the American Society of
Corporate Secretaries, Inc. Nominee List.
. An exempt charitable remainder trust, or a trust described in
section 4947.
Payment of dividends and patronage dividends not generally subject to
backup withholding include the following:
. Payments to non-resident aliens subject to withholding under
section 1441.
. Payments to partnerships not engaged in a trade or business in the
United States and which have at least one non-resident partner.
. Payments of patronage dividends where the amount received is not
paid in money.
. Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include
the following:
. Payments of interest on obligations issued by individuals. Note:
you may be subject to backup withholding if this interest is $600
or more and is paid in the course of the taxpayer's trade or
business and you have not provided your correct taxpayer
identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest
dividends under section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER.
B-4
<PAGE>
Payments that are not subject to information reporting are also not
subject to backup withholding. For details, see the regulations under section
6041, 6041A, 6042, 6044, 6045, 6049, 6050A and 6050N and the regulations
thereto.
Privacy Act Notice
Section 6109 requires most recipients of dividends, interest, or other
payments to give taxpayer identification numbers to payers who must report the
payments to IRS. The IRS uses the numbers for identification purposes and to
help verify the accuracy of your tax return. Payers must be given the numbers
whether or not recipients are required to file tax returns. Payers must
generally withhold 31% of taxable interest, dividends, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number. If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding. If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information. Falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT
OR THE INTERNAL REVENUE SERVICE
B-5
<PAGE>
Draft 5/6/96
------------
TREX MEDICAL CORPORATION
International Holder Subscription Form
IMPORTANT: The number of Rights that may be exercised pursuant to the
Subscription Privilege by the person whose name appears on the label affixed to
this form is the number indicated in the top right - hand corner of the label.
There is no oversubscription privilege.
EXERCISE AND SUBSCRIPTION: The undersigned irrevocably exercises one or
more Rights to subscribe for shares of Trex Medical Common Stock as indicated
below, on the terms and subject to the conditions specified in the prospectus
of Trex Medical Corporation dated May ___, 1996 (the "Prospectus"), receipt of
which is hereby acknowledged.
(a) Number of shares subscribed for pursuant to the Subscription Privilege
(one Right needed to subscribe for each full share): _______________
(b) Total Subscription Price (total number of shares subscribed for
pursuant to the Subscription Privilege times the Subscription Price of
$16.00): _______________ (1)
METHOD OF PAYMENT (CHECK ONE)
_ CHECK OR BANK DRAFT DRAWN ON A U.S. BANK OR MONEY ORDER
PAYABLE TO AMERICAN STOCK TRANSFER & TRUST COMPANY.
_ WIRE TRANSFER DIRECTED TO THE ACCOUNT MAINTAINED BY
AMERICAN STOCK TRANSFER & TRUST COMPANY AT CHEMICAL BANK, 55
WATER STREET, NEW YORK, NEW YORK 10041, ACCOUNT NO. 323-294723,
ABA NO. 021 000 128.
(1) If the amount enclosed or transmitted is not sufficient to pay the
Subscription Price for all shares that are stated to be subscribed for,
or if the number of shares being subscribed for is not specified, the
number of shares subscribed for will be assumed to be the maximum
number that could be subscribed for upon payment of such amount. If the
amount enclosed or transmitted exceeds the Subscription Price for all
shares that the undersigned has the right to purchase pursuant to the
Subscription Privilege (the "Subscription Excess"), the Subscription
Agent shall return the Subscription Excess to the subscriber without
interest or deduction. In addition, the Subscription Price is subject
to the refund (the "Refund") of the amount, if any, by which $16.00
exceeds the initial public offering price of the Company's common stock
in the Company's concurrent firm commitment offering to the public. The
Subscription Agent shall forward the Refund to the subscriber without
interest or deduction.
THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE PROSPECTUS
AND ARE INCORPORATED HEREIN BY REFERENCE. ALL CAPITALIZED TERMS USED BUT NOT
DEFINED HEREIN HAVE THE MEANINGS ASCRIBED TO THEM IN THE PROSPECTUS. COPIES OF
THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM AMERICAN STOCK TRANSFER & TRUST
COMPANY, THE SUBSCRIPTION AGENT.
ANY PERSON LOCATED IN THE UNITED KINGDOM WHO IS NOT EITHER (1) A PERSON WHOSE
ORDINARY BUSINESS IS TO BUY OR SELL SHARES OR DEBENTURES, WHETHER AS PRINCIPAL
OR AGENT, OR (2) AN EXISTING REGISTERED HOLDER OF TREX MEDICAL COMMON STOCK,
REPRESENTS, BY SIGNING BELOW, THAT ANY SHARES OF TREX MEDICAL COMMON STOCK
PURCHASED UPON THE EXERCISE OF RIGHTS ARE BEING PURCHASED WITH A VIEW TO HOLDING
SUCH SHARES AS AN INVESTMENT AND WITHOUT ANY INTENTION TO RESELL SUCH SHARES.
<PAGE>
IMPORTANT
RIGHTS HOLDER SIGN HERE
......................................................
......................................................
(Signature(s) of Holder(s))
Dated:............................................1996
(Must be signed by the Rights holder(s) exactly as name(s) appear(s) on the
certificate(s) representing shares of Common Stock of ThermoTrex Corporation or
Trex Medical Corporation as to which the Rights have been distributed. If
signature is by trustee(s), executor(s), administrator(s), guardian(s),
attorney(s) - in - fact, agent(s), officer(s) of a corporation or another acting
in a fiduciary or representative capacity, please provide the following
information. See instructions.)
Names(s).......................................................................
...............................................................................
(Please Print)
Capacity.......................................................................
...............................................................................
Address........................................................................
...............................................................................
(Including Zip Code)
Area Code and
Telephone Number...............................................................
(Home)
...............................................................................
(Business)
Tax Identification or
Social Security No.............................................................
(Complete Substitute Form W - 9)
2
<PAGE>
Draft 5/6/96
------------
[TREX MEDICAL LETTERHEAD]
May ____, 1996
Dear Shareholder:
Trex Medical Corporation is distributing to its shareholders subscription
rights (the "Rights") to purchase shares of Trex Medical Common Stock for a
price of $16.00 per share (the "Subscription Price"), subject to the refund of
the amount, if any, by which $16.00 exceeds the initial public offering price of
the Underwritten Public Offering (as defined below). The Rights are generally
non-transferable, except that ThermoTrex Corporation may distribute the Rights
it receives to its shareholders. ThermoTrex will not exercise the Rights it
receives from Trex Medical, but is instead distributing the rights to its
shareholders.
Concurrently with this Rights Offering, Trex Medical is proceeding with an
underwritten public offering (the "Underwritten Public Offering") of 2,400,000
shares of its Common Stock. The closing of this Rights Offering is conditioned
upon the closing of the Underwritten Public Offering. In addition, if the
initial public offering price of the Underwritten Public Offering is more than
$16.00 per share, this rights offering will be terminated and all amounts
tendered by subscribers will be refunded.
This Rights Offering provides existing shareholders of both Trex Medical and
ThermoTrex with the opportunity to participate directly in the initial public
offering of Trex Medical. Upon completion of the Offerings, Trex Medical will
enjoy the benefits of being a publicly traded company.
Summary of Terms of the Rights Offering
The basic terms of the Rights Offering are as follows:
. Each Trex Medical shareholder will receive 0.10 Rights for each share of
Trex Medical Common Stock held on the Record Date (one Right for every 10
shares of Trex Medical Common Stock held).
. One whole Right is exercisable for one share of Trex Medical Common Stock
at a price of $16.00 per share subject to the refund of the amount, if
any, by which $16.00 exceeds the initial public offering price of the
Underwritten Public Offering.
. This Rights Offering is conditioned upon the closing of the Underwritten
Public Offering.
. This Rights Offering will be terminated and all amounts tendered by
subscribers will be refunded, if the initial public offering price of the
Underwritten Public Offering is more than $16.00 per share.
. Rights are exercisable from May ___, 1996 to June ___, 1996.
. There is no oversubscription privilege.
. The rights are not transferable except that ThermoTrex may distribute the
rights that it receives to its shareholders.
. THE RIGHTS MAY NOT BE EXERCISED AFTER 5:00 P.M., EASTERN TIME, ON
JUNE ___, 1996.
A more detailed description of the Rights Offering is contained in the
enclosed Prospectus.
<PAGE>
Enclosures
You will find enclosed a Prospectus describing the Rights Offering and, if you
are located in the United States, a Subscription Certificate representing Rights
to purchase Trex Medical Common Stock as well as related instructions. If you
are located anywhere outside the United States (except the United Kingdom), you
will find instead an International Holder Subscription Form and related
instructions. You should carefully review the Prospectus and, if applicable, the
other enclosed materials.
Exercise of Rights
If you are located in the United States, you should follow the enclosed
instructions as to the exercise of the Rights represented by the enclosed
Subscription Certificate. If you are located outside the United States (except
the United Kingdom), you should follow the enclosed instructions as to the
completion of the International Holder Subscription Form. If you are located in
the United Kingdom, you should contact NatWest Securities Limited at the
international address indicated below if you are interested in participating in
the Rights Offering.
Additional Information
You may obtain additional information concerning the Rights Offering from the
following sources:
United States International
NatWest Securities Limited NatWest Securities Limited
175 Water Street 135 Bishopsgate
New York, New York 10038 2nd Floor
telephone: (212) 602-5617 London, England EC2M 3UR
telecopier: (212) 602-5720 Attention: Mr. Melvyn Rowe
Attention: Ms. Tierney Bartell telephone: 011-44-71-375-8726
telecopier: 011-44-71-375-6580
Information is also available from the subscription agent:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
telephone; (718) 921-8200
telecopier: (718) 234-5001
Trex Medical is pleased to provide you with this opportunity to participate in
its initial public offering. We thank you for your support and look forward to
our continuing relationship.
Very truly yours,
Hal Kirshner
President and Chief Executive Officer
<PAGE>
Draft 5/6/96
------------
[THERMOTREX LETTERHEAD]
May ____, 1996
Dear Shareholder:
ThermoTrex is pleased to offer you the opportunity to participate in the
initial public offering of its majority-owned subsidiary, Trex Medical
Corporation, a worldwide leader in the design, manufacture and marketing of
mammography equipment and minimally invasive stereotactic needle biopsy systems
used for the detection of breast cancer, as well as a leading designer and
manufacturer of general radiography (X-Ray) equipment.
Trex Medical is distributing to its shareholders subscription rights (the
"Rights") to purchase shares of Trex Medical Common Stock for a price of $16.00
per share (the "Subscription Price"), subject to the refund of the amount, if
any, by which $16.00 exceeds the initial public offering price of the
Underwritten Public Offering (as defined below). The Rights are generally non-
transferable, except that ThermoTrex may distribute the Rights it receives to
its shareholders. ThermoTrex will not exercise the Rights it receives from Trex
Medical, but is instead distributing the rights to its shareholders in order to
provide them with an opportunity to participate directly the initial public
offering of Trex Medical.
Concurrently with this Rights Offering, Trex Medical is proceeding with an
underwritten public offering (the "Underwritten Public Offering") of 2,400,000
shares of its Common Stock. The closing of this Rights Offering is conditioned
upon the closing of the Underwritten Public Offering. In addition, if the
initial public offering price of the Underwritten Public Offering is more than
$16.00 per share, this rights offering will be terminated and all amounts
tendered by subscribers will be refunded.
Summary of Terms of the Rights Offering
The basic terms of the Rights Offering are as follows:
. Each Trex Medical shareholder will receive 0.10 Rights for each share of
ThermoTrex Common Stock held on the Record Date (one Right for every 10
shares of Trex Medical Common Stock held).
. One whole Right is exercisable for one share of Trex Medical Common Stock
at a price of $16.00 per share subject to the refund of the amount, if
any, by which $16.00 exceeds the initial public offering price of the
Underwritten Public Offering.
. This Rights Offering is conditioned upon the closing of the Underwritten
Public Offering.
. This Rights Offering will be terminated and all amounts tendered by
subscribers will be refunded, if the initial public offering price of the
Underwritten Public Offering is more than $16.00 per share.
. Rights are exercisable from May ___, 1996 to June ___, 1996.
. There is no oversubscription privilege.
. The rights are not transferable except that ThermoTrex may distribute the
rights that it receives to its shareholders.
. THE RIGHTS MAY NOT BE EXERCISED AFTER 5:00 P.M., EASTERN TIME, ON
JUNE ___, 1996.
A more detailed description of the Rights Offering is contained in the
enclosed Prospectus.
<PAGE>
Enclosures
You will find enclosed a Prospectus describing the Rights Offering and, if
your shares of ThermoTrex Common Stock are held in your name and you are located
in the United States, a Subscription Certificate representing Rights to purchase
Trex Medical Common Stock as well as related instructions. If you are located
anywhere outside the United States (except the United Kingdom), you will find
instead an International Holder Subscription Form and related instructions. You
should carefully review the Prospectus and, if applicable, the other enclosed
materials.
Exercise of Rights
If your shares of ThermoTrex Common Stock are held in your name and you are
located in the United States, you should follow the enclosed instructions as to
the exercise of the Rights represented by the enclosed Subscription Certificate.
If you are located outside the United States (except the United Kingdom), you
should follow the enclosed instructions as to the completion of the
International Holder Subscription Form. If your shares of ThermoTrex Common
Stock are held in your name and you are located in the United Kingdom, you
should contact NatWest Securities Limited at the international address indicated
below if you are interested in participating in the Rights Offering. If your
shares of ThermoTrex Common Stock are held in the name of a nominee such as a
broker, you should contact the nominee and provide instructions as to the
exercise of your Rights.
Additional Information
You may obtain additional information concerning the Rights Offering from the
following sources:
United States International
NatWest Securities Limited NatWest Securities Limited
175 Water Street 135 Bishopsgate
New York, New York 10038 2nd Floor
telephone: (212) 602-5617 London, England EC2M 3UR
telecopier: (212) 602-5720 Attention: Mr. Melvyn Rowe
Attention: Ms. Tierney Bartell telephone: 011-44-71-375-8726
telecopier: 011-44-71-375-6580
Information is also available from the subscription agent:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
telephone; (718) 921-8200
telecopier: (718) 234-5001
ThermoTrex is pleased to provide you with this opportunity to participate in
its initial public offering. We thank you for your support and look forward to
our continuing relationship.
Very truly yours,
Gary Weinstein
Chairman and Chief Executive Officer
