SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________________________
AMENDMENT NO. 1 ON FORM 10-K/A
TO FORM 10-K
(mark one)
X Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended
September 28, 1996
___ Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 1-11827
TREX MEDICAL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 06-1439626
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
36 Apple Ridge Road
Danbury, Connecticut 06810
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(203) 790-1188
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of Exchange on which registered
Common Stock, $.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to the filing requirements for at least
the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference into Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
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The aggregate market value of the voting stock held by
nonaffiliates of the Registrant as of November 22, 1996, was
approximately $91,459,000.
As of November 22, 1996, the Registrant had 28,592,630 shares of
Common Stock outstanding.
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Trex Medical Corporation Amendment No. 1
on Form 10K/A to Annual Report on Form 10-K
for the fiscal year ended September 28, 1996
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Fiscal 1996 Annual Report to
Shareholders for the year ended September 28, 1996, are
incorporated by reference into Parts I and II.
Part III, Item 10. Directors and Executive
Officers of the Registrant.
Part III, Item 11. Executive Compensation.
Part III, Item 12. Security Ownership of Certain
Beneficial Owners and Management.
Part III, Item 13. Certain Relationships and
Transactions.
The information required under these items, originally to be
incorporated by reference from the Registrant's definitive proxy
statement to be filed with the Commission pursuant to Regulation
14A, not later than 120 days after the close of the fiscal year,
is contained in the following Attachment A, which is included
herein and made a part of this Annual Report on Form 10-K.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Amendment No. 1 on Form 10-K/A to be signed by the
undersigned, duly authorized.
TREX MEDICAL CORPORATION
By: /s/ Sandra L. Lambert
Sandra L. Lambert
Secretary
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ATTACHMENT A
DIRECTORS AND DIRECTOR COMPENSATION
Set forth below are the names of the persons nominated as
Directors, their ages, their offices in the Corporation, if any,
their principal occupation or employment for the past five years,
the length of their tenure as Directors and the names of other
public companies in which such persons hold directorships.
Information regarding their beneficial ownership of the
Corporation's Common Stock and of the common stock of its parent
corporation, Thermo Electron, is reported under the caption
"Stock Ownership." All of the nominees are currently Directors of
the Corporation.
Elias P. Dr. Gyftopoulos, 69, has been a Director of the
Gyftopoulos Corporation since November 1995. Dr.
Gyftopoulos is Professor Emeritus of the
Massachusetts Institute of Technology, where he
was the Ford Professor of Mechanical
Engineering and of Nuclear Engineering at the
Massachusetts Institute of Technology for more
than 20 years until his retirement in September
1996. Dr. Gyftopoulos is also a director of
Thermo BioAnalysis Corporation, Thermo
Cardiosystems Inc., Thermo Electron,
ThermoLase Corporation, Thermo Remediation
Inc., ThermoSpectra Corporation and Thermo
Voltek Corp.
Robert C. Mr. Howard, 66, has been a Director of the
Howard Corporation since its inception in October
1995. Mr. Howard also served as the
Corporation's Chairman of the Board from 1988
to February 1996. Mr. Howard served as an
Executive Vice President of Thermo Electron
from 1986 until his retirement in January 1997.
He is also a Director of Thermedics Inc.,
Thermo Cardiosystems Inc., ThermoLase
Corporation, Thermo Power Corporation and
ThermoTrex Corporation.
Hal Kirshner Mr. Kirshner, 55, has been Chief Executive
Officer, President and a Director of the
Corporation since its inception in October
1995. Mr. Kirshner has been President of the
Lorad division of the Corporation since
February 1991. Prior to that time, he served
as chief operating officer and president of
Electrolux Water Systems, Inc.
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Earl R. Lewis Mr. Lewis, 52, has been a Director of the
Corporation since its inception in October
1995. Mr. Lewis has been a Vice President of
Thermo Electron since September 1996 and
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, a subsidiary of Thermo
Optek Corporation, for more than five years.
Mr. Lewis is also a Director of ThermoSpectra
Corporation.
James W. May Dr. May, 53, has been a Director of the
Jr. Corporation 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.
Hutham S. Ms. Olayan, 42, has been a Director of the
Olayan Corporation 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.
Anthony J. Mr. Pellegrino, 56, has been a Director of the
Pellegrino Company since its inception in October 1995.
Mr. Pellegrino has been a Senior Vice President
of ThermoTrex Corporation since July 1995 and
was chairman of LORAD Corporation, a
manufacturer of mammography equipment that was
acquired by ThermoTrex in November 1992, for
more than five years prior to that time. Mr.
Pellegrino is also a director of ThermoLase
Corporation and ThermoQuest Corporation.
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Firooz Rufeh Mr. Rufeh, 59, has been a Director of the
Corporation since its inception in October
1995. Mr. Rufeh served as the Chief Executive
Officer of ThermoTrex from 1988 to February
1996, and as the President of ThermoTrex from
1988 to February 1997. Mr. Rufeh also served
as a Vice President of Thermo Electron from
1986 until January 1997. Since January 1997,
Mr. Rufeh has been a consultant to Thermo
Electron. Mr. Rufeh is also a director of
ThermoLase Corporation and ThermoTrex
Corporation.
Kenneth Y. Tang Dr. Tang, 49, has been a Director of the
Corporation since June 1995. Dr. Tang has been
Senior Vice President of ThermoTrex Corporation
for more than five years. He is also a
director of ThermoLase Corporation.
Gary S. Mr. Weinstein, 39, has been a Director of the
Weinstein Corporation and its Chairman of the Board
since February 1996. He has also served as
Chief Executive Officer of ThermoTrex and as 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 from March 1995 to
February 1996. Prior to his appointment as a
Managing Director, 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 ThermoLase Corporation and
ThermoTrex Corporation.
Committees of the Board of Directors and Meetings
The Board of Directors has established an Audit Committee
and a Human Resources Committee, each consisting solely of
outside Directors. The present members of the Audit Committee
are Ms. Olayan (Chairman), Dr. Gyftopoulos and Dr. May. The Audit
Committee reviews the scope of the audit with the Corporation's
independent public accountants and meets with them for the
purpose of reviewing the results of the audit subsequent to its
completion. The present members of the Human Resources Committee
are Dr. Gyftopoulos (Chairman), Dr. May and Ms. Olayan. The
Human Resources Committee reviews the performance of senior
members of management, recommends executive compensation and
administers the Corporation's stock-based compensation plans.
The Corporation does not have a nominating committee of the Board
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of Directors. The Board of Directors met five times, the Audit
Committee met once and the Human Resources Committee met four
times during fiscal 1996. Each Director attended at least 75% of
all meetings of the Board of Directors and Committees on which he
or she served held during fiscal 1996, except Dr. May who
attended 60% of such meetings.
Compensation of Directors
Cash Compensation
Directors who are not employees of the Corporation, of
Thermo Electron or of 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
outside Directors' fees is made quarterly. Mr. Howard, Mr.
Lewis, Mr. Pellegrino, Mr. Rufeh, Dr. Tang and Mr. Weinstein are
all employees of Thermo Electron and do not receive any cash
compensation from the Corporation for their services as
Directors. Directors are also reimbursed for out-of-pocket
expenses incurred in attending meetings.
Deferred Compensation Plan for Directors
Under the Deferred Compensation Plan for Directors (the
"Deferred Compensation Plan"), a Director has the right to defer
receipt of his cash fees until he ceases to serve as a Director,
dies or retires from his principal occupation. In the event of a
change in control or proposed change in control of the
Corporation that is not approved by the Board of Directors,
deferred amounts become payable immediately. Either of the
following is deemed to be a change of control: (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. A
total of 25,000 shares of Common Stock have been reserved for
issuance under the Deferred Compensation Plan. As of September
28, 1996, deferred units equal to 24.88 shares of Common Stock
were accumulated under the Deferred Compensation Plan.
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Directors Stock Option Plan
The Corporation has adopted a directors stock option plan
(the "Directors 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 to purchase 1,000
shares annually to Directors.
Under the Plan, each eligible Director and each new outside
Director initially joining the Board of Directors in 1996 was
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 is 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 are presently exercisable, however, the shares
acquired upon exercise are subject to restrictions on transfer
and the right of the Corporation to repurchase such shares at the
exercise price in the event the Director ceases to serve as a
Director of the Corporation or another 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 Corporation, 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 Corporation, 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 Corporation 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
Corporation at the exercise price if the recipient ceased to
serve as a Director of the Corporation or any other Thermo
Electron company prior to the first anniversary of the date of
grant for any reason other than death.
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The exercise price for options granted under the Plan is
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 day
immediately preceding and including the date the option is
granted or, if the shares underlying the option were not so
traded, at the last price paid per share by independent investors
in an arms' length transaction with the Corporation 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. An aggregate of 200,000
shares of Common Stock has been reserved for issuance under the
Directors Plan.
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of
Common Stock, as well as the common stock of Thermo Electron and
ThermoTrex Corporation ("ThermoTrex") as of December 28, 1996,
with respect to (i) each person who was known by the Corporation
to own beneficially more than 5% of the outstanding shares of
Common Stock, (ii) each Director and nominee for Director, (iii)
each executive officer named in the summary compensation table
under the heading "Executive Compensation" and (iv) all Directors
and executive officers as a group.
While certain Directors and executive officers of the
Corporation are also Directors and executive officers of
ThermoTrex or its subsidiaries other than the Corporation, all
such persons disclaim beneficial ownership of the shares of
Common Stock owned by ThermoTrex.
<TABLE>
<CAPTION>
Trex Medical ThermoTrex Thermo Electron
Name (1) Corporation (2) Corporation (3) Corporation (4)
<S> <C> <C> <C>
Thermo Electron Corporation (5) 22,883,798 N/A N/A
Elias P. Gyftopoulos 40,000 4,500 71,700
Robert C. Howard 43,174 35,554 194,493
Hal Kirshner 285,000 93,321 117,824
Earl R. Lewis 40,500 420 131,914
James W. May Jr. 40,000 0 0
Hutham S. Olayan 45,024 4,500 23,787
Anthony J. Pellegrino 147,513 807,021 115,875
Firooz Rufeh 93,600 100,541 133,286
Kenneth Y. Tang 48,706 79,516 26,204
Gary S. Weinstein 315,000 110,000 160,412
All Directors and current 1,202,500 1,218,617 1,681,131
executive officers as a group
(14 persons)
(1) Except as reflected in the footnotes to this table, shares
of Common Stock of the Corporation and of the common stock of
Thermo Electron and ThermoTrex beneficially owned consist of
shares owned by the indicated person, and all share ownership
includes sole voting and investment power.
(2) Shares of the Common Stock beneficially owned by each
Director and executive officer and by all Directors and executive
officers as a group exclude 22,883,798 shares beneficially owned
by ThermoTrex, as to which shares each Director and executive
officer and all members of such group disclaim beneficial
ownership. Shares of the Common Stock beneficially owned by Dr.
Gyftopoulos, Mr. Howard, Mr. Kirshner, Mr. Lewis, Dr. May, Ms.
Olayan, Mr. Pellegrino, Mr. Rufeh, Dr. Tang, Mr. Weinstein and
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all Directors and executive officers as a group include 40,000,
40,000, 150,000, 40,000, 40,000, 40,000, 40,000, 40,000, 40,000,
300,000 and 851,000 shares, respectively, that such person or
group has the right to acquire within 60 days of December 28,
1996 through the exercise of stock options. Shares beneficially
owned by Ms. Olayan and all Directors and executive officers as a
group include 24 full shares, respectively, that had been
allocated through December 28, 1996, to their respective accounts
maintained under the Corporation's Deferred Compensation Plan for
Directors. Shares beneficially owned by Mr. Pellegrino include
1,041 shares held in a trust of which Mr. Pellegrino's spouse is
the trustee for the benefit of Mr. Pellegrino's minor child.
Shares beneficially owned by Mr. Rufeh include 53,600 shares
held by the Rufeh Family Trust of which Mr. Rufeh is the trustee.
Shares beneficially owned by Ms. Olayan do not include 228,500
shares owned by Crescent International Holdings Ltd. or 15,000
shares owned by Crescent Growth Fund Ltd., each a member of the
Olayan Group. Crescent International Holdings Ltd. and Crescent
Growth Fund Ltd. are indirectly controlled by Suliman S. Olayan,
Ms. Olayan's father. Ms. Olayan disclaims beneficial ownership
of the shares owned by Crescent International Holdings Ltd. and
Crescent Growth Fund Ltd. As of December 28, 1996, no Director
or executive officer beneficially owned more than 1.0% of the
Common Stock outstanding as of December 28, 1996, other than
Mr. Weinstein, who beneficially owned approximately 1.07% of
the Common Stock; all Directors and executive officers as a
group beneficially owned 4.0% of the Common Stock outstanding
as of such date.
(3) Shares of the common stock of ThermoTrex beneficially owned
by Dr. Gyftopoulos, Mr. Howard, Mr. Kirshner, Ms. Olayan, Mr.
Pellegrino, Mr. Rufeh, Dr. Tang, Mr. Weinstein and all
Directors and executive officers as a group include 4,500,
31,320, 73,000, 4,500, 134,500, 66,000, 63,318, 100,000 and
527,538 shares, respectively, that such person or group has the
right to acquire within 60 days of December 28, 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 for the benefit of Mr.
Pellegrino's minor child. Shares beneficially owned by Dr. Tang
include 2,025 shares held by Dr. Tang's daughter. As of
December 28, 1996, no Director or executive officer beneficially
owned more than 1.0% of the Common Stock outstanding as of
December 28, 1996, other than Mr. Pellegrino, who beneficially
owned approximately 4.1% of the Common Stock; all Directors and
executive officers as a group beneficially owned 65% of the
Common Stock outstanding as of such date.
(4) The shares of common stock of Thermo Electron shown in the
table reflect a three-for-two split of such stock effected in May
1996. Shares of the common stock of Thermo Electron beneficially
owned by Dr. Gyftopoulos, Mr. Howard, Mr. Kirshner, Mr. Lewis,
Ms. Olayan, Mr. Pellegrino, Mr. Rufeh, Dr. Tang, Mr. Weinstein
and all Directors and executive officers as a group include
9,375, 47,361, 116,025, 126,937, 9,375, 115,875, 90,560, 23,850,
160,075 and 1,231,192 shares, respectively, that such person or
group has the right to acquire within 60 days of December 28,
1996 through the exercise of stock options. Shares beneficially
owned by Mr. Howard and all Directors and executive officers as
a group include 3,040 and 6,298 full shares, respectively,
allocated to their respective accounts maintained pursuant to
Thermo Electron's Employee Stock Ownership Plan. Shares
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beneficially owned by Ms. Olayan and all Directors and executive
officers as a group include 14,412 full shares, allocated through
September 28, 1996 to their respective accounts maintained
pursuant to Thermo Electron's deferred compensation plan for
directors. Shares beneficially owned by Mr. Olayan do not include
4,400,000 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.
As of December 28, 1996, no Director or executive
officer beneficially owned more than 1% of the outstanding Thermo
Electron common stock; all directors and executive officers as a
group beneficially owned approximately 1.1% of the Thermo
Electron common stock outstanding as of December 28, 1996.
(5) ThermoTrex beneficially owned 79.2% of the Common Stock
outstanding as of December 28, 1996. ThermoTrex's address is
10455 Pacific Center Court, San Diego, California 92121. As of
December 28, 1996, ThermoTrex had the power to elect all of the
members of the Corporation's Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporation's Directors and executive officers, and
beneficial owners of more than 10% of the Common Stock, such as
Thermo Electron, to file with the Securities and Exchange
commission initial reports of ownership and periodic reports of
changes in ownership of the Corporation's securities. Based upon
a review of such filings, all Section 16(a) filing requirements
applicable to such persons were complied with during fiscal 1996,
except in the following instances. Due to clerical errors, the
following purchases of Common Stock in the Corporation's initial
public offering on July 2, 1996 by the following Directors of the
Corporation were not reported until November 11, 1996: Mr. Hal
Kirshner - 25,000 shares; Mr. Earl R. Lewis - 500 shares; Ms.
Hutham S. Olayan - 5,000 shares; Mr. Firooz Rufeh - 34,000
shares; Dr. Kenneth Y. Tang - 6,000 shares; Mr. Gary S. Weinstein
- 15,000 shares. In addition, ThermoTrex Corporation and Thermo
Electron Corporation the parent companies of the Corporation
filed their Forms 4 for July 1996, reporting the conversion of a
note held by ThermoTrex into 2,629,346 shares of the Corporation,
eight days late, and their Forms 4 for September 1996, reporting
the lapse of options to purchase 2,000 shares granted by
ThermoTrex to an employee, 28 days late.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation for services to
the Corporation in all capacities awarded to, earned by or paid
to the Corporation's chief executive officer (the "named
executive officers") for the last full fiscal year from October
1, 1995 to September 28, 1996 ("fiscal 1996"), 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 the 52 or 53 week period ending on the Saturday closest to
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September 30, and for the preceding full fiscal year from January
2, 1994 to December 31, 1994 ("fiscal 1994"). No other executive
officer of the Corporation met the definition of "highly
compensated" within the meaning of the Securities and Exchange
Commission's executive compensation disclosure rules during these
periods.
The Corporation is required to appoint certain executive
officers and full-time employees of Thermo Electron as executive
officers of the Corporation, 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 Corporation's
affairs is provided to the Corporation under the Corporate
Services Agreement between the Corporation and Thermo Electron.
Accordingly, the compensation for these individuals is not
reported in the following table.
</TABLE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Securities
Underlying All Other
Fiscal Annual Compensation Options (No. Compensation
Name and Year of Shares and (4)
Principal Company) (3)
Position Salary Bonus
<S> <C> <C> <C> <C> <C><C> <C> <C> <C>
Hal Kirshner 1996 $192,500 $200,000 (2) 150,000 (TXM) $9,958(5)
(5)
Chief 150 (TMO)
Executive
Officer and 2,000 (TBA)
President 2,000 (TFG)
2,000 (TLT)
6,000 (TOC)
6,000 (TMQ)
2,000 (TSR)
1995 $150,000 (1) $200,000 -- $7,005
1994 $200,000 $180,000 22,500 (TMO) $6,750
</TABLE>
(1) Annual compensation for executive officers is reviewed and
determined on a calendar year basis, even though the
Corporation's fiscal year ends in September. The Corporation
changed its fiscal year-end to September from December in 1995,
and as a consequence, the salary data for fiscal 1995 reflects
salary paid during the nine-month period from January 1, 1995 to
September 30, 1995. Salary data for subsequent fiscal years
represents salary paid during the Corporation's full fiscal year.
(2) The bonus amount presented for fiscal 1995 represents the
bonus paid for performance during calendar 1995. Bonuses have
not yet been determined for calendar 1996; therefore, the bonus
amounts shown for fiscal 1996 are estimates.
(3) 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
and certain of its other subsidiaries as part of Thermo
Electron's stock option program. Options have been granted
during the period covered by the table to Mr. Kirshner in the
following Thermo Electron companies: Thermo Electron (designated
in the table as TMO), Thermo BioAnalysis Corporation (designated
in the table as TBA), Thermo Fibergen Inc. (designated in the
table as TFG), ThermoLyte Corporation (designated in the table
as TLT), Thermo Optek Corporation (designated in the table as
TOC), ThermoQuest Corporation (designated in the table as TMQ)
and Thermo Sentron Inc. (designated in the table as TSR).
Information with respect to options to purchase the common stock
of Thermo Electron relect a three-for-two split effected in May
1996.
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(4) Represents the amount of matching contributions made by the
individual's employer on behalf of executive officers
participating in the Thermo Electron 401(k) plan.
(5) In addition to the matching contribution referred to in
footnote (4), such amount includes $4,614, representing the
market value of 115 shares of Thermo Electron common stock
received by Mr. Kirshner in May 1996 in recognition of his
managerial achievements at Thermo Electron's Annual Management
Conference.
STOCK OPTIONS GRANTED DURING FISCAL 1996
The following table sets forth information concerning
individual grants of stock options by the Corporation and other
Thermo Electron companies made during fiscal 1996 to the named
executive officers. It has not been the Corporation's policy in
the past to grant stock appreciation rights, and no such rights
were granted during fiscal 1996.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
Option Grants In Fiscal 1996
Percent of
Number of Total Exercise Potential Realizable
Securities Options Price Value at Assumed
Underlying Granted to Per Expiration Annual Rates of
Name Options Employees Share Date Stock Price
----
Granted (1) in Fiscal Appreciation for
Year Option Term
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5% 10%
Hal 150,000(TXM) 8.5% $11.00 3/26/08 $1,312,500 $3,528,000
Kirshner
150 (TMO) 0.1% (3) $42.79 5/22/99 $1,011 $2,124
2,000 (TBA) 0.2% (3) $10.00 3/11/08 $15,920 $42,760
2,000 (TFG) 0.4% (3) $10.00 9/12/08 $15,920 $42,760
2,000 (TLT) 0.6% (3) $10.00 3/11/08 $15,920 $42,760
6,000 (TOC) 0.2% (3) $12.00 4/9/08 $57,300 $153,960
6,000 (TMQ) 0.2% (3) $13.00 3/11/08 $62,100 $166,800
</TABLE>
(1) All of the options granted during the fiscal year are
immediately exercisable, except options to purchase shares of
ThermoLyte Corporation (designated in the table as TLT), which
are not exercisable until the earlier of (i) 90 days after the
effective date of the registration of that company's common stock
under Section 12 of the Securities Exchange Act of 1934 (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 Corporation or another
Thermo Electron company. As to the options to purchase shares of
the Corporation granted to Mr. Kirshner, the repurchase rights
are deemed to lapse 20% per year commencing on the fifth
anniversary of the grant date. For other 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 Corporation or another Thermo
Electron Company. For companies that are not publicly traded,
the repurchase rights lapse in their entirety on the ninth
anniversary of the grant date. Certain options granted as part
of Thermo Electron's stock option program have three year terms,
and the repurchase rights lapse in their entirety on the second
anniversary of the grant date. The granting corporation may
exercise its repurchase rights within six months after the
termination of the optionee's employment. The granting
corporation may permit the holders of such options to exercise
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options and to 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 of the granting corporation, the optionee's
continued employment through the option period and the date on
which the options are exercised.
(3) These options were granted as a part of Thermo Electron's
stock option program, and accordingly are reported as a
percentage of total options granted to employees of Thermo
Electron and its public subsidiaries.
Stock Options Exercised During Fiscal 1996 And Fiscal Year-End
Values
The following table reports certain information regarding
stock option exercises during fiscal 1996 and outstanding stock
options of the Thermo Electron companies held at the end of
fiscal 1996 by the named executive officers. No stock
appreciation rights were exercised or were outstanding during
fiscal 1996.
Aggregated Option Exercises In Fiscal 1996 And Fiscal 1996
Year-End Option Values
<TABLE>
<CAPTION>
Aggregated Option Exercises In Fiscal 1996 And Fiscal 1996 Year-End Option Values
No. of
Shares Unexercised Value of
Acquired Options at Unexercised
on Value Fiscal Year-end In-the-Money
Name Company Exercise Realized (Exercisable/ Options
Unexercisable)
(1)
<S> <C> <C> <C> <C> <C> <C>
Hal Trex Medical -- -- 150,000/0 $1,387,500 /--
Kirshner
ThermoTrex 76,500 $2,079,270 73,000/0 $1,809,155 /--
ThermoLase -- -- 36,400/0 $787,150 /--
Thermo -- -- 116,025/0 (2) $2,953,132 /--
Electron
Thermo -- -- 2,000/0 $7,750 /--
BioAnalysis
Thermo -- -- 2,000/0 $5,250 /--
Fibergen
ThermoLyte -- -- 0/2,000 -- /$0(3)
Thermo Optek -- -- 6,000/0 $18,000 /--
ThermoQuest -- -- 6,000/0 $3,000 /--
Thermo Sentron -- -- 2,000/0 $0 /--
</TABLE>
(1) All of the options reported outstanding at the end of the
fiscal year are immediately exercisable as of fiscal year-end,
except options to purchase shares of ThermoLyte, which are not
exercisable until the earlier of (i) 90 days after the effective
date of the registration of that 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. As to the options to purchase shares of
the Corporation granted to Mr. Kirshner, the repurchase rights
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<PAGE>
are deemed to lapse 20% per year commencing on the fifth
anniversary of the grant date. For other 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 Corporation or another Thermo
Electron company. For companies that are not publicly traded,
the repurchase rights lapse in their entirety on the ninth
anniversary of the grant date. Certain options granted as part
of Thermo Electron's stock option program have three year terms,
and the repurchase rights lapse in their entirety on the second
anniversary of the grant date.
(2) Options to purchase 22,500 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.
(3) No public market existed for the shares as of December 28,
1996. Accordingly, no value in excess of the exercise price has
been attributed to these options.
Employment Agreements
In connection with the acquisition of the LORAD Corporation
("LORAD") in November 1992, the Corporation 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.
RELATIONSHIP WITH AFFILIATES
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 several privately and publicly held majority-owned
subsidiaries, including the Corporation which was created by
ThermoTrex. From time to time, Thermo Electron and its
subsidiaries will create other majority-owned subsidiaries as
part of its spinout strategy. (The Corporation and the other
Thermo Electron subsidiaries are referred to hereinafter as the
"Thermo Subsidiaries." )
Thermo Electron and the Thermo Subsidiaries, including the
Corporation, recognize that the benefits and support that derive
from their affiliation are essential elements of their individual
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<PAGE>
performance. Accordingly, Thermo Electron and each of the Thermo
Subsidiaries, including the Corporation, 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.
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 Corporation, 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
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<PAGE>
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.
As provided in the Charter, Thermo Electron and the
Corporation 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 Corporation. In calendar 1994 and calendar
1995, Thermo Electron assessed the Corporation an annual fee for
these services equal to 1.25% and 1.20%, respectively, of the
Corporation's total revenues. Effective January 1, 1996, the fee
was reduced to 1.0% of the Corporation's total revenues. The fee
may be changed by mutual agreement of the Corporation and Thermo
Electron. During fiscal 1996, Thermo Electron assessed the
Corporation $1,567,000 in fees under the Services Agreement.
Management believes that the charges under the Services Agreement
are representative of the expenses the Corporation 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 Corporation based upon costs
attributable to the Corporation. The Services Agreement
automatically renews for successive one-year terms, unless
canceled by the Corporation upon 30 days' prior notice. In
addition, the Services Agreement terminates automatically in the
event the Corporation 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 Corporation will be
required to pay a termination fee equal to the fee that was paid
by the Corporation 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 Corporation or as
required in order to meet the Corporation's obligations under
Thermo Electron's policies and procedures. Thermo Electron will
charge the Corporation a fee equal to the market rate for
comparable services if such services are provided to the
Corporation following termination.
From time to time, the Corporation may transact business
with other companies in the Thermo Group. In fiscal 1996, such
transactions included the following.
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<PAGE>
In October 1995, ThermoTrex granted to the Corporation 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 Corporation 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 Corporation a fully-paid,
exclusive, worldwide, perpetual license to use and sell the
digital imaging technology in these additional fields. The
license agreement provides that ThermoTrex will manufacture
products based on the digital imaging technology for the
Corporation in the applicable fields. ThermoTrex will sell the
products to the Corporation at ThermoTrex's cost until the
Corporation has received an amount of Net Profit (as defined
below) from the resale of such products equal to amounts paid by
the Corporation 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 Corporation,
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 Corporation receives upon
resale of such products and the aggregate costs of the
Corporation and ThermoTrex relating to such sales. As of
September 28, 1996, the Corporation had paid approximately
$1,800,000 to ThermoTrex under this arrangement.
The Corporation has an arrangement with the Tecomet division
of Thermo Electron for the manufacture of the Corporation's
proprietary HTC grid. Under this arrangement Tecomet manufactures
the grid for the Corporation pursuant to written purchase orders.
The Corporation owns the intellectual property rights to the
grid. During fiscal 1996, the Corporation purchased 331 grids for
an aggregate purchase price of $397,000 under this arrangement.
In addition, the Corporation paid Tecomet $250,000 during fiscal
1996 for research and development provided by Tecomet in
connection with this project.
Under an arrangement with ThermoLase Corporation, a
majority-owned subsidiary of ThermoTrex, the Corporation
manufactures the laser used in ThermoLase Corporation's
hair-removal process. The Corporation manufactures these lasers
for ThermoLase pursuant to written purchase orders. During fiscal
1996, the Corporation sold 143 laser systems to ThermoLase at
various prices for an aggregate of $8,549,000 under this
arrangement. As of September 28, 1996, the Corporation had
committed to deliver 132 additional lasers to ThermoLase under
this arrangement for an aggregate of approximately $6,400,000.
Under an arrangement with Thermedics Detection Inc., a
subsidiary of Thermedics Inc., a majority-owned subsidiary of
Thermo Electron, the Corporation manufactures an X- ray source
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<PAGE>
that is used as a component to a fill-measuring device produced
by Thermedics Detection. The Corporation manufactures these X-ray
sources for Thermedics Detection pursuant to written purchase
orders. During fiscal 1996, Thermedics Detection purchased 100
units from the Corporation for an aggregate purchase price of
$361,000 under this arrangement.
On October 2, 1995, in exchange for all of the outstanding
shares of capital stock of Bennett X-Ray Corporation, the
Corporation issued to ThermoTrex a $42,000,000 principal amount
4.2% subordinated convertible note due 2000 (the "Convertible
Note"), convertible into shares of the Corporation's Common Stock
at a conversion price of $11.79 per share. In fiscal 1996,
ThermoTrex converted $34,000,000 principal amount of the
Convertible Note into 2,883,798 shares of Common Stock.
In November 1995, Mr. Pellegrino and Mr. Rufeh, Directors of
the Corporation, and Mr. Kirshner, Director and executive officer
of the Corporation, purchased from the Corporation 20,000, 19,600
and 100,000, shares of Common Stock of the Corporation
respectively, for an aggregate purchase price of $205,000,
$200,900 and $1,025,000, respectively. In addition, in November
1995 and January 1996, Crescent International Holdings Ltd.
purchased from the Corporation an aggregate of 200,000 shares of
the Common Stock of the Corporation for an aggregate purchase
price of $2,100,000. Crescent International Holdings Ltd. is
indirectly controlled by Suliman S. Olayan, the father of Hutham
S. Olayan, a Director of the Corporation. Ms. Olayan disclaims
beneficial ownership of the shares owned by Crescent
International Holdings Ltd. All of such purchases were made in
private placements of 1,862,000 shares of the Corporation's
Common Stock in November 1995 and 100,000 shares of the
Corporation's Common Stock in January 1996 at per share prices of
$10.25 and $10.75, respectively.
As of September 28, 1996, $32,696,000 of the Corporation's
cash equivalents were invested pursuant to a repurchase agreement
with Thermo Electron. Under this agreement, the Corporation 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 Corporation's funds subject to the repurchase agreement are
readily convertible into cash by the Corporation. The repurchase
agreement earns a rate based on the 90-day Commercial Paper
Composite Rate plus 25 basis points, set at the beginning of each
quarter.
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Stock Holding Assistance Plan
In 1996, the Corporation adopted a stock holding policy
which requires its executive officers to acquire and hold a
minimum number of shares of Common Stock. In order to assist the
executive officers in complying with the policy, the Corporation
also adopted a Stock Holding Assistance Plan under which it may
make interest-free loans to certain key employees, including its
executive officers, to enable such employees to purchase the
Common Stock in the open market. No such loans are currently
outstanding under the plan.
