<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________________________
AMENDMENT NO. 2 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. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of January 30, 1997, was approximately $82,732,777.
As of January 30, 1997, the Registrant had 28,892,630 shares of Common Stock
outstanding.
<PAGE>
Trex Medical Corporation Amendment No. 2
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.
--------------------------------------
Items 10, 11, 12 and 13 of Part III of the Registrant's Annual Report on
Form 10-K for the fiscal year ended September 28, 1996 are hereby amended and
restated in their entirety as 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. 2 on
Form 10-K/A to be signed by the undersigned, duly authorized.
TREX MEDICAL CORPORATION
By: /s/ Jonathan W. Painter
------------------------
Jonathan W. Painter
Treasurer
<PAGE>
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. GYFTOPOULOS Dr. Gyftopoulos, 69, has been a Director of the
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 for
more than 20 years. 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. HOWARD Mr. Howard, 66, has been a Director of the 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.
- --------------------------------------------------------------------------------
EARL R. LEWIS Mr. Lewis, 53, 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., a majority
owned subsidiary of Thermo Electron that develops,
manufactures and markets analytical instruments, 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, a majority owned subsidiary of
Thermo Instrument Systems Inc., 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 JR. Dr. May, 53, has been a Director of the 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.
- --------------------------------------------------------------------------------
A-1
<PAGE>
- --------------------------------------------------------------------------------
HUTHAM S. OLAYAN Ms. Olayan, 42, has been a Director of the 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. In addition, Ms. Olayan 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. PELLEGRINO Mr. Pellegrino, 56, has been a Director of the
Corporation 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.
- --------------------------------------------------------------------------------
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
February 1997. Beginning February 15, 1997, Mr. Rufeh
will be 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. WEINSTEIN Mr. Weinstein, 39, has been a Director of the
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 from March 1995 until
leaving the firm as Managing Director, head of Global
Syndicate and Equity Capital Markets. Mr. Weinstein
joined Lehman Brothers in 1988 and served in various
positions, 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 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.
A-2
<PAGE>
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. Lewis, Mr. Pellegrino, 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 December 28, 1996, deferred units equal to 198.73
shares of Common Stock were accumulated under the Deferred Compensation Plan.
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
A-3
<PAGE>
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.
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 POLICIES FOR DIRECTORS
During fiscal 1996, the Human Resources Committee of the Board of Directors
(the "Committee") established a stock holding policy for Directors. The stock
holding policy requires each Director to hold a minimum of 1,000 shares of
Common Stock. Directors are requested to achieve this ownership level by the
1998 Annual Meeting of Stockholders. Directors who are also executive officers
of the Corporation are required to comply with a separate stock holding policy
established by the Committee in fiscal 1996. The stock holding policy specifies
an appropriate level of ownership of the Corporation's Common Stock as a
multiple of the officer's compensation. For the chief executive officer, the
multiple is one times his base salary and reference bonus for the calendar year.
For all other executive officers, the multiple is one times the officer's base
salary. The Committee deemed it appropriate to permit officers to achieve these
ownership levels over a three-year period.
In addition, the Committee adopted a policy requiring Directors to hold a
certain number of shares of the Corporation's Common mon Stock acquired upon the
exercise of stock options. Under this policy, Directors are required to hold
shares of Common Stock equal to one-half of their net option exercises over a
period of five years. The net option exercise is determined by calculating the
number of shares acquired upon exercise of a stock option, after deducting the
number of shares that could have been traded to exercise the option and the
number of shares that could have been surrendered to satisfy tax withholding
obligations attributable to the exercise of the option. This policy is also
applicable to executive officers. Under this policy, the executive officers are
required to hold shares of Common Stock equal to one-half of their net option
exercises over a period of five years. The net option exercise is determined by
calculating the number of shares acquired upon exercise of a stock option, after
deducting the number of shares that could have been traded to exercise the
option and the number of shares that could have been surrendered to satisfy tax
withholding obligations attributable to the exercise of the option.
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.
A-4
<PAGE>
<TABLE>
<CAPTION>
TREX MEDICAL THERMOTREX THERMO ELECTRON
NAME (1) CORPORATION (2) CORPORATION (3) CORPORATION (4)
-------- --------------- --------------- ---------------
<S> <C> <C> <C>
ThermoTrex 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........................... 45,198 4,500 23,995
Anthony J. Pellegrino...................... 147,513 807,021 115,875
Firooz Rufeh............................... 93,600 100,541 133,286
Kenneth Y. Tang............................ 48,706 79,516 26,033
Gary S. Weinstein.......................... 315,000 110,000 160,412
All Directors and current executive
officers as a group (14 persons).......... 1,202,890 1,291,011 1,682,349
</TABLE>
(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 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 198 full shares, respectively, that
had been allocated through December 28, 1996, to Ms. Olayan's account
maintained under the Corporation's Deferred Compensation Plan for
Directors. Shares beneficially owned by Mr. Pellegrino include 1,041 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
4.04% 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
A-5
<PAGE>
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 6.5% 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 distributed in June 1996 in the form of a
50% stock dividend. 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, of which the trustees, who have investment power over
its assets, were, as of December 28, 1996, executive officers of Thermo
Electron. Shares beneficially owned by Ms. Olayan and all Directors and
executive officers as a group include 14,620 full shares, allocated through
December 28, 1996 to Ms. Olayan's account maintained pursuant to Thermo
Electron's deferred compensation plan for directors. Shares beneficially
owned by Ms. 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.
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 owned by ThermoTrex. Thermo Electron disclaims beneficial
ownership of these shares.
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. The following Directors of the Corporation each had one late Form 4,
reporting one transaction each: Mr. Hal Kirshner, Mr. Earl R. Lewis, Ms. Hutham
S. Olayan, Mr. Firooz Rufeh, Dr. Kenneth Y. Tang and Mr. Gary S. Weinstein. In
addition, ThermoTrex Corporation and Thermo Electron Corporation, the parent
companies of the Corporation, each had two late Forms 4, reporting two
transactions.
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 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
A-6
<PAGE>
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.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM
COMPENSATION
------------
SECURITIES
UNDERLYING
ANNUAL COMPENSATION OPTIONS (NO. OF
FISCAL ------------------- SHARES AND ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPANY) (3) COMPENSATION (4)
- --------------------------- ---- ----- ----- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Hal Kirshner (5)........... 1996 $192,500 $200,000 (2) 150,000 (TXM) $9,958 (5)
Chief Executive Officer 150 (TMO)
and President 2,000 (TBA)
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 reflect a three-for-two split distributed in June 1996 in the form
of a 50% stock dividend.
A-7
<PAGE>
(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 at Thermo
Electron's Annual Management Conference in recognition of his managerial
achievements.
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>
- --------------------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
PERCENT OF ASSUMED ANNUAL RATES OF
TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
NUMBER OF SECURITIES GRANTED TO EXERCISE OPTION TERM
UNDERLYING OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------
NAME GRANTED (1) FISCAL YEAR SHARE DATE 5% 10%
---- ------- ----------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Hal Kirshner...... 150,000 (TXM) 16.9% $11.00 3/26/08 $1,312,500 $3,528,000
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
2,000 (TSR) 0.4% (3) $14.00 3/11/08 $ 22,280 $ 59,880
- -------------------------------------------------------------------------------------------------------------------------------
</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 sixth
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 options and
to satisfy tax withholding obligations by surrendering shares equal in fair
market value to the exercise price or withholding obligation.
A-8
<PAGE>
(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>
- -----------------------------------------------------------------------------------------------------------------------
NO. OF UNEXERCISED
OPTIONS AT FISCAL VALUE OF
SHARES YEAR-END UNEXERCISED
ACQUIRED ON VALUE (EXERCISABLE/ IN-THE-MONEY
NAME COMPANY EXERCISE REALIZED UNEXERCISABLE) (1) OPTIONS
---- ------- -------- -------- ------------------ -------
<S> <C> <C> <C> <C> <C>
Hal Kirshner........ Trex Medical -- -- 150,000 /0 $1,387,500 /--
ThermoTrex 76,500 $2,079,270 73,000 /0 $1,809,155 /--
ThermoLase -- -- 36,400 /0 $ 787,150 /--
Thermo Electron -- -- 116,025 /0 (2) $2,953,132 /--
Thermo BioAnalysis -- -- 2,000 /0 $ 7,750 /--
Thermo Fibergen -- -- 2000 /0 $ 5,250 /--
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) The shares of common stock of Thermo Electron shown in the table have been
adjusted to reflect a three-for-two stock split distributed in June 1996 in
the form of a 50% stock dividend. 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 are deemed to lapse 20% per
year commencing on the sixth 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
A-9
<PAGE>
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. This agreement expired on December
31, 1995.
A-10
<PAGE>
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 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
A-11
<PAGE>
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.
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.
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
A-12
<PAGE>
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 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.
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.
A-13
