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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TREX MEDICAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
TREX MEDICAL CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
TREX MEDICAL CORPORATION
36 Apple Ridge Road, Danbury, Connecticut 06810
January 21, 1998
Dear Stockholder:
The enclosed Notice calls the 1998 Annual Meeting of the Stockholders of
Trex Medical Corporation. I respectfully request all Stockholders to attend this
meeting, if possible.
Our Annual Report for the fiscal year ended September 27, 1997, is
enclosed. I hope you will read it carefully. Feel free to forward any questions
you may have if you are unable to be present at the meeting.
Enclosed with this letter is a proxy authorizing three officers of the
Corporation to vote your shares for you if you do not attend the meeting.
Whether or not you are able to attend the meeting, I urge you to complete your
proxy and return it to our transfer agent, American Stock Transfer and Trust
Company, in the enclosed addressed, postage-paid envelope, as a quorum of the
Stockholders must be present at the meeting, either in person or by proxy.
I would appreciate your immediate attention to the mailing of this proxy.
Yours very truly,
HAL KIRSHNER
President and Chief Executive Officer
<PAGE>
TREX MEDICAL CORPORATION
36 Apple Ridge Road, Danbury, Connecticut 06810
January 21, 1998
To the Holders of the Common Stock of
TREX MEDICAL CORPORATION
NOTICE OF ANNUAL MEETING
The 1998 Annual Meeting of the Stockholders of Trex Medical Corporation
(the "Corporation") will be held on Friday, February 27, 1998 at 2:30 p.m. at
the executive offices of Thermo Electron Corporation, 81 Wyman Street, Waltham,
Massachusetts 02154. The purpose of the meeting is to consider and take action
upon the following matters:
1. Election of seven directors.
2. Such other business as may properly be brought before the meeting and
any adjournment thereof.
The transfer books of the Corporation will not be closed prior to the
meeting, but, pursuant to appropriate action by the board of directors, the
record date for the determination of the Stockholders entitled to receive notice
of and to vote at the meeting is January 14, 1998.
The By-laws require that the holders of a majority of the stock issued and
outstanding and entitled to vote be present or represented by proxy at the
meeting in order to constitute a quorum for the transaction of business. It is
important that your stock be represented at the meeting regardless of the number
of shares you may hold. Whether or not you are able to be present in person,
please sign and return promptly the enclosed proxy in the accompanying envelope,
which requires no postage if mailed in the United States.
This notice, the proxy and proxy statement enclosed herewith are sent to
you by order of the board of directors.
SANDRA L. LAMBERT
Secretary
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the board of directors of Trex Medical
Corporation (the "Corporation") for use at the 1997 Annual Meeting of the
Stockholders (the "Meeting") to be held on Friday, February 27, 1998 at 2:30
p.m. at the executive offices of Thermo Electron Corporation, 81 Wyman Street,
Waltham, Massachusetts 02154, and any adjournment thereof. The mailing address
of the executive offices of the Corporation is 36 Apple Ridge Road, Danbury,
Connecticut 06810. This proxy statement and the enclosed proxy were first
furnished to Stockholders of the Corporation on or about January 23, 1998.
VOTING PROCEDURES
The board of directors intends to present to the Meeting the election of
seven directors, constituting the entire board of directors.
The representation in person or by proxy of a majority of the outstanding
shares of Common Stock of the Corporation, $.01 par value ("Common Stock"),
entitled to vote at the Meeting is necessary to provide a quorum for the
transaction of business at the Meeting. Shares can only be voted if the
Stockholder is present in person or is represented by returning a properly
signed proxy. Each Stockholder's vote is very important. Whether or not you plan
to attend the Meeting in person, please sign and promptly return the enclosed
proxy card, which requires no postage if mailed in the United States. All signed
and returned proxies will be counted towards establishing a quorum for the
Meeting, regardless of how the shares are voted.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted for the management nominees for directors,
and as the individuals named as proxy holders on the proxy deem advisable on all
other matters as may properly come before the Meeting.
In order to be elected a director, a nominee must receive the affirmative
vote of a majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote on the election. Withholding authority
to vote for a nominee for director will be treated as shares present and
entitled to vote and, for purposes of determining the outcome of the vote, will
have the same effect as a vote against the nominee. Broker "non-votes" will not
be treated as shares present and entitled to vote on a voting matter and will
have no effect on the outcome of the vote. A broker "non-vote" occurs when a
nominee holding shares for a beneficial holder does not have discretionary
voting power and does not receive voting instructions from the beneficial owner.
A Stockholder who returns a proxy may revoke it at any time before the
Stockholder's shares are voted at the Meeting by written notice to the secretary
of the Corporation received prior to the Meeting, by executing and returning a
later-dated proxy or by voting by ballot at the Meeting.
The outstanding stock of the Corporation entitled to vote (excluding shares
held in treasury by the Corporation) as of January 14, 1998, consisted of
28,894,630 shares of Common Stock. Only Stockholders of record at the close of
business on January 14, 1998, are entitled to vote at the Meeting. Each share is
entitled to one vote.
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--PROPOSAL 1--
ELECTION OF DIRECTORS
Seven directors are to be elected at the Meeting, each to hold office until
his successor is chosen and qualified or until his earlier resignation, death or
removal.
Nominees For Directors
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, ThermoTrex Corporation
("ThermoTrex"), a provider of medical products, personal-care products and
services, and advanced technology research, and ThermoTrex's parent corporation,
Thermo Electron Corporation ("Thermo Electron"), a provider of diversified
products and services for the biomedical, instrument, and environmental markets,
is reported under the caption "Stock Ownership." All of the nominees are
currently directors of the Corporation.
<TABLE>
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<S> <C>
Elias P. Gyftopoulos Dr. Gyftopoulos, 70, 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 until his retirement in 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.
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Hal Kirshner Mr. Kirshner, 56, has been chief executive officer,
president and a director of the Corporation since its
inception in October 1995. Mr. Kirshner was also
president of the LORAD division of the Corporation
from 1991 until 1997.
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John T. Keiser Mr. Keiser, 62, has been a director of the
Corporation since June 1997. Mr. Keiser has been a
vice president of Thermo Electron since April 1997.
Since 1994, Mr. Keiser has been a senior vice
president of Thermedics Inc. and the president of the
Thermo Biomedical division of Thermo Electron, which
manufactures a variety of medical equipment and
instruments. Mr. Keiser was president of the Eberline
Instrument division of Thermo Instrument Systems
Inc., a majority-owned subsidiary of Thermo Electron,
from 1985 to July 1994. The Eberline Instrument
division manufactures radiation detection and
counting instrumentation and radiation monitoring
systems. Mr. Keiser is also a director of Metrika
Systems Corporation, Thermedics Inc. and Thermo
Cardiosystems Inc.
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James W. May Jr. Dr. May, 54, 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. He has also been
Director of Plastic Surgery at Massachusetts General
Hospital since 1982.
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Hutham S. Olayan Ms. Olayan, 43, has been a director of the
Corporation since February 1996. She has served since
1995 as president and a director of Olayan America
Corporation, a member of the Olayan Group, and as
president and a director of Competrol Real Estate
Limited, another member of the Olayan Group, until
its merger into Olayan America Corporation in 1997.
The surviving company is engaged in private
investments, including real estate, and advisory
services. In addition, from 1985 to 1994, Ms. Olayan
served as president and a director of Crescent
Diversified Limited, another member of the Olayan
Group engaged in private investments. Ms. Olayan is
also a director of Thermo Electron.
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</TABLE>
2
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<TABLE>
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<S> <C>
Firooz Rufeh Mr. Rufeh, 60, has been a director of the Corporation
since its inception in October 1995. Mr. Rufeh
presently serves as a consultant to Thermo Electron.
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 his retirement in February
1997.
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Gary S. Weinstein Mr. Weinstein, 40, 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 and 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.
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</TABLE>
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 option and other stock-based compensation plans. The
Corporation does not have a nominating committee of the board of directors. The
board of directors met six times, the audit committee met twice and the human
resources committee met six times during fiscal 1997. 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 1997.
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. Kirshner, Mr. Keiser 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 acquisition, without the prior approval of the board of
directors, 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
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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 November 28, 1997, deferred units equal to 1,042.89 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 options 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 the Stockholders 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 the average of the
closing prices of the Common Stock as reported on the American Stock Exchange
(or other principal exchange on which the Common Stock is then traded) for the
five trading days immediately preceding and including the date of grant, or, if
the shares are not then traded, at the last price paid per share by third
parties in an arms-length transaction prior to the option grant. As of November
28, 1997, options to purchase 120,000 shares of Common Stock had been granted
and were outstanding under the Director's Plan, no options had lapsed, no
options had been exercised, and options to purchase 80,000 shares of Common
Stock were reserved and available for grant.
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 the Stockholders. Directors who are also executive
officers of the Corporation are required to comply with a
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<PAGE>
separate stock holding policy established by the Committee in fiscal 1996, which
is described in the Committee Report on Executive Compensation - Stock Ownership
Policies.
In addition, the Committee adopted a policy requiring directors to hold a
certain number of shares of the Corporation's Common 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 and is described in the Committee Report on
Executive Compensation - Stock Ownership Policies.
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermo Electron and ThermoTrex as of November 28,
1997, 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 current executive officers as a group.
While certain directors and executive officers of the Corporation are also
directors and executive officers of Thermo Electron or its subsidiaries other
than the Corporation, all such persons disclaim beneficial ownership of the
shares of Common Stock beneficially owned by Thermo Electron.
<TABLE>
<CAPTION>
Trex Medical ThermoTrex Thermo Electron
Name (1) Corporation (2) Corporation (3) Corporation (4)
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<S> <C> <C> <C>
Thermo Electron Corporation (5) 23,560,961 N/A N/A
John M. Brenna 51,500 0 10,000
Elias P. Gyftopoulos 41,000 4,500 72,070
John T. Keiser 20,000 1,800 175,283
Hal Kirshner 285,000 93,321 118,124
James W. May Jr. 40,000 0 0
Steven R. Moseley 18,216 21,394 5,681
Hutham S. Olayan 45,636 4,500 25,663
Firooz Rufeh 93,600 101,541 133,834
Gary S. Weinstein 315,000 110,000 201,211
All directors and current executive
officers as a group (10 persons) 941,719 349,906 1,542,787
</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 or by that person for the benefit of minor children, 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 current executive officers as a
group exclude 23,560,961 shares beneficially owned by Thermo Electron.
Shares of the Common Stock beneficially owned by Mr. Brenna, Dr.
Gyftopoulos, Mr. Keiser, Mr. Kirshner, Dr. May, Mr. Moseley, Ms. Olayan,
Mr. Rufeh, Mr. Weinstein and all directors and current executive officers
as a group include 50,000, 40,000, 20,000, 150,000, 40,000, 15,000, 40,000,
40,000, 300,000 and 726,000 shares, respectively, that such person or group
has the right to acquire within 60 days of November 28, 1997, through the
exercise of stock options. Shares beneficially owned by Ms. Olayan and
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all directors and current executive officers as a group include 636 full
shares, respectively, that had been allocated through November 28, 1997, to
Ms. Olayan's account maintained under the Corporation's Deferred
Compensation Plan for Directors. 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 227,000
shares owned by Crescent International Holdings Ltd., a member of the
Olayan Group. Crescent International Holdings Ltd. is indirectly controlled
by Suliman S. Olayan, Ms. Olayan's father. Ms. Olayan disclaims beneficial
ownership of the shares owned by Crescent International Holdings Ltd. As of
November 28, 1997, no director or executive officer beneficially owned more
than 1% of the Common Stock outstanding as of November 28, 1997, other than
Mr. Weinstein, who beneficially owned approximately 1.1% of the Common
Stock; all directors and current executive officers as a group beneficially
owned 3.2% of the Common Stock outstanding as of such date.
(3) Shares of the common stock of ThermoTrex beneficially owned by Dr.
Gyftopoulos, Mr. Keiser, Mr. Kirshner, Mr. Moseley, Ms. Olayan, Mr. Rufeh,
Mr. Weinstein and all directors and current executive officers as a group
include 4,500, 1,800, 73,000, 19,000, 4,500, 67,000, 100,000 and 282,200
shares, respectively, that such person or group has the right to acquire
within 60 days of November 28, 1997, through the exercise of stock options.
Shares beneficially owned by Ms. Olayan do not include 10,000 shares owned
by Crescent Growth Fund Ltd., a member of the Olayan Group. Crescent Growth
Fund Ltd. is indirectly controlled by Suliman S. Olayan, Ms. Olayan's
father. Ms. Olayan disclaims beneficial ownership of the shares owned by
Crescent Growth Fund Ltd. As of November 28, 1997, no director or executive
officer beneficially owned more than 1% of the common stock outstanding as
of November 28, 1997; all directors and current executive officers as a
group beneficially owned 1.8% of the common stock outstanding as of such
date.
(4) Shares of the common stock of Thermo Electron beneficially owned by Mr.
Brenna, Dr. Gyftopoulos, Mr. Keiser, Mr. Kirshner, Mr. Moseley, Ms. Olayan,
Mr. Rufeh, Mr. Weinstein and all directors and current executive officers
as a group include 10,000, 10,375, 134,397, 116,325, 4,500, 10,375, 90,560,
200,175 and 1,232,779 shares, respectively, that such person or group has
the right to acquire within 60 days of November 28, 1997, through the
exercise of stock options. Shares beneficially owned by all directors and
current executive officers as a group include 3,462 full shares 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 November 28, 1997, executive officers of
Thermo Electron. Shares beneficially owned by Ms. Olayan and all directors
and current executive officers as a group include 15,288 full shares,
allocated through November 28, 1997, 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 4,865,300 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 November 28, 1997, no director or executive
officer beneficially owned more than 1% of the outstanding Thermo Electron
Common Stock; all directors and current executive officers as a group
beneficially owned less than 1% of the Thermo Electron common stock
outstanding as of November 28, 1997.
(5) Thermo Electron beneficially owned 79.7% of the Common Stock outstanding as
of November 28, 1997, all of which is owned through ThermoTrex, which is a
majority-owned subsidiary of Thermo Electron. Shares beneficially owned by
Thermo Electron include 678,541 shares issuable upon conversion of a 4.2%
convertible debenture due in 2000. Thermo Electron's address is 81 Wyman
Street, Waltham, Massachusetts 02254-9046. As of November 28, 1997, Thermo
Electron 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
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such persons were complied with during fiscal 1997, except in the following
instances. The Forms 3 for Mr. John M. Brenna and Mr. Steven R. Moseley, vice
presidents of the Corporation, were each filed late, and the Form 3 for Mr. John
T. Keiser, a director of the Corporation, was also filed late. ThermoTrex, the
Corporation's parent company, filed one Form 4 late, reporting one transaction
associated with the lapse of options to purchase Common Stock granted to
employees under its stock option program. Thermo Electron, the parent company of
ThermoTrex, filed five Forms 4 late, reporting a total of six transactions
associated with the grant, exercise and lapse of options to purchase Common
Stock granted to employees under its stock option program.
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 and two other most highly compensated executive officers
(the "named executive officers") for the last two full fiscal years from
September 29, 1996 to September 27, 1997 ("fiscal 1997") and 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 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>
<CAPTION>
Summary Compensation Table
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Long Term
Compensation
------------
Securities Underlying
Fiscal Annual Compensation (1) Options (No. of Shares All Other
----------------------
Name and Principal Position Year Salary Bonus (2) and Company) (3) Compensation (4)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hal Kirshner 1997 $197,500 $200,000 (2) 300 (TMO) $5,344
Chief Executive Officer 1996 $192,500 $200,000 150,000 (TXM) $9,958 (5)
and President 150 (TMO)
2,000 (TBA)
2,000 (TFG)
2,000 (TLT)
6,000 (TOC)
6,000 (TMQ)
2,000 (TSR)
1995 $150,000 $200,000 -- --
1994 $200,000 $180,000 22,500 (TMO) $7,005
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John M. Brenna (6) 1997 $128,750 $63,000 (2) 30,000 (TXM) --
Vice President 10,000 (TMO)
- ----------------------------------------------------------------------------------------------------------------------------
Steven R. Moseley (7) 1997 $116,780 $30,000 (2) -- -- $7,541
Former Vice President, Sales,
and current Vice President,
Breast Imaging Products, LORAD Division
- ----------------------------------------------------------------------------------------------------------------------------
</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
7
<PAGE>
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 represents the bonus paid for performance during the
calendar year in which the Corporation's fiscal year-end occurred. As
bonuses have not yet been determined for calendar 1997, the bonus
amounts shown for fiscal 1997 are estimates.
(3) In addition to receiving options to purchase Common Stock (designated
in the table as "TXM"), the named executive officers of the Corporation
were 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 the named executive officers 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).
(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 a $5,344 matching contribution referred to in footnote
(4), this amount includes $4,614, representing the then 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.
(6) Mr. Brenna was appointed a vice president of the Corporation in
December 1996.
(7) Mr. Moseley was appointed vice president, sales, of the Corporation in
December 1996 and resigned from that position effective as of September
1997 to accept the position of vice president, breast imaging products,
of the Corporation's LORAD division.
Stock Options Granted During Fiscal 1997
The following table sets forth information concerning individual grants
of stock options by the Corporation and other Thermo Electron companies made
during fiscal 1997 to the Corporation's chief executive officer and the other
named executive officers in their capacities as executive officers of the
Corporation. It has not been the Corporation's policy in the past to grant stock
appreciation rights, and no such rights were granted during fiscal 1997.
<TABLE>
<CAPTION>
Option Grants in Fiscal 1997
- ----------------------------------------------------------------------------------------------------------------------------
Potential Realizable
Percent of Value at Assumed
Total Options Annual Options Rates of Stock
Number of Securities Granted to Exercise Price Appreciation for
Underlying Options Employees in Price Per Expiration Option Term (2)
-----------------
Name Granted (1) Fiscal Year Share Date 5% 10%
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hal Kirshner 300 (TMO) 0.02% (3) $34.20 06/03/00 $1,617 $3,396
- ----------------------------------------------------------------------------------------------------------------------------
John M. Brenna 30,000 (TXM) 5.9% $13.50 06/20/09 $322,200 $866,100
10,000 (TMO) 0.7% (3) $39.39 09/24/09 $313,500 $842,300
- ----------------------------------------------------------------------------------------------------------------------------
Steven R. Moseley -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) As part of Thermo Electron's stock option program, options have been
granted during fiscal 1997 to the named executive officers to purchase
the common stock of the Corporation (designated in the table as TXM)
and Thermo Electron (designated in the table as TMO). All of the
options granted during the fiscal
8
<PAGE>
year are immediately exercisable at the date of grant. 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. For
publicly traded companies, the repurchase rights generally lapse
ratably over a five-to ten-year period, depending on the option term,
which may vary from seven to twelve years, provided that the optionee
continues to be employed by the 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.
(2) The amounts shown in 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 under stock option plans maintained by
Thermo Electron and, accordingly, are reported as a percentage of total
options granted to employees of Thermo Electron and its subsidiaries.
Stock Options Exercised During Fiscal 1997 and Fiscal Year-End Values
The following table reports certain information regarding stock option
exercises during fiscal 1997 and outstanding stock options to purchase shares of
Thermo Electron companies held at the end of fiscal 1997 by the Corporation's
chief executive officer and the other named executive officers. No stock
appreciation rights were exercised or were outstanding during fiscal 1997.
9
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises In Fiscal 1997 And Fiscal 1997 Year-End Option Values
- --------------------------------------------------------------------------------------------------------------------
Number of
Unexercised
Options at Fiscal Value of
Shares Year-End Unexercised
Acquired on Value (Exercisable/ In-the-Money
Name Company Exercise Realized (1) Unexercisable) (2) Options
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hal Kirshner Trex Medical -- -- 150,000 /0 $600,000 /--
Thermo Electron -- -- 116,325 /0 (3) $2,817,084 /--
Thermo BioAnalysis -- -- 2,000 /0 $13,750 /--
Thermo Fibergen -- -- 2,000 /0 $0 /--
ThermoLase -- -- 36,400 /0 $568,750 /--
ThermoLyte -- -- 0 /2,000 -- /$0 (4)
Thermo Optek -- -- 6,000 /0 $40,128 /--
ThermoQuest -- -- 6,000 /0 $36,750 /--
Thermo Sentron -- -- 2,000 /0 $250 /--
ThermoTrex -- -- 73,000 /0 $1,102,004 /--
- --------------------------------------------------------------------------------------------------------------------
John Brenna Trex Medical -- -- 50,000 /0 $125,000 /--
Thermo Electron -- -- 10,000 /0 $0 /--
- --------------------------------------------------------------------------------------------------------------------
Steven Moseley Trex Medical -- -- 15,000 /0 $60,000 /--
Thermo Electron -- -- 4,500 /0 $93,591 /--
ThermoTrex -- -- 19,000 /0 $246,752 /--
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the option
because in many cases the shares are not sold on exercise but continue to
be held by the executive officer exercising the option. The amounts shown
represent the difference between the option exercise price and the market
price on the date of exercise, which is the amount that would have been
realized if the shares had been sold immediately upon exercise.
(2) 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 Corporation, 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 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 10% on each of
the first two anniversaries of the grant date and 20% per year commencing
on the seventh 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.
(3) 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.
10
<PAGE>
(4) No public market existed for the shares as of November 28, 1997.
Accordingly, no value in excess of the exercise price has been attributed
to these options.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive Compensation
All decisions on compensation for the Corporation's executive officers are
made by the human resources committee of the board of directors (the
"Committee"). In reviewing and establishing total cash compensation and stock-
based compensation for executives, the Committee follows guidelines established
by the human resources committee of the board of directors of its parent
corporation, Thermo Electron. The executive compensation program presently
consists of annual base salary ("salary"), short-term incentives in the form of
annual cash bonuses, and long-term incentives in the form of stock options.
The Committee believes that the total compensation of executive officers
should reflect the scope of their responsibilities, the success of the
Corporation, and the contributions of each executive to that success. In
addition, the Committee believes that base salaries should approximate the mid-
point of competitive salaries derived from market surveys and that short-term
and long-term incentive compensation should reflect the performance of the
Corporation and the contributions of each executive.
External competitiveness is an important element of the Committee's
compensation policy. The competitiveness of the Corporation's total compensation
for its executives is assessed by comparing it to market data provided by its
compensation consultant and by participating in annual executive compensation
surveys, primarily "Project 777", an executive compensation survey prepared by
Management Compensation Services, a division of Hewitt Associates. The majority
of firms represented in the Project 777 survey are included in the Standard &
Poor's Index, but do not necessarily correspond to the companies included in the
Corporation's peer group index, the Standard and Poor's Index for Medical
Products and Supplies.
Principles of internal equity are also central to the Committee's
compensation policies. Total compensation considered for the Corporation's
officers, whether cash or stock-based incentives, is also evaluated by comparing
it to total compensation of other executives within the Thermo Electron
organization with comparable levels of responsibility for comparably sized
business units.
The Committee has changed its fiscal year to end on the Saturday nearest
September 30. Because the compensation practices of the Corporation are guided
by the policies of its parent corporation, Thermo Electron, the Committee plans
to continue to conduct cash compensation reviews on a calendar-year basis in
order to coincide with the compensation reviews conducted by the human resources
committee of the board of directors of Thermo Electron. Thermo Electron operates
on a fiscal year that ends on the Saturday nearest December 31.
The process for determining each of the elements of total compensation for
the Corporation's officers is outlined below.
Base Salary
Base salaries are intended to approximate the mid-point of competitive
salaries for similar organizations of comparable size and complexity to the
Corporation. Executive salaries are adjusted gradually over time and only as
necessary to meet this objective. Increases in base salary may be moderated by
other considerations, such as geographic or regional market data, industry
trends or internal fairness within the Corporation and Thermo Electron. It is
the Committee's intention that over time the base salaries for the chief
executive officer and the Corporation's other named executive officers will
approach the mid-point of competitive data. The salary increases in calendar
1997 for the chief executive officer and the other named executive officers
generally reflect this practice of gradual increases and moderation.
Cash Bonus
11
<PAGE>
The Committee establishes a median potential bonus for each executive by
using the market data on total cash compensation from the same executive
compensation surveys as used to determine salaries. Specifically, the median
potential bonus plus the salary of an executive officer is approximately equal
to the mid-point of competitive total cash compensation for a similar position
and level of responsibility in businesses having comparable sales and complexity
to the Corporation. The actual bonus awarded to an executive officer may range
from zero to three times the median potential bonus. The value within the range
(the bonus multiplier) is determined at the end of each year by the Committee in
its discretion. The Committee exercises its discretion by evaluating each
executive's performance using a methodology developed by its parent corporation,
Thermo Electron, and applied throughout the Thermo Electron organization. The
methodology incorporates measures of operating returns which are designed to
measure profitability and contributions to shareholder value, and are measures
of corporate and divisional performance that are evaluated using graphs
developed by Thermo Electron intended to reward performance that is perceived as
above average and to penalize performance that is perceived as below average.
The measures of operating returns used in the Committee's determinations in
calendar 1997 included return on net assets, growth in income, and return on
sales, and the Committee's determinations also included a subjective evaluation
of the contributions of each executive that are not captured by operating
measures but are considered important to the creation of long-term value for the
Stockholders. These measures of achievements are not financial targets that are
met, not met or exceeded. The relative weighting of the operating measures and
subjective evaluation varies depending on the executive's role and
responsibilities within the organization.
The bonuses for the named executive officers approved by the Committee with
respect to calendar 1997 performance in each case met or exceeded the median
potential bonus.
Stock Option Program
The primary goal of the Corporation is to excel in the creation of long-
term value for the Stockholders. The principal incentive tool used to achieve
this goal is the periodic award to key employees of options to purchase common
stock of the Corporation and other Thermo Electron companies.
The Committee and management believe that awards of stock options to
purchase the shares of both the Corporation and other companies within the
Thermo Electron group of companies accomplish many objectives. The grant of
options to key employees encourages equity ownership in the Corporation, and
closely aligns management's interests to the interests of all the Stockholders.
The emphasis on stock options also results in management's compensation being
closely linked to stock performance. In addition, because they are subject to
vesting periods of varying durations and to forfeiture if the employee leaves
the Corporation prematurely, stock options are an incentive for key employees to
remain with the Corporation long-term. The Committee believes stock option
awards in its parent companies, ThermoTrex and Thermo Electron, and the other
majority-owned subsidiaries of ThermoTrex and Thermo Electron, are an important
tool in providing incentives for performance within the entire organization.
In determining awards, the Committee considers the average annual value of
all options to purchase shares of the Corporation and other companies within the
Thermo Electron organization that vest in the next five years. (Values are
established using a modified Black-Scholes option pricing model.) Awards are
reviewed annually in conjunction with the annual review of cash compensation,
and additional awards are made periodically as deemed appropriate. The Committee
considers total compensation of executives, actual and anticipated contributions
of each executive (which includes a subjective assessment by the Committee of
the value of the executive's future potential within the organization), as well
as the value of previously awarded options as described above, in determining
option awards. The option awards made to the named executive officers in fiscal
1997 with respect to the common stock of the Corporation's parent company,
Thermo Electron, as part of Thermo Electron's overall stock option program, were
determined by the human resources committee of the board of directors of that
company using a similar analysis. Certain options to purchase Thermo Electron
stock were made under a program that awards options to eligible employees
annually based on the number of shares of the common stock of Thermo Electron
held by the employee, as an incentive to buy and hold Thermo Electron stock.
12
<PAGE>
Stock Ownership Policies
During fiscal 1996, the Committee established a stock holding policy for
executive officers of the Corporation. 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 order to assist officers in complying with the policy, the Committee
also adopted a stock holding assistance plan under which the Corporation is
authorized to make interest-free loans to officers to enable them to purchase
shares of the Common Stock in the open market. The loans are required to be
repaid upon the earlier of demand or the fifth anniversary of the date of the
loan, unless otherwise authorized by the Committee. No such loans are currently
outstanding under the plan.
The Committee also adopted a policy requiring its executive officers to
hold a certain number of shares of the Corporation's Common Stock acquired upon
the exercise of stock options granted by the Corporation. Under this policy,
executive officers are required to hold shares of Common Stock equal to one-half
of their net option exercises for 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.
Policy on Deductibility of Compensation
The Committee has also considered the application of Section 162(m) of the
Internal Revenue Code to the Corporation's compensation practices. Section
162(m) limits the tax deduction available to public companies for annual
compensation paid to senior executives in excess of $1 million unless the
compensation qualifies as "performance based" or is otherwise exempt from
Section 162(m). The annual cash compensation paid to individual executives does
not approach the $1 million threshold, and it is believed that the stock
incentive plans of the Corporation qualify as "performance based." Therefore,
the Committee does not believe any further action is necessary in order to
comply with Section 162(m). From time to time, the Committee will reexamine the
Corporation's compensation practices and the effect of Section 162(m).
1997 CEO Compensation
The salary and bonus of Mr. Hal Kirshner are established using the same
criteria as described above for all officers. In determining Mr. Kirshner's cash
compensation as reported, the Committee considered as part of its subjective
evaluation, among other factors, Mr. Kirshner's achievements in continuing to
identify and complete strategic acquisitions as part of the Corporation's growth
strategy and the development of his management team to run the Corporation's
operating divisions and subsidiaries.
Awards to Mr. Kirshner of options to purchase shares of the Corporations
Common Stock are reviewed annually and granted periodically by the Committee
using criteria similar to those described above for all officers of the
Corporation. No options to purchase shares of the Corporation's Common Stock
were awarded to Mr. Kirshner in fiscal 1997. In July 1997, the Committee
accelerated the vesting of 20% of the shares subject to an option to purchase
150,000 shares of the Common Stock in recognition of Mr. Kirshner's performance.
As modified, the repurchase rights (equivalent to vesting) are deemed to lapse
with respect to 10% of the shares subject to the option on each of the first two
anniversaries of the grant date, with the remainder lapsing 20% per year
commencing on the seventh anniversary of the grant date. In the absence of the
acceleration, the repurchase rights would have lapsed 20% per year commencing on
the sixth anniversary of the grant date.
In addition to any stock option awards by the Committee, Mr. Kirshner may
receive awards to purchase shares of the common stock of Thermo Electron or its
other majority-owned subsidiaries from time to time as part of Thermo Electron's
stock option program due to his position as a chief executive officer of a
majority-owned subsidiary of Thermo Electron. No options to purchase stock were
awarded to Mr. Kirshner under this program in
13
<PAGE>
fiscal 1997. The award to purchase shares of the common stock of Thermo Electron
granted to Mr. Kirshner in fiscal 1997 was made by the Thermo Electron human
resources committee under a program which awards options to certain eligible
employees annually based on the number of shares of the common stock of Thermo
Electron held by the employee, as an incentive to buy and hold Thermo Electron
shares.
Dr. Elias P. Gyftopoulos (Chairman)
Dr. James W. May Jr.
Ms. Hutham S. Olayan
14
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Corporation
include in this proxy statement a line-graph presentation comparing cumulative,
five-year shareholder returns for the Corporation's Common Stock with a broad-
based market index and either a nationally recognized industry standard or an
index of peer companies selected by the Corporation. The Corporation's Common
Stock has been publicly traded only since June 26, 1996 and, as a result, the
following graph commences as of such date. The Corporation has compared its
performance with the American Stock Exchange Market Value Index and the Dow
Jones Total Return Index for the Medical Supplies Group.
Comparison of Total Return Among Trex Medical Corporation,
the American Stock Exchange Market Value Index and the
Dow Jones Total Return Index for the Medical Supplies Group
from June 26, 1996 to September 26, 1997
<TABLE>
<CAPTION>
-----------------------------------------------------
06/26/96 09/27/96 09/26/97
-----------------------------------------------------
<S> <C> <C> <C>
TXM 100 145 107
-----------------------------------------------------
AMEX 100 99 120
-----------------------------------------------------
DJ MDS 100 110 135
-----------------------------------------------------
</TABLE>
The total return for the Corporation's Common Stock (TXM), the American
Stock Exchange Market Value Index (AMEX) and the Dow Jones Total Return Index
for the Medical Supplies Group (DJ MDS) assumes the reinvestment of dividends,
although dividends have not been declared on the Corporation's Common Stock. The
American Stock Exchange Market Value Index tracks the aggregate performance of
equity securities of companies listed on the American Stock Exchange. The
Corporation's Common Stock is traded on the American Stock Exchange under the
ticker symbol "TXM."
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 each of the Thermo Subsidiaries recognize that the
benefits and support that derive from their affiliation are essential elements
of their individual performance. Accordingly, Thermo Electron and each
15
<PAGE>
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 or other
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 determining 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
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement and tax allocation
agreement (if any) 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. In
addition, a withdrawing company is required to continue to comply with all
policies and procedures applicable to the Thermo Group and to provide certain
administrative functions mandated by Thermo Electron so long as the withdrawing
company is controlled by or affiliated with Thermo Electron.
Corporate Services Agreement
As provided in the Charter, Thermo Electron and the 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. The Corporation was assessed an annual fee equal to 1% of the
Corporation's total revenues for these services in calendar 1996 and 1997. The
annual fee will be reduced to 0.8% of the Corporation's total revenues in
calendar 1998. The fee may be changed by mutual agreement of the Corporation and
Thermo Electron. During fiscal 1997, Thermo Electron assessed the Corporation
$2,293,000 in fees under the Services Agreement. Management believes that the
charges under the Services Agreement are reasonable and that such fees are
representative of the expenses the Corporation would have incurred on a stand-
alone basis. 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,
16
<PAGE>
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.
Miscellaneous
From time to time, the Corporation may transact business with other
companies in the Thermo Group. In fiscal 1997, 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 27, 1997, the Corporation had paid approximately $3,800,000 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 1997, the Corporation purchased grids for an
aggregate purchase price of $678,000 under this arrangement.
Under an arrangement with ThermoLase Corporation, a majority-owned
subsidiary of ThermoTrex, the Corporation manufactures the lasers used in
ThermoLase Corporation's hair-removal process. The Corporation manufactures
these lasers for ThermoLase pursuant to written purchase orders. During fiscal
1997, the Corporation sold laser systems to ThermoLase at various prices for an
aggregate of $11,390,000 under this arrangement. As of September 27, 1997, the
Corporation had committed to deliver additional lasers to ThermoLase under this
arrangement for an aggregate of approximately $6,000,000.
Under an arrangement with Thermedics Detection Inc., a majority-owned
subsidiary of Thermedics Inc., a majority-owned subsidiary of Thermo Electron,
the Corporation manufactures an X-ray source that is used as a component in 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 1997, Thermedics Detection purchased X-ray source
units from the Corporation for an aggregate purchase price of $37,000 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 1997, ThermoTrex converted
$34,000,000 principal amount of the Convertible
17
<PAGE>
Note into 2,883,798 shares of Common Stock and $8,000,000 principal amount
remained outstanding at September 27, 1997.
As of September 27, 1997, $34,587,000 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.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1998. Arthur Andersen LLP has acted as independent
public accountants for the Corporation since 1995. Representatives of that firm
are expected to be present at the Meeting, will have the opportunity to make a
statement if they desire to do so and will be available to respond to questions.
The board of directors has established an audit committee, presently consisting
of three outside directors, the purpose of which is to review the scope and
results of the audit.
OTHER ACTION
Management is not aware at this time of any other matters that will be
presented for action at the Meeting. Should any such matters be presented, the
proxies grant power to the proxy holders to vote shares represented by the
proxies in the discretion of such proxy holders.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the 1999 Annual
Meeting of the Stockholders of the Corporation must be received by the
Corporation for inclusion in the proxy statement and form of proxy relating to
that meeting no later than September 25, 1998.
SOLICITATION STATEMENT
The cost of this solicitation of proxies will be borne by the Corporation.
Solicitation will be made primarily by mail, but regular employees of the
Corporation may solicit Proxies personally, by telephone or by telegram.
Brokers, nominees, custodians and fiduciaries are requested to forward
solicitation materials to obtain voting instructions from beneficial owners of
stock registered in their names, and the Corporation will reimburse such parties
for their reasonable charges and expenses in connection therewith.
Danbury, Connecticut
January 21, 1998
18
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FORM OF PROXY
TREX MEDICAL CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 27, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints John N. Hatsopoulos, Hal Kirshner and
Melissa F. Riordan and Gary S. Weinstein, or any one of them in the absence of
the others, as attorneys and proxies of the undersigned, with full power of
substitution, for and in the name of the undersigned, to represent the
undersigned at the Annual Meeting of the Stockholders of Trex Medical
Corporation, a Delaware corporation (the "Company"), to be held on Friday,
February 27, 1998, at 2:30 p.m. at the executive offices of Thermo Electron
Corporation, 81 Wyman Street, Waltham, Massachusetts 02154, and at any
adjournment or postponement thereof, and to vote all shares of common stock of
the Company standing in the name of the undersigned on January 14, 1998, with
all of the powers the undersigned would possess if personally present at such
meeting.
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
Please mark your
[x] votes as in this
example.
1. ELECTION OF DIRECTORS OF THE COMPANY (see reverse).
FOR [_] WITHHELD [_]
- --------------------------------------
FOR all nominees listed at right, except authority to vote withheld for the
following nominees (if any)
- --------------------------------------
<PAGE>
Nominees: Elias P. Gyftopoulos, Hal Kirshner, John T. Keiser, James W. May,
Jr., Hutham S. Olayan, Firooz Rufeh and Gary S. Weinstein.
2. In their discretion on such other matters as may properly come before the
Meeting.
The shares represented by this Proxy will be voted "FOR" the nominees set forth
herein if no instruction to the contrary is indicated or if no instruction is
given.
Copies of the Notice of Meeting and of the Proxy Statement have been received
by the undersigned.
SIGNATURE(S)
---------------------------------
DATE
-----------------
Note: This proxy should be dated, signed by the shareholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.
