SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________________________
AMENDMENT NO. 1 ON FORM 10-K/A
TO FORM 10-K
(mark one) X Annual Report Pursuant to Section 13 or
-----
15(d) of the Securities Exchange Act of 1934
Transition Report Pursuant to Section 13 or
-----
15(d) of the Securities Exchange Act of 1934
Commission file number 1-14254
THERMO SENTRON INC.
(Exact name of Registrant as specified in its charter)
Delaware 41-1827303
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 90th Avenue N.W.
Minneapolis, Minnesota 55433
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(612) 783-2500
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class 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 24, 1997, was
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approximately $31,456,000.
As of January 24, 1997, the Registrant had 9,875,000 shares of
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for
the fiscal year ended December 28, 1996, are incorporated by
reference into Parts I and II.
Part III, Item 10. Directors and Executive Officers of
the Registrant.
Part III, Item 11. Executive Compensation.
Part III, Item 12. Security Ownership of Certain
Beneficial Owners and
Management.
Part III, Item 13. Certain Relationships and
Transactions.
The information required under these items, originally to be
incorporated by reference from the Registrant's definitive proxy
statement to be filed with the Commission pursuant to Regulation
14A, not later than 120 days after the close of the fiscal year,
is contained in the following Attachment A, which is included
herein and made a part of this Annual Report on Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Amendment No. 1 on Form 10-K/A to be signed by the
undersigned, duly authorized.
THERMO SENTRON INC.
By: /s/ Sandra L. Lambert
-------------------------------
Sandra L. Lambert
Secretary
ATTACHMENT A
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DIRECTORS
Set forth below are the names of the persons serving 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
company, Thermedics Inc. ("Thermedics"), a manufacturer of inspection
and measurement instrumentation and biomedical products, and
Thermedics' parent company, Thermo Electron Corporation
("Thermo Electron"), a diversified high technology company, is
reported under the caption "Stock Ownership."
Marshall J. Mr. Armstrong, 61, has been a director of
Armstrong the Corporation since September 1996. Mr.
Armstrong has been senior vice president,
government affairs of Thermo Electron since
March 1997 and was a vice president of
Thermo Electron from 1986 until his
promotion. He also served as chairman of
the board of Thermo Power Corporation, a
majority-owned subsidiary of Thermo
Electron that manufactures packaged
cogeneration, commercial cooling and
specialized refrigeration systems, from
1990 to 1996, as its chief executive
officer from 1991 to 1996, and as its
president from 1992 to 1995. He is also a
director of SatCon Technology Corporation
and Thermo Power Corporation.
Donald E. Noble Mr. Noble, 82, has been a director of the
Corporation since January 1996. For more
than 20 years, from 1959 to 1980, Mr. Noble
served as the chief executive officer of
Rubbermaid Incorporated, first with the
title of president and then as chairman of
the board. Mr. Noble is also a director of
Thermo Electron, Thermo Fibertek Inc.,
Thermo Power Corporation and Thermo
TerraTech Inc.
Lewis J. Ribich Mr. Ribich, 53, has been the chief
executive officer, president and a director
of the Corporation since its inception in
1995. He has also been president of Ramsey
Technology Inc., the predecessor of the
Corporation, since 1990.
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Peter Richman Mr. Richman, 69, has been a director of the
Corporation since January 1996. Mr.
Richman has been a consultant on corporate
development and acquisition strategies
since March 1993. For more than five years
prior to 1993, Mr. Richman was the founder,
president and chief executive officer of
Keytek Instrument Corp., a manufacturer of
electromagnetic compatibility testing
equipment, which was sold in 1993 to Thermo
Voltek Corp., a majority-owned subsidiary
of Thermedics. Mr. Richman is also a
director of Thermo Voltek Corp.
John W. Wood Jr. Mr. Wood, 53, has been a director of the
Corporation since its inception in 1995.
Mr. Wood has been a senior vice president
of Thermo Electron since November 1995, and
was a vice president of Thermo Electron
from September 1994 to November 1995. Mr.
Wood also has been the president and chief
executive officer of Thermedics since 1984.
Mr. Wood is also a director of Thermedics,
Thermedics Detection Inc., Thermo
Cardiosystems Inc. and Thermo Voltek
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
Mr. Noble and Mr. Richman (Chairman). 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 Mr.
Noble (Chairman) and Mr. Richman. 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 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 served held during fiscal 1996.
Compensation of Directors
Cash Compensation
Directors who are not employees of the Corporation, of
Thermo Electron or of any other companies affiliated with Thermo
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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
directors' fees is made quarterly. Messrs. Armstrong, Ribich and
Wood are all employees of Thermo Electron or its subsidiaries 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 such meetings.
Deferred Compensation Plan
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 Thermedics 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 Thermedics or
25% or more of the outstanding common stock of 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 the Corporation's 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 March 1,
1997, deferred units equal to 971.40 shares of Common Stock were
accumulated under the Deferred Compensation Plan.
Directors Stock Option Plan
The Corporation's directors stock option plan (the
"Directors Plan") provides for the grant of stock options to
purchase shares of Common Stock to outside
directors as additional compensation for their service as
directors. The Directors 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 outside
directors. A total of 100,000 shares of Common Stock have been
reserved for issuance under the Directors Plan.
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Under the Directors Plan, each outside director who joined
the Board of Directors prior to or during 1996 was granted an
option to purchase 15,000 shares of Common Stock upon the
effective date of the Corporation's initial public offering. The
size of awards to new directors appointed to the Board of
Directors after 1996 is reduced by 3,750 shares in each
subsequent year. Outside directors who join 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
exercisable six months after the date of grant. 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 any other Thermo Electron company.
The restrictions and repurchase rights lapse or are deemed to
have lapsed in equal annual installments of 3,750 shares per
year, starting with the first anniversary of the grant date,
provided the director has continuously served as a director of
the Corporation or any other Thermo Electron company since the
grant date. These options expire on the fifth anniversary of the
grant date, unless the director dies or otherwise ceases to serve
as a director of the Corporation or any other Thermo Electron
company prior to that date.
Outside directors will also receive an annual grant of
options to purchase 1,000 shares of Common Stock, commencing with
the Annual Meeting of the Stockholders to be held in 2000. The
annual grant is 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. Options evidencing annual
grants may be exercised at any time from and after the six-month
anniversary of the grant date of the option and prior to the
expiration of the option on the third anniversary of the grant
date. 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 grant date.
The exercise price for options granted under the Directors
Plan is the average of the closing prices of the common stock as
reported on the American Stock Exchange (or other principal
market on which the Common Stock is then traded) for the five
trading days preceding and including the date of grant, or, if
the shares are not then traded, at the last price per share paid
by third parties in an arms-length transaction prior to the
option grant. Options to purchase 100,000 shares of Common Stock
were reserved and available for grant under the Directors Plan as
of March 1, 1997.
Stock Ownership Policies for Directors
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During 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
1996.
In addition, the Committee adopted a policy requiring
directors to hold shares of the Corporation's 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.
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of
Common Stock, as well as the common stock of Thermedics, the
Corporation's parent company, and of Thermo Electron, Thermedics'
parent company, as of March 1, 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, (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
Thermedics or its subsidiaries other than the Corporation, all
such persons disclaim beneficial ownership of the shares of
Common Stock owned by Thermedics.
<TABLE>
<CAPTION>
Name Thermo Thermedics Thermo
Sentron Inc. (3) Electron
Inc. (2) Corporation
(4)
<S> <C> <C> <C>
Thermedics Inc. (5) 7,000,000 N/A N/A
Investment Advisers, Inc. 500,200 N/A N/A
(6)
Marshall J. Armstrong 2,000 1,313 167,013
M. Preston Luman 26,200 10,777 386
Donald E. Noble 16,785 14,173 54,701
Lewis J. Ribich 65,200 51,501 12,039
Peter Richman 16,485 8,000 3,300
John W. Wood Jr. 33,000 175,347 263,199
All directors and current
executive
officers as a group (8 194,670 346,954 1,172,404
</TABLE>
(1) Except as reflected in the footnotes to this table, shares
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 Mr.
Armstrong, Mr. Luman, Mr. Noble, Mr. Ribich, Mr. Richman,
Mr. Wood and all directors and executive officers as a group
include 2,000, 20,000, 15,000, 60,000, 15,000, 30,000 and
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162,000 shares, respectively, that such person or group has
the right to acquire within 60 days of March 1, 1997,
through the exercise of stock options. Shares of the Common
Stock beneficially owned by Mr. Noble, Mr. Richman and all
directors and executive officers as a group include 485, 485
and 970 full shares, respectively, allocated to their
respective accounts through March 1, 1997, maintained under
the Corporation's deferred compensation plan for directors.
No director or executive officer beneficially owned more
than 1% of the Common Stock outstanding as of March 1, 1997;
all directors and executive officers as a group beneficially
owned 1.9% of the Common Stock outstanding as of such date.
(3) Shares of the common stock of Thermedics beneficially owned
by Mr. Luman, Mr. Noble, Mr. Ribich, Mr. Richman, Mr. Wood
and all directors and executive officers as a group include
10,000, 4,500, 50,700, 4,500, 125,500 and 264,200 shares,
respectively, that such person or group has the right to
acquire within 60 days after March 1, 1997, through the
exercise of stock options. Shares of the common stock of
Thermedics beneficially owned by Mr. Armstrong and all
directors and executive officers as a group include 1,313
full shares, allocated through March 1, 1997, to Mr.
Armstrong's account maintained pursuant to Thermo Electron's
employee stock ownership plan (the "ESOP"), of which the
trustees, who have investment power over its assets, are
executive officers of Thermo Electron. Shares of the common
stock of Thermedics beneficially owned by Mr. Wood include
2,600 shares held in custodial accounts for the benefit of
minor children. The directors and executive officers of the
Corporation did not individually or as a group beneficially
own more than 1% of the common stock of Thermedics
outstanding as of March 1, 1997.
(4) The shares of the 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 Mr. Armstrong, Mr. Noble, Mr. Ribich,
Mr. Wood and all directors and executive officers as a group
include 111,374, 9,375, 11,325, 227,658 and 886,991 shares,
respectively, that such person or group has the right to
acquire within 60 days of March 1, 1997, through the
exercise of stock options. Shares of the common stock of
Thermo Electron beneficially owned by Mr. Noble and all
directors and executive officers as a group include 41,911
full shares allocated to Mr. Noble's account maintained
under the Thermo Electron deferred compensation plan for
directors. Shares of the common stock of Thermo Electron
beneficially owned by Mr. Armstrong include 249 shares owned by
his spouse. The directors and executive officers of the
corporation did not individually or as a group beneficially own
more than 1% of the common stock of Thermo Electron outstanding
as of March 1, 1997.
(5) As of March 1, 1997, Thermedics beneficially owned
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approximately 71% of the outstanding Common Stock.
Thermedics' address is 470 Wildwood Street, Woburn,
Massachusetts 02254. As of March 1, 1997, Thermedics had
the power to elect all of the members of the Corporation's
Board of Directors. Thermedics is a majority-owned
subsidiary of Thermo Electron and therefore, Thermo Electron
may be deemed a beneficial owner of the shares of Common
Stock beneficially owned by Thermedics. Thermo Electron
disclaims beneficial ownership of these shares.
(6) Information regarding the number of shares of the Common
Stock beneficially owned by Investment Advisers, Inc. is
based on the most recent Schedule 13G of Investment
Advisers, Inc. received by the Corporation, which reported
such ownership as of December 31, 1996. The address of
Investment Advisers, Inc. is 3700 First Bank Place, Box 357,
Minneapolis, Minnesota 55440. As of December 31, 1996,
Investment Advisers, Inc. beneficially owned approximately
5.07% of the outstanding Common Stock.
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
Thermedics and its parent company, 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 1996, except in the following
instances. Mr. Peter Richman, a director of the Corporation,
filed one Form 4 late reporting one transaction consisting of an
open market purchase of shares. Thermo Electron filed six Forms
4 late, reporting a total of 17 transactions, consisting of 13
open market purchases of Common Stock, the exercise of two
options to purchase Common Stock granted to employees and the
lapse and cancellation of two such options without exercise.
EXECUTIVE COMPENSATION
NOTE: All share amounts reported below have, in all cases, been
adjusted as applicable to reflect a three-for-two stock split
with respect to the common stock of Thermo Electron distributed
in June 1996 in the form of a 50% stock dividend.
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 one other
executive officer for the last two fiscal years. No other
executive officer of the Corporation met the definition of
"highly compensated" within the meaning of the Securities and
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Exchange Commission's executive compensation disclosure rules.
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
Long Term
Compensation
Securities
Underlying
Annual Options (No. of
Name and Fiscal Compensation Shares All Other
Principal Position Year Salary Bonus and Company) (1) Compensation
(2)
<S> <C> <C> <C> <C> <C>
Lewis J. Ribich 1996 $159,000 $89,000 60,000(TSR) $8,059(3)
President and 600(TMD)
Chief Executive 75(TMO)
Officer
2,000(TFG)
1995 $155,000 $87,500 100(TMD) $6,750
M. Preston Luman 1996 $100,000 $48,000 20,000(TSR) $6,240(3)
Vice President,
1995 $ 95,000 $40,000 -- $6,594
Finance and
Operations
</TABLE>
(1) Options granted by the Corporation are designated in the
table as "TSR." In addition, Mr. Ribich has also been
granted options to purchase common stock of Thermo Electron
and its majority-owned subsidiaries from time to time as
part of Thermo Electron's stock option program. Options
have been granted during the last two fiscal years in the
following Thermo Electron companies: Thermedics Inc.
(designated in the table as TMD), Thermo Electron
(designated in the table as TMO) and Thermo Fibergen Inc.
(designated in the table as TFG).
(2) 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.
(3) In addition to the matching contribution referred to in
footnote (2), such amount includes $1,309 and $896, which
represents the amount of compensation attributable to an
interest-free loan provided to Mr. Ribich and Mr. Luman,
respectively, pursuant to the Corporation's stock holding
assistance plan. See "Relationship with Affiliates - Stock
Holding Assistance Plan."
Stock Options Granted During Fiscal 1996
The following table sets forth information concerning
individual grants of stock options made during fiscal 1996 to the
Corporation's chief executive officer and the other named
executive officer. 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.
<TABLE>
<CAPTION>
Option Grants in Fiscal 1996
Potential
Realizable
Percent of Value at Assumed
Total Annual Rates of
Options Stock
Number of Granted to Price Appreciation
Securities Exercise for
Underlying Employees Price Expira- Option Term (2)
Options in Per tion
Name Granted (1) Fiscal Year Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Lewis J. Ribich 60,000 (TSR) 20.8% $14.00 03/01/08 $668,400 $1,796,400
600 (TMD) 0.2% (3) $28.13 02/09/99 $2,658 $5,586
75 (TMO) -- (3) $42.79 05/22/99 $506 $1,062
2,000 (TFG) 0.4% (3) $10.00 09/12/08 $15,920 $42,760
M. Preston Luman 20,000 (TSR) 6.9% $14.00 03/01/08 $222,800 $598,800
</TABLE>
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(1) The options granted during the fiscal year are immediately
exercisable as of the end of the fiscal year. 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 such corporation or any
other Thermo Electron company. The granting corporation may
exercise its repurchase rights within six months after the
termination of the optionee's employment. The repurchase
rights 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. The options granted to Mr. Ribich were granted as
a part of Thermo Electron's stock option program. These
options have three-year terms, and the repurchase rights
lapse in their entirety on the second anniversary of the
grant date. The granting corporation may permit the holder
of 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 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 under stock option plans
maintained by Thermo Electron companies and accordingly are
reported as a percentage of total options granted to
employees of Thermo Electron and its subsidiaries.
Stock Options Exercised During Fiscal 1996
The following table reports certain information regarding
stock option exercises during fiscal 1996 and outstanding stock
options held at the end of fiscal 1996 by the Corporation's chief
executive officer and the other named executive officer. No
stock appreciation rights were exercised or were outstanding
during fiscal 1996.
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<TABLE>
<CAPTION>
Aggregated Option Exercises In Fiscal 1995 And
Fiscal 1996 Year-End Option Values
Number of
Unexercised
Options at
Shares Fiscal Value of
Acquired Year-End Unexercised
on Value (Exercisable/ In-the-Money
Name Company Exercise Realized Unexercisable) Options
(1)
<S> <C> <C> <C> <C> <C> <C> <C>
Lewis J. Ribich Thermo Sentron -- -- 60,000/0 $0 /--
Thermo -- -- 11,325/0 $223,426 /--
Electron
Thermedics -- -- 50,700/0 $270,061 /--
Thermo -- -- 2,000/0 $1,500 /--
Fibergen
ThermoSpectra -- -- 800/0 $1,500 /--
M. Preston Luman Thermo Sentron -- -- 20,000/0 $0 /--
Thermedics -- -- 10,000/0 $53,950 /--
</TABLE>
(1) All of the options reported outstanding at the end of the
fiscal year were immediately exercisable as of the end of
the fiscal year. 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
any other Thermo Electron company. The granting corporation
may exercise its repurchase rights within six months after
the termination of the optionee's employment. The
repurchase rights 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. Certain options granted as a 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 permit the holder 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.
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 subsidiaries,
including the Corporation, which was created by Thermedics Inc.
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 majority-owned Thermo
Electron subsidiaries are hereinafter referred to 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 of the Thermo
Subsidiaries 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
stockholders 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,
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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, can 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.
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.
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As provided in the Charter, the Corporation and Thermo
Electron 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, employee benefit
administration, tax advice and preparation of tax returns,
centralized cash management and financial and other services to
the Corporation. The Corporation was assessed an annual fee equal
to 1.0% of the Corporation's revenues for these services for
calendar 1996. The fee is reviewed annually and may be changed by
mutual agreement of the Corporation and Thermo Electron. During
fiscal 1996, Thermo Electron assessed the Corporation $700,000 in
fees under the Services Agreement. Management believes that the
charges under the Services Agreement are reasonable and that the
terms of the Services Agreement are fair to the Corporation. For
items such as employee benefit plans, insurance coverage and
other identifiable costs, Thermo Electron charges the Corporation
based on charges 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.
The Corporation acts as a distributor in Europe for process
measurement instruments manufactured by TN Technologies ("TN"),
a subsidiary of Thermo Instrument Systems Inc. ("Thermo Instrument"),
a publicly traded, majority- owned subsidiary of Thermo Electron.
In 1996, the Corporation purchased such products from TN for $563,000.
In 1996, the Corporation also sold meters to TN resulting in revenues
of $114,000.
In 1996, the Corporation received a ten percent (10%)
commission totaling $69,670 from another subsidiary of Thermo
Instrument, which the Corporation earned in connection with the sale
by this subsidiary of one of its CrossBelt Analyzers to an
Australian-based cement manufacturing company.
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As of December 28, 1996, $1,018,000 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
During 1996, the Human Resources Committee of the Corporation's
Board of Directors (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 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 grant date,
unless otherwise authorized by the Committee. During 1996, Mr.
Lewis J. Ribich, the Corporation's chief executive officer, and
Mr. M. Preston Luman, the Corporation's vice president, each
received loans in the respective principal amounts of $75,384 and
$70,010.70 under this plan to purchase 5,200 and 5,800 shares,
respectively.
AA971130051
