<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 1997
REGISTRATION NO. 333-16017
------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-1
POST-EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
THERMO OPTEK CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
<TABLE>
<S> <C> <C>
DELAWARE 3826 04-3283973
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
---------------
8E FORGE PARKWAY
FRANKLIN, MASSACHUSETTS 02038
(508) 528-0551
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
SANDRA L. LAMBERT, SECRETARY
THERMO OPTEK CORPORATION
c/o THERMO ELECTRON CORPORATION
81 WYMAN STREET
P.O. BOX 9046
WALTHAM, MASSACHUSETTS 02254-9046
(617) 622-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
Copy To:
SETH H. HOOGASIAN
GENERAL COUNSEL
THERMO OPTEK CORPORATION
c/o THERMO ELECTRON CORPORATION
81 WYMAN STREET
P.O. BOX 9046
WALTHAM, MASSACHUSETTS 02254-9046
---------------
<PAGE> 2
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement has become effective.
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, CHECK THE FOLLOWING BOX. / X /
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING PURSUANT
TO RULE 462(b) UNDER THE SECURITIES ACT OF 1933, CHECK THE FOLLOWING BOX AND
LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
REGISTRATION STATEMENT FOR THE SAME OFFERING. / /
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(c) UNDER
THE SECURITIES ACT OF 1933, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. / /
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434, CHECK
THE FOLLOWING BOX. / /
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- -------------------------------------------------------------------------
<PAGE> 3
PROSPECTUS
6,481,481 SHARES
THERMO OPTEK CORPORATION
COMMON STOCK
---------------
This Prospectus relates to the resale of 6,481,481 shares (the "Shares")
of Common Stock, par value $.01 per share (the "Common Stock"), of Thermo Optek
Corporation (the "Company") issuable upon conversion of $96,250,000 principal
amount of the Company's outstanding 5% Convertible Subordinated Debentures due
2000 (the "Debentures"). The Debentures are convertible, at the option of the
holder (a "Selling Shareholder"), at a conversion price of $14.85 per share,
subject to adjustment for certain events. The Shares may be offered from time to
time in transactions on the American Stock Exchange, in negotiated transactions,
through the writing of options on the Shares, or a combination of such methods
of sale, at fixed prices that may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. Such transactions may be effected by the sale of Shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the sellers and/or the
purchasers of the Shares for whom such broker-dealers may act as agent or to
whom they sell as principal, or both (which compensation to a particular
broker-dealer might be in excess of customary commissions). The sellers of the
Shares and any broker-dealer who acts in connection with the sale of Shares
hereunder may be deemed to be "underwriters" as that term is defined in the
Securities Act of 1933, as amended (the "Securities Act"), and any commission
received by them and profit on any resale of the Shares as principal might be
deemed to be underwriting discounts and commissions under the Securities Act.
---------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed to bear all
expenses (other than underwriting discounts and selling commissions, and fees
and expenses of counsel or other advisors to the
1
<PAGE> 4
sellers of the Shares) in connection with the registration and sale of the
Shares being registered hereby. The Company has agreed to indemnify the sellers
of the Shares against certain liabilities under the Securities Act as
underwriter or otherwise.
---------------
Thermo Optek is a majority-owned subsidiary of Thermo Instrument Systems
Inc., a manufacturer of analytical, environmental monitoring and process control
instrumentation ("Thermo Instrument"), which is a majority-owned subsidiary of
Thermo Electron Corporation, a diversified high technology company ("Thermo
Electron"). The Common Stock is traded on the American Stock Exchange under the
symbol "TOC." On April 23, 1997, the reported closing price of the Common Stock
on the American Stock Exchange was $11.00 per share.
THE DATE OF THIS PROSPECTUS IS APRIL __, 1997.
2
<PAGE> 5
THE COMPANY
Except as otherwise indicated, all information in this Prospectus reflects
(i) three-for-two splits of the Common Stock and of the common stock of Thermo
Electron effected on April 11, 1996 and June 5, 1996, respectively, each
effected in the form of 50% stock dividends, (ii) the acquisition by the Company
of Mattson Instruments and Unicam, former divisions of Analytical Technology,
Inc., as of December 1, 1995, the date on which such companies were acquired by
Thermo Instrument, and (iii) the acquisition by the Company of A.R.L. Applied
Research Laboratories S.A. and VG Elemental, former divisions of Fisons plc, as
of March 29, 1996, the date on which such companies were acquired by Thermo
Instrument. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations." Investors should carefully consider the information set
forth under the heading "Risk Factors."
THE COMPANY
The Company is a worldwide leader in the development, manufacture and
marketing of analytical instruments and has technologies in electro-optic
components and systems. The Company's instruments are used in the quantitative
and qualitative chemical analysis of elements and molecular compounds in solids,
liquids, and gases. These products are used by its customers for productivity
enhancement, research and development, quality control, and testing applications
in the environmental testing, chemical, metallurgical, food and beverage,
pharmaceutical, and petroleum industries; and by forensic laboratories, research
organizations, and educational institutions. The Company was incorporated in
Delaware in August 1995 as a wholly owned subsidiary of Thermo Instrument.
Thermo Instrument is a publicly traded, majority-owned subsidiary of Thermo
Electron.
The Company's name reflects its focus, which is the development,
manufacture and marketing of optical spectroscopy technologies and instruments.
After the formation of the Company, Thermo Instrument transferred to the Company
all of the assets, liabilities and businesses of Nicolet Instrument Corporation,
which conducts the Company's FT-IR and FT-Raman spectrometer businesses, and
Thermo Jarrell Ash Corporation ("TJA"), which conducts the Company's atomic
absorption ("AA") and atomic emission ("AE") spectrometer businesses. Nicolet
was acquired by Thermo Instrument in 1992. Through its Thermo Vision Corporation
subsidiary ("Thermo Vision"), the Company pursues applications of its
technologies for cost-effective, application-specific instruments and other
opportunities based on optical technologies. In September 1996, the Company
announced its intent to spinout Thermo Vision through a distribution of all of
its outstanding capital stock in the form of a dividend to the Company's
shareholders. See "Business."
The Company has recently completed several acquisitions. In January 1995,
the Company acquired the Analytical Instruments Division of Baird, a
manufacturer of arc/spark spectrometers. In February 1996, Thermo Vision
acquired both Corion Corporation ("Corion"), a manufacturer of commercial
optical filters, and Oriel Corporation ("Oriel"), a
3
<PAGE> 6
manufacturer and distributor of electro-optical instruments and components. See
"Business."
In December 1995, Thermo Instrument acquired the assets of the Analytical
Instruments Division of Analytical Technology, Inc. (the "ATI Division"), a
manufacturer of analytical instruments, for $42.5 million. In April 1996, the
Company acquired the ATI Division's Mattson Instruments ("Mattson") and Unicam
businesses from Thermo Instrument for an aggregate purchase price of $36.6
million. These businesses have been included in the Company's historical results
of operations from December 1, 1995, the date on which they were acquired by
Thermo Instrument. Mattson is a Wisconsin-based manufacturer of FT-IR
spectroscopy instruments and Unicam is a Cambridge, UK-based manufacturer of
atomic absorption and ultraviolet/visible spectroscopy instruments.
Effective March 29, 1996, the Company acquired two businesses, A.R.L.
Applied Research Laboratories S.A. ("ARL") and VG Elemental, and four associated
sales organizations located in South Africa, Austria, Sweden and Canada, from
Thermo Instrument for approximately $55.2 million in cash and the assumption of
$16.6 million in debt. These businesses were originally part of the Scientific
Instruments Division of Fisons plc ("Fisons"), a wholly owned subsidiary of
Rhone-Poulenc Rorer, Inc., a substantial portion of which was acquired by Thermo
Instrument on March 29, 1996. The purchase price is subject to a post-closing
adjustment based on a post-closing adjustment to be negotiated with Fisons by
Thermo Instrument in connection with the negotiations for settlement of the
final purchase price for all of the businesses of Fisons acquired by Thermo
Instrument. ARL is a Switzerland-based manufacturer of arc/spark AE
spectrometers and X-ray fluorescence instruments. VG Elemental is a U.K.-based
manufacturer of inductively coupled plasma/mass spectrometers.
Unless the context requires otherwise, references herein to the Company
refer to Thermo Optek Corporation and its subsidiaries and to the predecessor
businesses as conducted by Thermo Instrument, including acquired businesses from
their dates of acquisition by the Company or Thermo Instrument. As of March 28,
1997, Thermo Instrument owned 93% of the Company's outstanding Common Stock. The
Company's principal executive offices are located at 8E Forge Parkway, Franklin,
Massachusetts 02038 and its telephone number is (508) 528-0551.
4
<PAGE> 7
RISK FACTORS
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Prospectus. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," "seeks,"
"estimates," and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could cause the results
of the Company to differ materially from those indicated by such forward-looking
statements, including those detailed below.
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Accordingly, the following factors should be carefully
considered in evaluating the Company and its business before purchasing any of
such shares.
Risks Associated with Technological Change, Obsolescence and the
Development and Acceptance of New Products. The market for the Company's
products is characterized by rapid and significant technological change and
evolving industry standards. New product introductions responsive to these
factors require significant planning, design, development and testing at the
technological, product and manufacturing process levels, and may render existing
products and technologies uncompetitive or obsolete. There can be no assurance
that the Company's products will not become uncompetitive or obsolete. In
addition, industry acceptance of new technologies developed by the Company may
be slow to develop due to, among other things, existing regulations written
specifically for older technologies and general unfamiliarity of users with new
technologies.
Risks Associated with Acquisition Strategy; No Assurance of a Successful
Acquisition Strategy. The Company's growth strategy is to supplement its
internal growth with the acquisition of businesses and technologies that
complement or augment the Company's existing product lines. The Company has
recently acquired certain businesses within the former analytical instruments
division of ATI and the former scientific instruments division of Fisons plc
that were initially acquired by Thermo Instrument in December 1995 and March
1996, respectively. Certain of these businesses have low levels of
profitability, and businesses that the Company may seek to acquire in the future
may also be marginally profitable or unprofitable. In order for any acquired
businesses to achieve the level of profitability desired by the Company, the
Company must successfully reduce expenses and improve market penetration. No
assurance can be given that the Company will be successful in this regard. In
addition, promising acquisitions are difficult to identify and complete for a
number of reasons, including competition among prospective buyers and the need
for regulatory approvals, including antitrust approvals. There can be no
assurance that the Company will be able to complete pending or future
acquisitions. In order to finance any such acquisitions, it may be necessary for
the Company to raise additional funds either through public or private
financings. Any equity or debt financing, if available at all, may be on terms
which are not favorable to the Company and may result in dilution to the
Company's shareholders.
5
<PAGE> 8
Possible Adverse Effect From Consolidation in the Environmental Market and
Changes in Environmental Regulations. One of the largest markets for the
Company's products is environmental analysis. In recent years, there has been a
contraction in the market for analytical instruments used for environmental
analysis. This contraction has caused consolidation in the businesses serving
this market. Such consolidation may have an adverse impact on certain of the
Company's businesses. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." In addition, most air, water and soil
analysis is conducted to comply with federal, state, local and foreign
environmental regulations. These regulations are frequently specific as to the
type of technology required for a particular analysis and the level of detection
required for that analysis. The Company develops, configures and markets its
products to meet customer needs created by existing and anticipated
environmental regulations. These regulations may be amended or eliminated in
response to new scientific evidence or political or economic considerations. Any
significant change in environmental regulations could result in a reduction in
demand for the Company's products.
Possible Adverse Impact of Significant International Operations. Sales
outside the United States accounted for approximately 65% of the Company's
revenues in 1996, and the Company expects that international sales will continue
to account for a significant portion of the Company's revenues in the future.
Sales to customers in foreign countries are subject to a number of risks,
including the following: agreements may be difficult to enforce and receivables
difficult to collect through a foreign country's legal system; foreign customers
may have longer payment cycles; foreign countries could impose withholding taxes
or otherwise tax the Company's foreign income, impose tariffs, or adopt other
restrictions on foreign trade; fluctuations in exchange rates may affect product
demand and adversely affect the profitability in U.S. dollars of products and
services provided by the Company in foreign markets where payment for the
Company's products and services is made in the local currency; U.S. export
licenses may be difficult to obtain; and the protection of intellectual property
in foreign countries may be more difficult to enforce. There can be no assurance
that any of these factors will not have a material adverse effect on the
Company's business and results of operations.
Competition. The Company encounters and expects to continue to encounter
intense competition in the sale of its products. The Company believes that the
principal competitive factors affecting the market for its products include
product performance, price, reliability and customer service. The Company's
competitors include large multinational corporations and their operating units,
including The Perkin-Elmer Corporation and Varian Associates, Inc. These
companies and certain of the Company's other competitors have substantially
greater financial, marketing and other resources than those of the Company. As a
result, they may be able to adapt more quickly to new or emerging technologies
and changes in customer requirements, or to devote greater resources to the
promotion and sale of their products than the Company. In addition, competition
could increase if new companies enter the market or if existing competitors
expand their product lines or intensify efforts within existing product lines.
There can be no assurance that the Company's current products, products under
development, or ability to
6
<PAGE> 9
discover new technologies will be sufficient to enable it to compete effectively
with its competitors. See "Business -- Competition."
Risks Associated with Protection, Defense and Use of Intellectual
Property. The Company holds many patents relating to various aspects of its
products, and believes that proprietary technical know-how is critical to many
of its products. Proprietary rights relating to the Company's products are
protected from unauthorized use by third parties only to the extent that they
are covered by valid and enforceable patents or are maintained in confidence as
trade secrets. There can be no assurance that patents will issue from any
pending or future patent applications owned by or licensed to the Company or
that the claims allowed under any issued patents will be sufficiently broad to
protect the Company's technology and, in the absence of patent protection, the
Company may be vulnerable to competitors who attempt to copy the Company's
products or gain access to its trade secrets and know-how. Proceedings initiated
by the Company to protect its proprietary rights could result in substantial
costs to the Company. There can be no assurance that competitors of the Company
will not initiate litigation to challenge the validity of the Company's patents,
or that they will not use their resources to design comparable products that do
not infringe the Company's patents. There may also be pending or issued patents
held by parties not affiliated with the Company that relate to the Company's
products or technologies. The Company may need to acquire licenses to, or
contest the validity of, any such patents. There can be no assurance that any
license required under any such patent would be made available on acceptable
terms or that the Company would prevail in any such contest. The Company could
incur substantial costs in defending itself in suits brought against it or in
suits in which the Company may assert its patent rights against others. If the
outcome of any such litigation is unfavorable to the Company, the Company's
business and results of operations could be materially adversely affected. In
addition, the Company relies on trade secrets and proprietary know-how which it
seeks to protect, in part, by confidentiality agreements with its collaborators,
employees and consultants. There can be no assurance that these agreements will
not be breached, that the Company would have adequate remedies for any breach or
that the Company's trade secrets will not otherwise become known or be
independently developed by competitors. See "Business -- Patents, Licenses and
Trademarks."
Potential Conflicts of Interest. For financial reporting purposes, the
Company's financial results are included in Thermo Instrument's and Thermo
Electron's consolidated financial statements. Certain officers of the Company
are also officers of Thermo Instrument, Thermo Electron and/or other
subsidiaries of Thermo Electron. Such officers will devote only a portion of
their working time to the affairs of the Company. Further, it is an essential
element of Thermo Electron's career development program that successful
executives and managers be considered for positions of increased responsibility
anywhere within the Thermo Electron family of companies. A number of the
Company's executives and managers were promoted to their present positions under
this policy. There can be no assurance that its present executives and managers
will not assume other positions within the Thermo Electron family of companies,
causing them to be unavailable to serve the Company or to reduce the amount of
time that they devote to the affairs of the Company.
7
<PAGE> 10
The members of the Board of Directors and officers of the Company who are also
affiliated with Thermo Instrument or Thermo Electron will consider not only the
short-term and the long-term impact of operating decisions on the Company, but
also the impact of such decisions on the consolidated financial results of
Thermo Instrument and Thermo Electron. In some cases the impact of such
decisions could be disadvantageous to the Company while advantageous to Thermo
Instrument or Thermo Electron, or vice versa. The Company is also a party to
various agreements with Thermo Electron that may limit the Company's operating
flexibility. See "Relationship with Thermo Electron and Thermo Instrument."
Control by Thermo Instrument. The Company's shareholders do not have the
right to cumulate votes for the election of directors. Thermo Instrument, which
owns approximately 93% of the voting stock of the Company and which intends to
maintain at least an 80% interest in the Company in the future, has the power to
elect the entire Board of Directors of the Company and to approve or disapprove
any corporate actions submitted to a vote of the Company's shareholders. See
"Relationship with Thermo Electron and Thermo Instrument."
Shares Eligible for Future Sale and the Potential Adverse Impact on the
Market Price for the Common Stock. The 45,000,000 shares of Common Stock owned
by Thermo Instrument will become eligible for sale under Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Securities Act") commencing
in December 1997. In addition, as long as Thermo Instrument is able to elect a
majority of the Company's Board of Directors, it will be able to cause the
Company at any time to register all or a portion of the Common Stock owned by
Thermo Instrument under the Securities Act at any time. As of March 29, 1997,
the Company had outstanding $96,250,000 aggregate principal amount of 5%
Convertible Subordinated Debentures due 2000 (the "Debentures"). The Debentures
are convertible at any time into 6,481,481 shares of Common Stock ($96,250,000
divided by the conversion price of $14.85). The Company has reserved 3,000,000
shares of Common Stock for issuance under its stock-based compensation plans. As
of March 29, 1997, options to purchase 2,383,575 shares of Common Stock were
outstanding. Additional shares of Common Stock issuable upon exercise of options
which have been or may be granted under the Company's stock-based compensation
plans will become available for future sale in the public market at prescribed
times. Sales of a significant number of shares of Common Stock in the public
market following this offering could adversely affect the market price of the
Common Stock. See "Shares Eligible for Future Sale," and "Relationship with
Thermo Electron and Thermo Instrument."
Lack of Dividends. The Company has never paid any cash dividends on its
Common Stock. The Board of Directors anticipates that for the foreseeable future
the Company's earnings, if any, will be retained for use in the business and
that no cash dividends will be paid on the Common Stock.
8
<PAGE> 11
PRICE RANGE OF COMMON STOCK
The Company's Common Stock has been publicly traded on the American Stock
Exchange since June 7, 1996. The following table sets forth, for the periods
indicated, the high and low sales prices for the Common Stock on the American
Stock Exchange.
<TABLE>
<CAPTION>
Fiscal 1996 High Low
- ----------- ------ ------
<S> <C> <C>
Second Quarter (June 7, 1996 through
June 29, 1996) $14.00 $12.00
Third Quarter $15.25 $10.75
Fourth Quarter $14.875 $10.50
<CAPTION>
Fiscal 1997 High Low
- ----------- ------ ------
<S> <C> <C>
First Quarter $14.75 $11.25
Second Quarter $12.125 $10.75
(through April 24, 1997)
</TABLE>
As of April 24, 1997, there were approximately 56 record holders of Common
Stock.
DIVIDEND POLICY
The Company has never paid any cash dividends on the Common Stock. The
Board of Directors anticipates that for the foreseeable future the Company's
earnings, if any, will be retained for use in the business and that no cash
dividends will be paid on the Common Stock.
9
<PAGE> 12
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 28, 1996, and as adjusted to give effect to the assumed conversion of
the Company's 5% Convertible Subordinated Debentures due 2000 at a conversion
price equal to $14.85 per share.
<TABLE>
<CAPTION>
December 28, 1996
------------------------------
Actual As Adjusted
--------- -----------
(In thousands, except
share amounts)
<S> <C> <C>
Short-term Obligations:
Notes payable $ 27,225 $ 27,225
Current maturities of long-term
obligations 511 511
--------- ---------
27,736 27,736
========= =========
Long-term Obligations:
5% Convertible subordinated
debentures, due 2000 $ 96,250 $ --
Other 528 528
--------- ---------
96,778 528
--------- ---------
Shareholders' Investment:
Common stock, $.01 par value,
100,000,000 shares authorized;
48,450,000 shares issued and
outstanding and 54,931,481 shares
as adjusted (1) 485 549
Capital in excess of par value 222,123 318,309
Retained earnings 28,663 28,663
Cumulative translation adjustment (2,107) (2,107)
--------- ---------
Total Shareholders' Investment 249,164 345,414
--------- ---------
Total Capitalization (Long-term
Obligations and Shareholders'
Investment) $ 345,942 $ 345,942
========= =========
</TABLE>
- --------------------
(1) Does not include 3,000,000 shares of Common Stock reserved for issuance
under the Company's stock-based compensation plans. Options to purchase
2,383,575 shares of Common Stock were outstanding under the Company's
stock-based compensation plans as of March 29, 1997. See
"Management--Compensation of Directors" and "--Compensation of Executive
Officers" and Notes 3 and 8 of Notes to Consolidated Financial Statements.
10
<PAGE> 13
SELECTED FINANCIAL INFORMATION
The selected financial information below as of and for the fiscal years
ended December 28, 1996, and December 30, 1995, and for the fiscal year ended
December 31, 1994 has been derived from the Company's Consolidated Financial
Statements, which have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report included elsewhere in this Prospectus.
The selected financial information as of and for the fiscal year ended January
1, 1994 and as of December 31, 1994 has been derived from the Company's
Consolidated Financial Statements which have been audited by Arthur Andersen
LLP, but have not been included in this Prospectus. The selected financial
information for the fiscal year ended January 2, 1993, has not been audited but,
in the opinion of the Company, includes all adjustments (consisting only of
normal, recurring adjustments) necessary to present fairly such information in
accordance with generally accepted accounting principles applied on a consistent
basis.
<TABLE>
<CAPTION>
1996(1) 1995(2) 1994 1993 1992(3)
--------- --------- --------- --------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Revenues $ 350,639 $ 212,152 $ 165,398 $ 161,006 $ 102,232
--------- --------- --------- --------- ---------
Costs and Operating
Expenses:
Cost of revenues 188,631 108,590 82,124 76,632 50,851
Selling, general,
and administra-
tive expenses 98,316 62,109 46,532 45,778 28,121
Research and
development
expenses 21,979 13,018 10,496 10,593 7,176
--------- --------- --------- --------- ---------
308,926 183,717 139,152 133,003 86,148
--------- --------- --------- --------- ---------
Operating Income 41,713 28,435 26,246 28,003 16,084
Interest Income 5,479 1,514 89 58 12
Interest Expense (6,772) (2,450) (1,672) (2,249) (1,367)
Income Before
Provision for
Income Taxes 40,420 27,499 24,663 25,812 14,729
Provision for
Income Taxes 17,019 11,490 10,240 10,440 6,848
--------- --------- --------- --------- ---------
Net Income $ 23,401 $ 16,009 $ 14,423 $ 15,372 $ 7,881
========= ========= ========= ========= =========
Earnings per
Share (4) $ .50 $ .35 $ .32 $ .34 $ .17
========= ========= ========= ========= =========
Weighted Average
Shares (4) 46,944 45,157 45,157 45,157 45,157
========= ========= ========= ========= =========
</TABLE>
11
<PAGE> 14
SELECTED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
1996(1) 1995(2) 1994 1993 1992(3)
--------------------------------------------------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
(AT END OF PERIOD):
Working capital $103,889 $144,541 $ 33,429 $ 31,448 $ 34,148
Total assets 498,358 432,882 230,606 229,034 226,130
Long-term
obligations 96,778 101,079 1,037 8,589 9,106
Shareholders'
investment 249,164 220,988 156,175 146,918 149,304
</TABLE>
(1) Includes the results of the ARL and VG Elemental divisions of Fisons since
their acquisition by Thermo Instrument in March 1996 and the net proceeds
from the Company's initial public offering in June and July 1996.
(2) Includes the results of Baird since its acquisition by Thermo Instrument
in January 1995 and the Mattson and Unicam divisions of ATI since their
acquisition by Thermo Instrument in December 1995. Also reflects the
issuance in October 1995 of $96,250,000 principal amount of 5% convertible
subordinated debentures due 2000.
(3) Includes the results of the Nicolet since its acquisition by Thermo
Instrument in August 1992.
(4) Pursuant to Securities and Exchange Commission requirements, earnings per
share have been presented for all periods. Weighted average shares for all
periods include the 45,000,000 shares issued to Thermo Instrument in
connection with the initial capitalization of the Company and, for periods
prior to the Company's initial public offering, the effect of the assumed
exercise of stock options issued within one year prior to the Company's
initial public offering.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Prior to 1996, the Company's principal operating units included Thermo
Jarrell Ash Corporation (TJA), a manufacturer and distributor of atomic
absorption (AA) and atomic emission (AE) spectrometry products based in
Franklin, Massachusetts, and Nicolet Instrument Corporation (Nicolet), a
manufacturer and distributor of Fourier transform infrared (FT-IR) and FT-Raman
spectrometry products based in Madison, Wisconsin. During 1996, the Company
acquired five additional companies, summarized below, significantly increasing
its operations.
The Company's strategy is to supplement its internal growth with the
acquisition of businesses and technologies that complement and augment its
existing product lines. Effective December 1, 1995, the Company acquired Mattson
Instruments (Mattson), a manufacturer of FT-IR spectroscopy instruments, and
Unicam, a manufacturer of AA and ultraviolet/visible spectroscopy instruments,
from Thermo Instrument Systems Inc. (Thermo Instrument) (See Note 2 to the
Consolidated Financial Statements of the Company). In February 1996, the Company
acquired Oriel Corporation (Oriel), a manufacturer and distributor of
electro-optical instruments and components, and Corion Corporation (Corion), a
manufacturer of commercial optical filters.
In addition, effective March 29, 1996, the Company acquired A.R.L. Applied
Research Laboratories S.A. (ARL), a manufacturer of wavelength-dispersive X-ray
fluorescence instruments and arc/spark atomic emission spectrometers, and VG
Elemental, a manufacturer of inductively coupled plasma/mass spectrometers, from
Thermo Instrument (See Note 2 to the Consolidated Financial Statements of the
Company).
The Company has a subsidiary, Thermo Vision Corporation (Thermo Vision),
that addresses the photonics marketplace for optical components, imaging
systems, analytical instruments, and lasers. Thermo Vision is pursuing
applications of the Company's technologies for cost-effective,
application-specific instruments and for optical components, systems, and
subassemblies for analytical instrumentation and other applications. In
September 1996, the Company announced its intent to spin out Thermo Vision
through a distribution of 100 percent of its outstanding capital stock in the
form of a dividend to the Company's shareholders. The Company anticipates
completing the spinout in 1997. The Company is seeking a Letter Ruling from the
Internal Revenue Service stating that this proposed spinout would have no
current tax effect on the Company or its shareholders. There can be no assurance
that a favorable Letter Ruling will be obtained. The Company would distribute
the shares upon receipt of the Letter Ruling and satisfaction of other
conditions, including the listing of the Thermo Vision shares on the American
Stock Exchange. Thermo Vision, which includes Oriel and Corion, had revenues of
$30.5 million and $6.1 million in 1996 and 1995, respectively.
The Company sells its products on a worldwide basis. Although the Company
seeks to charge its customers in the same currency as its operating costs, the
Company's financial performance and competitive
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<PAGE> 16
position can be affected by currency exchange rate fluctuations. Where
appropriate, the Company uses forward contracts to reduce its exposure to
currency fluctuations.
RESULTS OF OPERATIONS
1996 Compared With 1995
Revenues increased 65% to $350.6 million in 1996 from $212.2 million in
1995, primarily as a result of the inclusion of $137.2 million from acquisitions
(See Note 2 to the Consolidated Financial Statements of the Company). To a
lesser extent, revenues increased due to greater product demand, primarily at
Nicolet. These increases were offset in part by a decrease of $6.6 million in
revenues due to the unfavorable effects of currency translation as a result of
the strengthening of the U.S. dollar relative to foreign currencies in countries
where the Company operates.
The gross profit margin declined to 46% in 1996 from 49% in 1995,
primarily due to the inclusion of lower-margin revenues from acquired
businesses.
Selling, general, and administrative expenses as a percentage of revenues
decreased to 28% in 1996 from 29% in 1995, primarily due to the acquisitions of
ARL and VG Elemental. Prior to their acquisition by the Company and throughout
1996, ARL and VG Elemental sold products primarily to other business units
formerly part of the Scientific Instruments Division of Fisons plc for marketing
and ultimate resale to the customer, and thus the Company's results for 1996
exclude selling, general, and administrative costs relating to these sales. In
late 1996, the Company began distributing these products primarily through its
existing distribution channels and, therefore the Company expects that selling,
general, and administrative expenses as a percentage of revenues at these
businesses will increase. However, the Company's goal is to increase the gross
profit margin to cover these additional costs by increasing selling prices, as
well as through improving product mix and manufacturing efficiencies. There can
be no assurance that the Company will be successful in these efforts.
Research and development expenses as a percentage of revenues were
unchanged at 6% in 1996 and 1995.
Interest income increased to $5.5 million in 1996 from $1.5 million in
1995 as a result of interest income earned on the invested proceeds from the
Company's October 1995 issuance of $96.3 million principal amount of 5%
subordinated convertible debentures and the June and July 1996 initial public
offering of common stock, offset in part by a reduction in interest income as a
result of cash expended for acquisitions. Interest expense increased to $6.8
million in 1996 from $2.5 million in 1995, primarily due to interest expense
incurred on the Company's 5% subordinated convertible debentures.
The effective tax rate was 42% in both 1996 and 1995. The effective tax
rates exceeded the statutory federal income tax rate due to the impact of state
income taxes, the nondeductible amortization of cost in excess of net assets of
acquired companies, and the inability to provide
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<PAGE> 17
a tax benefit on foreign losses, offset in part by the tax benefit associated
with a foreign sales corporation.
1995 Compared With 1994
Revenues increased 28% to $212.2 million in 1995 from $165.4 million in
1994. Revenues increased $25.9 million and $9.2 million due to the January 1995
acquisition of Baird, a manufacturer of arc/spark spectrometers that was
subsequently consolidated into TJA, and the December 1995 acquisitions of
Mattson and Unicam. In addition, revenues from Nicolet increased $10.4 million
due to increased demand for its products, particularly in Japan and the Pacific
Rim and, to a lesser extent, due to currency fluctuations. Overall, revenues
increased $5.7 million in 1995 due to the weakness of the U.S. dollar in
relation to foreign currencies.
The gross profit margin declined to 49% in 1995 from 50% in 1994. This
decline was primarily due to the inclusion of lower-margin products from Baird
and disruption in operations caused by the consolidation of the manufacturing
operations of Baird and TJA into a new facility in mid-1995. In addition,
increased competition due to the contraction of the environmental market had a
negative impact on the margins of TJA in 1995. The U.S. environmental market has
been consolidating, which has negatively affected sales of several of TJA's
products. The declines at Baird and TJA were offset in part due to improved
margins at Nicolet resulting primarily from the weakness of the U.S. dollar in
relation to foreign currencies, in particular the Japanese yen and German mark,
as well as improved margins for its newly introduced products.
Selling, general, and administrative expenses as a percentage of revenues
increased to 29% in 1995 from 28% in 1994 as a result of higher expenses at
Baird prior to the consolidation of Baird's operations with TJA and expanded
selling efforts in China and Brazil. Research and development expenses as a
percentage of revenues were relatively unchanged at 6% in 1995 and 1994.
Interest income increased to $1.5 million in 1995 as a result of interest
income earned on the invested proceeds from the Company's October 1995 issuance
of $96.3 million principal amount of 5% subordinated convertible debentures.
Interest expense increased to $2.5 million in 1995 from $1.7 million in 1994,
primarily due to interest expense incurred on these debentures.
The effective tax rate was 42% in both 1995 and 1994. The effective tax
rates exceeded the statutory federal income tax rate due to the impact of state
income taxes, nondeductible amortization of cost in excess of net assets of
acquired companies, and the inability in 1995 to provide a tax benefit on
foreign losses, offset in part by the tax benefit associated with a foreign
sales corporation.
LIQUIDITY AND CAPITAL RESOURCES
Consolidated working capital was $103.9 million at December 28, 1996,
compared with $144.5 million at December 30, 1995. Included in working capital
are cash and cash equivalents of $63.6 million at
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<PAGE> 18
December 28, 1996, and $116.9 million at December 30, 1995. During 1996, $27.1
million of cash was provided by operating activities. The Company used $8.6
million of cash to reduce its accounts payable, primarily for inventories
received in the fourth quarter of 1995, and accounts payable acquired at ARL and
VG Elemental.
The Company's investing activities used $112.6 million of cash in 1996.
The Company expended an aggregate of $104.1 million, net of cash acquired, for
acquisitions (See Note 2 to the Consolidated Financial Statements of the
Company), and $7.5 million for the purchase of property, plant, and equipment.
In February 1997, the Company acquired Laser Science, Inc., a manufacturer of
nitrogen, tunable dye, and pulsed lasers, for $3.6 million in cash. During 1997,
the Company plans to make capital expenditures of approximately $5.0 million.
The Company's financing activities provided $32.6 million of cash in 1996.
In June and July 1996, the Company sold 3,450,000 shares of its common stock in
an initial public offering for net proceeds of $42.9 million (See Note 3 to the
Consolidated Financial Statements of the Company). During 1996, the Company
repaid $10.4 million of short- and long-term borrowings.
Although the Company expects to have positive cash flow from its existing
operations, the Company may require significant amounts of cash for any
acquisition of complementary businesses. The Company expects that it will
finance any such acquisitions through a combination of internal funds,
additional debt or equity financing from capital markets, or short-term
borrowings from Thermo Instrument or Thermo Electron, although it has no
agreement with these companies to ensure that funds will be available on
acceptable terms or at all. The Company believes its existing resources are
sufficient to meet the capital requirements of its existing operations for the
foreseeable future.
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BUSINESS
The Company is a worldwide leader in the development, manufacture, and
marketing of analytical instruments and has technologies in electro-optic
components and systems. The Company's instruments are used in the quantitative
and qualitative chemical analysis of elements and molecular compounds in solids,
liquids, and gases. These products are used by its customers for productivity
enhancement, research and development, quality control, and testing applications
in the environmental testing, chemical, metallurgical, food and beverage,
pharmaceutical, and petroleum industries; and by forensic laboratories, research
organizations, and educational institutions. The Company was incorporated in
Delaware in August 1995 as a wholly owned subsidiary of Thermo Instrument.
Thermo Instrument is a publicly traded, majority-owned subsidiary of Thermo
Electron.
An element of the Company's strategy is to combine its internal growth
with the acquisition of complementary products and technologies. In December
1995, Thermo Instrument acquired the assets of the Analytical Instruments
Division of Analytical Technology, Inc. (the "ATI Division"), a manufacturer of
analytical instruments, for $42.5 million. In April 1996, the Company acquired
the ATI Division's Mattson and Unicam businesses from Thermo Instrument for an
aggregate purchase price of $36.6 million. These businesses have been included
in the Company's historical results of operations from December 1, 1995, the
date on which they were acquired by Thermo Instrument. Mattson is a
Wisconsin-based manufacturer of FT-IR spectroscopy instruments and Unicam is a
Cambridge, UK-based manufacturer of atomic absorption and ultraviolet/visible
spectroscopy instruments.
Effective March 29, 1996, the Company acquired two businesses, A.R.L.
Applied Research Laboratories S.A. ("ARL") and VG Elemental, and four associated
sales organizations located in South Africa, Austria, Sweden and Canada, from
Thermo Instrument for approximately $55.2 million in cash and the assumption of
$16.6 million in debt. These businesses were originally part of the Scientific
Instruments Division of Fisons plc ("Fisons"), a wholly owned subsidiary of
Rhone-Poulenc Rorer, Inc., a substantial portion of which was acquired by Thermo
Instrument on March 29, 1996. The purchase price is subject to a post-closing
adjustment based on a post-closing adjustment to be negotiated with Fisons by
Thermo Instrument in connection with the negotiations for settlement of the
final purchase price for all of the businesses of Fisons acquired by Thermo
Instrument. ARL is a Switzerland-based manufacturer of arc/spark AE
spectrometers and X-ray fluorescence instruments. VG Elemental is a U.K.-based
manufacturer of inductively coupled plasma/mass spectrometers.
In June and July 1996, the Company sold 3,450,000 shares of its common
stock in an initial public offering at $13.50 per share for net proceeds of
$42.9 million. In October 1995, the Company issued and sold $96.3 million
principal amount of 5% subordinated convertible debentures due 2000. The
debentures are convertible into shares of the Company's common stock at a
conversion price of $14.85 per share and are guaranteed on a subordinated basis
by Thermo Electron. As of December 28, 1996, Thermo Instrument owned 45,000,000
shares of the common stock of the
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<PAGE> 20
Company, representing 93% of such stock outstanding. Thermo Instrument develops,
manufactures, and markets instruments used to detect and measure air pollution,
radioactivity, complex chemical compounds, toxic metals, and other elements in a
broad range of liquids and solids, as well as to control and monitor various
industrial processes. As of December 28, 1996, Thermo Electron owned 144,900
shares of the common stock of the Company, representing 0.3% of such stock
outstanding. These shares were purchased during 19961 in the open market for a
total purchase price of $1,967,000. Thermo Electron is a world leader in
environmental monitoring and analysis instruments, biomedical products such as
heart-assist devices and mammography systems, paper-recycling and papermaking
equipment, biomass electric power generation, and other specialized products and
technologies. Thermo Electron also provides a range of services related to
environmental quality.
LINES OF BUSINESS
Analytical instruments are generally classified by their principal
operating technologies. The Company's atomic emission ("AE") and atomic
absorption ("AA") spectrometers comprise its elemental analysis product line,
and FT-IR and FT-Raman spectrometers comprise its molecular analysis product
line. In addition, through Thermo Vision, the Company addresses the photonics
marketplace for optical components, imaging systems, analytical instruments, and
lasers. Thermo Vision develops and manufactures cost-effective,
application-specific instruments, as well as components, systems, and
subassemblies for analytical instruments.
ELEMENTAL ANALYSIS - AE AND AA SPECTROMETERS
The Company produces a range of AE and AA spectrometers that are used to
detect and measure metals and other elements in solid and liquid samples from
ultratrace (parts per billion) to major concentrations. These instruments are
used in a wide variety of applications, including testing environmental samples,
such as soil and water, and food and drugs; analyzing blood, urine, and animal
tissue; and process quality control and product quality assurance. The Company
sells its products to customers in a wide range of industries, including those
in manufacturing industries such as producers of aircraft, automobiles and
trucks, computers, chemicals, food, pharmaceuticals, and primary metals; service
industries such as waste management companies and commercial testing
laboratories; and government and university laboratories.
In AE spectrometers, the samples are excited by an energy source, causing
the sample atoms to emit radiation. The radiation is then dispersed by a grating
into its component light wavelengths, which are detected by a photo multiplier
tube or a solid state detector. Each element has a characteristic wavelength
that acts as a "fingerprint" for that element, which the instrument compares
against a library of spectra for identification. The resulting data may be
stored and manipulated by computer. AE spectrometers use either an electrical
discharge ("arc/spark") or a high frequency inductively coupled plasma ("ICP")
as the energy source.
- --------
1 References to 1996, 1995, and 1994 herein are for the fiscal years ended
December 28, 1996, December 30, 1995, and December 31, 1994, respectively.
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Arc/spark instruments are used primarily for solid samples in highly
capital-intensive processes such as steel and other primary metal production,
foundries that fabricate raw metals, and production of products such as pipe and
machine parts. Customers in these industries use the arc/spark instrument in
near line quality control as part of the production process. Due to the high
cost of these processes, the minimization of downtime and the maintenance of
quality control are critical. For these reasons, reliability is frequently the
most important feature to an arc/spark user. ARL, acquired in 1996, is a
worldwide supplier of spectrochemical instrumentation based on arc/spark optical
emission spectrometry and wavelength dispersive x-ray fluorescence ("WDXRF")
spectrometry. WDXRF spectrometers offer elemental analysis of a wide variety of
materials in a highly precise and generally nondestructive manner.
ICP spectrometers are used for both solid and liquid samples and allow for
simultaneous multi-element testing. The largest users of ICP instruments are
public and private environmental laboratories, which must test for multiple
elements but which have well defined testing objectives. These users test for
compliance with applicable environmental regulations, which prescribe the
specific pollutants and concentrations to be identified. The Company has
recently developed the first ultratrace ICP spectrometer that incorporates a
solid state detector, the IRIS(TM), and the first combined optical emission mass
spectrometer, the POEMS(R), which allows customers to perform with one
instrument analyses that previously would have required multiple instruments. In
addition, the IRIS incorporates Windows(TM)-based software that facilitates use
of the instrument with relatively minimal training. ICP instruments can also be
coupled with a mass spectrometer ("ICP/MS") to provide detection at the parts
per trillion level. This high level of sensitivity is often required by
semiconductor, pharmaceutical, and chemical companies in both research and
development and quality control functions. The Company has recently introduced
the second generation of its POEMS ICP/MS, which incorporates several
significant advances, including automated sample preparation and Windows-based
software. POEMS is the first ICP/MS instrument to integrate a CID detector,
which enhances the flexibility of the instrument. VG Elemental, acquired in
November 1996, manufactures ICP/MS instruments that are utilized in the
environmental, nuclear, semiconductor, biological, metals, and chemicals
industries where critical, ultratrace detection of elements is required.
Due to their sensitivity and relatively low cost, AA spectrometers are the
instrument of choice for environmental applications. Certain of the EPA's
protocols for the determination of toxic metals in water and wastes are written
for AA spectrometers. In addition to environmental testing, AA spectrometers are
used in biological testing and for testing in the agricultural and petroleum
industries. AA spectrometers use a graphite furnace or flame to heat the sample
and incorporate a hollow cathode lamp that contains the element to be measured.
Because the hollow cathode lamp radiates at the same wavelength as the sample
atoms, the sample atoms absorb radiation from the lamp, and the detector
measures this absorption. The 1996 acquisition of Unicam has increased the
Company's product base in AA spectrometers, as well as its presence in the
European market, and will complement its other products and presence
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in the environmental, life science research, pharmaceutical, and chemical
markets.
MOLECULAR ANALYSIS - FT-IR AND FT-RAMAN SPECTROMETERS
Thermo Optek is among the world's largest manufacturers of molecular
analysis instruments that utilize FT-IR and FT-Raman spectroscopic techniques.
Using these "vibrational" spectroscopic techniques, customers are able to
nondestructively analyze liquids and solids for their molecular composition.
These techniques permit the analysis of samples in their packaging, which
eliminates much of the time involved with sample preparation.
The Company's FT-IR and FT-Raman spectrometers are used principally in
research and development and quality control in a variety of industries.
Chemical and pharmaceutical companies use FT-IR and FT-Raman spectrometers for
verification, identification, and quantification of chemical materials and
mixtures because of the superior ability of these instruments to provide
detailed structural information. Other applications involve analysis of total
petroleum hydrocarbon content and other contamination in soil and water, and
monitoring of industrial waste streams.
The Company also offers several lines of infrared microscopes and
micro-imaging accessories. The Company believes it is the world's leading
supplier of these devices, which are utilized, individually or in conjunction
with FT-IR spectrometers, to obtain the infrared spectrum of small samples in
the range from 20 to 1000 microns.
THERMO VISION CORPORATION
Through its Thermo Vision subsidiary, the Company addresses the photonics
marketplace for optical components, imaging systems, analytical instruments, and
lasers. Thermo Vision is pursuing applications of its photonics technologies in
a wide array of markets such as dental imaging, semiconductor processing,
high-energy physics, and nuclear inspection, in addition to analytical
instrumentation. Within instrumentation, Thermo Vision addresses the market for
cost-effective, application-specific instruments and for optical components,
systems, and subassemblies for analytical instrumentation. The Company believes
that there is a trend in the market for analytical instruments toward the
development of lower-cost instruments that are easy to use and capable of
performing discrete analyses accurately and reliably. Thermo Vision is building
a sales and service channel for optical components and lower-cost instruments
that cannot be effectively or profitably sold or serviced through the channels
used for larger, higher-performance analytical instruments.
In February 1996, Thermo Vision acquired Corion Corporation ("Corion"), a
manufacturer of commercial optical filters, for $5.1 million in cash and Oriel
Corporation ("Oriel"), a manufacturer and distributor of electro-optical
instruments and components, for $11.8 million in cash and the assumption of $0.7
million in debt. In addition, Thermo Vision acquired Laser Science, Inc.
("LSI"), a manufacturer of nitrogen, tunable dye, and pulsed lasers, in February
1997 for $3.6
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million in cash. The Company believes that these acquisitions will further
Thermo Vision's strategic move into the photonics marketplace by broadening its
product offerings and providing a base for low-cost distribution.
In 1996 and 1995, the Company derived revenues of $30.5 million and $6.1
million, respectively, from its Thermo Vision businesses.
In September 1996, the Company announced its intent to spin out Thermo
Vision through a distribution of all of its outstanding capital stock in the
form of a dividend to the Company's shareholders. The Company anticipates
completing the spinout in 1997, and is seeking a Letter Ruling from the Internal
Revenue Service stating that the proposed spinout will have no current tax
effect on Thermo Optek or its shareholders. The Company would distribute the
shares upon receipt of the Letter Ruling and satisfaction of other conditions,
including the listing of the Thermo Vision shares on the American Stock
Exchange. Upon completion of this proposed transaction, Thermo Vision would be a
majority-owned subsidiary of Thermo Instrument.
SALES AND MARKETING
The Company markets its instruments internationally through its own
worldwide sales force and through a network of dealers and distributors. In
addition, the Company sells certain components and instruments pursuant to
original equipment manufacturer ("OEM") arrangements under which third parties
purchase and resell the Company's products. The Company's sales force is
supported throughout the world by a customer support group which provides
training, instrument servicing, and parts replacement.
NEW PRODUCTS; RESEARCH AND DEVELOPMENT
The Company maintains active programs for the development of new
technologies and the enhancement of existing products. In addition, the Company
seeks to develop new applications for its products and technologies. Research
and development expenses for the Company were $22.0 million, $13.0 million, and
$10.5 million in 1996, 1995, and 1994, respectively.
RAW MATERIALS
Raw materials, components, and supplies purchased by the Company are
either available from a number of different suppliers or from alternative
sources that could be developed without a material adverse effect on the
Company. To date, the Company has experienced no difficulties in obtaining these
materials.
PATENTS, LICENSES, AND TRADEMARKS
The Company's policy is to protect its intellectual property rights,
including applying for and obtaining patents when appropriate. The Company holds
numerous patents relating to its technologies, with additional patents pending.
The Company also enters into licensing agreements with other companies and
government agencies in which it
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grants or receives rights to specific patents and technical know-how. The
Company also considers technical know-how, trade secrets, and trademarks to be
important to its business.
SEASONAL INFLUENCES
There are no significant seasonal influences on the Company's sales of its
products.
WORKING CAPITAL REQUIREMENTS
There are no special inventory requirements or credit terms extended to
customers that would have a material adverse effect on the Company's working
capital.
DEPENDENCY ON A SINGLE CUSTOMER
No single customer accounted for more than 10% of the Company's total
revenues in any of the past three years.
BACKLOG
The Company's backlog of firm orders was $67.2 million and $50.1 million
as of December 28, 1996, and December 30, 1995, respectively. The Company
believes that substantially all of the backlog at December 28, 1996, will be
shipped or completed during 1997. The Company does not believe that the size of
its backlog is necessarily indicative of intermediate or long-term trends in its
business.
COMPETITION
The Company competes in each of its markets primarily on performance,
reliability, customer service, and price. In the market for AE and AA
spectrometers and ICP/MS instruments, the Company competes primarily with The
Perkin-Elmer Corporation and, to a lesser extent, Varian Associates, Inc. The
Company competes in the arc/spark market primarily with Spectro. In the FT-IR
and FT-Raman markets, the Company competes primarily with Perkin-Elmer; the
Digilab division of Bio-Rad Laboratories, Inc.; Bruker Instruments, Inc.; and
Bomem Inc. The Company entered the market for UV/Vis instruments with its
acquisition of Unicam in 1996. The primary competitors in this market are
Perkin-Elmer, Shimadzu, and Hewlett-Packard Co.
ENVIRONMENTAL PROTECTION REGULATIONS
The Company believes that compliance by the Company with federal, state,
and local environmental protection regulations will not have a material adverse
effect on its capital expenditures, earnings, or competitive position.
NUMBER OF EMPLOYEES
As of December 28, 1996, the Company employed approximately 2,065 people.
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FACILITIES
The Company owns approximately 600,000 square feet of office and
manufacturing space in Wisconsin, Colorado, England and Switzerland, and leases
an additional 600,000 square feet of office and manufacturing space under lease
expiring from 1997 through 2013, principally in Massachusetts, Connecticut and
England. The Company believes that its facilities are in good condition and are
suitable and adequate to meet current needs.
RELATIONSHIP WITH THERMO ELECTRON
AND THERMO INSTRUMENT
The Company was organized in August 1995 as a wholly owned subsidiary of
Thermo Instrument. Thermo Instrument has contributed all of the assets,
liabilities and businesses of Nicolet and TJA to the Company in exchange for
45,000,000 shares of Common Stock of the Company. Thermo Electron holds $10
million principal amount of the Company's 5% Convertible Subordinated
Debentures.
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 publicly and privately held subsidiaries, and
Thermo Instrument has created the Company as a publicly held, majority owned
subsidiary. From time to time, Thermo Electron and its subsidiaries will create
other majority owned subsidiaries as part of its spinout strategy. (The Company
and the other Thermo Electron subsidiaries are hereinafter referred to as the
"Thermo Subsidiaries.")
Thermo Instrument develops, manufactures, and markets instruments used to
detect and monitor air pollution, radioactivity, complex chemical compounds,
toxic metals, and other elements in a broad range of liquids and solids. For its
fiscal year ended December 28, 1996, Thermo Instrument had consolidated revenues
of $1,209,362,000 and consolidated net income of $132,751,000.
Thermo Electron and its subsidiaries develop, manufacture and market
environmental monitoring and analysis instruments and manufacture biomedical
products including heart-assist devices and mammography systems, paper-recycling
and papermaking equipment, alternative-energy systems, industrial process
equipment and other specialized products. Thermo Electron and its subsidiaries
also provide environmental and metallurgical services and conduct advanced
technology research and development. For its fiscal year ended December 28,
1996, Thermo Electron had consolidated revenues of $2,766,002,000 and
consolidated net income of $190,816,000.
THE THERMO ELECTRON CORPORATE CHARTER
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 has adopted the Thermo Electron
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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, are able to obtain the most favorable terms from
outside parties.
To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")
to external financing sources, ensuring compliance with external financial
covenants and internal financial policies, assisting in the formulation of
long-range planning and providing other banking and credit services. Pursuant to
the Charter, Thermo Electron may also provide guarantees of debt obligations of
the Thermo Subsidiaries or may obtain external financing at the parent level for
the benefit of the Thermo Subsidiaries. In certain instances, the Thermo
Subsidiaries may provide credit support to, or on behalf of, the consolidated
entity or may obtain financing directly from external financing sources. Under
the Charter, Thermo Electron is responsible for 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 Company, 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
24
<PAGE> 27
Electron so long as the withdrawing company is controlled by or affiliated with
Thermo Electron.
CORPORATE SERVICES AGREEMENT
As provided in the Charter, the Company 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 certain financial and other services to the Company. In 1994,
1995 and 1996, Thermo Electron assessed the Company an annual fee for these
services equal to 1.25%, 1.20% and 1%, respectively, of the Company's revenues.
The fee is reviewed annually and may be changed by mutual agreement of the
Company and Thermo Electron. During fiscal 1995 and 1996, Thermo Electron
assessed the Company $2,546,000 and $3,506,000, respectively, 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 Company. For items such as employee benefit plans, insurance coverage and
other identifiable costs, Thermo Electron charges the Company based on charges
attributable to the Company. The Services Agreement automatically renews for
successive one-year terms, unless canceled by the Company upon 30 days' prior
notice. In addition, the Services Agreement terminates automatically in the
event the Company ceases to be a member of the Thermo Group or ceases to be a
participant in the Charter. In the event of a termination of the Services
Agreement, the Company will be required to pay a termination fee equal to the
fee that was paid by the Company for services under the Services Agreement for
the nine-month period prior to termination. Following termination, Thermo
Electron may provide certain administrative services on an as-requested basis by
the Company or as required in order to meet the Company's obligations under
Thermo Electron's policies and procedures. Thermo Electron will charge the
Company a fee equal to the market rate for comparable services if such services
are provided to the Company following termination.
TAX ALLOCATION AGREEMENT
The Company has entered into a Tax Allocation Agreement with Thermo
Electron which outlines the terms under which the Company will be included in
Thermo Electron's consolidated Federal and state income tax returns. Under
current law, the Company will be included in such tax returns so long as Thermo
Electron owns at least 80% of the outstanding common stock of Thermo Instrument
and Thermo Instrument owns at least 80% of the outstanding Common Stock of the
Company. In years in which the Company has taxable income, it will pay to Thermo
Electron amounts comparable to the taxes the Company would have paid if it had
filed its own separate company tax returns. If Thermo Instrument's equity
ownership of the Company were to drop below 80%, the Company would file its own
tax returns.
25
<PAGE> 28
MASTER GUARANTEE REIMBURSEMENT AGREEMENTS
The Company has entered into a Master Guarantee Reimbursement Agreement
with Thermo Electron which provides that the Company will reimburse Thermo
Electron for any costs it incurs in the event it is required to pay third
parties pursuant to any guarantees it issues on the Company's behalf. Thermo
Instrument has entered into a similar agreement with Thermo Electron pursuant to
which Thermo Instrument has guaranteed the Company's obligation to so reimburse
Thermo Electron. The Company has also entered into a Master Guarantee
Reimbursement Agreement with Thermo Instrument which provides that the Company
will reimburse Thermo Instrument for any costs it incurs in the event that
Thermo Instrument is required to pay Thermo Electron or any other party pursuant
to any guarantees Thermo Instrument issues on the Company's behalf.
RELATED PARTY TRANSACTIONS
From time to time, the Company may transact business with other companies
in the Thermo Group. During fiscal 1996, these transactions included the
following:
The Company leases office and manufacturing space to ThermoSpectra
Corporation ("ThermoSpectra"), a majority-owned subsidiary of Thermo Instrument,
and Nicolet Biomedical Inc. ("Nicolet Biomedical"), a wholly owned subsidiary of
Thermo Electron, pursuant to an arrangement whereby the Company charges
ThermoSpectra and Nicolet Biomedical their allocated share of the occupancy
expenses of the Company's principal Wisconsin facility, based on the space
ThermoSpectra and Nicolet Biomedical utilize. The Company recorded operating
lease income of $913,000 in 1996 from these affiliates. These leases are
effective until December 31, 1998, but may be terminated by ThermoSpectra and
Nicolet Biomedical upon 30 days' prior notice to the Company.
The Company purchases and sells products in the ordinary course of
business with other subsidiaries of Thermo Electron. In 1996, the Company sold a
total of $28,155,000 of products to Thermo Electron subsidiaries and purchased a
total of $8,680,000 of products from such companies.
During 1996, the Company acquired various businesses from Thermo
Instrument. In April 1996, the Company acquired the Mattson Instruments and
Unicam Divisions of Analytical Technology, Inc. for $36,558,000 in cash. In
November 1996, the Company acquired Applied Research Laboratories S.A., V.G.
Elemental and four related sales offices for an aggregate of $55,196,000 in cash
and the assumption of $16,593,000 in debt. The purchase price paid by the
Company is subject to a post-closing adjustment to be negotiated with the former
owner of these businesses by Thermo Instrument. (See Note 2 to the Consolidated
Financial Statements of the Company.)
MISCELLANEOUS
The Company's cash equivalents are invested in a repurchase agreement with
Thermo Electron, pursuant to which the Company in effect lends cash to Thermo
Electron, which Thermo Electron collateralizes with investments principally
consisting of corporate notes, United States
26
<PAGE> 29
government agency securities, money market funds, commercial paper, and other
marketable securities, in the amount of at least 103% of such obligation. The
Company's funds subject to the repurchase agreement will be readily convertible
into cash by the Company and have an original maturity of three months or less.
The repurchase agreement earns a rate based on the 90-day Commercial Paper
Composite Rate plus 25 basis points, set at the beginning of each quarter. (See
Note 1 to Consolidated Financial Statements of the Company.)
MANAGEMENT
The Directors and executive officers of the Company are as follows:
NAME AGE POSITION
- ---- --- --------
Earl R. Lewis ........... 53 Chief Executive
Officer and Director
Dr. Robert J. Rosenthal . 40 President and Chief
Operating Officer
John N. Hatsopoulos ..... 62 Vice President and
Chief Financial
Officer
Kristine A. Langdon ..... 38 Vice President
Paul F. Kelleher ........ 54 Chief Accounting
Officer
Arvin H. Smith .......... 67 Chairman of the Board
and Director
Dr. George N. Hatsopoulos 70 Director
Stephen R. Levy(1) ...... 56 Director
Robert A. McCabe(1) ..... 62 Director
- ----------
(1) Member of the Audit and Human Resources Committees.
All of the Company's Directors are elected annually and hold office until
their respective successors are elected and qualified. Executive officers are
elected annually by the Board of Directors and serve at its discretion. Messrs.
Lewis, Hatsopoulos and Kelleher are employees of Thermo Electron and certain of
its subsidiaries other than the Company, but devote such time to the affairs of
the Company as the Company's needs reasonably require from time to time. Mr.
Lewis is also Executive Vice President and Chief Operating Officer of Thermo
Instrument, and is responsible for certain operations within Thermo Instrument
that are not related to the Company's operations.
Earl R. Lewis has been Chief Executive Officer and a Director of the
Company since its inception in August 1995. He also served as the Company's
President from August 1995 to April 1997. Mr. Lewis has been President and Chief
Operating Officer of Thermo Instrument since March 1997 and January 1996,
respectively, was Executive Vice President of
27
<PAGE> 30
Thermo Instrument from January 1996 to March 1997, was a Senior Vice President
of Thermo Instrument from January 1994 to January 1996, and was a Vice President
of Thermo Instrument from March 1992 to January 1994. Mr. Lewis is a director of
Thermo BioAnalysis Corporation, ThermoQuest Corporation, ThermoSpectra
Corporation and Trex Medical Corporation.
Robert J. Rosenthal was named President of the Company in April 1997,
having served as its Executive Vice President and Chief Operating Officer since
December 6, 1997. Prior to that time, Dr. Rosenthal served as the Company's
Senior Vice President since its inception in August 1995. Since 1984 he has
served in various capacities at Nicolet, and was named President of that company
in 1993.
John N. Hatsopoulos has served as a Vice President and the Chief Financial
Officer of the Company since its inception in August 1995. Mr. Hatsopoulos has
been a Vice President and Chief Financial Officer of Thermo Instrument since
1988. Mr. Hatsopoulos has been President of Thermo Electron since January 1997,
Chief Financial Officer of Thermo Electron since 1988 and was an Executive Vice
President of Thermo Electron from 1986 until January 1997. Mr. Hatsopoulos is
the brother of Dr. George N. Hatsopoulos, a Director of the Company.
Kristine A. Langdon has been Vice President of the Company since its
inception in August 1995. She was named President of Thermo Jarrell Ash in
January 1996 and has served as Chief Executive Officer and President of Thermo
Vision since its inception in January 1995. Ms. Langdon was Special Assistant to
the Presidents of Thermo Electron and Thermo Instrument from August 1991 to
April 1994 and Director of Business Development of Thermo Jarrell Ash from April
1994 until being named President of Thermo Vision. From 1987 to 1991, Ms.
Langdon was employed by McKinsey & Co., a management consulting firm, most
recently as an engagement manager.
Paul F. Kelleher has been the Chief Accounting Officer of the Company
since its inception in August 1995. Mr. Kelleher has been Vice President,
Finance of Thermo Electron since 1987 and served as its Controller from 1982 to
January 1996. He is a director of ThermoLase Corporation.
Arvin H. Smith has been a Director of the Company since its inception in
August 1995. Mr. Smith has been the Chairman of the Board and Chief Executive
Officer of Thermo Instrument since March 1997 and 1986, respectively, and was
President of Thermo Instrument from 1986 to March 1997. Mr. Smith also has been
an Executive Vice President of Thermo Electron since 1991 and a Senior Vice
President of Thermo Electron from 1986 to 1991. Mr. Smith is also a Director of
Thermo BioAnalysis Corporation, Thermo Instrument, Thermo Power Corporation,
ThermoQuest Corporation and ThermoSpectra Corporation.
George N. Hatsopoulos has been Chairman of the Board of Directors of the
Company since its inception in August 1995. He has served as Chairman and Chief
Executive Officer of Thermo Electron since he founded that company in 1956 and
as its President from 1956 to January 1997. Dr. Hatsopoulos is also a director
of Photoelectron Corporation, Thermo Ecotek Corporation, Thermo Electron, Thermo
Fibertek Inc., Thermo
28
<PAGE> 31
Instrument, Thermedics Inc., ThermoQuest Corporation and ThermoTrex Corporation.
Dr. Hatsopoulos is the brother of John N. Hatsopoulos, a Vice President and the
Chief Financial Officer of the Company.
Stephen R. Levy has been a Director of the Company since November 1995.
Since November 1995, Mr. Levy has been President of The Apogee Group, Inc., a
private venture capital company that he founded. Mr. Levy served as Chairman of
the Board and Chief Executive Officer of BBN Corporation, a high technology
company, from 1983 to 1994 and was President and Chief Executive Officer of BBN
Corporation from 1976 to 1983. He retired from BBN Corporation in 1995 and is
currently its Chairman Emeritus. He is also a director of BBN Corporation and
OneWave, Inc.
Robert A. McCabe has been a Director of the Company since March 1996. He
has served as President of Pilot Capital Corporation, which is engaged in
private investments and provides acquisition services, since 1987. Prior to that
time, Mr. McCabe was a Managing Director of Lehman Brothers Inc., an investment
banking firm. Mr. McCabe is also a director of Borg-Warner Security Corporation,
Church & Dwight Company and Thermo Electron.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company, Thermo Instrument or
Thermo Electron receive an annual retainer of $4,000 and a fee of $1,000 per day
for attending 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.
Dr. G. Hatsopoulos and Messrs. Lewis and Smith are all employees of Thermo
Electron companies and do not receive any cash compensation from the Company for
their services as Directors. Directors are also reimbursed for reasonable
out-of-pocket expenses incurred in attending such meetings.
Directors Deferred Compensation Plan. Under the Company's Deferred
Compensation Plan for Directors (the "Deferred Compensation Plan"), a Director
has the right to defer receipt of his 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 Company 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 Thermo Instrument 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 Thermo Instrument 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
29
<PAGE> 32
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 75,000
shares of Common Stock have been reserved for issuance under the Deferred
Compensation Plan. As of March 1, 1997, deferred units equal to 556.47 shares of
Common Stock were accumulated under the Deferred Compensation Plan.
Directors Stock Option Plan. The Company has adopted a directors stock
option plan (the "Plan") providing for the grant of stock options to purchase
shares of the Common Stock to outside Directors (Directors who are not employees
of the Company or any of its affiliates) 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 outside Directors. A total of 225,000 shares
of Common Stock have been reserved for issuance under the Plan.
Under the Plan, each eligible Director was granted an option to purchase
45,000 shares of Common Stock upon the effective date of the Company's initial
public offering. In addition, each new outside director who joined the Board of
Directors during 1996 was granted an option to purchase 45,000 shares of Common
Stock. The size of the award to new Directors appointed to the Board of
Directors after 1996 is reduced by 11,250 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 Company to repurchase such shares
at the exercise price in the event the Director ceases to serve as a Director of
the Company or any other Thermo Electron company. The restrictions and
repurchase rights lapse or are deemed to have lapsed in equal annual
installments of 11,250 shares per year, starting with the first anniversary of
the grant date, provided the Director has continuously served as a Director of
the Company 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 Company 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
Company's stockholders to be held in 2000. The annual grant will be made at the
close of business on the date of each annual meeting of stockholders of the
Company to each eligible 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 Company at the exercise price if
the recipient ceased to serve as a Director of the Company or any other Thermo
Electron company prior to the first anniversary of the grant date.
30
<PAGE> 33
The exercise price for options granted under the Plan is the average of
the closing prices reported by the American Stock Exchange (or other principal
exchange in which the Common stock is then traded) for the five trading days
immediately preceding and including the date the option is granted or, if the
shares are not then traded, at the last price paid per share by independent
investors in an arms-length transaction with the Company prior to the option
grant.
As of March 1, 1997, options to purchase 135,000 shares of Common Stock
were available for future grant under the Plan.
Stock Ownership Policies for Directors. 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 Company 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
a certain number of shares of the Company'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.
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table summarizes compensation for services to the Company
in all capacities awarded to, earned by or paid to the Company's chief executive
officer and its two other most highly compensated executive officers for the
last two fiscal years. No other executive officer of the Company met the
definition of "highly compensated" within the meaning of the Securities and
Exchange Commission's executive compensation disclosure rules.
The Company is required to appoint certain executive officers and
full-time employees of Thermo Electron as executive officers of the Company, in
accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Company's affairs is
provided to the Company under the Corporate Services Agreement between the
Company and Thermo Electron. Accordingly, the compensation for these individuals
is not reported in the following table. See "Relationship with Thermo Electron
and Thermo Instrument."
31
<PAGE> 34
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------------
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ------------
-------------------- SECURITIES UNDERLYING
NAME AND PRINCIPAL FISCAL OPTIONS (NO. OF SHARES ALL OTHER
POSITION YEAR SALARY BONUS AND COMPANY(1) COMPENSATION(2)
- ----------- ------- ------ ----- ---------------------- ---------------
<S> <C> <C> <C> <C> <C>
Earl R. Lewis 1996 $ 72,000 $ 64,000 225,000(TOC) $11,550(4)
Chief Executive 2,000(TFG)
Officer(3) 2,000(TLT)
2,000(TSR)
1995 $123,250 $ 76,500 150(TMO) $ 6,750
7,500(TBA)
5,000(TLZ)
- ---------------------------------------------------------------------------------------------------------------------
Robert J. Rosenthal 1996 $135,000 $120,000 112,500(TOC) $ 4,500
President and 150(TMO)
Chief Operating 10,000(TMQ)
Officer(5)
1995 $119,945 $ 97,000 15,000(TMO) $ 4,500
2,000(TBA)
- ---------------------------------------------------------------------------------------------------------------------
Kristine A. Langdon 1996 $100,000 $ 40,000 75,000(TOC) $ 5,344
Vice President 5,000(TMQ)
1995 $ 93,000 $ 35,000 -- $ 5,198
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Options granted by the Company are designated in the table as "TOC". In
addition, the named executive officers have been granted options to
purchase common stock of Thermo Electron companies from time to time as
part of Thermo Electron's stock option program. Options have been
granted to the named executive officers during the last two fiscal
years 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), ThermoLase Corporation (designated in the table as
TLZ), ThermoLyte Corporation (designated in the table as TLT),
ThermoQuest Corporation (designated in the table as TMQ) and Thermo
Sentron Inc. (designated in the table as TSR).
(2) Represents the amount of matching contributions made by the
individual's employer on behalf of the named executive officers
participating in the Thermo Electron 401(k) Plan or the Nicolet
Retirement Savings Plan.
(3) Mr. Lewis was appointed Chief Executive Officer of the Company in
August 1995 and Vice President of Thermo Electron in September 1996.
Mr. Lewis was also appointed Chief Operating Officer of Thermo
Instrument effective January 1996, and as such, is responsible for the
day-to-day operations of Thermo Instrument. A portion of Mr. Lewis'
annual cash compensation (salary and bonus) has been allocated to and
paid by Thermo Instrument and Thermo Electron in each of the last two
fiscal years for the time he devoted to his
32
<PAGE> 35
responsibilities to these companies. The annual cash compensation
(salary and bonus) reported in the table for Mr. Lewis represents the
amount paid by the Company and all other sources for Mr. Lewis'
services as its Chief Executive Officer. For calendar 1996 and 1995,
approximately 40% and 85%, respectively, of Mr. Lewis' salary and bonus
earned in all capacities throughout the Thermo Electron organization
was paid by the Company for his services as Chief Executive Officer.
(4) In addition to the matching contribution referred to in footnote (2),
such amount includes $4,800, which represents the amount of
compensation attributable to an interest-free loan provided to Mr.
Lewis pursuant to the Company's stock holding assistance plan. See
"Stock Holding Assistance Plan."
(5) Dr. Rosenthal was appointed President of the Company in April 1997. He
was appointed an Executive Vice President and Chief Operating Officer
of the Company in December 1996. Prior to that date, he was a Senior
Vice President of the Company.
STOCK OPTIONS GRANTED DURING FISCAL 1996
The following table sets forth information concerning individual grants
of stock options made during fiscal 1996 to the Company's Chief Executive
Officer and the other named executive officers. It has not been the Company's
policy in the past to grant stock appreciation rights, and no rights were
granted during fiscal 1996.
33
<PAGE> 36
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1996
- --------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF STOCK
TOTAL OPTIONS PRICE APPRECIATION FOR
NUMBER OF SECURITIES GRANTED TO EXERCISE OPTION TERM(2)
UNDERLYING OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ------------------------
NAME GRANTED(1) FISCAL YEAR SHARE DATE 5% 10%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Earl R. Lewis(3)............ 225,000 (TOC) 12.1% $12.00 04/11/08 $2,148,750 $5,773,500
2,000 (TFG) 0.4%(4) $10.00 09/12/08 $ 15,920 $ 42,760
2,000 (TLT) 0.6%(4) $10.00 03/11/08 $ 15,920 $ 42,760
2,000 (TSR) 0.4%(4) $14.00 03/11/08 $ 22,280 $ 59,880
- --------------------------------------------------------------------------------------------------------------------
Dr. Robert J. Rosenthal..... 112,500 (TOC) 6.0% $12.00 04/11/08 $1,074,375 $2,886,750
150 (TMO) 0.01%(4) $42.79 05/22/99 $ 1,011 $ 2,124
10,000 (TMQ) 0.4%(4) $13.00 02/08/08 $ 103,500 $ 278,000
- --------------------------------------------------------------------------------------------------------------------
Kristine A. Langdon......... 75,000 (TOC) 4.0% $12.00 04/11/08 $ 716,250 $1,924,500
5,000 (TMQ) 0.2%(4) $13.00 02/08/08 $ 51,750 $ 139,000
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All the options granted during the fiscal year are immediately
exercisable as of the end of the fiscal year, except options to
purchase the common stock 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 (the "Exchange Act") and (ii) nine
years after the grant date. In all cases, the shares acquired upon
exercise are subject to repurchase by the granting corporation at the
exercise price if the optionee ceases to be employed by such
corporation or another Thermo Electron company. The granting
corporation may exercise its repurchase rights within six months after
the termination of the optionee's employment. For 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 the optionee continues to be employed
by the Company 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 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, the optionholders' continued
employment through the option period and the date on which the options
are exercised.
34
<PAGE> 37
(3) Mr. Lewis has been granted options to purchase shares of the common
stock of Thermo Electron and its subsidiaries other than the Company.
These options are not reported in the table as they were granted as
compensation for service in capacities other than Mr. Lewis' capacity
as Chief Executive Officer of the Company.
(4) These options (a) were granted under stock option plans maintained by
Thermo Electron companies other than the Company and accordingly are
reported as a percentage of total options granted to employees of
Thermo Electron and its subsidiaries and (b) reflect a three-for-two
stock split of the common stock of Thermo Electron effected on June 5,
1996.
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 Company's Chief Executive Officer and the other named
executive officers. No stock appreciation rights were exercised or were
outstanding during fiscal 1996.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND FISCAL 1996 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 UNEXERCISABLE)(1) OPTIONS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Earl R. Lewis(2)............ Thermo Optek -- -- 225,000 /0 $ 0 /--
Thermo Fibergen -- -- 2,000 /0 $ 1,500 /--
ThermoLyte -- -- 0 /2,000 $ -- /0(5)
Thermo Sentron -- -- 2,000 /0 $ 0 /--
- --------------------------------------------------------------------------------------------------------------------
Dr. Robert J. Rosenthal..... Thermo Optek -- -- 112,500 /0 $ 0 /--
Thermo Electron -- -- 30,900 /0(3) $ 390,976 /--
Thermo BioAnalysis -- -- 2,000 /0 $ 6,250 /--
Thermo Instrument -- -- 60,890 /0 $1,064,971 /--
ThermoQuest -- -- 10,000 /0 $ 0 /--
ThermoSpectra -- -- 2,500 /0 $ 4,688 /--
- --------------------------------------------------------------------------------------------------------------------
Kristine A. Langdon(4)...... Thermo Optek -- -- 75,000 /0 $ 0 /--
ThermoQuest -- -- 5,000 /0 $ 0 /--
ThermoSpectra -- -- 400 /0 $ 750 /--
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All of the options reported outstanding at the end of the fiscal year
were immediately exercisable as of fiscal year-end, except options to
purchase the common stock 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 Exchange Act and (ii) nine years after the grant date. In all
cases, the shares acquired upon exercise of the
35
<PAGE> 38
options reported in the table are subject to repurchase by the granting
corporation at the exercise price if the optionee ceases to be employed
by such corporation or another Thermo Electron company. The granting
corporation may exercise its repurchase rights within six months after
the termination of the optionee's employment. For publicly traded
companies, the repurchase rights generally lapse ratably over a five-
to ten-year period, depending on the option term which may vary from
seven to twelve years, provided that the optionee continues to be
employed by the granting corporation or another Thermo Electron
company. For companies that are not publicly traded, the repurchase
rights generally lapse in their entirety on the ninth anniversary of
the grant date. 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. Information with respect to options to purchase
the common stock of Thermo Electron reflect a three-for-two stock split
effected on June 5, 1996.
(2) Mr. Lewis holds unexercised options to purchase shares of the common
stock of Thermo Electron and its subsidiaries other than the Company.
These options are not reported here as they were granted as
compensation for service to other Thermo Electron companies in
capacities other than in his capacity as Chief Executive Officer of the
Company.
(3) Options to purchase 15,750 shares of the common stock of Thermo
Electron granted to Dr. Rosenthal are subject to the same terms as
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 optionee'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.
(4) Ms. Langdon became an employee of the Company on April 1, 1994 and was
named President of Thermo Vision Corporation, a wholly owned subsidiary
of the Company, in January 1995. Prior to that date, she had been
employed by Thermo Electron, and had been granted options to purchase
shares of the common stock of Thermo Electron and its subsidiaries
other than the Company as compensation for her service to Thermo
Electron. These options are not reported here as they were granted as
compensation for service to other Thermo Electron companies and prior
to her service to the Company.
(5) No public market for the shares underlying these options existed at
fiscal year-end. Accordingly, no value in excess of the exercise price
has been attributed to these options.
36
<PAGE> 39
STOCK HOLDING ASSISTANCE PLAN
During 1996, the Human Resources Committee of the Company's Board of
Directors (the "Committee") established a stock holding policy for executive
officers of the Company. The stock holding policy specifies an appropriate level
of ownership of the Company'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 Company 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. During 1996, Mr. Lewis
received a loan in the principal amount of $194,029.50 under this plan to
purchase 15,000 shares of the Common Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDER
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of March 1, 1997 with respect to each
person who was known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock.
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class
- ------------------- ----------------------- --------
<S> <C> <C>
Thermo Instrument Systems Inc.(1) 45,000,000 93%
1275 Hammerwood Avenue
Sunnyvale, California
94089
</TABLE>
- ----------
(1) The shares of the Common Stock beneficially owned by Thermo Instrument
are held by Optek-Nicolet Holdings Inc., a wholly owned subsidiary of
Thermo Instrument. Thermo Instrument is a majority-owned subsidiary of
Thermo Electron and, therefore, Thermo Electron may be deemed to be a
beneficial owner of the shares of Common Stock beneficially owned by
Thermo Instrument. Thermo Electron disclaims beneficial ownership of
these shares.
37
<PAGE> 40
MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of December 28, 1996 as well as
information regarding the beneficial ownership of the Common Stock and the
common stock of Thermo Instrument and Thermo Electron, as of March 1, 1997, with
respect to (i) each Director, (ii) each executive officer named in the summary
compensation table above, and (iii) all Directors and current executive officers
as a group.
While certain Directors or executive officers of the Company are also
directors and executive officers of Thermo Instrument or its subsidiaries other
than the Company, all such persons disclaim beneficial ownership of the shares
of Common Stock owned by Thermo Instrument.
<TABLE>
<CAPTION>
Thermo Thermo
Thermo Optek Instrument Electron
Name(1) Corporation(2) Systems Inc.(3) Corporation(4)
<S> <C> <C> <C>
Earl R. Lewis............... 254,000 128,233 124,184
Robert J. Rosenthal......... 113,500 61,441 31,350
Kristine A. Langdon......... 75,500 7,417 16,452
Arvin H. Smith.............. 98,000 431,667 513,038
George N. Hatsopoulos....... 110,000 143,314 3,512,279
Stephen R. Levy............. 47,556 0 0
Robert A. McCabe............ 48,000 53,504 47,515
All Directors and
current executive
officers as a group
(9 persons)................. 872,556 925,472 4,916,584
- -------------------------------------------------------------------------
</TABLE>
(1) Except as reflected in the footnotes to this table, shares of Common
Stock and the common stock of Thermo Instrument and Thermo Electron
beneficially owned include shares owned by the indicated person and by
that person for the benefit of minor children, and all share ownership
involves sole voting and investment power.
(2) Shares of the Common Stock beneficially owned by each Director and
executive officer and by all Directors and executive officers as a
group exclude 45,000,000 shares beneficially owned by Thermo
Instrument, as to which shares each Director and executive officer and
all members of such group disclaim beneficial ownership. Shares of the
Common Stock beneficially owned by Dr. Hatsopoulos, Ms. Langdon, Mr.
Levy, Mr. Lewis, Mr. McCabe, Dr. Rosenthal, Mr. Smith and all Directors
and executive officers as a group include 90,000, 75,000, 45,000,
225,000, 45,000, 112,500, 90,000 and 778,500 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 beneficially owned by Ms.
38
<PAGE> 41
Langdon include a total of 500 shares held by her as custodian for two
minor children. Shares of the Common Stock beneficially owned by Mr.
Lewis include 2,500 shares owned by his spouse and a total of 2,000
shares owned by his sons. 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 1.8%
of the Common Stock outstanding as of such date.
(3) Shares of the common stock of Thermo Instrument beneficially owned by
Dr. Hatsopoulos, Ms. Langdon, Mr. Levy, Mr. Lewis, Mr. McCabe, Dr.
Rosenthal, Mr. Smith and all Directors and executive officers as a
group include 93,750, 7,124, 112,500, 10,995, 60,890, 234,375 and
600,529 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 Thermo Instrument
beneficially owned by Dr. Hatsopoulos, Mr. Smith and all Directors and
executive officers as a group include 529, 530 and 1,984 shares,
respectively, allocated through March 1, 1997 to their respective
accounts maintained pursuant to Thermo Electron's employee stock
ownership plan ("ESOP"). The trustees of the ESOP, who have investment
power over its assets, are executive officers of Thermo Electron.
Shares beneficially owned by Dr. Hatsopoulos include 21,368 shares held
by his spouse and 50 shares allocated to the account of his spouse
maintained pursuant to the ESOP. Shares beneficially owned by Mr. Lewis
include 2,390 shares held by Mr. Lewis' spouse. The Directors and
executive officers of the Company did not individually or as a group
beneficially own more than 1% of the common stock of Thermo Instrument
outstanding as of March 1, 1997.
(4) The shares of common stock of Thermo Electron shown in the table have
been adjusted to reflect a three-for-two stock split effected on June
5, 1996 in the form of a 50% stock dividend. Shares of the common stock
of Thermo Electron beneficially owned by Dr. Hatsopoulos, Ms. Langdon,
Mr. Lewis, Mr. McCabe, Dr. Rosenthal, Mr. Smith and all Directors and
executive officers as a group include 1,499,500, 15,750, 121,536,
9,375, 30,900, 222,411 and 2,426,731 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 Thermo Electron beneficially owned by Dr. Hatsopoulos, Mr. Smith and
all Directors and executive officers as a group include 2,164, 1,717
and 7,139 full shares, respectively, allocated through March 1, 1997 to
their respective accounts maintained pursuant to the ESOP. Shares of
the common stock of Thermo Electron beneficially owned by Mr. McCabe
and all Directors and executive officers as a group include 34,725 full
shares allocated to Mr. McCabe's account under Thermo Electron's
Deferred Compensation Plan for Directors. Shares beneficially owned by
Dr. Hatsopoulos include 89,601 shares held by Dr. Hatsopoulos' spouse,
168,750 shares held by a QTIP trust of which Dr. Hatsopoulos' spouse is
a trustee, 39,937 shares held by a family trust of which Dr.
Hatsopoulos' spouse is the trustee, and 153 shares allocated to the
account of Dr. Hatsopoulos' spouse maintained pursuant to the ESOP.
Shares beneficially owned by Ms.
39
<PAGE> 42
Langdon include 310 shares held by her as custodian for two minor
children. Dr. Hatsopoulos beneficially owned approximately 2.3% of the
common stock of Thermo Electron outstanding as of March 1, 1997; all
Directors and executive officers as a group beneficially owned
approximately 3.2% of such common stock as of such date.
40
<PAGE> 43
SELLING SHAREHOLDERS
The Selling Shareholders currently hold Debentures convertible into the
Shares which are the subject of this Prospectus. It is unknown if, when or in
what amounts a Selling Shareholder may offer Shares for sale and there can be no
assurance that the Selling Shareholders will sell any or all of the Shares
offered hereby.
Because the Selling Shareholders may offer all or some of the Shares
pursuant to the offering contemplated by this Prospectus, and because there are
currently no agreements, arrangements or understandings with respect to the sale
of any of the Shares that will be held by the Selling Shareholders after
completion of this offering, no estimate can be given as to the amount of the
Shares that will be held by the Selling Shareholders after completion of this
offering. To the best of the Company's knowledge, none of the Selling
Shareholders, other than Mr. Robert McCabe, currently owns any shares of Common
Stock.
Other than as a result of the ownership of the Debentures, to the best
of the Company's knowledge, none of the Selling Shareholders other than Mr.
Robert McCabe, a Director of the Company, had any material relationship with the
Company within the three year period ending on the date of this Prospectus.
The names of the Selling Shareholders, the principal amount of
Debentures held by each of them, and the number of Shares into which such
Debentures are convertible are set forth below.
<TABLE>
<CAPTION>
NUMBER OF
SHARES INTO
PRINCIPAL WHICH DEBEN-
AMOUNT OF TURES ARE
NAME DEBENTURES CONVERTIBLE(1)
- ---- ---------- --------------
<S> <C> <C>
ABN Amro Bank ...................... $ 100,000 6,734
Bank Julius Baer & Co., Ltd. ....... 1,410,000 94,949
Bank Sarasin et Cie ................ 500,000 33,670
Bank Von Ernst and Cie AG .......... 75,000 5,050
BHF Securities Corporation ......... 300,000 20,202
Blondell Establishment ............. 200,000 13,468
Bober & Co. ........................ 9,496,000 639,461
Boyd & Co. ......................... 1,600,000 107,744
Brown Brothers Harriman & Co. ...... 110,000 7,407
Cantrade Private Bank .............. 100,000 6,734
Cie de Gestion et de Banque Gonet
SA.................................. 125,000 8,417
Clariden Bank Zurich ............... 75,000 5,050
Credit Suisse Zurich ............... 75,000 5,050
</TABLE>
41
<PAGE> 44
<TABLE>
<CAPTION>
NUMBER OF
SHARES INTO
PRINCIPAL WHICH DEBEN-
AMOUNT OF TURES ARE
NAME DEBENTURES CONVERTIBLE(1)
- ---- ---------- --------------
<S> <C> <C>
Cudd & Co. ....................... 850,000 57,239
Darier Hentsch et Cie ............ 9,530,000 641,750
Egger & Co. ...................... 1,750,000 117,845
Forbank & Co. .................... 4,575,000 308,080
Gerlach & Co. .................... 2,340,000 157,575
Greig Middleton Ltd. ............. 5,000 336
Gorman & Co. ..................... 50,000 3,367
Hare & Co. ....................... 12,938,000 871,245
J. Romeo & Co. ................... 745,000 50,168
Kink & Co. ....................... 100,000 6,734
Lehman Brothers Inc. ............. 2,284,000 153,804
LGT Bank in Lichenstein AG ....... 50,000 3,367
Loco & Co. ....................... 1,025,000 69,023
Petronome Corp. .................. 250,000 16,835
Prudential Securities Incorporated 100,000 6,734
Rush & Co. ....................... 3,875,000 260,942
Swiss Volksbank Switzerland ...... 40,000 2,693
TFinn & Co. ...................... 920,000 61,952
Verwaltungs und Privat Bank AG ... 100,000 6,734
Zvercher Kantonalbank Switzerland 500,000 33,670
Akkad & Co. ...................... 5,000,000 336,700
Alpine & Co. ..................... 250,000 16,385
Artistic Investments Ltd. ........ 90,000 6,060
Auer & Co. ....................... 800,000 53,872
Banque San Paolo ................. 500,000 33,670
Biltrust Ltd. .................... 405,000 27,272
Booth & Co. ...................... 530,000 35,690
Bost & Co. ....................... 6,460,000 435,016
Bridgerope & Co. ................. 1,585,000 106,734
C.O. Nominees Limited/Chelmsford
Essex ............................ 150,000 10,101
Catamaran & Co. .................. 1,065,000 71,717
Comar Inc. ....................... 200,000 13,468
DeckAnchor & Co. ................. 2,000,000 134,680
Fuelship & Co. ................... 430,000 28,956
</TABLE>
42
<PAGE> 45
<TABLE>
<CAPTION>
NUMBER OF
SHARES INTO
PRINCIPAL WHICH DEBEN-
AMOUNT OF TURES ARE
NAME DEBENTURES CONVERTIBLE(1)
- ---- ---------- --------------
<S> <C> <C>
Glyns Nominees Limited ........... 350,000 23,569
Robert A. McCabe ................. 100,000 6,734
Merrill Lynch Pierce Fenner &
Smith Incorporated ............... 250,000 16,835
Muico & Co. ...................... 3,852,000 259,393
Northman & Co. ................... 580,000 39,057
Pitt & Co. ....................... 350,000 23,569
Republic New York Securities Corp. 250,000 16,835
Salkeld & Co. .................... 2,000,000 134,680
Tamarack & Co. ................... 2,430,000 163,636
Comdisco Foundation .............. 100,000 6,734
Hal Kirshner ..................... 200,000 13,468
William Pontikees 1985 Family
Trust ............................ 100,000 6,734
</TABLE>
- ----------------
(1) Share amounts set forth in the table do not include fractional amounts
which will be cashed out at the time of any conversion of Debentures
into Shares.
SALE OF SHARES
The Company will not receive any of the proceeds from this offering.
The Shares offered hereby may be sold from time to time by or for the account of
any of the Selling Shareholders or by their pledgees, donees, distributees or
transferees or other successors in interest to the Selling Shareholders. The
Shares may be sold hereunder directly to purchasers by the Selling Shareholders
in negotiated transactions; by or through brokers or dealers in ordinary
brokerage transactions or transactions in which the broker solicits purchasers;
block trades in which the broker or dealer will attempt to sell the Shares as
agent but may position and resell a portion of the block as principal;
transactions in which a broker or dealer purchases as principal for resale for
its own account; or through underwriters or agents. The Shares may be sold at a
fixed offering price, which may be changed, at the prevailing market price at
the time of sale, at prices related to such prevailing market price or at
negotiated prices. Any brokers, dealers, underwriters or agents may arrange for
others to participate in any such transaction and may receive compensation in
the form of discounts, commissions or concessions from the Selling Shareholders
and/or the purchasers of the Shares. Each Selling Shareholder will be
responsible for payment of any and all commissions to brokers.
43
<PAGE> 46
The aggregate proceeds to any Selling Shareholder from the sale of the
Shares offered by a Selling Shareholder hereby will be the purchase price of
such Shares less any broker's commissions.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdiction only through registered
or licensed brokers or dealers. In addition, in certain states the Shares may
not be sold unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Any Selling Shareholder and any broker-dealer, agent or underwriter
that participates with the Selling Shareholder in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act, in
which event any commissions received by such broker-dealers, agents or
underwriters and any profit on the resale of the Shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
DESCRIPTION OF CAPITAL STOCK
As of April 1, 1997, the Company had 100,000,000 shares of Common Stock
authorized for issuance, of which 48,450,000 are issued and outstanding. Each
share of Common Stock is entitled to pro rata participation in distributions
upon liquidation and to one vote on all matters submitted to a vote of
stockholders. Dividends may be paid to the holders of Common Stock when and if
declared by the Board of Directors out of funds legally available therefor.
Holders of Common Stock have no preemptive or similar rights. The outstanding
shares of Common Stock are, and the shares offered hereby when issued will be,
legally issued, fully paid and nonassessable.
The shares of Common Stock have noncumulative voting rights, which
means that the holders of more than 50% of the shares voting can elect all the
Directors if they so choose, and in such event, the holders of the remaining
shares cannot elect any Directors. Thermo Instrument beneficially owns
45,000,000 shares of Common Stock, which represents approximately 93% of the
outstanding Common Stock, and has the power to elect all of the members of the
Company's Board of Directors.
The Company's Certificate of Incorporation contains certain provisions
permitted under the General Corporation Law of Delaware relating to the
liability of Directors. The provisions eliminate a Director's liability for
monetary damages for a breach of fiduciary duty, except in certain circumstances
involving wrongful acts or omissions, which involve intentional misconduct or a
knowing violation of law. The Company's Certificate of Incorporation also
contains provisions to indemnify the Directors and officers of the Company to
the fullest extent permitted by the General Corporation Law of Delaware. The
Company believes that these provisions will assist the Company in attracting and
retaining qualified individuals to serve as Directors and officers.
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
44
<PAGE> 47
SHARES ELIGIBLE FOR FUTURE SALE
There are currently 48,450,000 shares of Common Stock of the Company
outstanding, of which 3,450,000 are freely tradable without restriction or
further registration under the Securities Act, except for any shares purchased
by affiliates of the Company as that term is defined in Rule 144 under the
Securities Act.
The remaining 45,000,000 shares are beneficially owned by Thermo
Instrument. Thermo Instrument may sell its shares of Common Stock in an offering
registered under the Securities Act or pursuant to an exemption from such
registration. So long as Thermo Instrument is able to elect a majority of the
Board of Directors it will be able to cause the Company at any time to register
under the Securities Act all or a portion of the Common Stock owned by Thermo
Instrument or its affiliates, in which case it would be able to sell such shares
without restriction upon effectiveness of the registration statement.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted shares for at
least two years is entitled to sell, within any three-month period, a number of
such shares that does not exceed the greater of (i) 1% of the then outstanding
shares of Common Stock or (ii) the average weekly trading volume in the Common
Stock during the four calendar weeks preceding the date of the notice filed
pursuant to Rule 144. Sales under Rule 144 are also subject to certain manner of
sale restrictions and notice requirements and to the availability of current
public information about the Company. In addition, a person who is deemed an
"affiliate" of the Company must comply with Rule 144 in any sale of shares of
Common Stock not covered by a registration statement (except, in the case of
registered shares acquired by the affiliate on the open market, for the holding
period requirement). A person (or person whose shares are aggregated) who is not
deemed an "affiliate" of the Company and who has beneficially owned restricted
shares for at least three years is entitled to sell such shares under Rule
144(k) without regard to the volume, notice and other limitations of Rule 144.
In meeting the two and three year holding periods described above, a holder of
restricted shares can include the holding periods of a prior owner who was not
an affiliate. The Securities and Exchange Commission has recently adopted
certain changes to Rule 144. Effective April 29, 1997, the three year and two
year holding periods described above will be shortened to two years and one
year, respectively.
As of March 29, 1997, the Company had options outstanding to purchase
up to 2,383,575 shares of Common Stock to its employees and Directors at a
weighted average exercise price of $12.07 per share. Such options are currently
exercisable, subject to repurchase at the exercise price if the optionee ceases
to be employed by the Company. As of March 29, 1997, the repurchase right had
not lapsed with respect to any shares issuable upon exercise of outstanding
options. In addition, the Company has reserved 616,425 shares for future grant
under its existing stock-based compensation plans. The Company has filed
registration statements under the Securities Act to register all shares of
Common Stock issuable under such plans.
45
<PAGE> 48
As of March 29, 1997, the Company had outstanding $96,250,000 in
aggregate principal amount of 5% Convertible Subordinated Debentures due 2000
(the "Debentures"). Of such amount, $10,000,000 in aggregate principal amount of
Debentures is held by Thermo Electron. The Debentures are convertible into the
shares of Common Stock registered hereby. Shares issuable upon conversion of the
Debentures will be eligible for sale in the public market after the
effectiveness of the Registration Statement of which this Prospectus forms a
part.
LEGAL OPINIONS
The validity of the issuance of the Common Stock offered hereby has
been passed upon for the Company by Seth H. Hoogasian, Esq., General Counsel of
Thermo Electron, Thermo Instrument and the Company. Mr. Hoogasian is a full-time
employee of Thermo Electron and, at the time his opinion was issued, owned or
had the right to acquire 6,000 shares of Common Stock, 16,737 shares of common
stock of Thermo Instrument and 118,177 shares of common stock of Thermo
Electron.
EXPERTS
The financial statements of the Company included in this Prospectus and
the financial statement schedule included in the Registration Statement of which
this Prospectus forms a part have been audited by Arthur Andersen LLP,
independent public accountants, to the extent and for the periods as indicated
in this report with respect thereto, and are included herein in reliance upon
the authority of said firm as experts in giving said reports.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (together with all amendments
and exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended, with respect to the securities offered hereby. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information, reference is made to the
Registration Statement, copies of which may be obtained upon payment of the fees
prescribed by the Commission from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at 7 World Trade Center, New York, New York 10048
and at 500 West Madison Street, Chicago, Illinois 60661.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at Seven World
Trade Center, New York, New York 10048 and at 500 West Madison Street, Chicago,
Illinois 60661.
46
<PAGE> 49
Copies of such material can also be obtained from the Public Reference Section
of the commission at 450 Fifth Street, N.W., Washington, D.C. at prescribed
rates. The Commission also maintains a Web site at (http:\\www.sec.gov). The
Common Stock of the Company is listed on the American Stock Exchange, and the
reports, proxy statements and other information filed by the Company with the
Commission can be inspected at the office of the American Stock Exchange, 86
Trinity Place, New York, New York 10006.
Index to Financial Statements
Thermo Optek Corporation
Report of Independent Public Accountants F-2
Consolidated Statement of Income for the years ended
December 28, 1996, December 30, 1995, and
December 31, 1994 F-3
Consolidated Balance Sheet as of December 28, 1996, and
December 30, 1995 F-4
Consolidated Statement of Cash Flows for the years ended
December 28, 1996, December 30, 1995, and
December 31, 1994 F-6
Consolidated Statement Shareholders' Investment for the
years ended December 28, 1996, December 30, 1995, and
December 31, 1994 F-8
Notes to Consolidated Financial Statements F-9
F-1PAGE
<PAGE>
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Thermo Optek Corporation:
We have audited the accompanying consolidated balance sheet of Thermo
Optek Corporation (a Delaware corporation and 93%-owned subsidiary of
Thermo Instrument Systems Inc.) and subsidiaries as of December 28, 1996,
and December 30, 1995, and the related consolidated statements of income,
shareholders' investment, and cash flows for each of the three years in
the period ended December 28, 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Thermo Optek Corporation and subsidiaries as of December 28, 1996, and
December 30, 1995, and the results of their operations and their cash
flows for each of the three years in the period ended December 28, 1996,
in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
February 11, 1997
F-2PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Consolidated Statement of Income
(In thousands except per share amounts) 1996 1995 1994
------------------------------------------------------------------------
Revenues (Notes 7 and 10) $350,639 $212,152 $165,398
-------- -------- --------
Costs and Operating Expenses:
Cost of revenues (Note 7) 188,631 108,590 82,124
Selling, general, and administrative
expenses (Note 7) 98,316 62,109 46,532
Research and development expenses 21,979 13,018 10,496
-------- -------- --------
308,926 183,717 139,152
-------- -------- --------
Operating Income 41,713 28,435 26,246
Interest Income 5,479 1,514 89
Interest Expense (6,772) (2,450) (1,672)
-------- -------- --------
Income Before Provision for Income
Taxes 40,420 27,499 24,663
Provision for Income Taxes (Note 5) 17,019 11,490 10,240
-------- -------- --------
Net Income $ 23,401 $ 16,009 $ 14,423
======== ======== ========
Earnings per Share $ .50 $ .35 $ .32
======== ======== ========
Weighted Average Shares 46,944 45,157 45,157
======== ======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
F-3PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Consolidated Balance Sheet
(In thousands) 1996 1995
-----------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $ 63,641 $116,890
Accounts receivable, less allowances of
$4,436 and $5,669 79,568 62,250
Inventories 62,684 44,116
Prepaid expenses 5,961 4,221
Prepaid income taxes (Note 5) 15,254 11,955
Due from affiliated companies (Note 7) 11,919 -
-------- --------
239,027 239,432
-------- --------
Property, Plant, and Equipment, at Cost, Net 53,586 42,001
-------- --------
Patents and Other Assets 10,232 11,400
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Notes 2 and 5) 195,513 140,049
-------- --------
$498,358 $432,882
======== ========
F-4PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Consolidated Balance Sheet (continued)
(In thousands except share amounts) 1996 1995
-----------------------------------------------------------------------
Liabilities and Shareholders' Investment
Current Liabilities:
Notes payable and current maturities of
long-term obligations (Note 8) $ 27,736 $ 18,041
Accounts payable 23,101 19,657
Accrued payroll and employee benefits 11,494 7,551
Accrued commissions 6,377 5,301
Accrued income taxes 12,425 5,401
Accrued installation and warranty expenses 11,953 4,194
Deferred revenue 14,568 8,858
Other accrued expenses (Note 2) 27,484 25,888
-------- --------
135,138 94,891
-------- --------
Deferred Income Taxes (Note 5) 13,865 12,293
-------- --------
Other Deferred Items 3,413 3,631
-------- --------
Long-term Obligations (Note 8) 96,778 101,079
-------- --------
Commitments and Contingency (Note 6)
Shareholders' Investment (Notes 3 and 4):
Common stock, $.01 par value, 100,000,000 shares
authorized; 48,450,000 and 45,000,000 shares
issued and outstanding 485 450
Capital in excess of par value 222,123 215,342
Retained earnings 28,663 5,262
Cumulative translation adjustment (2,107) (66)
-------- --------
249,164 220,988
-------- --------
$498,358 $432,882
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
F-5PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Consolidated Statement of Cash Flows
(In thousands) 1996 1995 1994
------------------------------------------------------------------------
Operating Activities:
Net income $ 23,401 $ 16,009 $ 14,423
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 6,394 3,962 3,693
Amortization 4,856 2,760 2,294
Provision for losses on accounts
receivable 907 378 521
Deferred income tax (benefit)
expense (354) (370) 2,144
Other noncash expenses 1,813 1,231 1,201
Changes in current accounts,
excluding the effects of
acquisitions:
Accounts receivable (610) (5,856) (1,828)
Inventories 668 3,158 (35)
Other current assets (3,919) (70) 763
Accounts payable (8,574) (896) 3,990
Other current liabilities 1,373 2,099 (7,389)
Other 1,134 383 26
--------- --------- ---------
Net cash provided by operating
activities 27,089 22,788 19,803
--------- --------- ---------
Investing Activities:
Acquisitions, net of cash acquired
(Note 2) (67,583) (12,593) -
Payment to parent company for
acquired businesses (Note 2) (36,558) - -
Purchases of property, plant, and
equipment (7,502) (2,681) (1,804)
Other (927) 1,028 (1,049)
--------- --------- ---------
Net cash used in investing activities $(112,570) $ (14,246) $ (2,853)
--------- --------- ---------
F-6PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Consolidated Statement of Cash Flows (continued)
(In thousands) 1996 1995 1994
-----------------------------------------------------------------------
Financing Activities:
Net proceeds from issuance of
Company common stock (Note 4) $ 42,937 $ - $ -
Repayment of short-term obligations,
net (6,163) (475) (1,968)
Repayment of long-term obligations (4,221) (618) (7,278)
Net proceeds from issuance of
subordinated convertible
debentures (Note 8) - 93,895 -
Transfer from parent company to
fund acquisition of Baird - 12,926 -
Net transfer to parent company - (100) (9,054)
-------- -------- --------
Net cash provided by (used in)
financing activities 32,553 105,628 (18,300)
-------- -------- --------
Exchange Rate Effect on Cash (321) (538) 160
-------- -------- --------
Increase (Decrease) in Cash and
Cash Equivalents (53,249) 113,632 (1,190)
Cash and Cash Equivalents at Beginning
of Year 116,890 3,258 4,448
-------- -------- --------
Cash and Cash Equivalents at End
of Year $ 63,641 $116,890 $ 3,258
======== ======== ========
Cash Paid For:
Interest $ 6,313 $ 1,285 $ 1,676
Income taxes $ 10,771 $ 187 $ 335
Noncash Activities:
Transfer of acquired businesses
from parent company $ - $ 36,558 $ 3,401
Fair value of assets of acquired
companies $133,312 $ 20,901 $ -
Cash paid for acquired companies (72,065) (12,926) -
-------- -------- --------
Liabilities assumed of acquired
companies $ 61,247 $ 7,975 $ -
======== ======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
F-7PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Consolidated Statement of Shareholders' Investment
(In thousands) 1996 1995 1994
----------------------------------------------------------------------------
Common Stock, $.01 Par Value
Balance at beginning of year $ 450 $ - $ -
Issuance of Company common stock (Note 4) 35 - -
Capitalization of Company - 300 -
Effect of three-for-two stock split - 150 -
-------- -------- --------
Balance at end of year 485 450 -
-------- -------- --------
Capital in Excess of Par Value
Balance at beginning of year 215,342 - -
Issuance of Company common stock (Note 4) 42,902 - -
Tax benefit related to employees' and
directors' stock plans 437 - -
Payment to parent company for acquired
businesses (Note 2) (36,558) - -
Transfer of acquired businesses from parent
company - 36,558 -
Capitalization of Company - 178,934 -
Effect of three-for-two stock split - (150) -
-------- -------- --------
Balance at end of year 222,123 215,342 -
-------- -------- --------
Retained Earnings
Balance at beginning of year 5,262 - -
Net income after capitalization of Company 23,401 5,262 -
-------- -------- --------
Balance at end of year 28,663 5,262 -
-------- -------- --------
Cumulative Translation Adjustment
Balance at beginning of year (66) 514 27
Translation adjustment (2,041) (580) 487
-------- -------- --------
Balance at end of year (2,107) (66) 514
-------- -------- --------
Net Parent Company Investment
Balance at beginning of year - 155,661 146,891
Net income prior to capitalization of
Company - 10,747 14,423
Net transfer to parent company - (100) (9,054)
Transfer from parent company to fund
acquisition of Baird - 12,926 -
Transfer of acquired business from parent
company - - 3,401
Capitalization of Company - (179,234) -
-------- -------- --------
Balance at end of year - - 155,661
-------- -------- --------
Total Shareholders' Investment $249,164 $220,988 $156,175
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
F-8PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Thermo Optek Corporation (the Company) develops, manufactures, and
markets analytical instruments that are used in the quantitative and
qualitative chemical analysis of elements and molecular compounds, and
has technologies in electro-optic components and systems. The Company's
instruments are used by its customers for productivity enhancement,
research and development, quality control, and testing applications in
the environmental testing, chemical, metallurgical, food and beverage,
pharmaceutical, and petroleum industries; and by forensic laboratories,
research organizations, and educational institutions.
Relationship with Thermo Instrument Systems Inc. and Thermo Electron
Corporation
The Company was incorporated in August 1995 as a wholly owned
subsidiary of Thermo Instrument Systems Inc. (Thermo Instrument). After
the formation of the Company, Thermo Instrument transferred to the
Company all of the assets, liabilities, and businesses of Nicolet
Instrument Corporation (Nicolet) and Thermo Jarrell Ash Corporation (TJA)
in exchange for 45,000,000 shares of the Company's common stock. As of
December 28, 1996, Thermo Instrument owned 45,000,000 shares of the
Company's common stock, representing 93% of such stock outstanding.
Thermo Instrument is an 82%-owned subsidiary of Thermo Electron
Corporation (Thermo Electron). As of December 28, 1996, Thermo Electron
owned 144,900 shares of the Company's common stock, representing 0.3% of
such stock outstanding.
Principles of Consolidation
The accompanying financial statements include the accounts of the
Company and its wholly owned subsidiaries. All material intercompany
accounts and transactions have been eliminated.
Fiscal Year
The Company has adopted a fiscal year ending the Saturday nearest
December 31. References to 1996, 1995, and 1994 are for the fiscal years
ended December 28, 1996, December 30, 1995, and December 31, 1994,
respectively.
Revenue Recognition
The Company recognizes product revenues upon shipment of its products
and recognizes service contract revenues ratably over the term of the
contract. The Company provides a reserve for its estimate of warranty and
installation costs at the time of shipment. Deferred revenue in the
accompanying balance sheet consists primarily of unearned revenue on
service contracts. Substantially all of the deferred revenue included in
the accompanying 1996 balance sheet will be recognized within one year.
Revenues earned on contracts in process in excess of billings are
included in inventories in the accompanying balance sheet and were not
material at year-end 1996 and 1995.
F-9PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Stock-based Compensation Plans
The Company applies Accounting Principles Board Opinion (APB) No.
25, "Accounting for Stock Issued to Employees" and related
interpretations in accounting for its stock-based compensation plans
(Note 3). Accordingly, no accounting recognition is given to stock
options granted at fair market value until they are exercised. Upon
exercise, net proceeds, including tax benefits realized, are credited to
equity.
Income Taxes
The Company and Thermo Instrument have a tax allocation agreement
under which both the Company and Thermo Instrument are included in Thermo
Electron's consolidated federal and certain state income tax returns. The
agreement provides that in years in which the Company has taxable income,
it will pay to Thermo Electron amounts comparable to the taxes the
Company would have paid if it had filed separate tax returns. If Thermo
Instrument's equity ownership of the Company were to drop below 80%, the
Company would be required to file its own federal income tax return.
In accordance with Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," the Company recognizes deferred
income taxes based on the expected future tax consequences of differences
between the financial statement basis and the tax basis of assets and
liabilities, calculated using enacted tax rates in effect for the year in
which the differences are expected to be reflected in the tax return.
Earnings per Share
Earnings per share has been computed based on the weighted average
number of shares outstanding during the year. Pursuant to Securities and
Exchange Commission requirements, earnings per share have been presented
for all periods. Weighted average shares for all periods include the
45,000,000 shares issued to Thermo Instrument in connection with the
initial capitalization of the Company and, for periods prior to the
Company's initial public offering, the effect of the assumed exercise of
stock options issued within one year prior to the Company's initial
public offering. Because the effect of the assumed exercise of stock
options would be immaterial, they have been excluded from weighted
average shares subsequent to the Company's initial public offering. Fully
diluted earnings per share has not been presented because the effect of
the assumed conversion of the Company's subordinated convertible
debentures and elimination of the related interest expense is not
material.
Stock Split
All share and per share information has been restated to reflect a
three-for-two stock split, effected in the form of a 50% stock dividend,
distributed in April 1996.
Cash and Cash Equivalents
As of December 28, 1996, $55,007,000 of the Company's cash
equivalents were invested in a repurchase agreement with Thermo Electron.
F-10PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Under this agreement, the Company in effect lends excess cash to Thermo
Electron, which Thermo Electron collateralizes with investments
principally consisting of U.S. government agency securities, corporate
notes, commercial paper, money market funds, and other marketable
securities, in the amount of at least 103% of such obligation. The
Company's funds subject to the repurchase agreement are readily
convertible into cash by the Company and have an original maturity of
three months or less. The repurchase agreement earns a rate based on the
90-day Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter. As of December 28, 1996, the Company's cash
equivalents also included investments in commercial paper and short-term
certificates of deposit of the Company's foreign operations, which have
an original maturity of three months or less. Cash equivalents are
carried at cost, which approximates market value.
Inventories
Inventories are stated at the lower of cost (on a first-in, first-out
or weighted average basis) or market value and include materials, labor,
and manufacturing overhead. The components of inventories are as follows:
(In thousands) 1996 1995
-----------------------------------------------------------------------
Raw materials and supplies $27,865 $29,523
Work in process 10,353 5,762
Finished goods 24,466 8,831
------- -------
$62,684 $44,116
======= =======
Property, Plant, and Equipment
The costs of additions and improvements are capitalized, while
maintenance and repairs are charged to expense as incurred. The Company
provides for depreciation and amortization using the straight-line method
over the estimated useful lives of the property as follows: buildings, 16
to 40 years; machinery and equipment, 3 to 10 years; and leasehold
improvements, the shorter of the term of the lease or the life of the
asset. Property, plant, and equipment consist of the following:
(In thousands) 1996 1995
-----------------------------------------------------------------------
Land $ 7,702 $ 5,051
Buildings 32,052 25,404
Machinery, equipment, and leasehold improvements 35,853 28,191
------- -------
75,607 58,646
Less: Accumulated depreciation and amortization 22,021 16,645
------- -------
$53,586 $42,001
======= =======
F-11PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Patents and Other Assets
Patents and other assets in the accompanying balance sheet includes
the costs of acquired patents that are amortized using the straight-line
method over their estimated useful lives, which range from 12 to 13
years. These assets were $7,527,000 and $8,592,000, net of accumulated
amortization of $6,102,000 and $4,833,000, at year-end 1996 and 1995,
respectively. Patents and other assets in the accompanying balance sheet
also includes deferred debt costs of $1,931,000 and $2,254,000, net of
accumulated amortization of $608,000 and $102,000, at year-end 1996 and
1995, respectively. Deferred debt costs are amortized through the
maturity of the related debt in 2000.
Cost in Excess of Net Assets of Acquired Companies
The excess of cost over the fair value of net assets of acquired
companies is amortized using the straight-line method over 40 years.
Accumulated amortization was $13,788,000 and $8,932,000 at year-end 1996
and 1995, respectively. The Company assesses the future useful life of
this asset whenever events or changes in circumstances indicate that the
current useful life has diminished. The Company considers the future
undiscounted cash flows of the acquired companies in assessing the
recoverability of this asset. If impairment has occurred, any excess of
carrying value over fair value is recorded as a loss.
Environmental Liabilities
The Company accrues for costs associated with the remediation of
environmental pollution when it is probable that a liability has been
incurred and the Company's proportionate share of the amount can be
reasonably estimated. Any recorded liabilities have not been discounted.
Foreign Currency
All assets and liabilities of the Company's foreign subsidiaries are
translated at year-end exchange rates, and revenues and expenses are
translated at average exchange rates for the year in accordance with SFAS
No. 52, "Foreign Currency Translation." Resulting translation adjustments
are reflected as a separate component of shareholders' investment titled
"Cumulative translation adjustment." Foreign currency transaction gains
and losses are included in the accompanying statement of income and are
not material for the three years presented.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Presentation
Certain amounts in 1995 have been reclassified to conform to the 1996
financial statement presentation.
F-12PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
2. Acquisitions
On March 29, 1996, Thermo Instrument acquired a substantial portion
of the businesses comprising the Scientific Instruments Division of
Fisons plc (Fisons), a wholly owned subsidiary of Rhone-Poulenc Rorer,
Inc. In November 1996, the Company acquired two businesses formerly part
of Fisons, A. R. L. Applied Research Laboratories S.A. (ARL) and VG
Elemental, from Thermo Instrument for an aggregate $55,196,000 in cash
and the assumption of $16,593,000 in debt. The purchase price is subject
to a post-closing adjustment based on a post-closing adjustment to be
negotiated with Fisons by Thermo Instrument in connection with the
negotiations for settlement of the final purchase price for all of the
businesses of Fisons acquired by Thermo Instrument in March 1996. The
purchase price was determined based on the net book value of ARL and VG
Elemental at March 29, 1996, and a pro rata allocation of Thermo
Instrument's total cost in excess of net assets of acquired companies
recorded in connection with the acquisition of the Fisons businesses. ARL
is a manufacturer of wavelength-dispersive X-ray fluorescence instruments
and arc/spark atomic emission spectrometers and VG Elemental is a
manufacturer of inductively coupled plasma/mass spectrometers.
Because the Company, ARL, and VG Elemental were deemed for accounting
purposes to be under control of their common majority owner, Thermo
Instrument, the November 1996 transaction has been accounted for in a
manner similar to a pooling of interests. Accordingly, the Company's 1996
financial statements include the results of ARL and VG Elemental from
March 29, 1996, the date these businesses were acquired by Thermo
Instrument. During 1996, the Company acquired two additional companies,
for an aggregate $16,869,000 in cash and the assumption of $731,000 of
debt, which were accounted for using the purchase method of accounting.
On December 1, 1995, Thermo Instrument acquired the assets of the
analytical instruments division of Analytical Technology, Inc. (ATI). In
April 1996, the Company acquired the Mattson Instruments (Mattson) and
Unicam divisions of ATI from Thermo Instrument for $36,558,000 in cash.
Mattson is a manufacturer of Fourier transform infrared (FT-IR)
spectroscopy instruments and Unicam is a manufacturer of atomic
absorption and ultraviolet/visible spectroscopy instruments. Because the
Company, Mattson, and Unicam were deemed for accounting purposes to be
under control of their common majority owner, Thermo Instrument, the
accompanying historical financial information includes the results of
operations of Mattson and Unicam from December 1, 1995, the date these
businesses were acquired by Thermo Instrument. Because the Company had
not disbursed the funds in connection with these acquisitions as of
December 30, 1995, the transfer of these businesses was recorded as a
contribution of capital in excess of par value as of December 1, 1995.
The $36,558,000 payment to Thermo Instrument was accounted for as a
reduction of capital in excess of par value in April 1996.
In January 1995, TJA acquired the Analytical Instruments Division of
Baird Corporation (Baird), a wholly owned subsidiary of IMO Industries
Inc., for $12,926,000 in cash. Baird is a manufacturer of arc/spark and
other spectrometers. This acquisition was accounted for using the
purchase method of accounting.
F-13PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
2. Acquisitions (continued)
The cost of these acquisitions exceeded the estimated fair value of
the acquired net assets by $115,080,000, which is being amortized over 40
years. Allocation of the purchase price for these acquisitions was based
on estimates of the fair value of the net assets acquired and, for the
ARL and VG Elemental acquisitions, is subject to adjustment upon
finalization of the purchase price allocation.
Based on unaudited data, the following table presents selected
financial information for the Company and the businesses acquired, on a
pro forma basis, assuming the Company, ARL, and VG Elemental had been
combined since the beginning of 1995, and the Company, Baird, Mattson,
and Unicam had been combined since the beginning of 1994. The effect of
the acquisitions not included in the pro forma data was not material to
the Company's results of operations.
(In thousands except per share amounts) 1996 1995 1994
------------------------------------------------------------------------
Revenues $368,167 $352,832 $263,892
Net income 19,740 4,658 6,620
Earnings per share .42 .10 .15
The pro forma results are not necessarily indicative of future
operations or the actual results that would have occurred had the
acquisitions of ARL and VG Elemental been made at the beginning of 1995
and the acquisitions of Baird, Mattson, and Unicam been made at the
beginning of 1994.
In connection with the acquisitions of Mattson, Unicam, ARL, and VG
Elemental, the Company has undertaken a restructuring of the acquired
businesses. The restructuring activities include reductions in staffing
levels, abandonment of excess facilities, and other costs associated with
exiting certain activities of the acquired businesses. In connection with
these restructuring activities, the Company established reserves of
$10,878,000 for Mattson and Unicam in 1995 and $5,531,000 for ARL and VG
Elemental in 1996. These amounts were recorded as costs of the respective
acquisitions in accordance with Emerging Issues Task Force Pronouncement
95-3 (EITF 95-3). During 1996, the Company expended $7,350,000 and
$2,853,000 for restructuring costs at Mattson and Unicam and at ARL and
VG Elemental, respectively. These expenditures consisted primarily of
severance and abandoned facility payments. During 1996, the Company
finalized its restructuring plans for Mattson and Unicam. The remaining
balance of the reserve for Mattson and Unicam of $3,528,000 is for
ongoing severance and abandoned facility payments. At December 28, 1996,
unresolved matters related to the restructuring activities at ARL and VG
Elemental include completing the identification of specific employees for
termination and locations to be abandoned or consolidated, as well as
other decisions concerning the integration of the acquired businesses
into the Company. In accordance with EITF 95-3, finalization of the
Company's plan for restructuring ARL and VG Elemental will not occur
beyond one year from the date of acquisition. Any changes in estimates of
these costs prior to such finalization will be recorded as adjustments to
cost in excess of net assets of acquired companies. As of December 28,
1996, the Company had accrued a total of $8,237,000 for restructuring
F-14PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
2. Acquisitions (continued)
costs for all of its acquisitions, including those discussed above. These
reserves are included in other accrued expenses in the accompanying
balance sheet.
3. Employee Benefit Plans
Stock-based Compensation Plans
Stock Option Plans
------------------
In November 1995, the Company adopted a stock-based compensation plan
for its key employees, directors, and others, which permits the grant of
a variety of stock and stock-based awards as determined by the human
resources committee of the Company's Board of Directors (the Board
Committee), including restricted stock, stock options, stock bonus
shares, or performance-based shares. To date, only nonqualified stock
options have been awarded under this plan. The option recipients and the
terms of options granted under this plan are determined by the Board
Committee. Options granted through the date of the Company's initial
public offering became exercisable on September 6, 1996. All options are
subject to certain transfer restrictions and the right of the Company to
repurchase shares issued upon exercise of the options at the exercise
price, upon certain events. The restrictions and repurchase rights
generally lapse ratably over a five to ten year period depending on the
term of the option, which generally ranges from ten to twelve years.
Nonqualified stock options may be granted at any price determined by the
Board Committee, although incentive stock options must be granted at not
less than the fair market value of the Company's common stock on the date
of grant. To date, all options have been granted at fair market value.
The Company also has a directors' stock option plan, adopted in November
1995, that provides for the grant of stock options to outside directors
pursuant to a formula approved by the Company's shareholders. Options
granted under this plan have the same general terms as options granted
under the stock-based compensation plan described above, except that the
restrictions and repurchase rights generally lapse ratably over a
four-year period and the option term is five years. In addition to the
Company's stock-based compensation plans, certain officers and key
employees may also participate in the stock-based compensation plans of
Thermo Electron and Thermo Instrument.
Employee Stock Purchase Program
-------------------------------
Substantially all of the Company's full-time U.S. employees are
eligible to participate in an employee stock purchase program sponsored
by Thermo Instrument and Thermo Electron. Under this program, shares of
Thermo Instrument's and Thermo Electron's common stock can be purchased
at the end of a 12-month period at 95% of the fair market value at the
beginning of the period, and the shares purchased are subject to a
six-month resale restriction. Prior to November 1, 1995, the applicable
shares of common stock could be purchased at 85% of the fair market value
at the beginning of the period, and the shares purchased were subject to
a one-year resale restriction. Shares are purchased through payroll
deductions of up to 10% of each participating employee's gross wages.
F-15PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
3. Employee Benefit Plans (continued)
Pro Forma Stock-based Compensation Expense
In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock-Based Compensation," which sets forth a
fair-value based method of recognizing stock-based compensation expense.
As permitted by SFAS No. 123, the Company has elected to continue to
apply APB No. 25 to account for its stock-based compensation plans. Had
compensation cost for awards granted in 1996 under the Company's
stock-based compensation plans been determined based on the fair value at
the grant dates consistent with the method set forth under SFAS No. 123,
the effect on the Company's net income and earnings per share would have
been as follows:
(In thousands except per share amounts) 1996
-----------------------------------------------------------------------
Net income:
As reported $23,401
Pro forma 22,526
Earnings per share:
As reported .50
Pro forma .48
Pro forma compensation expense for options granted is reflected over
the vesting period; therefore, future pro forma compensation expense may
be greater as additional options are granted.
The fair value of each option grant is estimated on the grant date
using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
1996
-----------------------------------------------------------------------
Volatility 26%
Risk-free interest rate 6.8%
Expected life of options 7.7 years
The Black-Scholes option-pricing model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option-pricing
models require the input of highly subjective assumptions, including
expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of
the fair value of its employee stock options.
F-16PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
3. Employee Benefit Plans (continued)
Stock Option Activity
A summary of the Company's stock option activity is as follows:
1996
------------------
Weighted
Number Average
of Exercise
(Shares in thousands) Shares Price
----------------------------------------------------------------------
Options outstanding, beginning of year - $ -
Granted 2,511 12.06
Forfeited (114) 12.00
----- ------
Options outstanding, end of year 2,397 $12.07
===== ======
Options exercisable 2,397 $12.07
===== ======
Options available for grant 528
=====
Weighted average fair value per share
of options granted during year $ 5.77
======
As of December 28, 1996, the options outstanding were exercisable
at prices ranging from $11.98 to $13.58 and had a weighted-average
remaining contractual life of 10.3 years.
401(k) Savings Plans
Substantially all of the Company's full-time U.S. employees are
eligible to participate in Thermo Electron's or Nicolet's 401(k) savings
plans and, prior to 1995, in Thermo Electron's employee stock ownership
plan (ESOP). Contributions to the 401(k) savings plans are made by both
the employee and the Company. Company contributions to the 401(k) plans
are based upon the level of employee contributions. For these plans, the
Company contributed and charged to expense $1,242,000, $1,106,000, and
$1,005,000 in 1996, 1995, and 1994, respectively. Effective December 31,
1994, the ESOP was split into two plans: ESOP I, covering employees of
Thermo Electron's corporate office and its wholly owned subsidiaries and
ESOP II, covering employees of Thermo Electron's majority-owned
subsidiaries. Also, effective December 31, 1994, the ESOP II plan was
terminated and as a result, the Company's employees are no longer
eligible to participate in an ESOP.
F-17PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
4. Common Stock
In June and July 1996, the Company sold 3,450,000 shares of its
common stock in an initial public offering at $13.50 per share for net
proceeds of $42,937,000.
At December 28, 1996, the Company had reserved 9,481,000 unissued
shares of its common stock for possible issuance under stock-based
compensation plans and for issuance upon possible conversion of the
Company's subordinated convertible debentures.
5. Income Taxes
The components of income before provision for income taxes are as
follows:
(In thousands) 1996 1995 1994
-----------------------------------------------------------------------
Domestic $29,532 $23,205 $22,877
Foreign 10,888 4,294 1,786
------- ------- -------
$40,420 $27,499 $24,663
======= ======= =======
The components of the provision for income taxes are as follows:
(In thousands) 1996 1995 1994
-----------------------------------------------------------------------
Currently payable:
Federal $10,443 $ 8,227 $ 5,687
State 2,102 1,658 1,412
Foreign 4,828 1,975 997
------- ------- -------
17,373 11,860 8,096
------- ------- -------
Net deferred (prepaid):
Federal (211) (435) 1,898
State (45) (92) 474
Foreign (98) 157 (228)
------- ------- -------
(354) (370) 2,144
------- ------- -------
$17,019 $11,490 $10,240
======= ======= =======
The 1995 provision for income taxes that is currently payable does
not reflect $1,000,000 of tax benefits used to reduce cost in excess of
net assets of acquired companies. In addition, the Company receives a tax
deduction upon exercise of nonqualified stock options by employees for
the difference between the exercise price and the market price of the
underlying common stock on the date of exercise. The provision for income
taxes that is currently payable does not reflect $437,000 of such
benefits that have been allocated to capital in excess of par value in
1996.
F-18PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
5. Income Taxes (continued)
The provision for income taxes in the accompanying statement of
income differs from the provision calculated by applying the statutory
federal income tax rate of 35% to income before provision for income
taxes due to the following:
(In thousands) 1996 1995 1994
-----------------------------------------------------------------------
Provision for income taxes at
statutory rate $14,147 $ 9,625 $ 8,632
Increases (decreases) resulting from:
State income taxes, net of federal
tax 1,337 1,018 1,226
Amortization of cost in excess of
net assets of acquired companies 1,013 894 767
Net foreign losses not benefited
and tax rate differential 919 629 144
Tax benefit of foreign sales
corporation (606) (659) (642)
Other, net 209 (17) 113
------- ------- -------
$17,019 $11,490 $10,240
======= ======= =======
Prepaid income taxes and deferred income taxes in the accompanying
balance sheet consist of the following:
(In thousands) 1996 1995
-------------------------------------------------------------
Prepaid income taxes:
Foreign tax loss carryforwards $16,205 $11,220
Reserves and accruals 5,917 3,378
Inventory basis difference 4,698 3,592
Accrued compensation 1,107 1,010
Other, net 3,532 3,975
------- -------
31,459 23,175
Less: Valuation allowance 16,205 11,220
------- -------
$15,254 $11,955
======= =======
Deferred income taxes:
Depreciation $ 7,045 $ 8,427
Intangible assets 3,088 3,019
Other, net 3,732 847
------- -------
$13,865 $12,293
======= =======
F-19PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
5. Income Taxes (continued)
As of December 28, 1996, Unicam had tax loss carryforwards in the
U.K. of $37,700,000 that are subject to review and adjustment by the U.K.
Inland Revenue Service as a result of the acquisition of the analytical
instruments division of ATI by Thermo Instrument. These and additional
foreign tax loss carryforwards of $9,300,000 can be used only to offset
taxable income generated in certain foreign countries. The loss
carryforwards generally do not expire and any resulting benefit will be
used to reduce cost in excess of net assets of acquired companies.
The valuation allowance relates to the uncertainty surrounding the
realization of foreign tax loss carryforwards, the realization of which
is limited to the future income of certain subsidiaries. The increase in
the valuation allowance results from valuation allowances established for
tax loss carryforwards of businesses acquired in 1996.
A provision has not been made for U.S. or additional foreign taxes on
$20,665,000 of undistributed earnings of foreign subsidiaries that could
be subject to taxation if remitted to the U.S. because the Company plans
to keep these amounts permanently reinvested overseas. The Company
believes that any additional U.S. tax liability due upon remittance of
such earnings would be immaterial due to available U.S. foreign tax
credits.
6. Commitments and Contingency
Commitments
The Company leases portions of its office and operating facilities
under various operating lease arrangements. The accompanying statement of
income includes expenses from operating leases of $6,779,000, $3,154,000,
and $2,989,000 in 1996, 1995, and 1994, respectively. Future minimum
payments due under noncancellable operating leases at December 28, 1996,
were $5,067,000 in 1997; $4,194,000 in 1998; $2,977,000 in 1999;
$2,362,000 in 2000; $2,281,000 in 2001; and $9,627,000 in 2002 and
thereafter. Total future minimum lease payments are $26,508,000.
Contingency
Prior to Nicolet's acquisition by the Company, the Wisconsin
Department of Natural Resources (DNR) notified Nicolet that the DNR had
begun a remedial investigation to determine the extent of releases of
hazardous substances from the Refuse Hideaway Landfill located in
Middleton, Wisconsin (the Landfill), and that Nicolet was a potential
responsible party (PRP) with regard to the Landfill. Approximately 50
other parties were also notified of their potential PRP status. The
Environmental Protection Agency (EPA) subsequently added the Landfill to
its National Priorities List under the Comprehensive Environmental
Response Compensation and Liability Act of 1980 (CERCLA). In February
1995, the EPA and the DNR recommended that various remediation efforts be
made at the Landfill at an estimated cost of approximately $5.2 million,
and the Company expects that such agencies will also seek to recover
their oversight costs and expenses related to the site. Under CERCLA,
responsible parties can include current and previous owners of a site,
F-20PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
6. Commitments and Contingency (continued)
generators of hazardous substances disposed of at a site, and
transporters of hazardous substances to a site. Each responsible party
can be jointly and severally liable, without regard to fault or
negligence, for all costs associated with the remediation of the site.
Although the Company believes that the quantity of materials generated by
Nicolet and transported to the Landfill is relatively small in comparison
to that of other named PRPs, there can be no assurance as to the exact
amount, if any, for which Nicolet will be held responsible by the EPA and
the DNR for costs associated with remediation of the Landfill.
In connection with the organization of the Company, Thermo Instrument
agreed to indemnify the Company for any cash damages resulting from this
matter. Notwithstanding this indemnification, the Company would be
required to report any such damages as an expense in its results of
operations, with any indemnification payment it receives from Thermo
Instrument being treated as a contribution to shareholders' investment.
In the opinion of management, resolution of this matter will not have a
material adverse effect on the Company's financial position or results of
operations.
7. Related Party Transactions
Corporate Services Agreement
The Company and Thermo Electron have a corporate services agreement
under which Thermo Electron's corporate staff provides certain
administrative services, including certain legal advice and services,
risk management, certain employee benefit administration, tax advice and
preparation of tax returns, centralized cash management, and certain
financial and other services, for which the Company pays Thermo Electron
annually an amount equal to 1.0% of the Company's revenues. The Company
paid an annual fee equal to 1.20% and 1.25% of the Company's revenues in
1995 and 1994, respectively. The annual fee is reviewed and adjusted
annually by mutual agreement of the parties. For these services, the
Company was charged $3,506,000, $2,546,000, and $2,067,000 in 1996, 1995,
and 1994, respectively. The corporate services agreement is renewed
annually but can be terminated upon 30 days' prior notice by the Company
or upon the Company's withdrawal from the Thermo Electron Corporate
Charter (the Thermo Electron Corporate Charter defines the relationship
among Thermo Electron and its majority-owned subsidiaries). Management
believes that the service fee charged by Thermo Electron is reasonable
and that such fees are representative of the expenses the Company would
have incurred on a stand-alone basis. For additional items such as
employee benefit plans, insurance coverage, and other identifiable costs,
Thermo Electron charges the Company based upon costs attributable to the
Company.
F-21PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
7. Related Party Transactions (continued)
Other Related Party Services
Prior to 1995, the Company provided certain services to ThermoSpectra
Corporation (ThermoSpectra), a majority-owned subsidiary of Thermo
Instrument, and to Nicolet Biomedical Inc. (Nicolet Biomedical), a wholly
owned subsidiary of Thermo Electron. The costs of such services were
allocated based on the subsidiaries' revenues attributable to their
businesses operated at the Company's Wisconsin facilities as a percentage
of the total revenues of all businesses operated at such facilities.
These services included personnel administration, accounting, data
processing, and general administrative management. For these services,
the Company charged $672,000 in 1994.
Operating Leases
The Company leases office and manufacturing space to ThermoSpectra
and Nicolet Biomedical pursuant to an arrangement whereby the Company
charges ThermoSpectra and Nicolet Biomedical their allocated share of the
occupancy expenses of the Company's Wisconsin facility, based on the
space ThermoSpectra and Nicolet Biomedical utilize. The Company recorded
operating lease income of $913,000, $898,000, and $1,120,000 in 1996,
1995, and 1994, respectively, which is deducted from selling, general,
and administrative expenses in the accompanying statement of income.
These leases are effective until December 31, 1998, but may be terminated
by ThermoSpectra and Nicolet Biomedical upon 30 days' prior notice to the
Company.
Other Related Party Transactions
The Company purchases and sells products in the ordinary course of
business with other companies affiliated with Thermo Instrument. Sales of
products to such affiliated companies totaled $28,155,000, $5,280,000,
and $3,389,000 in 1996, 1995, and 1994, respectively. Purchases of
products from such affiliated companies totaled $8,680,000, $1,720,000,
and $1,555,000 in 1996, 1995, and 1994, respectively.
The increase in related party sales in 1996 results from the
Company's acquisition of ARL and VG Elemental. Throughout most of 1996,
the marketing and ultimate resale of products manufactured by these
businesses were performed by business units that were formerly part of
Fisons and that were acquired by Thermo Instrument. These products were
sold at prices and commercial terms that are representative of
transactions with unaffiliated parties. In late 1996, the Company began
selling these products through its existing distribution channels and,
therefore the amount of related party sales in 1997 is expected to
decline. Due from affiliated companies in the accompanying balance sheet
primarily represents amounts receivable from the sale of ARL and VG
Elemental products.
Repurchase Agreement
The Company invests excess cash in a repurchase agreement with Thermo
Electron as discussed in Note 1.
F-22PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
8. Short- and Long-term Obligations
Short-term Obligations
Notes payable and current maturities of long-term obligations in the
accompanying balance sheet includes $27,097,000 and $17,275,000 in 1996
and 1995, respectively, of short-term bank borrowings by the Company's
foreign subsidiaries. The weighted average interest rate for these
borrowings was 4.5% and 5.8% at year-end 1996 and 1995, respectively.
Long-term Obligations
Long-term obligations of the Company are as follows:
(In thousands except per share amounts) 1996 1995
------------------------------------------------------------------------
5% Subordinated convertible debentures,
due 2000, convertible at $14.85 per share $ 96,250 $ 96,250
Other 1,039 5,524
-------- --------
97,289 101,774
Less: Current maturities of long-term
obligations 511 695
-------- --------
$ 96,778 $101,079
======== ========
The $96,250,000 principal amount 5% subordinated convertible
debentures are guaranteed on a subordinated basis by Thermo Electron.
Thermo Instrument and the Company have agreed to reimburse Thermo
Electron in the event Thermo Electron is required to make a payment under
the guarantee. In addition, the Company has agreed to reimburse Thermo
Instrument in the event Thermo Instrument is required to make a payment
under the guarantee.
The annual requirements of long-term obligations as of December 28,
1996, are $511,000 in 1997; $96,000 in 1998; $63,000 in 1999; $96,313,000
in 2000; $63,000 in 2001; and $243,000 in 2002 and thereafter. Total
future requirements of long-term obligations are $97,289,000.
The fair value of the Company's 5% subordinated convertible
debentures was $96,250,000 and $100,000,000 as of year-end 1996 and 1995,
respectively. The carrying amount of the Company's other long-term
obligations approximates fair value as of December 28, 1996. The fair
value of long-term obligations was determined based on quoted market
prices and on borrowing rates available to the Company at the respective
year-ends.
9. Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash and
cash equivalents, accounts receivable, due from affiliated companies,
notes payable and current maturities of long-term obligations, accounts
payable, long-term obligations, and forward exchange contracts. The
carrying amounts of these financial instruments, with the exception of
long-term obligations and forward exchange contracts, approximate fair
F-23PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
9. Fair Value of Financial Instruments (continued)
value due to their short-term nature. See Note 8 for fair value
information pertaining to the Company's long-term obligations.
The Company enters into forward exchange contracts to hedge certain
firm purchase and sale commitments denominated in currencies other than
its subsidiaries' local currencies, principally U.S. dollars, British
pounds sterling, Japanese yen, French francs, and Swiss francs. The
purpose of the Company's foreign currency hedging activities is to
protect the Company's local currency cash flows related to these
commitments from fluctuations in foreign exchange rates. The amounts of
such forward exchange contracts at year-end 1996 and 1995 were $2,411,000
and $500,000, respectively.
The fair value of the Company's forward exchange contracts
receivable was $63,000 and $43,000 at year-end 1996 and 1995,
respectively. The fair value of forward exchange contracts is the
estimated amount that the Company would receive upon termination of the
contract, taking into account the change in foreign exchange rates.
F-24PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
10. Geographical Information
The Company is engaged in one business segment: developing,
manufacturing, and selling analytical instruments. The following table
shows data for the Company by geographical area:
(In thousands) 1996 1995 1994
------------------------------------------------------------------------
Revenues:
United States $204,939 $152,282 $124,634
United Kingdom 69,180 20,013 15,718
Switzerland 36,489 - -
Other Europe 55,726 41,212 24,929
Japan 25,401 26,377 18,559
Other 13,084 4,976 4,274
Transfers among geographical
areas (a) (54,180) (32,708) (22,716)
-------- -------- --------
$350,639 $212,152 $165,398
======== ======== ========
Income before provision for income taxes:
United States (b) $ 29,747 $ 22,834 $ 23,169
United Kingdom 3,807 951 589
Switzerland 4,690 - -
Other Europe 504 2,794 1,340
Japan 2,064 1,543 894
Other 901 313 254
-------- -------- --------
Total operating income 41,713 28,435 26,246
Interest expense, net (1,293) (936) (1,583)
-------- -------- --------
$ 40,420 $ 27,499 $ 24,663
======== ======== ========
Identifiable assets:
United States (c) $296,235 $340,566 $182,967
United Kingdom 84,866 45,208 13,568
Switzerland 56,458 - -
Other Europe 36,586 27,574 18,154
Japan 16,171 15,895 14,020
Other 8,042 3,639 1,897
-------- -------- --------
$498,358 $432,882 $230,606
======== ======== ========
F-25PAGE
<PAGE>
Thermo Optek Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
10. Geographical Information (continued)
(In thousands) 1996 1995 1994
------------------------------------------------------------------------
Export revenues included in United
States revenues above (d):
Europe $ 29,390 $ 22,001 $ 18,504
Asia 40,138 30,770 15,625
Other 14,752 14,317 6,906
-------- -------- --------
$ 84,280 $ 67,088 $ 41,035
======== ======== ========
(a) Transfers among geographical areas are accounted for at prices that
are representative of transactions with unaffiliated parties.
(b) Includes corporate general and administrative expenses.
(c) Includes $42.9 million in net proceeds from the 1996 initial public
offering of Company common stock, net of cash payments of $104.1
million in 1996 for companies acquired, and $93.9 million in net
proceeds from the 1995 issuance of 5% subordinated convertible
debentures.
(d) In general, export sales are denominated in U.S. dollars.
11. Unaudited Quarterly Information
(In thousands except per share amounts)
1996 First Second(a) Third Fourth
----------------------------------------------------------------------
Revenues $69,668 $93,321 $90,693 $96,957
Gross profit 33,908 42,012 42,775 43,313
Net income 4,296 5,424 6,426 7,255
Earnings per share .10 .12 .13 .15
1995 First Second Third Fourth(b)
----------------------------------------------------------------------
Revenues $50,862 $51,780 $45,932 $63,578
Gross profit 25,152 25,848 24,897 27,665
Net income 4,220 4,309 3,916 3,564
Earnings per share .09 .10 .09 .08
1994 First Second Third Fourth
----------------------------------------------------------------------
Revenues $43,276 $37,127 $38,705 $46,290
Gross profit 22,040 19,244 19,558 22,432
Net income 4,230 3,032 3,363 3,798
Earnings per share .09 .07 .07 .08
(a) Includes the results of the ARL and VG Elemental divisions of Fisons
since their acquisition by Thermo Instrument in March 1996.
(b) Includes the results of the Mattson and Unicam divisions of ATI since
their acquisition by Thermo Instrument in December 1995.
F-26
47
<PAGE> 50
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses incurred by the Company in connection with the issuance
and distribution of the securities being registered are as follows. All amounts
are estimated except the Securities and Exchange Commission registration fee.
<TABLE>
<CAPTION>
AMOUNT
------
<S> <C>
Securities and Exchange Commission registration fee $23,234
Legal fees and expenses 10,000
Accounting fees and expenses 10,000
Miscellaneous 6,766
--------
Total $50,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law and the Company's Certificate of
Incorporation and By-Laws limit the monetary liability of directors to the
Company and to its stockholders and provide for indemnification of the Company's
officers and directors for liabilities and expenses that they may incur in such
capacities. In general, officers and directors are indemnified with respect to
actions taken in good faith in a manner reasonably believed to be in, or not
opposed to, the best interests of the Company, and with respect to any criminal
action or proceeding, actions that the indemnitee had no reasonable cause to
believe were unlawful. The Company also has indemnification agreements with its
directors and officers that provide for the maximum indemnification allowed by
law. Reference is made to the Company's Certificate of Incorporation, By-Laws
and Form of Indemnification Agreement for Officers and Directors incorporated by
reference as Exhibits 3.1, 3.2 and 10.9 hereto, respectively.
Thermo Electron Corporation has an insurance policy which insures the
directors and officers of Thermo Electron and its subsidiaries, including the
Company, against certain liabilities which might be incurred in connection with
the performance of their duties.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In December 1995, the businesses of a wholly owned subsidiary of Thermo
Instrument were contributed to the Company in exchange for 44,998,500 shares of
Common Stock; in August 1995, the Company issued 1,500 shares of Common Stock to
such subsidiary for $.01 per share at the time of the incorporation of the
Company. Exemption from registration for these transactions is claimed under
Section 4(2) of the Securities Act.
II-1
<PAGE> 51
In October 1995, the Company issued $96,250,000 principal amount of 5%
Convertible Subordinated Debentures due 2000 (the "Debentures") at par pursuant
to a subscription agreement with Lehman Brothers International (Europe), NatWest
Securities Limited and Raymond James & Associates Inc. $57,300,000 principal
amount of Debentures was sold to non-U.S. persons in reliance upon Regulation S
under the Securities Act and $38,950,000 principal amount of Debentures was sold
pursuant to Regulation D under the Securities Act.
ITEM 16. EXHIBITS.
(a) See the Exhibit Index included immediately preceding the exhibits
to this Registration Statement.
(b) Financial Statement Schedule and the Report of Independent Public
Accountants on such Schedule are included in this Registration Statement as of
December 28, 1996. All other schedules are omitted as not applicable or not
required under Regulation S-X.
ITEM 17. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers for sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the
II-2
<PAGE> 52
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE> 53
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Post-Effective Amendment No. 1 to Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Waltham, Commonwealth of Massachusetts, on this 28th
day of April, 1997.
THERMO OPTEK CORPORATION
By: EARL R. LEWIS*
------------------------------------
Earl R. Lewis
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
DR. RICHARD W.K. CHAPMAN* President, Chief Executive April 28, 1997
- ------------------------------- Officer and Director (Principal
Dr. Richard W. K. Chapman Executive Officer)
JOHN N. HATSOPOULOS* Vice President and Chief April 28, 1997
- ------------------------------- Financial Officer (Principal
John N. Hatsopoulos Financial Officer)
/s/PAUL F.KELLEHER Chief Accounting Officer April 28, 1997
- ------------------------------- (Principal Accounting Officer)
Paul F. Kelleher
ARVIN H. SMITH* Chairman of the Board April 28, 1997
- ------------------------------- and Director
Arvin H. Smith
DR. GEORGE N. HATSOPOULOS* Director April 28, 1997
- -------------------------------
Dr. George N. Hatsopoulos
FRANK JUNGERS* Director April 28, 1997
- -------------------------------
Frank Jungers
ANTHONY J. PELLEGRINO* Director April 28, 1997
- -------------------------------
Anthony J. Pellegrino
DR. MICHAEL E. PORTER* Director April 28, 1997
- -------------------------------
Dr. Michael E. Porter
</TABLE>
II-4
<PAGE> 54
The undersigned Paul F. Kelleher, by signing his name hereto,
does hereby execute this Post-Effective Amendment No. 1 to Registration
Statement on behalf of each of the above-named persons pursuant to powers of
attorney executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Paul F. Kelleher
------------------------
Paul F. Kelleher
Attorney-in-Fact
II-5
<PAGE> 55
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Thermo Optek Corporation:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Thermo Optek
Corporation's Form S-1, and have issued our report thereon dated February 11,
1997. Our audits were made for the purpose of forming an opinion on those
statements taken as a whole. Thermo Optek Corporation's schedule of Valuation
and Qualifying Accounts, included in Schedule II on page S-2, is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic consolidated financial statements. This schedule has been subjected to
the auditing procedures applied in the audits of the basic consolidated
financial statements and, in our opinion, fairly states in all material respects
the consolidated financial data required to be set forth therein in relation to
the basic consolidated financial statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
February 11, 1997
S-1
<PAGE> 56
SCHEDULE II
THERMO OPTEK CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
<TABLE>
<CAPTION>
Balance at Provision Accounts Balance
Beginning Charged to Accounts Written at End
of Year Expense Recovered Off Other (a) of Year
------- ------- --------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED
DECEMBER 28, 1996
Allowance for
Doubtful
Accounts $5,669 $ 907 $ (30) $(2,687) $ 577 $4,436
YEAR ENDED
DECEMBER 30, 1995
Allowance for
Doubtful
Accounts $2,783 $ 378 $ 32 $ (788) $3,264 $5,669
YEAR ENDED
DECEMBER 31, 1994
Allowance for
Doubtful
Accounts $2,649 $ 521 $ 69 $ (373) $ (83) $2,783
</TABLE>
(a) Includes allowance of businesses acquired during the year as described in
Note 2 to Consolidated Financial Statements in the Registrant's 1996 Annual
Report to Shareholders and the effect of foreign currency translation.
S-2
<PAGE> 57
EXHIBIT INDEX
Each exhibit listed below which is marked by an asterisk (*) is
incorporated by reference to the corresponding numbered exhibit in the Company's
Registration Statement on Form S-1 (File No. 333-03630).
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION OF EXHIBIT PAGE NO.
--- ---------------------- -----------
<S> <C> <C>
2.1 Stock Purchase Agreement dated as of November 4, 1996, among Thermo
Instrument Systems Inc., SID Instruments Inc., and ATI Acquisition
Corp. (filed as Exhibit 2.1 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 28, 1996 [File No.
1-11757] and incorporated herein by reference)
2.2 Stock Purchase Agreement dated as of November 4, 1996, between
Thermo Instrument and the Company (filed as Exhibit 2.2 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 28, 1996 [File No. 1-11757] and incorporated herein by
reference)
3.1* Certificate of Incorporation, as amended, of the Company
3.2* By-laws of the Company
4* Specimen Common Stock Certificate
5# Opinion of Seth H. Hoogasian, Esq.
10.1* Corporate Services Agreement dated as of August 18, 1995 between
Thermo Electron and the Company
10.2 Thermo Electron Corporate Charter, as amended and restated effective
January 3, 1993 (incorporated by reference herein from Exhibit 10.1
to Thermo Electron's Annual Report on from 10-K for the fiscal year
ended January 2, 1993 [File No. 1-8002])
10.3* Tax Allocation Agreement dated as of August 18, 1995 between Thermo
Instrument and the Company
10.4 Amended and Restated Master Repurchase Agreement dated as of
December 28, 1996 between Thermo Electron and the Company
(incorporated by reference herein from Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 28,
1996 [File No. 1-11757])
10.5* Master Guarantee Reimbursement Agreement dated as of August 18,
1995, between Thermo Electron, Thermo Instrument, and the Company
</TABLE>
<PAGE> 58
<TABLE>
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EXHIBIT SEQUENTIAL
NO. DESCRIPTION OF EXHIBIT PAGE NO.
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10.5A* Master Guarantee Reimbursement Agreement dated as of August 18, 1995
between Thermo Instrument and the Company
10.6* Equity Incentive Plan of the Company In addition to the stock-based
compensation plans of the Registrant, the executive officers of the
Registrant may be granted awards under stock-based compensation
plans of Thermo Electron and Thermo Instrument for services rendered
to the Registrant or such affiliated corporations. Thermo Electron's
plans were filed as Exhibits 10.21 through 10.44 to the Annual
Report on Form 10-K of Thermo Electron for the fiscal year ended
December 30, 1995 [File No. 1-8002] and as Exhibit 10.19 to the
Annual Report on Form 10-K of Trex Medical Corporation for the
fiscal year ended September 28, 1996 [File No. 1-11827], and Thermo
Instrument's plans were filed as Exhibits 10.18 through 10.27 to the
Annual Report on Form 10-K of Thermo Instrument for the fiscal year
ended December 28, 1996 [File No. 1-9786], and are incorporated
herein by reference.
10.7* Deferred Compensation Plan for Directors of the Company
10.8* Directors Stock Option Plan of the Company
10.9* Form of Indemnification Agreement for Officers and Directors
10.10* Fiscal Agency Agreement dated as of October 12, 1995 between the
Company and The Chase Manhattan Bank (formerly Chemical Bank)
10.11* Stock Purchase Agreement dated as of April 11, 1996 between the
Company and Thermo Instrument
10.12* Asset Transfer Agreement dated as of December 31, 1995, by and among
the Company, Nicolet Instrument Corporation and Thermo Instrument
10.13* Indemnification Agreement dated as of November 4, 1996, between
Thermo Instrument and the Company (incorporated by reference herein
from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 28, 1996 [File No. 1-11757])
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10.14 Restated Stock Holdings Assistance Plan and Form of Promissory Note
(incorporated by reference herein from Exhibit 10.15 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 28, 1996 [File No. 1-11757])
11 Computation of Earnings per Share
21 Subsidiaries of the Company (incorporated by reference herein from
Exhibit 21 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 28, 1996 [File No. 1-11757])
23.1 Consent of Arthur Andersen LLP
23.2# Consent of Seth H. Hoogasian, Esq. (contained in Exhibit 5)
24 Power of Attorney (See Signature Page of this Registration
Statement)
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# Previously filed as part of this registration statement.
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EXHIBIT 11
THERMO OPTEK CORPORATION
COMPUTATION OF EARNINGS PER SHARE
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1996 1995 1994
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COMPUTATION OF PRIMARY EARNINGS
PER SHARE
<S> <C> <C> <C>
Net Income (a) $23,401,000 $16,009,000 $14,423,000
----------- ----------- -----------
Shares:
Weighted average shares
outstanding 46,904,670 45,000,000 45,000,000
Add: Shares issuable from assumed
exercise of options (as
determined by the
application of the
treasury stock method) 39,260 157,040 157,040
----------- ----------- -----------
Weighted average
shares outstanding,
as adjusted (b) 46,943,930 45,157,040 45,157,040
----------- ----------- -----------
PRIMARY EARNINGS PER SHARE
(a) DIVIDED BY (b) $ .50 $ .35 $ .32
=========== =========== ===========
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EXHIBIT 23.1
Consent of Independent Public Accountants
To Thermo Optek Corporation:
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.
Arthur Andersen LLP
Boston, Massachusetts
April 22, 1997
