SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________________________
AMENDMENT NO. 1 ON FORM 10-K/A
TO FORM 10-K
(mark one) X Annual Report Pursuant to Section 13 or
-----
15(d) of the Securities Exchange Act of 1934
Transition Report Pursuant to Section 13 or
-----
15(d) of the Securities Exchange Act of 1934
Commission file number 1-12179
THERMO BIOANALYSIS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 85-0429899
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
504 Airport Road
Santa Fe, New Mexico 87504-2108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------------
Common Stock, $.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to the filing requirements for at least
the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference into Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by
nonaffiliates of the Registrant as of January 24, 1997, was
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approximately $40,240,275.
As of January 24, 1997, the Registrant had 9,771,500 shares of
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for
the fiscal year ended December 28, 1996, are incorporated by
reference into Parts I and II.
Part III, Item 10. Directors and Executive Officers of
the Registrant.
Part III, Item 11. Executive Compensation.
Part III, Item 12. Security Ownership of Certain
Beneficial Owners and
Management.
Part III, Item 13. Certain Relationships and
Transactions.
The information required under these items, originally to be
incorporated by reference from the Registrant's definitive proxy
statement to be filed with the Commission pursuant to Regulation
14A, not later than 120 days after the close of the fiscal year,
is contained in the following Attachment A, which is included
herein and made a part of this Annual Report on Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Amendment No. 1 on Form 10-K/A to be signed by the
undersigned, duly authorized.
THERMO BIOANALYSIS CORPORATION
By: /s/ Sandra L. Lambert
-------------------------------
Sandra L. Lambert
Secretary
ATTACHMENT A
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DIRECTORS
Set forth below are the names of the persons serving as
directors, their ages, their offices in the Corporation, if any,
their principal occupation or employment for the past five years,
the length of their tenure as directors and the names of other
public companies in which such persons hold directorships.
Information regarding their beneficial ownership of the
Corporation's Common Stock and of the common stock of its parent
company, Thermo Instrument Systems Inc. ("Thermo Instrument"), a
manufacturer of analytical, environmental monitoring and process
control instrumentation, and Thermo Instrument's parent company,
Thermo Electron Corporation ("Thermo Electron"), a diversified
high technology company, is reported under the caption "Stock
Ownership."
Richard W.K. Dr. Chapman, 52, has been chairman of the
Chapman board and a director of the Corporation
since its inception in February 1995. Dr.
Chapman has been the chief executive
officer and president of ThermoQuest
Corporation, a manufacturer of mass
spectrometers and chromatography systems,
since June 1995 and a vice president of
Thermo Instrument, since 1994. He also
served as president of ThermoQuest's Finnigan
Corporation subsidiary, from 1992 to 1995.
Dr. Chapman is a director of ThermoQuest
Corporation.
Elias P. Dr. Gyftopoulos, 69, has been a director of
Gyftopoulos the Corporation since its inception in
February 1995. He is Professor Emeritus at
the Massachusetts Institute of Technology,
where he was the Ford Professor of
Mechanical Engineering and of Nuclear
Engineering for more than 20 years prior to
his retirement in 1996. Dr. Gyftopoulos is
also a director of Thermo Electron, Thermo
Cardiosystems Inc., ThermoLase Corporation,
Thermo Remediation Inc., ThermoSpectra
Corporation, Thermo Voltek Corp. and Trex
Medical Corporation.
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Denis A. Helm Mr. Helm, 58, has been vice chairman of the
board and a director of the Corporation
since its inception in February 1995. Mr.
Helm has been the chief executive officer
of Metrika Systems Corporation, a
manufacturer of on-line industrial process
optimization systems, since its formation
in November 1996 and a senior vice
president of Thermo Instrument since 1994.
He has also been president of Thermo
Instrument's Thermo Environmental
Instruments Inc. subsidiary, an
environmental instruments company, since
1981. Mr. Helm was a vice president of
Thermo Instrument from 1986 until 1994.
Barry S. Howe Mr. Howe, 41, has been the chief executive
officer, president and a director of the
Corporation since its inception in February
1995. Mr. Howe has been a vice president
of Thermo Instrument since 1994. From
September 1989 to December 1995, he served
as the president of Thermo Separation
Products Inc. and its predecessor, a
manufacturer of chromatography instruments
and a subsidiary of ThermoQuest
Corporation.
Earl R. Lewis Mr. Lewis, 53, has been a director of the
Corporation since 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 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.
He has also been the chief executive
officer of Thermo Optek Corporation, a
manufacturer of analytical instruments and
a majority-owned subsidiary of Thermo
Instrument, since its inception in August
1995, and was president of Thermo Optek
Corporation from August 1995 to March 1997.
Prior to August 1995, he was president of
Thermo Jarrell Ash Corporation, a
subsidiary of Thermo Optek Corporation, for
more than five years. Mr. Lewis is also a
director of Thermo Optek Corporation,
ThermoQuest Corporation, ThermoSpectra
Corporation and Trex Medical Corporation.
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Jonathan W. Painter Mr. Painter, 38, has been a director of the
Corporation since its inception in February
1995. Mr. Painter has been treasurer of
the Corporation and Thermo Electron since
August 1994. Mr. Painter had served as
director of strategic planning of Thermo
Electron's Thermo Fibertek Inc. subsidiary,
a supplier of paper-recycling equipment,
papermaking systems and accessories, from
February 1993 through September 1994.
Prior to that time, Mr. Painter was
associate general counsel of Thermo
Electron and its subsidiaries. Mr. Painter
is also a director of Thermo Fibergen Inc.
Arvin H. Smith Mr. Smith, 67, has been a director of the
Corporation since its inception in February
1995. Mr. Smith has been the chairman of
the board and chief executive officer of
Thermo Instrument since March 1997 and
1986, respectively, and the president of
Thermo Instrument from 1986 to March 1997.
He also has been an executive vice
president of Thermo Electron since 1991 and
was a senior vice president of Thermo
Electron from 1986 to 1991. Mr. Smith is
also a director of Thermo Instrument,
Thermo Optek Corporation, Thermo Power
Corporation, ThermoQuest Corporation and
ThermoSpectra Corporation.
Arnold N. Weinberg Dr. Weinberg, 67, has been a director of
the Corporation since November 1995. He
has been Professor of Medicine at the
Harvard Medical School and Medical Director
of the Medical Department of the
Massachusetts Institute of Technology for
more than five years.
Committees of the Board of Directors and Meetings
The Board of Directors has established an Audit Committee
and a Human Resources Committee, each consisting solely of
outside directors. The present members of the Audit Committee are
Dr. Gyftopoulos and Dr. Weinberg (Chairman). The Audit Committee
reviews the scope of the audit with the Corporation's independent
public accountants and meets with them for the purpose of
reviewing the results of the audit subsequent to its completion.
The present members of the Human Resources Committee are Dr.
Gyftopoulos (Chairman) and Dr. Weinberg. The Human Resources
Committee reviews the performance of senior members of
management, recommends executive compensation and administers the
Corporation's stock option and other stock-based compensation
plans. The Corporation does not have a nominating committee of
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the Board of Directors. The Board of Directors met seven times,
the Audit Committee met twice and the Human Resources Committee
met five times during fiscal 1996. Each director attended at
least 75% of all meetings of the Board of Directors and
Committees on which he served held during fiscal 1996.
Compensation of Directors
Cash Compensation
Directors who are not employees of the Corporation, of
Thermo Electron or of any other companies affiliated with Thermo
Electron (also referred to as "outside directors") receive an
annual retainer of $2,000 and a fee of $1,000 per day for
attending regular meetings of the Board of Directors and $500 per
day for participating in meetings of the Board of Directors held
by means of conference telephone and for participating in certain
meetings of committees of the Board of Directors. Payment of
directors' fees is made quarterly. Dr. Chapman and Messrs. Helm,
Howe, Lewis, Painter and Smith are all employees of Thermo
Electron companies and do not receive any cash compensation from
the Corporation for their services as directors. Directors are
also reimbursed for out-of-pocket expenses incurred in attending
such meetings.
Deferred Compensation Plan
Under the Deferred Compensation Plan for directors (the
"Deferred Compensation Plan"), a director has the right to defer
receipt of his cash fees until he ceases to serve as a director,
dies or retires from his principal occupation. In the event of a
change in control or proposed change in control of the
Corporation that is not approved by the Board of Directors,
deferred amounts become payable immediately. Either of the
following is deemed to be a change of control: (a) the
occurrence, without the prior approval of the Board of Directors,
of the acquisition, directly or indirectly, by any person of 50%
or more of the outstanding Common Stock or the outstanding common
stock of 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
Compensation Plan are valued at the end of each quarter as units
of the Corporation's Common Stock. When payable, amounts deferred
may be disbursed solely in shares of Common Stock accumulated
under the Deferred Compensation Plan. A total of 25,000 shares of
Common Stock have been reserved for issuance under the Deferred
Compensation Plan. As of March 1, 1997, deferred units equal to
371.57 shares of Common Stock were accumulated under the Deferred
Compensation Plan.
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Directors Stock Option Plan
The Corporation's directors stock option plan (the
"Directors Plan") provides for the grant of stock options to
purchase shares of common stock of the Corporation to outside
directors as additional compensation for their service as
directors. The Directors Plan provides for the grant of stock
options upon a director's initial appointment and, beginning in
2000, awards options to purchase 1,000 shares annually to outside
directors. A total of 100,000 shares of Common Stock have been
reserved for issuance under the Directors Plan.
Under the Directors Plan, each eligible director and each
new outside director who joined the Board of Directors prior to
or during 1996 was granted an option to purchase 15,000 shares of
Common Stock. The size of the award to new directors appointed
to the Board of Directors after 1996 is reduced by 3,750 shares
in each subsequent year. Outside directors who join the Board of
Directors after 1999 would not receive an option grant upon their
appointment or election to the Board of Directors, but would be
eligible to participate in the annual option awards described
below. Options evidencing initial grants to directors are
exercisable six months after the date of grant. The shares
acquired upon exercise are subject to restrictions on transfer
and the right of the Corporation to repurchase such shares at the
exercise price in the event the director ceases to serve as a
director of the Corporation or any other Thermo Electron company.
The restrictions and repurchase rights lapse or are deemed to
have lapsed in equal annual installments of 3,750 shares per
year, starting with the first anniversary of the grant date,
provided the director has continuously served as a director of
the Corporation or any other Thermo Electron company since the
grant date. These options expire on the fifth anniversary of the
grant date, unless the director dies or otherwise ceases to serve
as a director of the Corporation or any other Thermo Electron
company prior to that date.
Outside directors will also receive an annual grant of
options to purchase 1,000 shares of Common Stock, commencing with
the Annual Meeting of the Stockholders to be held in 2000. The
annual grant will be made at the close of business on the date of
each Annual Meeting of the Stockholders of the Corporation to
each outside director then holding office. Options evidencing
annual grants may be exercised at any time from and after the
six-month anniversary of the grant date of the option and prior
to the expiration of the option on the third anniversary of the
grant date. Shares acquired upon exercise of the options would
be subject to repurchase by the Corporation at the exercise price
if the recipient ceased to serve as a director of the Corporation
or any other Thermo Electron company prior to the first
anniversary of the grant date.
The exercise price for options granted under the Directors
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Plan is the average of the closing prices of the common stock as
reported on the American Stock Exchange (or other principal
market on which the common stock is then traded) for the five
trading days preceding and including the date of grant, or, if
the shares are not then traded, at the last price per share paid
by third parties in an arms-length transaction prior to the
option grant. As of March 1, 1997, options to purchase 70,000
shares of Common Stock were available for future grant under the
Directors 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 Corporation are required to comply with a
separate stock holding policy established by the Committee in
1996.
In addition, the Committee adopted a policy requiring
directors to hold shares of the Corporation's Common Stock equal
to one-half of their net option exercises over a period of five
years. The net option exercise is determined by calculating the
number of shares acquired upon exercise of a stock option, after
deducting the number of shares that could have been traded to
exercise the option and the number of shares that could have been
surrendered to satisfy tax withholding obligations attributable
to the exercise of the option. This policy is also applicable to
executive officers.
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of
Common Stock, as well as the common stock of Thermo Instrument,
the Corporation's parent company, and of Thermo Electron, Thermo
Instrument's parent company, as of March 1, 1997, with respect to
(i) each person who was known by the Corporation to own
beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each director, (iii) each executive officer named in
the summary compensation table under the heading "Executive
Compensation" and (iv) all directors and current executive
officers as a group.
While certain directors and executive officers of the
Corporation are also directors and executive officers of Thermo
Instrument or its subsidiaries other than the Corporation, all
such persons disclaim beneficial ownership of the shares of
Common Stock owned by Thermo Instrument.
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<TABLE>
<CAPTION>
Thermo Thermo Thermo
BioAnalysis Instrument Electron
Name (1) Corporation Systems Inc. Corporation
(2) (3) (4)
<S> <C> <C> <C>
Thermo Instrument 6,500,000 N/A N/A
Systems Inc. (5)
Richard W. K. Chapman 40,500 139,087 82,126
Elias P. Gyftopoulos 15,000 47,018 71,070
Donald W. Hanna 21,000 15,506 22,216
Denis A. Helm 15,000 161,729 164,378
Barry S. Howe 64,300 99,886 81,048
Earl R. Lewis 56,000 128,233 124,184
Jonathan W. Painter 15,000 5,782 33,271
Arvin H. Smith 39,000 431,667 513,038
Arnold N. Weinberg 15,371 0 0
All directors and
current executive
officers as a group 312,171 1,128,804 1,763,097
(11 persons)
</TABLE>
(1) Except as reflected in the footnotes to this table, shares
beneficially owned consist of shares owned by the indicated
person or by that person for the benefit of minor children and
all share ownership includes sole voting and investment power.
(2) Shares of the Common Stock beneficially owned by Dr.
Chapman, Dr. Gyftopoulos, Mr. Hanna, Mr. Helm, Mr. Howe, Mr.
Lewis, Mr. Painter, Mr. Smith, Dr. Weinberg and all directors and
executive officers as a group include 30,000, 15,000, 21,000,
15,000, 50,000, 50,000, 15,000, 20,000, 15,000 and 249,000
shares, respectively, that such person or group has the right to
acquire within 60 days of March 1, 1997, through the exercise of
stock options. Shares of the Common Stock beneficially owned by
Dr. Weinberg and all directors and executive officers as a group
include 371 full shares allocated to Dr. Weinberg's account under
the Corporation's deferred compensation plan for directors. No
director or executive officer beneficially owned more than 1% of
the Common Stock outstanding as of March 1, 1997; all directors
and executive officers as a group beneficially owned 3.1% of the
Common Stock outstanding as of such date.
(3) Shares of the common stock of Thermo Instrument beneficially
owned by Dr. Chapman, Dr. Gyftopoulos, Mr. Hanna, Mr. Helm, Mr.
Howe, Mr. Lewis, Mr. Painter, Mr. Smith and all directors and
executive officers as a group include 121,287, 14,465, 15,000,
112,500, 89,062, 112,500, 5,625, 234,375 and 785,439 shares,
respectively, that such person or group had 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 Mr. Painter, Mr. Smith and all directors
and executive officers as a group include 157, 530 and 1,612
shares, respectively, allocated through March 1, 1997, to their
respective accounts maintained pursuant to Thermo Electron's
employee stock ownership plan, of which the trustees, who have
investment power over its assets, are executive officers of
Thermo Electron (the "ESOP"). Shares of the common stock of
Thermo Instrument beneficially owned by Mr. Helm include a total
of 4,212 shares held by him as custodian for four minor children.
Shares of the common stock of Thermo Instrument beneficially
owned by Mr. Howe include 1,968 shares held in a trust of which
he is trustee. Shares of the common stock of Thermo Instrument
beneficially owned by Mr. Lewis include 2,390 shares held by his
spouse. No director or executive officer beneficially owned more
than 1% of the common stock of Thermo Instrument outstanding as
of March 1, 1997; all directors and executive officers as a group
beneficially owned 1.2% of the common stock of Thermo Instrument
outstanding as of such date.
(4) The shares of the common stock of Thermo Electron shown in
the table reflect a three-for-two split of such stock distributed
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in June 1996 in the form of a 50% stock dividend. Shares of the
common stock of Thermo Electron beneficially owned by Dr.
Chapman, Dr. Gyftopoulos, Mr. Hanna, Mr. Helm, Mr. Howe, Mr.
Lewis, Mr. Painter, Mr. Smith and all directors and executive
officers as a group include 80,284, 9,375, 20,098, 106,347,
73,287, 121,536, 27,035, 222,411 and 1,187,632 full shares,
respectively, that such person or group has the right to acquire
within 60 days of March 1, 1997, through the exercise of stock
options. Shares of the common stock of Thermo Electron
beneficially owned by Mr. Painter, Mr. Smith and all directors
and executive officers as a group include 488, 1,717 and 5,463
full shares, respectively, allocated to accounts maintained
pursuant to the ESOP. No director or executive officer
beneficially owned more than 1% of the common stock of Thermo
Electron outstanding as of March 1, 1997; all directors and
executive officers as a group beneficially owned approximately
1.2% of the Thermo Electron common stock outstanding as of such
date.
(5) As of March 1, 1997, Thermo Instrument beneficially owned
67% of the outstanding Common Stock. Thermo Instrument's address
is 1275 Hammerwood Avenue, Sunnyvale, California 94089. As of
March 1, 1997, Thermo Instrument had the power to elect all of
the members of the Corporation's Board of directors. Thermo
Instrument is a majority owned subsidiary of Thermo Electron and
therefore, Thermo Electron may be deemed the beneficial owner of
the shares of Common Stock beneficially owned by Thermo
Instrument. Thermo Electron disclaims beneficial ownership of
these shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporation's directors and executive officers, and
beneficial owners of more than 10% of the Common Stock, such as
Thermo Electron, to file with the Securities and Exchange
Commission initial reports of ownership and periodic reports of
changes in ownership of the Corporation's securities. Based upon
a review of such filings, all Section 16(a) filing requirements
applicable to such persons were complied with during 1996, except
in the following instances. Thermo Instrument filed two Forms 4
late, reporting a total of two transactions, consisting of one
grant of options to employees to purchase the Common Stock under
Thermo Instrument's stock option plans and the expiration without
exercise of one such option. Thermo Electron filed four Forms 4
late, reporting a total of nine transactions, including the two
transactions described above for Thermo Instrument and, in
addition, five open market purchases of Common Stock, one grant
of options to employees to purchase the Common Stock under Thermo
Electron's stock option plans and the expiration without exercise
of one such option.
EXECUTIVE COMPENSATION
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NOTE: All share amounts reported below have, in all cases, been
adjusted as applicable to reflect a three-for-two stock split
with respect to the common stock of Thermo Electron distributed
in June 1996 in the form of a 50% stock dividend.
Summary Compensation Table
The following table summarizes compensation for services to
the Corporation in all capacities awarded to, earned by or paid
to the Corporation's chief executive officer and one other
executive officer for the last two fiscal years. No other
executive officer of the Corporation met the definition of
"highly compensated" within the meaning of the Securities and
Exchange Commission's executive compensation disclosure rules.
The Corporation is required to appoint certain executive
officers and full-time employees of Thermo Electron as executive
officers of the Corporation, in accordance with the Thermo
Electron Corporate Charter. The compensation for these executive
officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's
affairs is provided to the Corporation under the Corporate
Services Agreement between the Corporation and Thermo Electron.
Accordingly, the compensation for these individuals is not
reported in the following table.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Securities
Underlying
Annual Options (No. of
Name and Fiscal Compensation Shares All Other
Principal Year Salary Bonus and Company) (1) Compensation
Position (2)
<S> <C> <C> <C> <C> <C>
Barry S. Howe 1996 $145,000 $70,000 50,000(TBA) $8,076 (3)
President and 1,500(TMO)
Chief 2,000(TFG)
Executive
Officer 2,000(TLT)
15,000(TOC)
90,000(TMQ)
2,000(TSR)
4,000(TXM)
1995 $134,000 $65,000 1,650(TMO) $7,517
5,000(TLZ)
Donald W. Hanna 1996 $100,000 $19,500 21,000(TBA) $5,310
Vice 7,500(TOC)
President
5,000(TMQ)
1995 $95,000 $18,000 -- $7,461
</TABLE>
(1) In addition to receiving options to purchase Common Stock
(designated in the table as TBA), executive officers of the
Corporation have been granted options to purchase common stock of
Thermo Electron and certain of Thermo Electron's other
subsidiaries as part of Thermo Electron's stock option program.
Options have been granted during the last two fiscal years to the
named executive officers in the following Thermo Electron
companies: Thermo Electron (designated in the table as TMO),
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), Thermo Optek
Corporation (designated in the table as TOC), ThermoQuest
Corporation (designated in the table as TMQ), Thermo Sentron Inc.
(designated in the table as TSR) and Trex Medical Corporation
(designated in the table as TXM).
(2) Represents the amount of matching contributions made on
behalf of the named executive officer by the individual's
employer pursuant to the Thermo Electron 401(k) plan.
(3) In addition to the matching contribution referred to in
footnote (2), such amount includes $1,444, which represents the
amount of compensation attributable to an interest-free loan
provided to Mr. Howe pursuant to the company's stock holding
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assistance plan. See "Relationship with Affiliates - Stock
Holding Assistance Plan".
Stock Options Granted During Fiscal 1996
The following table sets forth information concerning
individual grants of stock options made during fiscal 1996 to the
Corporation's chief executive officer and the other named
executive officer. It has not been the Corporation's policy in
the past to grant stock appreciation rights, and no such rights
were granted during fiscal 1996.
<TABLE>
<CAPTION>
Option Grants in Fiscal 1996
Potential
Realizable
Percent of Value at Assumed
Total Annual Rates of
Options Stock
Number of Granted to Price Appreciation
Securities Exercise for
Underlying Employees Price Expira- Option Term (2)
Options in Per tion
Name Granted (1) Fiscal Year Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Barry S. Howe 50,000(TBA) 8.6% $10.00 01/31/08 $398,000 $1,069,000
1,500(TMO) 0.1% (3) $42.79 05/22/99 $10,110 $21,240
2,000(TFG) 0.4% (3) $10.00 09/12/08 $15,920 $42,760
2,000(TLT) 0.6% (3) $10.00 03/11/08 $15,920 $42,760
15,000(TOC) 0.5% (3) $12.00 04/11/08 $143,250 $384,900
90,000(TMQ) 3.2% (3) $13.00 01/10/08 $931,500 $2,502,000
2,000(TSR) 0.4% (3) $14.00 03/11/08 $22,280 $59,880
4,000(TXM) 0.2% (3) $11.00 03/11/08 $35,000 $94,080
Donald W. Hanna 21,000(TBA) 3.6% $10.00 01/31/08 $167,160 $448,980
7,500(TOC) 0.2% (3) $12.00 04/11/08 $71,625 $192,450
5,000(TMQ) 0.2% (3) $13.00 02/08/08 $51,750 $139,000
</TABLE>
(1) All of the options granted during the fiscal year are
immediately exercisable as of the end of the fiscal year, except
options to purchase shares of the common stock of ThermoLyte
Corporation (designated in the table as TLT), which are not
exercisable until the earlier of (i) 90 days after the effective
date of the registration of that company's common stock under
Section 12 of the Securities Exchange Act of 1934 (the "Exchange
Act") and (ii) nine years after the grant date. In all cases,
the shares acquired upon exercise are subject to repurchase by
the granting corporation at the exercise price in the optionee
ceases to be employed by the granting 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 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 holders of options to exercise options and satisfy tax
withholding obligations by surrendering shares equal in fair
market value to the exercise price or withholding obligation.
(2) The amounts shown on this table represent hypothetical gains
that could be achieved for the respective options if exercised at
the end of the option term. These gains are based on assumed
rates of stock appreciation of 5% and 10%, compounded annually
from the date the respective options were granted to their
expiration date. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock
option exercises will depend on the future performance of the
common stock of the granting corporation, the option holders'
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continued employment through the option period and the date on
which the options are exercised.
(3) These options were granted under stock option plans
maintained by Thermo Electron companies other than the
Corporation and accordingly are reported as a percentage of total
options granted to employees of Thermo Electron and its
subsidiaries.
Stock Options Exercised During Fiscal 1996
The following table reports certain information regarding
stock option exercises during fiscal 1996 and outstanding stock
options held at the end of fiscal 1996 by the Corporation's chief
executive officer and the other named executive 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 Value of
Options at Unexercised
Shares Fiscal
Acquired Year-End In-the-Money
on Value (Exercisable/
Name Company Exercise Realized Unexercisable) Options
(1)
<S> <C> <C> <C> <C> <C>
Barry S. Howe Thermo -- -- 50,000 /0 $156,250 /--
BioAnalysis
Thermo -- -- 73,287 /0(2) $1,428,259 /--
Electron
Thermedics -- -- 4,000 /0 $9,100 /--
Thermo Ecotek 5,250 $48,127 6,000 /0 $61,500 /--
Thermo -- -- 2,000 /0 $1,500 /--
Fibergen
Thermo -- -- 15,750 /0 $64,890 /--
Fibertek
Thermo -- -- 89,062 /0 $1,561,042 /--
Instrument
ThermoLase -- -- 5,000 /0 $0 /--
ThermoLyte -- -- -- /2,000 -- /$0(3)
Thermo Optek -- -- 15,000 /0 $0 /--
Thermo Power -- -- 4,000 /0 $0 /--
ThermoQuest -- -- 90,000 /-- $0 /--
Thermo -- -- 2,000 /0 $0 /--
Sentron
ThermoSpectra -- -- 4,000 /0 $7,500 /--
Thermo -- -- 4,000 /0 $3,880 /--
TerraTech
ThermoTrex 1,350 $55,755 4,000 /0 $51,700 /--
Trex Medical -- -- 4,000 /0 $6,500 /--
Donald W. Hanna Thermo -- -- 21,000 /0 $65,625 /--
BioAnalysis
Thermo 1,275 $39,895 20,098 /0(2) $420,940 /--
Electron
Thermo Ecotek 3,000 $21,249 -- /-- -- /--
Thermo -- -- 15,000 /0 $251,626 /--
Instrument
Thermo Optek -- -- 7,500 /0 $0 /--
ThermoQuest -- -- 5,000 /0 $0 /--
ThermoSpectra -- -- 1,500 /0 $2,813 /--
ThermoTrex 405 $17,942 -- /-- -- /--
</TABLE>
(1) All of the options reported outstanding at the end of the
fiscal year were immediately exercisable, except the options to
purchase shares of 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 price of the options reported in the table are subject
to repurchase by the granting corporation at the exercise price
if the optionee ceases to be employed by such corporation or
another Thermo Electron company. The granting corporation may
exercise its repurchase rights within six months after the
termination of the optionee's employment. For companies whose
shares are not publicly traded, the repurchase rights lapse in
their entirety on the ninth anniversary of the grant date. 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.
(2) Options to purchase 22,500 and 11,250 shares of the common
stock of Thermo Electron granted to Mr. Howe and Mr. Hanna,
respectively, are subject to the same terms described in footnote
(1), except that the repurchase rights of the granting
corporation generally do not lapse until the tenth anniversary of
the grant date. In the event of the employee's death or
involuntary termination prior to the tenth anniversary of the
grant date, the repurchase rights of the granting corporation
shall be deemed to have lapsed ratably over a five-year period
commencing with the fifth anniversary of the grant date.
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(3) No public market existed for the shares underlying these
options as of December 28, 1996. Accordingly, no value in excess
of the exercise price has been attributed to these options.
RELATIONSHIP WITH AFFILIATES
Thermo Electron has adopted a strategy of selling a minority
interest in subsidiary companies to outside investors as an
important tool in its future development. As part of this
strategy, Thermo Electron and certain of its subsidiaries have
created several privately and publicly held subsidiaries, and
Thermo Instrument has created the Corporation 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 Corporation
and such other majority-owned Thermo Electron subsidiaries are
hereinafter referred to as the "Thermo Subsidiaries.")
Thermo Electron and each of the Thermo Subsidiaries
recognize that the benefits and support that derive from their
affiliation are essential elements of their individual
performance. Accordingly, Thermo Electron and each of the Thermo
Subsidiaries have adopted the Thermo Electron Corporate Charter
(the "Charter") to define the relationships and delineate the
nature of such cooperation among themselves. The purpose of the
Charter is to ensure that (1) all of the companies and their
stockholders are treated consistently and fairly, (2) the scope
and nature of the cooperation among the companies, and each
company's responsibilities, are adequately defined, (3) each
company has access to the combined resources and financial,
managerial and technological strengths of the others, and (4)
Thermo Electron and the Thermo Subsidiaries, in the aggregate,
are able to obtain the most favorable terms from outside parties.
To achieve these ends, the Charter identifies the general
principles to be followed by the companies, addresses the role
and responsibilities of the management of each company, provides
for the sharing of group resources by the companies and provides
for centralized administrative, banking and credit services to be
performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by
members, coordinating the access of Thermo Electron and the
Thermo Subsidiaries (the "Thermo Group") to external financing
sources, ensuring compliance with external financial covenants
and internal financial policies, assisting in the formulation of
long-range planning and providing other banking and credit
services. Pursuant to the Charter, Thermo Electron may also
provide guarantees of debt or other obligations of the Thermo
Subsidiaries or may obtain external financing at the parent level
for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on
behalf of, the consolidated entity or may obtain financing
directly from external financing sources. Under the Charter,
Thermo Electron is responsible for determining that the Thermo
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Group remains in compliance with all covenants imposed by
external financing sources, including covenants related to
borrowings of Thermo Electron or other members of the Thermo
Group, and for apportioning such constraints within the Thermo
Group. In addition, Thermo Electron establishes certain internal
policies and procedures applicable to members of the Thermo
Group. The cost of the services provided by Thermo Electron to
the Thermo Subsidiaries is covered under existing corporate
services agreements between Thermo Electron and each of the
Thermo Subsidiaries.
The Charter presently provides that it shall continue in
effect so long as Thermo Electron and at least one Thermo
Subsidiary participate. The Charter may be amended at any time by
agreement of the participants. Any Thermo Subsidiary, including
the Corporation, can withdraw from participation in the Charter
upon 30 days' prior notice. In addition, Thermo Electron may
terminate a subsidiary's participation in the Charter in the
event the subsidiary ceases to be controlled by Thermo Electron
or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the
Charter automatically terminates the corporate services agreement
and tax allocation agreement (if any) in effect between the
withdrawing company and Thermo Electron. The withdrawal from
participation does not terminate outstanding commitments to third
parties made by the withdrawing company, or by Thermo Electron or
other members of the Thermo Group, prior to the withdrawal.
However, a withdrawing company is required to continue to comply
with all policies and procedures applicable to the Thermo Group
and to provide certain administrative functions mandated by
Thermo Electron so long as the withdrawing company is controlled
by or affiliated with Thermo Electron.
As provided in the Charter, the Corporation and Thermo
Electron have entered into a Corporate Services Agreement (the
"Services Agreement") under which Thermo Electron's corporate
staff provides certain administrative services, including certain
legal advice and services, risk management, employee benefit
administration, tax advice and preparation of tax returns,
centralized cash management and financial and other services to
the Corporation. In 1995 and 1996, the Corporation was assessed
an annual fee for these services equal to 1.2% and 1.0%,
respectively, of the Corporation's revenues. The fee is reviewed
annually and may be changed by mutual agreement of the
Corporation and Thermo Electron. During fiscal 1996, Thermo
Electron assessed the Corporation $716,000 in fees under the
Services Agreement. Management believes that the charges under
the Services Agreement are reasonable and that the terms of the
Services Agreement are fair to the Corporation. For items such
as employee benefit plans, insurance coverage and other
identifiable costs, Thermo Electron charges the Corporation based
on charges attributable to the Corporation. The Services
Agreement automatically renews for successive one-year terms,
unless canceled by the Corporation upon 30 days' prior notice. In
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<PAGE>
addition, the Services Agreement terminates automatically in the
event the Corporation ceases to be a member of the Thermo Group
or ceases to be a participant in the Charter. In the event of a
termination of the Services Agreement, the Corporation will be
required to pay a termination fee equal to the fee that was paid
by the Corporation for services under the Services Agreement for
the nine-month period prior to termination. Following
termination, Thermo Electron may provide certain administrative
services on an as-requested basis by the Corporation or as
required in order to meet the Corporation's obligations under
Thermo Electron's policies and procedures. Thermo Electron will
charge the Corporation a fee equal to the market rate for
comparable services if such services are provided to the
Corporation following termination.
From time to time, the Corporation may transact business
with other companies in the Thermo Group. In fiscal 1996, such
transactions included the following.
The Corporation has entered into a lease and services
arrangement with ThermoQuest under which ThermoQuest leases
approximately 15,000 square feet of space, and provides certain
accounting and administrative services, to the Corporation. The
Corporation pays ThermoQuest rent in the amount of 3 British
Pounds Sterling per square foot and an allocated portion of
ThermoQuest's costs for providing such services. This arrangement
may be terminated by the Corporation or by ThermoQuest upon 30 days'
prior notice. For the fiscal year ended December 28, 1996, the
Corporation paid ThermoQuest approximately $105,000 under this
arrangement.
ThermoQuest acts as a distributor of certain of the
Corporation's products, is the exclusive distributor of the
Corporation's MALDI-TOF products of Japan and is the exclusive
distributor of the Corporation's CE products in countries in
which it maintains a direct sales force. In consideration of
such arrangements, the Corporation sells ThermoQuest such
products at discounted rates negotiated by the parties.
ThermoQuest is responsible for all installation and warranty
labor obligations at its expense. These arrangements may be
terminated on not less than three months' notice by either party
given after December 31, 1996. For the fiscal year ended
December 28, 1996, the Corporation sold $2,002,000 of products to
ThermoQuest under these arrangements. In addition, the
Corporation pays ThermoQuest a finder's fee for each qualified
lead that generates order for the Corporation's MALDI-TOF
products from customers in the United States and Europe.
The Corporation has entered into an arrangement with
ThermoQuest whereby ThermoQuest provides assembly labor for the
Corporation's CE products on a contract basis. Under this
arrangement, ThermoQuest assembles instruments as required by the
Corporation for a charge based on the sum of ThermoQuest's actual
cost of materials and the allocable portion of its labor,
overhead and other indirect expenses. For the fiscal year ended
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December 28, 1996, the Corporation paid ThermoQuest approximately
$471,000 under this arrangement.
The Corporation's Eberline health Physics subsidiary
purchases certain controllers and detectors from Thermo
Instrument under an original equipment manufacturer agreement.
Under this agreement, the Corporation has the exclusive right to
sell these instruments in the United States, Canada and Mexico.
The Corporation is responsible for all warranty repair and
maintenance obligations at its expense, but obtains replacement
parts from Thermo Instrument without charge. For the fiscal year
ended December 28, 1996, the Corporation purchased $233,000 of
instruments from Thermo Instrument under this agreement.
The Corporation's Eberline health physics subsidiary also
acts as a distributor of certain Thermo Instrument product lines
and, with the exception of Thermo Instrument, is the exclusive
distributor of such product lines to nuclear power plants and
government agencies in the United States and Canada. Thermo
Instrument is responsible for warranty repairs at its own
expense. For the fiscal year ended December 28, 1996, the
Corporation purchased $306,000 of instruments from Thermo
Instrument under this arrangement.
Various Thermo Instrument companies act as distributors of
certain of the Corporation's LabSystems and Affinity Sensors
products under informal arrangements that date from prior to the
acquisition of the Fisons businesses in March 1996. In
consideration of such arrangements, the Corporation sells the
respective Thermo Instrument companies certain products at
discounted rates negotiated by the parties. Under such
arrangements, the respective Thermo Instrument companies are
generally responsible for warranty repair and maintenance
obligations. For the fiscal year ended December 28, 1996,
LabSystems and Affinity Sensors sold an aggregate of $3,912,000
of products to Thermo Instrument companies under these
arrangements.
As of December 28, 1996, $39,649,000 of the Corporation's
cash equivalents were invested in a repurchase agreement with
Thermo Electron. Under this agreement, the Corporation in effect
lends excess cash to Thermo Electron, which Thermo Electron
collateralizes with investments principally consisting of
corporate notes, United States government agency securities,
money market funds, commercial paper and other marketable
securities, in the amount of at least 103% of such obligation.
The Corporation's funds subject to the repurchase agreement will
be readily convertible into cash by the Corporation 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.
In February 1996, the Corporation borrowed $30,000,000 from Thermo
Electron pursuant to a promissory note, due in February 1997, and
bearing interest at the 90-day Commercial Paper Composite Rate plus
25 basis points, set at the beginning of each quarter. In July 1996,
the Corporation borrowed $50,000,000 from Thermo Instrument pursuant
to a subordinated convertible note, due in 2001, convertible into
shares of Common Stock at $16.50 per share, and bearing interest at an
annual rate of 4.875%. The Corporation repaid the amounts owed to
Thermo Electron in July 1996 with proceeds from the subordinated
convertible note issued to Thermo Instrument. As of December 28, 1996,
The Corporation owed Thermo Instrument an aggregate of $50,000,000.
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Stock Holding Assistance Plan
During 1996, the Human Resources Committee of the
Corporation's Board of Directors (the "Committee") established a
stock holding policy for executive officers of the Corporation.
The stock holding policy specifies an appropriate level of
ownership of the Corporation's Common Stock as a multiple of the
officer's compensation. For the chief executive officer, the
multiple is one times his base salary and reference bonus for the
calendar year. For all other officers, the multiple is one times
the officer's base salary. The Committee deemed it appropriate
to permit officers to achieve these ownership levels over a
three-year period.
In order to assist officers in complying with the policy,
the Committee also adopted a stock holding assistance plan under
which the Corporation is authorized to make interest-free loans
to officers to enable them to purchase shares of the Common Stock
in the open market. The loans are required to be repaid upon the
earlier of demand or the fifth anniversary of the date of the
loan, unless otherwise authorized by the Committee. In 1996, Mr.
Barry S. Howe, the Corporation's chief executive officer,
received loans in the aggregate principal amount of $164,375.52
under this plan to purchase 12,000 shares. Also in 1996, Dr.
Richard W.K. Chapman, the Corporation's chairman of the board,
received loans in the aggregate principal amount of $131,176.30
under this plan to purchase 10,000 shares.
AA971140048
