<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 3, 1997
REGISTRATION NO. 333-20081
================================================================================
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 BIOANALYSIS CORPORATION
(Exact name of registrant as specified in its charter)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 3826 85-0429899
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
------------------------
504 AIRPORT ROAD, SANTA FE, NEW MEXICO 87504-2108
(505) 471-3232
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
SANDRA L. LAMBERT, SECRETARY
THERMO BIOANALYSIS CORPORATION
C/O THERMO ELECTRON CORPORATION
81 WYMAN STREET
POST OFFICE 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, ESQ.
GENERAL COUNSEL
THERMO BIOANALYSIS CORPORATION
C/O THERMO ELECTRON CORPORATION
81 WYMAN STREET
POST OFFICE BOX 9046
WALTHAM, MASSACHUSETTS 02254-9046
(617) 622-1000
------------------------
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
effective 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> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION -- DATED APRIL 3, 1997
PROSPECTUS
1,601,500 SHARES
LOGO
COMMON STOCK
This Prospectus relates to the resale of 1,601,500 shares (the "Shares") of
Common Stock, par value $.01 per share (the "Common Stock"), of Thermo
BioAnalysis Corporation (the "Company"). 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 Selling
Shareholders 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 Shares were originally sold by the Company in private
placements pursuant to certain Securities Purchase Agreements with the Company
dated March 15, 1995 and April 19, 1995 (the "Purchase Agreements"). See
"Selling Shareholders."
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 2.
------------------------
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 sellers of the Shares) in
connection with the registration and sale of the Shares being registered hereby.
The Company has agreed to indemnify the Selling Shareholders against certain
liabilities under the Securities Act as underwriters or otherwise.
------------------------
The Company is a majority-owned subsidiary of Thermo Instrument Systems
Inc. ("Thermo Instrument"), which is a majority-owned subsidiary of Thermo
Electron Corporation ("Thermo Electron"). The Common Stock is traded on the
American Stock Exchange under the symbol "TBA". On April 2, 1997, the reported
closing price of the Common Stock on the American Stock Exchange was $9 3/8 per
share.
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE> 3
THE COMPANY
The Company was incorporated in Delaware in February 1995 as a wholly-owned
subsidiary of Thermo Instrument. At that time, Thermo Instrument contributed all
of the assets relating to its capillary electrophoresis product line, its
MALDI-TOF division and its Eberline health physics division to the Company in
exchange for 6,500,000 shares of Common Stock and the assumption by the Company
of substantially all of the liabilities relating to such businesses. On February
7, 1996, the Company acquired all of the assets, subject to certain liabilities,
of DYNEX Technologies, formerly Dynatech Laboratories, from Dynatech
Corporation. In March 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. On July 22,
1996, the Company acquired the Affinity Sensors and LabSystems divisions of
Fisons from Thermo Instrument.
Unless the context otherwise requires, references in this Prospectus to the
Company or Thermo BioAnalysis refer to Thermo BioAnalysis Corporation and its
subsidiaries and the predecessor businesses that constitute the Company. As of
March 29, 1997, Thermo Instrument beneficially owned approximately 67% of the
Company's outstanding Common Stock, excluding the shares of Common Stock
issuable upon conversion of $50.0 million principal amount of the Company's
4.875% Subordinated Convertible Note, due to Thermo Instrument, which was issued
in July 1996 (the "Convertible Note"). The Company's principal executive offices
are located at 504 Airport Road, Santa Fe, New Mexico 87504-2108, and its
telephone number is (505) 471-3232.
------------------------
DIAS Ultra and MLX are trademarks of Thermo BioAnalysis Corporation or its
subsidiaries. All other trademarks or tradenames referred to in this Prospectus
are the property of their respective owners.
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Accordingly, the following factors should be considered
carefully in evaluating the Company and its business before purchasing any of
such shares.
Intense 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 markets for its products
include product features, product performance, price and service. The Company's
competitors include a number of large multinational corporations. These
companies and certain of the Company's other competitors have substantially
greater financial, marketing and other resources than 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. 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 develop new technologies will be sufficient to enable
it to compete effectively. See "Business -- Competition."
Rapid and Significant Technological Change and New Products. The markets
for the Company's products are characterized by rapid and significant
technological change, evolving industry standards and frequent new product
introductions and enhancements. Many of the Company's products and products
under development are technologically innovative, and require significant
planning, design, development and testing, at the technological, product and
manufacturing process levels. These activities require significant capital
commitments and investment by the Company. In addition, products that are
competitive in the Company's markets are characterized by rapid and significant
technological change due to industry standards that may change on short notice
and by the introduction of new products and technologies that render existing
products and technologies uncompetitive or obsolete. There can be no assurance
that any of the products currently being developed by the Company, or those to
be developed in the future, will be technologically feasible or accepted by the
marketplace, that any such development will be completed in any particular time
frame, or
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<PAGE> 4
that the Company's products or proprietary technologies will not become
uncompetitive or obsolete. See "Business -- Research and Development" and "--
Competition."
Uncertainty of Market Acceptance of New Products. Certain of the Company's
products represent alternatives to traditional instruments and methods and as a
result may be slow to achieve, or may not achieve, market acceptance, as
customers may seek further validation of the efficiency and efficacy of the
Company's technology. This is particularly true where the purchase of the
product requires a significant capital commitment. The Company's optical
biosensor, MALDI-TOF and capillary electrophoresis products are based on
relatively new technologies. The Company believes that, to a significant extent,
its growth prospects depend on its ability to gain acceptance by a broader group
of customers of the efficiency and efficacy of the Company's innovative
technologies. There can be no assurance that the Company will be successful in
obtaining such broad acceptance. See "Business -- Products" and "-- Research and
Development."
Dependence on Capital Spending Policies and Government Funding. The
Company's customers include pharmaceutical, biotechnology and chemical companies
and clinical diagnostic laboratories and companies. The capital spending
policies of these companies can have a significant effect on the demand for the
Company's products. Such policies are based on a wide variety of factors,
including the resources available to make such purchases, the spending
priorities among various types of research equipment and the policies regarding
capital expenditures during recessionary periods. Any decrease in capital
spending by life sciences companies could have a material adverse effect on the
Company's business and results of operations. Recently, biotechnology companies
have raised significant amounts of capital through public share offerings, and
most of these companies are engaged in active research and development programs
that include capital spending. However, the availability of capital through the
public markets can be cyclical and there can be no assurance that the raising of
capital by these companies will continue, nor can there be any assurance that
additional capital, if available, will result in increased sales of the
Company's products. See "Business -- Products."
A significant portion of the Company's sales are to universities,
government research laboratories, private foundations and other institutions
where funding is dependent on grants from government agencies such as the
National Institutes of Health (the "NIH") and the equivalent of the NIH in the
foreign countries where the Company markets its products. If government funding
necessary to purchase the Company's products were to become unavailable to
researchers for any extended period of time or if overall research funding were
to decrease, the Company's business and results of operations could be adversely
affected. In addition, a significant portion of sales by the Company's Eberline
health physics subsidiary were made to various branches of the United States
government, primarily the United States Department of Energy (the "DOE").
Revenues attributable to sales to the Departments of Defense and Energy declined
in 1996 compared to 1995. Any further decline in purchases by the United States
government, including without limitation, declines as the result of budgeting
limitations, could have an adverse effect on the Company's business and results
of operations.
Dependence on Patents and Proprietary Rights. The Company places
considerable importance on obtaining patent and trade secret protection for
significant new technologies, products and processes because of the length of
time and expense associated with bringing new products through the development
process and to the marketplace. The Company's success depends in part on its
ability to develop patentable products and obtain and enforce patent protection
for its products both in the United States and in other countries. The Company
has filed and intends to file applications as appropriate for patents covering
its products. No assurance can be given 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. In addition, no assurance can be given that any issued
patents owned by or licensed to the Company will not be challenged, invalidated
or circumvented, or that the rights granted thereunder will provide competitive
advantages to the Company. 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.
The commercial success of the Company will also depend in part on its
neither infringing patents issued to competitors or others nor breaching the
technology licenses upon which components of the Company's products are based.
The Company is aware of patents and patent applications belonging to competitors
and
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<PAGE> 5
other third parties, and it is uncertain whether these patents and patent
applications will require the Company to alter its products or processes, pay
licensing fees or cease making and selling infringing products and pay damages
for past infringement. In particular, the Company is aware of a U.S. patent held
by a third party which may relate to the design of the cuvette used in the
Company's optical biosensor system. The Company is also aware of patents held by
another third party which may relate to the features of certain of the Company's
MALDI-TOF mass spectrometers. Although the Company believes that the validity
and/or infringement of these patents may be subject to challenge, if the patent
holder were successful in enforcing any such patent, the Company would be
subject to damages for past infringement and enjoined from manufacturing and
selling products utilizing the features associated with the patent, which could
have a material adverse effect on the Company's business and results of
operations.
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 and Proprietary
Technology."
Government Regulations; No Assurance of Regulatory Approval. The
production and marketing of certain of the Company's products and its ongoing
research and development activities are subject to regulation by government
authorities in the United States and in other countries. To the extent that an
analytical instrument will be used in human clinical or diagnostic applications,
the manufacturer of that instrument must submit to the U.S. Food and Drug
Administration (the "FDA"), prior to commercial distribution of the instrument
in the U.S., either a premarket notification ("510(k)") or a premarket approval
("PMA") application. The Company has, to date, been required to obtain 510(k)
clearance with respect to certain clinical applications of its Microtiter
technology products. There can be no assurance that 510(k) clearance for any
future product or modification of an existing product will be granted by the FDA
within a reasonable time frame, if at all, that in the future the FDA will not
require manufacturers of certain medical devices to engage in a more thorough
and time consuming approval process than the 510(k) process, or that the FDA or
certain corresponding state or international government agencies will permit
marketing of the Company's products in their respective jurisdictions.
As a result of the clinical applications of certain of the Company's
Microtiter technology products, the Company is registered with the FDA as a
medical device manufacturer. As such, the Company may be inspected on a routine
basis by the FDA for compliance with the FDA's Good Manufacturing Practices and
other applicable regulations. These regulations require that the Company
manufacture its products and maintain related documentation in a prescribed
manner with respect to manufacturing, testing and quality control activities.
Further, the Company is required to comply with various FDA requirements for
reporting of product malfunctions and other matters.
The regulatory standards for manufacturing are currently being applied
stringently by the FDA and state regulatory agencies. Noncompliance with FDA or
applicable state agency regulations or discovery of previously unknown problems
with a product, manufacturer or facility may result in restrictions on such
product or manufacturer, including fines, recalls, injunctions or seizures of
products, refusal of the government to approve or clear product approval
applications or to allow the Company to enter into government supply contracts,
or even withdrawal of the product from the market or criminal prosecution, any
of which could have a material adverse effect on the Company's business and
results of operations.
International regulatory bodies often establish varying regulations
governing product standards, packaging requirements, labeling requirements,
import restrictions, tariff regulations, duties and tax requirements. In order
to continue to sell its products in Europe, the Company is required to maintain
an ISO 9000 series registration, an internationally-recognized set of quality
standards, and each of its products is required to obtain a CE mark, evidence of
compliance with European Union electronic safety requirements. While the Company
has an active program to comply with CE mark requirements and an ISO 9000
compliance program, there can be no assurance that the Company will be
successful in maintaining its compliance with
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applicable certification requirements. Any violation of, and the cost of
compliance with, these regulations or requirements could have a material adverse
effect on the Company's business and results of operations.
See "Business -- Products."
Uncertainty of Patient Reimbursement. The Federal government regulates
reimbursement of fees for certain diagnostic examinations and capital equipment
acquisition costs connected with services to Medicare beneficiaries. Recent
legislation has limited Medicare reimbursement for diagnostic examinations. For
example, deficit reduction measures have resulted in reimbursement rate
reductions in the past and may result in further rate reductions in the future.
According to third party data, overall Medicare reimbursements were estimated to
decline approximately 2.3% in 1996 from 1995. These policies may have the effect
of limiting the availability or reimbursement for procedures, and as a result
may inhibit or reduce demand by healthcare providers for products in the markets
in which the Company competes. While the Company cannot predict what effect the
policies of government entities and other third party payors will have on future
sales of the Company's products, there can be no assurance that such policies
would not have an adverse impact on the operations of the Company.
Potential Product Liability. The Company's business exposes it to
potential product liability claims which are inherent in the manufacturing,
marketing and sale of biomedical instruments and diagnostic products, and as
such the Company may face substantial liability to patients for damages
resulting from the faulty design or manufacture of its products. The Company
currently maintains product liability insurance, but there can be no assurance
that this insurance will provide sufficient coverage in the event of a claim,
that the Company will be able to maintain such coverage on acceptable terms, if
at all, or that a product liability claim would not materially adversely affect
the business or financial condition of the Company.
Risks Associated with Acquisition Strategy. The Company's strategy
includes the acquisition of businesses and technologies that complement or
augment the Company's existing product lines. For example, in February 1996 the
Company acquired the DYNEX Technologies division of Dynatech Corporation, and,
in July 1996, acquired the Affinity Sensors and LabSystems divisions of Fisons
plc from Thermo Instrument. 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. Any
acquisitions completed by the Company may be made at substantial premiums over
the fair value of the net assets of the acquired companies. There can be no
assurance that the Company will be able to complete future acquisitions or that
the Company will be able to successfully integrate any acquired businesses. In
order to finance such acquisitions, it may be necessary for the Company to raise
additional funds 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, in the case of equity financing, may result in dilution to the
Company's stockholders. See "'Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business -- Overview."
Risks Associated With International Operations. International sales
accounted for 48% of the Company's revenues in fiscal 1996. The Company intends
to continue to expand its presence in international markets. International
revenues 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 may impose additional 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 of 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 impact on the Company's
business and results of operations. See "Business -- Products."
Potential Fluctuations in Quarterly Performance. The Company's quarterly
operating results may vary significantly depending on a number of factors,
including the size, timing and shipment of individual orders,
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seasonality of revenue, foreign currency exchange rates, the mix of products
sold and general economic conditions. Because the Company's operating expenses
are based on anticipated revenue levels and a high percentage of the Company's
expenses are fixed for the short term, a small variation in the timing of
recognition of revenue can cause significant variations in operating results
from quarter to quarter. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Control by Thermo Instrument. The Company's stockholders do not have the
right to cumulate votes for the election of directors. Thermo Instrument, which
owns approximately 67% of the outstanding Common Stock of the Company, has the
power to elect the entire Board of Directors of the Company and to approve or
disapprove any corporate action submitted to a vote of the Company's
stockholders. See "Relationship with Thermo Electron and Thermo Instrument" and
"Security Ownership of Certain Beneficial Owners and Management."
Potential Conflicts of Interest. The Company may be subject to potential
conflicts of interest from time to time as a result of its relationship with
Thermo Electron and Thermo Instrument. For example, conflicts may arise in the
determination of the annual services fee payable by the Company pursuant to the
Corporate Services Agreement between the Company and Thermo Electron and in
determining whether to invest funds with or borrow funds from Thermo Electron
pursuant to other contractual arrangements. Certain officers of the Company are
also officers of Thermo Instrument, Thermo Electron and/or other subsidiaries of
Thermo Electron, and are full-time employees of Thermo Instrument or Thermo
Electron. Such officers will devote only a portion of their working time to the
affairs of the Company. For financial reporting purposes, the Company's
financial results are included in the consolidated financial statements of
Thermo Instrument and Thermo Electron. The members of the Board of Directors of
the Company who are also affiliated with Thermo Electron or Thermo Instrument
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
instances 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 a party to various agreements with Thermo Electron and Thermo
Instrument that may limit the Company's operating flexibility. See "Relationship
with Thermo Electron and Thermo Instrument."
Significant Additional Shares Eligible for Sale After this Offering. The
6,500,000 shares of Common Stock owned by Thermo Instrument have been eligible
for resale under Rule 144 promulgated under the Securities Act since February
1997. In addition, as long as Thermo Instrument is able to elect a majority of
the Company's Board of Directors, it will have the ability to cause the Company
at any time to register for resale all or a portion of the Common Stock owned by
Thermo Instrument. Additional shares of Common Stock issuable upon exercise of
options 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 and affect
the Company's ability to raise capital. See "Relationship with Thermo Electron
and Thermo Instrument" and "Shares Eligible for Future Sale."
Lack of Dividends. The Company 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. Declaration of
dividends on the Common Stock will depend upon, among other things, future
earnings, the operating and financial condition of the Company, its capital
requirements and general business conditions. See "Dividend Policy."
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PRICE RANGE OF COMMON STOCK
The Company's Common Stock has been publicly traded on the American Stock
Exchange since September 18, 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>
Third Quarter (September 18, 1996 through September 28, 1996)............... $14 $13 1/8
Fourth Quarter.............................................................. $14 5/8 $12 1/2
FISCAL 1997
First Quarter............................................................... $14 1/8 $ 9 1/4
Second Quarter (through April 2, 1997)...................................... $ 9 5/8 $ 9
</TABLE>
As of April 2, 1997, there were 137 holders of record of Common Stock.
DIVIDEND POLICY
The Company 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.
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1996
---------------------------------------------
FIRST (1) SECOND THIRD FOURTH
--------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues............................................ $ 10,911 $18,871 $19,346 $22,521
Gross Profit........................................ 4,195 9,481 9,573 10,593
Net Income (Loss)................................... (3,114) 431 787 1,460
Earnings (Loss) per Share:
Primary........................................... (.38) .05 .10 .15
Fully diluted..................................... (.38) .05 .10 .14
</TABLE>
<TABLE>
<CAPTION>
1995
------------------------------------------
FIRST SECOND THIRD FOURTH
------- ------- ------- ------
<S> <C> <C> <C> <C>
Revenues............................................ $6,229 $5,457 $5,350 $5,498
Gross Profit........................................ 2,540 2,320 2,266 2,372
Net Income.......................................... 603 704 631 576
Earnings per Share.................................. .09 .09 .08 .07
</TABLE>
- ---------------
(1) Reflects the results of DYNEX since February 1996, and of Affinity Sensors
and LabSystems since their acquisition by Thermo Instrument in March 1996,
including the associated write-off of $3,500,000 of acquired technology.
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SELECTED FINANCIAL INFORMATION
The selected financial information below as of and for the fiscal years
ended December 31, 1994, December 30, 1995 and December 28, 1996 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. This information should be
read in conjunction with the Company's Consolidated Financial Statements and
related notes included elsewhere in this Prospectus. The selected financial
information as of and for the fiscal year ended January 1, 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>
FISCAL YEAR
------------------------------------------------------------------
PRO FORMA
COMBINED
---------
1992 1993 1994 1995 1996 (1) 1996 (2)
------- ------- ------- ------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................... $20,120 $24,479 $25,127 $22,534 $ 71,649 $78,837
------- ------- ------- ------- -------- -------
Costs and Operating Expenses:
Cost of revenues......................... 10,981 13,010 14,176 13,036 37,807 41,762
Selling, general and administrative
expenses............................... 4,067 4,914 5,054 4,804 20,987 25,979
Research and development expenses........ 2,448 2,242 2,042 1,325 7,298 8,413
Write-off of acquired technology......... -- -- -- -- 3,500 --
------- ------- ------- ------- -------- -------
17,496 20,166 21,272 19,165 69,592 76,154
------- ------- ------- ------- -------- -------
Operating Income........................... 2,624 4,313 3,855 3,369 2,057 2,683
Interest Income (Expense), Net............. -- -- -- 819 (593) (1,146)
------- ------- ------- ------- -------- -------
Income Before Income Taxes................. 2,624 4,313 3,855 4,188 1,464 1,537
Income Tax Provision....................... 1,449 1,775 1,455 1,674 1,900 1,096
------- ------- ------- ------- -------- -------
Net Income (Loss).......................... $ 1,175 $ 2,538 $ 2,400 $ 2,514 $ (436) $ 441
======= ======= ======= ======= ======== =======
Earnings (Loss) per Share (3).............. $ .18 $ .38 $ .36 $ .32 $ (.05) $ .05
======= ======= ======= ======= ======== =======
Weighted Average Shares (3)................ 6,617 6,617 6,617 7,811 8,601 8,601
======= ======= ======= ======= ======== =======
BALANCE SHEET DATA (AT END OF PERIOD):
Working Capital............................ $ 5,808 $ 6,333 $ 8,282 $27,105 $ 59,750
Total Assets............................... 11,767 13,596 14,349 32,907 122,997
Subordinated Convertible Note, Due to
Parent Company........................... -- -- -- -- 50,000
Shareholders' Investment................... 7,838 8,332 10,162 29,146 51,316
</TABLE>
- ---------------
(1) Reflects the results of DYNEX since February 1996, and of Affinity Sensors
and LabSystems since their acquisition by Thermo Instrument in March 1996,
including the associated write-off of $3,500,000 of acquired technology.
(2) The pro forma combined statement of operations data was derived from the pro
forma combined condensed statement of operations included elsewhere in this
Prospectus. The pro forma combined statement of operations data sets forth
the results of operations for 1996 as if the acquisitions of DYNEX, Affinity
Sensors and LabSystems, the issuance of the $50.0 million principal amount
Convertible Note to Thermo Instrument and the repayment of the $30.0 million
principal amount note payable to Thermo Electron had occurred at the
beginning of 1996.
(3) Pursuant to Securities and Exchange Commission requirements, earnings (loss)
per share have been presented for all periods. Weighted average shares for
all periods include the 6,500,000 shares issued to Thermo Instrument in
connection with the initial capitalization of the Company and the effect of
the assumed exercise of stock options issued within one year prior to the
Company's initial public offering.
8
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company has three principal product lines: life sciences
instrumentation, information management systems, and health physics
instrumentation. The Company's life sciences instrumentation group includes its
DYNEX Technologies ("DYNEX"), Affinity Sensors, and MALDI-TOF mass spectrometer
subsidiaries and its capillary electrophoresis ("CE") division, through which
the Company designs, manufactures, and markets a broad range of instruments and
consumables based on proprietary immunoassay, optical biosensor, mass
spectrometry, and CE technologies. The Company's LabSystems subsidiary designs,
implements, and supports laboratory information management systems ("LIMS") and
chromatography data systems. The Company's Eberline health physics subsidiary
supplies radiation detection and counting instrumentation and sophisticated
radiation monitoring systems to the nuclear industry worldwide.
The Company's strategy is to develop and market a portfolio of instruments
and information management systems for biochemistry and other applications
through research and development of innovative products and through the
acquisition of complementary businesses and technologies. In February 1996, the
Company acquired DYNEX, which supplies automated systems, detection systems, and
consumables for the immunoassay market. Effective March 29, 1996, the Company
acquired Affinity Sensors and LabSystems from Thermo Instrument Systems Inc.
("Thermo Instrument") (see Note 2 to the Company's Consolidated Financial
Statements). Affinity Sensors supplies optical biosensors used in life sciences
research by the pharmaceutical and biotechnology industries, universities, and
medical research institutes. Affinity Sensors was established to develop and
commercialize products based on a new technology, optical biosensors, and
commenced commercial sales in 1993. LabSystems designs, implements, and supports
LIMS and chromatography data systems used in research and development, quality
assurance and control, and processing plants.
RESULTS OF OPERATIONS
1996 Compared With 1995
Revenues increased to $71.6 million in 1996 from $22.5 million in 1995.
This increase was primarily due to the inclusion of $33.1 million in revenues
from DYNEX, acquired in February 1996, and the inclusion of $19.2 million in
revenues from LabSystems and Affinity Sensors, which were acquired effective
March 29, 1996, offset in part by lower revenues at the Company's MALDI-TOF
subsidiary due to increased competition and a change in distribution channels
from commission-based sales agents to distributors. In addition, the Company
believes that revenues at the Company's Eberline health physics subsidiary
decreased primarily due to reduced spending at U.S. Department of Energy
facilities as a result of the federal budgetary impasse.
The gross profit margin increased to 47% in 1996 from 42% in 1995,
primarily due to the inclusion of higher-margin revenues at LabSystems and
Affinity Sensors and, to a lesser extent, at DYNEX. These increases were offset
in part by a decrease in margins at the Company's MALDI-TOF subsidiary, due to a
change in distribution channels from commission-based sales agents to
distributors, which resulted in reduced revenues.
Selling, general and administrative expenses as a percentage of revenues
increased to 29% in 1996 from 21% in 1995, primarily due to higher costs as a
percentage of revenues at DYNEX and, to a lesser extent, at LabSystems. In
mid-1996 the Company implemented a cost reduction plan at DYNEX, which is
intended to reduce selling, general, and administrative expenses as a percentage
of revenues primarily by decreasing staffing levels and, to a lesser extent,
travel and other related costs. Research and development expenses increased to
$7.3 million in 1996 from $1.3 million in 1995, primarily due to the inclusion
of expenses at DYNEX, LabSystems, and Affinity Sensors.
During 1996, the Company wrote off $3.5 million of acquired technology in
connection with the acquisitions of Affinity Sensors and LabSystems (see Note 2
to the Company's Consolidated Financial Statements).
9
<PAGE> 11
Interest income in both periods primarily represents interest earned on
invested proceeds from the Company's private placements of common stock in March
and April 1995, and initial public offering of common stock in September and
October 1996. Interest expense, related party, in 1996 represents interest
associated with a $50.0 million principal amount subordinated convertible note
issued to Thermo Instrument in July 1996 and, to a lesser extent, interest
associated with a $30.0 million promissory note issued to Thermo Electron
Corporation (Thermo Electron) in February 1996, which was repaid in July 1996.
The effective tax rate was 38% and 40% in 1996 and 1995, respectively,
excluding the effect of the 1996 write-off of acquired technology associated
with the acquisitions of U.K.-based Affinity Sensors and LabSystems, for which
no tax benefit has been recorded. These rates exceed the statutory federal
income tax rate primarily due to the impact of state income taxes. The effective
tax rate decreased in 1996 primarily due to income from certain newly acquired
foreign companies, which are subject to lower tax rates.
1995 Compared With 1994
Revenues decreased 10% to $22.5 million in 1995 from $25.1 million in 1994,
primarily due to lower health physics sales which resulted from lower capital
spending by commercial nuclear power producers and government laboratories, U.S.
government budget constraints, and regulatory uncertainty concerning clean-up
projects.
The gross profit margin declined to 42% in 1995 from 44% in 1994. This
reduction was primarily due to lower sales of high-margin personnel
contamination monitors and environmental monitors produced by the Company's
Eberline health physics subsidiary.
Selling, general and administrative expenses as a percentage of revenues
increased to 21% in 1995 from 20% in 1994 due to the decrease in revenues noted
above. Research and development expenses decreased to $1.3 million in 1995 from
$2.0 million in 1994 primarily due to the elimination of German research and
development activities at the Company's MALDI-TOF subsidiary and a reduction in
spending at the Company's Eberline health physics subsidiary in 1994 and in
1995.
Interest income in 1995 represents interest on invested proceeds from the
Company's private placements of common stock in March and April 1995.
The effective tax rate was 40% in 1995 and 38% in 1994. These rates exceed
the statutory federal rate primarily due to the impact of state income taxes.
The increase in the effective rate resulted from the inability in 1995 to
provide a tax benefit on foreign losses and a reduced tax benefit associated
with the Company's foreign sales corporation.
LIQUIDITY AND CAPITAL RESOURCES
Consolidated working capital was $59.8 million as of December 28, 1996,
compared with $27.1 million as of December 30, 1995. Included in working capital
are cash and cash equivalents of $45.5 million as of December 28, 1996, compared
with $17.7 million as of December 30, 1995. During 1996, $8.6 million of cash
was provided by operating activities. An increase in accounts payable and other
current liabilities provided $3.1 million primarily as a result of higher
accounts payable and accrued expense balances at DYNEX, which had been reduced
from normal levels in anticipation of its acquisition by the Company. Cash flow
from operations was reduced by an increase in accounts receivable of $2.1
million, primarily at DYNEX.
Investing activities used $52.2 million of cash during 1996. The Company
expended $50.7 million, net of cash acquired, for acquisitions (see Note 2 to
the Company's Consolidated Financial Statements) and $1.5 million for purchases
of property, plant and equipment. The Company expects to make capital
expenditures of approximately $2 million for purchases of property, plant and
equipment during 1997.
During 1996, financing activities provided $70.8 million in cash. To help
finance the acquisition of DYNEX, the Company borrowed $30.0 million from Thermo
Electron pursuant to a promissory note due February 1997. In connection with the
acquisition of Affinity Sensors and LabSystems in July 1996, the Company issued
to Thermo Instrument a $50.0 million principal amount subordinated convertible
note, and used part of the proceeds to retire the $30.0 million promissory note
issued to Thermo Electron. In September
10
<PAGE> 12
and October 1996, the Company sold 1,670,000 shares of its common stock in an
initial public offering for net proceeds of $20.8 million.
Although the Company expects to have positive cash flow from its existing
operations, the Company anticipates it will require significant amounts of cash
for the possible acquisition of complementary businesses and technologies. The
Company expects that it will finance these acquisitions through a combination of
internal funds, additional debt or equity financing, and/or short-term
borrowings from Thermo Instrument or Thermo Electron, although there is no
agreement with these companies to ensure that funds will be available on
acceptable terms or at all. The Company believes that its existing resources are
sufficient to meet the capital requirements of its existing businesses for the
foreseeable future.
11
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS OF DYNEX TECHNOLOGIES
OVERVIEW
DYNEX Technologies operated as a division of Dynatech Corporation through
February 7, 1996. The Company acquired substantially all of the assets of DYNEX,
subject to certain liabilities, on February 7, 1996. DYNEX designs, manufactures
and markets products used in the immunoassay segment of the bioinstrumentation
market.
In describing the results of operations below, the period from April 1,
1995 through February 7, 1996 is referenced as fiscal 1996, and the years ended
March 31, 1995 and 1994 are referenced as fiscal 1995 and fiscal 1994,
respectively.
RESULTS OF OPERATIONS
Fiscal 1996 Compared With Fiscal 1995
Revenues decreased 24% to $28.5 million in fiscal 1996 from $37.3 million
in fiscal 1995. Revenues decreased $5.8 million in fiscal 1996 due to the
abbreviated fiscal year. In addition, DYNEX had nonrecurring sales of certain
products to customers in Russia of $0.2 million in fiscal 1996 compared with
$3.0 million in fiscal 1995.
The gross profit margin decreased to 45% in fiscal 1996 from 46% in fiscal
1995, primarily due to an increase in lower margin sales to original equipment
manufacturers ("OEM's"), offset in part by a reduction in lower margin
nonrecurring sales in fiscal 1996 of certain products manufactured by third
parties for customers in Russia.
Selling, general and administrative expenses as a percentage of revenues
increased to 40% in fiscal 1996 from 34% in fiscal 1995 primarily due to the
decrease in revenues discussed above. Research and development expenses
decreased to $2.3 million in fiscal 1996 from $2.5 million in fiscal 1995
primarily due to the abbreviated fiscal year.
Interest expense increased in fiscal 1996 primarily due to an increase in
the interest allocation from Dynatech Corporation as a result of increased
borrowings.
The effective tax rates in fiscal 1996 and fiscal 1995 differ from the
statutory federal income tax rate primarily due to the inability to provide a
tax benefit on losses incurred at certain subsidiaries and, to a lesser extent,
higher tax rates at certain foreign subsidiaries.
Fiscal 1995 Compared With Fiscal 1994
Revenues increased 24% to $37.3 million in fiscal 1995 from $30.1 million
in fiscal 1994. Revenues increased primarily due to increased demand, which
resulted in part from the introduction of certain new instrumentation products.
In addition, nonrecurring sales of certain products to customers in Russia
accounted for an increase in revenues of $2.3 million.
The gross profit margin decreased to 46% in fiscal 1995 from 49% in fiscal
1994, primarily due to the inclusion of lower margin nonrecurring revenues on
the sale of certain products manufactured by third parties for customers in
Russia, and an increase in lower margin sales to OEM's.
Selling, general and administrative expenses as a percentage of revenues
decreased to 34% in fiscal 1995 from 41% in fiscal 1994 primarily due to the
increase in revenues discussed above. Research and development expenses were
$2.5 million in both periods.
Interest expense decreased in fiscal 1995 primarily due to a decrease in
the interest allocation from Dynatech Corporation.
The effective tax rates in fiscal 1995 and fiscal 1994 differ from the
statutory federal income tax rate primarily due to the inability to provide a
tax benefit on losses incurred at certain subsidiaries and, to a lesser extent,
higher tax rates at certain foreign subsidiaries.
12
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
OF AFFINITY SENSORS AND LABSYSTEMS
OVERVIEW
Affinity Sensors and LabSystems operated as divisions of Fisons plc through
March 29, 1996 at which time Thermo Instrument acquired a substantial portion of
the Scientific Instruments Division of Fisons plc (of which Affinity Sensors and
LabSystems form a part). In July 1996, the Company acquired Affinity Sensors and
LabSystems from Thermo Instrument.
Affinity Sensors was established to develop and commercialize products
based on a new technology, optical biosensors, and commenced commercial sales in
1993. LabSystems designs, implements and supports laboratory information
management systems and chromatography data systems.
RESULTS OF OPERATIONS
First Quarter 1996 Compared with First Quarter 1995
Turnover increased 7% to 2.9 million British pounds sterling in the first
quarter of 1996 from 2.7 million British pounds sterling in the first quarter of
1995. This increase was primarily due to an increase of 0.6 million British
pounds sterling in turnover at LabSystems due to increased demand for its
product in South America and Asia, partially offset by a decrease in turnover of
0.4 million British pounds sterling at Affinity Sensors due to the timing of
certain shipments.
The gross profit margin declined to 53% in the first quarter of 1996, from
63% in the first quarter of 1995, primarily due to a provision for obsolescence
recorded in the first quarter of 1996 for approximately 0.3 million British
pounds sterling.
Distribution costs represented 30% of turnover in the first quarter of 1996
compared with 24% of turnover in the first quarter of 1995. The increase was
primarily due to an increase in the reserve for bad debts of approximately 0.2
million British pounds sterling. Administrative expenses remained constant at
63% of turnover in both periods.
1995 Compared With 1994
Turnover decreased 4% to 14.4 million British pounds sterling in 1995 from
15.0 million British pounds sterling in 1994. This decrease was primarily due to
a decrease of 1.0 million British pounds sterling in turnover at LabSystems due
to a decrease in demand for its chromatography data systems, offset in part by
an increase in turnover of 0.4 million British pounds sterling at Affinity
Sensors due to increased demand.
The gross profit margin increased to 75% in 1995 from 72% in 1994,
primarily due to a change in sales mix at Affinity Sensors.
Distribution costs represented 18% of turnover in 1995 compared with 21% of
turnover in 1994. The decrease was primarily due to a restructuring of
LabSystems' United States sales office which resulted in the elimination of
approximately one third of the office's sales personnel. Administrative expenses
remained constant at 55% of turnover in both periods.
The tax provision in both periods exceeded the United Kingdom statutory
rate of 33% primarily due to losses incurred by sales offices in the United
States for which no tax benefit has been recorded.
1994 Compared With 1993
Turnover decreased 6% to 15.0 million British pounds sterling in 1994 from
16.0 million British pounds sterling in 1993. This decrease was primarily due to
a decrease of 1.7 million British pounds sterling in turnover at LabSystems due
to a decrease in demand for its chromatography data systems products, offset in
part by an increase in turnover of 0.7 million British pounds sterling at
Affinity Sensors due to increased demand.
13
<PAGE> 15
The gross profit margin decreased to 72% in 1994 from 74% in 1993 due to a
decrease in turnover of higher margin products at LabSystems.
Distribution costs represented 21% of turnover in 1994 compared with 18% of
turnover in 1993. This increase was primarily due to an increase of
approximately 0.4 million British pounds sterling in costs for Affinity Sensors'
United States sales office for a full year of operations in 1994 compared with
three months in 1993. Administrative expenses represented 55% of turnover in
1994 compared with 58% of turnover in 1993. This decrease was primarily due to a
write-off of 0.4 million British pounds sterling of intangibles in 1993.
The tax provision in both periods exceeds the United Kingdom statutory rate
of 33% primarily due to losses incurred by sales offices in the United States
for which no tax benefit has been recorded.
14
<PAGE> 16
BUSINESS
OVERVIEW
Thermo BioAnalysis designs, manufactures, and markets instruments and
information management systems used in biochemical research and production, as
well as in clinical diagnostics. The Company has three principal product lines:
life sciences instrumentation, information management systems, and health
physics instrumentation. The Company's life sciences instrumentation group
includes its DYNEX Technologies ("DYNEX"), Affinity Sensors, and MALDI-TOF mass
spectrometer subsidiaries and its capillary electrophoresis ("CE") division,
through which the Company designs, manufactures, and markets a broad range of
instruments and consumables based on proprietary immunoassay, optical biosensor,
mass spectrometry, and CE technologies. The Company's LabSystems subsidiary
designs, implements, and supports laboratory information management systems and
chromatography data systems. The Company's Eberline health physics subsidiary
supplies radiation detection and counting instrumentation and sophisticated
radiation monitoring systems to the nuclear industry worldwide.
The Company's strategy is to develop and market a portfolio of instruments
and information management systems for biochemistry and other applications
through research and development of innovative products and through the
acquisition of complementary businesses and technologies. In February 1996, the
Company acquired DYNEX, which supplies automated systems, detection systems, and
consumables for the immunoassay market, for $43.2 million in cash. In July 1996,
the Company acquired for $9.0 million in cash the Affinity Sensors and
LabSystems divisions of Fisons plc ("Fisons") from Thermo Instrument, which had
acquired a substantial portion of the Scientific Instruments Division of Fisons
from Rhone-Poulenc Rorer, Inc. 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 settlement of the final
purchase price for all of the businesses of Fisons acquired by Thermo Instrument
in March 1996. Affinity Sensors supplies optical biosensors used in life
sciences research by the pharmaceutical and biotechnology industries,
universities, and medical research institutes. Affinity Sensors was established
to develop and commercialize products based on a new technology, optical
biosensors, and commenced commercial sales in 1993. LabSystems designs,
implements, and supports laboratory information management systems and
chromatography data systems used in research and development, quality assurance
and control, and processing plants.
The Company markets and distributes its products through a number of
channels, including a direct sales force, independent sales representatives,
distributors, and original equipment manufacturers ("OEMs"). The method of
distribution is determined by product line and market size and potential, as
well as by local business convention, industry mix, and the availability of
technically-qualified representatives.
PRODUCTS
Life Sciences Instrumentation
The Company designs, manufactures, and markets a broad range of instruments
and consumables based on proprietary immunoassay, optical biosensor, mass
spectrometry, and capillary electrophoresis technologies. The Company's products
include automated systems, detection systems, and consumables for the
immunoassay market; optical biosensors; MALDI-TOF mass spectrometers; and
capillary electrophoresis systems, components, and accessories.
Immunoassay. The Company's DYNEX subsidiary designs, manufactures, sells,
and supports products for immunoassay testing. Immunoassay is an analytical
method used for the qualitative and quantitative analysis of biological
molecules. Immunoassay products are used in medical and pharmaceutical research;
clinical diagnostics including tests for pregnancy, hepatitis, and HIV;
veterinary medicine; agricultural diagnostics; water quality testing; and food
and beverage testing. In 1996, the Company introduced the MLX luminescence
detection system, and a third-generation fully automated testing system, the
DIAS Ultra.
The Company has focused its sales efforts on the clinical diagnostic and
research markets, including healthcare and hospital facilities, chemical and
pharmaceutical manufacturers, universities, medical and
15
<PAGE> 17
pharmaceutical research laboratories, veterinary and agricultural research
laboratories, and governmental institutions such as the U.S. Food and Drug
Administration, the National Institute of Health, and the Center for Disease
Control. The Company's products are used principally by large clinical and
research laboratories and manufacturers, including pharmaceutical companies,
where large-batch, high-volume testing methods are required.
The Company sells its immunoassay products principally through its direct
sales force, OEMs, and distributors throughout the world. The company maintains
direct sales offices in the Czech Republic, France, Germany, Hong Kong, Russia,
the United Kingdom, and the United States. The Company also sells through
manufacturers' representatives. The Company sells to clinical laboratories and
hospitals primarily through OEM arrangements with major reagent manufacturers
that purchase consumables and instruments for resale to their customers.
Optical Biosensors. Optical biosensor systems are a new technology used to
quantify biomolecules and characterize their functional properties. Optical
biosensor systems monitor the interaction of two or more biological compounds by
measuring changes in the refractive index caused by molecular activity. The
Company's Affinity Sensors subsidiary designs, develops, and sells optical
biosensors for life sciences research in the pharmaceutical and biotechnology
industries, universities, and medical research institutes. The Company offers
both manual and automated versions of its optical biosensor system for
performing a broad range of assays and affinity measurements. In 1996, the
Company introduced an automated optical biosensor system, and is currently
developing multi-analyte biosensors.
The Company's optical biosensor products serve a variety of geographic
markets. In the United Kingdom and the United States, the Company maintains
direct sales and service offices, as well as distributors. In Australia,
Belgium, France, Germany, Italy, Japan, the Netherlands, Spain, Scandinavia,
Switzerland, and Singapore, the Company distributes its optical biosensor
products through an arrangement with Thermo Instrument.
MALDI-TOF Mass Spectrometry. The Company currently offers three MALDI-TOF
mass spectrometers, including an enhanced benchtop MALDI-TOF mass spectrometer
that has significantly enhanced resolution, which was introduced in 1996. Mass
spectrometry measures the molecular weight of a sample's components, thereby
enabling identification and measurement of organic chemical compounds and/or
inorganic elements contained in the sample. Historically, mass spectrometry has
been of little use to biochemists because mass spectrometry measurements of
large molecules, such as the biomolecules that comprise peptides and proteins
that have molecular weights in excess of 3,000 daltons, were not possible.
The development of ionization techniques such as those used in the
MALDI-TOF mass spectrometer have solved this problem. MALDI-TOF mass
spectrometers, first commercially available in 1990, measure the amount of time
required for an ionized molecule to reach a detector, and convert that
measurement into a measurement of mass. Using these devices, biochemists can
measure molecules with molecular weights of up to 500,000 daltons.
The Company distributes its MALDI-TOF mass spectrometry products through
its direct sales force in the United States and Western Europe, and through
sales representatives elsewhere in the world. In Japan, the Company distributes
its MALDI-TOF mass spectrometry products through an arrangement with ThermoQuest
Corporation ("ThermoQuest"), a majority-owned subsidiary of Thermo Instrument.
Capillary Electrophoresis. Capillary electrophoresis or "CE" is a
purification and separation technique commercially introduced in 1989. CE
systems separate molecules as they move through an extremely narrow tube, or
capillary, that is charged with an electric field. The Company's line of CE
systems includes a low-cost, manually-controlled CE system and a fully-automated
CE system with multiple wavelength detectors. In 1996, the Company introduced
its new generation CE system that has more than twice the sample capacity of
competing products, thereby permitting users to decrease labor costs by allowing
longer periods of unattended operation. The Company's CE systems offer high
sensitivity, as well as advanced data handling, control, and automation
features. The Company also offers a line of CE capillaries, buffers, and other
consumables.
16
<PAGE> 18
The largest market for CE systems are pharmaceutical companies, whose
research activities require state-of-the-art CE systems and related supplies.
One of the principal applications for CE systems is the analysis and separation
of biomolecules such as proteins, peptides, and nucleic acids, including DNA.
Applications of DNA separation by CE include the identification of specific
individuals through DNA "fingerprinting" and the diagnosis of diseases and
specific genetic disorders such as leukemia, hepatitis, and sickle cell anemia.
ThermoQuest distributes the Company's CE products and is the exclusive
distributor of such products in jurisdictions in which it maintains a direct
sales force.
Life sciences instrumentation revenues were $6,467,000, $6,308,000, and
$40,623,000 in 1994, 1995, and 1996, respectively.
Information Management Systems
The Company's LabSystems subsidiary designs, develops, and supports
laboratory information management systems ("LIMS") and chromatography data
systems ("CDS"), and is recognized as one of the world's leading LIMS suppliers.
The Company also maintains an implementation support group that provides
software customization and project management services for its customers. The
Company's products are distributed throughout a wide user base including
research and development, quality assurance/quality control, and processing
facilities. A substantial majority of the Company's customers are Fortune 500
companies in the process chemical, aerospace, pharmaceutical, environmental, oil
and gas, petrochemical, automotive, food and beverage, agricultural, and medical
products industries.
The Company's CDS products are open system analytical tools that assist
users in analyzing chromatographic data obtained via gas and liquid
chromatography and capillary electrophoresis.
The Company's LIMS and CDS products serve a variety of geographic markets.
In the United Kingdom and the United States, the Company maintains direct sales
and service offices, as well as a network of distributors. In Australia, Brazil,
Canada, France, Germany, Italy, the Middle East, the Netherlands, Scandinavia,
Singapore, South Africa, and Spain, the Company distributes its LIMS and CDS
products through an arrangement with Thermo Instrument.
Information management systems revenues were $16,217,000 from March 29,
1996, the date Thermo Instrument acquired LabSystems, through December 28, 1996.
Health Physics Instrumentation
The Company produces a broad range of products, including portable and
stand-alone instruments and computer-integrated systems that detect and measure
nuclear radiation in and around nuclear power plants and other facilities where
radioactive materials are used.
Approximately 58% of the radiation monitoring instruments sold by the
Company are purchased for use in nuclear power plants and United States
Department of Energy facilities. The remainder are sold to medical and
educational institutions, the military service, state and local governments, and
others.
The Company also designs, manufactures, and installs complete
computer-integrated systems for monitoring effluents from nuclear power plants
and for making radiation measurements at strategic locations throughout such
facilities. These systems comprise a network of radiation monitors and data
acquisition subsystems that process and store measurements and, on request,
transmit data to a central system controller for display and recordkeeping.
The Company sells its health physics instruments directly through sales and
support offices in the United States and Canada, and through sales
representatives elsewhere in the world.
Health physics revenues were $18,660,000, $16,226,000, and $14,809,000 in
1994, 1995, and 1996, respectively.
17
<PAGE> 19
COMPETITION
The markets for the Company's products are highly competitive. In each of
the markets it serves, the Company competes with a number of companies, many of
which have greater engineering, manufacturing, and marketing resources than the
Company.
Life Sciences Instrumentation
Immunoassay. The Company competes in the immunoassay market primarily on
the basis of technological innovation, performance (including throughput and
sensitivity), flexibility, and price. The Company's principal competitors in the
consumables or plastics market include Nunc-Nalge Inc., Greiner GmbH, and
Corning-Costar Corporation. In the detection systems market, the Company
competes primarily with Bio-Tek Instruments, Inc. and Molecular Devices
Corporation. In the automated systems market, the Company's main competitors
include BioChem Pharma Inc., Immunosystems, Inc., Hamilton Bonaduz AG, and Tecan
AG.
Optical Biosensors. The Company competes in the optical biosensor market
primarily on the basis of ease and flexibility of use, technical performance,
analytical throughput, speed of data analysis, and price. The dominant
competitor in the market for optical biosensors is Biocore International, Inc.,
a majority-owned subsidiary of Pharmacia & Upjohn, Inc.
MALDI-TOF Mass Spectrometry. The Company competes in the MALDI-TOF mass
spectrometry market primarily on the basis of the technical performance of its
MALDI-TOF mass spectrometers as well as on the need in the analytical
biochemistry community for highly-automated mass spectrometers. To a lesser
degree, the Company also competes on the basis of price. Principal competitors
in the mass spectrometry market include PerSeptive Biosystems, Inc., Shimadzu
Corporation, Hewlett-Packard Company ("Hewlett-Packard"), Bruker Instruments
Inc., and Micromass Ltd.
Capillary Electrophoresis. The Company competes in the market for CE
systems primarily on the basis of technical performance and automation features,
and, to a lesser extent, price. The Company's principal competitors in the CE
market include Beckman Instruments, Inc. ("Beckman"), Bio-Rad Laboratories,
Inc., and Hewlett-Packard.
Information Management Systems
The Company competes in the high-end LIMS and CDS markets primarily on the
basis of the functionality, flexibility, and technical sophistication of its
systems, as well as on its ability to tailor its software packages to a
customer's specific laboratory protocols, its ability to provide superior
customer service and technical support, and price. Significant competitors in
the LIMS and CDS markets include Perkin-Elmer Corporation, Beckman,
Hewlett-Packard, the Laboratory MicroSystems, Inc. subsidiary of Instron
Corporation, and Waters Instruments, Inc.
Health Physics Instrumentation
Although there has been a trend toward consolidation among suppliers of
health physics instrumentation over the last five years, the market for health
physics instrumentation remains fragmented. The Company competes in this market
primarily on the basis of product reliability and technological innovation, and
price. Significant competitors include the Instruments Group of EG&G, Inc., the
Nuclear Products Division of Morgan Crucible Co. plc, the Bicron/NE Technology
division of Saint-Gobain-Norton Industrial Ceramics Corporation, and The Rados
Companies.
RESEARCH AND DEVELOPMENT
During 1994, 1995, and 1996, the Company expended approximately $2,042,000,
$1,325,000, and $7,298,000, respectively, on internally sponsored research and
development programs.
18
<PAGE> 20
PATENTS AND PROPRIETARY TECHNOLOGY
The Company's policy is to protect its intellectual property rights and to
apply for patent protection when appropriate. The Company currently holds
several issued United States patents expiring at various dates ranging from 2002
to 2011. The Company also has applications pending for additional United States
patents and a number of foreign counterparts for its patents in various foreign
countries. In addition, the Company has registered, or other, trademarks. Patent
protection provides the Company with competitive advantages with respect to
certain systems. The Company believes, however, that technical know-how and
trade secrets are more important to its business than patent protection.
The Company seeks to maintain the confidentiality of its proprietary
technology that is not covered by patent protection by requiring employees who
work with proprietary information to sign confidentiality agreements and by
limiting access by parties outside the Company to such confidential information.
There can be no assurance, however, that these measures will prevent the
unauthorized disclosure or use of this information, or that others will not be
able to independently develop such information. Moreover, as is the case with
the Company's patent rights, the enforcement by the Company of its trade secret
rights can be lengthy and costly, with no guarantee of success. See "Risk
Factors -- Dependence on Patents and Proprietary Rights."
BACKLOG
The backlog of firm orders was $2.5 million and $13.6 million as of
December 30, 1995, and December 28, 1996, respectively. The Company believes
that substantially all of its 1996 backlog will be completed during 1997.
FACILITIES
The Company owns approximately 67,000 square feet of manufacturing, sales,
and administration space in New Mexico. The Company leases 130,000 square feet
of manufacturing, sales, and administration space in Virginia, Channel Islands,
and England, including 14,000 square feet subleased from ThermoQuest, under
leases expiring from 1997 through 2016. In addition, the Company leases 29,000
square feet of sales space in Germany, England, Massachusetts, Hong Kong, and
the Czech Republic, under leases expiring from 1997 through 2001. The Company
believes that its facilities are in good condition and are suitable and adequate
to meet current needs.
EMPLOYEES
As of December 28, 1996, the Company had a total of 483 employees.
19
<PAGE> 21
RELATIONSHIP WITH THERMO ELECTRON
AND THERMO INSTRUMENT
The Company was incorporated in Delaware in February 1995 as a wholly-owned
subsidiary of Thermo Instrument. At that time, Thermo Instrument contributed all
of the assets relating to its CE product line, its MALDI-TOF division and its
Eberline health physics division to the Company in exchange for 6,500,000 shares
of Common Stock and the assumption by the Company of substantially all of the
liabilities relating to such businesses. On February 7, 1996, the Company
acquired all of the assets, subject to certain liabilities, of DYNEX from
Dynatech Corporation. In March 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. On
July 22, 1996, the Company acquired the Affinity Sensors and LabSystems
divisions of Fisons from Thermo Instrument for approximately $9.0 million,
subject to a post-closing adjustment based on a post-closing adjustment to be
negotiated with Fisons by Thermo Instrument in connection with the settlement of
the final purchase price for all of the businesses of Fisons acquired by Thermo
Instrument.
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 publicly and/or privately held majority-owned
subsidiaries. The Company and the other Thermo Electron subsidiaries are
hereinafter referred to herein as the "Thermo Subsidiaries."
Thermo Instrument develops, manufactures and markets analytical instruments
used to detect and monitor air pollution, radioactivity, complex chemical
compounds and 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, biomedical products including
heart-assist systems and respiratory care products, papermaking and recycling
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 $2,932,600,000 and consolidated net income
of $190,800,000.
See "Risk Factors -- Potential Conflicts of Interest" and "--Significant
Additional Shares Eligible for Sale After this Offering."
THE THERMO ELECTRON CORPORATE CHARTER
Thermo Electron and the Thermo Subsidiaries, including the Company,
recognize that the benefits and support that derive from their affiliation are
essential elements of their individual performance. Accordingly, Thermo Electron
and each of the Thermo Subsidiaries, including the Company, have adopted the
Thermo Electron Corporate Charter (the "Charter") to define the relationships
and delineate the nature of such cooperation among themselves. The purpose of
the Charter is to ensure that (1) all of the companies and their shareholders
are treated consistently and fairly, (2) the scope and nature of the cooperation
among the companies, and each company's responsibilities, are adequately
defined, (3) each company has access to the combined resources and financial,
managerial and technological strengths of the others, and (4) Thermo Electron
and the Thermo Subsidiaries, in the aggregate, are able to obtain the most
favorable terms from outside parties.
To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")to
external financing sources, ensuring compliance with external financial
covenants and
20
<PAGE> 22
internal financial policies, assisting in the formulation of long-range planning
and providing other banking and credit services. Pursuant to the Charter, Thermo
Electron may also provide guarantees of debt obligations of the Thermo
Subsidiaries or may obtain external financing at the parent level for the
benefit of the Thermo Subsidiaries. In certain instances, the Thermo
Subsidiaries may provide credit support to, or on behalf of, the consolidated
entity or may obtain financing directly from external financing sources. Under
the Charter, Thermo Electron is responsible for ensuring that the Thermo Group
remains in compliance with all covenants imposed by external financing sources,
including covenants related to borrowings of Thermo Electron or other members of
the Thermo Group, and for apportioning such constraints within the Thermo Group.
In addition, Thermo Electron establishes certain internal policies and
procedures applicable to members of the Thermo Group. The cost of the services
provided by Thermo Electron to the Thermo Subsidiaries is covered under existing
corporate services agreements between Thermo Electron and each of the Thermo
Subsidiaries.
The Charter presently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Company, may withdraw from participation in the Charter upon 30
days' prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement 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.
CORPORATE SERVICES AGREEMENT
As provided in the Charter, Thermo Electron and the Company have entered
into a Corporate Services Agreement (the "Services Agreement") under which
Thermo Electron's corporate staff provides certain administrative services,
including certain legal advice and services, risk management, certain employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and certain financial and other services to the Company. In
1994, 1995 and 1996, Thermo Electron assessed the Company an annual fee for the
services equal to 1.25%, 1.20% and 1.00%, respectively, of the Company's
revenues. The fee may be changed by mutual agreement of the Company and Thermo
Electron. For the fiscal year ended December 28, 1996, Thermo Electron assessed
the Company $716,000 in fees under the Services Agreement. The Company believes
that the charges under the Services Agreement are representative of the expenses
that the Company would have incurred on a stand alone basis and that the terms
of the Services Agreement are reasonable. For additional items such as employee
benefit plans, insurance coverage and other identifiable costs, Thermo Electron
charges the Company based upon costs 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 following termination.
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
21
<PAGE> 23
has entered into a similar agreement with Thermo Electron with regard to the
Company's obligations which are guaranteed by 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 it issues on the
Company's behalf.
RELATED PARTY TRANSACTIONS
The Company has entered into a lease and services arrangement with
ThermoQuest under which ThermoQuest leases approximately 15,000 square feet of
space, and provides certain services, to the Company. The Company pays
ThermoQuest rent in an amount that is approximately equal to the Company's pro
rata share of ThermoQuest's occupancy costs and an allocated portion of
ThermoQuest's costs for providing such services. This arrangement may be
terminated by the Company or by ThermoQuest upon 30 days' prior notice. For the
fiscal year ended December 28, 1996, the Company paid ThermoQuest approximately
$105,000 under this arrangement.
ThermoQuest acts as a distributor of certain of the Company's products, is
the exclusive distributor of the Company's MALDI-TOF products in Japan and is
the exclusive distributor of the Company's CE products in countries in which it
maintains a direct sales force. In consideration of such arrangements, the
Company 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 Company sold $2,002,000 of products to
ThermoQuest under these arrangements. In addition, the Company pays ThermoQuest
a finder's fee for each qualified lead that generates an order for the Company's
MALDI-TOF products from customers in the United States and Europe.
The Company has entered into an arrangement with ThermoQuest whereby
ThermoQuest provides assembly labor for the Company's CE products on a contract
basis. Under this arrangement, ThermoQuest assembles instruments as required by
the Company 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 December 28, 1996, the Company paid
ThermoQuest approximately $471,000 under this arrangement.
The Company's Eberline health physics subsidiary purchases certain
controllers and detectors from Thermo Instrument under an original equipment
manufacturer agreement. Under this agreement, the Company has the exclusive
right to sell these instruments in the United States, Canada and Mexico. In
consideration of the Company's agreement to purchase certain minimum quantities
of these instruments, Thermo Instrument grants the Company certain discounts,
which are increased for volume purchases. The Company is responsible for all
warranty repair and maintenance obligations at its expense, but obtains
replacement parts from Thermo Instrument without charge. This agreement will
remain in effect until December 31, 1997, and is automatically renewable for
one-year periods thereafter unless terminated by either party upon 90 days'
notice. For the fiscal year ended December 28, 1996, the Company purchased
$233,000 of instruments from Thermo Instrument under this agreement.
The Company'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. In consideration
of such arrangement, Thermo Instrument sells the Company such instruments at a
discount from Thermo Instrument's published list prices, and provides additional
quantity discounts. Thermo Instrument is responsible for warranty repairs at its
own expense. For the fiscal year ended December 28, 1996, the Company purchased
$306,000 of instruments from Thermo Instrument under this arrangement.
Various Thermo Instrument companies act as distributors of certain of the
Company'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 Company 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
22
<PAGE> 24
maintenance obligations. For the fiscal year ended December 28, 1996, LabSystems
and Affinity Sensors sold an aggregate of $3,912,000 of products to Fisons
companies that were subsequently acquired by Thermo Instrument, respectively,
under these arrangements.
The Company believes that the arrangements set forth above are on terms
comparable to those the Company would receive from unaffiliated parties.
STOCK HOLDING ASSISTANCE PLAN
In 1996, the Company adopted a stock holding policy which requires certain
executives of the Company to acquire and hold a minimum number of shares of
Common Stock. In order to assist the executives in complying with the policy,
the Company also adopted a Stock Holding Assistance Plan, under which it may
make interest-free, recourse loans to certain individuals, including its Named
Executive Officers, to enable such individuals to purchase the Company's Common
Stock in the open market. In November 1996, Mr. Barry S. Howe, the Company's
Chief Executive Officer, received loans in the aggregate principal amount of
$164,375 under this plan to purchase 12,000 shares. The loans to Mr. Howe are
payable on demand and require that 20% of the aggregate principal amount of the
loans be repaid from the bonus payable to Mr. Howe in each of the next five
years (commencing with the bonus to be paid in 1997 for calendar 1996
performance) until the loans are repaid in full. Also in November 1996, Dr.
Richard W.K. Chapman, the Company's Chairman, received loans in the aggregate
principal amount of $131,176 under this plan to purchase 10,000 shares. The
loans to Dr. Chapman are payable on demand and require that 5% of the aggregate
principal amount of the loans be repaid by Dr. Chapman in each of the next five
years, and 25% to be repaid annually thereafter until the loans are repaid in
full.
MISCELLANEOUS
Currently, Thermo Instrument beneficially owns approximately 67% of the
outstanding shares of Common Stock (excluding shares of Common Stock issuable
upon conversion of the Convertible Note). Thermo Instrument presently intends to
maintain a majority interest in the Company. This may require Thermo Instrument
to convert principal amounts of the Convertible Note or to purchase additional
shares of Common Stock from time to time as the number of outstanding shares
issued by the Company increases. These purchases may be made either in the open
market or directly from the Company. See "Risk Factors -- Control by Thermo
Instrument."
The Company's cash equivalents may be invested from time to time pursuant
to a repurchase agreement with Thermo Electron. Under this agreement, the
Company 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 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
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter.
From time to time, the Company may transact business in the ordinary course
with other companies in the Thermo Group.
23
<PAGE> 25
MANAGEMENT
The directors and executive officers of the Company and their ages as of
December 28, 1996 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- -------------------------------------------------
<S> <C> <C>
Barry S. Howe 41 Chief Executive Officer, President and Director
Donald W. Hanna 40 Vice President
John N. Hatsopoulos 62 Vice President and Chief Financial Officer
Paul F. Kelleher 54 Chief Accounting Officer
Jonathan W. Painter 37 Treasurer and Director
Richard W. K. Chapman, Ph.D. 51 Chairman of the Board and Director
Denis A. Helm 57 Vice Chairman of the Board and Director
Arvin H. Smith 66 Director
Elias P. Gyftopoulos,
Ph.D.(1) 68 Director
Arnold N. Weinberg, M.D.(1) 66 Director
</TABLE>
- ---------------
(1) Member of the Audit and Human Resources Committees.
All of the Company's Directors are elected annually by the shareholders and
hold office until their respective successors are duly elected and qualified.
Executive officers are elected annually by the Board of Directors and serve at
its discretion. Messrs. Hatsopoulos, Kelleher and Painter are full-time
employees of Thermo Electron, Thermo Instrument or other subsidiaries of Thermo
Electron, but these individuals devote such time to the affairs of the Company
as the Company's needs reasonably require from time to time.
Mr. Howe has been Chief Executive Officer, President and a Director of the
Company since its inception in February 1995. Mr. Howe was also President of TSP
and its predecessor, a manufacturer of chromatography instruments for
pharmaceutical, biotechnical and environmental analysis, from September 1989 to
December 1995, and has been a Vice President of Thermo Instrument, a
manufacturer of analytical, environmental-monitoring and process-control
instrumentation, since 1994.
Mr. Hanna has been Vice President of the Company since its inception in
February 1995. Mr. Hanna was President of Thermo Instrument's National Nuclear
Corporation subsidiary, a manufacturer of products for the nuclear power
industry, from 1990 through 1994 and has been President of the Company's
Eberline subsidiary since 1994.
Mr. Hatsopoulos has been Vice President and Chief Financial Officer of the
Company since its inception in February 1995. He also served as a Director of
the Company from February 1995 to December 1996. Mr. Hatsopoulos has been a Vice
President and Chief Financial Officer of Thermo Instrument since 1988. Mr.
Hatsopoulos has been President of Thermo Electron, a diversified technology
company, since January 1, 1997, and the Chief Financial Officer of Thermo
Electron since 1988. Prior to his appointment as President, Mr. Hatsopoulos had
been an Executive Vice President of Thermo Electron since 1986. He is also a
Director of Thermedics Inc., Thermedics Detection Inc., Thermo Ecotek
Corporation, Thermo Fibergen Inc., Thermo Fibertek Inc., Thermo Instrument,
Thermo Power Corporation, Thermo TerraTech Inc. and ThermoTrex Corporation.
Mr. Kelleher has been the Chief Accounting Officer of the Company since its
inception in February 1995. Mr. Kelleher has been Vice President, Finance of
Thermo Electron since 1987 and served as its Controller from January 1982 to
January 1996. He is a Director of ThermoLase Corporation.
Mr. Painter has been Treasurer and Director of the Company since its
inception in February 1995. Mr. Painter has been Treasurer of Thermo Electron
and Thermo Instrument 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
24
<PAGE> 26
1994. Prior to that time, Mr. Painter was Associate General Counsel of Thermo
Electron and its subsidiaries. Mr. Painter is a Director of Thermo Fibergen Inc.
Dr. Chapman has been Chairman of the Board and a Director of the Company
since its inception in February 1995. Dr. Chapman served as President of
ThermoQuest's Finnigan Corporation subsidiary, a manufacturer of mass
spectrometers and chromatography systems, from 1992 to 1995, as Chief Executive
Officer and President of ThermoQuest, the parent company of Finnigan
Corporation, since June 1995, and as a Vice President of Thermo Instrument since
1994. Dr. Chapman is a Director of ThermoQuest and Thermo Cardiosystems Inc.
Mr. Helm has been Vice Chairman of the Board and a Director of the Company
since its inception in February 1995. Mr. Helm has been Chairman of the Board,
Chief Executive Officer and a Director of Metrika Systems Corporation, a
subsidiary of Thermo Instrument, since November 1996 and President of Thermo
Instrument's Thermo Environmental Instruments Inc. subsidiary, an environmental
instruments company, since 1981. Mr. Helm has been a Senior Vice President of
Thermo Instrument since 1994 and was a Vice President of Thermo Instrument from
1986 until 1994.
Mr. Smith has been a Director of the Company since its inception in
February 1995. Mr. Smith has been a Director and Chief Executive Officer of
Thermo Instrument since 1986 and as President of Thermo Instrument from 1986 to
March 1997. Mr. Smith has been an Executive Vice President of Thermo Electron
since 1991 and, prior to that time, a Senior Vice President of that corporation
since 1986. Mr. Smith is also a Director of Thermedics Inc., Thermo Optek
Corporation, ThermoQuest and ThermoSpectra Corporation.
Dr. Gyftopoulos has been a Director of the Company since its inception in
February 1995. Dr. Gyftopoulos is Professor Emeritus of the Massachusetts
Institute of Technology, where he had been the Ford Professor of Mechanical and
Nuclear Engineering for more than five years prior to his retirement in April
1996. He is also a Director of Thermo Cardiosystems Inc., Thermo Electron,
ThermoLase Corporation, Thermo Remediation Inc., ThermoSpectra Corporation and
Thermo Voltek Corp.
Dr. Weinberg has been Professor of Medicine at the Harvard Medical School
and Medical Director of the Medical Department of the Massachusetts Institute of
Technology for at least five years.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company, Thermo Instrument, Thermo
Electron or 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 or 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, Hatsopoulos, Painter 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 of control or proposed change of control of the Company that is not
approved by the Board of Directors, deferred amounts become payable immediately.
For purposes of the Deferred Compensation Plan, a change in control is defined
as (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 of 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 date of deferral as units of Common Stock. When payable,
amounts deferred may be disbursed solely in shares of Common Stock accumulated
under the Deferred Compensation Plan. The Company has reserved 25,000
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<PAGE> 27
shares of Common Stock under this plan. As of December 28, 1996, no units had
been allocated under this plan.
Directors Stock Option Plan. The Company has adopted a Directors Stock
Option Plan (the "Plan") under which options to purchase shares of the Common
Stock will be automatically granted to each non-management Director for his
service as a Director (i) upon the later of the adoption of the Plan and his
election or appointment as a Director and (ii) for his attendance at or
participation in meetings of the Board of Directors or its committees. 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
eligible Directors, provided the Company's Common Stock is then publicly traded.
A total of 100,000 shares of Common Stock has been reserved for issuance under
the Plan.
Under the Plan, each eligible Director and each new outside Director
initially joining the Board of Directors in 1996 was granted an option to
purchase 15,000 shares of Common Stock upon the Director's appointment or
election. The size of the award to new Directors appointed to the Board of
Directors after 1996 will be reduced by 3,750 shares in each subsequent year.
Directors initially joining the Board of Directors after 1999 would not receive
an option grant upon their appointment or election to the Board of Directors,
but would be eligible to participate in the annual option awards described
below. Options evidencing initial grants to Directors are presently exercisable;
however, the shares acquired upon exercise are subject to restrictions on
transfer and the right of the 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. In such event, the restrictions and
repurchase rights shall lapse or be deemed to have lapsed in annual installments
of 3,750 shares per year, starting with the first anniversary of the date of
grant, provided the Director has continuously served as a Director of the
Company, Thermo Electron or any subsidiary of Thermo Electron since the grant
date. These options expire on the fifth anniversary of the grant date, unless
the Director dies, ceases to be an eligible director or otherwise ceases to
serve as a Director of the Company, Thermo Electron or any subsidiary of Thermo
Electron prior to that date.
Commencing in 2000, eligible Directors will also receive an annual grant of
options to purchase 1,000 shares of Common Stock, provided the Common Stock is
then publicly traded. The annual grant would be made at the close of business on
the date of each annual meeting of shareholders of the Company to each outside
Director then holding office, commencing with the annual meeting to be held in
2000. Options evidencing annual grants may be exercised at any time from and
after the six-month anniversary of the date of grant and prior to the expiration
of the option on the third anniversary of the date of grant. Shares acquired
upon exercise of the options would be subject to repurchase by the 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 date
of grant for any reason other than death.
The exercise price for options granted under the Plan is determined by the
average of the closing prices reported by the American Stock Exchange (or such
other principal exchange on which the Common Stock is then traded) for the five
trading days immediately preceding and including the date the option is granted
or, if the shares underlying the option are not so traded, at the last price
paid per share by independent investors in an arms' length transaction with the
Company prior to the date of grant.
As of December 28, 1996, options to purchase 30,000 shares of the Company's
Common Stock exercisable at $10.00 per share were outstanding under the Plan.
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 one other executive officer for the last two fiscal years (the Chief
Executive Officer and such other executive officer being hereinafter referred to
as the "Named Executive Officers"). No other executive officer of the Company
who held office at the end of fiscal 1996 met the definition of "highly
compensated" within the meaning of the Securities and Exchange Commission's
executive compensation disclosure rules during this period.
26
<PAGE> 28
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 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."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION SECURITIES
NAME AND PRINCIPAL FISCAL ------------------ UNDERLYING OPTIONS (NO. OF ALL OTHER
POSITION YEAR SALARY BONUS SHARES AND COMPANY)(2) COMPENSATION
- ------------------------- ------ -------- ------- -------------------------- ---------------
<S> <C> <C> <C> <C> <C>
Barry S. Howe............ 1996 $145,000 (1) 50,000(TBA) $ 8,076(3)
President and Chief 1,500(TMO)
Executive Officer 2,000(TFG)
15,000(TOC)
2,000(TSR)
2,000(TLT)
90,000(TMQ)
4,000(TXM)
1995 $134,000 $65,000 1,650(TMO) $ 7,517(4)
5,000(TLZ)
Donald W. Hanna.......... 1996 $100,000 (1) 21,000(TBA) $ 5,310(4)
Vice President 7,500(TOC)
5,000(TMQ)
1995 $ 95,000 $18,000 -- $ 4,682(4)
</TABLE>
- ---------------
(1) Bonuses for fiscal 1996 have not yet been determined.
(2) In addition to receiving options to purchase Common Stock (designated in the
table as TBA), executive officers of the Company 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), ThermoLyte Corporation (designated in the table as
TLT), ThermoLase Corporation (designated in the table as TLZ), 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).
(3) Includes $6,632, which represents the amount of matching contributions made
on behalf of the Named Executive Officer by the Company under the Thermo
Electron 401(k) plan, and $1,444, which represents the amount of
compensation attributable to an interest-free loan provided to the Named
Executive Officer pursuant to the Company's Stock Holding Assistance Plan.
See "Relationship with Thermo Electron and Thermo Instrument -- Stock
Holding Assistance Plan".
(4) Represents the amount of matching contributions made on behalf of the Named
Executive Officer by the Company under the Thermo Electron 401(k) plan.
27
<PAGE> 29
Stock Options Granted During Fiscal 1996
The following table sets forth certain information concerning grants of
stock options made during fiscal 1996 to each of the Named Executive Officers.
It has not been the Company's policy in the past to grant stock appreciation
rights, and no such rights were granted during fiscal 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
% OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE
SHARES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(2)
OPTIONS IN FISCAL PRICE PER EXPIRATION ---------------------
NAME GRANTED(1) YEAR SHARE DATE 5% 10%
- --------------------- ---------- ------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Barry S. Howe........ 50,000(TBA) 8.6% $ 10.00 1/31/08 $398,000 $1,069,000
1,500(TMO) 0.1%(3) $ 42.79 5/22/99 $ 10,110 $ 21,240
2,000(TFG) 0.4%(3) $ 10.00 9/12/08 $ 15,920 $ 42,760
15,000(TOC) 0.5%(3) $ 12.00 4/11/08 $143,250 $ 384,900
2,000(TSR) 0.4%(3) $ 14.00 3/11/08 $ 22,280 $ 59,880
2,000(TLT) 0.6%(3) $ 10.00 3/11/08 $ 15,920 $ 42,760
90,000(TMQ) 3.2%(3) $ 13.00 1/10/08 $931,500 $2,502,000
4,000(TXM) 0.2%(3) $ 11.00 3/11/08 $ 35,000 $ 94,080
Donald W. Hanna...... 21,000(TBA) 3.6% $ 10.00 1/31/08 $167,160 $ 448,980
7,500(TOC) 0.2%(3) $ 12.00 4/11/08 $ 71,625 $ 192,450
5,000(TMQ) 0.2%(3) $ 13.00 2/8/08 $ 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 Exchange Act and (ii) nine years after the grant
date. In all cases, the shares acquired upon exercise are subject to
repurchase by the granting corporation at the exercise price if the optionee
ceases to be employed by the 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. The options to purchase shares of
the common stock of Thermo Electron granted to Mr. Howe have a three-year
term and the repurchase rights lapse in their entirety on the second
anniversary of the grant date. The granting corporation may permit the
holders of all such 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 optionholders' continued employment through the option
period and the date on which the options are exercised.
(3) These options were granted under a stock option plan maintained by Thermo
Electron and accordingly are reported as a percentage of total options
granted to employees of Thermo Electron and its subsidiaries.
28
<PAGE> 30
Stock Options Exercised During Fiscal 1996 and Year-End Option Values
The following table sets forth certain information concerning each exercise
of a stock option during fiscal 1996 and outstanding stock options held at the
end of fiscal 1996 by each of the Named Executive Officers. No stock
appreciation rights were exercised or outstanding during fiscal 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
NUMBER OF YEAR-END YEAR-END
SHARES ----------------- --------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME COMPANY EXERCISE REALIZED UNEXERCISABLE(1) UNEXERCISABLE(1)
- -------------------- -------------------- ----------- -------- ----------------- --------------------
<S> <C> <C> <C> <C> <C>
Barry S. Howe(2).... Thermo BioAnalysis -- -- 50,000/ 0 $ 156,250/ --
Thermo Instrument -- -- 89,062/ 0 $1,561,042/ --
Thermedics -- -- 4,000/ 0 $ 9,100/ --
Thermo Ecotek 5,250 $48,127 6,000/ 0 $ 61,500/ --
Thermo Electron -- -- 73,287/ 0(2) $1,428,259/ --
Thermo Fibertek -- -- 15,750/ 0 $ 64,890/ --
Thermo Fibergen -- -- 2,000/ 0 $ 1,500/ --
Thermo Optek -- -- 15,000/ 0 $ 0/ --
Thermo Power -- -- 4,000/ 0 $ 0/ --
Thermo Sentron -- -- 2,000/ 0 $ 0/ --
Thermo TerraTech -- -- 4,000/ 0 $ 3,880/ --
ThermoLase -- -- 5,000/ 0 $ 0/ --
ThermoLyte -- -- --/ 2,000 $ --/ 0(3)
ThermoQuest -- -- 90,000/ -- $ 0/ --
ThermoSpectra -- -- 4,000/ 0 $ 7,500/ --
ThermoTrex 1,350 $55,755 4,000/ 0 $ 51,700/ --
TrexMedical -- -- 4,000/ 0 $ 6,500/ --
Donald W. Hanna..... Thermo BioAnalysis -- -- 21,000/ 0 $ 65,625/ --
Thermo Instrument -- -- 15,000/ 0 $ 251,626/ --
Thermo Ecotek 3,000 $21,249 --/ -- $ --/ --
Thermo Electron 1,275 $39,895 20,098/ 0(2) $ 420,940/ --
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, which are not exercisable until the earlier of (i) 90
days after the effective date of the registration of that company's common
stock under Section 12 of the Exchange Act and (ii) nine years after the
grant date. In all cases, the shares acquired upon exercise of the options
reported in the table are subject to repurchase by the granting corporation
at the exercise price if the optionee ceases to be employed by such
corporation or another Thermo Electron company. The granting corporation may
exercise its repurchase rights within six months after the termination of
the optionee's employment. 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
29
<PAGE> 31
grant date. In the event of the employee's death or involuntary termination
prior to the tenth anniversary of the grant date, the repurchase rights of
the granting corporation shall be deemed to have lapsed ratably over a
five-year period commencing with the fifth anniversary of the grant date.
(3) No public market existed for the shares underlying the options as of
December 28, 1996. Accordingly, no value in excess of the exercise price has
been attributed to these options.
30
<PAGE> 32
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDER
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of December 28, 1996 by Thermo
Instrument, which is the only person or entity that owns beneficially more than
5% of the outstanding shares of Common Stock. See "Risk Factors -- Control by
Thermo Instrument."
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS NUMBER OF SHARES OUTSTANDING SHARES
OF BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED
- --------------------------------------------------------- ------------------ ------------------
<S> <C> <C>
Thermo Electron Corporation(1)........................... 6,559,200(2) 68%(2)
81 Wyman Street
Waltham, Massachusetts 02254
Thermo Instrument Systems Inc.(1)........................ 6,500,000(2) 67%(2)
1275 Hammerwood Avenue
Sunnyvale, California 94089
</TABLE>
- ---------------
(l) Thermo Instrument is a majority-owned subsidiary of Thermo Electron and,
therefore, Thermo Electron may be deemed a beneficial owner of the 6,500,000
shares of Common Stock beneficially owned by Thermo Instrument. Thermo
Electron disclaims beneficial ownership of such shares.
(2) Excludes 3,030,303 shares of Common Stock issuable upon conversion of the
Convertible Note.
MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of December 28, 1996 as well as
information regarding the beneficial ownership of the common stock of Thermo
Instrument and Thermo Electron, as of December 28, 1996, with respect to (i)
each of the Company's Directors, (ii) each of the Named Executive Officers, and
(iii) all Directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
THERMO THERMO
BIOANALYSIS INSTRUMENT THERMO ELECTRON
NAME(1) CORPORATION(2) SYSTEMS INC.(3) CORPORATION(4)
- ---------------------------------------------------- -------------- --------------- ---------------
<S> <C> <C> <C>
Dr. Richard W.K. Chapman............................ 40,500 139,087 82,126
Dr. Elias P. Gyftopoulos............................ 15,000 47,018 71,170
Donald W. Hanna..................................... 21,000 15,966 22,469
Denis A. Helm....................................... 15,000 161,729 159,312
Barry S. Howe....................................... 64,300 99,886 83,897
Jonathan W. Painter................................. 15,000 5,782 33,271
Arvin H. Smith...................................... 39,000 431,667 513,038
Dr. Arnold N. Weinberg.............................. 15,000 0 0
All Directors and current executive officers as a
group (10 persons)................................ 255,200 1,007,201 1,670,997
</TABLE>
- ---------------
(1) Except as reflected in the footnotes to this table, shares of Common Stock
and common stock of Thermo Instrument and Thermo Electron beneficially owned
consist of shares owned by the indicated person or 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 Dr. Chapman, Dr.
Gyftopoulos, Mr. Hanna, Mr. Helm, Mr. Howe, 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, 15,000, 20,000, 15,000 and 199,000 shares,
respectively, that such person or group has the right to acquire within 60
days of December 28, 1996, through the exercise of options. No Director or
executive officer beneficially owned more than 1% of the
31
<PAGE> 33
Common Stock outstanding as of such date, and all Directors and executive
officers as a group beneficially owned less than 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. Painter, Mr.
Smith and all Directors and executive officer as a group include 121,287,
14,465, 15,000, 112,500, 89,062, 5,625, 234,375 and 682,314 shares,
respectively, that such person or group has the right to acquire within 60
days of December 28, 1996, through the exercise of stock options. Shares
beneficially owned by Mr. Painter, Mr. Smith and all Directors and executive
officers as a group include 157, 530 and 1,612 full shares, respectively,
allocated through December 31, 1995 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 Mr.
John N. Hatsopoulos and Mr. Peter G. Pantazelos. Shares beneficially owned
by Mr. Howe include 1,968 shares held in a trust of which Mr. Howe is the
trustee. No Director or executive officer beneficially owned more than 1% of
the common stock of Thermo Instrument outstanding as of December 28, 1996;
all Directors and executive officers as a group beneficially owned 1.03% of
such common stock outstanding as of such date.
(4) The shares of common stock of Thermo Electron have been adjusted to reflect
three-for-two stock splits effected on May 25, 1995 and June 5, 1996. Shares
of the common stock of Thermo Electron beneficially owned by Dr. Chapman,
Dr. Gyftopoulos, Mr. Hanna, Mr. Helm, Mr. Howe, Mr. Painter, Mr. Smith and
all Directors and executive officers as a group include 80,284, 9,375,
20,098, 106,347, 73,287, 27,035, 222,411 and 1,066,096 shares, respectively,
that such person or group has the right to acquire within 60 days of
December 28, 1996, through the exercise of stock options. Shares
beneficially owned by Mr. Hanna, Mr. Helm, Mr. Howe, Mr. Painter, Mr. Smith
and all Directors and executive officers as a group include 488, 1,717 and
5,463 full shares, respectively, allocated through December 31, 1995 to
their respective accounts maintained pursuant to Thermo Electron's ESOP. The
trustees of the ESOP, who have investment power over its assets, are Mr.
John N. Hatsopoulos and Mr. Peter G. Pantazelos. No Director or executive
officer beneficially owned more than 1% of the common stock of Thermo
Electron outstanding as of December 28, 1996; all Directors and executive
officers as a group beneficially owned 1.1% of such common stock outstanding
as of such date.
32
<PAGE> 34
SELLING SHAREHOLDERS
The following table shows the names of the Selling Shareholders, the number
of shares of the Company's Common Stock each owned, the number of Shares that
may be offered by each of them pursuant to this Prospectus and the number of
Shares each will own after completion of the offering, assuming all of the
Shares being offered hereby are sold.
<TABLE>
<CAPTION>
SHARES OF COMMON SHARES OWNED
STOCK OWNED PRIOR AFTER
TO SHARES BEING COMPLETION
SELLING SHAREHOLDER THE OFFERING(1) OFFERED OF THE OFFERING
- ---------------------------------------------------- ------------------ ------------ -----------------
<S> <C> <C> <C>
Craig Drill Capital, L.P............................ 450,000 300,000 150,000
Bankers Trust TTEE for Chrysler Corp.
Emp. #1 Pens. Plan Dtd 4/1/89....................... 80,000 80,000 0
Chase Manhattan, N.A. TTEE for IBM Corp.
Retirement Plan Trust Dtd. 12/18/45................. 80,000 80,000 0
Sam Wietschner and Tova Wietschner JTWROS........... 5,000 5,000 0
Richardson Electronics Ltd.......................... 10,000 10,000 0
Howard Sacher and Jacqueline Sacher JTWROS.......... 5,000 5,000 0
J. Zagorski and J. Schenkman, Trustees
Miami Orth. & Sports Medicine Inc. Profit Sharing
Plan
Dtd. 9/1/81......................................... 5,000 5,000 0
Janice Robinson..................................... 5,000 5,000 0
Whiffletree Partners L.P............................ 10,000 10,000 0
Thomas Paine Investors, L.P......................... 20,000 20,000 0
Stuart Albrecht..................................... 10,500 4,000 6,500
Lloyd Arnel......................................... 17,500 1,500 16,000
Richard J. Gusick................................... 16,300 5,000 11,300
Natalie and Jason Karp(2)........................... 1,000 1,000 0
Alvin J. Smith...................................... 1,000 1,000 0
Harold Speert....................................... 5,000 5,000 0
Kathryn H. Speert................................... 5,000 5,000 0
Peter K. Speert..................................... 1,000 1,000 0
Elizabeth Speert.................................... 1,000 1,000 0
Edward A. Sweeney................................... 1,000 1,000 0
Arvin H. Smith(3)................................... 39,000 9,000 30,000
Frank Jungers(4).................................... 4,000 4,000 0
Maritime Capital Limited............................ 25,000 25,000 0
Michael Zuk......................................... 3,000 3,000 0
Robert C. Howard.................................... 4,500 2,500 2,000
Barry S. Howe(5).................................... 64,300 2,000 62,300
Eugene Goodman...................................... 2,500 2,500 0
Michael D. Norton and Pamela Norton JTWROS(6)....... 1,000 1,000 0
Steven J. Coleman(7)................................ 1,000 1,000 0
Donald E. Noble(8).................................. 3,000 2,000 1,000
Gerald Feldman(9)................................... 1,500 1,500 0
Jiela Rufeh......................................... 8,000 8,000 0
Theobald M. Karch Trustee Theobald M.
Karch Revocable Trust U/A/D 1/11/94................. 2,500 2,500 0
</TABLE>
33
<PAGE> 35
<TABLE>
<CAPTION>
SHARES OF COMMON SHARES OWNED
STOCK OWNED PRIOR AFTER
TO SHARES BEING COMPLETION
SELLING SHAREHOLDER THE OFFERING(1) OFFERED OF THE OFFERING
- ---------------------------------------------------- ------------------ ------------ -----------------
<S> <C> <C> <C>
Alan J. Rubin....................................... 7,500 7,500 0
Edward E. Chanod.................................... 1,000 1,000 0
George R. Freund.................................... 1,000 1,000 0
Richard V. Aghababian............................... 2,500 2,500 0
B. Bollag, M. Bollag & S. Sonnenschine
Co-Ttee's FBO Sunshine Charitable Trust U/A/D 1-8-92... 5,000 5,000 0
Michael Bollag...................................... 5,000 5,000 0
Universal Partners, L.P............................. 2,500 2,500 0
Jacqueline O'Neill.................................. 1,000 1,000 0
Mittersill Investment Partners...................... 5,000 5,000 0
Joseph Giamanco(10)................................. 5,000 5,000 0
Ronald Menello...................................... 2,500 2,500 0
Anne T. Barrett(11)................................. 4,000 4,000 0
R.W. Chapman(12).................................... 40,500 500 40,000
Pavlos and Efstahia Servetopoulos................... 5,000 5,000 0
Athanasios and Panayota Stamatiadis................. 5,000 5,000 0
Konstantine Papatheodorou........................... 5,000 5,000 0
Silvermerlin Maritime, Inc.......................... 6,000 6,000 0
Gama Co., Ltd....................................... 3,000 3,000 0
Efal Investment Co. Inc............................. 12,500 12,500 0
Konstantinos Kanaris................................ 2,000 2,000 0
Orsenna Ltd......................................... 4,000 4,000 0
Pavlos and Kalliopi Perratis........................ 3,500 3,500 0
Kitty Kyriakopoulos................................. 10,000 10,000 0
Alexandros Chryssis................................. 1,000 1,000 0
Dimitiris Diakopoulos and Efimia Chryssi............ 1,000 1,000 0
Vasilios and Irini Lezos............................ 1,000 1,000 0
Blondell Establishment.............................. 25,000 25,000 0
Comar, Inc.......................................... 7,500 7,500 0
George and Aristea Kambanis......................... 3,500 3,500 0
M. John and G. Vasiliki Paguidas.................... 10,000 10,000 0
CEPA SA............................................. 85,000 80,000 5,000
J. Henry Schoder Bank AG............................ 52,000 24,000 28,000
Darier, Hentsch & Cie............................... 60,000 60,000 0
Lombard, Odier & Cie................................ 64,000 64,000 0
ABN AMRO Bank (Schweiz)............................. 25,000 25,000 0
CS Zurich........................................... 76,000 76,000 0
Canrade Privatbank, Zurich.......................... 4,000 4,000 0
Swiss Volksbank..................................... 16,000 16,000 0
Union Bank of Switzerland........................... 18,000 18,000 0
John A. & M.M. Pike................................. 750 750 0
NPI Global Care Unit Trust.......................... 15,000 15,000 0
</TABLE>
34
<PAGE> 36
<TABLE>
<CAPTION>
SHARES OF COMMON SHARES OWNED
STOCK OWNED PRIOR AFTER
TO SHARES BEING COMPLETION
SELLING SHAREHOLDER THE OFFERING(1) OFFERED OF THE OFFERING
- ---------------------------------------------------- ------------------ ------------ -----------------
<S> <C> <C> <C>
Ronald David Smith.................................. 750 750 0
Investarit AG....................................... 50,000 50,000 0
United Overseas Bank................................ 60,000 60,000 0
Swiss Bank Corporation, Geneva...................... 4,000 4,000 0
Mindful Partners L.P................................ 15,000 15,000 0
Julian I. Edison.................................... 7,000 7,000 0
Hope R. Edison...................................... 4,000 4,000 0
Aaron D. Edison 1986 Trust.......................... 4,000 4,000 0
Philip H. Geier, Jr................................. 20,000 20,000 0
Leonard Cohen and Jean E. Cohen,
Trustees of the Leonard Cohen and Jean E. Cohen
Revocable Trust U/A/D 12/19/83...................... 10,000 10,000 0
Robert B. Gwyn, Trustee for the Robert B.
Gwyn Trust Dated 11/1/90............................ 10,000 10,000 0
Alex E. Booth, Jr................................... 5,000 5,000 0
HTOOB, Inc.......................................... 10,000 10,000 0
Robert E. Kirby..................................... 10,000 10,000 0
Yiska Moser Trust................................... 10,000 10,000 0
M.S.I. Investments Limited.......................... 10,000 10,000 0
Richard B. Felder................................... 5,000 5,000 0
Irish Eagle Partnership............................. 2,500 2,500 0
Michael D. Mintz Trust U/A 9/12/92.................. 10,000 10,000 0
Martin R. Walsh..................................... 2,500 2,500 0
Kathleen Carlin Rold................................ 15,000 15,000 0
The Abrams Group.................................... 10,000 10,000 0
Gerlach & Co........................................ 27,000 27,000 0
Egger & Co.......................................... 10,000 10,000 0
Delos Balanced Mutual Fund.......................... 10,000 10,000 0
Paris Nicolaides, Trustee, The Razis
Revocable Trust(13)................................. 5,000 5,000 0
Gesico International S.A............................ 40,000 40,000 0
MSS Nominees Limited................................ 15,000 15,000 0
MSS Nominees Limited................................ 20,000 20,000 0
Bear Stearns IRA fbo Terence Hogan.................. 172 172 0
Terence Hogan....................................... 916 916 0
Charles McQuaid..................................... 387 387 0
Ralph Wanger........................................ 1,843 1,843 0
LZW Family Investment Partnership................... 652 652 0
Wanger Asset Management, L.P........................ 1 1 0
Flying Squirrel Liquidating Trust................... 60 60 0
Charles F. Allison.................................. 523 523 0
Mone Anathan III.................................... 707 707 0
Robert D. Appelbaum................................. 1,021 1,021 0
</TABLE>
35
<PAGE> 37
<TABLE>
<CAPTION>
SHARES OF COMMON SHARES OWNED
STOCK OWNED PRIOR AFTER
TO SHARES BEING COMPLETION
SELLING SHAREHOLDER THE OFFERING(1) OFFERED OF THE OFFERING
- ---------------------------------------------------- ------------------ ------------ -----------------
<S> <C> <C> <C>
Philip Appelbaum.................................... 219 219 0
Henry R. Appelbaum.................................. 219 219 0
Barbara B. Appelbaum................................ 219 219 0
Ralph A. Bard, Jr., Trustee UAD 2/12/83............. 203 203 0
Bear Stearns IRA fbo Ben A. Beavers................. 311 311 0
Ellen H. Block Revocable Trust...................... 1,022 1,022 0
Daryl D. Boddicker Trust............................ 523 523 0
Ann K. Butler....................................... 1,046 1,046 0
William J. Cadogan.................................. 459 459 0
Common Sense Partners, L.P.......................... 5,237 5,237 0
Couderay Partners................................... 1,549 1,549 0
Sara Crown 65 Trust................................. 104 104 0
Terry D. Diamond Trust.............................. 485 485 0
John E. Doddridge................................... 1,853 1,853 0
Bear Stearns IRA fbo Joseph P. Durrett.............. 410 410 0
Eugene H. Edson..................................... 460 460 0
Stephen M. Ehrlichman............................... 204 204 0
S. Cody Engle....................................... 732 732 0
Roxanne H. Frank Trust.............................. 387 387 0
Samuel J. Gerson.................................... 523 523 0
Howard N. Gilbert................................... 523 523 0
The Goldfeder Family Trust.......................... 993 993 0
Lenore S. Greenberg Trust........................... 835 835 0
Madeline Halpern.................................... 1,539 1,539 0
J. Davis Hamlin..................................... 816 816 0
Irving B. Harris Revocable Trust.................... 1,358 1,358 0
Joan W. Harris Revocable Trust...................... 194 194 0
William W. Harris Trust............................. 387 387 0
David F. Hinchman................................... 460 460 0
Larry J. Hochberg Revocable Trust................... 410 410 0
Roger L. Howe....................................... 2,664 2,664 0
Roger Howe Revocable Trust #2....................... 820 820 0
Joseph Huber........................................ 184 184 0
Jerome Kahan Jr. Revocable Trust.................... 194 194 0
Keim Family Partnership............................. 347 347 0
Bear Stearns IRA fbo Alexander S. Knopfler.......... 101 101 0
Michael S. Koeneke.................................. 411 411 0
Alan J. Lacy........................................ 460 460 0
Lakeview Multi-Strategy Fund, L.P................... 581 581 0
Gladys K. Lazarus................................... 821 821 0
Daniel H. Levy...................................... 410 410 0
John S. Lillard..................................... 460 460 0
</TABLE>
36
<PAGE> 38
<TABLE>
<CAPTION>
SHARES OF COMMON SHARES OWNED
STOCK OWNED PRIOR AFTER
TO SHARES BEING COMPLETION
SELLING SHAREHOLDER THE OFFERING(1) OFFERED OF THE OFFERING
- ---------------------------------------------------- ------------------ ------------ -----------------
<S> <C> <C> <C>
Dean Linderman...................................... 923 923 0
J.M. Lozier Revocable Trust......................... 411 411 0
C.H. Randolph Lyon, Jr.............................. 919 919 0
Charles N. Matthewson Trust......................... 1,046 1,046 0
Bear Stearns IRA fbo Edward J. McCabe............... 821 821 0
Robert G. McVicker.................................. 410 410 0
Meier Family Partnership............................ 509 509 0
Gerald B. Mitchell.................................. 705 705 0
MND Investment Company.............................. 458 458 0
S. William Pattis................................... 459 459 0
Virginia H. Polsky Trust............................ 387 387 0
Qualified Terminal Interest Trust................... 101 101 0
Allen I. Questrom................................... 1,046 1,046 0
Erick & Heather Reickert............................ 410 410 0
Richard M. Ross Trust............................... 1,842 1,842 0
Henry Shapiro....................................... 408 408 0
G. Nichols Simonds.................................. 411 411 0
Bear Stearns IRA fbo Edward W. Smeds................ 459 459 0
Martin H. Snitzer................................... 715 715 0
Christopher & Mary Susan Steffen.................... 459 459 0
Michael & Susanna Steinberg......................... 410 410 0
Jerome H. Stone..................................... 523 523 0
Joseph G. Temple Jr................................. 1,046 1,046 0
Thermo Electron Corporation(14)..................... 917 917 0
James R. Trueman Trust.............................. 5,213 5,213 0
Francis A. Waters................................... 414 414 0
Winchester Partners................................. 193 193 0
Rochelle Zell Revocable Trust....................... 970 970 0
------------------ ------------ -----------------
Total.......................................... 1,953,600 1,601,500 352,100
</TABLE>
- ---------------
(1) Except as otherwise reflected in the footnotes to this table, all share
ownership includes Shares owned by the Selling Shareholders and shares that
the Selling Shareholders have the right to acquire within 60 days of
December 28, 1996, through the exercise of stock options.
(2) Ms. Karp is an employee of Thermo Electron.
(3) Mr. Smith is a Director of the Company and holds various offices with
Thermo Electron, Thermo Instrument and their affiliates and subsidiaries.
See "Management."
(4) Mr. Jungers is a director of Thermo Electron, ThermoQuest and Thermo Ecotek
Corporation.
(5) Mr. Howe is President, Chief Executive Officer and a Director of the
Company and is a Vice President of Thermo Instrument. See "Management."
(6) Mr. Norton is an employee of Thermo Voltek Corp., an affiliate of the
Company.
(7) Mr. Coleman is an employee of Thermo Fibergen Inc., an affiliate of the
Company.
37
<PAGE> 39
(8) Mr. Noble is a director of Thermo Electron, Thermo Fibertek Inc., Thermo
Power Corporation, Thermo Sentron Inc. and Thermo TerraTech Inc., each of
which is an affiliate of the Company.
(9) Mr. Feldman is President of International Technidyne Corporation, a wholly
owned subsidiary of Thermo Electron.
(10) Mr. Giamanco is the owner and president of GMH, Inc., which serves as a
specialist in the Company's Common Stock on the American Stock Exchange.
(11) Ms. Barrett is a consultant to Thermo Electron and a director of Thermo
Fibergen Inc., an affiliate of the Company.
(12) Dr. Chapman is Chairman of the Board and a Director of the Company and is
President and Chief Executive Officer of ThermoQuest. See "Management."
(13) Mr. Paris Nicolaides, a consultant to Thermo Electron, is trustee of The
Razis Revocable Trust. Accordingly, Mr. Nicolaides may be deemed to own the
5,000 Shares owned by such trust.
(14) As the owner of a majority of the shares of capital stock of Thermo
Instrument, Thermo Electron may be deemed to beneficially own the 6,500,000
shares of Common Stock beneficially owned by Thermo Instrument. See
"Security Ownership of Certain Beneficial Owners and Management --
Principal Stockholder." Thermo Electron disclaims beneficial ownership of
such 6,500,000 shares.
The Shares are being registered to permit public secondary trading of the
Shares from time to time by the Selling Shareholders. All of the Shares being
offered by the Selling Shareholders were sold by the Company in private
placement transactions pursuant to Securities Purchase Agreements with the
Company dated March 15, 1996 and April 19, 1996 (the "Purchase Agreements") for
cash.
In the Purchase Agreements, the Company agreed, among other things, to bear
all expenses (other than underwriting discounts, selling commissions, and fees
and expenses of counsel and other advisors to the Selling Shareholders) in
connection with the registration and sale of the Shares being offered by the
Selling Shareholders. See "Sale of Shares." The Company has agreed to prepare
and file such amendments and supplements to the Registration Statement of which
this Prospectus forms a part as may be necessary to keep the Registration
Statement effective until all the Shares offered hereby have been sold pursuant
thereto or until such Shares are no longer, by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect, required to be registered
for the public sale thereof by the Selling Shareholders.
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 purchases;
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.
The aggregate proceeds to any Selling Shareholder from the sale of the
Shares offered by a Selling Shareholder 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 jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares
38
<PAGE> 40
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 December 28, 1996 the Company had 25,000,000 shares of Common Stock
authorized for issuance, of which 9,771,500 were 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
shareholders. 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, conversion 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. As a result,
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 intends to continue to beneficially own
at least a majority of the outstanding Common Stock, and will have the power to
elect all of the members of the Company's Board of Directors. Thermo Instrument
is a majority-owned subsidiary of Thermo Electron and, therefore, Thermo
Electron may be deemed a beneficial owner of the shares of Common Stock
beneficially owned by Thermo Instrument. Thermo Electron disclaims beneficial
ownership of these shares.
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, such as the breach of a director's duty of loyalty or
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.
39
<PAGE> 41
SHARES ELIGIBLE FOR FUTURE SALE
There are currently 9,771,500 shares of Common Stock of the Company
outstanding, of which 1,670,000 are freely tradable without restriction or
further registration under the Securities Act, except that any shares purchased
by affiliates of the Company, as that term is defined in Rule 144 under the
Securities Act (an "Affiliate"), may generally only be resold in compliance with
applicable provisions of Rule 144.
The remaining 6,500,000 shares of Common Stock are beneficially owned by
Thermo Instrument (not including 3,030,303 shares issuable to Thermo Instrument
upon conversion of the Convertible Note). 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 stockholder, including
an Affiliate, who has beneficially owned his or her restricted securities (as
that term is defined in Rule 144) for at least two years from the later of the
date such securities were acquired from the Company or (if applicable) the date
they were acquired from an Affiliate 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 on
which notice of such sale was filed pursuant to Rule 144 provided certain
requirements concerning availability of public information, manner of sale and
notice of sale are satisfied. In addition, under Rule 144(k), if a period of at
least three years has elapsed between the later of the date restricted
securities were acquired from the Company or (if applicable) the date they were
acquired from an Affiliate of the Company, a stockholder who is not an Affiliate
of the Company at the time of sale and has not been an Affiliate of the Company
for at least three months prior to the sale is entitled to sell the shares
immediately without compliance with the foregoing requirements under Rule 144.
The Securities and Exchange Commission has amended Rule 144 to reduce the
holding period required for shares subject to Rule 144 to become eligible for
sale in the public market from two years to one year, and from three years to
two years in the case of Rule 144(k). Such amendment will become effective on
April 29, 1997.
The Company has reserved 925,000 shares of Common Stock for grants under
its existing stock-based compensation plans. As of December 28, 1996, options to
purchase up to 743,200 shares of Common Stock had been granted under such plans.
All of such options are exercisable, subject to the right of the Company to
repurchase shares at the exercise price if the optionee ceases to be employed by
the Company. This repurchase right lapses ratably (on an annual basis) over a
five to ten year period depending upon the term of the option. As of December
28, 1996, repurchase rights had lapsed as to 26,000 shares issuable upon
exercise of outstanding options. The Company has reserved 182,800 shares for
future grant under such plans. The Company intends to file registration
statements under the Securities Act to register all shares of Common Stock
issuable under such plans. Shares covered by these registration statements that
are not subject to transferability restrictions will be eligible for sale in the
public market immediately upon the filing of such registration statements,
subject to Rule 144 limitations applicable to Affiliates as noted above.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Seth H. Hoogasian, Esq., General Counsel of
Thermo Electron, Thermo Instrument and the Company. Mr. Hoogasian owns or has
the right to acquire 3,000 shares of Common Stock, 16,737 shares of common stock
of Thermo Instrument and 114,187 shares of common stock of Thermo Electron.
EXPERTS
The Consolidated Financial Statements of the Company and of others included
in this Prospectus and the financial statement schedules 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
40
<PAGE> 42
as indicated in their reports with respect thereto, and are included herein in
reliance upon the reports of said firm and the authority of said firm as experts
in accounting and auditing in giving said reports.
The balance sheets as of March 31, 1995 and February 7, 1996 and the
statements of income, retained earnings and cash flows for the years ended March
31, 1994 and 1995 and the period from April 1, 1995 through February 7, 1996 of
Dynatech Medical Products Limited, referred to in this Prospectus, have been
referenced in reliance on the report of Coopers & Lybrand, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
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
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 Seven 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 Exchange
Act, and in accordance therewith files reports, proxy statements, and other
information with 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. 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.
41
<PAGE> 43
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
THERMO BIOANALYSIS CORPORATION
Report of Independent Public Accountants......................................... F-2
Consolidated Statement of Operations for the years ended December 31, 1994,
December 30, 1995 and December 28, 1996......................................... F-3
Consolidated Balance Sheet as of December 30, 1995 and December 28, 1996......... F-4
Consolidated Statement of Cash Flows for the years ended December 31, 1994,
December 30, 1995 and December 28, 1996......................................... F-5
Consolidated Statement of Shareholders' Investment for the years ended December
31, 1994, December 30, 1995 and December 28, 1996............................... F-6
Notes to Consolidated Financial Statements....................................... F-7
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
Reports of Independent Public Accountants........................................ F-18
Consolidated Statement of Operations for the years ended March 31, 1994 and 1995
and for the period from April 1, 1995 through February 7, 1996.................. F-20
Consolidated Balance Sheet as of March 31, 1995 and February 7, 1996............. F-21
Consolidated Statement of Cash Flows for the years ended March 31, 1994 and 1995
and for the period from April 1, 1995 through February 7, 1996.................. F-22
Consolidated Statement of Shareholder's Investment for the years ended March 31,
1994 and 1995 and for the period from April 1, 1995 through February 7, 1996.... F-23
Notes to Consolidated Financial Statements....................................... F-24
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
Auditors' Report................................................................. F-29
Combined Profit and Loss Accounts for the years ended December 31, 1993, 1994 and
1995, for the three months ended March 31, 1995 and for the period from January
1, 1996 through March 29, 1996.................................................. F-30
Combined Balance Sheets as of December 31, 1994 and 1995......................... F-31
Combined Cash Flow Statements for the years ended December 31, 1993, 1994 and
1995, for the three months ended March 31, 1995 and for the period from January
1, 1996 through March 29, 1996.................................................. F-32
Notes to Combined Financial Statements........................................... F-33
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION OF THERMO BIOANALYSIS CORPORATION,
THE DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION AND THE AFFINITY SENSORS AND
LABSYSTEMS DIVISIONS OF FISONS PLC (UNAUDITED)
Pro Forma Combined Condensed Statement of Operations for the year ended
December 28, 1996.............................................................. F-41
Notes to Pro Forma Combined Condensed Statement of Operations.................... F-42
</TABLE>
F-1
<PAGE> 44
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Thermo BioAnalysis Corporation:
We have audited the accompanying consolidated balance sheet of Thermo
BioAnalysis Corporation (a Delaware corporation and 67%-owned subsidiary of
Thermo Instrument Systems Inc.) and subsidiaries as of December 30, 1995 and
December 28, 1996, and the related consolidated statements of operations, cash
flows, and shareholders' investment 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
BioAnalysis Corporation and subsidiaries as of December 30, 1995 and December
28, 1996 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-2
<PAGE> 45
THERMO BIOANALYSIS CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Revenues (Notes 6 and 8)...................................... $25,127 $22,534 $71,649
------- ------- -------
Costs and Operating Expenses:
Cost of revenues (Note 6)................................... 14,176 13,036 37,807
Selling, general and administrative expenses (Note 6)....... 5,054 4,804 20,987
Research and development expenses........................... 2,042 1,325 7,298
Write-off of acquired technology (Note 2)................... -- -- 3,500
------- ------- -------
21,272 19,165 69,592
------- ------- -------
Operating Income.............................................. 3,855 3,369 2,057
Interest Income............................................... -- 819 1,280
Interest Expense, Related Party (Note 6)...................... -- -- (1,873)
------- ------- -------
Income Before Provision for Income Taxes...................... 3,855 4,188 1,464
Provision for Income Taxes (Note 4)........................... 1,455 1,674 1,900
------- ------- -------
Net Income (Loss)............................................. $ 2,400 $ 2,514 $ (436)
======= ======= =======
Earnings (Loss) per Share..................................... $ .36 $ .32 $ (.05)
======= ======= =======
Weighted Average Shares....................................... 6,617 7,811 8,601
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 46
THERMO BIOANALYSIS CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995 1996
------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................................. $17,747 $ 45,476
Accounts receivable, less allowances of $154 and $991................. 5,482 17,265
Inventories........................................................... 5,968 14,592
Prepaid income taxes (Note 4)......................................... 673 2,319
Prepaid expenses...................................................... 7 618
Due from parent company and affiliates................................ 761 965
------- --------
30,638 81,235
------- --------
Property, Plant and Equipment, at Cost, Net............................. 1,654 5,547
------- --------
Other Assets............................................................ 195 3,098
------- --------
Cost in Excess of Net Assets of Acquired Companies (Note 2)............. 420 33,117
------- --------
$32,907 $122,997
======= ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable...................................................... $ 432 $ 4,282
Accrued payroll and employee benefits................................. 692 2,616
Accrued income taxes.................................................. 1,665 2,775
Other accrued expenses (Note 2)....................................... 744 7,651
Deferred revenue...................................................... -- 4,161
------- --------
3,533 21,485
------- --------
Deferred Income Taxes (Note 4).......................................... 228 196
------- --------
Subordinated Convertible Note, Due to Parent Company (Note 6)........... -- 50,000
------- --------
Commitments (Note 5)
Shareholders' Investment (Notes 3 and 7):
Common stock, $.01 par value, 25,000,000 shares authorized; 8,101,500
and 9,771,500 shares issued and outstanding........................ 81 98
Capital in excess of par value........................................ 26,917 47,882
Retained earnings..................................................... 2,143 1,707
Cumulative translation adjustment..................................... 5 1,629
------- --------
29,146 51,316
------- --------
$32,907 $122,997
======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 47
THERMO BIOANALYSIS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss).................................................................. $ 2,400 $ 2,514 $ (436)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization.................................................. 289 346 3,002
Provision for losses on accounts receivable.................................... 15 -- 210
Deferred income tax expense (benefit).......................................... 279 (60) 10
Write-off of acquired technology (Note 2)...................................... -- -- 3,500
Changes in current accounts, excluding the effects of acquisitions:
Accounts receivable.......................................................... 269 388 (2,091)
Inventories.................................................................. (1,265) (303) 548
Other current assets......................................................... (78) (698) 817
Accounts payable............................................................. (610) (384) 1,706
Other current liabilities.................................................... (540) (41) 1,323
Other.......................................................................... -- -- 34
------- ------- --------
Net cash provided by operating activities.................................. 759 1,762 8,623
------- ------- --------
INVESTING ACTIVITIES:
Acquisitions, net of cash acquired (Note 2)........................................ -- -- (50,698)
Purchases of property, plant and equipment......................................... (237) (313) (1,476)
Other.............................................................................. -- (183) --
------- ------- --------
Net cash used in investing activities...................................... (237) (496) (52,174)
------- ------- --------
FINANCING ACTIVITIES:
Net proceeds from issuance of Company common stock (Note 7)...................... -- 14,918 20,782
Proceeds from issuance of subordinated convertible note to parent company (Note
6).............................................................................. -- -- 50,000
Proceeds from issuance of note payable to Thermo Electron (Note 6)............... -- -- 30,000
Repayment of note payable to Thermo Electron (Note 6)............................ -- -- (30,000)
Transfer from parent company to fund income tax payments......................... 1,670 1,930 --
Net transfer to parent company................................................... (2,185) (383) --
Other............................................................................ -- -- 58
------- ------- --------
Net cash provided by (used in) financing activities........................ (515) 16,465 70,840
------- ------- --------
Exchange Rate Effect on Cash....................................................... -- (5) 440
------- ------- --------
Increase in Cash and Cash Equivalents.............................................. 7 17,726 27,729
Cash and Cash Equivalents at Beginning of Year..................................... 14 21 17,747
------- ------- --------
Cash and Cash Equivalents at End of Year........................................... $ 21 $17,747 $ 45,476
======= ======= ========
CASH PAID FOR:
Interest........................................................................... $ -- $ -- $ 1,848
======= ======= ========
Income taxes....................................................................... $ 1,670 $ 1,930 $ 536
======= ======= ========
NONCASH INVESTING ACTIVITIES:
Fair value of assets of acquired companies......................................... $ -- $ -- $ 68,356
Cash paid for acquired companies................................................... -- -- (52,191)
------- ------- --------
Liabilities assumed of acquired companies...................................... $ -- $ -- $ 16,165
======= ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 48
THERMO BIOANALYSIS CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON CAPITAL
NET PARENT STOCK, IN CUMULATIVE
COMPANY $.01 PAR EXCESS OF RETAINED TRANSLATION
INVESTMENT VALUE PAR VALUE EARNINGS ADJUSTMENT
----------- -------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
BALANCE JANUARY 1, 1994...................... $ 8,277 $ -- $ -- $ -- $ --
Net income................................... 2,400
Net transfer to parent company............... (515) -- -- -- --
-------- -------- ------- ------- -------
BALANCE DECEMBER 31, 1994.................... 10,162 -- -- -- --
Net income prior to capitalization of
Company.................................... 371 -- -- -- --
Net transfer from parent company............. 1,547 -- -- -- --
Capitalization of Company.................... (12,080) 65 12,015 -- --
Net proceeds from issuance -- 16 14,902 -- --
of Company common stock
(Note 7)...................................
Net income after capitalization of
Company.................................... -- -- -- 2,143 --
Translation adjustment....................... -- -- -- -- 5
-------- -------- ------- ------- -------
BALANCE DECEMBER 30, 1995.................... -- 81 26,917 2,143 5
Net loss..................................... -- -- -- (436) --
Net proceeds from issuance of -- 17 20,765 -- --
Company common stock (Note 7)..............
Tax benefit related to employees' and -- -- 200 -- --
directors' stock plans.....................
Translation adjustment....................... -- -- -- -- 1,624
-------- -------- ------- ------- -------
BALANCE DECEMBER 28, 1996.................... $ -- $ 98 $47,882 $ 1,707 $ 1,629
======== ======== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 49
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Thermo BioAnalysis Corporation (the "Company") designs, manufactures, and
markets life sciences instrumentation, including instruments and consumables
based on immunoassay, optical biosensor, mass spectrometry and capillary
electrophoresis ("CE") technologies; information management systems including
laboratory information management systems ("LIMS") and chromatography data
systems; and health physics instrumentation including radiation detection and
counting instrumentation, and sophisticated radiation monitoring systems.
Relationship with Thermo Instrument Systems Inc. and Thermo Electron
Corporation
The Company was incorporated in February 1995 as a wholly owned subsidiary
of Thermo Instrument Systems Inc. ("Thermo Instrument") at which time Thermo
Instrument transferred to the Company the assets related to certain elements of
its Thermo Separation Products Inc. CE product line, its Finnigan MAT Ltd.
MALDI-TOF division and its Eberline Instruments health physics instrumentation
division in exchange for 6,500,000 shares of the Company's common stock. As of
December 28, 1996, Thermo Instrument owned 6,500,000 shares of the Company's
common stock, representing 67% 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 59,200 shares of the Company's
common stock, representing .6% 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 1994, 1995 and 1996 are for the fiscal years ended December
31, 1994, December 30, 1995 and December 28, 1996, respectively.
Revenue Recognition
The Company recognizes revenue upon shipment of its products. The Company
provides a reserve for its estimate of warranty and installation costs at the
time of shipment. The Company recognizes revenue from service contracts over the
respective terms of the contracts. Information management systems revenue is
recognized upon execution of the license agreement and delivery of the software
when any ongoing service commitments are not critical to the functionality of
the software; otherwise revenue on both the service and software components is
recognized based on long-term contract accounting. Revenue from software
maintenance contracts, including amounts bundled in initial software licenses,
is recognized ratably over the term of the contract. Deferred revenue in the
accompanying 1996 balance sheet consists of unearned revenue on service
contracts and maintenance contracts, which will be recognized within one year.
Software Development Costs
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
86, "Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed," software development costs are expensed as incurred until
technological feasibility has been established. The Company believes that, under
its current process for developing software, the software is essentially
completed concurrently with the establish-
F-7
<PAGE> 50
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ment of technological feasibility. Accordingly, no software development costs
have been capitalized except for software recorded in connection with an
acquisition (see "Other Assets").
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
In the period prior to the Company's initial public offering, the Company
and Thermo Instrument were included in Thermo Electron's consolidated federal
and certain state income tax returns. Subsequent to the Company's initial public
offering in September 1996, Thermo Instrument's equity ownership of the Company
was reduced below 80%, and as a result, the Company is required to file its own
federal income tax return.
In accordance with 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 has been presented for all periods.
Weighted average shares for all periods includes the 6,500,000 shares issued to
Thermo Instrument in connection with the 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 been computed, where dilutive, assuming the conversion of
the Company's subordinated convertible debentures and elimination of the related
interest expense, as well as the exercise of stock options and their related
income tax effects (Note 9).
Cash and Cash Equivalents
As of December 28, 1996, $39,649,000 of the Company's cash equivalents were
invested in a repurchase agreement with Thermo Electron. 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. 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. Cash equivalents are carried at cost, which
approximates market value.
F-8
<PAGE> 51
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Inventories
Inventories are stated at the lower of cost (on a weighted average basis)
or market value and include materials, labor and manufacturing overhead. The
components of inventories are as follows:
<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Raw materials and supplies....................................... $ 3,501 $ 7,473
Work in process.................................................. 1,127 1,064
Finished goods................................................... 1,340 6,055
------ ------
$ 5,968 $14,592
====== ======
</TABLE>
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 and improvements, 15 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
consists of the following:
<TABLE>
<CAPTION>
1995 1996
------ -------
(IN THOUSANDS)
<S> <C> <C>
Land................................................................ $ 285 $ 285
Buildings........................................................... 2,603 2,603
Machinery, equipment and leasehold improvements..................... 3,429 9,241
------ ------
6,317 12,129
Less: Accumulated depreciation and amortization..................... 4,663 6,582
------ ------
$1,654 $ 5,547
====== ======
</TABLE>
Other Assets
Other assets in the accompanying balance sheet primarily represents the
cost of acquired product technology and capitalized software associated with the
1996 acquisitions of the Affinity Sensors and LabSystems divisions of Fisons plc
("Fisons") from Thermo Instrument (Note 2). These assets are being amortized
using the straight-line method over their estimated useful lives of 8 years.
These assets were $2,997,000, net of accumulated amortization of $295,000, at
year-end 1996.
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 $302,000 and $1,010,000 at year-end 1995 and 1996,
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.
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
F-9
<PAGE> 52
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
component of shareholders' investment titled "Cumulative translation
adjustment." Foreign currency transaction gains and losses are included in the
accompanying statement of operations and are not material for the three years
presented.
Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash and cash
equivalents, accounts receivable, due from parent company and affiliates,
accounts payable and a subordinated convertible note. The carrying amounts of
these financial instruments, with the exception of the subordinated convertible
note, approximate fair value due to their short-term nature. See Note 6 for fair
value information pertaining to the Company's subordinated convertible note.
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.
2. ACQUISITIONS
In February 1996, the Company acquired substantially all of the assets,
subject to certain liabilities, of the DYNEX Technologies ("DYNEX") division of
Dynatech Corporation for $43,191,000 in cash. DYNEX designs, manufactures, and
markets products used in the immunoassay segment of the bioinstrumentation
market. This acquisition has been accounted for using the purchase method of
accounting, and DYNEX's results have been included in the accompanying financial
statements from the date of acquisition. The cost of DYNEX exceeded the
estimated fair value of the acquired net assets by $32,740,000, which is being
amortized over 40 years.
On March 29, 1996, Thermo Instrument acquired a substantial portion of the
businesses comprising the Scientific Instruments Division of Fisons, a wholly
owned subsidiary of Rhone-Poulenc Rorer Inc. In July 1996, the Company acquired
from Thermo Instrument two businesses formerly part of Fisons, Affinity Sensors
and LabSystems, for an aggregate purchase price of $9,000,000 in cash, subject
to a post-closing adjustment based on a post-closing adjustment to be negotiated
with Fisons by Thermo Instrument in connection with the settlement of the final
purchase price for all of the businesses of Fisons acquired by Thermo Instrument
in March 1996. Affinity Sensors supplies biosensors used in life sciences
research by the pharmaceutical and biotechnology industries, universities and
medical research institutes. LabSystems designs, implements and supports
laboratory information management systems and chromatography data systems used
in research and development, quality assurance and control, and processing
plants. Because the Company, Affinity Sensors and LabSystems were deemed for
accounting purposes to be under control of their common majority owner, Thermo
Instrument, the 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 Affinity Sensors and LabSystems from March 29, 1996, the
date these businesses were acquired by Thermo Instrument. The acquired assets of
Affinity Sensors and LabSystems included certain technologies for which
technological feasibility had not been established at the acquisition date and
which had no alternative future use. In connection with the acquisitions, the
Company wrote off such technology in the amount of $3,500,000, which represents
the portion of the purchase price allocated to technology in development at the
acquired businesses, based on estimated replacement cost.
F-10
<PAGE> 53
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Based on unaudited data, the following table presents selected financial
information for the Company, DYNEX, Affinity Sensors and LabSystems on a pro
forma basis, assuming the companies had been combined since the beginning of
1995.
<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS,
EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C>
Revenues............................................... $80,803 $78,837
Net income............................................. 822 570
Earnings per share..................................... .11 .07
</TABLE>
The pro forma results are not necessarily indicative of future operations
or the actual results that would have occurred had the acquisitions of DYNEX,
Affinity Sensors and LabSystems been made at the beginning of 1995. Additional
pro forma information for the Company, DYNEX, Affinity Sensors and LabSystems is
included elsewhere in this Prospectus.
In connection with the acquisition of DYNEX, the Company has undertaken a
restructuring of the acquired business. The restructuring activities include
reductions in staffing levels, abandonment of excess facilities, and other costs
associated with exiting certain activities of the acquired business. In
connection with these restructuring activities, the Company established reserves
of $2,259,000. These amounts were recorded as costs of the acquisition and were
provided in accordance with Emerging Issues Task Force Pronouncement 95-3 ("EITF
95-3"). During 1996, the Company expended $915,000 for restructuring costs.
These expenditures consisted primarily of severance payments and lease
termination fees. The Company finalized its restructuring plan for DYNEX as of
year-end 1996, and had a remaining reserve balance for DYNEX's restructuring of
$1,344,000 related to ongoing severance and abandoned facility payments. As of
December 28, 1996, the Company had accrued a total of $1,741,000 for
restructuring costs for all of its acquisitions, which is included in other
accrued expenses in the accompanying balance sheet.
3. EMPLOYEE BENEFIT PLANS
Stock-based Compensation Plans
Stock Option Plans
In February 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.
The option recipients and the terms of options granted under this plan are
determined by the Board Committee. Options granted to date became exercisable in
December 1996, but 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 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
to date under the stock-based compensation plan described above, except that the
option term is five years and the transfer restrictions and repurchase rights
generally lapse ratably over a four-year period. 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 Instrument and
Thermo Electron.
F-11
<PAGE> 54
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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 in 1996
and 1995 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 (loss) and earnings
(loss) per share would have been as follows:
<TABLE>
<CAPTION>
1995 1996
------ -----
(IN THOUSANDS,
EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Net income (loss):
As reported....................................................... $2,514 $(436)
Pro forma......................................................... 2,477 (863)
Earnings (loss) per share:
As reported....................................................... .32 (.05)
Pro forma......................................................... .32 (.10)
</TABLE>
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 was estimated on the grant date using
the Black-Scholes option-pricing model with the following weighted-average
assumptions:
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Volatility........................................................ 26% 26%
Risk-free interest rate........................................... 6.2% 6.5%
Expected life of options.......................................... 8.1 years 3.5 years
</TABLE>
The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options that 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-12
<PAGE> 55
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Stock Option Activity
A summary of the Company's stock option activity is as follows:
<TABLE>
<CAPTION>
1995 1996
------------------- -------------------
WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE
OF EXERCISE OF EXERCISE
SHARES PRICE SHARES PRICE
------ -------- ------ --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Options outstanding, beginning of year......... -- $ -- 30 $10.00
Granted...................................... 30 10.00 713 11.28
Forfeited.................................... -- -- (26) 10.00
--
---
Options outstanding, end of year............... 30 $10.00 717 $11.27
=== ====== == ======
Options exercisable............................ -- $ -- 717 $11.27
=== ====== == ======
Options available for grant.................... 70 183
=== ==
Weighted average fair value per share of
options granted during year.................. $ 2.93 $ 5.36
====== ======
</TABLE>
As of December 28, 1996, the options outstanding were exercisable at prices
ranging from $10.00 to $13.63 and had a weighted-average remaining contractual
life of 10.4 years.
401(k) Savings Plan and Employee Stock Ownership Plan
Substantially all of the Company's full-time U.S. employees are eligible to
participate in Thermo Electron's 401(k) savings plan and, prior to 1995, in
Thermo Electron's employee stock ownership plan ("ESOP"). Contributions to the
401(k) savings plan are made by both the employee and the Company. Company
contributions are based upon the level of employee contributions. For these
plans, the Company contributed and charged to expense $169,000, $128,000 and
$285,000 in 1994, 1995 and 1996, 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 certain of Thermo Electron's majority-owned subsidiaries, including
the Company. 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.
4. INCOME TAXES
The components of income before provision for income taxes are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic................................................. $3,684 $3,828 $1,786
Foreign.................................................. 171 360 (322)
------ ------ ------
$3,855 $4,188 $1,464
====== ====== ======
</TABLE>
F-13
<PAGE> 56
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Currently payable:
Federal................................................ $ 939 $1,331 $ 487
State.................................................. 237 284 93
Foreign................................................ -- 119 1,310
------ ------ ------
1,176 1,734 1,890
------ ------ ------
Net deferred (prepaid):
Federal................................................ 231 (50) 8
State.................................................. 48 (10) 2
------ ------ ------
279 (60) 10
------ ------ ------
$1,455 $1,674 $1,900
====== ====== ======
</TABLE>
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 $200,000
of such benefits that have been allocated to capital in excess of par value in
1996 resulting from employee exercises of stock options in affiliated companies.
The provision for income taxes in the accompanying statement of operations
differs from the provision calculated by applying the statutory federal income
tax rate of 35% in 1994 and 1995 and 34% in 1996 to income before provision for
income taxes due to the following:
<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Provision for income taxes at statutory rate............. $1,349 $1,466 $ 498
Increases (decreases) resulting from:
State income taxes, net of federal tax................. 185 178 63
Net foreign losses not benefited and tax rate
differential........................................ (60) (7) 229
Tax benefit of foreign sales corporation............... (34) (6) (23)
Write-off of acquired technology (Note 2).............. -- -- 1,190
Amortization of cost in excess of net assets of
acquired company.................................... 6 6 6
Other, net............................................. 9 37 (63)
------ ------ ------
$1,455 $1,674 $1,900
====== ====== ======
</TABLE>
F-14
<PAGE> 57
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Prepaid income taxes and deferred income taxes in the accompanying balance
sheet consist of the following:
<TABLE>
<CAPTION>
1995 1996
---- ------
(IN THOUSANDS)
<S> <C> <C>
Prepaid income taxes:
Reserves and accruals............................................. $355 $1,872
Inventory basis difference........................................ 256 370
Allowance for doubtful accounts 62 77
---- ----
$673 $2,319
==== ====
Deferred income taxes:
Depreciation...................................................... $228 $ 196
==== ====
</TABLE>
A provision has not been made for U.S. or additional foreign taxes on
$2,246,000 of undistributed earnings in foreign subsidiaries that could be
subject to taxation if remitted to the U.S. because the Company currently 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.
5. COMMITMENTS
The Company leases portions of its office and operating facilities under
various noncancellable operating lease arrangements that expire at various dates
through 2015. The accompanying statement of operations includes expenses from
operating leases of $71,000, $69,000 and $1,401,000 in 1994, 1995 and 1996,
respectively. Future minimum payments due under noncancellable operating leases
as of December 28, 1996, are $1,561,000 in 1997; $1,421,000 in 1998; $1,368,000
in 1999; $1,360,000 in 2000; $982,000 in 2001; and $6,255,000 in 2002 and
thereafter. Total future minimum lease payments are $12,947,000.
6. 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 1.25% and 1.20% of
the Company's revenues in 1994 and 1995, respectively. The annual fee is
reviewed and adjusted annually by mutual agreement of the parties. For these
services, the Company was charged $314,000, $270,000, and $716,000 in 1994, 1995
and 1996, 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.
Other Related Party Transactions
The Company purchases and sells products in the ordinary course of business
with other companies associated with Thermo Electron. Sales of such products to
affiliated companies totaled $262,000, $279,000
F-15
<PAGE> 58
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and $5,990,000 in 1994, 1995 and 1996, respectively. Purchases of products from
such companies totaled $413,000, $414,000 and $306,000 in 1994, 1995 and 1996,
respectively.
Prior to 1996, a majority-owned subsidiary of Thermo Instrument acted as a
commission-based sales agent for certain of the Company's products. The Company
paid $1,288,000 and $1,263,000 under this arrangement in 1994 and 1995,
respectively.
In addition, a majority-owned subsidiary of Thermo Instrument assembles
certain of the Company's products. For these services, the Company paid
$566,000, $600,000 and $704,000 in 1994, 1995 and 1996, respectively.
Repurchase Agreement
The Company invests excess cash in a repurchase agreement with Thermo
Electron as discussed in Note 1.
Short- and Long-term Obligations
In July 1996, the Company issued to Thermo Instrument a $50,000,000
principal amount 4.875% subordinated convertible note, due 2001, convertible
into shares of the Company's common stock at $16.50 per share. The fair value of
the subordinated convertible note approximates its carrying amount based
primarily on the quoted market price of the Company's common stock and
prevailing market interest rates.
In February 1996, the Company borrowed $30,000,000 from Thermo Electron
pursuant to a promissory note due February 1997 and bearing interest at the
90-day Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter. This note was repaid in July 1996 with proceeds from
the $50,000,000 subordinated convertible note issued to Thermo Instrument.
7. COMMON STOCK
In March 1995, the Company sold 700,000 shares of its common stock in a
private placement at $10.00 per share for net proceeds of $6,530,000. In April
1995, the Company sold 901,500 shares of its common stock in a private placement
for net proceeds of $8,388,000.
In September and October 1996, the Company sold 1,670,000 shares of its
common stock in an initial public offering at $14.00 per share for net proceeds
of $20,782,000.
At December 28, 1996, the Company had reserved 3,955,303 unissued shares of
its common stock for possible issuance under stock-based compensation plans and
for issuance upon possible conversion of the 4.875% subordinated convertible
note.
F-16
<PAGE> 59
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
8. GEOGRAPHICAL INFORMATION AND SIGNIFICANT CUSTOMER
The following table shows data for the Company by geographical area.
<TABLE>
<CAPTION>
1994 1995 1996
-------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
United States......................................... $ 19,891 $17,741 $ 43,098
England............................................... 5,236 4,793 27,817
Other Europe.......................................... -- -- 11,228
Asia.................................................. -- -- 3,381
Transfers among geographical areas (a)................ -- -- (13,875)
------- ------- -------
$ 25,127 $22,534 $ 71,649
======= ======= =======
Income before provision for income taxes:
United States......................................... $ 3,998 $ 3,321 $ 3,398
England (b)........................................... 171 360 (1,061)
Other Europe.......................................... -- -- 621
Asia.................................................. -- -- 577
Corporate and eliminations (c)........................ (314) (312) (1,478)
------- ------- -------
Total operating income................................ 3,855 3,369 2,057
Interest income (expense), net........................ -- 819 (593)
------- ------- -------
$ 3,855 $ 4,188 $ 1,464
======= ======= =======
Identifiable assets:
United States......................................... $ 11,134 $29,022 $ 47,096
England............................................... 3,215 3,885 27,720
Other Europe.......................................... -- -- 6,467
Asia.................................................. -- -- 1,149
Corporate (d)......................................... -- -- 40,565
------- ------- -------
$ 14,349 $32,907 $122,997
======= ======= =======
Export revenues included in United States revenues above
(e)................................................... $ 3,217 $ 2,741 $ 3,432
======= ======= =======
</TABLE>
- ---------------
(a) Transfers among geographical areas are accounted for at prices that are
representative of transactions with unaffiliated parties.
(b) Includes a write-off of acquired technology in 1996 of $3,500,000 related to
the acquisitions of Affinity Sensors and LabSystems.
(c) Primarily corporate general and administrative expenses.
(d) Primarily cash and cash equivalents.
(e) In general, export sales are denominated in U.S. dollars.
U.S. government agencies accounted for 32% and 24% of the Company's total
revenues in 1994 and 1995, respectively. No customer accounted for 10% or more
of the Company's total revenues in 1996.
F-17
<PAGE> 60
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the DYNEX Technologies Division of Dynatech Corporation:
We have audited the accompanying consolidated balance sheet of the DYNEX
Technologies Division of Dynatech Corporation as of March 31, 1995 and February
7, 1996, and the related consolidated statements of operations, cash flows, and
shareholder's investment for each of the two years in the period ended March 31,
1995 and the period from April 1, 1995 through February 7, 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 did not audit the financial
statements of Dynatech Medical Products Limited, which statements reflect 14
percent and 16 percent of consolidated assets as of March 31, 1995 and February
7, 1996, respectively, and 35 percent, 32 percent and 41 percent of consolidated
cost of revenues for each of the two years in the period ended March 31, 1995
and the period from April 1, 1995 through February 7, 1996, respectively. Those
statements were audited by other auditors whose report has been furnished to us
and our opinion, insofar as it relates to the amounts included for that entity,
is based solely on the report of the other auditors.
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 and the report of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of the DYNEX Technologies Division of
Dynatech Corporation as of March 31, 1995 and February 7, 1996 and the results
of their operations and their cash flows for each of the two years in the period
ended March 31, 1995 and for the period from April 1, 1995 through February 7,
1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
July 19, 1996
F-18
<PAGE> 61
REPORT OF THE AUDITORS TO THE MEMBERS OF
DYNATECH MEDICAL PRODUCTS LIMITED
We have audited the accounts.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The company's directors are responsible for the preparation of the
accounts. It is our responsibility to form an independent opinion, based on our
audit, on those accounts and to report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the accounts. It also
includes an assessment of the significant estimates and judgements made by the
directors in the preparation of the accounts, and of whether the accounting
policies are appropriate to the company's circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the accounts are free from
material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion, we also evaluated the overall adequacy of the
presentation of information in the accounts.
OPINION
In our opinion the accounts give a true and fair view of the state of the
company's affairs as at March 31, 1995 and at February 7, 1996 and of its income
and cash flows for the years ended March 31, 1994 and 1995 and the period from
April 1, 1995 through February 7, 1996 and have been properly prepared in
accordance with the Companies (Guernsey) Law, 1994.
Coopers & Lybrand
Chartered Accountants
Guernsey, Channel Islands
July 19, 1996
F-19
<PAGE> 62
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
--------------------- FEBRUARY 7,
1994 1995 1996
------- ------- -------------
<S> <C> <C> <C>
Revenues (Note 6)........................................ $30,130 $37,328 $28,503
------- ------- -------------
Costs and Operating Expenses:
Cost of revenues....................................... 15,476 20,297 15,783
Selling, general and administrative expenses (includes
$2,515, $2,182 and $2,152 to Dynatech Corporation)
(Note 5)............................................ 12,203 12,636 11,402
Research and development expenses...................... 2,483 2,467 2,297
------- ------- -------------
30,162 35,400 29,482
------- ------- -------------
Operating Income (Loss).................................. (32) 1,928 (979)
Interest Income.......................................... 154 156 146
Interest Expense (includes $1,353, $1,050 and $1,427 to
Dynatech Corporation) (Note 5)......................... (1,662) (1,312) (1,610)
------- ------- -------------
Income (Loss) Before Provision for Income Taxes.......... (1,540) 772 (2,443)
Provision for Income Taxes (Note 3)...................... 228 436 320
------- ------- -------------
Net Income (Loss)........................................ $(1,768) $ 336 $(2,763)
======= ======= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-20
<PAGE> 63
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, FEBRUARY 7,
1995 1996
--------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................................... $ 5,269 $ 1,232
Accounts receivable, less allowances of $293 and $174............... 5,435 4,923
Inventories......................................................... 5,861 6,737
Prepaid expenses.................................................... 585 866
Prepaid income taxes (Note 3)....................................... 130 170
--------- -----------
17,280 13,928
--------- -----------
Property and Equipment, at Cost, Net.................................. 2,080 2,138
--------- -----------
$19,360 $16,066
======== ========
LIABILITIES AND SHAREHOLDER'S INVESTMENT
Current Liabilities:
Short-term debt..................................................... $ 3,732 $ --
Accounts payable.................................................... 1,670 1,094
Accrued payroll and employee benefits............................... 1,681 825
Accrued installation and warranty expenses.......................... 270 270
Customer deposits................................................... 479 483
Accrued income taxes................................................ 436 320
Deferred revenue.................................................... 106 189
Accrued sales commissions........................................... 427 264
Other accrued expenses.............................................. 781 564
--------- -----------
9,582 4,009
--------- -----------
Deferred Income Taxes (Note 3)........................................ 130 170
--------- -----------
Commitments (Note 4)
Shareholder's Investment:
Net parent company investment....................................... 9,292 12,056
Cumulative translation adjustment................................... 356 (169)
--------- -----------
9,648 11,887
--------- -----------
$19,360 $16,066
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-21
<PAGE> 64
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
------------------- FEBRUARY 7,
1994 1995 1996
------- ------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)........................................ $(1,768) $ 336 $(2,763)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization....................... 1,255 1,103 874
Provision for losses on accounts receivable......... 36 74 41
Changes in current accounts:
Accounts receivable.............................. 1,462 (634) 333
Inventories...................................... 320 (887) (1,152)
Other current assets............................. 75 75 (301)
Accounts payable................................. (980) 693 (531)
Other current liabilities........................ 1,115 (721) (1,184)
------- ------- -------------
Net cash provided by (used in) operating
activities..................................... 1,515 39 (4,683)
------- ------- -------------
INVESTING ACTIVITIES:
Purchases of property and equipment...................... (892) (1,127) (975)
------- ------- -------------
FINANCING ACTIVITIES:
Net transfer from Dynatech Corporation................... 895 1,746 5,527
Dividends paid to Dynatech Corporation................... (600) (400) --
Increase (decrease) in short-term debt................... 685 156 (3,652)
------- ------- -------------
Net cash provided by financing activities........ 980 1,502 1,875
------- ------- -------------
Exchange Rate Effect on Cash............................... 716 (489) (254)
------- ------- -------------
Increase (Decrease) in Cash and Cash Equivalents........... 2,319 (75) (4,037)
Cash and Cash Equivalents at Beginning of Period........... 3,025 5,344 5,269
------- ------- -------------
Cash and Cash Equivalents at End of Period................. $ 5,344 $ 5,269 $ 1,232
======= ======= ==========
CASH PAID FOR:
Interest................................................. $ 311 $ 260 $ 193
======= ======= ==========
Income taxes............................................. $ 315 $ 305 $ 78
======= ======= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-22
<PAGE> 65
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDER'S INVESTMENT
(IN THOUSANDS)
<TABLE>
<CAPTION>
NET PARENT CUMULATIVE
COMPANY TRANSLATION
INVESTMENT ADJUSTMENT
----------- -----------
<S> <C> <C>
BALANCE MARCH 31, 1993............................................... $ 9,083 $ 41
Net loss............................................................. (1,768) --
Net transfer from Dynatech Corporation............................... 895 --
Dividends paid to Dynatech Corporation............................... (600) --
Translation adjustment............................................... -- 759
----------- -----------
BALANCE MARCH 31, 1994............................................... 7,610 800
Net income........................................................... 336 --
Net transfer from Dynatech Corporation............................... 1,746 --
Dividends paid to Dynatech Corporation............................... (400) --
Translation adjustment............................................... -- (444)
----------- -----------
BALANCE MARCH 31, 1995............................................... 9,292 356
Net loss............................................................. (2,763) --
Net transfer from Dynatech Corporation............................... 5,527 --
Translation adjustment............................................... -- (525)
----------- -----------
BALANCE FEBRUARY 7, 1996............................................. $12,056 $(169)
======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-23
<PAGE> 66
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
DYNEX Technologies (the "Company") designs, manufactures and markets
products used in the immunoassay segment of the bioinstrumentation market. The
Company is a division of Dynatech Corporation ("Dynatech"), and was formerly
known as Dynatech Laboratories.
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.
Revenue Recognition
The Company recognizes revenues upon shipment of its products. 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 of
unearned revenue on service contracts which is recognized as revenue over the
life of the service contract. Substantially all of the deferred revenue included
in the accompanying balance sheet as of February 7, 1996, will be recognized
within one year.
Income Taxes
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.
Inventories
Inventories are stated at the lower of cost (on a first-in, first-out
basis) or market value and include materials, labor, and manufacturing overhead.
The components of inventories are as follows:
<TABLE>
<CAPTION>
MARCH 31, FEBRUARY 7,
1995 1996
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Raw materials and supplies.................................. $ 2,191 $ 2,054
Work in process............................................. 559 581
Finished goods.............................................. 3,111 4,102
--------- -----------
$ 5,861 $ 6,737
======== ========
</TABLE>
F-24
<PAGE> 67
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Property 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: 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 and equipment consist of the following:
<TABLE>
<CAPTION>
MARCH 31, FEBRUARY 7,
1995 1996
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Machinery, equipment and leasehold improvements................. $ 6,782 $ 6,807
Less: Accumulated depreciation and amortization................. 4,702 4,669
--------- -----------
$ 2,080 $ 2,138
======== ========
</TABLE>
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 shareholder's investment titled "Cumulative translation
adjustment." Foreign currency transaction gains and losses are included in the
accompanying statement of operations and are not material for all periods
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 and
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.
2. 401(K) SAVINGS PLAN
Substantially all of the Company's full-time U.S. employees are eligible to
participate in Dynatech's 401(k) savings plan. Contributions to the 401(k)
savings plan are made by both the employee and the Company. Company
contributions are based upon the level of employee contributions. In addition,
the Company may provide a discretionary contribution which is allocated based on
each employee's salary and length of service. Contributions charged to expense
were $66,000, $113,000, and $103,000 for the years ended March 31, 1994 and 1995
and for the period from April 1, 1995 through February 7, 1996, respectively.
3. INCOME TAXES
The components of income (loss) before provision for income taxes are as
follows:
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
----------------- FEBRUARY 7,
1994 1995 1996
------- ----- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic................................................... $(1,094) $(163) $(1,926)
Foreign.................................................... (446) 935 (517)
------- ----- -------------
$(1,540) $ 772 $(2,443)
======= ===== ==========
</TABLE>
F-25
<PAGE> 68
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
------------- FEBRUARY 7,
1994 1995 1996
---- ---- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Currently payable
Foreign..................................................... $228 $436 $ 320
==== ==== ==========
</TABLE>
The provision for income taxes in the accompanying statement of operations
differs from the provision calculated by applying the statutory federal income
tax rate of 35% to income (loss) before provision for income taxes due to the
following:
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
----------------- FEBRUARY 7,
1994 1995 1996
----- ------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Provision (benefit) for income taxes at statutory rate..... $(539) $ 270 $ (855)
Increases (decreases) resulting from:
Net foreign losses not benefited and tax rate
differential.......................................... 384 109 501
Net operating loss not benefited......................... 613 366 1,014
Other, net............................................... (230) (309) (340)
----- ------- -------------
$ 228 $ 436 $ 320
===== ======= ==========
</TABLE>
Prepaid income taxes and deferred income taxes in the accompanying balance
sheet consist of the following:
<TABLE>
<CAPTION>
MARCH 31, FEBRUARY 7,
1995 1996
--------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Prepaid income taxes:
Reserves and accruals.......................................... $ 146 $ 192
Inventory basis difference..................................... 4 5
Net operating loss carryforwards............................... 5,003 5,397
-------
5,153 5,594
Less: Valuation allowance...................................... 5,023 5,424
-------
$ 130 $ 170
=======
Deferred income taxes:
Depreciation................................................... $ 127 $ 167
Other.......................................................... 3 3
-------
$ 130 $ 170
=======
</TABLE>
The valuation allowance relates to uncertainty concerning the realization
of $13,875,000 of federal net operating loss carryforwards, the realization of
which is limited to the future income of the Company's U.S. subsidiary. The loss
carryforwards will expire in the years 2004 through 2011. Any tax benefit
resulting from use of the loss carryforwards will be recorded as a reduction to
the provision for income taxes.
F-26
<PAGE> 69
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A provision has not been made for U.S. or additional foreign taxes on
$2,164,000 of undistributed earnings in foreign subsidiaries that could be
subject to taxation if remitted to the U.S. because the Company currently plans
to keep these amounts permanently reinvested overseas.
4. COMMITMENTS
The Company leases portions of its office and operating facilities under
various operating lease arrangements. The accompanying statement of operations
includes expenses from operating leases of $977,000, $948,000 and $688,000 for
the years ended March 31, 1994 and 1995 and for the period from April 1, 1995
through February 7, 1996, respectively. Future minimum payments due under
noncancelable operating leases are $736,000 in the remainder of calendar 1996;
$600,000 in 1997; $371,000 in 1998; $376,000 in 1999; $383,000 in 2000; and
$29,000 in 2001 and thereafter. Total future minimum lease payments are
$2,495,000.
5. RELATED PARTY TRANSACTIONS
Corporate Services Agreement
The Company and Dynatech have corporate services agreements under which
Dynatech provides certain administrative services, including risk management,
administration for certain employee benefits, tax advice and preparation of tax
returns, centralized cash management and certain other services. For these
services, the Company paid fees of approximately 1.2% of budgeted revenue and
2.6% of actual expenses incurred. In addition, Dynatech charged the Company an
interest allocation. The corporate service fees and the interest allocation
totaled $2,515,000, $2,182,000, and $2,152,000 for the years ended March 31,
1994 and 1995 and for the period from April 1, 1995 through February 7, 1996,
respectively. Management believes that the corporate service fee and interest
allocation are reasonable and representative of the expenses the Company would
have incurred on a stand-alone basis.
6. GEOGRAPHICAL INFORMATION
The Company is engaged in one business segment: developing, manufacturing,
and marketing products used in the immunoassay segment of the bioinstrumentation
market. The following table shows data for the Company by geographical area.
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
-------------------- FEBRUARY 7,
1994 1995 1996
------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
United States........................................ $15,541 $ 18,428 $13,250
Germany.............................................. 7,212 9,962 7,169
Guernsey Channel Islands............................. 6,591 8,163 7,547
United Kingdom....................................... 3,519 3,833 2,689
France............................................... 1,907 3,064 3,617
Other................................................ 3,827 4,907 3,806
Transfers among geographical areas (a)............... (8,467) (11,029) (9,575)
------- -------- -------
$30,130 $ 37,328 $28,503
======= ======== =======
</TABLE>
F-27
<PAGE> 70
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
-------------------- FEBRUARY 7,
1994 1995 1996
------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Income (loss) before provision for income taxes:
United States................................ $ (335) $ 395 $(1,257)
Germany...................................... (220) 439 286
Guernsey, Channel Islands.................... (253) 145 (573)
United Kingdom............................... 180 336 98
France....................................... (247) 125 313
Other........................................ 843 488 154
------- -------- -------
Total operating income (loss)................ (32) 1,928 (979)
Interest expense, net........................ (1,508) (1,156) (1,464)
------- -------- -------
$(1,540) $ 772 $(2,443)
======= ======== =======
Identifiable assets:
United States................................ $ 5,212 $ 5,800 $ 2,619
Germany...................................... 3,743 3,537 3,456
Guernsey, Channel Islands.................... 1,792 2,601 2,759
United Kingdom............................... 3,414 4,441 4,060
France....................................... 1,304 1,509 1,647
Other........................................ 1,506 1,472 1,525
------- -------- -------
$16,971 $ 19,360 $16,066
======= ======== =======
Export revenues included in United States
revenues above (b):
Europe....................................... $ 1,612 $ 2,519 $ 1,544
Other........................................ 1,148 1,243 878
------- -------- -------
$ 2,760 $ 3,762 $ 2,422
======= ======== =======
</TABLE>
- ---------------
(a) Transfers among geographical areas are accounted for at prices that are
representative of transactions with unaffiliated parties.
(b) In general, export sales are denominated in U.S. dollars.
7. SUBSEQUENT EVENT
On February 7, 1996, the Company was sold to Thermo BioAnalysis
Corporation.
F-28
<PAGE> 71
AUDITORS' REPORT
TO THE BOARD OF DIRECTORS OF THERMO BIOANALYSIS CORPORATION
We have audited the combined financial statements on pages F-30 to F-40
which have been prepared under the historical cost convention and the accounting
policies set out on pages F-33 to F-34.
RESPECTIVE RESPONSIBILITIES OF MANAGEMENT AND AUDITORS
The managements of Affinity Sensors and LabSystems are responsible for
preparing financial statements for the division for which they are responsible,
which give a true and fair view of the state of affairs of the division at
December 31, 1994 and 1995, and of the results of the division for the years
ended December 31, 1993, 1994 and 1995. In preparing those financial statements,
each division's management is required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements; and
- prepare the financial statements on the going concern basis unless it its
inappropriate to presume that the division will continue in business.
Each division's management is responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the financial
position of the division. Each division's management is also responsible for
safeguarding the assets of the division and hence for taking reasonable steps
for the prevention of fraud and other irregularities.
The responsibility for the preparation of the combined financial statements
rests with the directors of Thermo BioAnalysis Corporation.
It is our responsibility to form an independent opinion, based on our
audit, on the combined financial statements and to report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board which are substantially in accordance with generally
accepted auditing standards in the United States. An audit includes examination,
on a test basis, of evidence relevant to the amounts and disclosures in the
financial statements. It also includes an assessment of the significant
estimates and judgements made by management in the preparation of the financial
statements, and of whether the accounting policies are appropriate to the
circumstances of each division, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the
combined state of affairs of the divisions at December 31, 1994 and 1995 and of
their losses and cash flows for the years ended December 31, 1993, 1994 and
1995, in accordance with generally accepted accounting principles in the United
Kingdom.
Accounting practices used by the divisions and Thermo BioAnalysis
Corporation in preparing the accompanying combined financial statements conform
with generally accepted accounting principles in the United Kingdom. Had the
accompanying financial statements been prepared in accordance with United States
generally accepted accounting principles, the information included in them would
not be materially different. Accordingly, no reconciliation of net income and
owner's equity to United States generally accepted accounting principles has
been included in the combined financial statements.
ARTHUR ANDERSEN
Cambridge, England
July 22, 1996
F-29
<PAGE> 72
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
COMBINED PROFIT AND LOSS ACCOUNTS
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, THREE MONTHS JANUARY 1, 1996
---------------------------- ENDED THROUGH
1993 1994 1995 MARCH 31, 1995 MARCH 29, 1996
L000 L000 L000 L000 L000
------ ------ ------ -------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Turnover (Note 2).................. 15,980 14,959 14,361 2,678 2,862
Cost of sales...................... (4,210) (4,220) (3,526) (1,000) (1,349)
------ ------ ------ ------ ------
Gross profit....................... 11,770 10,739 10,835 1,678 1,513
Distribution costs................. (2,803) (3,075) (2,539) (636) (862)
Administrative expenses............ (9,206) (8,246) (7,893) (1,675) (1,802)
------ ------ ------ ------ ------
Profit (loss) on ordinary
activities before taxation (Note
3)............................... (239) (582) 403 (633) (1,151)
Tax on profit (loss) on ordinary
activities (Note 5).............. (292) (104) (406) -- --
------ ------ ------ ------ ------
Loss for the financial year after
taxation transferred to reserves
(Note 11)........................ (531) (686) (3) (633) (1,151)
====== ====== ====== ====== ======
</TABLE>
Movements in reserves are shown in Note 11.
All amounts relate to continuing operations.
The loss for each financial year is the only material recognised gain or loss
for each year, and accordingly a statement of total recognised gains and losses
is not presented in these financial statements.
The accompanying notes are an integral part of these profit and loss accounts.
F-30
<PAGE> 73
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1994 1995
L000 L000
------ ------
<S> <C> <C>
FIXED ASSETS
Tangible assets (Note 6).................................................... 1,885 1,592
------ ------
CURRENT ASSETS
Stocks (Note 7)............................................................. 1,197 1,026
Debtors (Note 8)............................................................ 5,781 5,507
Cash at bank and in hand.................................................... 10,526 13,039
------ ------
17,504 19,572
Creditors: Amounts falling due within one year (Note 9)..................... (4,802) (5,033)
------ ------
Net current assets.......................................................... 12,702 14,539
------ ------
Total assets less current liabilities....................................... 14,587 16,131
Provisions for liabilities and charges (Note 10)............................ (647) (949)
------ ------
13,940 15,182
====== ======
OWNER'S EQUITY
Net parent company investment (Note 11)..................................... 13,913 15,152
Cumulative translation adjustment (Note 11)................................. 27 30
------ ------
13,940 15,182
====== ======
</TABLE>
These accounts were approved on July 22, 1996.
The accompanying notes are an integral part of these balance sheets.
F-31
<PAGE> 74
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
COMBINED CASH FLOW STATEMENTS
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, THREE MONTHS JANUARY 1,
------------------------ ENDED 1996 THROUGH
1993 1994 1995 MARCH 31, 1995 MARCH 29, 1996
L000 L000 L000 L000 L000
------ ------ ------ -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES
(Note 12)................................ 1,840 1,759 1,263 287 742
TAXATION
Corporation tax paid....................... (292) (104) (406) -- --
------ ------ ------
Tax paid................................... (292) (104) (406) -- --
------ ------ ------
INVESTING ACTIVITIES
Payments to acquire tangible fixed
assets................................... (1,145) (939) (795) -- (142)
Receipts from sales of tangible fixed
assets................................... -- 20 35 35 --
------ ------ ------
Net cash inflow (outflow) from investing
activities............................... (1,145) (919) (760) 35 (142)
------ ------ ------
Net cash inflow before financing........... 403 736 97 322 600
------ ------ ------
FINANCING
Capital injection (withdrawal) (Note 11)... 2,503 1,031 1,242 (10,848) (13,609)
------ ------ ------
Net cash inflow (outflow) from financing... 2,503 1,031 1,242 (10,848) (13,609)
------ ------ ------
Increase (decrease) in cash and cash
equivalents (Note 13).................... 2,906 1,767 1,339 (10,526) (13,009)
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these cash flow statements.
F-32
<PAGE> 75
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
A summary of the principal accounting policies, all of which have been
applied consistently throughout the three years ending December 31, 1993, 1994
and 1995, is set out below.
(a) Basis of preparation
The combined financial statements have been prepared as an aggregation of
the financial statements of the Affinity Sensors and LabSystems divisions of
Fisons plc, and their respective sales offices based in the United States.
In preparing this aggregation, the directors of Thermo BioAnalysis
Corporation have eliminated transactions and balances between LabSystems and its
sales office and Affinity Sensors and its sales office. Unrealised profit on
stocks and demonstration models held as tangible fixed assets have also been
eliminated. LabSystems and Affinity Sensors do not trade with each other.
(b) Basis of accounting
The financial statements are prepared under the historical cost convention
and have been prepared in accordance with applicable United Kingdom accounting
standards.
(c) Tangible fixed assets
Fixed assets are shown at cost less depreciation. Depreciation is provided
at rates calculated to write-off the cost, less estimated residual value, of
each asset on a straight-line basis over its expected useful life, as follows:
Plant and equipment, fixtures and fittings 4 years - 10
years
Leasehold improvements Over the period
of the lease
(d) Stocks
Stocks and work-in-progress are stated at the lower of cost or net
realisable value.
Cost, which is calculated on the FIFO basis, comprises material and, where
appropriate, labour and factory overheads.
(e) Taxation
Corporation tax payable is provided on taxable profits at the current rate.
Corporation tax payable is settled via the capital account with Fisons plc
in the United Kingdom, and Fisons Instruments North America Inc. in the United
States. Hence no corporation tax creditors appear in these financial statements.
Deferred taxation is provided using the liability method on all timing
differences only to the extent that they are expected to reverse in the future
without being replaced.
Deferred tax assets resulting from tax losses carried forward are not
recognised in the financial statements except to the extent that they are
anticipated to be recoverable without being replaced by equivalent debit
balances.
F-33
<PAGE> 76
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(f) Foreign currency
Transactions denominated in foreign currencies are recorded using the rate
of exchange ruling at the date of the transaction or, if hedged, at the forward
contract rate.
Monetary assets and liabilities denominated in foreign currencies at the
balance sheet date are reported at the exchange rates prevailing at that date
or, if appropriate, at the forward contract rate. Any gain or loss arising from
a change in exchange rates subsequent to the date of transaction is included as
an exchange gain or loss in the profit and loss account.
The results of the sales offices in the United States are translated at the
average rate of exchange during each year and their balance sheets at the rate
ruling at each balance sheet date.
Exchange differences arising on translation of the opening net assets and
results of overseas operations are dealt with through reserves.
(g) Turnover
Turnover represents the invoiced value of goods and services sold during
the year, less trade discounts and allowances, stated net of value added tax.
(h) Research and development costs
Research and development expenditure is charged to the profit and loss
account as incurred.
(i) Leases
The company enters into operating leases as described in Note 15.
Operating leases are charged on a straight-line basis over the lease term.
(j) Pension costs
The amount charged to the profit and loss account in respect of pension
costs for defined benefit schemes is the estimated regular cost of providing the
benefits accrued in the year, adjusted to reflect variations from that cost. The
regular cost is calculated so that it represents a substantially level
percentage of current and future payroll. Variations from regular cost are
charged or credited to the profit and loss account over the estimated average
remaining working life of scheme members.
The schemes are externally funded, with the assets held separately from
those of the group in trustee administered funds. Differences between amounts
charged to the profit and loss account and amounts contributed to the schemes
are shown as either provisions or prepayments in the balance sheet.
F-34
<PAGE> 77
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
2. TURNOVER
The analysis of turnover by geographical area is as follows:
<TABLE>
<CAPTION>
1993 1994 1995
L000 L000 L000
------ ------ ------
<S> <C> <C> <C>
United Kingdom............................................ 3,113 3,226 3,310
United States............................................. 9,158 8,582 6,911
Rest of world............................................. 3,709 3,151 4,140
------- ------- -------
15,980 14,959 14,361
======= ======= =======
</TABLE>
The analysis of turnover and profit (loss) on ordinary activities before
taxation by activity is as follows:
<TABLE>
<CAPTION>
1993 1994 1995
L000 L000 L000
------ ------ ------
<S> <C> <C> <C>
Turnover
LabSystems................................................ 15,620 13,878 12,851
Affinity Sensors.......................................... 360 1,081 1,510
------- ------- -------
15,980 14,959 14,361
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
1993 1994 1995
L000 L000 L000
------ ------ ------
<S> <C> <C> <C>
Profit (loss) on ordinary activities before taxation
LabSystems................................................ 1,903 927 1,975
Affinity Sensors.......................................... (2,142) (1,509) (1,572)
------- ------- -------
(239) (582) 403
======= ======= =======
</TABLE>
3. PROFIT (LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION
Profit (loss) on ordinary activities is stated after charging:
<TABLE>
<CAPTION>
1993 1994 1995
L000 L000 L000
------ ------ ------
<S> <C> <C> <C>
Exceptional items included within administrative expenses
-- redundancy and restructuring costs................... -- -- 507
-- tangible fixed assets written off.................... 273 -- --
Depreciation
-- owned tangible fixed assets.......................... 604 893 781
Hire of plant and machinery under operating leases........ 17 59 154
Operating lease rentals -- land and buildings............. 156 142 266
Staff costs............................................... 4,588 5,018 4,638
Research and development.................................. 2,117 2,788 3,010
</TABLE>
4. STAFF COSTS
Particulars of employees are shown below.
<TABLE>
<CAPTION>
1993 1994 1995
L000 L000 L000
------ ------ ------
<S> <C> <C> <C>
Wages and salaries........................................ 4,186 4,585 4,212
Social security costs..................................... 357 392 334
Other pension costs....................................... 45 41 92
------- ------- -------
4,588 5,018 4,638
======= ======= =======
</TABLE>
F-35
<PAGE> 78
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The average weekly number of persons employed by the divisions was as
follows:
<TABLE>
<CAPTION>
1993 1994 1995
NUMBER NUMBER NUMBER
------ ------ ------
<S> <C> <C> <C>
Administration............................................ 41 43 44
Sales and support......................................... 68 81 73
Research and development.................................. 66 62 48
--- --- ---
175 186 165
=== === ===
</TABLE>
5. TAX ON PROFIT (LOSS) ON ORDINARY ACTIVITIES
The tax charge is based on the result for the year and comprises:
<TABLE>
<CAPTION>
1993 1994 1995
L000 L000 L000
--- --- ---
<S> <C> <C> <C>
Corporation tax at 33%............................................ 292 104 406
=== === ===
</TABLE>
In arriving at the tax charge for each year, no account has been taken of
any deferred tax asset resulting from losses incurred by the sales offices in
the United States.
Management considers it would be imprudent to recognize such an asset as
its recovery is not expected to occur in the foreseeable future.
It is not practicable to quantify the tax losses carried forward in the
United States.
6. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
LEASEHOLD PLANT AND FIXTURES AND
IMPROVEMENTS EQUIPMENT FITTINGS TOTAL
L000 L000 L000 L000
------------- --------- ------------ ------
<S> <C> <C> <C> <C>
COST
At January 1, 1994............... 432 3,804 12 4,248
Additions........................ -- 925 14 939
Disposals........................ -- (742) (6) (748)
Exchange adjustment.............. -- (19) -- (19)
--- --------- --- ------
At December 31, 1994............. 432 3,968 20 4,420
--- --------- --- ------
DEPRECIATION
At January 1, 1994............... 172 1,886 7 2,065
Charge for the year.............. 35 849 9 893
On disposals..................... -- (416) -- (416)
Exchange adjustment.............. -- (6) (1) (7)
--- --------- --- ------
At December 31, 1994............. 207 2,313 15 2,535
--- --------- --- ------
NET BOOK VALUE
At December 31, 1994............. 225 1,655 5 1,885
============= ======== =========== ======
At January 1, 1994............... 260 1,918 5 2,183
============= ======== =========== ======
COST
At January 1, 1995............... 432 3,968 20 4,420
Additions........................ -- 793 2 795
Disposals........................ -- (1,423) (6) (1,429)
Exchange adjustment.............. -- 5 -- 5
--- --------- --- ------
At December 31, 1995............. 432 3,343 16 3,791
--- --------- --- ------
</TABLE>
F-36
<PAGE> 79
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
LEASEHOLD PLANT AND FIXTURES AND
IMPROVEMENTS EQUIPMENT FITTINGS TOTAL
L000 L000 L000 L000
------------- --------- ------------ ------
<S> <C> <C> <C> <C>
DEPRECIATION
At January 1, 1995............... 207 2,313 15 2,535
Charge for the year.............. 37 742 2 781
On disposals..................... -- (1,111) (6) (1,117)
--- --------- --- ------
At December 31, 1995............. 244 1,944 11 2,199
--- --------- --- ------
NET BOOK VALUE
At December 31, 1995............. 188 1,399 5 1,592
============= ======== =========== ======
At January 1, 1995............... 225 1,655 5 1,885
============= ======== =========== ======
</TABLE>
7. STOCKS
<TABLE>
<CAPTION>
1994 1995
L000 L000
----- -----
<S> <C> <C>
Components............................................................ 99 230
Work-in-progress...................................................... 121 58
Finished goods........................................................ 977 738
----- -----
1,197 1,026
===== =====
</TABLE>
8. DEBTORS
The following are included in the net book value of debtors:
<TABLE>
<CAPTION>
1994 1995
L000 L000
----- -----
<S> <C> <C>
Amounts falling due within one year:
Trade debtors....................................................... 4,284 3,943
Amounts owed by Fisons group undertakings........................... 1,091 1,340
Other debtors....................................................... 145 --
Prepayments and accrued income...................................... 261 224
----- -----
5,781 5,507
===== =====
</TABLE>
9. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
1994 1995
L000 L000
----- -----
<S> <C> <C>
Bank overdraft........................................................ 210 1,384
Trade creditors....................................................... 1,120 819
Amounts owed to Fisons group undertakings............................. 698 225
Other creditors....................................................... 361 541
Accruals and deferred income.......................................... 2,413 2,064
----- -----
4,802 5,033
===== =====
</TABLE>
F-37
<PAGE> 80
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
10. PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
INSTALLATION OTHER
PROVISION PROVISIONS TOTAL
L000 L000 L000
------------- ----------- ------
<S> <C> <C> <C>
BALANCE AT JANUARY 1, 1994........................... 375 99 474
Charged to profit and loss account................... 212 83 295
Released unused...................................... (3) (116) (119)
Utilised............................................. -- (3) (3)
--- ---- ----
BALANCE AT DECEMBER 31, 1994......................... 584 63 647
Charged to profit and loss account................... 407 69 476
Released unused...................................... (98) (10) (108)
Utilised............................................. -- (66) (66)
--- ---- ----
BALANCE AT DECEMBER 31, 1995......................... 893 56 949
=== ==== ====
</TABLE>
11. RECONCILIATION OF MOVEMENTS IN OWNER'S EQUITY
<TABLE>
<CAPTION>
NET PARENT CUMULATIVE
COMPANY TRANSLATION
INVESTMENT ADJUSTMENT TOTAL
L000 L000 L000
------------- ----------- ------
<S> <C> <C> <C>
At January 1, 1994................................... 13,568 27 13,595
Capital injection.................................... 1,031 -- 1,031
Retained loss for the year........................... (686) -- (686)
------ --- ------
At December 31, 1994................................. 13,913 27 13,940
====== === ======
At January 1, 1995................................... 13,913 27 13,940
Capital injection.................................... 1,242 -- 1,242
Retained loss for the year........................... (3) -- (3)
Gain on foreign currency translation................. -- 3 3
------ --- ------
At December 31, 1995................................. 15,152 30 15,182
====== === ======
</TABLE>
12. RECONCILIATION OF OPERATING PROFIT (LOSS) TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
<TABLE>
<CAPTION>
1993 1994 1995
L000 L000 L000
------------- ----------- ------
<S> <C> <C> <C>
Profit (loss) on ordinary activities before
taxation........................................... (239) (582) 403
Adjustment for items not involving the movement of
cash:
Depreciation charge............................. 604 893 781
Loss on disposal of fixed assets................ 55 312 277
Decrease in debtors............................. 1,643 245 273
(Increase) decrease in stocks................... (87) (131) 171
Increase (decrease) in creditors and
provisions.................................... (163) 1,010 (640)
Translation (loss) gain on consolidation........ 27 12 (2)
----- ----- -----
Net cash inflow from operating activities............ 1,840 1,759 1,263
===== ===== =====
</TABLE>
The translation (loss) gain on consolidation is considered to be immaterial
and has not been allocated to individual captions.
F-38
<PAGE> 81
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
13. ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS DURING THE YEAR
<TABLE>
<CAPTION>
CASH AT BANK BANK
AND IN HAND OVERDRAFTS NET
L000 L000 L000
------------ ---------- -------
<S> <C> <C> <C>
Balance at January 1, 1993.......................... 5,643 -- 5,643
Movement in year.................................... 3,093 (187) 2,906
------ ------ ------
Balance at December 31, 1993........................ 8,736 (187) 8,549
Movement in year.................................... 1,790 (23) 1,767
------ ------ ------
Balance at December 31, 1994........................ 10,526 (210) 10,316
Movement in year.................................... 2,513 (1,174) 1,339
------ ------ ------
Balance at December 31, 1995........................ 13,039 (1,384) 11,655
====== ====== ======
</TABLE>
14. RELATED PARTY TRANSACTIONS
Sales to other Fisons entities
Both divisions make the majority of overseas sales via other Fisons
businesses, which in turn sell product to end users. These combined financial
statements include the selling operations based in the United States, but not
those in other territories as these entities are not being acquired by Thermo
BioAnalysis. The total sales to other Fisons businesses (except for those based
in the United States) are as follows:
<TABLE>
<CAPTION>
AFFINITY
LABSYSTEMS SENSORS TOTAL
YEAR ENDED L000 L000 L000
----------- --------- ------
<S> <C> <C> <C>
December 31, 1993................................. 2,820 176 2,996
===== === =====
December 31, 1994................................. 2,217 271 2,488
===== === =====
December 31, 1995................................. 1,856 447 2,303
===== === =====
</TABLE>
15. OPERATING LEASE COMMITMENTS
Annual commitments under noncancellable operating leases are as follows:
<TABLE>
<CAPTION>
1993 1994 1995
L000 L000 L000
----------- --------- ------
<S> <C> <C> <C>
Land and buildings
Expiry date:
-- between two and five years................ 88 88 88
-- after five years.......................... 141 142 269
------
-
------- ---- ---
229 230 357
======= ======= =======
Other
Expiry date:
-- within one year........................... -- 63 24
-- between two and five years................ 8 45 63
------
-
------- ---- ---
8 108 87
======= ======= =======
</TABLE>
F-39
<PAGE> 82
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONCLUDED)
16. CONTINGENT LIABILITIES
A third party has claimed that a part used by Affinity Sensors in their
products may infringe one of its patents.
The management of Affinity Sensors considers that the likelihood of a
material liability resulting from this claim is remote. Accordingly, no
provision has been made in respect of this claim in these combined financial
statements.
17. PENSION ARRANGEMENTS
The majority of the United Kingdom employees of LabSystems and Affinity
Sensors belongs to group defined benefit pension schemes operated by Fisons plc.
These schemes are funded to cover future pension liabilities after allowing for
expected future earnings and pension increases.
The costs of providing these benefits are addressed in accordance with the
advice of professionally qualified actuaries. Contributions are based on pension
costs across the Fisons plc group as a whole.
Actuarial valuations of these schemes are undertaken on a regular basis by
independent qualified actuaries using the projected unit method.
The last valuation of the UK pension scheme, being the scheme principally
affecting these combined financial statements, was made at March 31, 1994.
Particulars of that valuation may be found in the Fisons plc financial
statements for the year ended December 31, 1994.
The aggregate pension cost charged in these combined financial statements
is shown in Note 4. There were no provisions or prepayments in the combined
balance sheet at either December 31, 1994 or 1995 resulting from a difference
between the amounts recognised as cost and the amounts paid to the schemes.
Following the acquisition of a substantial portion of the businesses
comprising the Scientific Instruments Division of Fisons plc by Thermo
Instrument Systems Inc., no contributions will be paid to Fisons group pension
schemes after September 1996. Those employees who are eligible have been offered
membership of certain defined contribution pension schemes operated by Thermo
Instrument Systems Inc. or its parent company.
18. POST BALANCE SHEET EVENTS
On March 29, 1996, a substantial portion of the businesses comprising the
Scientific Instruments Division of Fisons plc (of which LabSystems and Affinity
Sensors form a part) was acquired by Thermo Instrument Systems Inc., a company
incorporated in the United States.
F-40
<PAGE> 83
THERMO BIOANALYSIS CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 28, 1996
(UNAUDITED)
On February 7, 1996, the Company acquired substantially all the assets of
the DYNEX Technologies ("DYNEX") division of Dynatech Corporation ("Dynatech")
for approximately $43.2 million in cash. On March 29, 1996, Thermo Instrument
Systems Inc. ("Thermo Instrument") acquired a substantial portion of the
businesses comprising the Scientific Instruments Division of Fisons plc
("Fisons"). On July 22, 1996, the Company acquired the Affinity Sensors and
LabSystems divisions of Fisons from Thermo Instrument for $9.0 million in cash.
Because the Company, Affinity Sensors and LabSystems were deemed for accounting
purposes to be under control of their common owner, Thermo Instrument, the
Company's 1996 historical financial information includes the results of
operations of Affinity Sensors and LabSystems from March 29, 1996, the date
these businesses were acquired by Thermo Instrument. During 1996, the Company
wrote-off $3.5 million of acquired technology in connection with the
acquisitions of Affinity Sensors and LabSystems. This nonrecurring expense has
been omitted from the pro forma combined condensed statements of operations. To
help finance the acquisition of DYNEX, the Company borrowed $30.0 million from
Thermo Electron Corporation ("Thermo Electron") pursuant to a promissory note
due February 1997, and bearing interest at the Commercial Paper Composite Rate
plus 25 basis points, set at the beginning of each quarter. In conjunction with
the acquisition of Affinity Sensors and LabSystems in July 1996, the Company
issued to Thermo Instrument a $50.0 million principal amount 4.875% subordinated
convertible note (the "Convertible Note"), due 2001, convertible into shares of
the Company's common stock at $16.50 per share. The Company used part of the
proceeds of the Convertible Note to retire the $30.0 million promissory note.
The following unaudited pro forma combined condensed statement of
operations sets forth the results of operations for the year ended December 28,
1996, as if the acquisitions of DYNEX, Affinity Sensors and LabSystems and the
issuance of the Convertible Note to Thermo Instrument had occurred at the
beginning of 1996. DYNEX has a fiscal year which differs from the Company's
fiscal year-end. The historical results of operations for DYNEX presented below
have been adjusted to conform to the Company's fiscal year-end for purposes of
the pro forma combined condensed statement of operations. The pro forma results
of operations are not necessarily indicative of future operations or the actual
results that would have occurred had the acquisitions of DYNEX and Affinity
Sensors and LabSystems and the issuance of the Convertible Note to Thermo
Instrument occurred at the beginning of 1996. These statements should be read in
conjunction with the accompanying notes and the respective historical financial
statements and related notes of the Company, DYNEX and Affinity Sensors and
LabSystems appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
HISTORICAL
-----------------------------------------
DYNEX AFFINITY
TECHNOLOGIES SENSORS AND
DIVISION LABSYSTEMS PRO FORMA
THERMO OF DYNATECH DIVISIONS ----------------------
BIOANALYSIS CORPORATION OF FISONS ADJUSTMENTS COMBINED
----------- ------------ ------------ ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues.......................................... $71,649 $2,821 $ 4,367 $ -- $78,837
-------- -------- -------- -------- --------
Costs and Operating Expenses:
Cost of revenues................................ 37,807 1,794 2,059 102 41,762
Selling, general and administrative
expenses..................................... 20,987 1,475 3,300 217 25,979
Research and development expenses............... 7,298 351 764 -- 8,413
Write-off of acquired technology................ 3,500 -- -- (3,500) --
-------- -------- -------- -------- --------
69,592 3,620 6,123 (3,181) 76,154
-------- -------- -------- -------- --------
Operating Income (Loss)........................... 2,057 (799) (1,756) 3,181 2,683
Interest Income................................... 1,280 12 -- -- 1,292
Interest Expense.................................. (1,873) (183) -- (382) (2,438)
-------- -------- -------- -------- --------
Income (Loss) Before Income Taxes................. 1,464 (970) (1,756) 2,799 1,537
Income Tax Provision (Benefit).................... 1,900 11 -- (815) 1,096
-------- -------- -------- -------- --------
Net Loss.......................................... (436) $ (981) $ (1,756) $ 3,614 $ 441
======== ======== ======== ======== ========
Income (Loss) per Share........................... (.05) $ .05
======== ========
Weighted Average Shares........................... 8,601 8,601
======== ========
</TABLE>
F-41
<PAGE> 84
THERMO BIOANALYSIS CORPORATION
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The historical financial statements of Affinity Sensors and LabSystems,
which are denominated in British pounds sterling, have been translated into U.S.
dollars for the pro forma combined condensed statement of operations at the
average exchange rate of approximately 1.53 British pounds sterling per U.S.
dollar for the year ended December 28, 1996.
NOTE 2 -- PRO FORMA ADJUSTMENTS TO PRO FORMA COMBINED CONDENSED STATEMENT OF
OPERATIONS FOR THE YEAR ENDED DECEMBER 28, 1996 (IN THOUSANDS, EXCEPT
IN TEXT)
<TABLE>
<CAPTION>
DEBIT (CREDIT)
--------------
<S> <C>
COST OF REVENUES
Increase in the finished goods inventory of DYNEX to the estimated selling
price, less the sum of the costs of disposal and a reasonable profit
allowance for the Company's selling efforts.................................. $ 102
----------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Eliminate corporate service fees charged to DYNEX by Dynatech Corporation...... (75)
Service fee of 1.0% of the revenues of DYNEX, Affinity Sensors and LabSystems
for services provided under a services agreement between the Company and
Thermo Electron.............................................................. 72
Amortization over 40 years of $32,740,000 of cost in excess of net assets of
acquired companies created by the acquisition of DYNEX, and over 8 years of
$3,084,000 of product technology and capitalized software created by the
acquisitions of Affinity Sensors and LabSystems.............................. 220
----------
217
----------
WRITE-OFF OF ACQUIRED TECHNOLOGY
Reverse the write-off of acquired technology under development associated with
the acquisitions of Affinity Sensors and LabSystems.......................... (3,500)
----------
INTEREST EXPENSE
Eliminate the corporate interest allocation charged to DYNEX by Dynatech
Corporation as a direct consequence of the acquisition of DYNEX by the
Company without the assumption of DYNEX debt................................. (183)
Increase interest expense on the Convertible Note issued to Thermo Instrument,
due to the assumed issuance of the Convertible Note at the beginning of
1996......................................................................... 1,359
Eliminate interest expense on the $30,000,000 principal amount promissory note
payable to Thermo Electron, due to its assumed repayment with the proceeds of
the Convertible Note issued to Thermo Instrument............................. (794)
----------
382
----------
INCOME TAX PROVISION (BENEFIT)
Income tax benefit associated with the utilization of the U.S. portion of net
operating losses at Affinity Sensors and LabSystems.......................... (623)
Income tax benefit associated with the adjustments above (excluding
amortization of cost in excess of net assets of acquired companies and the
write-off of acquired technology), calculated at the Company's statutory
income tax rate of 40%....................................................... (192)
----------
(815)
----------
</TABLE>
F-42
<PAGE> 85
======================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company........................... 2
Risk Factors.......................... 2
Price Range of Common Stock........... 7
Dividend Policy....................... 7
Selected Quarterly Financial Data
(Unaudited)......................... 7
Selected Financial Information........ 8
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 9
Management's Discussion and Analysis
of Results of Operations of DYNEX
Technologies........................ 12
Management's Discussion and Analysis
of Results of Operations of Affinity
Sensors and LabSystems.............. 13
Business.............................. 15
Relationship with Thermo Electron and
Thermo Instrument................... 20
Management............................ 24
Security Ownership of Certain
Beneficial Owners and Management.... 31
Selling Shareholders.................. 33
Sale of Shares........................ 38
Description of Capital Stock.......... 39
Shares Eligible for Future Sale....... 40
Legal Matters......................... 40
Experts............................... 40
Additional Information................ 41
Index to Financial Statements......... F-1
------------------------
UNTIL , 1997 (25 DAYS AFTER
THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
============================================
</TABLE>
======================================================
1,601,500 SHARES
[THERMO BIOANALYSIS LOGO]
COMMON STOCK
-------------------
PROSPECTUS
, 1997
-------------------
======================================================
<PAGE> 86
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered. All amounts shown are
estimates except for the Securities and Exchange Commission (the "Commission")
registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.......... $ 6,586
Legal fees and expenses...................................... 10,000
Accounting fees and expenses................................. 10,000
Printing and engraving expenses.............................. 20,000
Miscellaneous................................................ 2,000
-------
Total.............................................. $ 48,586
=======
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law and the Registrant's Certificate of
Incorporation and By-Laws limit the monetary liability of directors to the
Registrant and to its shareholders and provide for indemnification of the
Registrant'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 Registrant and, with respect
to any criminal action or proceeding, actions that the indemnitee had no
reasonable cause to believe were unlawful. The Registrant also has
indemnification agreements with its directors and officers that provide for the
maximum indemnification allowed by law. Reference is made to the Registrant'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 10.10
hereto, respectively.
Thermo Electron has an insurance policy which insures the directors and
officers of Thermo Electron and its subsidiaries, including the Registrant,
against certain liabilities which might be incurred in connection with the
performance of their duties.
The Selling Shareholders are obligated under the Purchase Agreements to
indemnify Directors, officers and controlling persons of the Registrant against
certain liabilities, including liabilities under the Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On February 24, 1995, Thermo Instrument transferred to the Registrant all
of the assets and operations relating to its bioinstruments business in exchange
for 6,500,000 shares of Common Stock of the Registrant and the assumption by the
Registrant of certain liabilities relating to such business. Exemption from
registration for this transaction is claimed under Section 4(2) of the
Securities Act.
On March 15, 1995, the Registrant sold an aggregate of 700,000 shares of
Common Stock to accredited investors for an aggregate purchase price of
$6,530,000 pursuant to Regulation D of the Commission promulgated under the
Securities Act. On April 19, 1995, the Registrant sold an aggregate of 901,500
shares of Common Stock to accredited investors for an aggregate purchase price
of $8,388,000 pursuant to Regulation D of the Commission promulgated under the
Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
See the Exhibit Index included immediately preceding the exhibits to this
Registration Statement.
II-1
<PAGE> 87
(B) FINANCIAL STATEMENT SCHEDULES
The Financial Statement Schedules as of December 28, 1996 and the Report of
Independent Public Accountants on such schedules are included in this
Registration Statement. All other schedules are omitted because they are not
applicable or are not required under Regulation S-X.
ITEM 17. UNDERTAKINGS
(a) 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 1993;
(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 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.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions contained in the Certificate of
Incorporation and By-Laws of the Registrant and the laws of the State of
Delaware, 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 Securities 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
Securities Act and will be governed by the final adjudication of such issue.
II-2
<PAGE> 88
SIGNATURES
Pursuant to the requirements of the Securities Act, 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, Massachusetts, on this 2nd day of April, 1997.
THERMO BIOANALYSIS CORPORATION
BARRY S. HOWE
By:.................................
BARRY S. HOWE
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act, this Post-Effective
Amendment No. 1 to 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>
BARRY S. HOWE* Chief Executive Officer, April 2, 1997
.......................................... President and Director
BARRY S. HOWE (Principal Executive
Officer)
JOHN N. HATSOPOULOS* Vice President and Chief April 2, 1997
.......................................... Financial Officer
JOHN N. HATSOPOULOS (Principal Financial
Officer)
PAUL F. KELLEHER* Chief Accounting Officer April 2, 1997
.......................................... (Principal Accounting
PAUL F. KELLEHER Officer)
RICHARD W. K. CHAPMAN* Chairman of the Board and April 2, 1997
.......................................... Director
RICHARD W. K. CHAPMAN
.......................................... Vice Chairman of the Board April , 1997
DENIS A. HELM and Director
JONATHAN W. PAINTER* Director April 2, 1997
..........................................
JONATHAN W. PAINTER
.......................................... Director April , 1997
ARVIN H. SMITH
ELIAS P. GYFTOPOULOS* Director April 2, 1997
..........................................
ELIAS P. GYFTOPOULOS
ARNOLD N. WEINBERG* Director April 2, 1997
..........................................
ARNOLD N. WEINBERG
*JONATHAN W. PAINTER
..........................................
JONATHAN W. PAINTER
Attorney-in-Fact
</TABLE>
II-3
<PAGE> 89
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF THERMO BIOANALYSIS CORPORATION:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Thermo BioAnalysis Corporation included
in Thermo BioAnalysis 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 the basic consolidated financial statements taken as a whole. Thermo
BioAnalysis 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 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> 90
SCHEDULE II
THERMO BIOANALYSIS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT PROVISION BALANCE
BEGINNING ACCOUNTS CHARGED TO ACCOUNTS AT END
DESCRIPTION OF YEAR RECOVERED EXPENSE WRITTEN OFF OTHER (A) OF YEAR
- ------------------------------------ ---------- --------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
Allowance for Doubtful Accounts... $153 $ 15 $ -- $ (14) $ -- $ 154
YEAR ENDED DECEMBER 30, 1995
Allowance for Doubtful Accounts... $154 $ -- $ 2 $ (2) $ -- $ 154
YEAR ENDED DECEMBER 28, 1996
Allowance for Doubtful Accounts... $154 $ 9 $ 210 $(188) $ 806 $ 991
</TABLE>
- ---------------
(a) Allowances of businesses acquired during the year as described in Note 2 to
the Company's Consolidated Financial Statements and the effect of foreign
currency translation.
S-2
<PAGE> 91
EXHIBIT INDEX
Each exhibit listed below which is marked by an asterisk (*) is
incorporated by reference to the correspondingly numbered exhibit to the
Company's Registration Statement on Form S-1 (File No. 333-8697).
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------------------------------------------------------------
<S> <C> <C>
*2 -- Purchase Agreement dated as of February 5, 1996 by and among the Registrant,
Dynatech Corporation and certain of their respective affiliates. Pursuant to
Item 601(b)(2) of Regulation S-K, schedules to this Agreement have been
omitted. The Registrant hereby undertakes to furnish supplementally a copy
of such schedules to the Commission upon request.
*3.1 -- Certificate of Incorporation of the Registrant.
*3.2 -- By-Laws of the Registrant.
*4 -- Specimen Common Stock Certificate.
+5 -- Opinion of Seth H. Hoogasian, Esq. with respect to the validity of the
securities being offered.
*10.1 -- Corporate Services Agreement dated as of February 27, 1995 between Thermo
Electron Corporation ("Thermo Electron") and the Registrant.
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 Form 10-K for the fiscal year ended January 2,
1993 [File No. 1-8002]).
*10.3 -- Tax Allocation Agreement dated as of February 27, 1995 between Thermo
Electron and the Registrant.
10.4 -- Amended and Restated Master Repurchase Agreement dated as of December 28,
1996 between Thermo Electron and the Registrant (incorporated by reference
herein from Exhibit 10.4 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 28, 1996).
*10.5 -- Master Guarantee Reimbursement Agreement dated as of February 27, 1995 among
Thermo Electron, Thermo Instrument and the Registrant.
*10.6 -- Master Guarantee Reimbursement Agreement dated as of February 27, 1995
between Thermo Instrument and the Registrant.
*10.7 -- Equity Incentive Plan of the Registrant.
*10.8 -- Deferred Compensation Plan for Directors of the Registrant.
*10.9 -- Directors Stock Option Plan of the Registrant.
*10.10 -- Form of Indemnification Agreement for Officers and Directors.
*10.11 -- Asset Transfer Agreement dated as of February 27, 1995 between Thermo
Instrument and the Registrant.
*10.12 -- Asset Transfer Agreement dated as of February 27, 1995 between Thermo
Separation Products Inc. and the Registrant.
*10.13 -- Exclusive License Agreement dated as of February 27, 1995 between Thermo
Separation Products Inc. and the Registrant.
*10.14 -- Exclusive License Agreement dated as of February 27, 1995 between the
Registrant and Thermo Separation Products Inc.
*10.15 -- Manufacturing Agreement dated as of February 27, 1995 between Thermo
Separation Products Inc. and the Registrant.
*10.16 -- Note Purchase Agreement dated as of July 22, 1996 between Thermo Instrument
and the Registrant.
*10.17 -- $50,000,000 Principal Amount 4.875% Convertible Subordinated Note due 2001
dated July 22, 1996.
*10.18 -- Asset and Share Purchase Agreement dated as of July 22, 1996 among SID
Instruments Inc., HB Instruments Inc., the Registrant and Thermo Instrument.
*10.19 -- Asset Purchase Agreement dated as of July 22, 1996 among Thermo Labsystems
Limited, FI Instruments Inc., Thermo Fast UK Limited, the Registrant and
Thermo Instrument.
10.20 -- Restated Stock Holding Assistance Plan and Form of Promissory Note
(incorporated by reference herein from Exhibit 10.20 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 28, 1996).
</TABLE>
<PAGE> 92
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------------------------------------------------------------
<S> <C> <C>
+10.21 -- Form of Securities Purchase Agreement between the Company and certain
purchasers of securities of the Company, including certain officers,
directors and affiliates of the Company, in private placements in March and
April 1995.
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.
11 -- Computation of Earnings per Share.
21 -- Subsidiaries of the Registrant (incorporated by reference herein from
Exhibit 21 to the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 28, 1996).
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Coopers & Lybrand.
23.3 -- Consent of Arthur Andersen LLP.
23.4 -- Consent of Arthur Andersen.
23.5 -- Consent of Seth H. Hoogasian, Esq. (included in Exhibit 5).
24 -- Power of Attorney. (See Signature Page of this Registration Statement).
</TABLE>
- ---------------
+ Previously filed.
<PAGE> 1
EXHIBIT 11
THERMO BIOANALYSIS CORPORATION
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------
DECEMBER 31, DECEMBER 30, DECEMBER 28,
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
COMPUTATION OF PRIMARY EARNINGS (LOSS) PER
SHARE:
Net Income (Loss)(a)............................ $2,400,000 $2,514,000 $ (436,000)
------ ------ ------
Shares:
Weighted average shares outstanding........... 6,500,000 7,693,637 8,542,324
Add: Shares issuable from assumed exercise of
options (as determined by the application
of the treasury stock method).............. 117,450 117,450 58,725
------ ------ ------
Weighted average shares, as adjusted(b)....... 6,617,450 7,811,087 8,601,049
------ ------ ------
Primary Earnings (Loss) per Share (a)/(b)....... $ .36 $ .32 $ (.05)
====== ====== ======
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Thermo BioAnalysis 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
March 31, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 of
our report dated July 19, 1996, on our audits of the financial statements of
Dynatech Medical Products Limited. We also consent to the reference to our firm
under the caption "Experts."
COOPERS & LYBRAND
Guernsey, Channel Islands
April 2, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To DYNEX Technologies Division of Dynatech 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
March 31, 1997
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Affinity Sensors and LabSystems Divisions of Fisons plc:
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
Cambridge, England
March 31, 1997
