SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________________________________________
FORM 10-K
(mark one)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 28, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-12179
THERMO BIOANALYSIS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 85-0429899
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
504 Airport Road
Santa Fe, New Mexico 87504-2108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on which registered
---------------------------- ------------------------------------
Common Stock, $.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to the filing requirements for at least the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy
or information statements incorporated by reference into Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of
the Registrant as of January 24, 1997, was approximately $40,240,275.
As of January 24, 1997, the Registrant had 9,771,500 shares of Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year
ended December 28, 1996, are incorporated by reference into Parts I and
II.
Portions of the Registrant's definitive Proxy Statement for the Annual
Meeting of Shareholders to be held on June 2, 1997, are incorporated by
reference into Part III.
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PART I
Item 1. Business
(a) General Development of Business
Thermo BioAnalysis Corporation (the Company or the Registrant)
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 (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 was incorporated in February 1995 as a wholly
owned subsidiary of Thermo Instrument Systems Inc. (Thermo Instrument).
Thermo Instrument is a publicly traded, majority-owned subsidiary of
Thermo Electron Corporation (Thermo Electron).
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-cloing 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.
In September 1996, the Company commenced an initial public offering
of 1,670,000 shares of its common stock at $14.00 per share for net
proceeds of $20.8 million. As of December 28, 1996, Thermo Instrument
owned 6,500,000 shares of the common stock of the Company, representing
67% of such stock outstanding. Thermo Instrument develops, manufactures,
and markets instruments used to detect and measure air pollution,
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radioactivity, complex chemical compounds, toxic metals, and other
elements in a broad range of liquids and solids, as well as to control
and monitor various industrial processes. As of December 28, 1996, Thermo
Electron owned 59,200 shares of the common stock of the Company,
representing .61% of such stock outstanding. These shares were purchased
during 1996* in the open market for a total purchase price of $809,000.
Thermo Electron is a world leader in environmental monitoring and
analysis instruments, biomedical products such as heart-assist devices
and mammography systems, papermaking and paper-recycling equipment,
biomass electric power generation, and other specialized products and
technologies. Thermo Electron also provides a range of services related
to environmental quality.
Forward-looking Statements
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Annual Report
on Form 10-K. For this purpose, any statements contained herein that are
not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes,"
"anticipates," "plans," "expects," "seeks," "estimates," and similar
expressions are intended to identify forward-looking statements. There
are a number of important factors that could cause the results of the
Company to differ materially from those indicated by such forward-looking
statements, including those detailed under the caption "Forward-looking
Statements" in the Registrant's 1996 Annual Report to Shareholders
incorporated herein by reference.
(b) Financial Information About Industry Segments
The Company conducts business in one industry segment.
(c) Description of Business
(i) Principal Products and Services
The Company designs, manufactures, and markets instruments and
information management systems for use in biochemical research and
production, as well as in clinical diagnostics. The Company markets and
distributes its products through a number of channels, including a direct
sales force, independent sales representatives, distributors, and 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.
The Company focuses on three principal product areas:
Life Sciences Instrumentation. The Company markets a broad range of
instruments and consumables based on proprietary immunoassay, optical
biosensor, mass spectrometry, and capillary electrophoresis (CE)
technologies.
* References to 1996, 1995, and 1994 herein are for the fiscal years
ended December 28, 1996, December 30, 1995, and December 31, 1994,
respectively.
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Information Management Systems. The Company offers laboratory
information management systems (LIMS) and chromatography data systems
(CDS) for use in laboratories and clinical testing facilities. The
Company's information management systems are designed to facilitate
the monitoring and analysis of samples throughout the laboratory or
clinical lifecycle.
Health Physics Instrumentation. The Company markets radiation
detection instrumentation and complete radiation monitoring systems
for use in and around nuclear power plants and other facilities where
radioactive materials are used.
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
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.
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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 (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
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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.
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 $40,623,000, $6,308,000,
and $6,467,000 in 1996, 1995, and 1994, respectively.
Information Management Systems
The Company's LabSystems subsidiary designs, develops, and supports
LIMS and 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.
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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 $14,809,000, $16,226,000, and
$18,660,000 in 1996, 1995, and 1994, respectively.
(ii) New Products
The Company's business includes the research and development of new
products. (see "Principal Products and Services.")
(iii) Raw Materials
Raw materials, components, and supplies purchased by the Company are
either available from a number of different suppliers or from alternative
sources that could be developed without a material adverse effect on the
Company. To date, the Company has experienced no difficulties in
obtaining these materials.
(iv) Patents, Licenses, and Trademarks
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.
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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.
(v) Seasonal Influences
There are no significant seasonal influences on the Company's sales
of its products and services.
(vi) Working Capital Requirements
There are no special inventory requirements or credit terms extended
to customers that would have a material adverse effect on the Company's
working capital.
(vii) Dependency on a Single Customer
No single customer accounted for more than 10% of the Company's
total revenues in any of the past three years.
(viii) Backlog
The backlog of firm orders was $13.6 million and $2.5 million as of
December 28, 1996, and December 30, 1995, respectively. The Company
believes that substantially all of its 1996 backlog will be completed
during 1997.
(ix) Government Contracts
Less than 10% of the Company's total revenues in 1996 were derived
from contracts or subcontracts with the federal government, which are
subject to renegotiation of profits or termination. The Company does not
have any knowledge of threatened or pending renegotiations or
terminations.
(x) 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
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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.
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(xi) Research and Development
During 1996, 1995, and 1994, the Company expended approximately
$7,298,000, $1,325,000, and $2,042,000, respectively, on internally
sponsored research and development programs.
(xii) Environmental Protection Regulations
The Company believes that compliance by the Company with federal,
state, and local environmental regulations will not have a material
adverse effect on its capital expenditures, earnings, or competitive
position.
(xiii) Number of Employees
As of December 28, 1996, the Company had a total of 483 employees.
(d) Financial Information about Exports by Domestic Operations and
About Foreign Operations
Financial information about exports by domestic operations and about
foreign operations is summarized in Note 8 to Consolidated Financial
Statements in the Company's 1996 Annual Report to Shareholders and is
incorporated herein by reference.
(e) Executive Officers of the Registrant
Present Title (Year First
Name Age Became Executive Officer)
------------------- --- ----------------------------------------
Barry S. Howe 41 Chief Executive Officer and President
(1995)
Donald W. Hanna 40 Vice President (1995)
John N. Hatsopoulos 62 Vice President and Chief Financial
Officer (1995)
Paul F. Kelleher 54 Chief Accounting Officer (1995)
Each executive officer serves until his successor is chosen or
appointed by the Board of Directors and qualified or until earlier
resignation, death, or removal. Messrs. Hatsopoulos and Kelleher have
held comparable positions for at least five years with Thermo Instrument
and Thermo Electron. Mr. Howe has been Chief Executive Officer,
President, and a Director of the Company since its inception in February
1995. Prior to joining the Company, Mr. Howe was President of Thermo
Instrument's Thermo Separation Products Inc. subsidiary and its
predecessor, a manufacturer of liquid chromatography instruments, from
September 1989 to December 1995. Mr. Hanna has been Vice President of the
Company since its inception in February 1995, and has been President of
the Company's Eberline subsidiary since 1994. Prior to joining the
Company, 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.
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Item 2. Properties
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.
Item 3. Legal Proceedings
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
Information concerning the market and market price for the
Registrant's common stock, $.01 par value, and dividend policy is
included under the sections labeled "Common Stock Market Information" and
"Dividend Policy" in the Registrant's 1996 Annual Report to Shareholders
and is incorporated herein by reference.
Item 6. Selected Financial Data
The information required under this item is included under the
sections labeled "Selected Financial Information" and "Dividend Policy"
in the Registrant's 1996 Annual Report to Shareholders and is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required under this item is included under the
heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Registrant's 1996 Annual Report to
Shareholders and is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The Registrant's Consolidated Financial Statements and
Supplementary Data are included in the Registrant's 1996 Annual Report to
Shareholders and are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
Not applicable.
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Item 10. Directors and Executive Officers of the Registrant
The information concerning directors required under this item is
incorporated herein by reference from the material contained under the
caption "Election of Directors" in the Registrant's definitive proxy
statement to be filed with the Securities and Exchange Commission
pursuant to Regulation 14A, not later than 120 days after the close of
the fiscal year. The information concerning delinquent filers pursuant to
Item 405 of Regulation S-K is incorporated herein by reference from the
material contained under the heading "Section 16(a) Beneficial Ownership
Reporting Compliance" under the caption "Stock Ownership" in the
Registrant's definitive proxy statement to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A, not later than 120
days after the close of the fiscal year.
Item 11. Executive Compensation
The information required under this item is incorporated herein by
reference from the material contained under the caption "Executive
Compensation" in the Registrant's definitive proxy statement to be filed
with the Securities and Exchange Commission pursuant to Regulation 14A,
not later than 120 days after the close of the fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required under this item is incorporated herein by
reference from the material contained under the caption "Stock Ownership"
in the Registrant's definitive proxy statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, not later
than 120 days after the close of the fiscal year.
Item 13. Certain Relationships and Related Transactions
The information required under this item is incorporated herein by
reference from the material contained under the caption "Relationship
with Affiliates" in the Registrant's definitive proxy statement to be
filed with the Securities and Exchange Commission pursuant to Regulation
14A, not later than 120 days after the close of the fiscal year.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a,d) Financial Statements and Schedules
(1)The consolidated financial statements set forth in the list
below are filed as part of this Report.
(2)The consolidated financial statement schedule set forth in
the list below is filed as part of this Report.
(3)Exhibits filed herewith or incorporated herein by reference
are set forth in Item 14(c) below.
List of Financial Statements and Schedules Referenced in this
Item 14
Information incorporated by reference from Exhibit 13 filed
herewith:
Consolidated Statement of Operations
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Shareholders' Investment
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
Financial Statement Schedules filed herewith:
Schedule II: Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable
or not required, or because the required information is shown
either in the financial statements or in the notes thereto.
(b) Reports on Form 8-K
None.
(c) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: March 17, 1997 THERMO BIOANALYSIS CORPORATION
By: Barry S. Howe
---------------------------------
Barry S. Howe
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities indicated, as of March 17,
1997.
Signature Title
--------- -----
By: Barry S. Howe President, Chief Executive Officer,
-------------------------
Barry S. Howe and Director
By: John N. Hatsopoulos Vice President and Chief Financial
-------------------------
John N. Hatsopoulos Officer
By: Paul F. Kelleher Chief Accounting Officer
-------------------------
Paul F. Kelleher
By: Richard W. K. Chapman Chairman of the Board and Director
-------------------------
Richard W. K. Chapman
By: Elias P. Gyftopoulos Director
-------------------------
Elias P. Gyftopoulos
By: Denis A. Helm Vice Chairman of the Board and
-------------------------
Denis A. Helm Director
By: Jonathan W. Painter Director
-------------------------
Jonathan W. Painter
By: Arvin H. Smith Director
-------------------------
Arvin H. Smith
By: Arnold N. Weinberg Director
-------------------------
Arnold N. Weinberg
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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 included in Thermo
BioAnalysis Corporation's Annual Report to Shareholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated
February 11, 1997. Our audits were made for the purpose of forming an
opinion on those statements taken as a whole. The schedule listed in Item
14 on page 13 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. The schedule has been subjected to the auditing procedures
applied in the audits of the basic consolidated financial statements and,
in our opinion, fairly states in all material respects the consolidated
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
February 11, 1997
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SCHEDULE II
THERMO BIOANALYSIS CORPORATION
Valuation and Qualifying Accounts
(In thousands)
Balance Provision Balance
at Charged Accounts at
Beginning Accounts to Written End of
Description of Year Recovered Expense Off Other(a) Year
- ------------------------------------------------------------------------------
Year Ended
December 28, 1996
Allowance for
Doubtful
Accounts $ 154 $ 9 $ 210 $(188) $ 806 $ 991
Year Ended
December 30, 1995
Allowance for
Doubtful
Accounts $ 154 $ - $ 2 $ (2) $ - $ 154
Year Ended
December 31, 1994
Allowance for
Doubtful
Accounts $ 153 $ 15 $ - $ (14) $ - $ 154
(a) Allowances of businesses acquired during the year as described in Note 2 to
Consolidated Financial Statements in the Registrant's 1996 Annual Report to
Shareholders and the effect of foreign currency translation.
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
2* Purchase Agreement dated as of February 5, 1996, by and among
the Company, Dynatech Corporation, and certain of their
respective affiliates.
3.1* Certificate of Incorporation of the Company.
3.2* By-Laws of the Company.
4* Form of Common Stock Certificate.
10.1* Corporate Services Agreement dated as of February 27, 1995,
between Thermo Electron Corporation ("Thermo Electron") and
the Company.
10.2 Thermo Electron Corporate Charter, as amended and restated
effective January 3, 1993 (incorporated by reference herein
from Exhibit 10.1 to Thermo Electron's Annual Report on 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 Company.
10.4 Amended and Restated Master Repurchase Agreement dated as of
December 28, 1996, between Thermo Electron and the Company.
10.5* Master Guarantee Reimbursement Agreement dated as of February
27, 1995, among Thermo Electron, Thermo Instrument and the
Company.
10.6* Master Guarantee Reimbursement Agreement dated as of February
27, 1995, between Thermo Instrument and the Company.
10.7* Equity Incentive Plan of the Company.
In addition to the stock-based compensation plans of the
Company, the executive officers of the Company may be granted
awards under stock-based compensation plans of Thermo
Electron and Thermo Instrument for services rendered to the
Company 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.
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
10.8* Deferred Compensation Plan for Directors of the Company.
10.9* Directors Stock Option Plan of the Company.
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 Company.
10.12* Asset Transfer Agreement dated as of February 27, 1995,
between Thermo Separation Products Inc. and the Company.
10.13* Exclusive License Agreement dated as of February 27, 1995,
between Thermo Separation Products Inc. and the Company.
10.14* Exclusive License Agreement dated as of February 27, 1995,
between the Company and Thermo Separation Products Inc.
10.15* Manufacturing Agreement dated as of February 27, 1995,
between Thermo Separation Products Inc. and the Company.
10.16* Note Purchase Agreement dated as of July 22, 1996, between
Thermo Instrument and the Company.
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 Company
and Thermo Instrument.
10.19* Asset Purchase Agreement dated as of July 22, 1996, among
Thermo LabSystems Limited, FI Instruments Inc., Thermo FAST
U.K. Limited, the Company, and Thermo Instrument.
10.20 Restated Stock Holding Assistance Plan and Form of Promissory
Note.
11 Statement re: Computation of Earnings per Share.
13 Annual Report to Shareholders for the year ended December
28, 1996 (only those portions incorporated herein by
reference).
21 Subsidiaries of the Company.
27 Financial Data Schedule.
Each exhibit above which is marked with 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].
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Exhibit 10.4
AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
The Master Repurchase Agreement dated as of February 27,
1995 between Thermo Electron Corporation, a Delaware corporation
("Seller"), and Thermo BioAnalysis Corporation, a Delaware
corporation (the "Buyer"), is hereby amended and restated in its
entirety as follows on and as of December 28, 1996.
1. Applicability
From time to time Buyer and Seller may enter into
transactions in which Seller agrees to transfer to Buyer certain
securities and/or financial instruments ("Securities") against
the transfer of funds by Buyer, with a simultaneous agreement by
Buyer to transfer to Seller such Securities on demand, against
the transfer of funds by Seller. Each such transaction shall be
referred to herein as a "Transaction" and shall be governed by
this Agreement, unless otherwise agreed in writing.
2. Definitions
(a) "Act of Insolvency", with respect to either party (i)
the commencement by such party as debtor of any case or
proceeding under any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar law, or such party seeking
the appointment of a receiver, trustee, custodian or similar
official for such party or any substantial part of its property;
or (ii) the commencement of any such case or proceeding against
such party, or another seeking such an appointment, which (A) is
consented to or not timely contested by such party, (B) results
in the entry of an order for relief, such an appointment or the
entry of an order having a similar effect, or (C) is not
dismissed within 15 days; or (iii) the making by a party of a
general assignment for the benefit of creditors; or (iv) the
admission in writing by a party of such party's inability to pay
such party's debts as they become due;
(b) "Additional Purchased Securities", Securities provided
by Seller to Buyer pursuant to Paragraph 4(a) hereof;
(c) "Income", with respect to any Security at any time, any
principal thereof then payable and all interest, dividends or
other distributions thereon;
(d) "Market Value", with respect to any Securities as of
any date, the price for such Securities on such date obtained
from a generally recognized source agreed to by the parties or
the most recent closing bid quotation from such a source, plus
accrued Income to the extent not included therein (other than any
Income transferred to Seller pursuant to Paragraph 6 hereof) as
of such date (unless contrary to market practice for such
Securities);
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(e) "Other Buyers", third parties that have entered into an
agreement with Seller that is substantially similar to this
Agreement;
(f) "Pricing Rate", a rate equal to the Commercial Paper
Composite rate for 90-day maturities provided by Merrill Lynch,
Pierce, Fenner & Smith Incorporated (or, if such rate is not
available, a substantially equivalent rate agreed to by Buyer and
Seller) plus 25 basis points, which rate shall be adjusted on the
first business day of each fiscal quarter and shall be in effect
for the entirety such fiscal quarter;
(g) "Purchase Price", the price at which Purchased
Securities are transferred by Seller to Buyer;
(h) "Purchased Securities", the Securities transferred by
Seller to Buyer in a Transaction hereunder, and any Securities
substituted therefor in accordance with Paragraph 9 hereof. The
term "Purchased Securities" with respect to any Transaction at
any time also shall include Additional Purchase Securities
transferred pursuant to Paragraph 4(a) and shall exclude
Securities returned pursuant to Paragraph 4(b);
(i) "Repurchase Collateral Account", a book account
maintained by Seller containing, among other Securities, the
Purchased Securities; and
(j) "Repurchase Price", for any Purchased Security, an
amount equal to the Purchase Price paid by Buyer to Seller for
such Purchased Security.
3. Transactions
(a) A Transaction may be initiated by Buyer upon the
transfer of the Purchase Price to Seller's account. Upon such
transfer, Seller shall transfer to Buyer Purchased Securities
having a Market Value equal to 103% of the Purchase Price.
(b) Purchased Securities shall be held in custody for Buyer
by Seller in the Repurchase Collateral Account. Seller shall
indicate on its books for such account Buyer's ownership of the
Purchased Securities. Upon reasonable request from Buyer, Seller
shall provide Buyer with a complete list of Purchased Securities
owned by Buyer.
(c) Upon demand by Buyer or Seller, Seller shall repurchase
from Buyer, and Buyer shall sell to Seller, for the Repurchase
Price all or any part of the Purchased Securities then owned by
Buyer.
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4. Margin Maintenance
(a) If at any time the aggregate Market Value of all
Purchased Securities then owned by Buyer is less than 103% of the
aggregate Repurchase Price for such Purchased Securities, then
Seller shall transfer to Buyer additional Securities ("Additional
Purchased Securities"), so that the aggregate Market Value of
such Purchased Securities, including any such Additional
Purchased Securities, will thereupon equal or exceed 103% of such
aggregate Repurchase Price.
(b) If at any time the aggregate Market Value of all
Purchased Securities then owned by Buyer exceeds 103% of the
aggregate Repurchase Price for such Purchased Securities, then
Seller may transfer Purchased Securities to Seller, so that the
aggregate Market Value of such Purchased Securities will
thereupon not exceed 103% of such aggregate Repurchase Price.
5. Interest Payments
If during any fiscal month Buyer owned Purchased Securities,
then on the first day of the next following fiscal month Seller
shall pay to Buyer an amount equal to the sum of the aggregate
Repurchase Prices of the Purchased Securities owned by Buyer at
the close of each day during the preceding fiscal month divided
by the number of days in such month and the product multiplied by
the Pricing Rate times the number of days in such month divided
by 360.
6. Income Payments and Voting Rights
Where a particular Transaction's term extends over an Income
payment date on the Purchased Securities subject to that
Transaction, Buyer shall, on the date such Income is payable,
transfer to Seller an amount equal to such Income payment or
payments with respect to any Purchased Securities subject to such
Transaction. Seller shall retain all voting rights with respect
to Purchased Securities sold to Buyer under this Agreement.
7. Security Interest
Although the parties intend that all Transactions hereunder
be sales and purchases and not loans, in the event any such
Transactions are deemed to be loans, Seller shall be deemed to
have pledged to Buyer as security for the performance by Seller
of its obligations under each such Transaction and this
Agreement, and shall be deemed to have granted to Buyer a
security interest in, all of the Purchased Securities with
respect to all Transactions hereunder and all proceeds thereof.
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8. Payment and Transfer
Unless otherwise mutually agreed, all transfers of funds
hereunder shall be in immediately available funds. As used
herein with respect to Securities, "transfer" is intended to have
the same meaning as when used in Section 8-313 of the
Massachusetts Uniform Commercial Code or, where applicable, in
any federal regulation governing transfers of the Securities.
9. Substitution
Buyer hereby grants Seller the authority to manage, in
Seller's sole discretion, the Purchased Securities held in
custody for Buyer by Seller in the Repurchase Collateral Account.
Buyer expressly agrees that Seller may (i) substitute other
Securities for any Purchased Securities and (ii) commingle
Purchased Securities with other Securities held in the Repurchase
Collateral Account. Substitutions shall be made by transfer to
Buyer of such other Securities and transfer to Seller of the
Purchased Securities for which substitution is being made. After
substitution, the substituted Securities shall be deemed to be
Purchased Securities. Securities which are substituted for
Purchased Securities shall have a Market Value at the time of
substitution equal to or greater than the Market Value of the
Purchase Securities for which such Securities were substituted.
10. Representations
Each of Buyer and Seller represents and warrants to the
other that (i) it is duly authorized to execute and deliver this
Agreement, to enter into the Transactions contemplated hereunder
and to perform its obligations hereunder and has taken all
necessary action to authorize such execution, delivery and
performance, (ii) the person signing this Agreement on its behalf
is duly authorized to do so on its behalf, (iii) it has obtained
all authorizations of any governmental body required in
connection with this Agreement and the Transactions hereunder and
such authorizations are in full force and effect and (iv) the
execution, delivery and performance of this Agreement and the
Transactions hereunder will not violate any law, ordinance,
charter, by-law or rule applicable to it or any agreement by
which it is bound or by which any of its assets are affected. On
the date for any Transaction Buyer and Seller shall each be
deemed to repeat all the foregoing representations made by it.
11. Events of Default
In the event that (i) Seller fails to repurchase or Buyer
fails to transfer Purchased Securities upon demand for repurchase
from either Buyer or Seller, (ii) Seller or Buyer fails, after
one business day's notice, to comply with Paragraph 4 hereof,
(iii) Buyer fails to make payment to Seller pursuant to Paragraph
6 hereof, (iv) Seller fails to comply with Paragraph 5 hereof,
(v) an Act of Insolvency occurs with respect to Seller or Buyer,
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(vi) any representation made by Seller or Buyer shall have been
incorrect or untrue in any material respect when made or repeated
or deemed to have been made or repeated, or (vii) Seller or Buyer
shall admit to the other its inability to, or its intention not
to, perform any of its obligations hereunder (each an "Event of
Default"):
(a) At the option of the nondefaulting party, exercised by
written notice to the defaulting party (which option shall be
deemed to have been exercised, even if no notice is given,
immediately upon the occurrence of any Act of Insolvency), Seller
shall become obligated to repurchase, and Buyer shall become
obligated to sell, all Purchased Securities then owned by Buyer
for the Repurchase Price of such Purchased Securities.
(b) If Seller is the defaulting party and Buyer exercises
or is deemed to have exercised the option referred to in
subparagraph (a) of this Paragraph, (i) the Seller's obligations
hereunder to repurchase all Purchased Securities in such
Transactions shall thereupon become immediately due and payable,
(ii) all Income paid after such exercise or deemed exercise shall
be retained by Buyer and applied to the aggregate unpaid
Repurchase Prices owed by Seller, and (iii) Seller shall
immediately deliver to Buyer any Purchased Securities subject to
such Transactions then in Seller's possession.
(c) In all Transactions in which Buyer is the defaulting
party, upon tender by Seller of payment of the aggregate
Repurchase Prices for all such Transactions, Buyer's right, title
and interest in all Purchased Securities subject to such
Transactions shall be deemed transferred to Seller, and Buyer
shall deliver all such Purchased Securities to Seller.
(d) After one business day's notice to the defaulting party
(which notice need not be given if an Act of Insolvency shall
have occurred, and which may be the notice given under
subparagraph (a) of this Paragraph or the notice referred to in
clause (ii) of the first sentence of this Paragraph), the
nondefaulting party may:
(i) as to Transactions in which Seller is the
defaulting party, (A) immediately sell, in a recognized market at
such price or prices as Buyer may reasonably deem satisfactory,
any or all Purchased Securities subject to such Transactions and
apply the proceeds thereof to the aggregate unpaid Repurchase
Prices and any other amounts owing by Seller hereunder or (B) in
its sole discretion elect, in lieu of selling all or a portion of
such Purchased Securities, to give Seller credit for such
Purchased Securities in an amount equal to the price therefor on
such date, obtained from a generally recognized source or the
most recent closing bid quotation from such a source, against the
aggregate unpaid Repurchase Prices and any other amounts owing by
Seller hereunder; and
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(ii) as to Transactions in which Buyer is the
defaulting party, (A) purchase securities ("Replacement
Securities") of the same class and amount as any Purchased
Securities that are not delivered by Buyer to Seller as required
hereunder or (B) in its sole discretion elect, in lieu of
purchasing Replacement Securities, to be deemed to have purchased
Replacement Securities at the price therefor on such date,
obtained from a generally recognized source or the most recent
closing bid quotation from such a source.
(e) As to Transactions in which Buyer is the defaulting
party, Buyer shall be liable to Seller (i) with respect to
Purchased Securities (other than Additional Purchased
Securities), for any excess of the price paid (or deemed paid) by
Seller for Replacement Securities therefor over the Repurchase
Price for such Purchased Securities and (ii) with respect to
Additional Purchased Securities, for the price paid (or deemed
paid) by Seller for the Replacement Securities therefor.
(g) The defaulting party shall be liable to the
nondefaulting party for the amount of all reasonable legal or
other expenses incurred by the nondefaulting party in connection
with or as a consequence of an Event of Default.
(h) The nondefaulting party shall have, in addition to its
rights hereunder, any rights otherwise available to it under any
other agreement or applicable law.
12. Single Agreement
Buyer and Seller acknowledge that, and have entered hereinto
and will enter into each Transaction hereunder in consideration
of and in reliance upon the fact that, all Transactions hereunder
constitute a single business and contractual relationship and
have been made in consideration of each other. Accordingly, each
of Buyer and Seller agrees (i) to perform all of its obligations
in respect of each Transaction hereunder, and that a default in
the performance of any such obligations shall constitute a
default by it in respect of all Transactions hereunder, (ii) that
each of them shall be entitled to set off claims and apply
property held by them in respect of any Transaction against
obligations owing to them in respect of any other Transactions
hereunder and (iii) that payments, deliveries and other transfers
made by either of them in respect of any Transaction shall be
deemed to have been made in consideration of payments, deliveries
and other transfers in respect of any other Transactions
hereunder, and the obligations to make any such payments,
deliveries and other transfers may be applied against each other
and netted.
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13. Entire Agreement; Severability
This Agreement shall supersede any existing agreements
between the parties containing general terms and conditions for
repurchase transactions. Each provision and agreement and
agreement herein shall be treated as separate and independent
from any other provision or agreement herein and shall be
enforceable notwithstanding the unenforceability of any such
other provision or agreement.
14. Non-assignability; Termination
The rights and obligations of the parties under this
Agreement and under any Transactions shall not be assigned by
either party without the prior written consent of the other
party. Subject to the foregoing, this Agreement and any
Transactions shall be binding upon and shall inure to the benefit
of the parties and their respective successors and assigns. This
Agreement may be canceled by either party upon giving written
notice to the other, except that this Agreement shall,
notwithstanding such notice, remain applicable to any
Transactions then outstanding.
15. Governing Law
This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts without giving effect to the
conflict of law principles thereof.
16. No Waivers, Etc.
No express or implied waiver of any Event of Default by
either party shall constitute a waiver of any other Event of
Default and no exercise of any remedy hereunder by any party
shall constitute a wavier of its right to exercise any other
remedy hereunder. No modification or waiver of any provision of
this Agreement and no consent by any party to a departure
herefrom shall be effective unless and until such shall be in
writing and duly executed by both of the parties hereto.
17. Intent
(a) The parties recognize that each Transaction is a
"repurchase agreement" as that term is defined in Section 101 of
Title 11 of the United States Code, as amended (except insofar as
the type of Securities subject to such Transaction or the term of
such Transaction would render such definition inapplicable), and
a "securities contract" as that term is defined in Section 741 of
Title 11 of the United States Code, as amended.
(b) It is understood that either party's right to liquidate
Securities delivered to it in connection with Transactions
hereunder or to exercise any other remedies pursuant to Paragraph
11 hereof, is a contractual right to liquidate such Transaction
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as described in Sections 555 and 559 of Title 11 of the United
States Code, as amended.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of December 28, 1996.
THERMO ELECTRON CORPORATION THERMO BIOANALYSIS CORPORATION
By: Jonathan W. Painter By: Barry S. Howe
Name: Jonathan W. Painter Name: Barry S. Howe
Title: Treasurer Title: President
8
Exhibit 10.20
THERMO BIOANALYSIS CORPORATION
RESTATED STOCK HOLDING ASSISTANCE PLAN
SECTION 1. Purpose.
The purpose of this Plan is to benefit Thermo BioAnalysis
Corporation (the "Company") and its stockholders by encouraging
Key Employees to acquire and maintain share ownership in the
Company, by increasing such employees' proprietary interest in
promoting the growth and performance of the Company and its
subsidiaries and by providing for the implementation of the Stock
Holding Policy.
SECTION 2. Definitions.
The following terms, when used in the Plan, shall have the
meanings set forth below:
Committee: The Human Resources Committee of the Board of
Directors of the Company as appointed from time to time.
Common Stock: The common stock of the Company and any
successor thereto.
Company: Thermo BioAnalysis Corporation, a Delaware
corporation.
Stock Holding Policy: The Stock Holding Policy of the
Company, as adopted by the Committee and as in effect from time
to time.
Key Employee: Any employee of the Company or any of its
subsidiaries, including any officer or member of the Board of
Directors who is also an employee, as designated by the
Committee, and who, in the judgment of the Committee, will be in
a position to contribute significantly to the attainment of the
Company's strategic goals and long-term growth and prosperity.
Loans: Loans extended to Key Employees by the Company
pursuant to this Plan.
Plan: The Thermo BioAnalysis Corporation Stock Holding
Assistance Plan, as amended from time to time.
SECTION 3. Administration.
The Plan and the Stock Holding Policy shall be administered
by the Committee, which shall have authority to interpret the
Plan and the Stock Holding Policy and, subject to their
provisions, to prescribe, amend and rescind any rules and
regulations and to make all other determinations necessary or
desirable for the administration thereof. The Committee's
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interpretations and decisions with regard to the Plan and the
Stock Holding Policy and such rules and regulations as may be
established thereunder shall be final and conclusive. The
Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or the Stock Holding
Policy, or in any Loan in the manner and to the extent the
Committee deems desirable to carry it into effect. No member of
the Committee shall be liable for any action or omission in
connection with the Plan or the Stock Holding Policy that is made
in good faith.
SECTION 4. Loans and Loan Limits.
The Committee has determined that the provision of Loans
from time to time to Key Employees in such amounts as to cause
such Key Employees to comply with the Stock Holding Policy is, in
the judgment of the Committee, reasonably expected to benefit the
Company and authorizes the Company to extend Loans from time to
time to Key Employees in such amounts as may be requested by such
Key Employees in order to comply with the Stock Holding Policy.
Such Loans may be used solely for the purpose of acquiring Common
Stock (other than upon the exercise of stock options or under
employee stock purchase plans) in open market transactions or
from the Company.
Each Loan shall be full recourse and evidenced by a
non-interest bearing promissory note substantially in the form
attached hereto as Exhibit A (the "Note") and maturing in
accordance with the provisions of Section 6 hereof, and
containing such other terms and conditions, which are not
inconsistent with the provisions of the Plan and the Stock
Holding Policy, as the Committee shall determine in its sole and
absolute discretion.
SECTION 5. Federal Income Tax Treatment of Loans.
For federal income tax purposes, interest on Loans shall be
imputed on any interest free Loan extended under the Plan. A Key
Employee shall be deemed to have paid the imputed interest to the
Company and the Company shall be deemed to have paid said imputed
interest back to the Key Employee as additional compensation.
The deemed interest payment shall be taxable to the Company as
income, and may be deductible to the Key Employee to the extent
allowable under the rules relating to investment interest. The
deemed compensation payment to the Key Employee shall be taxable
to the employee and deductible to the Company, but shall also be
subject to employment taxes such as FICA and FUTA.
SECTION 6. Maturity of Loans.
Each Loan to a Key Employee hereunder shall be due and
payable on demand by the Company. If no such demand is made,
then each Loan shall mature and the principal thereof shall
become due and payable in five equal annual installments from the
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payment of annual cash incentive compensation (referred to as
bonus) to the Key Employee by the Company, beginning with the
first such bonus payment to occur after the date of the Note
evidencing the Loan, and on each of the next four bonus payment
dates, provided that the Committee may, in its sole and absolute
discretion, authorize such other maturity and repayment schedule
as the Committee may determine. Each Loan shall also become
immediately due and payable in full, without demand, upon the
occurrence of any of the events set forth in the Note; provided
that the Committee may, in its sole and absolute discretion,
authorize an extension of the time for repayment of a Loan upon
such terms and conditions as the Committee may determine.
SECTION 7. Amendment and Termination of the Plan.
The Committee may from time to time alter or amend the Plan
or the Stock Holding Policy in any respect, or terminate the Plan
or the Stock Holding Policy at any time. No such amendment or
termination, however, shall alter or otherwise affect the terms
and conditions of any Loan then outstanding to Key Employee
without such Key Employee's written consent, except as otherwise
provided herein or in the promissory note evidencing such Loan.
SECTION 8. Miscellaneous Provisions.
(a) No employee or other person shall have any claim or
right to receive a Loan under the Plan, and no employee shall
have any right to be retained in the employ of the Company due to
his or her participation in the Plan.
(b) No Loan shall be made hereunder unless counsel for the
Company shall be satisfied that such Loan will be in compliance
with applicable federal, state and local laws.
(c) The expenses of the Plan shall be borne by the Company.
(d) The Plan shall be unfunded, and the Company shall not
be required to establish any special or separate fund or to make
any other segregation of assets to assure the making of any Loan
under the Plan.
(e) Except as otherwise provided in Section 7 hereof, by
accepting any Loan under the Plan, each Key Employee shall be
conclusively deemed to have indicated his acceptance and
ratification of, and consent to, any action taken under the Plan
or the Stock Holding Policy by the Company, the Board of
Directors of the Company or the Committee.
(f) The appropriate officers of the Company shall cause to
be filed any reports, returns or other information regarding
Loans hereunder, as may be required by any applicable statute,
rule or regulation.
SECTION 9. Effective Date.
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The Plan and the Stock Holding Policy shall become effective
upon approval and adoption by the Committee.
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EXHIBIT A TO STOCK HOLDING ASSISTANCE PLAN
THERMO BIOANALYSIS CORPORATION
Promissory Note
$_________
Dated:____________
For value received, ________________, an individual whose
residence is located at _______________________ (the "Employee"),
hereby promises to pay to Thermo BioAnalysis Corporation (the
"Company"), or assigns, ON DEMAND, but in any case on or before
[insert date which is the fifth anniversary of date of issuance]
(the "Maturity Date"), the principal sum of [loan amount in
words] ($_______), or such part thereof as then remains unpaid,
without interest. Principal shall be payable in lawful money of
the United States of America, in immediately available funds, at
the principal office of the Company or at such other place as the
Company may designate from time to time in writing to the
Employee.
Unless the Company has already made a demand for payment in
full of this Note, the Employee agrees to repay the Company an
amount equal to 20% of the initial principal amount of the Note
from the payment of annual cash incentive compensation (referred
to as bonus) to the Employee by the Company, beginning with the
first such bonus payment to occur after the date of this Note,
and on each of the next four bonus payment dates. Any amount
remaining unpaid under this Note, if no demand has been made by
the Company, shall be due and payable on the Maturity Date.
This Note may be prepaid at any time or from time to time,
in whole or in part, without any premium or penalty. The
Employee acknowledges and agrees that the Company has advanced to
the Employee the principal amount of this Note pursuant to the
Company's Stock Holding Assistance Plan, and that all terms and
conditions of such Plan are incorporated herein by reference.
The unpaid principal amount of this Note shall be and become
immediately due and payable without notice or demand, at the
option of the Company, upon the occurrence of any of the
following events:
(a) the termination of the Employee's employment with
the Company, with or without cause, for any reason or for no
reason;
(b) the death or disability of the Employee;
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(c) the failure of the Employee to pay his or her
debts as they become due, the insolvency of the Employee, the
filing by or against the Employee of any petition under the
United States Bankruptcy Code (or the filing of any similar
petition under the insolvency law of any jurisdiction), or the
making by the Employee of an assignment or trust mortgage for the
benefit of creditors or the appointment of a receiver, custodian
or similar agent with respect to, or the taking by any such
person of possession of, any property of the Employee; or
(d) the issuance of any writ of attachment, by trustee
process or otherwise, or any restraining order or injunction not
removed, repealed or dismissed within thirty (30) days of
issuance, against or affecting the person or property of the
Employee or any liability or obligation of the Employee to the
Company.
In case any payment herein provided for shall not be paid
when due, the Employee further promises to pay all costs of
collection, including all reasonable attorneys' fees.
No delay or omission on the part of the Company in
exercising any right hereunder shall operate as a waiver of such
right or of any other right of the Company, nor shall any delay,
omission or waiver on any one occasion be deemed a bar to or
waiver of the same or any other right on any future occasion.
The Employee hereby waives presentment, demand, notice of
prepayment, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or
enforcement of this Note. The undersigned hereby assents to any
indulgence and any extension of time for payment of any
indebtedness evidenced hereby granted or permitted by the
Company.
This Note has been made pursuant to the Company's Stock
Holding Assistance Plan and shall be governed by and construed in
accordance with, such Plan and the laws of the State of Delaware
and shall have the effect of a sealed instrument.
_______________________________
Employee Name: _________________
________________________
Witness
Exhibit 11
THERMO BIOANALYSIS CORPORATION
Computation of Earnings per Share
Year Ended
-------------------------------------
Dec. 28, Dec. 30, Dec. 31,
1996 1995 1994
--------------------------------------------------------------------------
Computation of Primary
Earnings (Loss) per Share:
Net Income (Loss) (a) $ (436,000)$ 2,514,000 $ 2,400,000
Shares:
Weighted average
shares outstanding 8,542,324 7,693,637 6,500,000
Add: Shares issuable
from assumed
exercise of
options (as
determined by
the application
of the treasury
stock method) 58,725 117,450 117,450
----------- ----------- -----------
Weighted average
shares outstanding,
as adjusted (b) 8,601,049 7,811,087 6,617,450
----------- ----------- -----------
Primary Earnings (Loss)
per Share (a) / (b) $ (.05)$ .32 $ .36
=========== =========== ===========
Exhibit 13
THERMO BIOANALYSIS CORPORATION
Consolidated Financial Statements
1996
PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Consolidated Statement of Operations
(In thousands except per share amounts) 1996 1995 1994
-----------------------------------------------------------------------
Revenues (Notes 6 and 8) $71,649 $22,534 $25,127
------- ------- -------
Costs and Operating Expenses:
Cost of revenues (Note 6) 37,807 13,036 14,176
Selling, general, and administrative
expenses (Note 6) 20,987 4,804 5,054
Research and development expenses 7,298 1,325 2,042
Write-off of acquired technology
(Note 2) 3,500 - -
------- ------- -------
69,592 19,165 21,272
------- ------- -------
Operating Income 2,057 3,369 3,855
Interest Income 1,280 819 -
Interest Expense, Related Party (Note 6) (1,873) - -
------- ------- -------
Income Before Provision for Income Taxes 1,464 4,188 3,855
Provision for Income Taxes (Note 4) 1,900 1,674 1,455
------- ------- -------
Net Income (Loss) $ (436) $ 2,514 $ 2,400
======= ======= =======
Earnings (Loss) per Share $ (.05) $ .32 $ .36
======= ======= =======
Weighted Average Shares 8,601 7,811 6,617
======= ======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
2PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Consolidated Balance Sheet
(In thousands except share amounts) 1996 1995
------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $ 45,476 $ 17,747
Accounts receivable, less allowances of
$991 and $154 17,265 5,482
Inventories 14,592 5,968
Prepaid income taxes (Note 4) 2,319 673
Prepaid expenses 618 7
Due from parent company and affiliates 965 761
-------- --------
81,235 30,638
-------- --------
Property, Plant, and Equipment, at Cost, Net 5,547 1,654
-------- --------
Other Assets 3,098 195
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Note 2) 33,117 420
-------- --------
$122,997 $ 32,907
======== ========
Liabilities and Shareholders' Investment
Current Liabilities:
Accounts payable $ 4,282 $ 432
Accrued payroll and employee benefits 2,616 692
Accrued income taxes 2,775 1,665
Other accrued expenses (Note 2) 7,651 744
Deferred revenue 4,161 -
-------- --------
21,485 3,533
-------- --------
Deferred Income Taxes (Note 4) 196 228
-------- --------
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; 9,771,500 and 8,101,500 shares
issued and outstanding 98 81
Capital in excess of par value 47,882 26,917
Retained earnings 1,707 2,143
Cumulative translation adjustment 1,629 5
-------- --------
51,316 29,146
-------- --------
$122,997 $ 32,907
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
3PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Consolidated Statement of Cash Flows
(In thousands) 1996 1995 1994
------------------------------------------------------------------------
Operating Activities:
Net income (loss) $ (436) $ 2,514 $ 2,400
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 3,002 346 289
Provision for losses on accounts
receivable 210 - 15
Deferred income tax expense
(benefit) 10 (60) 279
Write-off of acquired technology
(Note 2) 3,500 - -
Changes in current accounts,
excluding the effects of
acquisitions:
Accounts receivable (2,091) 388 269
Inventories 548 (303) (1,265)
Other current assets 817 (698) (78)
Accounts payable 1,706 (384) (610)
Other current liabilities 1,323 (41) (540)
Other 34 - -
-------- -------- --------
Net cash provided by operating
activities 8,623 1,762 759
-------- -------- --------
Investing Activities:
Acquisitions, net of cash acquired
(Note 2) (50,698) - -
Purchases of property, plant, and
equipment (1,476) (313) (237)
Other - (183) -
-------- -------- --------
Net cash used in investing activities $(52,174) $ (496) $ (237)
-------- -------- --------
4PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Consolidated Statement of Cash Flows (continued)
(In thousands) 1996 1995 1994
------------------------------------------------------------------------
Financing Activities:
Net proceeds from issuance of Company
common stock (Note 7) $ 20,782 $ 14,918 $ -
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 - 1,930 1,670
Net transfer to parent company - (383) (2,185)
Other 58 - -
-------- -------- --------
Net cash provided by (used in)
financing activities 70,840 16,465 (515)
-------- -------- --------
Exchange Rate Effect on Cash 440 (5) -
-------- -------- --------
Increase in Cash and Cash Equivalents 27,729 17,726 7
Cash and Cash Equivalents at Beginning
of Year 17,747 21 14
-------- -------- --------
Cash and Cash Equivalents at End
of Year $ 45,476 $ 17,747 $ 21
======== ======== ========
Cash Paid For:
Interest $ 1,848 $ - $ -
Income taxes $ 536 $ 1,930 $ 1,670
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 $ - $ -
======== ======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
5PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Consolidated Statement of Shareholders' Investment
(In thousands) 1996 1995 1994
Common Stock, $.01 Par Value
Balance at beginning of year $ 81 $ - $ -
Capitalization of Company - 65 -
Net proceeds from issuance of
Company common stock (Note 7) 17 16 -
-------- -------- --------
Balance at end of year 98 81 -
-------- -------- --------
Capital in Excess of Par Value
Balance at beginning of year 26,917 - -
Capitalization of Company - 12,015 -
Net proceeds from issuance of
Company common stock (Note 7) 20,765 14,902 -
Tax benefit related to employees'
and directors' stock plans 200 - -
-------- -------- --------
Balance at end of year 47,882 26,917 -
-------- -------- --------
Retained Earnings
Balance at beginning of year 2,143 - -
Net income (loss) after
capitalization of Company (436) 2,143 -
-------- -------- --------
Balance at end of year 1,707 2,143 -
-------- -------- --------
Cumulative Translation Adjustment
Balance at beginning of year 5 - -
Translation adjustment 1,624 5 -
-------- -------- --------
Balance at end of year 1,629 5 -
-------- -------- --------
Net Parent Company Investment
Balance at beginning of year - 10,162 8,277
Net income prior to
capitalization of Company - 371 2,400
Net transfer (to) from parent
company - 1,547 (515)
Capitalization of Company - (12,080) -
-------- -------- --------
Balance at end of year - - 10,162
-------- -------- --------
Total Shareholders' Investment $ 51,316 $ 29,146 $ 10,162
======== ======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
6PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
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 1996, 1995, and 1994 are for the fiscal years
ended December 28, 1996, December 30, 1995, and December 31, 1994,
respectively.
Revenue Recognition
The Company recognizes 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.
7PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
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 establishment
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).
8PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
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.
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:
(In thousands) 1996 1995
----------------------------------------------------------------------
Raw materials and supplies $ 7,473 $ 3,501
Work in process 1,064 1,127
Finished goods 6,055 1,340
------- -------
$14,592 $ 5,968
======= =======
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:
(In thousands) 1996 1995
-----------------------------------------------------------------------
Land $ 285 $ 285
Buildings 2,603 2,603
Machinery, equipment, and leasehold improvements 9,241 3,429
------- -------
12,129 6,317
Less: Accumulated depreciation and amortization 6,582 4,663
------- -------
$ 5,547 $ 1,654
======= =======
9PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
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 $1,010,000 and $302,000 at year-end 1996 and
1995, respectively. The Company assesses the future useful life of this
asset whenever events or changes in circumstances indicate that the
current useful life has diminished. The Company considers the future
undiscounted cash flows of the acquired companies in assessing the
recoverability of this asset. If impairment has occurred, any excess of
carrying value over fair value is recorded as a loss.
Foreign Currency
All assets and liabilities of the Company's foreign subsidiaries are
translated at year-end exchange rates, and revenues and expenses are
translated at average exchange rates for the year in accordance with SFAS
No. 52, "Foreign Currency Translation." Resulting translation adjustments
are reflected as a separate component of shareholders' investment titled
"Cumulative translation adjustment." Foreign currency transaction gains
and losses are included in the accompanying statement of 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.
10PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
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.
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.
(In thousands except per share amounts) 1996 1995
-----------------------------------------------------------------------
Revenues $78,837 $80,803
Net income 570 822
Earnings per share .07 .11
The pro forma results are not necessarily indicative of future
operations or the actual results that would have occurred had the
11PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
2. Acquisitions (continued)
acquisitions of DYNEX, Affinity Sensors, and LabSystems been made at the
beginning of 1995.
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.
12PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
3. Employee Benefit Plans (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:
(In thousands except per share amounts) 1996 1995
------------------------------------------------------------------------
Net income (loss):
As reported $ (436) $2,514
Pro forma (863) 2,477
Earnings (loss) per share:
As reported (.05) .32
Pro forma (.10) .32
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:
1996 1995
-----------------------------------------------------------------------
Volatility 26% 26%
Risk-free interest rate 6.2% 6.5%
Expected life of options 8.1 years 3.5 years
13PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
3. Employee Benefit Plans (continued)
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.
Stock Option Activity
A summary of the Company's stock option activity is as follows:
1996 1995
---------------- -----------------
Weighted Weighted
Number Average Number Average
of Exercise of Exercise
(Shares in thousands) Shares Price Shares Price
--------------------------------------------------------------------------
Options outstanding,
beginning of year 30 $10.00 - $ -
Granted 713 11.28 30 10.00
Forfeited (26) 10.00 - -
----- -----
Options outstanding,
end of year 717 $11.27 30 $10.00
===== ====== ===== ======
Options exercisable 717 $11.27 - $ -
===== ====== ===== ======
Options available
for grant 183 70
===== =====
Weighted average fair
value per share of
options granted
during year $ 5.36 $ 2.93
====== ======
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
14PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
3. Employee Benefit Plans (continued)
contributions. For these plans, the Company contributed and charged to
expense $285,000, $128,000, and $169,000 in 1996, 1995, and 1994,
respectively. Effective December 31, 1994, the ESOP was split into two
plans: ESOP I, covering employees of Thermo Electron's corporate office and
its wholly owned subsidiaries and ESOP II, covering employees of 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:
(In thousands) 1996 1995 1994
-----------------------------------------------------------------------
Domestic $ 1,786 $ 3,828 $ 3,684
Foreign (322) 360 171
------- ------- -------
$ 1,464 $ 4,188 $ 3,855
======= ======= =======
The components of the provision for income taxes are as follows:
(In thousands) 1996 1995 1994
-----------------------------------------------------------------------
Currently payable:
Federal $ 487 $ 1,331 $ 939
State 93 284 237
Foreign 1,310 119 -
------- ------- -------
1,890 1,734 1,176
------- ------- -------
Net deferred (prepaid):
Federal 8 (50) 231
State 2 (10) 48
------- ------- -------
10 (60) 279
------- ------- -------
$ 1,900 $ 1,674 $ 1,455
======= ======= =======
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.
15PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
4. Income Taxes (continued)
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 34% in 1996 and 35% in 1995 and 1994 to income
before provision for income taxes due to the following:
(In thousands) 1996 1995 1994
----------------------------------------------------------------------
Provision for income taxes at
statutory rate $ 498 $1,466 $1,349
Increases (decreases) resulting from:
State income taxes, net of federal tax 63 178 185
Net foreign losses not benefited and
tax rate differential 229 (7) (60)
Tax benefit of foreign sales corporation (23) (6) (34)
Write-off of acquired technology (Note 2) 1,190 - -
Amortization of cost in excess of net
assets of acquired companies 6 6 6
Other, net (63) 37 9
------ ------ ------
$1,900 $1,674 $1,455
====== ====== ======
Prepaid income taxes and deferred income taxes in the accompanying
balance sheet consist of the following:
(In thousands) 1996 1995
--------------------------------------------------------------
Prepaid income taxes:
Reserves and accruals $1,872 $ 355
Inventory basis difference 370 256
Allowance for doubtful accounts 77 62
------ ------
$2,319 $ 673
====== ======
Deferred income taxes:
Depreciation $ 196 $ 228
====== ======
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.
16PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
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 $1,401,000, $69,000, and $71,000
in 1996, 1995, and 1994, 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 1.20% and 1.25% of the Company's revenues in
1995 and 1994, respectively. The annual fee is reviewed and adjusted
annually by mutual agreement of the parties. For these services, the
Company was charged $716,000, $270,000, and $314,000 in 1996, 1995, and
1994, respectively. The corporate services agreement is renewed annually
but can be terminated upon 30 days' prior notice by the Company or upon the
Company's withdrawal from the Thermo Electron Corporate Charter (the Thermo
Electron Corporate Charter defines the relationship among Thermo Electron
and its majority-owned subsidiaries). Management believes that the service
fee charged by Thermo Electron is reasonable and that such fees are
representative of the expenses the Company would have incurred on a
stand-alone basis. For additional items such as employee benefit plans,
insurance coverage, and other identifiable costs, Thermo Electron charges
the Company based upon costs attributable to the Company.
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 $2,078,000, $279,000, and
$262,000 in 1996, 1995, and 1994, respectively. Purchases of products from
such companies totaled $306,000, $414,000, and $413,000 in 1996, 1995, and
1994, 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 $1,263,000 and $1,288,000 under this arrangement in 1995
and 1994, respectively.
In addition, a majority-owned subsidiary of Thermo Instrument assembles
certain of the Company's products. For these services, the Company paid
$704,000, $600,000, and $566,000 in 1996, 1995, and 1994, respectively.
17PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
6. Related Party Transactions (continued)
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 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.
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.
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.
18PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
8. Geographical Information and Significant Customer
The following table shows data for the Company by geographical area.
(In thousands) 1996 1995 1994
------------------------------------------------------------------------
Revenues:
United States $ 43,098 $ 17,741 $ 19,891
England 27,817 4,793 5,236
Other Europe 11,228 - -
Asia 3,381 - -
Transfers among geographical areas (a) (13,875) - -
-------- -------- --------
$ 71,649 $ 22,534 $ 25,127
======== ======== ========
Income before provision for income taxes:
United States $ 3,398 $ 3,321 $ 3,998
England (b) (1,061) 360 171
Other Europe 621 - -
Asia 577 - -
Corporate and eliminations (c) (1,478) (312) (314)
-------- -------- --------
Total operating income 2,057 3,369 3,855
Interest income (expense), net (593) 819 -
-------- -------- --------
$ 1,464 $ 4,188 $ 3,855
======== ======== ========
Identifiable assets:
United States $ 47,096 $ 29,022 $ 11,134
England 27,720 3,885 3,215
Other Europe 6,467 - -
Asia 1,149 - -
Corporate (d) 40,565 - -
-------- -------- --------
$122,997 $ 32,907 $ 14,349
======== ======== ========
Export revenues included in United States
revenues above (e) $ 3,432 $ 2,741 $ 3,217
======== ======== ========
____________________
(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.
19PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Notes to Consolidated Financial Statements
8. Geographical Information and Significant Customer (continued)
No customer accounted for 10% or more of the Company's total revenues
in 1996. U.S. government agencies accounted for 24% and 32% of the
Company's total revenues in 1995 and 1994, respectively.
9. Unaudited Quarterly Information
(In thousands except per share amounts)
1996 First(a) Second Third Fourth
------------------------------------------------------------------------
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
1995 First Second Third Fourth
------------------------------------------------------------------------
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
(a) 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.
20PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
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 28,
1996, and December 30, 1995, 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 28, 1996,
and December 30, 1995, and the results of their operations and their cash
flows for each of the three years in the period ended December 28, 1996,
in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
February 11, 1997
21PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations.
For this purpose, any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," "seeks," "estimates," and similar expressions are
intended to identify forward-looking statements. There are a number of
important factors that could cause the results of the Company to differ
materially from those indicated by such forward-looking statements,
including those detailed immediately after this Management's Discussion
and Analysis of Financial Conditions and Results of Operations under the
caption "Forward-looking Statements."
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) (Note
2). 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.
22PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
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 (Note 2), 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 (Note 2).
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.
23PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
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
(Note 2) 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
24PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources (continued)
proceeds to retire the $30.0 million promissory note issued to Thermo
Electron. In September 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.
25PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Forward-looking Statements
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company wishes to caution
readers that the following important factors, among others, in some cases
have affected, and in the future could affect, the Company's actual
results and could cause its actual results in 1997 and beyond to differ
materially from those expressed in any forward-looking statements made
by, or on behalf of, the Company.
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.
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 that the
Company's products or proprietary technologies will not become
uncompetitive or obsolete.
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.
26PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Forward-looking Statements
There can be no assurance that the Company will be successful in
obtaining such broad acceptance.
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.
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 (NIH) and the
equivalent of the NIH in 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.
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
27PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Forward-looking Statements
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 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
that 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 that 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.
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 (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(R) 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
28PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Forward-looking Statements
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 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.
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
29PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Forward-looking Statements
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 shareholders.
Risks Associated With International Operations. International sales
accounted for 48% of the Company's total revenues in 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 for the
Company's products and services is made in the local currency; U.S.
export licenses may be difficult to obtain; and the protection of
intellectual property in foreign countries may be more difficult to
enforce. There can be no assurance that any of these factors will not
have a material adverse impact on the Company's business and results of
operations.
30PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Selected Financial Information
(In thousands except
per share amounts) 1996(a) 1995(b) 1994 1993 1992
--------------------------------------------------------------------------
Statement of Operations
Data:
Revenues $ 71,649 $ 22,534 $ 25,127 $ 24,479 $ 20,120
Income before provision
for income taxes 1,464 4,188 3,855 4,313 2,624
Net income (loss) (436) 2,514 2,400 2,538 1,175
Earnings (loss) per share (.05) .32 .36 .38 .18
Balance Sheet Data:
Working capital $ 59,750 $ 27,105 $ 8,282 $ 6,333 $ 5,808
Total assets 122,997 32,907 14,349 13,596 11,767
Subordinated convertible
note, due to parent
company 50,000 - - - -
Shareholders' investment 51,316 29,146 10,162 8,332 7,838
(a)Reflects the net proceeds of the Company's initial public offering of
common stock in September and October 1996, and 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.
(b)Reflects the net proceeds of the Company's private placements of common
stock in March 1995 and April 1995.
31PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Common Stock Market Information
The following table shows the market range for the Company's common
stock based on reported sales prices on the American Stock Exchange
(symbol TBA) since September 18, 1996, the date the Company's common
stock began trading on that exchange.
1996
---------------
Quarter High Low
------------------------------------------------------------------------
Third $14 $13 1/8
Fourth 14 5/8 12 1/2
As of January 24, 1997, the Company had 138 holders of record of its
common stock. This does not include holdings in street or nominee names.
The closing market price on the American Stock Exchange for the
Company's common stock on January 24, 1997, was $12 3/4 per share.
Shareholder Services
Shareholders of Thermo BioAnalysis Corporation who desire information
about the Company are invited to contact John N. Hatsopoulos, Chief
Financial Officer, Thermo BioAnalysis Corporation, 81 Wyman Street, P.O.
Box 9046, Waltham, Massachusetts 02254-9046, (617) 622-1111. A mailing
list is maintained to enable shareholders whose stock is held in street
name, and other interested individuals, to receive quarterly reports,
annual reports, and press releases as quickly as possible. Beginning in
1997, quarterly distribution will be limited to the second quarter report
only. All quarterly reports and press releases are available through the
Internet from Thermo Electron's home page on the World Wide Web
(http://www.thermo.com/subsid/tba.html).
Stock Transfer Agent
American Stock Transfer & Trust Company is the stock transfer agent
and maintains shareholder activity records. The agent will respond to
questions on issuance of stock certificates, change of ownership, lost
stock certificates, and change of address. For these and similar
matters, please direct inquiries to:
American Stock Transfer & Trust Company
Shareholder Services Department
40 Wall Street, 46th Floor
New York, New York 10005
(718) 921-8200
Dividend Policy
The Company has never paid cash dividends and does not expect to pay
cash dividends in the foreseeable future because its policy has been to
use earnings to finance expansion and growth. Payment of dividends will
rest within the discretion of the Board of Directors and will depend
upon, among other factors, the Company's earnings, capital requirements,
and financial condition.
32PAGE
<PAGE>
Thermo BioAnalysis Corporation 1996 Financial Statements
Form 10-K Report
A copy of the Annual Report on Form 10-K for the fiscal year ended
December 28, 1996, as filed with the Securities and Exchange Commission,
may be obtained at no charge by writing to John N. Hatsopoulos, Chief
Financial Officer, Thermo BioAnalysis Corporation, 81 Wyman Street, P.O.
Box 9046, Waltham, Massachusetts 02254-9046.
Annual Meeting
The annual meeting of shareholders will be held on Monday, June 2,
1997, at 10:00 a.m., at the Hyatt Regency Hotel, Hilton Head, South
Carolina.
33
Exhibit 21
THERMO BIOANALYSIS CORPORATION
Subsidiaries of the Registrant
At February 28, 1997, the Registrant owned the following companies:
Registrant's
State of Jurisdiction % of
Name or Incorporation Ownership
---------------------------------------------------------------------------
DYNEX Technologies (Asia) Inc. Delaware 100
DYNEX Technologies Inc. Virginia 100
Thermo BioAnalysis GmbH Germany 100
Dynatech Deutschland GmbH Germany 100
Thermo LabSystems Vertriebs GmbH Germany 100
Dynatech Labratories spol. s.r.o. Czech Republic 100
Thermo BioAnalysis (Guernsey) Ltd. Channel Islands 100
Thermo BioAnalysis Holding, Limited England 100
Thermo LabSystems Limited England 100
Thermo BioAnalysis Limited England 100
Thermo Fast U.K. Limited England 100
Dynex Technologies Limited England 100
Thermo BioAnalysis S.A. France 100
Thermo LabSystems S.A.R.L. France 100
Thermo LabSystems Inc. Massachusetts 100
Thermo LabSystems (Australia) Pty Limited Australia 100
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
BIOANALYSIS CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> DEC-28-1996
<CASH> 45,476
<SECURITIES> 0
<RECEIVABLES> 18,256
<ALLOWANCES> 991
<INVENTORY> 14,592
<CURRENT-ASSETS> 81,235
<PP&E> 12,129
<DEPRECIATION> 6,582
<TOTAL-ASSETS> 122,997
<CURRENT-LIABILITIES> 21,485
<BONDS> 0
0
0
<COMMON> 98
<OTHER-SE> 51,218
<TOTAL-LIABILITY-AND-EQUITY> 122,997
<SALES> 71,649
<TOTAL-REVENUES> 71,649
<CGS> 37,807
<TOTAL-COSTS> 37,807
<OTHER-EXPENSES> 10,798
<LOSS-PROVISION> 210
<INTEREST-EXPENSE> 1,873
<INCOME-PRETAX> 1,464
<INCOME-TAX> 1,900
<INCOME-CONTINUING> (436)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (436)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> 0
</TABLE>
