THERMO BIOANALYSIS CORP /DE, S-1/A, 1998-05-22

THERMO BIOANALYSIS CORP /DE
S-1/A, 1998-05-22
LABORATORY ANALYTICAL INSTRUMENTS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1998
REGISTRATION NO. 333-52445

================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1
TO

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------

THERMO BIOANALYSIS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

------------------------

<TABLE>
<S> <C> <C>
DELAWARE 3826 85-0429899
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)

</TABLE>
------------------------

504 AIRPORT ROAD
SANTA FE, NEW MEXICO 87504-2108
(505) 471-3232
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

------------------------

SANDRA L. LAMBERT, SECRETARY
THERMO BIOANALYSIS CORPORATION
C/O THERMO ELECTRON CORPORATION
81 WYMAN STREET
P. O. BOX 9046
WALTHAM, MASSACHUSETTS 02254-9046
(781) 622-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

Copies to:

SETH H. HOOGASIAN, ESQ. EDWIN L. MILLER, JR., ESQ.
GENERAL COUNSEL TESTA, HURWITZ & THIBEAULT, LLP
THERMO BIOANALYSIS CORPORATION 125 HIGH STREET
C/O THERMO ELECTRON CORPORATION BOSTON, MASSACHUSETTS 02110
81 WYMAN STREET (617) 248-7000
WALTHAM, MASSACHUSETTS 02254-9046
(781) 622-1000

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement has become effective.

------------------------

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]

------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED MAY 22, 1998

PROSPECTUS
4,500,000 SHARES

[THERMO BIOANALYSIS LOGO]

COMMON STOCK
------------------

All of the shares of Common Stock offered hereby are being sold by Thermo
BioAnalysis Corporation ("Thermo BioAnalysis" or the "Company"), a
majority-owned subsidiary of Thermo Instrument Systems Inc. ("Thermo
Instrument"), which is a majority-owned subsidiary of Thermo Electron
Corporation ("Thermo Electron"). Following the offering, Thermo Instrument will
own approximately 58.1% and Thermo Electron will own approximately 6.5% of the
outstanding shares of Common Stock of the Company (assuming no exercise of the
Underwriters' over-allotment option and the issuance of 3,007,930 shares of
Common Stock to Thermo Instrument in connection with the Company's acquisition
of the Clinical Products Group of Life Sciences International from Thermo
Instrument). See "Business -- Acquisitions" and "Relationship with
Affiliates -- Related Party Transactions."

The Company's Common Stock is traded on the American Stock Exchange
("AMEX") under the symbol "TBA." On May 20, 1998, the closing price of the
Common Stock on the AMEX was $21.938 per share. See "Price Range of Common
Stock."

------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK
OFFERED HEREBY.
------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Per Share $ $ $
- --------------------------------------------------------------------------------
Total(3) $ $ $
================================================================================
</TABLE>

(1) For information regarding indemnification of the Underwriters, see
"Underwriting."

(2) Before deducting expenses of this offering payable by the Company estimated
at $750,000.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
675,000 additional shares of Common Stock solely to cover over-allotments,
if any. See "Underwriting." If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions and Proceeds to
Company will be $ , $ and $ , respectively.

------------------

The shares of Common Stock are being offered by the several Underwriters
named herein, subject to prior sale, when, as and if accepted by them, and
subject to certain conditions. It is expected that certificates for the shares
of Common Stock offered hereby will be made available for delivery on or about
, 1998, at the office of Smith Barney Inc., 333 West 34th Street, New
York, New York 10001.
------------------
SALOMON SMITH BARNEY
CIBC OPPENHEIMER
LEHMAN BROTHERS
PRUDENTIAL SECURITIES INCORPORATED

, 1998
<PAGE> 3

[Graphic depicting two single-channel and one multi-channel hand-held
pipettes. Each of the pipettes has a tapered cylindrical body with a cap and a
digital display. Each pipette ends in either single or multiple plastic tips.]

The Company produced the world's first continuously adjustable micropipette
and the first multi-channel pipette for microplates. The Company develops a
variety of hand-held, single and multi-channel pipettes which are used to
transport and deposit precise amounts of fluids and reagents during tests in
clinical and research laboratories.

[Graphic depicting various cytology and histology consumables. To the left,
there is a plastic bottle with a pump. In the foreground are several small
bottles and containers, a glass beaker, four glass microscope slides, a white
rectangular box, three medium plastic bottles, and a round object with a lid. In
the background, several red and blue circles are shown, representing stained
human cells.]

The Company's cytology and histology consumables are used by medical
laboratories to prepare microscope slides containing specially stained cells
from body fluids and tissue samples.

[Graphic depicting two white box-shaped devices with open lids and a
control panel. Inside each box are numerous test tubes. In the foreground is a
rectangular object holding multiple microscope slides.]

The Company's PCR Express and PCR Sprint thermal cyclers are used by
research laboratories to amplify DNA in connection with the diagnosis of
genetically based diseases and drug discovery.

[Graphic depicting a box-like instrument, with three plate-shaped objects
superimposed. The box represents a microplate reader and the superimposed
objects represent microplates. In the foreground, three rectangular plastic
trays are depicted. One is empty and the other two hold glass beakers and
tubes.]

The Company's Fluoroskan Ascent FL instrument is an advanced microplate
reader that uses both fluorometric and luminometric detection technologies,
thereby allowing a wider range of tests to be performed. The instrument is
compatible with other robotic systems and is used in high-volume diagnostic
testing and in high-throughput screening in drug research.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, ENTERING STABILIZING BIDS, EFFECTING SYNDICATE
COVERING TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."

------------------------

Cliniplate, Cytofunnels, Cytospin, Finnpipette, IAsys, LASERMAT,
Microtiter, MRX, MRX-HD, Multichrom, Shandon Lipshaw and SpectraPHORESIS are
registered trademarks, and Atlas, DIAS, DIAS Ultra, DYNAMO, Fluorolite,
Fluoroskan, Fluoroskan Ascent FL, Hybaid, Microlite, MLX, Multiskan, PCR
Express, PCR Sprint, SampleManager and VISION 2000 are trademarks, of Thermo
BioAnalysis Corporation or its subsidiaries. All other trademarks or tradenames
referred to in this Prospectus are the property of their respective owners.

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the financial statements and notes thereto appearing elsewhere
in this Prospectus. Except as otherwise indicated, all information contained in
this Prospectus assumes (i) no exercise of the Underwriters' over-allotment
option and (ii) completion of, and the issuance of 3,007,930 shares of Common
Stock to Thermo Instrument in connection with, the Company's acquisition of the
Clinical Products Group of Life Sciences International from Thermo Instrument.
The transfer of the Clinical Products Group to the Company will occur prior to
the closing of this offering. See "Business -- Acquisitions" and "Relationship
with Affiliates -- Related Party Transactions." Investors should carefully
consider the information set forth under the heading "Risk Factors."

THE COMPANY

Thermo BioAnalysis provides advanced tools that are used by molecular and
cellular scientists to understand diseases and to develop new drugs. The Company
develops, manufactures and supplies a broad range of products, including
biomolecular instruments and consumables, clinical laboratory equipment and
supplies, and information management systems, that are used in biochemical
research, clinical diagnosis and pharmaceutical production. The Company's
products serve an addressable market estimated by industry sources to be $2.5
billion. The Company has more than 30,000 customers in the U.S. and over 35
foreign countries, including pharmaceutical, biotechnology, chemical and
industrial companies, hospitals and medical laboratories, as well as academic
institutions, government laboratories and private foundations. Of these
organizations, biotechnology and pharmaceutical companies in particular are
substantially increasing their spending on drug research and development and are
increasingly dependent on advanced instrumentation and equipment to remain
competitive. The Company focuses on the following three principal product areas:

Biomolecular Instruments and Consumables. The Company's biomolecular
instruments and consumables are based primarily on immunoassay technology
and are widely used in pharmaceutical and biopharmaceutical research, as
well as for clinical laboratory testing and diagnosis of patient samples.
The Company is a market leader in open system microplate technology, which
significantly improves the speed and efficiency of immunoassay testing. The
Company's products also include a wide range of clinical and research
laboratory consumables, including single and multi-channel pipettes.
Additionally, the Company manufactures and markets a variety of proprietary
products based on emerging technologies, including optical biosensor,
polymerase chain reaction, MALDI-TOF mass spectrometry, DNA amplification
and capillary electrophoresis technologies. Sales and related service of
the Company's biomolecular instruments and consumables accounted for
approximately 50% of the Company's total revenues in 1997 (including sales
of several of the Company's biomolecular instruments and consumables that
are also used in clinical applications).

Clinical Laboratory Equipment and Supplies. The Company is a leader
in the manufacture of cytology and histology equipment and consumables.
These products are used to prepare microscope slides containing thin layers
of specially stained cells from body fluid and tissue samples, which enable
medical professionals to detect and diagnose cancers and other diseases.
The Company also supplies pathology equipment for use in autopsies and
forensic evaluations. Additionally, the Company supplies consumables for
blood gas and ion-selective electrolyte analyzers that diagnose the type
and stage of certain diseases by measuring the levels of gases and
electrolytes in blood, plasma and urine samples. Sales and related service
of the Company's clinical laboratory equipment and supplies accounted for
approximately 31% of the Company's total revenues in 1997.

Information Management Systems. The Company offers laboratory
information management systems and chromatography data systems for use in
laboratories, industrial applications and clinical testing facilities. The
Company's information management systems are designed to facilitate the
monitoring and analysis of samples and the organization and storage of data
throughout the laboratory or clinical lifecycle. Sales and related service
of the Company's information management systems accounted for approximately
12% of the Company's total revenues in 1997.

3
<PAGE> 5

During the past decade, life sciences researchers have made significant
advances in identifying the basic mechanisms of biological activity at the
molecular and cellular level. The clinical diagnostics market has also
experienced significant growth as medical professionals have developed a better
understanding of how to detect and diagnose diseases at the molecular and
cellular level. Companies and medical professionals are trying to capitalize on
the improved understanding of molecular and cell biology in order to develop
novel drug therapies and diagnostic products for human and animal health.
Reducing product development time and cost in life sciences research and testing
has become an increasingly important challenge and a potential competitive
advantage for pharmaceutical and biotechnology companies. This has created the
need for increasingly sophisticated instrumentation and equipment that analyze
samples faster and for information systems that analyze, process and store
information more efficiently. These factors underlie the demand for biomolecular
instruments and consumables, clinical equipment and supplies, and related
products, as well as the introduction of advanced bioanalytical systems such as
those developed and marketed by the Company. See "Business -- Industry
Background."

The Company seeks to become a leading provider of advanced tools that
enable molecular and cellular scientists to understand diseases and to develop
new drugs. The Company's strategy is to (i) broaden its product offerings by
developing products internally and making strategic acquisitions, (ii) optimize
its product mix by increasing the percentage of its revenues derived from
consumable sales, (iii) continue to invest in research for product development
and enhancement of existing products, (iv) continue to focus on product quality
and (v) pursue and integrate strategic acquisitions as a means of broadening its
product lines, improving its market share and enhancing growth. See
"Business -- Strategy."

The Company was incorporated in Delaware in February 1995 as a wholly owned
subsidiary of Thermo Instrument. At that time, Thermo Instrument contributed all
of the assets relating to its capillary electrophoresis product line, its
MALDI-TOF mass spectrometry division and its Eberline health physics division to
the Company in exchange for 6,500,000 shares of Common Stock and the assumption
by the Company of substantially all of the liabilities relating to such
businesses. Since its incorporation, the Company has acquired the businesses
summarized in the table below. For more detailed information regarding each of
these acquisitions, see "Business -- Acquisitions" and "Relationship with
Affiliates -- Related Party Transactions."

<TABLE>
<CAPTION>
ACQUIRED BUSINESS EFFECTIVE DATE PURCHASE PRICE PRINCIPAL PRODUCTS/TECHNOLOGY
----------------- -------------- -------------- -----------------------------
<S> <C> <C> <C>
DYNEX............................. February 1996 $ 43.2 million Immunoassay testing systems and
consumables
Affinity Sensors and
LabSystems(1)..................... March 1996 $ 9.0 million Optical biosensors; laboratory
information management systems
and chromatography data systems
Labsystems OY and
Hybaid Limited(2)................. March 1997 $ 97.4 million Immunoassay instruments and
liquid handling equipment;
thermal cyclers and consumables
for DNA amplification
Clinical Products Group(3)........ March 1997 $104.5 million Cytology, histology and
pathology equipment and
consumables; blood gas and
electrolyte analyzers
</TABLE>

- ---------------
(1) In March 1996, Thermo Instrument acquired a substantial portion of the
businesses comprising the Scientific Instruments Division of Fisons plc
("Fisons"), a wholly owned subsidiary of Rhone-Poulenc Rorer Inc. In July
1996, the Company acquired the Affinity Sensors and LabSystems divisions of
Fisons from Thermo Instrument, effective March 1996.

(2) In March 1997, Thermo Instrument acquired Life Sciences International PLC
("LSI"). In May 1997, the Company agreed to acquire the Labsystems OY
(unrelated to the LabSystems division of Fisons) and Hybaid Limited
("Hybaid") divisions of LSI from Thermo Instrument, effective March 1997.
This transaction was completed in April 1998. Also effective March 1997, the
Company acquired the Labsystems Japan division of LSI from Thermo
Instrument. Labsystems Japan distributes products manufactured by Labsystems
OY, Hybaid and other LSI companies.

(3) In May 1998, the Company agreed to acquire the Clinical Products Group of
LSI from Thermo Instrument. The Clinical Products Group is comprised of
Shandon Inc. and its related businesses, including ALKO Diagnostic
Corporation. Since the closing of this transaction is not subject to any
material conditions, the Company and Thermo Instrument are treating this
acquisition as effectively complete. The Company's financial statements
include the results of the Clinical Products Group from the date of Thermo
Instrument's acquisition of LSI in March 1997.

4
<PAGE> 6

In April 1998, the Company announced its intention to form a health physics
joint venture with Thermo Instrument. In July 1998, the Company will contribute
its Eberline health physics business in exchange for a 49% equity interest in
the joint venture, and Thermo Instrument will contribute its National Nuclear
and ESM Eberline Instruments businesses, along with $13.0 million in cash, for a
51% equity interest. The Eberline health physics business accounted for
approximately 7% of the Company's total revenues in 1997. Profits and losses
from the joint venture will be allocated (a) one-third to Thermo Instrument and
two-thirds to the Company until the later of (i) July 2000 or (ii) such time as
the joint venture has achieved consolidated division income (defined as
operating income excluding payments pursuant to the Services Agreement (as
defined in "Relationship with Affiliates -- Corporate Services Agreement")) of
17% for a full fiscal year and (b) to the members of the joint venture in
accordance with their respective equity interests thereafter. The joint venture
will provide instruments for the detection and monitoring of low-level radiation
to ensure personal and environmental protection. See "Business -- Health Physics
Joint Venture" and "Relationship with Affiliates -- Related Party Transactions."

Unless the context otherwise requires, references in this Prospectus to the
Company or Thermo BioAnalysis refer to Thermo BioAnalysis Corporation and its
subsidiaries and the predecessor businesses that constitute the Company. The
Company's principal executive offices are located at 504 Airport Road, Santa Fe,
New Mexico 87504-2108, and its telephone number is (505) 471-3232.

THE OFFERING

<S> <C>
Common Stock Offered by the Company.................. 4,500,000 shares
Common Stock to be Outstanding after the
Offering(1)........................................ 18,593,648 shares
AMEX Symbol.......................................... TBA
Use of Proceeds...................................... Repayment of certain indebtedness owed to
Thermo Instrument and for general corporate
purposes, including acquisitions. See "Use of
Proceeds."
</TABLE>

- ---------------

(1) Does not include 1,272,900 shares of Common Stock reserved for issuance
under the Company's stock-based compensation plans and 3,030,303 shares of
Common Stock reserved for issuance upon the conversion of the Company's
4.875% Subordinated Convertible Note, due to Thermo Instrument, which was
issued in July 1996 (the "Convertible Note"). Includes 3,007,930 shares of
Common Stock to be issued to Thermo Instrument in connection with the
Company's acquisition of the Clinical Products Group of LSI from Thermo
Instrument. See "Capitalization," "Business -- Acquisitions" and Notes 3 and
6 of Notes to the Company's Consolidated Financial Statements.

5
<PAGE> 7

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
THREE MONTHS
ENDED(4)
FISCAL YEAR(1) ---------------------
--------------------------------------------------- MARCH 29, APRIL 4,
1993 1994 1995 1996 (2) 1997 (3) 1997 1998
------- ------- ------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.............................. $24,479 $25,127 $22,534 $71,649 $201,998 $26,801 $54,434
Gross Profit.......................... 11,469 10,951 9,498 33,842 99,172 12,953 27,851
Research and Development Expenses..... 2,242 2,042 1,325 7,298 14,057 2,352 3,923
Write-off of Acquired Technology...... -- -- -- 3,500 -- -- --
Operating Income...................... 4,313 3,855 3,369 2,057 23,169 2,616 6,029
Net Income (Loss)..................... 2,538 2,400 2,514 (436) 11,340 1,582 3,202
Earnings (Loss) per Share (5):
Basic............................. .39 .37 .33 (.05) .86 .15 .23
Diluted........................... .39 .37 .33 (.05) .79 .14 .21
Weighted Average Shares (5):
Basic............................. 6,500 6,500 7,694 8,542 13,232 10,624 14,086
Diluted........................... 6,500 6,500 7,694 8,542 16,367 13,694 17,299
</TABLE>

<TABLE>
<CAPTION>
APRIL 4, 1998(4)
--------------------------
ACTUAL AS ADJUSTED(6)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and Cash Equivalents................................... $ 43,526 $ 98,206
Debt Payable to Parent Company (7).......................... 37,861 --
Working Capital............................................. 52,972 145,513
Total Assets................................................ 324,866 379,546
Long-term Obligations....................................... 100,198 100,198
Shareholders' Investment.................................... 135,626 228,167
</TABLE>

- ---------------

(1) The Company has a fiscal year ending the Saturday nearest December 31.

(2) Reflects the results of DYNEX since February 1996, and the Affinity Sensors
and LabSystems divisions of Fisons since their acquisition by Thermo
Instrument in March 1996, including the associated write-off of $3,500,000
of acquired technology.

(3) Reflects the results of the Labsystems OY, Hybaid and Labsystems Japan
divisions of LSI, and the Clinical Products Group of LSI, since their
acquisition by Thermo Instrument in March 1997. Weighted average shares
include the effect of assuming as outstanding from March 1997 the 1,300,000
shares issued as part of the purchase price for the Labsystems OY and Hybaid
divisions of LSI, and the 3,007,930 shares issuable to Thermo Instrument as
part of the purchase price for the Clinical Products Group of LSI. Pro forma
data for the acquisitions of the Labsystems OY and Hybaid divisions of LSI
and the Clinical Products Group of LSI is included elsewhere in this
Prospectus.

(4) Derived from unaudited financial statements.

(5) Pursuant to Securities and Exchange Commission requirements, earnings (loss)
per share have been presented for all periods. Weighted average shares for
all periods include the 6,500,000 shares issued to Thermo Instrument in
connection with the initial capitalization of the Company.

(6) Adjusted to reflect (i) the sale by the Company of 4,500,000 shares of
Common Stock offered hereby at an assumed public offering price of $21.938
per share (the closing price on the AMEX on May 20, 1998), after deducting
the estimated underwriting discounts and commissions and offering expenses
payable by the Company and (ii) the repayment of approximately $37.9 million
of indebtedness owed to Thermo Instrument in connection with the Company's
acquisition of the Clinical Products Group of LSI.

(7) Represents existing indebtedness owed by the Clinical Products Group of LSI
to Thermo Instrument, which was assumed by the Company in connection with
the acquisition of the Clinical Products Group of LSI, and which is included
in "Due to parent company and affiliated companies" in the Company's
Consolidated Financial Statements.

6
<PAGE> 8

RISK FACTORS

Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), are made
throughout this Prospectus. For this purpose, any statements contained herein
that are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," "seeks," "estimates," and similar expressions are intended
to identify forward-looking statements. In connection with the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995, the Company
wishes to caution readers that there are a number of important factors that
could cause the results of the Company in 1998 and beyond to differ materially
from those indicated by such forward-looking statements, including those
discussed below, as well as those discussed elsewhere in this Prospectus.

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 substantially all the assets, subject to certain liabilities,
of DYNEX Technologies, a supplier of automated systems, detection systems and
consumables for the immunoassay market; effective March 1996, the Company
acquired its Affinity Sensors and LabSystems businesses, a supplier of optical
biosensors, and laboratory information management systems and chromatography
data systems, respectively; effective March 1997, the Company acquired
Labsystems OY, a manufacturer of microplate-based immunoassay instruments and
liquid handling equipment, and Hybaid Limited ("Hybaid"), a manufacturer of
thermal cyclers and consumables for DNA amplification. In May 1998, the Company
agreed to acquire the Clinical Products Group of Life Sciences International
("LSI"), a provider of equipment and consumables for cytology, histology and
pathology applications, as well as consumables for blood gas and ion-selective
electrolyte analyzers. Since the closing is not subject to any material
conditions, the Company and Thermo Instrument are treating this acquisition as
effectively complete. See "Business -- Acquisitions" and "Relationship with
Affiliates -- Related Party Transactions." There can be no assurance that the
Company will be able to successfully integrate all of these recently acquired
businesses, or any future acquired businesses, and realize the benefits expected
from such acquisitions. In addition, promising acquisitions are difficult to
identify and complete for a number of reasons, including competition among
prospective buyers and the need for regulatory approvals, including antitrust
approvals. Any acquisitions completed by the Company may be made at substantial
premiums over the fair value of the net assets of the acquired companies,
resulting in significant amortization expenses related to goodwill and other
intangible assets. 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
that are not favorable to the Company and, in the case of equity financing, may
result in dilution to the Company's stockholders.

Intense Competition. The Company encounters and expects to continue to
encounter intense competition in the sale of its products. The Company believes
that the principal competitive factors affecting the markets for its products
include product features, product performance, price and service. The Company's
competitors include a number of large multinational corporations. These
companies and certain of the Company's other competitors have substantially
greater financial, marketing and other resources than the Company. As a result,
they may be able to adapt more quickly to new or emerging technologies and
changes in customer requirements, or to devote greater resources to the
promotion and sale of their products than the Company. Competition could
increase if new companies enter the market or if existing competitors expand
their product lines or intensify efforts within existing product lines. There
can be no assurance that the Company's current products, products under
development or ability to develop new technologies will be sufficient to enable
it to compete effectively. See "Business -- Competition."

Rapid and Significant Technological Change and New Products. The markets
for the Company's products are characterized by rapid and significant
technological change, evolving industry standards and frequent new product
introductions and enhancements. Many of the Company's products and products
under development are technologically innovative and require significant
planning, design, development and testing at the technological, product and
manufacturing process levels. These activities require significant capital
7
<PAGE> 9

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 mass spectrometry and capillary electrophoresis products
are based on relatively new, emerging technologies. The Company believes that,
to a significant extent, its growth prospects depend on its ability to gain
acceptance by a broader group of customers of the efficiency and efficacy of the
Company's innovative technologies. There can be no assurance that the Company
will be successful in obtaining such broad acceptance.

Dependence on Capital Spending Policies and Government Funding. The
Company's customers include pharmaceutical, biotechnology, chemical and
industrial companies, hospitals and clinical diagnostic laboratories and
companies. The capital spending policies of these companies and institutions 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. Biotechnology companies have raised significant amounts
of capital through public equity offerings and most of these companies are
engaged in 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 division that will be contributed to the joint venture with
Thermo Instrument (see "Business -- Health Physics Joint Venture") are made to
various branches of the United States government, primarily the United States
Department of Energy. 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 investment in this
joint venture.

Potential Fluctuations in Quarterly Performance. Many of the Company's
products are large systems that may require significant capital expenditures.
Consequently, the timing of sales of these systems could affect the Company's
quarterly earnings. Further, the Company's quarterly operating results may also
vary significantly depending on a number of other factors, including the size,
timing and shipment of individual orders, changes in pricing by the Company or
its competitors, discount levels, seasonality of revenue, foreign currency
exchange rates, the mix of products sold, the timing of the announcement,
introduction and delivery of new product enhancements by the Company and its
competitors, and general economic conditions. Generally, the Company recognizes
product revenues upon shipment of its products. Revenues on substantially all
contracts are recognized using the percentage-of-completion method. Typically,
the Company experiences higher revenues in the fourth quarter, and to a lesser
extent, the second quarter of each fiscal year. Because certain operating
expenses of the Company are based on anticipated capacity levels and a high
percentage of the Company's expenses are fixed for the short term, a small
variation in the timing of

8
<PAGE> 10

recognition of revenue can cause significant variations in operating results
from quarter to quarter. There can be no assurance that any of these factors
will not have a material adverse effect on the Company's business or results of
operations.

Risks Associated with International Operations. International sales
accounted for 64% of the Company's total revenues in 1997. A significant portion
of the Company's manufacturing operations are based in Finland. The Company
intends to continue to expand its presence in international markets.
International operations 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. A portion of the Company's
revenues is derived from sales in Asia. Asia is experiencing a severe economic
crisis, which has been characterized by sharply reduced economic activity and
liquidity, highly volatile foreign-currency-exchange and interest rates, and
unstable stock markets. The Company's sales to Asia could be materially
adversely affected by the unstable economic conditions there.

Dependence on Patents and Proprietary Rights. The Company places
considerable importance on obtaining patent and trade secret protection for
significant new technologies, products and processes because of the length of
time and expense associated with bringing new products through the development
process and to the marketplace. The Company's success depends, in part, on its
ability to develop patentable products and obtain and enforce patent protection
for its products both in the United States and in other countries. The Company
has filed and intends to file applications as appropriate for patents covering
its products. No assurance can be given that patents will issue from any pending
or future patent applications owned by or licensed to the Company, or that the
claims allowed under any issued patents will be sufficiently broad to protect
the Company's technology. In addition, no assurance can be given that any issued
patents owned by or licensed to the Company will not be challenged, invalidated
or circumvented, or that the rights granted thereunder will provide competitive
advantages to the Company. The Company could incur substantial costs in
defending itself in suits brought against it or in suits in which the Company
may assert its patent rights against others. If the outcome of any such
litigation is unfavorable to the Company, the Company's business and results of
operations could be materially adversely affected.

The commercial success of the Company will also depend in part on its
neither infringing patents issued to competitors or others, nor breaching the
technology licenses upon which components of the Company's products are based.
The Company is aware of patents and patent applications belonging to competitors
and 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 has been named as a defendant
in a patent infringement lawsuit brought by Biacore AB and Biacore, Inc.
("Biacore"). The complaint alleges that the design of the cuvette used in the
Company's optical biosensor system infringes a patent held by Biacore; however,
if Biacore were successful in enforcing such patent, the Company believes that
it is entitled to indemnification for losses in this matter by Rhone-Poulenc
Rorer Inc., the parent company of Fisons plc ("Fisons"). Fisons initially sold
the business to Thermo Instrument in March 1996.

The Company is aware of patents held by another third party that may relate
to the features of certain of the Company's MALDI-TOF mass spectrometers. The
Company has alleged that this party infringes certain of the Company's patents
on its MALDI-TOF mass spectrometers. This party was recently acquired by another
company with whom the Company has a dispute relating to patents licensed by such
acquiring company to the Company. The Company has ceased making royalty payments
of approximately $1.2 million per year but continues to accrue the royalties for
financial reporting purposes, pending a resolution of both of these matters.
There can be no assurance that a favorable resolution will occur.
9
<PAGE> 11

In general, the holder of a patent who is successful in proving
infringement by the Company would subject the Company to damages for past
infringement and would enjoin the Company from manufacturing and selling
products utilizing the features associated with such patent, which could have a
material adverse effect on the Company's business and results of operations. See
"Business -- Intellectual Property."

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 or an in vitro diagnostic product will be used in human
clinical or diagnostic applications, the manufacturer of that instrument may be
required to submit to the U.S. Food and Drug Administration ("FDA"), prior to
commercial distribution of the instrument or in vitro diagnostic product in the
U.S., either a premarket notification ("510(k)") or a premarket approval ("PMA")
application, unless the product has been in commercial distribution for the
labeled intended use since before May 28, 1976, the effective date of the
Medical Device Amendments to the Federal Food, Drug and Cosmetic Act. The FDA
uses a risk-based system to classify medical devices. Unless they are exempt,
lower risk devices, in Class I and Class II, are generally subject to 510(k)
premarket notification, in which the FDA determines that a device is safe and
effective based on its "substantial equivalence" to a legally marketed product.
Highest risk, Class III devices are subject to the premarket approval process,
in which the FDA generally determines the safety and effectiveness of the device
based on the submission of clinical data. The Company has, to date, been
required to obtain 510(k) clearances with respect to certain clinical
applications, instruments and in vitro diagnostic products, which are classified
as Class I and Class II 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 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
instruments and in vitro diagnostic products, certain of the Company's
facilities are registered with the FDA as medical device manufacturers. As such,
the Company may be inspected on a routine basis by the FDA for compliance with
the FDA's Quality System Regulation and other applicable regulations. These
regulations require that the Company manufacture its products and maintain
related documentation in accordance with current good manufacturing practices
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.

10
<PAGE> 12

electronic safety requirements. Failure to receive a CE Mark certification would
prohibit the Company from selling its products in Europe, which could have a
material adverse effect on the Company's business and results of operations. At
the present time, analytical instruments and in vitro diagnostic products are
not subject to CE Mark requirements under the Medical Device Directive, but it
is anticipated that CE Mark requirements will be extended to include analytical
instruments and in vitro diagnostic products within the next two years. Certain
other countries require the Company to obtain clearances for its products prior
to marketing the products in those countries. In addition, certain countries
impose product specifications that differ from those mandated in the United
States. These requirements may significantly affect the efficiency and
timeliness of international market introductions of the Company's products.

Although 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 current or
future applicable certification requirements. Any violation of, and the cost of
compliance with, these regulations or requirements could have a material adverse
effect on the Company's business and results of operations. See
"Business -- Government Regulations."

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. Although 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 a material adverse effect on the Company's business and
results of operations.

Potential Product Liability. The Company's business exposes it to
potential product liability claims which are inherent in the manufacturing,
marketing and sale of biomedical instruments and diagnostic products, and as
such the Company may face substantial liability to patients for damages
resulting from the faulty design or manufacture of its products. The Company
currently maintains product liability insurance, but there can be no assurance
that this insurance will provide sufficient coverage in the event of a claim,
that the Company will be able to maintain such coverage on acceptable terms, if
at all, or that a product liability claim would not materially adversely affect
the Company's business or results of operations.

Potential Impact of Year 2000 on Processing Date-sensitive
Information. The Company is currently assessing the potential impact of the
year 2000 on the processing of date-sensitive information by the Company's
computerized information systems and on products sold as well as products
purchased by the Company. The Company believes that its internal information
systems and current products are either year 2000 compliant or will be so prior
to the year 2000 without incurring material costs. There can be no assurance,
however, that the Company will not experience unexpected costs and delays in
achieving year 2000 compliance for its internal information systems and current
products, which could result in a material adverse effect on the Company's
future results of operations.

The Company is presently assessing the effect that the year 2000 problem
may have on its previously sold products. The Company is also assessing whether
its key suppliers are adequately addressing this issue and the effect this might
have on the Company. The Company has not completed its analysis and is unable to
conclude at this time that the year 2000 problem as it relates to its previously
sold products and products purchased from key suppliers is not reasonably likely
to have a material adverse effect on the Company's future results of operations.

Control by Thermo Instrument. The Company's stockholders do not have the
right to cumulate votes for the election of directors. Thermo Instrument, which
will own approximately 58.1% of the voting stock of

11
<PAGE> 13

the Company after this offering and approximately 64.0% assuming conversion of
the Convertible Note (in each case assuming (i) no exercise of the Underwriters'
over-allotment option and (ii) the issuance of 3,007,930 shares of Common Stock
issuable to Thermo Instrument in connection with the Company's acquisition of
the Clinical Products Group of LSI), has the power to elect the entire Board of
Directors of the Company and to approve or disapprove any corporate actions
submitted to a vote of the Company's stockholders. The Convertible Note is
generally convertible upon demand into up to 3,030,303 shares of Common Stock at
the election of Thermo Instrument at any time prior to July 23, 2001. In
addition, as long as Thermo Instrument is able to elect a majority of the
Company's Board of Directors, it will have the ability to cause the Company at
any time to register for resale all or a portion of the Common Stock owned by
Thermo Instrument, Thermo Electron or their affiliates. Thermo Electron and the
Company have agreed not to (and Thermo Electron has agreed to cause Thermo
Instrument not to) sell any shares of Common Stock for a 180-day period after
the date of this Prospectus, with certain exceptions. See "Relationship with
Affiliates -- Related Party Transactions," "Security Ownership of Certain
Beneficial Owners and Management" and "Underwriting."

Potential Conflicts of Interest. The Company may be subject to potential
conflicts of interest from time to time as a result of its relationship with
Thermo Electron and Thermo Instrument. For example, conflicts may arise in the
determination of the annual services fee payable by the Company pursuant to the
Corporate Services Agreement between the Company and Thermo Electron and in
determining whether to invest funds with or borrow funds from Thermo Electron
pursuant to other contractual arrangements. Certain officers of the Company,
including John N. Hatsopoulos, Paul F. Kelleher and Earl R. Lewis are also
officers of Thermo Instrument, Thermo Electron and/or other subsidiaries of
Thermo Electron, and are full-time employees of Thermo Instrument or Thermo
Electron. These officers will devote only a small portion of their working time
(anticipated to be less than 5% in the case of Messrs. Hatsopoulos and Kelleher
and less than 10% in the case of Mr. Lewis) to the affairs of the Company.
Further, it is an essential element of Thermo Electron's career development
program that successful executives and managers be considered for positions of
increased responsibility anywhere within the Thermo Electron family of
companies. Certain of the Company's executives and managers were promoted to
their present positions under this policy. There can be no assurance that the
Company's present executives and managers will not assume other positions within
the Thermo Electron family of companies, causing them to be unavailable to serve
the Company or to reduce the amount of time that they devote to the affairs of
the Company. For financial reporting purposes, the Company's financial results
are included in the consolidated financial statements of Thermo Instrument and
Thermo Electron. Since the members of the Board of Directors of the Company who
are also affiliated with Thermo Electron or Thermo Instrument have fiduciary
duties to the stockholders of the Company and the stockholders of Thermo
Electron or Thermo Instrument, or both, as applicable, such individuals will
consider not only the short-term and the long-term impact of operating decisions
on the Company, but also the impact of such decisions on the consolidated
financial results of Thermo Instrument and Thermo Electron. In some instances
the impact of such decisions could be disadvantageous to the Company while
advantageous to Thermo Instrument or Thermo Electron, or vice versa. For
example, conflicts may arise with respect to possible future acquisitions by the
Company of assets or businesses of Thermo Instrument or another Thermo Electron
affiliated company in which the purchase price to be paid by the Company is
subject to negotiation between the Company and Thermo Instrument or such other
Thermo Electron affiliated company. These negotiations will be subject to the
potential conflicts associated with related-party transactions. The Company is
also a party to various agreements with Thermo Electron and Thermo Instrument
that may limit the Company's operating flexibility. There can be no assurance
that these factors will not have a material adverse effect on the Company's
business, financial condition or results of operations. See "Relationship with
Affiliates."

Potential Volatility of Stock Price. Since public trading of the Company's
Common Stock commenced in September 1996, the market price has fluctuated
considerably, and it may continue to fluctuate in the future. Factors such as
fluctuations in the Company's operating results, announcements of technological
innovations or new contracts or products by the Company or its competitors,
government regulation and approvals, developments in patent or other proprietary
rights and market conditions for stocks of companies similar to the Company
could have a significant impact on the market price of the Common Stock.

12
<PAGE> 14

Lack of Dividends. The Company anticipates that for the foreseeable future
the Company's earnings, if any, will be retained for use in the business and
that no cash dividends will be declared or paid on the Common Stock. Declaration
of dividends on the Common Stock will depend upon, among other things, future
earnings, the operating and financial condition of the Company, its capital
requirements and general business conditions. See "Dividend Policy."

13
<PAGE> 15

USE OF PROCEEDS

The net proceeds to be received by the Company from this offering are
estimated to be $92,541,345 (approximately $106,535,047 if the Underwriters'
over-allotment option is exercised in full) assuming a public offering price of
$21.938 per share (the closing price on the AMEX on May 20, 1998) and after
deducting the estimated underwriting discounts and commissions and offering
expenses payable by the Company.

The Company intends to use the net proceeds from this offering (i) to pay
approximately $37.9 million of indebtedness owed to Thermo Instrument in
connection with the Company's acquisition of the Clinical Products Group of LSI,
which indebtedness is due January 2, 1999 and bears interest at the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter (see "Business -- Acquisitions" and "Relationship with Affiliates
- -- Related Party Transactions") and (ii) for general corporate purposes, which
may include possible acquisitions of businesses, repayment of other
indebtedness, which may include $50.0 million outstanding indebtedness owed to
Thermo Instrument, which indebtedness is due July 1999 and bears interest at the
90-day Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter (see "Relationship with Affiliates -- Related Party
Transactions"), capital expenditures, working capital requirements, research and
development, and loans to and/or investments in the Company's subsidiaries. The
precise amount and timing of the application of such proceeds will depend upon
the funding requirements of the Company and the availability and cost of other
funds. The Company has signed one agreement and two non-binding letters of
intent relating to the purchase of three businesses for aggregate consideration
of approximately $16.1 million in cash. These proposed acquisitions are subject
to certain conditions, including, in the case of the agreement, stockholder
approval by the potential acquiree, and in the case of the non-binding letters
of intent, completion of due diligence and negotiation of definitive agreements.
There can be no assurance that these acquisitions will be completed. The Company
currently has no commitment or agreement for any material acquisition other than
for the purchase of the Clinical Products Group of LSI from Thermo Instrument.

Pending these uses, the Company expects to invest the net proceeds from
this offering primarily in investment grade interest bearing or dividend bearing
instruments, either directly by the Company or pursuant to a repurchase
agreement with Thermo Electron in which the Company would in effect lend excess
cash to Thermo Electron on a collaterized basis at market interest rates. See
"Relationship with Affiliates -- Related Party Transactions."

DIVIDEND POLICY

The Company anticipates that for the foreseeable future the Company's
earnings, if any, will be retained to finance the growth and development of its
business and that no cash dividends will be declared or paid on the Common
Stock.
PRICE RANGE OF COMMON STOCK

The Company's Common Stock has been publicly traded on the AMEX (symbol:
TBA) since its initial public offering on September 18, 1996. The following
table sets forth, for the periods indicated, the high and low sales prices of
the Company's Common Stock as reported in the consolidated transaction reporting
system since that date.

<TABLE>
<CAPTION>
HIGH LOW
---- ---

1996
----
<S> <C> <C>
Third Quarter............................................... $14 $13 1/8
Fourth Quarter.............................................. 14 5/8 12 1/2
</TABLE>

<TABLE>
<CAPTION>
1997
----
<S> <C> <C>
First Quarter............................................... 14 1/8 9 3/4
Second Quarter.............................................. 16 1/8 9
Third Quarter............................................... 18 1/4 14 1/2
Fourth Quarter.............................................. 20 16 5/8
</TABLE>

<TABLE>
<CAPTION>
1998
----
<S> <C> <C>
First Quarter............................................... 22 3/8 17 7/16
Second Quarter (through May 20, 1998)....................... 22 3/4 21 3/8
</TABLE>

As of May 20, 1998, the Company had 81 holders of record of its Common
Stock. This does not include holdings in street or nominee names.

14
<PAGE> 16

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
April 4, 1998, and as adjusted to give effect to (i) the sale of the shares of
Common Stock offered hereby at an assumed public offering price of $21.938 per
share (the closing price on the AMEX on May 20, 1998), after deducting the
estimated underwriting discounts and commissions and offering expenses payable
by the Company, and (ii) the repayment of approximately $37.9 million of
indebtedness owed to Thermo Instrument in connection with the Company's
acquisition of the Clinical Products Group of LSI.

<TABLE>
<CAPTION>
APRIL 4, 1998
-----------------------
ACTUAL AS ADJUSTED
------ -----------
(IN THOUSANDS, EXCEPT
SHARE AMOUNTS)
<S> <C> <C>
Short-term Obligation:
Debt payable to parent company(1)......................... $ 37,861 $ --
======== ========
Long-term Obligations:
Note payable to parent company............................ $ 50,000 $ 50,000
4.875% subordinated convertible note, due to parent
company................................................ 50,000 50,000
Other..................................................... 198 198
-------- --------
100,198 100,198
-------- --------
Shareholders' Investment:
Common Stock, $.01 par value, 25,000,000 shares
authorized;
14,091,470 shares issued and 18,591,470 shares as
adjusted(2)............................................ 141 186
Capital in excess of par value............................ 131,585 224,081
Retained earnings......................................... 11,788 11,788
Treasury stock at cost, 392 shares........................ (7) (7)
Cumulative translation adjustment......................... (7,881) (7,881)
-------- --------
Total Shareholders' Investment......................... 135,626 228,167
-------- --------
Total Capitalization (Long-term Obligations and
Shareholders' Investment)....................... $235,824 $328,365
======== ========
</TABLE>

- ---------------

(1) Represents existing indebtedness owed by the Clinical Products Group of LSI
to Thermo Instrument, which was assumed by the Company in connection with
the acquisition of the Clinical Products Group of LSI, and which is included
in "Due to parent company and affiliated companies" in the Company's
Consolidated Financial Statements.

(2) Does not include 4,303,203 shares of Common Stock reserved for issuance
under the Company's stock-based compensation plans and for issuance upon
possible conversion of the Convertible Note. See
"Business -- "Acquisitions," "Management -- Compensation of Directors" and
"-- Compensation of Executive Officers" and Note 4 of the Company's
Consolidated Financial Statements.

15
<PAGE> 17

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1998
----
FIRST
-----
<S> <C> <C> <C> <C>
Revenues.......................................... $54,434
Gross Profit...................................... 27,851
Net Income........................................ 3,202
Earnings per Share:
Basic........................................ .23
Diluted...................................... .21
</TABLE>

<TABLE>
<CAPTION>
1997
-----------------------------------------
FIRST(1) SECOND THIRD FOURTH
-------- ------ ----- ------
<S> <C> <C> <C> <C>
Revenues.......................................... $26,801 $58,790 $53,354 $63,053
Gross Profit...................................... 12,952 28,130 25,521 32,569
Net Income........................................ 1,582 3,187 2,425 4,146
Earnings per Share:
Basic........................................ .15 .23 .17 .29
Diluted...................................... .14 .21 .16 .26
</TABLE>

<TABLE>
<CAPTION>
1996
-----------------------------------------
FIRST(2) SECOND THIRD FOURTH
-------- ------ ----- ------
<S> <C> <C> <C> <C>
Revenues.......................................... $10,911 $18,871 $19,346 $22,521
Gross Profit...................................... 4,195 9,481 9,573 10,593
Net Income (Loss)................................. (3,114) 431 787 1,460
Earnings (Loss) per Share:
Basic........................................ (.38) .05 .10 .15
Diluted...................................... (.38) .05 .09 .14
</TABLE>

- ---------------

(1) Reflects the results of the Labsystems OY, Hybaid and Labsystems Japan
divisions of LSI, and the Clinical Products Group of LSI, since their
acquisition by Thermo Instrument on March 12, 1997, including the 1,300,000
shares issued to Thermo Instrument in connection with the acquisition of the
Labsystems OY and Hybaid divisions of LSI and the 3,007,930 shares to be
issued to Thermo Instrument in connection with the acquisition of the
Clinical Products Group of LSI.

(2) Reflects the results of DYNEX since February 7, 1996, and the Affinity
Sensors and LabSystems divisions of Fisons since their acquisition by Thermo
Instrument on March 29, 1996, including the associated write-off of
$3,500,000 of acquired technology.

16
<PAGE> 18

SELECTED FINANCIAL INFORMATION

The selected financial information below as of and for the fiscal years
ended December 30, 1995, December 28, 1996 and January 3, 1998 has been derived
from the Company's Consolidated Financial Statements, which have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report included elsewhere in this Prospectus. This information should be read in
conjunction with the Company's Consolidated Financial Statements and related
notes included elsewhere in this Prospectus. The selected financial information
as of and for the fiscal year ended January 1, 1994 and December 31, 1994 has
been derived from the Company's Consolidated Financial Statements, which have
been audited by Arthur Andersen LLP, but have not been included in this
Prospectus. The selected financial information for the three month periods ended
March 29, 1997 and April 4, 1998 has not been audited but, in the opinion of the
Company, includes all adjustments (consisting only of normal, recurring
adjustments) necessary to present fairly such information in accordance with
generally accepted accounting principles applied on a consistent basis. The
results of operations for the three months ended April 4, 1998 are not
necessarily indicative of results for the entire year.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ---------------------
------------------------------------------------------- MARCH 29, APRIL 4,
1993 1994 1995 1996 (1) 1997 (2) 1997 1998
------- ------- ------- --------- --------- --------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................................... $24,479 $25,127 $22,534 $ 71,649 $201,998 $26,801 $ 54,434
------- ------- ------- -------- -------- ------- --------
Costs and Operating Expenses:
Cost of revenues............................ 13,010 14,176 13,036 37,807 102,826 13,848 26,583
Selling, general and administrative
expenses.................................. 4,914 5,054 4,804 20,987 61,946 7,985 17,899
Research and development expenses........... 2,242 2,042 1,325 7,298 14,057 2,352 3,923
Write-off of acquired technology............ -- -- -- 3,500 -- -- --
------- ------- ------- -------- -------- ------- --------
20,166 21,272 19,165 69,592 178,829 24,185 48,405
------- ------- ------- -------- -------- ------- --------
Operating Income.............................. 4,313 3,855 3,369 2,057 23,169 2,616 6,029
Interest and Other Income (Expense), Net...... -- -- 819 (593) (5,294) (131) (1,005)
------- ------- ------- -------- -------- ------- --------
Income Before Provision for Income Taxes...... 4,313 3,855 4,188 1,464 17,875 2,485 5,024
Provision for Income Taxes.................... 1,775 1,455 1,674 1,900 6,535 903 1,822
------- ------- ------- -------- -------- ------- --------
Net Income (Loss)............................. $ 2,538 $ 2,400 $ 2,514 $ (436) $ 11,340 $ 1,582 $ 3,202
======= ======= ======= ======== ======== ======= ========
Earnings (Loss) per Share (3):
Basic..................................... $ .39 $ .37 $ .33 $ (.05) $ .86 $ .15 $ .23
======= ======= ======= ======== ======== ======= ========
Diluted................................... $ .39 $ .37 $ .33 $ (.05) $ .79 $ .14 $ .21
======= ======= ======= ======== ======== ======= ========
Weighted Average Shares (3):
Basic..................................... 6,500 6,500 7,694 8,542 13,232 10,624 14,086
======= ======= ======= ======== ======== ======= ========
Diluted................................... 6,500 6,500 7,694 8,542 16,367 13,694 17,299
======= ======= ======= ======== ======== ======= ========
BALANCE SHEET DATA (AT END OF PERIOD):
Working Capital............................... $ 6,333 $ 8,282 $27,105 $ 59,750 $ 50,501 $ 52,972
Total Assets.................................. 13,596 14,349 32,907 122,997 322,439 324,866
Long-term Obligations......................... -- -- -- 50,000 100,204 100,198
Shareholders' Investment...................... 8,332 10,162 29,146 51,316 134,343 135,626
</TABLE>

- ---------------
(1) Reflects the results of DYNEX since February 1996, and the Affinity Sensors
and LabSystems divisions of Fisons since their acquisition by Thermo
Instrument in March 1996, including the associated write-off of $3,500,000
of acquired technology.

(2) Reflects the results of the Labsystems OY, Hybaid, and Labsystems Japan
divisions of LSI, and the Clinical Products Group of LSI, since their
acquisition by Thermo Instrument in March 1997. Weighted average shares
include the effect of assuming as outstanding from March 1997 the 1,300,000
shares issued as part of the purchase price for the Labsystems OY and Hybaid
divisions of LSI, and the 3,007,930 shares issuable to Thermo Instrument as
part of the purchase price for the Clinical Products Group of LSI. Pro forma
data for the acquisitions of the Labsystems OY and Hybaid divisions of LSI
and the Clinical Products Group of LSI is included elsewhere in this
Prospectus.

(3) Pursuant to Securities and Exchange Commission requirements, earnings (loss)
per share have been presented for all periods. Weighted average shares for
all periods include the 6,500,000 shares issued to Thermo Instrument in
connection with the initial capitalization of the Company.

17
<PAGE> 19

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Company has three principal product lines: biomolecular instruments and
consumables, clinical laboratory equipment and supplies and information
management systems. The Company's biomolecular instruments and consumables are
based on proprietary immunoassay, optical biosensor, polymerase chain reaction
("PCR"), MALDI-TOF mass spectometry ("MALDI-TOF"), DNA amplification and
capillary electrophoresis ("CE") technologies, and are used in pharmaceutical
and biopharmaceutical research, as well as for clinical laboratory testing and
diagnosis of patient samples. The Company's clinical laboratory business
supplies a range of equipment and consumables with applications in cytology,
histology and pathology. The Company's information management systems business
designs, implements and supports laboratory information management systems
("LIMS"), and chromatography data systems ("CDS") for use in laboratories,
industrial applications and clinical testing facilities.

The Company was incorporated in February 1995 and on February 7, 1996,
acquired the DYNEX Technologies division of Dynatech Corporation. Since then,
the Company has acquired from Thermo Instrument the LabSystems and Affinity
Sensors divisions of Fisons, the Labsystems OY, Hybaid and Labsystems Japan
divisions of LSI, and the Clinical Products Group of LSI. The Company's
financial statements include the results of operations of the acquired divisions
of Fisons and LSI from March 29, 1996 and March 12, 1997, respectively, the date
these businesses were acquired by Thermo Instrument (see Note 2 to the Company's
Consolidated Financial Statements included elsewhere in this Prospectus).

In July 1998, the Company will contribute the assets and liabilities of its
health physics division to a joint venture the Company is forming with Thermo
Instrument. The Company will receive a 49% equity interest in the joint venture,
and will initially receive 67% of the profit and losses of the joint venture.
See "Business -- Health Physics Joint Venture." The Company's health physics
business had revenues of $13.4 million in 1997.

Approximately 33%, 45% and 64% of the Company's revenues in 1995, 1996 and
1997, respectively, were derived from sales of products and services outside the
U.S., through export sales and sales by the Company's foreign operations. During
1997, the Company's sales to Asia were approximately 14% of total revenues,
primarily to Japan, China, and Hong Kong. The Company's sales to Asia could be
adversely affected by the unstable economic conditions in Asia. See "Risk
Factors -- Risks Associated with International Operations."

The Company anticipates that a significant portion of its revenues will
continue to be from sales to customers outside the U.S. As a result, the
Company's financial performance and competitive position can be affected by
currency exchange rate fluctuations. The Company may use forward contracts to
reduce its exposure to currency fluctuations.

RESULTS OF OPERATIONS

First Quarter 1998 Compared With First Quarter 1997

Revenues increased to $54.4 million in the first quarter of 1998 from $26.8
million in the first quarter of 1997. Revenues increased $28.0 million due to
acquisitions. In addition, an increase in revenues at DYNEX was slightly more
than offset by decreases in sales of LIMS and MALDI-TOF instruments. Revenues
also decreased $0.2 million due to the strengthening of the U.S. dollar relative
to foreign currencies in countries in which the Company operates.

The gross profit margin increased to 51% in the first quarter of 1998 from
48% in the first quarter of 1997, primarily due to the inclusion of a full
period of higher-margin revenues from the Labsystems OY liquid handling
business, acquired effective March 12, 1997, as well as an increase in the gross
profit margin at DYNEX, primarily due to an increase in the sale of certain
higher-margin products. These increases were offset in part by inclusion of a
full period of lower-margin revenues from the clinical laboratory products
business, acquired effective March 12, 1997.

18
<PAGE> 20

Selling, general, and administrative expenses as a percentage of revenues
increased to 33% in the first quarter of 1998 from 30% in the first quarter of
1997, primarily due to the inclusion of the liquid handling and PCR businesses,
which have higher costs as a percentage of revenues, for a full period in 1998,
offset in part by the impact of the inclusion of the clinical laboratory
products business, which has lower costs as a percentage of revenues, for a full
period in 1998. Research and development expenses increased to $3.9 million in
the first quarter of 1998 from $2.4 million in the first quarter of 1997,
primarily due to the inclusion of a full period of expenses at acquired
businesses. Research and development expenses as a percentage of revenues
decreased to 7% in 1998 from 9% in 1997, primarily due to lower costs as a
percentage of revenues at acquired businesses.

Interest income increased to $1.0 million in the first quarter of 1998 from
$0.7 million in the first quarter of 1997, primarily due to interest income
received from Thermo Instrument on a $9.1 million adjustment to the aggregate
purchase price for the acquisitions of the Labsystems OY, Hybaid and Labsystems
Japan divisions of LSI, offset in part by the effect of lower average invested
balances in 1998. Interest expense increased to $2.0 million in the first
quarter of 1998 from $0.9 million in the first quarter of 1997, primarily due to
interest expense on the debt to Thermo Instrument associated with the Company's
acquisitions.

The effective tax rate was 36% in both periods, and exceeded the statutory
federal income tax rate primarily due to the impact of state income taxes and
nondeductible amortization of cost in excess of net assets of acquired
companies, offset in part by the impact of relatively low tax rates in certain
countries in which the Company operates.

The Company is currently assessing the potential impact of the year 2000 on
the processing of date-sensitive information by the Company's computerized
information systems and on products sold as well as products purchased by the
Company. The Company believes that its internal information systems and current
products are either year 2000 compliant or will be so prior to the year 2000
without incurring material costs. There can be no assurance, however, that the
Company will not experience unexpected costs and delays in achieving year 2000
compliance for its internal information systems and current products, which
could result in a material adverse effect on the Company's future results of
operations.

1997 Compared With 1996

Revenues increased to $202.0 million in 1997 from $71.6 million in 1996.
Revenues increased $132.0 million due to acquisitions. In addition, revenues at
the Company's LIMS and CE businesses increased $3.1 million primarily due to new
product introductions and sales generated at four direct sales and service
offices established in the second quarter of 1997. These increases were offset
in part by a decrease in revenues at the Company's health physics division, due
to weakness in U.S. Department of Energy and nuclear power plant spending, and,
to a lesser extent, a $1.2 million decrease due to the unfavorable effects of
currency translation as a result of the strengthening of the U.S. dollar
relative to foreign currencies in countries in which the Company operates.

The gross profit margin increased to 49% in 1997 from 47% in 1996,
primarily due to the inclusion of higher-margin revenues from Labsystems OY,
acquired effective March 12, 1997, and, to a lesser extent, the inclusion of
higher-margin revenues from the Company's LIMS business, acquired effective
March 29, 1996. These increases were offset in part by the inclusion of
lower-margin revenues from the clinical laboratory products business, acquired
effective March 12, 1997, and, to a lesser extent, the PCR business, also
acquired effective March 12, 1997.

19
<PAGE> 21

Selling, general and administrative expenses as a percentage of revenues
increased to 31% in 1997 from 29% in 1996. The increase was primarily due to the
impact of higher costs at the Labsystems OY and PCR businesses, acquired
effective March 12, 1997, as well as an increase in costs in the LIMS business
as a result of the opening of four direct sales and service offices in the
second quarter of 1997. In addition, the Company incurred $0.7 million of
severance and related costs related to reductions in personnel in 1997. These
increases were offset in part by the impact of clinical laboratory products
business, acquired effective March 12, 1997, which has lower costs as a
percentage of revenues. Research and development expenses increased to $14.1
million in 1997 from $7.3 million in 1996, primarily due to the inclusion of
research and development costs at acquired businesses. Research and development
expenses as a percentage of revenues decreased to 7% in 1997 from 10% in 1996.

During 1996, the Company wrote off $3.5 million of acquired technology in
connection with the acquisitions of the U.K.-based LIMS and optical biosensor
businesses (see Note 2 to the Company's Consolidated Financial Statements
included elsewhere in this Prospectus.)

Interest income increased to $2.4 million in 1997 from $1.3 million in
1996, primarily due to interest income earned on invested proceeds from the
Company's initial public offering of common stock in September and October 1996.
Interest expense increased to $7.7 million in 1997 from $1.9 million in 1996,
primarily due to interest expense on the $50.0 million promissory note to Thermo
Instrument associated with the acquisition of the Labsystems OY and Hybaid
divisions of LSI, interest expense on the $37.9 million of existing indebtedness
owed by the Clinical Products Group of LSI to Thermo Instrument that was assumed
by the Company and the inclusion of a full year of interest for the $50.0
million Convertible Note issued to Thermo Instrument in July 1996. These
increases were offset in part by the effect of the repayment in July 1996 of a
$30.0 million promissory note issued to Thermo Electron in February 1996.

The effective tax rate was 37% in 1997, compared with 38% in 1996,
excluding the effect of the 1996 write-off of acquired technology associated
with the acquisitions of the Company's U.K.-based LIMS and optical biosensor
businesses, for which no tax benefit was recorded. These rates exceeded the
statutory federal income tax rate primarily due to the impact of state income
taxes.

1996 Compared With 1995

Revenues increased to $71.6 million in 1996 from $22.5 million in 1995. An
increase in revenues of $52.3 million due to acquisitions was offset in part by
lower revenues at the Company's MALDI-TOF business 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 its health
physics division 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 the Company's LIMS
and optical biosensor businesses and, to a lesser extent, at the Company's
immunoassay business. These increases were offset in part by a decrease in
margins at the Company's MALDI-TOF business, 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 the Company's recently acquired immunoassay business
and, to a lesser extent, at the LIMS business. In mid-1996 the Company
implemented a cost reduction plan at the immunoassay business, 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 acquired businesses.

20
<PAGE> 22

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 in 1996 represents interest associated with a
$50.0 million 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 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 the U.K.-based LIMS and optical biosensor businesses,
for which no tax benefit has been recorded. These rates exceeded the statutory
federal income tax rate primarily due to losses at foreign businesses for which
no benefit could be recognized and 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.

LIQUIDITY AND CAPITAL RESOURCES

Consolidated working capital was $53.0 million as of April 4, 1998,
compared with $50.5 million as of January 3, 1998. Included in working capital
are cash and cash equivalents of $43.5 million as of April 4, 1998, compared
with $39.7 million as of January 3, 1998. Of the Company's total cash and cash
equivalents at April 4, 1998, $13.0 million was invested in a repurchase
agreement with Thermo Electron (see Note 1 to the Company's Consolidated
Financial Statements included elsewhere in this Prospectus). During the first
quarter of 1998, operating activities used $4.1 million of cash. A decrease in
"Due to parent company and affiliated companies" used $10.3 million in cash,
primarily due to the repayment of certain trade and other operating balances
payable to other Thermo Instrument companies.

The Company's investing activities provided $7.4 million in cash in the
first quarter of 1998. The Company made expenditures of $1.9 million for
purchases of property, plant, and equipment, and expects to make capital
expenditures of approximately $4.9 million during the remainder of 1998.

The Company's financing activities provided $0.8 million of cash during the
first quarter of 1998. A net increase in the Company's bank overdraft facility
provided $0.7 million.

During 1997, $16.7 million of cash was provided by operating activities. An
increase in accounts receivable used $11.3 million in cash, primarily as a
result of an increase in shipments near the end of the year.

Investing activities used $20.1 million in cash during 1997. In May 1997,
the Company agreed to acquire Labsystems OY and Hybaid, which comprised the
Biosystems Group of LSI, from Thermo Instrument for approximately $102.5
million, which consists of: a) approximately $91.5 million for the net operating
assets of the acquired businesses plus b) $11.0 million for an equivalent amount
of cash held by the acquired businesses. Of the $102.5 million aggregate
purchase price, the Company paid $35.6 million in cash to Thermo Instrument in
June 1997, issued a $50.0 million promissory note to Thermo Instrument, and
issued to Thermo Instrument in May 1998 1,300,000 shares of Company common stock
valued at $16.9 million at the time of the May 1997 agreement to acquire
Labsystems OY and Hybaid (see Note 2 to the Company's Consolidated Financial
Statements included elsewhere in this Prospectus). The $50.0 million promissory
note, which bears interest at the 90-day Commercial Paper Composite Rate plus 25
basis points, set at the beginning of each quarter, is due on July 15, 1999.
During the first quarter of 1998, the Company received a refund from Thermo
Instrument of approximately $5.1 million relating to the purchase price for the
Biosystems Group, based on Thermo Instrument's final determination of the book
value of the acquired net assets as well as its final determination of the cost
in excess of net assets acquired. In July 1997, the Company agreed to acquire
Labsystems Japan for approximately $5.9 million in cash. Subsequently, the
Company assumed certain additional trade payables totaling approximately $4.4
million, which resulted in a corresponding decrease in the purchase price. Of
the $4.4 million purchase price adjustment, $0.4 million was received in 1997
and the remainder was received during the first quarter of 1998 (see Note 2 to
the Company's Consolidated Financial Statements included elsewhere in this
Prospectus). The Company expended $4.5 million for purchases of property, plant
and equipment during 1997.

21
<PAGE> 23

The net purchase price for the Clinical Products Group will be paid with
3,007,930 shares of Company Common Stock valued at $66.7 million (see Note 2 to
the Company's Consolidated Financial Statements included elsewhere in this
Prospectus). Issuance of the Common Stock will occur immediately after the
listing upon the AMEX of the 3,007,930 shares of Company Common Stock issuable
to Thermo Instrument, which will require approval by the Company's shareholders.
Because Thermo Instrument is the Company's majority shareholder and intends to
vote its shares in favor of such listing, the approval is assured. In addition,
the Company will assume approximately $37.9 million of existing indebtedness
owed by the Clinical Products Group to Thermo Instrument, making the gross
purchase price approximately $104.5 million. This amount included approximately
$12.0 million for an equivalent amount of cash acquired. The existing
indebtedness owed to Thermo Instrument is due January 2, 1999 and bears interest
at the 90-day Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter.

The Company has undertaken a restructuring of the Biosystems Group of LSI
and the Clinical Products Group of LSI (see Note 2 to the Company's Consolidated
Financial Statements included elsewhere in this Prospectus). The Company
expended $3.4 million and $0.9 million for restructuring activities during 1997
and the first quarter of 1998, respectively, and had accrued $4.2 million at
April 4, 1998, which will be expended primarily during the remainder of 1998.
The Company expects that such expenditures will not change materially from
amounts accrued at April 4, 1998.

The Company has signed one agreement and two non-binding letters of intent
relating to the purchase of three businesses for aggregate consideration of
approximately $16.1 million in cash. These proposed acquisitions are subject to
certain conditions, including, in the case of the agreement, stockholder
approval by the potential acquiree, and in the case of the non-binding letters
of intent, completion of due diligence and negotiation of definitive agreements.
There can be no assurance that these acquisitions will be completed.

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 expects to pay its $37.9 million debt payable to Thermo
Instrument with a portion of the net proceeds from the sale of the shares of
Common Stock offered hereby. The Company also has a $50.0 million promissory
note payable to Thermo Instrument in July 1999, which it expects to pay through
a combination of internal funds and additional debt or equity financing,
possibly to include a portion of the net proceeds from the sale of the shares of
Common Stock offered hereby. Thermo Instrument, however, has stated its
intention to require repayment of such indebtedness only to the extent that the
Company's resources permit. Accordingly, the Company believes that its existing
cash and cash equivalents are sufficient to meet the capital requirements of its
existing businesses for the foreseeable future, including at least the next 24
months.

22
<PAGE> 24

BUSINESS

Biomolecular Instruments and Consumables. The Company's biomolecular
instruments and consumables are based primarily on immunoassay technology
and are widely used in pharmaceutical and biopharmaceutical research, as
well as for clinical laboratory testing and diagnosis of patient samples.
The Company is a market leader in open system microplate technology, which
significantly improves the speed and efficiency of immunoassay testing. The
Company's products also include a wide range of clinical and research
laboratory consumables, including single and multi-channel pipettes.
Additionally, the Company manufactures and markets a variety of proprietary
products based on emerging technologies, including optical biosensor,
polymerase chain reaction ("PCR"), MALDI-TOF mass spectrometry
("MALDI-TOF"), DNA amplification and capillary electrophoresis ("CE")
technologies. Sales and related service of the Company's biomolecular
instruments and consumables accounted for approximately 50% of the
Company's total revenues in 1997 (including sales of several of the
Company's biomolecular instruments and consumables that are also used in
clinical applications).

Clinical Laboratory Equipment and Supplies. The Company is a leader
in the manufacture of cytology and histology equipment and consumables.
These products are used to prepare microscope slides containing thin layers
of specially stained cells from body fluid and tissue samples, which enable
medical professionals to detect and diagnose cancers and other diseases.
The Company also supplies pathology equipment for use in autopsies and
forensic evaluations. Additionally, the Company supplies consumables for
blood gas and ion-selective electrolyte ("ISE") analyzers that diagnose the
type and stage of certain diseases by measuring the levels of gases and
electrolytes in blood, plasma and urine samples. Sales and related service
of the Company's clinical laboratory equipment and supplies accounted for
approximately 31% of the Company's total revenues in 1997.

Information Management Systems. The Company offers laboratory
information management systems ("LIMS") and chromatography data systems
("CDS") for use in laboratories, industrial applications and clinical
testing facilities. The Company's information management systems are
designed to facilitate the monitoring and analysis of samples and the
organization and storage of data throughout the laboratory or clinical
lifecycle. Sales and related service of the Company's information
management systems accounted for approximately 12% of the Company's total
revenues in 1997.

23
<PAGE> 25

the introduction of advanced bioanalytical systems such as those developed and
marketed by the Company. See "-- Industry Background."

INDUSTRY BACKGROUND

During the past decade, biochemical research has been evolving rapidly as a
result of new techniques and discoveries that enabled scientists to address
biological problems at the molecular level. For example, dramatic strides have
been made in the understanding of the composition and function of the human
genome. These advances have in turn led to important developments in the
understanding, diagnosis and treatment of a wide variety of diseases, including
cancer, heart disease and diabetes.

Industry sources estimate that approximately 50,000 research groups are
engaged in biochemical and other forms of life sciences activities worldwide,
including academic institutions, government laboratories and private
foundations, as well as biotechnology, pharmaceutical and chemical companies and
diagnostic laboratories. A pharmaceutical manufacturer may spend as much as $500
million and as many as 12 to 15 years to develop a single government-approved
drug. Industry participants are thus seeking ways to accelerate and automate
their processes to lower costs and shorten research time. The increased emphasis
on cost-effectiveness and optimizing resources in the life sciences is forcing
organizations to become more selective in the allocation of their research
budgets and to embrace new technologies that accelerate and improve the
cost-effectiveness of the drug discovery and development process.

Researchers at pharmaceutical and biotechnology companies, universities and
other institutions have identified numerous novel receptors, enzymes and other
proteins as drug targets and have generated information on their potential role
in human diseases. Advances in genomics research leading to the identification
of genes implicated in human diseases have also contributed to this
proliferation of new biological targets. The identification of these targets has
provided expanded opportunities for the discovery and development of new drugs
and diagnostic applications. Through combinatorial chemistry (the process of
assembling chemical molecules to rapidly produce many ordered sequences to such
molecules), scientists are creating large libraries of novel compounds which are
screened against biological targets for molecular activity. This process
requires pharmaceutical and other companies to seek methods to rapidly design,
synthesize and evaluate greater numbers of drug candidates. The Company believes
that bioanalytical instruments will provide the medium to enable pharmaceutical
companies to achieve this goal.

This increased activity directed at understanding diseases has also created
opportunities for earlier diagnosis of diseases and has contributed to a
corresponding growth in the clinical diagnostics market during the past decade.
In order for medical professionals to make accurate diagnoses, they must have
precise and reliable methodologies for preparing tissue and cell samples. The
Company's cytology and histology equipment and consumables are designed to
address this need. The Company estimates that its products are used worldwide by
medical professionals to prepare over one million covered microscope slides of
tissue and cell specimens each day. The Company expects that the clinical
diagnostics market will continue to expand as new automated equipment and
disease-specific testing techniques lead to greater accuracy and additional
diagnostic applications. For example, there is currently an increasing demand
for immunohistochemistry tests, which enable medical professionals not only to
detect the presence of cancerous cells in a tissue sample, but also to determine
if the cancer has metastasized to other locations in the body. In addition,
medical professionals are beginning to use diagnostic tests for disease
prevention and screening. As screening and prevention tests become more common,
an even greater need for advanced histology and cytology equipment and
consumables will develop.

24
<PAGE> 26

Health care laboratories, including histology and cytology laboratories,
are also under increased pressure to be cost-effective. During the past decade,
governments, insurance companies, health maintenance organizations and large
employers have become focused on reducing health care costs. These economic
trends will require the Company and its competitors in the clinical diagnostics
market to emphasize cost and efficiency, in addition to reliability and
accuracy.

The Company's addressable market is approximately $2.5 billion. This market
is estimated by industry sources to be growing at a rate of approximately 9.0%
per year.

STRATEGY

The Company seeks to become a leading provider of advanced tools that
enable molecular and cellular scientists to understand diseases and to develop
new drugs. The Company's strategy is to:

Broaden Product Offerings. The Company seeks to develop products
internally and make strategic acquisitions so as to offer a broad range of
products in both biomolecular and clinical instruments and consumables. The
advantages of a broad portfolio of products include (i) enabling the Company to
take advantage of industry growth trends throughout the biomolecular research
and clinical diagnostics market, (ii) simplifying customer purchasing by
minimizing the number of suppliers with whom they have to deal and (iii)
allowing the Company to better leverage its existing infrastructure and
recognizable brand names.

Optimize Product Mix. The Company aims to increase the percentage of its
revenues derived from sales of consumables. The Company targets non-commodity
type consumables markets where its technical know-how in either design or
manufacturing allows it to achieve higher gross margins. Primarily as a result
of acquisitions, in 1997 approximately 35% of its revenues were from sales of
consumable products, as compared with 10% in 1996. The Company aims to increase
this percentage by targeting new applications for its existing products,
developing new products and making strategic acquisitions. Additionally, the
Company is able to leverage its installed base of instruments in customers'
laboratories, offering an attractive "total systems solution" to its customers
and achieving recurring revenues.

Continue to Invest in Research for Product Development. The Company's
research and development is focused on the development of new laboratory
products, as well as the enhancement of existing products. In addition to its
own research and development effort, the Company benefits from its ongoing
dialog and suggestions for product innovations from the Thermo Electron group of
companies. The Company is also exploring the opportunity of partnering with
universities and larger biotechnology companies for joint development of new
products and product enhancements.

Continue to Focus on Product Quality. The Company's goal is to be known as
the quality leader in the markets it serves. The Company believes that higher
product quality leads not only to higher sales growth, but also to lower costs
in most of its markets since product problems and warranty and inspection costs
are reduced. Many of the Company's manufacturing facilities are ISO 9000
certified and the Company continues to develop other initiatives to further
increase quality.

Pursue and Integrate Strategic Acquisitions. The Company believes
strategic acquisitions represent a cost-effective method of broadening its
product lines, improving its market share and enhancing growth. The Company
intends to pursue strategic acquisitions, both domestically and internationally.
Acquisitions also offer the Company the opportunity to improve profitability by
achieving significant efficiencies. While the Company maintains a decentralized
operational structure with separate sales forces that allow each operational
unit to focus on better selling its own products, it realizes significant
efficiencies by coordinating research and development efforts and trimming
general and administrative expenses. The Company has a track record of
identifying complementary acquisitions, integrating acquired companies into the
Company's operations and improving the performance of acquired companies by
replicating its applied managerial model. See "-- Acquisitions."

25
<PAGE> 27

PRODUCTS AND MARKETS

Biomolecular Instruments and Consumables

The Company's proprietary immunoassay instruments and laboratory
consumables are offered through its DYNEX and Labsystems OY businesses. The
Company also manufactures and markets a variety of proprietary products based on
emerging technologies, which include optical biosensor, PCR, mass spectrometry,
DNA amplification and CE technologies. These products are offered through the
Company's Affinity Sensors, MALDI-TOF, Hybaid and CE businesses. Sales and
related service of the Company's biomolecular instruments and consumables
accounted for approximately 50% of the Company's total revenues in 1997
(including sales of several of the Company's biomolecular instruments and
consumables that are also used in clinical applications).

Immunoassay. The Company designs, manufactures, sells and supports
products for immunoassay testing. Immunoassays are studies performed for the
qualitative and quantitative analysis of the molecular interaction between
molecules. Immunoassays are widely used in pharmaceutical and biopharmaceutical
research, as well as for clinical testing and diagnosis of patient samples. In
vitro diagnostic instruments for immunoassay testing are designed to measure the
presence of specific substances, or analytes, in blood or other body fluids.
Immunoassay testing is one of the most widely used methods for diagnostic
testing due to its ability to detect very small quantities of analytes.
Immunoassay technology is used in a number of screening, diagnostic and
monitoring tests, including tests for pregnancy, hepatitis and HIV.

Immunoassay products are used in medical and pharmaceutical research,
clinical diagnostics, veterinary medicine, agricultural diagnostics, water
quality testing, and food and beverage testing. The Company believes that trends
in the medical industry, such as the proliferation of disease, new diagnostic
discoveries and the demand for more cost-efficient automated testing systems,
will drive growth in this market over the next few years.

The Company is a market leader in microplate technology, which
significantly improves the speed and efficiency of immunoassay testing. This
technology enables laboratories to run analyses of up to 384 samples
simultaneously using small amounts of both the sample being tested and the
chemicals used to test the samples. Microplate systems offer clinical users the
ability to automate and increase the throughput of their testing processes.
These systems also allow researchers to conduct tests on small samples with
increased sensitivity and consistency. The Company's DYNEX and Labsystems OY
businesses pioneered the development of microplate technology, now an industry
standard for immunoassay testing in clinical applications and in pharmaceutical
and biopharmaceutical research, with its Microtiter and Multiskan product lines,
respectively.

The Company believes that it offers among the most sensitive, flexible and
automated microplate systems currently available. The primary advantage of its
immunoassay testing systems is the breadth of the Company's line of microplate
products and services. In addition, its microplate products are compatible with
all detection technologies and many reagent test kits. A number of immunoassay
systems currently available are closed systems, manufactured and supplied by
certain reagent manufacturers. These closed systems can only process tests made
by that manufacturer, limiting flexibility and requiring the user to purchase
multiple systems in order to utilize a variety of test kits. The Company's
systems are open systems that allow laboratories and clinics to select the most
appropriate and cost-effective assay from products offered by several competing
reagent manufacturers and to rapidly introduce new diagnostic tests as they
become available. The Company believes that this advantage will become
increasingly important as laboratories and clinics face continued cost pressure
in the current healthcare environment.

The Company's principal immunoassay products include:

Microplate detection systems that read the results of diagnostic tests
through the detection of color, luminescence or fluorescence. The Company
markets the DYNEX ImmunoAssay System ("DIAS") reader, a modular,
fully-automated detector that serves as a stand-alone reader or as the
controlling unit of DYNEX's automated microplate processing system; the MRX
and MRX-HD calorimetric detectors; the MLX luminescence detector; and the
Fluorolite line of fluorescence detectors. Suggested U.S. list

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prices for microplate detectors and computerized detection systems range
from approximately $9,000 to approximately $30,000.

Automated testing systems that combine detection, washing, reagent
dispensing, incubation and data management functions. The Company's DIAS
system with time management software allows users to automatically process
and analyze microplate applications and to conduct several assays or tests
concurrently or at pre-scheduled intervals. This system can be configured
to hold up to 24 microplates, resulting in the automated analysis of up to
2,304 samples. Suggested U.S. list prices for these systems range from
approximately $50,000 to approximately $90,000, depending on system
configuration.

Consumables, consisting primarily of small plastic microplates with
384 wells, which are used to hold the sample and reagents during the
immunoassay testing process. The Company's consumables are used by both
reagent manufacturers, who coat them with reagents and resell them to
laboratories, and by researchers, who are developing new applications using
experimental reagents for testing purposes. The Company's plastic products
are manufactured using high-performance resins with characteristics that
facilitate consistent test results.

In 1997, the Company introduced a combination luminescence and fluorescence
microplate, the Fluoroskan Ascent FL. The Fluoroskan offers on-board dispensers
for kinetic analysis, precise temperature control, orbital shaking and robotic
integration capabilities. Additionally, in 1997, the Company launched its
Cliniplate 384-well microplate that addresses the high throughput-sampling
marketplace.

Laboratory Consumables. The Company designs, manufactures and markets a
wide range of laboratory consumables. For example, the Company develops a
variety of hand-held, single and multi-channel pipettes, as well as tips which,
combined with pipettes, are used to transport and deposit precise amounts of
fluids and reagents during tests in clinical and research laboratories. The
Company's Labsystems OY business produced the world's first continuously
adjustable micropipette and the first multi-channel pipette for microplates. The
Company's comprehensive range of Finnpipette liquid handling equipment includes
the Finnpipette Digital and the Finnpipette BioControl, an electronically
assisted trigger-action pipette available in single channel and multi-channel
versions. The Company also manufactures disposable plastic pipette tips that are
designed to be used once and then discarded, as well as a variety of other
specialty, high precision plastic products, including microplates and
microstrips in which laboratory tests are carried out. Suggested U.S. list
prices for standard packages of the Company's laboratory consumables range from
approximately $10 to approximately $1,000.

Optical Biosensors. Optical biosensor systems are a new technology used to
quantify biomolecules and characterize their functional properties. Unlike
competing technologies, which statically measure only the presence and quantity
of a biomolecule, optical biosensors dynamically measure the speed and strength
of the molecular interaction. The result is an analytical instrument that
provides previously unavailable information regarding molecular activity in real
time without the need for chemical or radioactive labels, thereby reducing the
time associated with the testing process.

The Company offers both manual and automated versions of its IAsys optical
biosensor system, which includes patented technology that directly detects an
extensive range of analytes, including biopharmaceuticals, proteins, peptides,
DNA and cells. The Company believes that the IAsys system has a wide range of
applications, including life sciences research, clinical diagnostics,
environmental, industrial and defense applications. Researchers use the
Company's optical biosensors to assist them in understanding molecular
interactions and how molecules bind relative to one another. Suggested U.S. list
prices for the IAsys optical biosensor system range from approximately $85,000
to approximately $200,000.

In 1997, the Company introduced a multi-analyte biosensor, IAsys Auto+
Advantage. The IAsys Auto+ offers improved sensitivity, and the availability of
prewritten scripts provides researchers with a high degree of flexibility when
designing experiments.

MALDI-TOF Mass Spectrometry. 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

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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
believes that the growth of the mass spectrometer market may accelerate as the
advantages of the relatively new MALDI-TOF technology are recognized by the
biotechnology community and as a new applications for the technology are
developed.

The Company currently offers three MALDI-TOF mass spectrometers: LASERMAT,
an automated standard resolution benchtop instrument controlled by a personal
computer and designed to permit biochemists to conduct fast and accurate
measurements in their own laboratories; VISION 2000, a high-resolution,
research-grade instrument designed for the analysis of complex biomolecules with
a mass range of up to 500,000 daltons; and the DYNAMO, an enhanced benchtop
MALDI-TOF mass spectrometer which has significantly enhanced resolution.
Suggested U.S. list prices for the Company's MALDI-TOF mass spectrometers range
from approximately $100,000 to approximately $250,000.

DNA Amplification. The Company designs, manufactures and markets PCR
thermal cyclers and hybridization ovens for DNA amplification. PCR thermal
cyclers are used to amplify short sections of DNA by means of established gene
amplification processes. This technique creates numerous copies of a section of
DNA from a limited sample. PCR is used by research laboratories in order to
diagnose and treat genetically based diseases and in connection with drug
discovery efforts. The Company's hybridization ovens are used in a process in
which synthetic probes made of short fragments of complementary DNA attach to a
DNA sequence under study, enabling identification of the sequence. Suggested
U.S. list prices for the Company's PCR thermal cyclers range from approximately
$2,500 to approximately $6,000 and the suggested U.S. list prices for the
Company's hybridization ovens range from approximately $1,500 to approximately
$3,500.

Capillary Electrophoresis. CE is a purification and separation technique
commercially introduced in 1989. CE systems separate molecules by measuring the
speeds at which different compounds move through an extremely narrow tube, or
capillary, that is charged with an electric field. The largest market for CE
systems are biopharmaceutical 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.

The Company's SpectraPHORESIS 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, the SpectraPHORESIS Ultra. The Company believes that the SpectraPHORESIS
Ultra has more than twice the sample capacity of competing products, thereby
permitting users to decrease labor costs by allowing longer periods of
unattended operation. The Company's CE systems offer high sensitivity, as well
as advanced data handling, control and automation features. The Company also
offers a line of CE capillaries, buffers and other consumables. Suggested U.S.
list prices for the Company's CE products range from approximately $17,000 to
approximately $40,000.

Clinical Laboratory Equipment and Supplies

The Company's Clinical Products Group, which the Company is treating as
acquired effective March 1997 (see "-- Acquisitions" and "Relationship with
Affiliates -- Related Party Transactions"), designs, manufactures and markets a
broad range of clinical laboratory equipment and consumables, including
cytology, histology and pathology equipment and consumables and consumables for
blood gas and ISE analyzers. Sales and related service of the Company's clinical
laboratory equipment and supplies accounted for approximately 31% of the
Company's total revenues in 1997.

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Cytology and Histology. The Company's cytology and histology products are
used by medical laboratories to prepare microscope slides containing thin layers
of specially stained cells from body fluid and tissue samples. Medical
professionals analyze these slides to detect and diagnose cancers and other
diseases. For example, the Company's products are routinely used by health
professionals to prepare Pap smear slides and tumor biopsy slides. Slide
preparation is a multi-step process, which, in most cases, requires a specimen
to be stabilized, mounted, sectioned, stained and coverslipped. The Company
offers a complete line of equipment, accessories and consumables to perform each
step in the slide preparation process. The Company's equipment is designed to
enhance operator safety by limiting contact with body fluid and tissue samples,
as well as by preventing fumes from reagents used in the slide preparation
process from being released into the laboratory.

The Company's Cytospin cytocentrifuge is one of the most widely used
methods for depositing cells from fluid samples, such as cerebrospinal fluids,
bronchial washings and peritoneal cavity aspirations, onto microscope slides.
The Company estimates that more than 10,000 Cytospins are currently being used
in laboratories worldwide. The Company's other principal equipment products
include: tissue processors, which stabilize and preserve tissue samples obtained
from biopsies and autopsies; cryostats, which rapidly stabilize specimens using
a freezing technique; embedding stations, which permanently mount specimens in
paraffin to facilitate sectioning; microtomes, which section samples; automatic
slide stainers, which stain the nuclei and cytoplasm of the mounted cells; and
coverslippers, which permanently mount glass covers on the slides. Prices for
the Company's cytology and histology equipment range from approximately $5,000
to approximately $40,000.

The Company also manufactures and markets cytology and histology
consumables. The Company's Cytofunnels are patented disposable specimen
containers that are used in conjunction with its Cytospin. Other consumables
offered by the Company include biopsy bags, disposable cutting blades, knife
holders, reagents used by tissue processors, cell stains and fixatives, glass
slides and slide racks. In addition, the Company manufactures and markets
immunohistochemistry kits, which are used to provide specific information about
a disease. For example, they are used to determine the primary location of a
malignancy based on the antibodies present in a secondary tumor specimen.

Pathology Equipment. The Company is also a leading provider of vented
dissection equipment and refrigerated storage facilities used in autopsies and
forensic evaluations. The Company's products, which are sold under the
Shandon-Lipshaw brand name, are used by laboratories, morgues, medical schools,
medical examiners, and research and veterinary facilities worldwide. The Company
also designs, manufactures and installs complete autopsy/mortuary facilities
based upon customers' specific space, function and budget requirements.

The Company manufactures and markets a series of stationary tables, ranging
from a standard autopsy table to an elevating, rotating autopsy table. These
tables are equipped with several safety features including a down draft
ventilation system to ensure that fumes are exhausted away from the work surface
and a built-in continuous table rinse to flush waste away from the table
surface. The Company's other principal pathology products include dissecting
sinks, cadaver lifts, transportable tables and carts, refrigerators, storage
facilities and workstations. In addition to being used for autopsies, the
Company's workstations are used by medical laboratories for many types of gross
examinations and sectioning of specimens. Prices for the Company's pathology
products range from approximately $10,000 for a standard autopsy table to
approximately $850,000 for a complete facility. In addition, the Company also
markets numerous pathology-related consumables including fume hoods and filters,
dissecting tools, instrument trays, and disposable boots and gloves.

Blood Gas and ISE Consumables. The Clinical Products Group's ALKO
Diagnostic business supplies consumables for blood gas and ISE analyzers. Blood
gas analyzers are used to diagnosis the type and stage of certain diseases, such
as coronary artery disease, by measuring the levels of gases in blood samples.
ISE analyzers perform the same function by measuring the levels of electrolytes
in blood, plasma, serum and urine samples. The Company's products are used to
calibrate, clean and maintain these analyzers. The Company's products are
compatible with most major brands of blood gas and ISE analyzers, and are used
by hospitals and medical laboratories in all 50 states and in 100 countries
worldwide. The Company's principal products include

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electrodes, buffers, calibrators, cartridges and tubing. Prices for these
consumables range from approximately $5 to approximately $1,100.

Information Management Systems

The Company offers LIMS and CDS, through its LabSystems business, for use
in laboratories, industrial applications and clinical testing facilities. Sales
and related service of the Company's information management systems accounted
for approximately 12% of the Company's total revenues in 1997.

Companies can improve the efficiency of their analytical laboratories by
using a LIMS to perform sample login, test scheduling, test execution automated
results entry, results validation, reporting and data archiving. LIMS benefits
include minimizing the number of laboratory personnel needed to handle increases
in sample volume, facilitating the implementation of new analytical procedures
and improving compliance with regulatory guidelines. Productivity and accuracy
can also be enhanced by reducing manual data transcription and automating
error-prone manual tasks such as sample status tracking, calculations, report
preparation and information retrieval. In addition, LIMS facilitates the
maintenance of data and procedure security, audit trials and validation checks
that are key components in complying with regulatory agency requirements.

LabSystems, the Company's information management systems business, designs,
develops and supports LIMS and CDS. LabSystems is recognized as one of the
world's leading LIMS suppliers. LabSystems also maintains an implementation
support group that provides software customization and project management
services for its customers. LabSystems' products are distributed throughout a
diversified user base, including research and development, quality
assurance/quality control and processing facilities. A substantial majority of
LabSystems' 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.

SampleManager, LabSystems' LIMS product, is a fully-integrated suite of
software modules that provides industry-specific functionality in the areas of
statistical analysis, instrument control, pharmaceutical stability studies,
pharmaceutical batch material control and data security and integrity. The
current version of SampleManager is available on DEC, HP and IBM platforms,
running Rdb, Oracle and Microsoft Windows NT. The Company believes that it was
the first LIMS vendor worldwide to achieve an accredited ISO 9001/TickIT
certification. The SampleManager had been installed in over 550 sites worldwide.

LabSystems also offers SampleManager-IDI, a software module that enables
SampleManager to interface with SAP AG's R3 office data management system. The
Company's SampleManager-IDI software module has been certified by SAP AG and
integrates SampleManager with the user's other software data systems. The
Company believes that its SampleManager-IDI interface, which is used by
approximately 30% to 35% of LabSystems' customers, is an important selling point
for the SampleManager product. All current LabSystems LIMS products are now
fully compatible with the 32 bit Windows NT operating system.

XChrom and Multichrom, the Company's CDS products, are open system
analytical tools which assist users in analyzing chromatographic data obtained
via gas and liquid chromatography and capillary electrophoresis. XChrom is
available on a variety of platforms, runs on any Intel 486 or Pentium-based
personal computer under Microsoft Windows NT, and may be customized to suit most
hardware configurations. Multichrom is a multi-user, multi-channel system for
the DEC Alpha AXP and VAX platforms under the OpenVMS operating system.
Chromatography instruments and auto samples from leading vendors can be
controlled centrally by XChrom and Multichrom, providing a common interface
between instruments and aiding productivity and compliance with regulatory
practices.

XChrom and Multichrom are designed for use as stand-alone data systems or
as part of an integrated system running LIMS products. Sample lists, calibration
protocols and analytical results can be shared between the two applications,
simplifying operation and avoiding transcription errors. The close interaction
between the Company's LIMS and chromatography applications is of particular
benefit to customers operating in a regulated environment.

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LabSystems recently introduced Yukon, a software interface between
SampleManager and various analytical instruments. Yukon allows laboratory
personnel to automatically send analytical results from a laboratory test
instrument to SampleManager, thereby eliminating the time-consuming task of
manually transmitting such results into the management information system and
ensuring a secure information flow free of transcription errors. LabSystems also
launched Atlas, a 32 bit Windows NT upgrade to both Multichrom and XChrom, in
April 1998. Atlas is designed for multiple users and multiple instruments for
use in secure FDA, Environmental Protection Agency and other regulated
laboratory environments.

Suggested U.S. list prices for SampleManager, XChrom and Multichrom are
approximately $150,000, $50,000 and $50,000, respectively. Suggested U.S. list
prices for base models of Yukon and Atlas are approximately $7,500 and $12,000,
respectively. Both of these products are modular, and their prices increase if
additional applications are purchased.

ACQUISITIONS

The Company was incorporated in Delaware in February 1995 as a wholly owned
subsidiary of Thermo Instrument. At that time, Thermo Instrument contributed all
of the assets relating to its CE product line, its MALDI-TOF division and its
Eberline health physics division to the Company in exchange for 6,500,000 shares
of Common Stock and the assumption by the Company of substantially all of the
liabilities relating to such businesses. The Company's growth strategy includes
making acquisitions of companies that can benefit from the Company's
distribution channels, technology and management team, or that can provide the
Company with expanded distribution capabilities or broaden its technology and
product lines. The Company has completed the acquisition of the following
businesses since its incorporation:

Clinical Products Group of Life Sciences International

In May 1998, the Company agreed to acquire the Clinical Products Group of
Life Sciences International ("LSI"), which is comprised of Shandon Inc. and its
related businesses, including ALKO Diagnostic Corporation ("ALKO Diagnostic"),
from Thermo Instrument. The Clinical Products Group provides equipment and
consumables for cytology, histology and pathology applications. It also supplies
consumables for blood gas and ISE analyzers worldwide.

The net purchase price (the "Purchase Price") for the Clinical Products
Group is approximately $66.7 million, payable in shares of the Company's Common
Stock as described below. The Purchase Price represents the sum of the net book
value of the Clinical Products Group as of April 4, 1998, plus a percentage of
Thermo Instrument's total cost in excess of net assets acquired associated with
its acquisition of LSI, based on the aggregate 1996 revenues of the Clinical
Products Group relative to LSI's 1996 consolidated revenues. In addition, the
Company will assume approximately $37.9 million of existing indebtedness owed by
the Clinical Products Group to Thermo Instrument, making the gross purchase
price approximately $104.5 million. This amount included approximately $12.0
million for an equivalent amount of cash acquired. This existing indebtedness
owed to Thermo Instrument is due January 2, 1999 and bears interest at the
90-day Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter.

The Company will acquire all of the issued and outstanding shares of the
companies comprising the Clinical Products Group from Thermo Instrument at a
closing to be held prior to the closing of this offering. At the closing Thermo
Instrument will receive the right to receive an aggregate of 3,007,930 shares of
the Company's Common Stock (the "Purchase Price Shares") on the date that the
Purchase Price Shares are listed on the AMEX. Each Purchase Price Share is
valued at $22.163, the average of the closing prices of the Company's Common
Stock on the AMEX for each of the five trading days prior to April 20, 1998, the
date the parties reached agreement in principle on the material terms of the
transaction. The AMEX's rules require that the listing of the Purchase Price
Shares be approved by the Company's stockholders. Because Thermo Instrument is
the Company's majority stockholder and will vote its shares in favor of such
listing, the listing of the Purchase Price Shares is assured. Because there are
no material conditions to closing, the Company and Thermo Instrument have
treated the acquisition as effectively complete.

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Thermo Instrument acquired LSI pursuant to a tender offer in March 1997.
Since the Company and the Clinical Products Group are deemed for accounting
purposes to be under control of their common majority-owner Thermo Instrument,
the Company's acquisition of the Clinical Products Group has been accounted for
in a manner similar to a pooling of interests. Accordingly, the Company's
financial statements include the results of the Clinical Products Group from
March 1997 and the Purchase Price Shares have been deemed to be outstanding from
that date.

The Company and Thermo Instrument have made representations and warranties
to one another with respect to certain customary matters. Each party has agreed
to indemnify the other for a period of two years from the closing of the
transaction for any damages the indemnified party suffers as a result of
breaches of such representations and warranties by the other party.
Notwithstanding this indemnification, the Company would be required to report as
an expense in its results of operations the full amount, including any
reimbursable amount, of any damages, with any indemnification payment it
receives from Thermo Instrument being treated as a contribution to stockholders'
investment.

See "Relationship with Affiliates -- Related Party Transactions."

Biosystems Group of LSI. The Company acquired the Labsystems OY and Hybaid
Limited ("Hybaid") divisions of LSI from Thermo Instrument for a purchase price
of approximately $97.4 million, effective March 1997. The purchase price
included a cash payment of approximately $30.5 million, issuance of a $50.0
million promissory note to Thermo Instrument due July 15, 1999 and the issuance
of 1,300,000 shares of Common Stock to Thermo Instrument. The Company received
stockholder approval for the listing of the 1,300,000 shares issued to Thermo
Instrument in April 1998. See "Relationship with Affiliates -- Related Party
Transactions." Labsystems OY, based in Finland, manufactures microplate-based
immunoassay instruments and liquid handling equipment. Hybaid, based in the
U.K., manufactures thermal cyclers and consumables for DNA amplification.

Affinity Sensors and LabSystems. In March 1996, Thermo Instrument acquired
a substantial portion of the businesses comprising the Scientific Instruments
Division of Fisons plc ("Fisons"). In July 1996, the Company acquired the
Affinity Sensors and LabSystems divisions of Fisons from Thermo Instrument for a
purchase price of approximately $9.0 million in cash, effective March 1996.
Affinity Sensors is a supplier of optical biosensors that enable real-time
analysis of molecular interactions for use in life sciences research by the
pharmaceutical and biotechnology industries, universities and medical research
institutes. LabSystems designs, implements and supports LIMS and CDS used in
research and development, quality assurance and control and processing plants.
See "Relationship with Affiliates -- Related Party Transactions."

DYNEX Technologies ("DYNEX"). The Company acquired the DYNEX division of
Dynatech Corporation in February 1996 for a purchase price of approximately
$43.2 million in cash and the assumption of certain liabilities. In 1997 the
Company negotiated a post-closing adjustment in accordance with the terms of the
purchase agreement, resulting in a refund of $955,000. DYNEX supplies automated
systems, detection systems and consumables for the immunoassay market.

HEALTH PHYSICS JOINT VENTURE

In April 1998, the Company announced its intention to form a health physics
joint venture with Thermo Instrument. On July 5, 1998, the Company will
contribute the assets and liabilities of its Eberline health physics business,
which is based in Santa Fe, New Mexico, to the joint venture, in exchange for a
49% equity interest in the joint venture. The Company's Eberline health physics
business, a supplier of analytical instrumentation, radiation detection and
radiation monitoring systems, had revenues in 1997 of approximately $13,371,000,
which was approximately 7% of the Company's revenues.

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venture. National Nuclear, a manufacturer of specialized instruments, systems
and monitoring devices for the detection of low-level amounts of radioactive
materials and contamination, had revenues in 1997 of approximately $3,485,000.
Eberline Instruments, a manufacturer of radiation measuring and monitoring
devices for personal protection, environmental monitoring and military
applications, had revenues in 1997 of approximately $12,095,000.

Profits and losses from the joint venture will be allocated (a) one-third
to Thermo Instrument and two-thirds to the Company until the later of (i) July
2000 or (ii) such time as the joint venture has achieved consolidated division
income (defined as operating income excluding payments pursuant to the Services
Agreement (see "Relationship with Affiliates -- Corporate Services Agreement"))
of 17% for a full fiscal year and (b) to the members of the joint venture in
accordance with their respective equity interests thereafter.

The Company believes that its Eberline health physics business no longer
fits within its strategic business plan. The formation of this health physics
joint venture with Thermo Instrument provides an alternative that will not only
provide common managerial, operational and marketing support for the businesses
to be contributed, but will also allow the Company to better focus on its core
businesses described elsewhere in this Prospectus. The businesses to be
contributed to the joint venture have similar products and markets and will thus
be able to minimize duplicate managerial and marketing costs, as well as to
coordinate research and development and manufacturing activities. Mr. Donald W.
Hanna, a Vice President of the Company, will devote a portion of his time to the
operations of the joint venture.

See "Relationship with Affiliates -- Related Party Transactions."

CUSTOMERS, MARKETING AND DISTRIBUTION

Customers

The Company has more than 30,000 customers in the U.S. and over 35 foreign
countries. The Company's customers include pharmaceutical, biotechnology,
chemical and industrial companies, hospitals and medical laboratories, as well
as academic institutions, government laboratories and private foundations. The
Company derived 64% of its revenues from customers located outside of the United
States in fiscal 1997. See "Risk Factors -- Risks Associated with International
Operations." For more detailed financial information regarding the Company's
foreign and domestic operations and export sales, see Note 8 of Notes to the
Company's Consolidated Financial Statements. No single customer accounted for
more than 10% of the Company's total revenues in fiscal 1997 or 1996. U.S.
government agencies accounted for 24% of the Company's total revenues in 1995,
primarily due to the Company's Eberline health physics business' sales to the
U.S. Department of Energy.

Marketing and Distribution

The Company markets, sells and distributes its products worldwide through a
number of channels, including direct sales forces, independent sales
representatives, distributors and original equipment manufacturers ("OEMs"). The
method of distribution is determined independently by each of the Company's
businesses, which take into account the particular product line and market size
and potential, as well as the local business conventions, industry mix and the
availability of technically qualified representatives.

Biomolecular Instruments and Consumables. The Company has focused its
sales efforts on the research and clinical diagnostic 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 ("FDA"), the National Institutes of Health and
the Centers for Disease Control. The Company's products are used principally by
large research and clinical laboratories and manufacturers, including
pharmaceutical companies, where large-batch, high volume testing methods are
required.

The Company sells its immunoassay and optical biosensor products
principally through its direct sales force, OEMs and through distributors
throughout the major countries in the world. The Company maintains

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direct sales and service offices in Europe, Japan and the United States. The
Company also sells through manufacturers' representatives.

The Company distributes its laboratory consumables through regional and
national distributor sales channels in over 100 countries worldwide. The
Company's microplates are also sold to OEMs that then incorporate the
microplates into kits sold to diagnostic laboratories.

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. The Company distributes its MALDI-TOF
mass spectrometry products in Japan through an arrangement with ThermoQuest
Corporation, a majority-owned subsidiary of Thermo Instrument ("ThermoQuest").
ThermoQuest also distributes the Company's CE products and is the exclusive
distributor of such products in jurisdictions in which it maintains a direct
sales force. See "Relationship with Affiliates -- Related Party Transactions."

Clinical Laboratory Equipment and Supplies. The Company's cytology and
histology products are used primarily by hospitals and medical laboratories. The
Company's pathology products are used principally by laboratories, morgues,
medical schools, medical examiners, and research and veterinary facilities. The
Company sells to its customers through its direct sales force in France,
Germany, the United Kingdom and the United States, and through distributors.

The Company's blood gas and ISE analyzers are principally used by hospitals
and medical laboratories and are sold through its direct sales force in the
United States, international distributors and OEM arrangements.

Information Management Systems. The Company serves a variety of geographic
markets and maintains direct sales and service offices in the United Kingdom and
the United States, as well as a network of distributors, including in some
locations Thermo Instrument, in the United States, Europe, Australia and China.
See "Relationship with Affiliates -- Related Party Transactions."

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.

Biomolecular Instruments and Consumables

The Company competes in the immunoassay market primarily on the basis of
technological innovation, performance (including throughput and sensitivity),
flexibility and price. 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.

The Company competes in the laboratory consumables market primarily on the
basis of price, performance and ease of use. The Company's principal competitors
in the consumables or plastics market include Nalge Nunc Inc., Corning-Costar
Corporation, Rainin Instruments, Greiner GmbH and Eppendorf GmbH.

In the optical biosensors market, the Company competes primarily on the
basis of technological innovation, performance and price. The Company's main
competitor is Biacore.

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., a subsidiary of Perkin Elmer Corporation
("Perkin Elmer"), Shimadzu Corporation, Hewlett-Packard Company
("Hewlett-Packard"), Bruker Instruments Inc. and Micromass Ltd.

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The Company's thermal cyclers compete in the DNA amplification market
primarily on the basis of performance, ease of use and, to a lesser extent,
price. Major competitors include Perkin Elmer and MJ Research Technology, a
division of Protean.

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 Coulter,
Inc. ("Beckman"), Bio-Rad Laboratories, Inc. and Hewlett-Packard.

Clinical Laboratory Equipment and Supplies

The Company competes primarily on the basis of product quality, brand
recognition, customer service and price. The Company's competitors include:
Leica Microsystems and Sakura Finetechnical Co., Ltd. in the cytology and
histology equipment market; Allegiance Corporation, DAKO and Merck & Co., Inc.
in the cytology and histology consumables market; and Jewett Refrigeration Co.,
Inc. and Mopec Inc. in the pathology market. The Company competes primarily on
the basis of price, customer relationships and product quality in the blood gas
and ISE analyzers market. Its principal competitors are the manufacturers of the
blood gas and ISE analyzers, including Abbott Laboratories, AVL Scientific
Corp., Chiron Corporation, Instrumentation Laboratory Company and Radiometer
America Inc.

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, Beckman, Hewlett-Packard and Lab
Vantage Solutions, Inc., and Waters Corporation in the CDS market.

MANUFACTURING AND SUPPLIERS

The Company manufactures most of its proprietary technology-based products,
which generally provides faster time to market, cost savings and quality
assurance advantages to the Company. When economical to do so, certain other
manufacturing is outsourced by the Company, especially the manufacturing of
commodities and other products readily available in the market.

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.

RESEARCH AND DEVELOPMENT

The Company's research and development activities are designed to provide
the Company with continued technological leadership in its markets. Some of the
Company's current research and development projects include the following:
development of an automated immunoassay separation system based on a proprietary
magnetic bead technology for applications in research and clinical laboratories;
entering clinical trials with its Cytofunnel and Cytospin for FDA clearance of
their use to improve cervical cancer screening; development of new manual and
electronic pipettes; launching a new in situ hybridization system to carry out
DNA amplification on cells deposited on microscope slides; and development of
automated microtomes, enhanced cryostats and the next generation of slide
staining equipment.

The Company's research and development activities include new product
development, product updates and enhancement of existing products. A substantial
amount of the Company's research and development expenses are incurred in
connection with product development. Approximately 12% of the Company's
employees are involved with research and product development. The Company's
research and development expenditures were approximately $14.1 million, $7.3
million and $1.3 million during fiscal 1997, 1996 and 1995, respectively.

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GOVERNMENT REGULATIONS

Government regulations play a significant role in the research,
development, production and commercialization of health care products, such as
pharmaceuticals, diagnostics and certain instrumentation. 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 or an in vitro diagnostic product will be used in human clinical or
diagnostic applications, the manufacturer of that instrument may be required to
submit to the FDA, prior to commercial distribution of the instrument or in
vitro diagnostic product in the U.S., either a premarket notification ("510(k)")
or a premarket approval ("PMA") application, unless the product has been in
commercial distribution for the labeled intended use since before May 28, 1976,
the effective date of the Medical Device Amendments to the Federal Food, Drug
and Cosmetic Act. The FDA uses a risk-based system to classify medical devices.
Unless they are exempt, lower risk devices, in Class I and Class II, are
generally subject to 510(k) premarket notification, in which the FDA determines
that a device is safe and effective based on its "substantial equivalence" to a
legally marketed product. Highest risk, Class III devices are subject to the
premarket approval process, in which the FDA generally determines the safety and
effectiveness of the device based on the submission of clinical data. The
Company has, to date, been required to obtain 510(k) clearances with respect to
certain clinical applications, instruments and in vitro diagnostic products,
which are classified as Class I and Class II 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 international government agencies will permit
marketing of the Company's products in their respective jurisdictions.

In addition, a significant percentage of the Company's product revenues are
derived from sales outside of the United States. 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 instrument
products in Europe, certain of the Company's facilities maintain ISO 9000 series
registration, an internationally-recognized set of quality standards, and each
of its instrument products is required to obtain a CE Mark as evidence of
compliance with European Union electronic safety requirements. Failure to
receive a CE Mark certification would prohibit the Company from selling its
products in Europe, which could have a material adverse effect on the Company's
business and results of operations. At the present time, analytical instruments
and in vitro diagnostic products are not subject to CE Mark requirements under
the Medical Device Directive, but it is anticipated that CE Mark requirements
will be extended to include analytical instruments and in vitro diagnostic
products within the next two years. Certain other countries require the Company
to obtain clearances for its products prior to marketing the products in those
countries. In addition, certain countries impose product specifications that

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<PAGE> 38

differ from those mandated in the United States. These requirements may
significantly affect the efficiency and timeliness of international market
introductions of the Company's products.

The Company is also subject to numerous environmental and safety laws and
regulations, including those governing use of hazardous materials. Any
violations of, and the costs of compliance with these regulations could
adversely impact the Company's business and results operations.

See "Risk Factors -- Government Regulations; No Assurance of Regulatory
Approval."

INTELLECTUAL PROPERTY

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 and has
applications pending for additional United States patents and a number of
foreign counterparts for its patents in various foreign countries. In addition,
the Company has registered, or other, trademarks. Patent protection provides the
Company with competitive advantages with respect to certain systems. The Company
believes, however, that technical know-how and trade secrets are more important
to its business than patent protection.

The Company seeks to maintain the confidentiality of its proprietary
technology that is not covered by patent protection by requiring employees who
work with proprietary information to sign confidentiality agreements and by
limiting access by parties outside the Company to such confidentiality
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.

Competitors of the Company and other third parties hold issued patents and
pending patent applications relating to certain instrumentation and other
related technologies, 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 has been named as a defendant
in a patent infringement lawsuit brought by Biacore AB and Biacore, Inc.
("Biacore"). The complaint alleges that the design of the cuvette used in the
Company's optical biosensor system infringes a patent held by Biacore; however,
if Biacore were successful in enforcing such patent, the Company believes that
it is entitled to indemnification for losses in this matter by Rhone-Poulenc
Rorer Inc. ("Rhone-Poulenc"), the parent company of Fisons plc ("Fisons").
Fisons initially sold the business to Thermo Instrument in March 1996.

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BACKLOG

The backlog of firm orders was $31.2 million and $20.1 million as of April
4, 1998 and March 29, 1997, respectively. The Company includes in backlog only
those orders for which it has received firm purchase orders and for which
delivery has been specified within twelve months. Because of the possibility of
customer changes in delivery schedules, cancellation of orders and potential
delays in product shipments, the Company's backlog as of any particular date may
not be representative of actual sales for any succeeding period.

FACILITIES

The Company owns approximately 70,000 square feet of manufacturing,
distribution and sales space in Pittsburgh, Pennsylvania and 2,000 square feet
of office space in Stockholm, Sweden. The Company leases approximately 121,000
square feet of manufacturing, sales and administration space in Virginia,
Colorado, Massachusetts and California under leases expiring through 2003. The
Company leases approximately 403,000 square feet of manufacturing, sales and
administration space in Finland, England, Russia and other European countries,
including 14,000 square feet subleased from ThermoQuest (see "Relationship with
Affiliates -- Related Party Transactions"), under leases expiring through 2016.
In addition, the Company leases approximately 12,000 square feet of sales space
in Japan and Hong Kong under leases expiring through 1999. The Company also owns
approximately 60,000 square feet of manufacturing, sales and administration
space in Santa Fe, New Mexico and has a lease for 8,000 square feet of
manufacturing, sales and administration space in Columbia, South Carolina that
will be contributed to the joint venture with Thermo Instrument. See
"Business -- Health Physics Joint Venture" and "Relationship with
Affiliates -- Related Party Transactions."

The Company believes that its existing facilities and offices are in good
condition and are adequate for its current needs and that suitable additional
space will be available as needed in the future. The Company also believes that
none of its manufacturing facilities is currently fully utilized and that the
additional manufacturing capacity available at such facilities will be
sufficient to satisfy its manufacturing requirements for at least the next 12
months. With respect to leases expiring in the near future, in the event that
the Company does not renew such leases, the Company believes that suitable
alternative space is available for lease on acceptable terms.

EMPLOYEES

As of May 20, 1998, the Company had 1,420 employees, of which 164 were
engaged in research and development, 378 in sales and marketing, 714 in
manufacturing, operations and service, and 164 in general administrative
functions. Two hundred forty-one of the Company's employees at its Labsystems OY
business in Finland, 70 employees at one of the operations of its Clinical
Products Group in the UK and 36 employees of the Company's Eberline health
physics business are represented by labor unions. The Company considers its
relations with its employees and the labor unions to be good.

LEGAL PROCEEDINGS

The Company has been named as a defendant in a patent infringement lawsuit
brought by Biacore. The complaint alleges that the design of the cuvette used in
the Company's optical biosensor system infringes a patent held by Biacore;
however, if Biacore were successful in enforcing such patent, the Company
believes that it is entitled to indemnification for losses in this matter by
Rhone-Poulenc. See "-- Intellectual Property" and "Risk Factors -- Dependence on
Patents and Proprietary Rights."

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RELATIONSHIP WITH AFFILIATES

Thermo Electron has adopted a strategy of selling a minority interest in
subsidiary companies to outside investors as an important tool in its future
development. As part of this strategy, Thermo Electron and certain of its
subsidiaries have created several privately and publicly held subsidiaries, and
Thermo Instrument has created the Company as a publicly held, majority-owned
subsidiary. From time to time, Thermo Electron and its subsidiaries will create
other majority-owned subsidiaries as part of this spinout strategy. (The Company
and such other majority-owned Thermo Electron subsidiaries are collectively
referred to as the "Thermo Subsidiaries.")

Thermo Instrument develops, manufactures and markets analytical instruments
used to detect and monitor air pollution, radioactivity, complex chemical
compounds and toxic metals and other elements in a broad range of liquids, gases
and solids. For its fiscal years ended December 28, 1996 and January 3, 1998 and
the three months ended April 4, 1998, Thermo Instrument had consolidated
revenues of $1,209,362,000, $1,592,314,000 and $407,943,000, respectively, and
consolidated net income of $132,751,000, $147,258,000 and $37,855,000,
respectively.

Thermo Electron and its subsidiaries develop, manufacture and market
environmental monitoring and analysis instruments and manufacture biomedical
products including heart-assist devices and mammography systems, papermaking and
recycling equipment, alternative-energy systems and other specialized products
and technologies. Thermo Electron and its subsidiaries also provide
environmental and metallurgical services and conduct advanced technology
research and development. For its fiscal years ended December 28, 1996 and
January 3, 1998 and the three months ended April 4, 1998, Thermo Electron had
consolidated revenues of $2,932,558,000, $3,558,320,000 and $944,263,000,
respectively, and consolidated net income of $190,816,000, $239,328,000 and
$65,493,000, respectively.

See "Risk Factors -- Potential Conflicts of Interest."

THE THERMO ELECTRON CORPORATE CHARTER

Thermo Electron and each of the Thermo Subsidiaries recognize that the
benefits and support that derive from their affiliation are essential elements
of their individual performance. Accordingly, Thermo Electron and each of the
Thermo Subsidiaries have adopted the Thermo Electron Corporate Charter (the
"Charter") to define the relationships and delineate the nature of such
cooperation among themselves. The purpose of the Charter is to ensure that (1)
all of the companies and their stockholders are treated consistently and fairly,
(2) the scope and nature of the cooperation among the companies, and each
company's responsibilities, are adequately defined, (3) each company has access
to the combined resources and financial, managerial and technological strengths
of the others, and (4) Thermo Electron and the Thermo Subsidiaries, in the
aggregate, are able to obtain the most favorable terms from outside parties.

To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")
to external financing sources, ensuring compliance with external financial
covenants and internal financial policies, assisting in the formulation of
long-range planning and providing other banking and credit services. Pursuant to
the Charter, Thermo Electron may also provide guarantees of debt or other
obligations of the Thermo Subsidiaries or may obtain external financing at the
parent level for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on behalf of, the
consolidated entity or may obtain financing directly from external financing
sources. Under the Charter, Thermo Electron is responsible for determining that
the Thermo Group remains in compliance with

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all covenants imposed by external financing sources, including covenants related
to borrowings of Thermo Electron or other members of the Thermo Group, and for
apportioning such constraints within the Thermo Group. In addition, Thermo
Electron establishes certain internal policies and procedures applicable to
members of the Thermo Group. The cost of the services provided by Thermo
Electron to the Thermo Subsidiaries is covered under existing corporate services
agreements between Thermo Electron and each of the Thermo Subsidiaries.

The Charter presently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Company, can withdraw from participation in the Charter upon 30
days' prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement and tax allocation
agreement (if any) in effect between the withdrawing company and Thermo
Electron. The withdrawal from participation does not terminate outstanding
commitments to third parties made by the withdrawing company, or by Thermo
Electron or other members of the Thermo Group, prior to the withdrawal. In
addition, a withdrawing company is required to continue to comply with all
policies and procedures applicable to the Thermo Group and to provide certain
administrative functions mandated by Thermo Electron so long as the withdrawing
company is controlled by or affiliated with Thermo Electron.

CORPORATE SERVICES AGREEMENT

As provided in the Charter, the Company and Thermo Electron have entered
into a Corporate Services Agreement (the "Services Agreement") under which
Thermo Electron's corporate staff provides certain administrative services,
including certain legal advice and services, risk management, employee benefit
administration, tax advice and preparation of tax returns, centralized cash
management and financial and other services to the Company. In 1995, 1996 and
1997, the Company was assessed an annual fee for these services equal to 1.2%,
1.0% and 1.0%, respectively, of the Company's revenues. The fee is reviewed
annually and may be changed by mutual agreement of the Company and Thermo
Electron. Thermo Electron and the Company have agreed to reduce the fee to 0.8%
of the Company's revenues effective January 1, 1998. During fiscal 1995, fiscal
1996 and fiscal 1997, Thermo Electron assessed the Company $270,000, $716,000
and $2,020,000, respectively, in fees under the Services Agreement.

Management believes that the charges under the Services Agreement are
reasonable and that the terms of the Services Agreement are fair to the Company.
For items such as employee benefit plans, insurance coverage and other
identifiable costs, Thermo Electron charges the Company based on charges
attributable to the Company. The Services Agreement automatically renews for
successive one-year terms, unless canceled by the Company upon 30 days' prior
notice. In addition, the Services Agreement terminates automatically in the
event the Company ceases to be a member of the Thermo Group or ceases to be a
participant in the Charter. In the event of a termination of the Services
Agreement, the Company will be required to pay a termination fee equal to the
fee that was paid by the Company for services under the Services Agreement for
the nine-month period prior to termination. Following termination, Thermo
Electron may provide certain administrative services on an as-requested basis by
the Company or as required in order to meet the Company's obligations under
Thermo Electron's policies and procedures. Thermo Electron will charge the
Company a fee equal to the market rate for comparable services if such services
are provided to the Company following termination.

RELATED PARTY TRANSACTIONS

Formation of Health Physics Joint Venture

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instrumentation, radiation detection and radiation monitoring systems, had
revenues in 1997 of approximately $13,371,000, which was approximately 7% of the
Company's revenues.

On the same date, Thermo Instrument will contribute to the joint venture
(i) all of the assets and liabilities of National Nuclear Corporation ("National
Nuclear"), a wholly owned subsidiary of Thermo Instrument based in Sunnyvale,
California (ii) all of the issued and outstanding shares of ESM Eberline
Instruments Strahlen - und Umweltmesstechnik GmbH ("Eberline Instruments"), a
subsidiary of Thermo Instrument based in Germany, and (iii) $13,000,000 in cash
in exchange for a 51% equity interest in the joint venture. National Nuclear, a
manufacturer of specialized instruments, systems and monitoring devices for the
detection of low-level amounts of radioactive materials and contamination, had
revenues in 1997 of approximately $3,485,000. Eberline Instruments, a
manufacturer of radiation measuring and monitoring devices for personal
protection, environmental monitoring and military applications, had revenues in
1997 of approximately $12,095,000.

Profits and losses from the joint venture will be allocated (a) one-third
to Thermo Instrument and two-thirds to the Company until the later of (i) July
2000 or (ii) such time as the joint venture has achieved a consolidated division
income (defined as operating income excluding payments pursuant to the Services
Agreement) of 17% for a full fiscal year and (b) to the members of the joint
venture in accordance with their respective equity interests thereafter.

Acquisition of Clinical Products Group of Life Sciences International

In May 1998, the Company agreed to acquire the Clinical Products Group of
Life Sciences International ("LSI"), which is comprised of Shandon Inc. and its
related businesses, including ALKO Diagnostic, from Thermo Instrument. The
Clinical Products Group provides equipment and consumables for cytology,
histology and pathology applications. It also supplies consumables for blood gas
and ISE analyzers worldwide.

The net purchase price (the "Purchase Price") for the Clinical Products
Group is approximately $66,665,000, payable in shares of the Company's Common
Stock as described below. The Purchase Price represents the sum of the net book
value of the Clinical Products Group as of April 4, 1998, plus a percentage of
Thermo Instrument's total cost in excess of net assets acquired associated with
its acquisition of LSI, based on the aggregate 1996 revenues of the Clinical
Products Group relative to LSI's 1996 consolidated revenues. In addition, the
Company will assume approximately $37,861,000 of existing indebtedness owed by
the Clinical Products Group to Thermo Instrument, making the gross purchase
price approximately $104,526,000. This amount included approximately $12,013,000
for an equivalent amount of cash acquired. This existing indebtedness owed to
Thermo Instrument is due January 2, 1999 and bears interest at the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter.

The Company will acquire all of the issued and outstanding shares of the
companies comprising the Clinical Products Group from Thermo Instrument at a
closing to be held prior to the closing of this offering. At the closing, Thermo
Instrument will receive the right to receive an aggregate of 3,007,930 shares of
the Company's Common Stock (the "Purchase Price Shares") on the date that the
Purchase Price Shares are listed on the AMEX. Each Purchase Price Share is
valued at $22.163, the average of the closing prices of the Company's Common
Stock as reported by the AMEX for each of the five trading days prior to April
20, 1998, the date the parties reached agreement in principle on the material
terms of the transaction. The AMEX's rules require that the listing of the
Purchase Price Shares be approved by the Company's stockholders. Because Thermo
Instrument is the Company's majority stockholder and will vote its shares in
favor of such

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listing, the listing of the Purchase Price Shares is assured. Because there are
no material conditions to closing, the Company and Thermo Instrument have
treated the acquisition as effectively complete.

Thermo Instrument acquired LSI pursuant to a tender offer in March 1997.
Since the Company and the Clinical Products Group are deemed for accounting
purposes to be under control of their common majority-owner Thermo Instrument,
the Company's acquisition of the Clinical Products Group has been accounted for
in a manner similar to a pooling of interests. Accordingly, the Company's
financial statements include the results of the Clinical Products Group from
March 1997. In addition, the Purchase Price Shares have been deemed to be
outstanding from that date.

The Company and Thermo Instrument have made representations and warranties
to one another with respect to certain customary matters. Each party has agreed
to indemnify the other for a period of two years from the closing of the
transaction for any damages the indemnified party suffers as a result of
breaches of such representations and warranties by the other party.
Notwithstanding this indemnification, the Company would be required to report as
an expense in its results of operations the full amount, including any
reimbursable amount, of any damages, with any indemnification payment it
receives from Thermo Instrument or its subsidiaries being treated as a
contribution to stockholders' investment.

Acquisition of Biosystems Group of LSI

Also effective March 1997, the Company acquired the Biosystems Group of LSI
from Thermo Instrument. The Biosystems Group is comprised of Labsystems OY and
Hybaid Limited. The acquisition was effected through the issuance of 1,300,000
shares of the Company's Common Stock to Thermo Instrument (valued at $16,868,000
at the time the purchase agreement was signed), payment of $30,483,000 in cash
to Thermo Instrument and the issuance of a promissory note to Thermo Instrument
in the aggregate principal amount of $50,000,000. This promissory note bears
interest at the 90-day Commercial Paper Composite Rate, plus 25 basis points,
set at the beginning of each quarter, and is due July 15, 1999. The aggregate
purchase price of approximately $97,351,000 represents the sum of (i) the net
book value of the Biosystems Group plus (ii) a percentage of Thermo Instrument's
total cost in excess of net assets acquired associated with its acquisition of
LSI, based on the aggregate 1996 revenues of the Biosystems Group relative to
LSI's 1996 consolidated revenues.

Additionally, the Company acquired the Labsystems Japan business of LSI
from Thermo Instrument, effective March 1997, for approximately $5,900,000 in
cash. The purchase price represents the sum of (i) the net book value of
Labsystems Japan plus (ii) a percentage of Thermo Instrument's total cost in
excess of net assets acquired associated with its acquisition of LSI, based on
the aggregate 1996 revenues of Labsystems Japan relative to LSI's 1996
consolidated revenues. Subsequent to the initial determination of the purchase
price, the Company assumed certain additional trade payables totaling
approximately $4.4 million, which resulted in a corresponding decrease in the
purchase price.

Acquisition of Affinity Sensors and LabSystems

In March 1996, Thermo Instrument acquired a substantial portion of the
businesses comprising the Scientific Instruments Division of Fisons plc
("Fisons"), a wholly owned subsidiary of Rhone-Poulenc Rorer Inc.
("Rhone-Poulenc"). 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. The purchase price for Affinity
Sensors and LabSystems represents the sum of (i) the net tangible book value of
those businesses on their date of acquisition by Thermo Instrument plus (ii) a
percentage of Thermo Instrument's intangible assets associated with the acquired
businesses relative to the aggregate 1994 and 1995 revenues of the Fisons
businesses. 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.

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Miscellaneous

The Company has entered into a lease and services arrangement with
ThermoQuest Corporation ("ThermoQuest") under which ThermoQuest leases
approximately 14,000 square feet of space, and provides certain accounting and
administrative services, to the Company. The Company pays ThermoQuest rent in
the amount of three British pounds sterling per square foot and an allocated
portion of ThermoQuest's costs for providing such services. The arrangement may
be terminated by the Company or by ThermoQuest upon six months' prior notice.
During fiscal 1995, fiscal 1996, fiscal 1997 and the three months ended April 4,
1998, the Company paid ThermoQuest approximately $105,000, $105,000, $74,000 and
$12,000, respectively, under this arrangement.

ThermoQuest acts as a distributor of certain of the Company's products, is
the exclusive distributor of the Company's MALDI-TOF products in Japan and is
the exclusive distributor of the Company's CE products in countries in which it
maintains a direct sales force. ThermoQuest is responsible for all installation
and warranty labor obligations at its expense. These arrangements may be
terminated on not less than three months' notice by either party given after
December 31, 1996. During fiscal 1996, fiscal 1997 and the three months ended
April 4, 1998, the Company sold $2,058,000, $1,448,000 and $328,000,
respectively, of products to ThermoQuest under these arrangements. Prior to
1996, ThermoQuest acted as a commission-based sales agent for these products.
Under this prior arrangement, the Company paid ThermoQuest commissions of
$1,263,000 in fiscal 1995.

The Company has entered into an arrangement with ThermoQuest whereby
ThermoQuest provides assembly labor for the Company's CE products on a contract
basis. Under this arrangement, ThermoQuest assembles instruments as required by
the Company for a charge based on the sum of ThermoQuest's actual cost of
materials and the allocable portion of its labor, overhead and other indirect
expenses. During fiscal 1995, fiscal 1996, fiscal 1997 and the three months
ended April 4, 1998, the Company paid ThermoQuest approximately $600,000,
$471,000, $632,000 and $200,000, respectively, under this arrangement.

The Company's Eberline health physics business purchases certain
controllers and detectors from Thermo Instrument under an original equipment
manufacturer agreement. Under this agreement, the Company has the exclusive
right to sell these instruments in the United States, Canada and Mexico. The
Company is responsible for all warranty repair and maintenance obligations at
its expense, but obtains replacement parts from Thermo Instrument without
charge. During fiscal 1996, fiscal 1997 and the three months ended April 4,
1998, the Company purchased $233,000, $193,000 and $54,000, respectively, of
instruments from Thermo Instrument under this agreement. The Company made no
purchases from Thermo Instrument under this agreement in fiscal 1995.

The Company's Eberline health physics business also acts as a distributor
of certain Thermo Instrument product lines and, with the exception of Thermo
Instrument, is the exclusive distributor of such product lines to nuclear power
plants and government agencies in the United States and Canada. Thermo
Instrument is responsible for warranty repairs at its own expense. During fiscal
1995, fiscal 1996, fiscal 1997 and the three months ended April 4, 1998, the
Company purchased $212,000, $306,000, $179,000 and $3,000, respectively, of
instruments from Thermo Instrument under this arrangement.

The Company's Eberline health physics business sells radiation detection
equipment to Thermo Remediation Inc. ("Thermo Remediation"), an indirect,
majority-owned subsidiary of Thermo Electron, which Thermo Remediation resells
in connection with the environmental services it provides. During fiscal 1995,
fiscal 1996 and fiscal 1997, the Company sold $41,000, $175,000 and $686,000,
respectively, of such products to Thermo Remediation under this arrangement. The
Company made no such sales in the three months ended April 4, 1998. The Company
is responsible for all warranty repairs at its expense, but charges fees for
maintenance.

Various Thermo Instrument companies act as distributors of certain of the
Company's LabSystems and Affinity Sensors products under informal arrangements
that date from prior to the acquisition of the Fisons businesses in March 1996.
Under such arrangements, the respective Thermo Instrument companies are
generally responsible for warranty repair and maintenance obligations. During
fiscal 1996, fiscal 1997 and the

43
<PAGE> 45

three months ended April 4, 1998, LabSystems and Affinity Sensors sold an
aggregate of approximately $3,912,000, $1,836,000 and $163,000, respectively, of
products to Thermo Instrument companies under these arrangements. LabSystems and
Affinity Sensors made no sales under these arrangements in fiscal 1995.

Various Thermo Instrument companies act as distributors of certain products
of Labsystems OY and Hybaid Limited under informal distribution agreements.
During fiscal 1997 and the three months ended April 4, 1998, Labsystems OY and
Hybaid Limited sold an aggregate of approximately $5,129,000 and $290,000 of
products to Thermo Instrument companies under these arrangements. Labsystems OY
and Hybaid made no sales under these arrangements in any prior period.

From March through December 1997, the Company's Shandon Inc. subsidiary
("Shandon") acted as a distributor of primarily scientific research equipment
and certain histology equipment for various Thermo Instrument subsidiaries under
informal agreements. During this period and the three months ended April 4,
1998, Thermo Instrument subsidiaries sold an aggregate of $2,731,000 and
$405,000, respectively, of products to Shandon under these arrangements.

From March through December 1997, a subsidiary of Thermo Instrument
provided maintenance and warranty services to customers of Shandon under an
informal agreement. Shandon paid $364,000 for such services. The Thermo
Instrument subsidiary purchased $191,000 of parts from Shandon. Shandon made no
such payments or purchases in the three months ended April 4, 1998.

From March through December 1997, two subsidiaries of ThermoQuest acted as
distributors of certain of Shandon's histology products under informal
arrangements. During this period and the three months ended April 4, 1998,
Shandon sold $2,143,000 and $13,000, respectively, of products to such
ThermoQuest subsidiaries.

From March through December 1997, a subsidiary of Thermo Optek Corporation,
a majority-owned subsidiary of Thermo Instrument ("Thermo Optek"), acted as a
distributor of certain of Shandon's laboratory consumables under an informal
arrangement. During this period, Shandon sold $282,000 of products to such
Thermo Optek subsidiary. Shandon made no such sales in the three months ended
April 4, 1998.

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. In July 1996, the Company borrowed $50,000,000 from
Thermo Instrument pursuant to a subordinated convertible note, due in 2001,
convertible into shares of Common Stock at $16.50 per share, and bearing
interest at an annual rate of 4.875% (the "Convertible Note"). The Company
repaid the amounts owed to Thermo Electron in July 1996 with proceeds from the
Convertible Note. The Company also borrowed $50,000,000 from Thermo Instrument
in connection with its acquisition of the Biosystems Group of LSI from Thermo
Instrument. Such promissory note is due July 15, 1999 and bears interest at the
90-day Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter.

The Company, along with certain other Thermo Subsidiaries, participates in
a notional pool arrangement with Barclays Bank, which includes a $150 million
credit facility. Only European-based Thermo Subsidiaries participate in this
arrangement. Under this arrangement the Bank notionally combines the positive
and negative cash balances held by the participants to calculate the net
interest yield/expense for the group. The benefit derived from this arrangement
is then allocated based on balances attributable to the respective participants.
Thermo Electron guarantees all of the obligations of each participant in this
arrangement. In addition, funds on deposit under this arrangement provide credit
support for overdraft obligations of other participants. As of April 4, 1998,
the Company had a negative cash balance of approximately $3,190,000, based on an
exchange rate of $1.66/L1.00 as of April 4, 1998. For 1997, the average annual
interest rate earned on deposits by participants in this credit arrangement was
approximately 6.5% and the average annual interest rate paid on overdrafts was
approximately 7.2%.

As of December 30, 1995 and December 28, 1996, Thermo Electron and its
other subsidiaries owed the Company $761,000 and $965,000, respectively, for
products, services and miscellaneous items, net of amounts due to Thermo
Electron and its other subsidiaries under the Services Agreement and related
administrative charges and for other products, services and miscellaneous items.
As of January 3, 1998 and April 4, 1998, the Company owed Thermo Electron and
its other subsidiaries $7,085,000 and $510,000, respectively, for amounts

44
<PAGE> 46

due under the Services Agreement and related administrative charges, and for
other products, services and miscellaneous items, net of amounts owed to the
Company by Thermo Electron and its other subsidiaries for products, services and
miscellaneous items. The largest amount of net indebtedness owed by Thermo
Electron and its other subsidiaries to the Company during fiscal 1995 and 1996
was $761,000 and $1,496,000, respectively. These amounts do not bear interest
and were or are expected to be paid in the normal course of business.

As of April 4, 1998, $13,012,000 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 corporate
notes, United States government agency securities, money market funds,
commercial paper and other marketable securities, in the amount of at least 103%
of such obligation. The Company's funds subject to the repurchase agreement will
be readily convertible into cash by the Company and have an original maturity of
three months or less. The repurchase agreement earns interest at the rate of the
90-day Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter.

STOCK HOLDING ASSISTANCE PLAN

In 1996, the Company adopted a stock holding policy which requires its
executive officers to acquire and hold a minimum number of shares of Common
Stock. In order to assist the executive officers in complying with the policy,
the Company also adopted a stock holding assistance plan, under which it may
make interest-free loans to certain key employees, including its executive
officers, to enable these individuals to purchase the Common Stock in the open
market. In 1996, Mr. Barry S. Howe, then the Company's chief executive officer,
received loans in the aggregate principal amount of $164,376 under this plan to
purchase 12,000 shares, of which amount $131,500 was outstanding as of April
1998. Also in 1996, Dr. Richard W.K. Chapman, then the Company's chairman of the
board, received loans in the aggregate principal amount of $131,176.30 under
this plan to purchase 10,000 shares. All of these loans are repayable upon the
earlier of demand or the fifth anniversary of the date of the loan, unless
otherwise authorized by the Human Resources Committee of the Company's Board of
Directors.

45
<PAGE> 47

MANAGEMENT

The Directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Colin Maddix.................................... President, Chief Executive Officer and
52 Director
John N. Hatsopoulos............................. Senior Vice President and Chief Financial
63 Officer
Donald W. Hanna................................. 41 Vice President
Paul F. Kelleher................................ 55 Chief Accounting Officer
Earl R. Lewis................................... 54 Chairman of the Board and Director
Elias P. Gyftopoulos............................ 70 Director
Barry S. Howe................................... 42 Director
Jonathan W. Painter............................. 39 Director
Arvin H. Smith.................................. 68 Director
Arnold N. Weinberg.............................. 68 Director
</TABLE>

All of the Company's Directors are elected annually by the stockholders and
hold office until their respective successors are duly elected and qualified.
Executive officers are elected annually by the Board of Directors and serve at
its discretion.

Colin Maddix has been a Director of the Company, as well as its President
and Chief Executive Officer, since March 1998. Since 1996, Mr. Maddix also has
served as President and Chief Executive Officer of the Clinical Products Group
of Life Sciences International PLC, a supplier of equipment and consumables for
histology, cytology and pathology laboratories worldwide, which was acquired by
Thermo Instrument in March 1997. Mr. Maddix has managed various companies within
the Clinical Products Group since 1992, including Shandon Inc., ALKO Diagnostic
Corporation and Whale Scientific Inc. From 1989 through 1992, he was Vice
President and General Manager of the International Division of Fisher Scientific
International Inc., a distributor and manufacturer of scientific instruments and
consumables with scientific, clinical, educational, occupational health and
safety applications.

John N. Hatsopoulos has served as Vice President, Chief Financial Officer
and a Director of the Company since its inception in February 1995 and as Senior
Vice President since December 1997. Mr. Hatsopoulos has been a Vice President
and Chief Financial Officer of Thermo Instrument since 1988. Mr. Hatsopoulos has
been President of Thermo Electron since January 1997, Chief Financial Officer of
Thermo Electron since 1988 and was an Executive Vice President of Thermo
Electron from 1986 to January 1997. He is also a Director of LOIS/USA, Inc.,
Thermo Electron, Thermedics Inc., Thermo Ecotek Corporation, Thermo Fibertek
Inc., Thermo Instrument, Thermo Power Corporation, Thermo TerraTech Inc., Thermo
Vision Corporation and ONIX Systems Inc.

Donald W. Hanna has been Vice President of the Company since its inception
in February 1995. Mr. Hanna was President of Thermo Instrument's National
Nuclear Corporation subsidiary, a manufacturer of products for the nuclear power
industry, from 1990 through 1995 and has been President of the Company's
Eberline health physics business since 1994.

Paul F. Kelleher has been the Chief Accounting Officer of the Company since
its inception in February 1995. Mr. Kelleher has served as Senior Vice
President, Finance and Administration, of Thermo Electron since June 1997, as
Vice President, Finance, from 1987 to June 1997 and as its Controller from 1982
to January 1996. He is also a Director of ThermoLase Corporation.

Earl R. Lewis has been a Director of the Company since April 1997 and
Chairman of the Board since June 1997. Mr. Lewis has been President and Chief
Executive Officer of Thermo Instrument since March 1997 and January 1998,
respectively, was Chief Operating Officer of Thermo Instrument from January 1996
to January 1998, was Executive Vice President of Thermo Instrument from January
1996 to March 1997, was a Senior Vice President of Thermo Instrument from
January 1994 to January 1996, and was a Vice President of Thermo Instrument from
March 1992 to January 1994. He has been a Vice President of Thermo Electron
since September 1996. Prior to Mr. Lewis' appointment as Chief Executive Officer
of Thermo Instrument, he

46
<PAGE> 48

was also Chief Executive Officer of Thermo Optek, a manufacturer of analytical
instruments based upon the measurement of energy and light and used in materials
analysis, characterization and preparation, from its inception in August 1995
until January 1998, and was the President of its predecessor, Thermo Jarrell Ash
Corporation, for more than five years prior to 1995. Mr. Lewis is also a
Director of Metrika Systems Corporation, ONIX Systems Inc., Thermo Instrument,
Thermo Optek, ThermoQuest, ThermoSpectra Corporation and Thermo Vision
Corporation.

Elias P. Gyftopoulos has been a Director of the Company since its inception
in February 1995. He is Professor Emeritus at the Massachusetts Institute of
Technology, where he was the Ford Professor of Mechanical Engineering and of
Nuclear Engineering for more than 20 years prior to his retirement in 1996. Dr.
Gyftopoulos is also a Director of Thermo Electron, Thermo Cardiosystems Inc.,
ThermoLase Corporation, Thermo Remediation, ThermoSpectra Corporation, Thermo
Vision Corporation, Thermo Voltek Corp. and Trex Medical Corporation.

Barry S. Howe has been a Director of the Company since its inception in
February 1995. He was President and Chief Executive Officer of the Company from
February 1995 to March 1998, when he was named the President and Chief Executive
Officer of ThermoSpectra Corporation, a supplier of precision imaging,
inspection, temperature control and test and measurement instruments. Mr. Howe
has been a Vice President of Thermo Instrument since 1994. From September 1989
to December 1995, he served as the President of Thermo Separation Products Inc.
and its predecessor, a manufacturer of chromatography instruments and a
subsidiary of ThermoQuest. Mr. Howe is also a Director of ThermoSpectra
Corporation.

Jonathan W. Painter has been a Director of the Company since its inception
in February 1995. Mr. Painter has been Executive Vice President, Operations, of
Thermo Fibertek Inc., a supplier of paper-recycling equipment, papermaking
systems and accessories, since September 1997. Mr. Painter was Treasurer of the
Company and Thermo Electron from August 1994 through June 1997. He had served as
Director of Strategic Planning of Thermo Fibertek Inc. from February 1993
through September 1994. Prior to that time, Mr. Painter was Associate General
Counsel of Thermo Electron and its subsidiaries. Mr. Painter is also a Director
of Thermo Fibergen Inc.

Arvin H. Smith has been a Director of the Company since its inception in
February 1995. Mr. Smith has been Chairman of the Board of Thermo Instrument
since March 1997 and previously served as the Chief Executive Officer and
President of Thermo Instrument from 1986 to January 1998, and March 1997,
respectively. Mr. Smith is also Chairman of the Board of Thermo Power
Corporation, a majority-owned subsidiary of Thermo Electron that manufactures
traffic control systems and industrial refrigeration equipment. He has been an
Executive Vice President of Thermo Electron since 1991 and was a Senior Vice
President of Thermo Electron from 1986 to 1991. Mr. Smith is also a Director of
Metrika Systems Corporation, ONIX Systems Inc., Thermo Instrument, Thermo Optek,
Thermo Power Corporation, ThermoQuest, ThermoSpectra Corporation and Thermo
Vision Corporation.

Arnold N. Weinberg has been a Director of the Company since November 1995.
He has been Professor of Medicine at the Harvard Medical School and Medical
Director of the Medical Department of the Massachusetts Institute of Technology
for more than five years.

COMPENSATION OF DIRECTORS

Cash Compensation

Directors who are not employees of the Company, of Thermo Electron or of
any other companies affiliated with Thermo Electron (also referred to as
"Outside Directors") receive an annual retainer of $2,000 and a fee of $1,000
per day for attending regular meetings of the Board of Directors and $500 per
day for participating in meetings of the Board of Directors held by means of
conference telephone and for participating in certain meetings of committees of
the Board of Directors. Payment of Directors' fees is made quarterly. Messrs.
Howe, Lewis, Maddix, Painter and Smith are all employees of Thermo Electron
companies and do not receive any cash compensation from the Company for their
services as Directors. Directors are also reimbursed for out-of-pocket expenses
incurred in attending such meetings.

47
<PAGE> 49

Deferred Compensation Plan

Under the Company's deferred compensation plan for Directors (the "Deferred
Compensation Plan"), a Director has the right to defer receipt of his cash fees
until he ceases to serve as a Director, dies or retires from his principal
occupation. In the event of a change in control or proposed change in control of
the Company that is not approved by the Board of Directors, deferred amounts
become payable immediately. Either of the following is deemed to be a change in
control: (a) the acquisition, without the prior approval of the Board of
Directors, directly or indirectly, by any person of 50% or more of the
outstanding Common Stock or the outstanding common stock of Thermo Instrument or
25% or more of the outstanding common stock of Thermo Electron; or (b) the
failure of the persons serving on the Board of Directors immediately prior to
any contested election of directors or any exchange offer or tender offer for
the common stock or the common stock of Thermo Instrument or Thermo Electron to
constitute a majority of the Board of Directors at any time within two years
following any such event. Amounts deferred pursuant to the Deferred Compensation
Plan are valued at the end of each quarter as units of the Company's Common
Stock accumulated under the Deferred Compensation Plan. A total of 25,000 shares
of Common Stock have been reserved for issuance under the Deferred Compensation
Plan. As of March 1, 1998, deferred units equal to 892.03 shares of Common Stock
were accumulated under the Deferred Compensation Plan.

Directors Stock Option Plan

The Company's Directors stock option plan (the "Directors Plan") provides
for the grant of stock options to purchase shares of Common Stock to outside
directors as additional compensation for their service as Directors. The
Directors Plan provides for the grant of stock options upon a Director's initial
appointment and, beginning in 2000, awards options to purchase 1,000 shares
annually to Outside Directors. A total of 100,000 shares of Common Stock have
been reserved for issuance under the Directors Plan. Under the Directors Plan,
each eligible Director and each new Outside Director who joined the Board of
Directors prior to or during 1996 was granted an option to purchase 15,000
shares of Common Stock. The size of the award to new Directors appointed to the
Board of Directors after 1996 is reduced by 3,750 shares in each subsequent
year. Outside Directors who join the Board of Directors after 1999 would not
receive an option grant upon their appointment or election to the Board of
Directors, but would be eligible to participate in the annual option awards
described below. Options evidencing initial grants to directors are exercisable
six months after the date of grant. The shares acquired upon exercise are
subject to restrictions on transfer and the right of the Company to repurchase
such shares at the exercise price in the event the Director ceases to serve as a
Director of the Company or any other Thermo Electron company. The restrictions
and repurchase rights lapse or are deemed to have lapsed in equal annual
installments of 3,750 shares per year, starting with the first anniversary of
the grant date, provided the Director has continuously served as a Director of
the Company or any other Thermo Electron company since the grant date. These
options expire on the fifth anniversary of the grant date, unless the Director
dies or otherwise ceases to serve as a Director of the Company or any other
Thermo Electron company prior to that date.

Outside Directors will also receive an annual grant of options to purchase
1,000 shares of Common Stock, commencing with the Annual Meeting of the
Stockholders to be held in 2000. The annual grant will be made at the close of
business on the date of each Annual Meeting of the Stockholders of the Company
to each outside director then holding office. Options evidencing annual grants
may be exercised at any time from and after the six-month anniversary of the
grant date of the option and prior to the expiration of the option on the third
anniversary of the grant date. Shares acquired upon exercise of the options
would be subject to repurchase by the Company at the exercise price if the
recipient ceased to serve as a Director of the Company or any other Thermo
Electron company prior to the first anniversary of the grant date. The exercise
price for options granted under the Directors Plan is the average of the closing
prices of the common stock as reported on the AMEX (or other principal market on
which the common stock is then traded) for the five trading days immediately
preceding and including the date of grant, or, if the shares are not then
traded, at the last price per share paid by third parties in an arms-length
transaction prior to the option grant. As of March 1, 1998, options to purchase
30,000 shares were outstanding under the Directors Plan, no options had lapsed
or been exercised, and options to purchase 70,000 shares of Common Stock were
available for future grant.

48
<PAGE> 50

STOCK OWNERSHIP POLICIES FOR DIRECTORS AND EXECUTIVE OFFICERS

Directors

During 1996, the human resources committee of the Board of Directors (the
"Committee") established a stock holding policy for Directors. The stock holding
policy requires each Director to hold a minimum of 1,000 shares of Common Stock.
Directors are requested to achieve this ownership level by the 1998 Annual
Meeting of Stockholders. In addition, the Committee adopted a policy requiring
Directors to hold shares of the Company's Common Stock equal to one-half of
their net option exercises over a period of five years. The net option exercise
is determined by calculating the number of shares acquired upon exercise of a
stock option, after deducting the number of shares that could have been traded
to exercise the option and the number of shares that could have been surrendered
to satisfy tax withholding obligations attributable to the exercise of the
option.

Executive Officers

The Committee established a stock holding policy for executive officers of
the Company in 1996 that required executive officers to own a multiple of their
compensation in shares of the Company's Common Stock. For the chief executive
officer, the multiple was one times his base salary and reference bonus for the
calendar year. For all other officers, the multiple was one times the officer's
base salary. The Committee deemed it appropriate to permit officers to achieve
these ownership levels over a three-year period. The policy was amended in 1998
to apply only to the chief executive officer.

In order to assist officers in complying with the policy, the Committee
also adopted in 1996 a stock holding assistance plan under which the Company was
authorized to make interest-free loans to officers to enable them to purchase
shares of the Common Stock in the open market. The loans are required to be
repaid upon the earlier of demand or the fifth anniversary of the date of the
loan, unless otherwise authorized by the Committee. This plan was also amended
in 1998 to apply only to the chief executive officer. See "Relationship with
Affiliates -- Stock Holding Assistance Plan."

The Committee also has adopted a policy requiring its executive officers to
hold shares of the Company's Common Stock acquired upon the exercise of stock
options granted by the Company. Under this policy, executive officers are
required to hold one-half of their net option exercises over a period of five
years. The net option exercise is determined by calculating the number of shares
acquired upon exercise of a stock option, after deducting the number of shares
that could have been traded to exercise the option and the number of shares that
could have been surrendered to satisfy tax withholding obligations attributable
to the exercise of the options.

COMPENSATION OF EXECUTIVE OFFICERS

The following table summarizes compensation for services to the Company in
all capacities awarded to, earned by or paid to the Company's Chief Executive
Officer during 1997, the Company's current Chief Executive Officer and one other
executive officer for the last three fiscal years. No other executive officer of
the Company met the definition of "highly compensated" within the meaning of the
Securities and Exchange Commission's executive compensation disclosure rules.

The Company is required to appoint certain executive officers and full-time
employees of Thermo Electron as executive officers of the Company, in accordance
with the Thermo Electron Corporate Charter. The compensation for these executive
officers is determined and paid entirely by Thermo Electron. The time and effort
devoted by these individuals to the Company's affairs is provided to the Company
under the Corporate Services Agreement between the Company and Thermo Electron.
Accordingly, the compensation for these individuals is not reported in the
following table.

49
<PAGE> 51

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
----------------------
ANNUAL COMPENSATION SECURITIES UNDERLYING
NAME AND FISCAL -------------------- OPTIONS (NO. OF SHARES ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AND COMPANY(1) COMPENSATION(2)
------------------ ------ -------- -------- ---------------------- ---------------
<S> <C> <C> <C> <C> <C>
Colin Maddix.............. 1997 $186,000 $ 60,000 40,000(THI) $ 8,360(4)
President and Chief
Executive Officer(3)

Barry S. Howe............. 1997 $150,000 $110,000 1,100(TMO) $14,923(6)
Former President and 1996 $145,000 $ 70,000
Chief 50,000(TBA) $ 8,076(6)
Executive Officer(5) 1,500(TMO)
2,000(TFG)
2,000(TLT)
15,000(TOC)
90,000(TMQ)
2,000(TSR)
4,000(TXM)
1,650(TMO) $ 7,517
1995 $134,000 $ 65,000
5,000(TLZ)

Donald W. Hanna........... 1997 $105,000 $ 23,000 400(TMO) $ 5,677
Vice President 1996 $100,000 $ 19,500 21,000(TBA) $ 5,310
7,500(TOC)
5,000(TMQ)
-- $ 7,461
1995 $ 95,000 $ 18,000
</TABLE>

- ---------------

(1) In addition to receiving options to purchase Common Stock (designated in the
table as TBA), executive officers of the Company have been granted options
to purchase common stock of Thermo Electron and certain of Thermo Electron's
other subsidiaries as part of Thermo Electron's stock option program.
Options have been granted during the last three fiscal years to the named
executive officers in the following Thermo Electron companies: Thermo
Instrument (designated in the table as THI), Thermo Electron (designated in
the table as TMO), Thermo Fibergen Inc. (designated in the table as TFG),
ThermoLase Corporation (designated in the table as TLZ), ThermoLyte
Corporation (designated in the table as TLT), Thermo Optek (designated in
the table as TOC), ThermoQuest (designated in the table as TMQ), Thermo
Sentron Inc. (designated in the table as TSR) and Trex Medical Corporation
(designated in the table as TXM).

(2) Represents the amount of matching contributions made on behalf of the named
executive officer by the individual's employer pursuant to the Thermo
Electron 401(k) plan.

(3) Mr. Maddix succeeded Mr. Barry S. Howe as President and Chief Executive
Officer on March 11, 1998 and therefore, the information in the table
reflects compensation received in his capacity as President and Chief
Executive Officer of the Clinical Products Group of LSI, from the date of
its acquisition by Thermo Instrument in March 1997 through December 1997.

(4) Represents the amount of contributions made on behalf of Mr. Maddix under
the Shandon Inc. Pension Plan.

(5) Mr. Howe resigned as President and Chief Executive Officer of the Company on
March 11, 1998 to accept a position with ThermoSpectra Corporation as its
President and Chief Executive Officer, and was succeeded in the position of
President and Chief Executive Officer by Mr. Colin Maddix.

(6) In addition to the matching contribution referred to in footnote (2), such
amounts include $8,173 and $1,444 for 1997 and 1996, respectively, which
represent the amounts of compensation attributable to an interest-free loan
provided to Mr. Howe pursuant to the Company's stock holding assistance
plan. See "Relationship with Affiliates -- Stock Holding Assistance Plan."

50
<PAGE> 52

STOCK OPTIONS GRANTED DURING FISCAL 1997

The following table sets forth information concerning individual grants of
stock options made during fiscal 1997 to the Company's current Chief Executive
Officer, its former Chief Executive Officer and the other named executive
officer. It has not been the Company's policy in the past to grant stock
appreciation rights, and no such rights were granted during fiscal 1997.

OPTION GRANTS IN FISCAL 1997

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF STOCK
TOTAL OPTIONS PRICE APPRECIATION FOR
NUMBER OF SECURITIES GRANTED TO EXERCISE OPTION TERM(2)
UNDERLYING OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ----------------------
NAME GRANTED(1) FISCAL YEAR SHARE DATE 5% 10%
---- -------------------- -------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Colin Maddix......... 40,000(THI) 5.30%(3) $31.35 12/2/04 $510,400 $1,189,600
Barry S. Howe........ 1,100(TMO) 0.08%(3) $34.20 6/3/00 $ 5,929 $ 12,452
Donald W. Hanna...... 400(TMO) 0.03%(3) $34.20 6/3/00 $ 2,156 $ 4,528
</TABLE>

(1) All of the options granted during the fiscal year are immediately
exercisable as of the end of the fiscal year. In all cases, the shares
acquired upon exercise are subject to repurchase by the granting corporation
at the exercise price if the optionee ceases to be employed by the granting
corporation or another Thermo Electron company. The granting corporation may
exercise its repurchase rights within six months after the termination of
the optionee's employment. The repurchase rights generally lapse ratably
over a five-to ten-year period, depending on the option term, which may vary
from seven to twelve years, provided that the optionee continues to be
employed by the granting corporation or another Thermo Electron company.
Certain options granted as a part of Thermo Electron's stock option program
have three-year terms, and the repurchase right lapse in their entirety on
the second anniversary of the grant date. The granting corporation may
permit the holders of options to exercise options and satisfy tax
withholding obligations by surrendering shares equal in fair market value to
the exercise price or withholding obligation.

(2) The amounts shown in this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5% and
10%, compounded annually from the date the respective options were granted
to their expiration date. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses associated
with the exercise. Actual gains, if any, on stock option exercises will
depend on the future performance of the common stock of the granting
corporation, the option holders' continued employment through the option
period and the date on which the options are exercised.

(3) These options were granted under stock option plans maintained by Thermo
Electron companies other than the Company and accordingly are reported as a
percentage of total options granted to employees of Thermo Electron and its
subsidiaries.

STOCK OPTIONS EXERCISED DURING FISCAL 1997 AND FISCAL YEAR-END OPTION VALUES

The following table reports certain information regarding stock option
exercises during fiscal 1997 and outstanding stock options held at the end of
fiscal 1997 by the Company's current Chief Executive Officer, its former Chief
Executive Officer and the other named executive officer. No stock appreciation
rights were exercised or were outstanding during fiscal 1997.

51
<PAGE> 53

AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FISCAL 1997 YEAR-END OPTION
VALUES

<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED
OPTIONS AT FISCAL VALUE OF
SHARES YEAR-END UNEXERCISED
ACQUIRED ON VALUE (EXERCISABLE/ IN-THE-MONEY
NAME COMPANY EXERCISE REALIZED(1) UNEXERCISABLE)(2) OPTIONS
- ---- ------- ----------- ----------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
Colin Maddix......... Thermo Instrument -- -- 40,000/ -- $ 106,000/--
Barry S. Howe........ Thermo BioAnalysis -- -- 50,000/ -- $ 475,000/--
Thermo Electron 5,700 $154,655 68,687/ --(3) $ 1,667,339/--
Thermedics -- -- 4,000/ -- $ 1,852/--
Thermo Ecotek -- -- 6,000/ -- $ 75,750/--
Thermo Fibergen -- -- 2,000/ -- $ 0/--
Thermo Fibertek -- -- 15,750/ -- $ 115,101/--
Thermo Instrument -- -- 111,327/ -- $ 2,418,661/--
ThermoLase -- -- 5,000/ -- $ 0/--
ThermoLyte -- -- --/2,000 --/$0(4)
Thermo Optek -- -- 15,000/ -- $ 71,700/--
Thermo Power -- -- 4,000/ -- $ 0/--
ThermoQuest -- -- 90,000/ -- $ 450,000/--
Thermo Sentron -- -- 2,000/ -- $ 0/--
ThermoSpectra -- -- 4,000/ -- $ 252/--
Thermo TerraTech -- -- 4,000/ -- $ 0/--
ThermoTrex -- -- 4,000/ -- $ 29,200/--
Trex Medical -- -- 4,000/ -- $ 12,500/--

Donald W. Hanna...... Thermo BioAnalysis -- -- 21,000/ -- $ 199,500/--
Thermo Electron 2,100 $ 60,722 18,398/ --(3) $ 463,524/--
Thermo Instrument -- -- 18,750/ -- $ 396,001/--
Thermo Optek -- -- 7,500/ -- $ 35,850/--
ThermoQuest -- -- 5,000/ -- $ 25,000/--
ThermoSpectra -- -- 1,500/ -- $ 95/--
</TABLE>

- ---------------
(1) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the option
because in many cases the shares are not sold on exercise but continue to be
held by the executive officer exercising the option. The amounts shown
represent the difference between the option exercise price and the market
price on the date of exercise, which is the amount that would have been
realized if the shares had been sold immediately upon exercise.

(2) All of the options reported outstanding at the end of the fiscal year were
immediately exercisable as of fiscal year end, except the options to
purchase shares of the common stock of ThermoLyte Corporation, which are not
exercisable until the earlier of (i) 90 days after the effective date of the
registration of that company's common stock under Section 12 of the Exchange
Act and (ii) nine years after the grant date. In all cases, the shares
acquired upon exercise of the options reported in the table are subject to
repurchase by the granting corporation at the exercise price if the optionee
ceases to be employed by such corporation or another Thermo Electron
company. The granting corporation may exercise its repurchase rights within
six months after the termination of the optionee's employment. For companies
whose shares are not publicly traded, such as ThermoLyte Corporation, the
repurchase rights lapse in their entirety on the ninth anniversary of the
grant date. Certain options granted as a part of Thermo Electron's stock
option program have three-year terms, and the repurchase rights lapse in
their entirety on the second anniversary of the grant date. For publicly
traded companies, the repurchase rights generally lapse ratably over a five-
to ten-year period, depending on the option term, which may vary from seven
to twelve years, provided that the optionee continues to be employed by the
granting corporation or another Thermo Electron company.

(3) Options to purchase 22,500 and 11,250 shares of the common stock of Thermo
Electron granted to Mr. Howe and Mr. Hanna, respectively, are subject to the
same terms described in footnote (2), except that the repurchase rights of
the granting corporation generally do not lapse until the tenth anniversary
of the grant date. In the event of the employee's death or involuntary
termination prior to the tenth anniversary of the grant date, the repurchase
rights of the granting corporation shall be deemed to have lapsed ratably
over a five-year period commencing with the fifth anniversary of the grant
date.

(4) No public market existed for the shares underlying these options as of
fiscal year end. Accordingly, no value in excess of the exercise price has
been attributed to these options.

52
<PAGE> 54

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

PRINCIPAL STOCKHOLDER

The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of April 30, 1998 with respect to the only person
that was known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock.

<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE OF OUTSTANDING
OF BENEFICIAL OWNER BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
------------------- ------------------ -------------------------
<S> <C> <C>
Thermo Electron Corporation(1)........................ 12,031,440 85.2%
81 Wyman Street
Waltham, MA 02254-9046
</TABLE>

- ---------------

(1) Thermo Electron beneficially owned 85.2% of the Common Stock outstanding as
of April 30, 1998, of which 76.7% is owned through Thermo Instrument and
8.5% is owned directly. Includes 3,030,303 shares of Common Stock that
Thermo Electron, through Thermo Instrument, has the right to acquire through
the conversion of the Convertible Note. Thermo Electron, through Thermo
Instrument, has the power to elect all of the members of the Company's Board
of Directors. After the sale of the Common Stock in this offering and the
issuance of 3,007,930 shares of Common Stock in connection with the
Company's acquisition of the Clinical Products Group of LSI, Thermo Electron
will beneficially own approximately 69.5% of the outstanding Common Stock
(67.4% if the Underwriters' over-allotment option is exercised in full).

MANAGEMENT

The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermo Instrument, the Company's parent company, and
of Thermo Electron, Thermo Instrument's parent company, as of March 1, 1998,
with respect to (i) each Director, (ii) each executive officer named in the
summary compensation table under the heading "Compensation of Executive
Officers" and (iii) all Directors and current executive officers as a group.

While certain Directors and executive officers of the Company are also
directors and executive officers of Thermo Electron or its subsidiaries other
than the Company, all such persons disclaim beneficial ownership of the shares
of Common Stock beneficially owned by Thermo Electron.

<TABLE>
<CAPTION>
THERMO BIOANALYSIS THERMO INSTRUMENT THERMO ELECTRON
NAME(1) CORPORATION(2) SYSTEMS INC.(3) CORPORATION(4)
------- ------------------ ----------------- ---------------
<S> <C> <C> <C>
Elias P. Gyftopoulos....................... 15,000 58,766 72,067
Donald W. Hanna............................ 21,000 19,557 20,645
Barry S. Howe.............................. 64,900 125,422 77,670
Earl R. Lewis.............................. 72,500 203,726 84,037
Colin Maddix(5)............................ 0 40,000 0
Jonathan W. Painter........................ 15,000 7,188 28,537
Arvin H. Smith............................. 39,000 539,583 519,038
Arnold N. Weinberg......................... 15,892 0 0
All Directors and current executive
officers as a group (10 persons)......... 286,492 1,101,832 1,614,821
</TABLE>

- ---------------
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for
the benefit of minor children, and all share ownership includes sole voting
and investment power.

(2) Shares of the Common Stock beneficially owned by Dr. Gyftopoulos, Mr.
Hanna, Mr. Howe, Mr. Lewis, Mr. Painter, Mr. Smith, Dr. Weinberg and all
Directors and current executive officers as a group include 15,000, 21,000,
50,000, 15,000, 20,000, 15,000 and 206,200 shares, respectively, that such

53
<PAGE> 55

person or group has the right to acquire within 60 days of March 1, 1998,
through the exercise of stock options. Shares of the Common Stock
beneficially owned by Dr. Weinberg and all directors and current executive
officers as a group include 892 full shares allocated to Dr. Weinberg's
account under the Company's deferred compensation plan for directors.
Shares of the Common Stock beneficially owned by Mr. Howe include 600
shares held in custodial accounts for the benefit of two minor children.
Shares of the Common Stock beneficially owned by Mr. Lewis include 1,000
shares held by Mr. Lewis's spouse. No director or executive officer
beneficially owned more than 1% of the Common Stock outstanding as of March
1, 1998; all Directors and current executive officers as a group
beneficially owned 2.6% of the Common Stock outstanding as of such date.

(3) The shares of the common stock of Thermo Instrument shown in the table
reflect a five-for-four split of such stock distributed in October 1997 in
the form of a 25% stock dividend. Shares of the common stock of Thermo
Instrument beneficially owned by Dr. Gyftopoulos, Mr. Hanna, Mr. Howe, Mr.
Lewis, Mr. Maddix, Mr. Painter, Mr. Smith and all Directors and current
executive officers as a group include 18,075, 18,750, 111,327, 172,085,
40,000, 7,031, 292,698 and 749,298 shares, respectively, that such person
or group had the right to acquire within 60 days after March 1, 1998,
through the exercise of stock options. Shares of the common stock of Thermo
Instrument beneficially owned by Mr. Painter, Mr. Smith and all directors
and current executive officers as a group include 157, 663 and 1,976
shares, respectively, allocated through March 1, 1998, to their respective
accounts maintained pursuant to Thermo Electron's employee stock ownership
plan, of which the Trustees, who have investment power over its assets, are
executive officers of Thermo Electron (the "ESOP"). Shares of the common
stock of Thermo Instrument beneficially owned by Mr. Howe include 2,450
shares held in a trust of which he is a trustee. Shares of the common stock
of Thermo Instrument beneficially owned by Mr. Lewis include 2,987 shares
held by his spouse. No Director or executive officer beneficially owned
more than 1% of the common stock of Thermo Instrument outstanding as of
March 1, 1998; all Directors and current executive officers as a group
beneficially owned less than 1% of the common stock outstanding as of such
date.

(4) Shares of the common stock of Thermo Electron beneficially owned by Dr.
Gyftopoulos, Mr. Hanna, Mr. Howe, Mr. Lewis, Mr. Painter, Mr. Smith and all
Directors and current executive officers as a group include 10,375, 18,398,
68,687, 84,037, 22,775, 228,411 and 1,138,155 full shares, respectively,
that such person or group has the right to acquire within 60 days of March
1, 1998, through the exercise of stock options. Shares of the common stock
of Thermo Electron beneficially owned by Mr. Painter, Mr. Smith and all
current Directors and executive officers as a group include 590, 1,717 and
5,769 full shares, respectively, allocated to accounts maintained pursuant
to the ESOP. Shares of the common stock of Thermo Electron beneficially
owned by Mr. Howe include 200 shares held in custodial accounts for the
benefit of two minor children. No director or executive officer
beneficially owned more than 1% of the common stock of Thermo Electron
outstanding as of March 1, 1998; all Directors and current executive
officers as a group beneficially owned 1% of the Thermo Electron common
stock outstanding as of such date.

(5) Information as to Mr. Maddix's ownership is reported as of March 11, 1998.

54
<PAGE> 56

DESCRIPTION OF CAPITAL STOCK

As of April 30, 1998, the Company had 25,000,000 shares of Common Stock
authorized for issuance, of which 11,085,718 were issued and outstanding. Each
share of Common Stock is entitled to pro rata participation in distributions
upon liquidation and to one vote on all matters submitted to a vote of
stockholders. Dividends may be paid to the holders of Common Stock when and if
declared by the Board of Directors out of funds legally available therefor.
Holders of Common Stock have no preemptive or similar rights. The outstanding
shares of Common Stock are, and the shares offered hereby when issued will be,
legally issued, fully paid and nonassessable.

The shares of Common Stock have noncumulative voting rights, which means
that the holders of more than 50% of the shares voting can elect all the
Directors if they so choose, and in such event, the holders of the remaining
shares cannot elect any Directors. Prior to this offering, Thermo Instrument
owned 7,798,000 shares and Thermo Electron owned 1,203,137 shares of Common
Stock, which collectively represented approximately 81.2% of the outstanding
Common Stock. Upon completion of this offering and the issuance of 3,007,930
shares of Common Stock to Thermo Instrument in connection with the Company's
acquisition of the Clinical Products Group of LSI, Thermo Instrument and Thermo
Electron collectively will continue to own approximately 64.6% (assuming no
conversion of the Convertible Note) of the outstanding Common Stock, and will
have the power to elect all of the members of the Company's Board of Directors.

The Company's Certificate of Incorporation contains certain provisions
permitted under the General Corporation Law of Delaware relating to the
liability of Directors. The provisions eliminate a Director's liability for
monetary damages for a breach of fiduciary duty, except in certain circumstances
involving wrongful acts or omissions that involve intentional misconduct or a
knowing violation of law. The Company's Certificate of Incorporation also
contains provisions to indemnify the Directors and officers of the Company to
the fullest extent permitted by the General Corporation Law of Delaware. The
Company believes that these provisions will assist the Company in attracting and
retaining qualified individuals to serve as Directors and officers.

The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.

55
<PAGE> 57

UNDERWRITING

Upon the terms and subject to the conditions stated in the Underwriting
Agreement, dated , 1998 (the "Underwriting Agreement"), the
Company has agreed to sell to each of the entities named below (the
"Underwriters") and each of the Underwriters, for whom Smith Barney Inc., CIBC
Oppenheimer Corp., Lehman Brothers Inc. and Prudential Securities Incorporated
are acting as representatives (the "Representatives"), has severally agreed to
purchase from the Company the number of shares of Common Stock set forth
opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Smith Barney Inc............................................
CIBC Oppenheimer Corp.......................................
Lehman Brothers Inc.........................................
Prudential Securities Incorporated..........................

---------
Total.................................................. 4,500,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters to pay for and accept delivery of the shares are subject to
approval of certain legal matters by counsel and to certain other conditions.
The Underwriters are obligated to take and pay for all shares of Common Stock
offered hereby (other than those covered by the over-allotment option described
below) if any such shares are taken.

The Company has been advised by the Representatives that the Underwriters
propose to offer part of the shares directly to the public at the public
offering price set forth on the cover page of this Prospectus and part of the
shares to certain dealers at a price which represents a concession not in excess
of $ per share under the public offering price. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per share to certain
other dealers. After the initial offering of the shares to the public, the
public offering price and such concessions may be changed by the Underwriters.

The Company has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase up to an aggregate of 675,000
additional shares of Common Stock at the price to public set forth on the cover
page of the Prospectus minus the underwriting discounts and commissions. The
Underwriters may exercise such option solely for the purpose of covering
over-allotments, if any, in connection with the offering of the shares offered
hereby. To the extent such option is exercised, each Underwriter will be
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares as the number of shares set forth opposite
each Underwriter's name in the preceding table bears to the total number of
shares listed in the table.

The Company, Thermo Electron and the Underwriters have agreed to indemnify
each other against certain liabilities, including liabilities under the
Securities Act.

The Company and Thermo Electron have agreed that they will not, and Thermo
Electron has agreed to cause Thermo Instrument not to, without the prior written
consent of Smith Barney Inc., on behalf of the Underwriters, for a period of 180
days after the date of this Prospectus, offer, sell or contract to sell, or
otherwise dispose of (or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company, Thermo Electron or any subsidiary of Thermo Electron
or any person in privity with the Company, Thermo Electron or any subsidiary of
Thermo Electron) directly or indirectly, or announce the offering of, any other
shares of Common Stock or any securities convertible into, or exchangeable for,
shares of Common Stock (except for the issuance of shares of Common Stock
pursuant to

56
<PAGE> 58

existing stock option, purchase and compensation plans, or upon conversion of
any currently outstanding convertible securities or the issuance of shares of
Common Stock as consideration for the acquisition of one or more businesses
provided that such Common Stock may not be resold prior to the expiration of the
180 day period referenced above, or sales of shares of Common Stock by the
Company to Thermo Instrument), or sell or grant options, rights or warrants with
respect to any shares of Common Stock (other than the grant of options pursuant
to existing stock option, purchase and compensation plans), otherwise than in
accordance with the Underwriting Agreement or as contemplated herein.

The Representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act. Over-allotment involves syndicate sales in excess of the
offering size, which create a syndicate short position. Stabilizing transactions
permit bids for and purchases of the Common Stock for the purpose of preventing
or retarding a decline in the market price of the Common Stock so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Common Stock in the open market in order
to cover syndicate short positions. Penalty bids permit the Representatives to
reclaim a selling concession from a syndicate member when the Common Stock
originally sold by such syndicate member is purchased in a stabilizing
transaction or syndicate covering transaction to cover syndicate short
positions. Such stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the Common Stock to be higher than it would
otherwise be in the absence of such transactions. These transactions may be
effected on the AMEX or otherwise and, if commenced, may be discontinued at any
time.

Certain of the Underwriters from time to time have rendered various
investment banking services to the Company, Thermo Electron and their affiliates
and received customary compensation therefor.

LEGAL OPINIONS

The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Seth H. Hoogasian, Esq., General Counsel and an
officer of Thermo Electron, Thermo Instrument and the Company, and certain legal
matters will be passed upon for the Underwriters by Testa, Hurwitz & Thibeault,
LLP, Boston, Massachusetts. Mr. Hoogasian owns or has the right to acquire 3,000
shares of Common Stock of the Company, 20,986 shares of common stock of Thermo
Instrument and 108,764 shares of common stock of Thermo Electron.

EXPERTS

The financial statements of the Company, the DYNEX Technologies division of
Dynatech Corporation and the Clinical Products Group of LSI included in this
Prospectus, and the financial statement schedule included in the Registration
Statement of which this Prospectus forms a part, have been audited by Arthur
Andersen LLP, independent public accountants, to the extent and for the periods
as indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.

The balance sheets as of March 31, 1995 and February 7, 1996 and the
statements of income, retained earnings and cash flows for the years ended March
31, 1994 and 1995 and the period from April 1, 1995 through February 7, 1996 of
Dynatech Medical Products Limited, referred to in this Prospectus, have been
referenced in reliance on the report of Coopers & Lybrand, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.

The combined financial statements of the Biosystems Group of LSI for each
of the three years in the period ended December 31, 1996 included in the
Registration Statement of which this Prospectus forms a part have been included
in reliance upon the report of KPMG Audit Plc, chartered accountants, and upon
the authority of said firm as experts in accounting and auditing. The Company
has agreed to indemnify KPMG Audit Plc for losses, claims, damages, or
liabilities that KPMG Audit Plc may become subject to in defending itself
against litigation resulting from its consenting to the inclusion of its report
on the combined financial statements of the Biosystems Group of LSI in the
Registration Statement of which this Prospectus forms a part. Such
indemnification, however, shall not apply to the extent that such losses,
claims, damages, or liabilities result from a court adjudication that KPMG Audit
Plc is guilty of professional malpractice.

57
<PAGE> 59

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; and at the Commission's regional offices
at 7 World Trade Center, New York, New York 10048 and at 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material can be obtained by mail
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, DC 20549, at prescribed rates. The Commission also maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission,
including the Company. The address of such Web site is http://www.sec.gov. The
Common Stock is listed on the AMEX, and such material that relates to the
Company may also be inspected at the offices of the AMEX, 86 Trinity Place, New
York, New York 10006.

The Company has filed with the Commission a registration statement on Form
S-1 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act, with respect to the securities offered
hereby, and of which this Prospectus constitutes a part. This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information, reference is made to the
Registration Statement.

58
<PAGE> 60

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
THERMO BIOANALYSIS CORPORATION
Report of Independent Public Accountants............... F-2
Consolidated Statement of Operations for the years
ended December 30, 1995, December 28, 1996 and January
3, 1998 and for the three months ended March 29, 1997
and April 4, 1998..................................... F-3
Consolidated Balance Sheet as of December 28, 1996,
January 3, 1998 and April 4, 1998..................... F-4
Consolidated Statement of Cash Flows for the years
ended December 30, 1995, December 28, 1996 and January
3, 1998 and for the three months ended March 29, 1997
and April 4, 1998..................................... F-5
Consolidated Statement of Shareholders' Investment for
the years ended December 30, 1995, December 28, 1996
and January 3, 1998 and for the three months ended
April 4, 1998......................................... F-6
Notes to Consolidated Financial Statements............. F-7
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
Reports of Independent Public Accountants.............. F-22
Consolidated Statement of Operations for the years
ended March 31, 1994 and 1995 and for the period from
April 1, 1995 through February 7, 1996................ F-24
Consolidated Balance Sheet as of March 31, 1995 and
February 7, 1996...................................... F-25
Consolidated Statement of Cash Flows for the years
ended March 31, 1994 and 1995 and for the period from
April 1, 1995 through February 7, 1996................ F-26
Consolidated Statement of Shareholder's Investment for
the years ended March 31, 1994 and 1995 and for the
period from April 1, 1995 through February 7, 1996.... F-27
Notes to Consolidated Financial Statements............. F-28
BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC
Auditors' Report....................................... F-33
Combined Profit and Loss Accounts for the three years
ended December 31, 1996............................... F-34
Combined Statements of Total Recognised Gains and
Losses for the three years ended December 31, 1996.... F-35
Combined Balance Sheets at December 31, 1995 and
1996.................................................. F-36
Combined Cash Flow Statements for the three years ended
December 31, 1996..................................... F-37
Notes to the Combined Financial Statements............. F-38
CLINICAL PRODUCTS GROUP OF LIFE SCIENCES INTERNATIONAL PLC
Report of Independent Public Accountants............... F-53
Combined Statement of Operations for the years ended
December 31, 1995 and 1996 and the period from January
1, 1997 through March 12, 1997........................ F-54
Combined Balance Sheet as of December 31, 1995 and
1996.................................................. F-55
Combined Statement of Cash Flows for the years ended
December 31, 1995 and 1996 and the period from January
1, 1997 through March 12, 1997........................ F-56
Combined Statement of Shareholder's Investment for the
years ended December 31, 1995 and 1996 and the period
from January 1, 1997 through March 12, 1997........... F-57
Notes to Combined Financial Statements................. F-58
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION OF THERMO
BIOANALYSIS CORPORATION, THE BIOSYSTEMS GROUP OF LIFE
SCIENCES INTERNATIONAL PLC AND THE CLINICAL PRODUCTS GROUP
OF LIFE SCIENCES INTERNATIONAL PLC (UNAUDITED)
Pro Forma Combined Condensed Statement of Operations
for the year ended
January 3, 1998...................................... F-65
Notes to Pro Forma Combined Condensed Statement of
Operations............................................ F-67
</TABLE>

F-1
<PAGE> 61

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 77%-owned subsidiary of
Thermo Instrument Systems Inc.) and subsidiaries as of December 28, 1996 and
January 3, 1998, and the related consolidated statements of operations, cash
flows, and shareholders' investment for each of the three years in the period
ended January 3, 1998. 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 January 3,
1998 and the results of their operations and their cash flows for each of the
three years in the period ended January 3, 1998, in conformity with generally
accepted accounting principles.

ARTHUR ANDERSEN LLP

Boston, Massachusetts
May 5, 1998

F-2
<PAGE> 62

THERMO BIOANALYSIS CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------
MARCH 29, APRIL 4,
1995 1996 1997 1997 1998
------- ------- -------- ------------ --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues (includes $1,834, $6,298,
$16,667, $962 and $698 from affiliated
companies; Notes 6 and 8).............. $22,534 $71,649 $201,998 $26,801 $54,434
------- ------- -------- ------- -------
Costs and Operating Expenses:
Cost of revenues (includes $797,
$1,842, $9,272, $379 and $426 for
revenues from affiliated companies;
Note 6)............................. 13,036 37,807 102,826 13,848 26,583
Selling, general and administrative
expenses (Note 6)................... 4,804 20,987 61,946 7,985 17,899
Research and development expenses...... 1,325 7,298 14,057 2,352 3,923
Write-off of acquired technology
(Note 2)............................ -- 3,500 -- -- --
------- ------- -------- ------- -------
19,165 69,592 178,829 24,185 48,405
------- ------- -------- ------- -------
Operating Income......................... 3,369 2,057 23,169 2,616 6,029
Interest Income.......................... 819 1,280 2,431 725 998
Interest Expense (includes $0, $0,
$7,624, $771 and $1,865 to related
party; Note 6)......................... -- (1,873) (7,725) (856) (2,003)
------- ------- -------- ------- -------
Income Before Provision for Income
Taxes.................................. 4,188 1,464 17,875 2,485 5,024
Provision for Income Taxes (Note 4)...... 1,674 1,900 6,535 903 1,822
------- ------- -------- ------- -------
Net Income (Loss)........................ $ 2,514 $ (436) $ 11,340 $ 1,582 $ 3,202
======= ======= ======== ======= =======
Earnings (Loss) per Share (Note 9):
Basic.................................. $ .33 $ (.05) $ .86 $ .15 $ .23
======= ======= ======== ======= =======
Diluted................................ $ .33 $ (.05) $ .79 $ .14 $ .21
======= ======= ======== ======= =======
Weighted Average Shares (Note 9):
Basic.................................. 7,694 8,542 13,232 10,624 14,086
======= ======= ======== ======= =======
Diluted................................ 7,694 8,542 16,367 13,694 17,299
======= ======= ======== ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE> 63

THERMO BIOANALYSIS CORPORATION

CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
APRIL 4,
1996 1997 1998
-------- ----------- --------
(UNAUDITED)
--------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents (includes $39,649, $10,158 and
$13,012 under repurchase agreement with affiliated
company)................................................ $ 45,476 $ 39,704 $ 43,526
Accounts receivable, less allowances of $991, $6,232 and
$5,926.................................................. 17,265 47,210 45,146
Inventories............................................... 14,592 38,635 39,282
Prepaid income taxes (Note 4)............................. 2,319 8,484 8,475
Prepaid expenses and other current assets................. 618 4,221 5,446
Due from parent company and affiliates.................... 965 -- --
-------- -------- --------
81,235 138,254 141,875
-------- -------- --------
Property, Plant and Equipment, at Cost, Net................. 5,547 22,967 22,160
-------- -------- --------
Other Assets................................................ 3,098 2,712 2,397
-------- -------- --------
Cost in Excess of Net Assets of Acquired Companies (Note
2)........................................................ 33,117 158,506 158,434
-------- -------- --------
$122,997 $322,439 $324,866
======== ======== ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Borrowings under overdraft facility....................... $ -- $ 2,465 $ 3,190
Accounts payable.......................................... 4,282 12,596 12,618
Accrued payroll and employee benefits..................... 2,616 8,482 6,504
Accrued income taxes...................................... 2,775 6,097 5,550
Accrued acquisition expenses (Note 2)..................... 1,857 5,110 4,198
Other accrued expenses.................................... 5,794 13,482 13,651
Deferred revenue.......................................... 4,161 3,675 4,821
Due to parent company and affiliated companies (Note 2)... -- 35,846 38,371
-------- -------- --------
21,485 87,753 88,903
-------- -------- --------
Deferred Income Taxes (Note 4).............................. 196 139 139
-------- -------- --------
Long-term Obligations:
Note payable to parent company (Note 6)................... -- 50,000 50,000
Subordinated convertible note, due to parent company (Note
6)...................................................... 50,000 50,000 50,000
Other..................................................... -- 204 198
-------- -------- --------
50,000 100,204 100,198
-------- -------- --------
Commitments and Contingency (Note 5)
Shareholders' Investment (Notes 2, 3 and 7):
Common stock, $.01 par value, 25,000,000 shares
authorized; 9,771,500, 14,081,448 and 14,091,470 shares
issued.................................................. 98 141 141
Capital in excess of par value............................ 47,882 131,483 131,585
Retained earnings......................................... 1,707 9,633 11,788
Treasury stock at cost, 392 shares in 1998................ -- -- (7)
Cumulative translation adjustment......................... 1,629 (6,914) (7,881)
-------- -------- --------
51,316 134,343 135,626
-------- -------- --------
$122,997 $322,439 $324,866
======== ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE> 64

THERMO BIOANALYSIS CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
MARCH 29, APRIL 4,
1995 1996 1997 1997 1998
------- -------- -------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)......................................... $ 2,514 $ (436) $ 11,340 $ 1,582 $ 3,202
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization......................... 346 3,002 9,452 1,178 2,760
Provision for losses on accounts receivable........... -- 210 606 10 5
Deferred income tax expense (benefit)................. (60) 10 (948) -- --
Write-off of acquired technology (Note 2)............. -- 3,500 -- -- --
Changes in current accounts, excluding the effects of
acquisitions:
Accounts receivable................................. 388 (2,091) (11,330) 2,749 2,062
Inventories......................................... (303) 548 1,970 (3,370) (1,407)
Other current assets................................ (698) 817 2,065 (2,179) (1,136)
Accounts payable.................................... (384) 1,706 145 450 29
Due to/from parent company and affiliates........... (781) (264) 6,913 (2,334) (10,342)
Other current liabilities........................... 740 1,587 (3,519) 3,404 728
Other................................................. -- 34 47 -- --
------- -------- -------- -------- --------
Net cash provided by (used in) operating
activities...................................... 1,762 8,623 16,741 1,490 (4,099)
------- -------- -------- -------- --------
INVESTING ACTIVITIES:
Acquisitions, net of cash acquired in 1996 (Note 2)....... -- (50,698) (41,053) -- --
Cash acquired through acquisitions from Thermo Instrument
in 1997 (Note 2)........................................ -- -- 23,995 23,995 --
Adjustment to acquisition purchase price (Note 2)......... -- -- 955 -- 9,075
Purchases of property, plant and equipment................ (313) (1,476) (4,535) (468) (1,851)
Proceeds from sale of property, plant and equipment....... -- -- 665 -- --
Other..................................................... (183) -- (103) -- 220
------- -------- -------- -------- --------
Net cash provided by (used in) investing
activities...................................... (496) (52,174) (20,076) 23,527 7,444
------- -------- -------- -------- --------
FINANCING ACTIVITIES:
Net proceeds from issuance of Company common stock (Note
7)...................................................... 14,918 20,782 21 -- 95
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) -- -- --
Increase in bank overdraft facility, net.................. -- -- 2,465 219 725
Repayment of long-term debt............................... -- -- (2,220) (240) --
Transfer from parent company to fund income tax
payments................................................ 1,930 -- -- -- --
Net transfer to parent company............................ (383) -- -- -- --
Other..................................................... -- 58 -- -- --
------- -------- -------- -------- --------
Net cash provided by (used in) financing
activities...................................... 16,465 70,840 266 (21) 820
------- -------- -------- -------- --------
Exchange Rate Effect on Cash.............................. (5) 440 (2,703) 732 (343)
------- -------- -------- -------- --------
Increase (Decrease) in Cash and Cash Equivalents.......... 17,726 27,729 (5,772) 25,728 3,822
Cash and Cash Equivalents at Beginning of Period.......... 21 17,747 45,476 45,476 39,704
------- -------- -------- -------- --------
Cash and Cash Equivalents at End of Period................ $17,747 $ 45,476 $ 39,704 $ 71,204 $ 43,526
======= ======== ======== ======== ========
CASH PAID FOR:
Interest.................................................. $ -- $ 1,848 $ 7,736 $ 609 $ 1,324
======= ======== ======== ======== ========
Income taxes.............................................. $ 1,930 $ 536 $ 5,718 $ 693 $ 2,359
======= ======== ======== ======== ========
NONCASH INVESTING ACTIVITIES (NOTE 2):
Fair value of assets of acquired companies, including cash
acquired of $23,995 in 1997 and the three months ended
March 29, 1997.......................................... $ -- $ 68,356 $242,374 $242,374 --
Cash paid for acquired companies.......................... -- (52,191) (41,053) -- --
Issuance of Company common stock for acquired companies... -- -- (83,533) (83,533) --
Promissory note payable to parent company for acquired
companies............................................... -- -- (50,000) (50,000) --
Debt payable to parent company for acquired companies..... -- -- (37,861) (78,914) --
Adjustments to purchase price due from parent company for
acquired companies...................................... -- -- 9,075 9,075 --
------- -------- -------- -------- --------
Liabilities assumed of acquired companies............. $ -- $ 16,165 $ 39,002 $ 39,002 $ --
======= ======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE> 65

THERMO BIOANALYSIS CORPORATION

CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON
STOCK,
NET PARENT $.01 CAPITAL IN CUMULATIVE
COMPANY PAR EXCESS OF RETAINED TREASURY TRANSLATION
INVESTMENT VALUE PAR VALUE EARNINGS STOCK ADJUSTMENT
----------- ------ ----------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1994.................... $ 10,162 $ -- $ -- $ -- $ -- $ --
Net income prior to capitalization of
Company.................................... 371 -- -- -- -- --
Net transfer from parent company............. 1,547 -- -- -- -- --
Capitalization of Company.................... (12,080) 65 12,015 -- -- --
Net proceeds from issuance
of Company common stock (Note 7)........... -- 16 14,902 -- -- --
Net income after capitalization of
Company.................................... -- -- -- 2,143 -- --
Translation adjustment....................... -- -- -- -- -- 5
-------- ---- -------- ------- ------ -------
BALANCE DECEMBER 30, 1995.................... -- 81 26,917 2,143 -- 5
Net loss..................................... -- -- -- (436) -- --
Net proceeds from issuance of
Company common stock (Note 7).............. -- 17 20,765 -- -- --
Tax benefit related to employees' and
directors' stock plans..................... -- -- 200 -- -- --
Translation adjustment....................... -- -- -- -- -- 1,624
-------- ---- -------- ------- ------ -------
BALANCE DECEMBER 28, 1996.................... -- 98 47,882 1,707 -- 1,629
Net income................................... -- -- -- 11,340 -- --
Deemed distribution to parent company for the
acquisition of the Clinical Products Group
of LSI (Note 2)............................ -- -- -- (3,414) -- --

Issuance of Company common stock under
employees' and directors' stock plans...... -- -- 21 -- -- --

Tax benefit related to employees' and
directors' stock plans..................... -- -- 90 -- -- --

Issuance of Company common stock for the
acquisition of the Biosystems Group of LSI
(Note 2)................................... -- 13 16,855 -- -- --

Company common stock issuable for the
acquisition of the Clinical Products Group
of LSI (Note 2)............................ -- 30 66,635 -- -- --

Translation adjustment....................... -- -- -- -- -- (8,543)
-------- ---- -------- ------- ------ -------
BALANCE JANUARY 3, 1998...................... -- 141 131,483 9,633 -- (6,914)

(UNAUDITED)
Net income................................... -- -- -- 3,202 -- --

Deemed distribution to parent company for the
acquisition of the Clinical Products Group
of LSI..................................... -- -- -- (1,047) -- --

Issuance of Company common stock under
employees' and directors' stock plans...... -- -- 102 -- (7)

Translation adjustment....................... -- -- -- -- -- (967)
-------- ---- -------- ------- ------ -------
BALANCE APRIL 4, 1998........................ $ -- $141 $131,585 $11,788 $ (7) $(7,881)
======== ==== ======== ======= ====== =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE> 66

THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

The Company has three principal product lines: biomolecular instruments and
consumables, clinical laboratory equipment and supplies and information
management systems. The Company's biomolecular instruments and consumables are
based on proprietary immunoassay, optical biosensor, polymerase chain reaction
("PCR"), MALDI-TOF mass spectometry, DNA amplification and capillary
electrophoresis ("CE") technologies, and are used in pharmaceutical and
biopharmaceutical research, as well as for clinical laboratory testing and
diagnosis of patient samples. The Company's clinical laboratory business
supplies a range of equipment and consumables with applications in cytology,
histology, and pathology. The Company's information management systems business
designs, implements and supports laboratory information management systems
("LIMS") and chromatography data systems for use in laboratories, industrial
applications and clinical testing facilities.

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., 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 January 3, 1998, Thermo
Instrument owned 10,806,930 shares of the Company's common stock, representing
77% of such stock outstanding. Such shares include the 1,300,000 shares issued
to Thermo Instrument in connection with the acquisition of the Labsystems OY and
Hybaid divisions of LSI and 3,007,930 shares issuable to Thermo Instrument in
connection with the acquisition of the Clinical Products Group of LSI (Note 2).
Thermo Instrument is an 82%-owned subsidiary of Thermo Electron Corporation. As
of January 3, 1998, Thermo Electron owned 788,967 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 1995, 1996 and 1997 are for the fiscal years ended December
30, 1995, December 28, 1996 and January 3, 1998, respectively. Fiscal year 1995
and 1996 each included 52 weeks; 1997 included 53 weeks.

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 1997 balance sheet consists of unearned revenue on service
contracts and maintenance contracts, which will be recognized within one year.

F-7
<PAGE> 67
THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (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 (Loss) per Share

During the fourth quarter of 1997, the Company adopted SFAS No. 128,
"Earnings per Share" (Note 9). As a result, all previously reported earnings per
share have been restated; however, basic and diluted loss per share equal the
Company's previously reported loss per share for 1996. Basic earnings per share
have been computed by dividing net income by the weighted average number of
shares outstanding during the year. Diluted earnings per share have been
computed assuming the conversion of convertible obligations and the elimination
of the related interest expense, and the exercise of stock options, as well as
their related income tax effects. For periods prior to the Company's February
1995 capitalization, shares issued in connection with such capitalization have
been shown as outstanding for purposes of computing earnings per share.

Cash and Cash Equivalents and Overdraft Facility

At year-end 1996 and 1997, $39,649,000 and $10,158,000, respectively, 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 corporate notes, commercial paper, U.S.
government-agency securities, money market funds and other marketable
securities, in the amount of at least 103% of such obligation. The Company's
funds subject to the repurchase agreement are readily convertible into cash by
the Company. The repurchase agreement earns a rate based on the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter. Cash equivalents are carried at cost, which approximates market
value.

F-8
<PAGE> 68
THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Beginning in 1997, the Company has an overdraft facility for use by certain
of its European subsidiaries. As of January 3, 1998, the Company had $2,465,000
outstanding under the facility, the repayment of which was guaranteed by Thermo
Electron. Borrowings under the facility carried an interest rate of 7.2% during
1997.

Inventories

Inventories are stated at the lower of cost (on a weighted average basis)
or market value and include materials, labor and manufacturing overhead. The
components of inventories are as follows:

<TABLE>
<CAPTION>
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Raw materials and supplies.................................. $ 7,473 $12,818
Work in process............................................. 1,064 3,238
Finished goods.............................................. 6,055 22,579
------- -------
$14,592 $38,635
======= =======
</TABLE>

Property, Plant and Equipment

The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the estimated
useful lives of the property as follows: buildings and improvements, 15 to 30
years; machinery and equipment, 2 to 10 years; and leasehold improvements, the
shorter of the term of the lease or the life of the asset. Property, plant and
equipment consists of the following:

<TABLE>
<CAPTION>
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land........................................................ $ 285 $ 602
Buildings................................................... 2,603 6,659
Machinery, equipment and leasehold improvements............. 9,241 27,144
------- -------
12,129 34,405
Less: Accumulated depreciation and amortization............. 6,582 11,438
------- -------
$ 5,547 $22,967
======= =======
</TABLE>

Other Assets

Other assets in the accompanying balance sheet primarily represents the
cost of acquired product technology and capitalized software associated with the
1996 acquisition of the Affinity Sensors and LabSystems divisions of Fisons and
the 1997 acquisition of the Hybaid division of LSI (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 and $2,545,000, net of accumulated
amortization of $295,000 and $557,000, at year-end 1996 and 1997, respectively.

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 $4,466,000 at year-end 1996 and 1997,
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

F-9
<PAGE> 69
THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

Forward Contracts

The Company uses short-term forward foreign exchange contracts to manage
certain exposures to foreign currencies. The Company enters into forward foreign
exchange contracts to hedge firm purchase and sale commitments denominated in
currencies other than its subsidiaries' local currencies. These contracts
principally hedge transactions denominated in U.S. dollars, British pounds
sterling and German deutsche marks. The purpose of the Company's foreign
currency hedging activities is to protect the Company's local currency cash
flows related to these commitments from fluctuations in foreign exchange rates.
Gains and losses arising from forward foreign exchange contracts are recognized
as offsets to gains and losses resulting from the transactions being hedged. The
Company does not enter into speculative foreign currency agreements.

Fair Value of Financial Instruments

The Company's financial instruments consist primarily of cash and cash
equivalents, accounts receivable, due from parent company and affiliated
companies, accounts payable, payable to parent company, a subordinated
convertible note and forward foreign exchange contracts. The carrying amounts of
these financial instruments, with the exception of the payable to parent
company, subordinated convertible note, and forward foreign exchange contracts,
approximate fair value due to their short-term nature. See Note 6 for fair value
information pertaining to the Company's payable to parent company and
subordinated convertible note.

The Company had forward foreign exchange contracts of $212,000 and
$3,675,000 outstanding at year-end 1996 and 1997, respectively. The fair value
of such contracts is the estimated amount that the Company would receive upon
termination of the contract, taking into account the change in foreign exchange
rates. The fair value of the Company's forward foreign exchange contracts
receivable (payable) was $11,000 and ($24,000) at year-end 1996 and 1997,
respectively.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Presentation

Certain amounts in 1996 have been reclassified to conform to the
presentation in the 1997 financial statements.

F-10
<PAGE> 70
THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Interim Financial Statements

The financial statements as of April 4, 1998 and for the three-month
periods ended March 29, 1997 and April 4, 1998 are unaudited but, in the opinion
of management, reflect all adjustments of a normal recurring nature necessary
for a fair presentation of results for these interim periods. The results of
operations for the three-month period ended April 4, 1998 are not necessarily
indicative of the results to be expected for the entire year.

2. ACQUISITIONS

Acquisitions Effective in 1997

In March 1997, Thermo Instrument acquired approximately 95% of the
outstanding shares of Life Sciences International PLC ("LSI"), a London Stock
Exchange-listed company. Subsequently, Thermo Instrument acquired the remaining
shares of LSI capital stock. On May 6, 1997, the Company agreed to acquire
Labsystems OY and Hybaid, which comprised the Biosystems Group of LSI, from
Thermo Instrument. Labsystems OY, based in Finland, manufactures
microplate-based immunoassay instruments and liquid-handling equipment. Hybaid,
based in the U.K., manufactures thermal cyclers and consumables for DNA
amplification. The aggregate purchase price for Labsystems OY and Hybaid is
approximately $102,451,000, which consists of: a) approximately $91,500,000 for
the net operating assets of the acquired businesses plus b) $11,000,000 for an
equivalent amount of cash held by the acquired businesses. The purchase price
for the net operating assets represents the sum of the net book value, exclusive
of cash, of the businesses as of the date that Thermo Instrument acquired LSI,
plus a percentage of Thermo Instrument's total cost in excess of net assets
acquired associated with its acquisition of LSI, based on the aggregate 1996
revenues of Labsystems OY and Hybaid relative to LSI's 1996 consolidated
revenues. The Company believes that this allocation methodology is reasonable
and in accordance with the guidance provided by Staff Accounting Bulletin 55
(Topic 1:B). The purchase price was subject to a post-closing adjustment based
on final determination of the net book value, exclusive of cash, of the acquired
businesses and a final calculation of Thermo Instrument's total cost in excess
of net assets acquired associated with the acquisition of LSI. The Company and
Thermo Instrument have finalized the post-closing adjustment, which resulted in
a cash refund of approximately $5.1 million that the Company received during the
first quarter of 1998. Such amount is included in due from parent company and
affiliated companies in the accompanying 1997 balance sheet.

Of the $102,451,000 aggregate purchase price, the Company paid
approximately $35,583,000 in cash to Thermo Instrument in June 1997, issued a
$50,000,000 promissory note to Thermo Instrument and, following approval by the
Company's shareholders, issued to Thermo Instrument in April 1998 1,300,000
shares of Company common stock, valued at approximately $16,868,000, or $12.98
per share, representing the five-day average (April 28, 1997 through May 2,
1997) for the period preceding the date the transaction was approved by the
Company's and Thermo Instrument's respective boards of directors. The Company
believes that this five-day average is appropriate as it most closely represents
the value of Company common stock on the date the Company became obligated to
transfer such shares to Thermo Instrument. The $50,000,000 promissory note,
which bears interest at the 90-day Commercial Paper Composite Rate plus 25 basis
points, set at the beginning of each quarter, is due on July 15, 1999.

Because the Company, Labsystems OY and Hybaid 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 accompanying 1997 financial statements include the
results of Labsystems OY and Hybaid from March 12, 1997, the date these
businesses were acquired by Thermo Instrument, and the 1,300,000 shares issued
to Thermo Instrument have been deemed outstanding from that date and are
therefore included in the computation of earnings per share.

F-11
<PAGE> 71
THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In July 1997, the Company agreed to acquire Labsystems Japan from Thermo
Instrument for approximately $5,900,000 in cash. Labsystems Japan was acquired
by Thermo Instrument as part of its acquisition of LSI. The purchase price for
Labsystems Japan was determined in a manner similar to that for Labsystems OY
and Hybaid. Subsequent to the initial determination of the purchase price, the
Company assumed certain additional trade payables totaling approximately $4.4
million, which resulted in a corresponding decrease in the purchase price. Of
the $4.4 million purchase price adjustment, $0.4 million was received in 1997
and the remainder is included in due from parent company and affiliated
companies in the accompanying 1997 balance sheet. Such adjustment was received
during the first quarter of 1998. Labsystems Japan distributes products
manufactured by Labsystems OY and other LSI companies. The acquisition of
Labsystems Japan has been treated for accounting purposes in a manner similar to
the acquisition of Labsystems OY and Hybaid. Accordingly, the accompanying 1997
financial statements include the results of Labsystems Japan from March 12,
1997.

In May 1998, the Company agreed to acquire the Clinical Products Group of
LSI, which is comprised of Shandon Inc. and its related businesses, including
ALKO Diagnostic, from Thermo Instrument. The Clinical Products Group provides
equipment and consumables for cytology, histology and pathology applications. It
also supplies consumables for blood gas and ISE analyzers. The net purchase
price for the Clinical Products Group is approximately $66,665,000, which
represents the sum of the net book value of the businesses as of April 4, 1998,
plus a percentage of Thermo Instrument's total cost in excess of net assets
acquired associated with its acquisition of LSI, based on the 1996 revenues of
the Clinical Products Group relative to LSI's 1996 consolidated revenues. The
Company believes that this allocation methodology is reasonable and in
accordance with the guidance provided by Staff Accounting Bulletin 55 (Topic
1:B).

The net purchase price for the Clinical Products Group will be paid with
3,007,930 shares of Company common stock valued at $22.16 per share,
representing the five-day average for the period preceding the date the parties
reached agreement in principle on the material terms of the transaction.
Issuance of the common stock will occur immediately after the listing upon the
American Stock Exchange of the 3,007,930 shares of Company common stock issuable
to Thermo Instrument, which will require approval by the Company's shareholders.
Because Thermo Instrument is the Company's majority shareholder and intends to
vote its shares in favor of such listing, the approval is assured. In addition
to the shares of Company common stock to be issued to Thermo Instrument, the
Company will assume approximately $37,861,000 of existing indebtedness owed by
the Clinical Products Group to Thermo Instrument, making the gross purchase
price approximately $104,526,000. This amount included $12,013,000 for an
equivalent amount of cash acquired. The existing indebtedness owed to Thermo
Instrument is due January 2, 1999 and bears interest at the 90-day Commercial
Paper Composite Rate plus 25 basis points, set at the beginning of each quarter.

The acquisition of the Clinical Products Group has been treated for
accounting purposes in a manner similar to the acquisition of Labsystems OY and
Hybaid. Accordingly, the accompanying 1997 financial statements include the
results of the Clinical Products Group from March 12, 1997, and the shares
issuable subject to shareholder vote have been deemed outstanding from that date
and are therefore included in the computation of earnings per share. The
purchase price for the Clinical Products Group included $3,414,000 for the
increase in net book value from the date the Clinical Products Group was
acquired by Thermo Instrument. This amount was recorded as a deemed distribution
from retained earnings, reflecting consideration to Thermo Instrument for the
earnings of the Clinical Products Group from the date of the acquisition by
Thermo Instrument.

Acquisitions Effective in 1996

In February 1996, the Company acquired substantially all of the assets,
subject to certain liabilities, of the Dynex Technologies division of Dynatech
Corporation for $43,191,000 in cash. During 1997, the Company negotiated a
post-closing adjustment in accordance with the terms of the purchase agreement,
resulting in a
F-12
<PAGE> 72
THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

refund of $955,000 that has been recorded as a reduction to cost in excess of
net assets of acquired companies. 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.

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. The
purchase price for Affinity Sensors and LabSystems represents the sum of the net
tangible book value of those businesses on March 29, 1996, plus a percentage of
Thermo Instrument's intangible assets associated with its acquisition of the
Fisons businesses, based on the aggregate 1994 and 1995 revenues of the acquired
businesses relative to the aggregate 1994 and 1995 revenues of the Fisons
businesses. The Company believes that this allocation methodology is reasonable
and in accordance with the guidance provided by Staff Accounting Bulletin 55
(Topic 1:B). 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 accompanying 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.

The aggregate cost of the Clinical Products Group of LSI, the Labsystems OY
and Hybaid divisions of LSI and Dynex exceeded the estimated fair value of the
acquired net assets by $167,151,000, which is being amortized over 40 years.
Allocation of the purchase price for these acquisitions was based on estimates
of the fair value of the net assets acquired.

In connection with the acquisition of the Clinical Products Group of LSI
and the Labsystems OY and Hybaid divisions of LSI, the Company is in the process
of restructuring the acquired businesses. This restructuring is expected to
primarily include reductions in staffing levels and, to a lesser extent, costs
for termination of certain joint venture arrangements. In accordance with the
requirements of EITF 95-3, as part of the cost of the acquisition, the Company
has established reserves of approximately $8,536,000, of which the Company
expended $3,426,000 during 1997, primarily for severance payments. Unresolved
matters at year-end 1997 included completing planned severances and termination
of joint ventures. Finalization of the Company's plan for restructuring the
acquired businesses occurred during the first quarter of 1998.

In addition to the restructuring activities described above, during 1996
the Company had undertaken a restructuring in connection with its February 1996
acquisition of Dynex. The restructuring activities primarily included reductions
of staffing, including manufacturing, sales and administrative personnel within
the acquired business, and, to a lesser extent, abandonment of excess
facilities. In connection with these restructuring activities, the Company
established reserves of $2,259,000 in 1996. During 1996, the Company expended
$548,000 for severance and $367,000 for other exit costs, including lease
payments on abandoned facilities. The Company finalized its restructuring plan
for Dynex in 1996. During 1997, the Company expended $556,000 for these matters,
which primarily represented severance, and reversed its remaining reserve of
$788,000 with a corresponding decrease to cost in excess of net assets of
acquired companies.
F-13
<PAGE> 73
THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. EMPLOYEE BENEFIT PLANS

Stock-based Compensation Plans

Stock Option Plans

The Company has two stock-based compensation plans for its key employees,
directors and others, adopted in 1995 and 1997, which permit the grant of a
variety of stock and stock-based awards as determined by the human resources
committee of the Company's Board of Directors (the "Board Committee"), including
restricted stock, stock options, stock bonus shares or performance-based shares.
To date, only nonqualified stock options have been granted under these plans.
The option recipients and the terms of options granted under these plans are
determined by the Board Committee. Options granted to date are immediately
exercisable, 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 seven 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.

A summary of the Company's stock option activity is as follows:

<TABLE>
<CAPTION>
1995 1996 1997
----------------- ----------------- -----------------
WEIGHTED WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE NUMBER AVERAGE
OF EXERCISE OF EXERCISE OF EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------ -------- ------ -------- ------ --------
(SHARES IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Options outstanding, beginning of
year................................ -- $ -- 30 $10.00 717 $11.27
Granted............................. 30 10.00 713 11.28 282 15.71
Exercised........................... -- -- -- -- (2) 10.38
Forfeited........................... -- -- (26) 10.00 (90) 13.60
-- --- ---
Options outstanding, end of year...... 30 $10.00 717 $11.27 907 $12.42
== ====== === ====== === ======
Options exercisable................... -- $ -- 717 $11.27 907 $12.42
== ====== === ====== === ======
Options available for grant........... 70 183 291
== === ===
</TABLE>

A summary of the status of the Company's stock options at January 3, 1998,
is as follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING AND EXERCISABLE
------------------------------------
WEIGHTED
WEIGHTED AVERAGE AVERAGE
NUMBER REMAINING EXERCISE
RANGE OF EXERCISE PRICES SHARES CONTRACTUAL LIFE PRICE
------------------------ ------ ---------------- --------
(SHARES IN THOUSANDS)
<S> <C> <C> <C>
$10.00 - $11.84...................................... 392 9.4 years... $10.00
11.85 - 13.69...................................... 270 9.5 years... 12.92
13.70 - 15.53...................................... 214 9.0 years... 15.50
15.54 - 17.38...................................... 31 7.0 years... 17.38
---
$10.00 - $17.38...................................... 907 9.3 years... $12.42
===
</TABLE>

F-14
<PAGE> 74
THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Employee Stock Purchase Program

Effective November 1, 1997, substantially all of the Company's full-time
employees are eligible to participate in an employee stock purchase program
sponsored by the Company and Thermo Electron, under which employees can purchase
shares of the Company's and Thermo Electron's common stock. Prior to November 1,
1997, the program was sponsored by Thermo Instrument and Thermo Electron. Under
this program, the applicable shares of 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
1997, 1996 and 1995 under the Company's stock-based compensation plans been
determined based on the fair value at the grant dates consistent with the method
set forth under SFAS No. 123, the effect on the Company's net income (loss) and
earnings (loss) per share would have been as follows:

<TABLE>
<CAPTION>
1995 1996 1997
--------- -------- ----------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Net income (loss):
As reported...................................... $2,514 $(436) $11,340
Pro forma........................................ 2,477 (863) 10,850
Basic earnings (loss) per share:
As reported...................................... .33 (.05) .86
Pro forma........................................ .32 (.10) .82
Diluted earnings (loss) per share:
As reported...................................... .33 (.05) .79
Pro forma........................................ .32 (.10) .76
</TABLE>

Pro forma compensation expense for options granted is reflected over the
vesting period; therefore, future pro forma compensation expense may be greater
as additional options are granted.

The weighted average fair value per share of options granted was $2.93,
$5.36 and $6.73 in 1995, 1996 and 1997, respectively. The fair value of each
option grant was estimated on the grant date using the Black-Scholes
option-pricing model with the following weighted-average assumptions:

<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Volatility......................................... 26% 26% 28%
Risk-free interest rate............................ 6.5% 6.2% 6.4%
Expected life of options........................... 3.5 years 8.1 years 6.4 years
</TABLE>

The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option-pricing models require the input of highly
subjective assumptions, including expected stock price volatility. Because the
Company's employee stock options have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
F-15
<PAGE> 75
THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

Defined Contribution Savings Plans

Substantially all of the Company's full-time U.S. employees, other than
employees of Shandon Inc., are eligible to participate in a 401(k) savings plan.
Contributions to the 401(k) savings plan are made by both the employee and the
Company. Company contributions are based upon the level of employee
contributions. For these plans, the Company contributed and charged to expense
$128,000, $285,000 and $433,000 in 1995, 1996 and 1997, respectively. Shandon
Inc. has a defined contribution plan covering all eligible employees.
Contributions by the Company are required based on a percentage of eligible
compensation annually. The plan does not provide for employee contributions. For
this plan, the Company contributed and charged to expense $430,000 in 1997.

4. INCOME TAXES

The components of income before provision for income taxes are as follows:

<TABLE>
<CAPTION>
1995 1996 1997
------ ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic............................................ $3,828 $1,786 $15,727
Foreign............................................. 360 (322) 2,148
------ ------ -------
$4,188 $1,464 $17,875
====== ====== =======
</TABLE>

The components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
1995 1996 1997
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Currently payable:
Federal................................................ $1,331 $ 487 $5,255
State.................................................. 284 93 729
Foreign................................................ 119 1,310 1,499
------ ------ ------
1,734 1,890 7,483
------ ------ ------
Net deferred (prepaid):
Federal................................................ (50) 8 (381)
State.................................................. (10) 2 (81)
Foreign................................................ -- -- (486)
------ ------ ------
(60) 10 (948)
------ ------ ------
$1,674 $1,900 $6,535
====== ====== ======
</TABLE>

The Company receives a tax deduction upon exercise of nonqualified stock
options by employees for the difference between the exercise price and the
market price of the underlying common stock on the date of exercise. The
provision for income taxes that is currently payable does not reflect $200,000
and $90,000 of such benefits that have been allocated to capital in excess of
par value in 1996 and 1997, respectively, resulting primarily from employee
exercises of stock options in affiliated companies.

F-16
<PAGE> 76
THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (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% to income before provision for income taxes due to the
following:

<TABLE>
<CAPTION>
1995 1996 1997
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Provision for income taxes at statutory rate............. $1,424 $ 498 $6,078
Increases (decreases) resulting from:
State income taxes, net of federal tax................. 181 63 428
Net foreign losses not benefited and tax rate
differential........................................ (7) 229 283
Tax benefit of foreign sales corporation............... (6) (23) (37)
Write-off of acquired technology (Note 2).............. -- 1,190 --
Amortization of cost in excess of net assets of
acquired companies.................................. 6 6 20
Other, net............................................... 76 (63) (237)
------ ------ ------
$1,674 $1,900 $6,535
====== ====== ======
</TABLE>

Prepaid income taxes and deferred income taxes in the accompanying balance
sheet consist of the following:

<TABLE>
<CAPTION>
1996 1997
------ ------
(IN THOUSANDS)
<S> <C> <C>
Prepaid income taxes:
Reserves and accruals..................................... $1,872 $7,235
Net operating loss........................................ -- 609
Inventory basis difference................................ 370 1,145
Allowance for doubtful accounts........................... 77 104
------ ------
2,319 9,093
Less: Valuation allowance................................. -- 609
------ ------
$2,319 $8,484
====== ======
Deferred income taxes:
Depreciation.............................................. $ 196 $ 139
====== ======
</TABLE>

At year-end 1997, the Company had foreign net operating loss carryforwards
of approximately $1,365,000 for which a valuation allowance has been established
due to uncertainty surrounding their realizability. Of this amount,
approximately $167,000 expires in 2002 and the remainder do not expire.

A provision has not been made for U.S. or additional foreign taxes on
$8,400,000 of undistributed earnings of 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.

5. COMMITMENTS AND CONTINGENCY

Operating Leases

The Company leases portions of its office and operating facilities under
various noncancellable operating lease arrangements that expire at various dates
through 2016. The accompanying statement of operations includes expenses from
operating leases of $69,000, $1,401,000 and $2,327,000 in 1995, 1996 and 1997,
respectively. Future minimum payments due under noncancellable operating leases
as of January 3, 1998, are

F-17
<PAGE> 77
THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$3,973,000 in 1998; $3,580,000 in 1999; $3,208,000 in 2000; $2,479,000 in 2001;
$1,859,000 in 2002; and $2,873,000 in 2003 and thereafter. Total future minimum
lease payments are $17,972,000.

Contingency

As a result of the acquisition of Affinity Sensors, formerly part of the
Fisons businesses acquired by Thermo Instrument (Note 2), the Company has been
named a defendant in a dispute alleging patent infringement brought by Biacore
AB and Biacore, Inc. In general, an owner of intellectual property can prevent
others from using such property and is entitled to damages for unauthorized past
usage. The Company is vigorously defending this matter, although the Company
believes that it is entitled to indemnification for any losses on such matter by
Rhone-Poulenc Rorer under the purchase agreement between Thermo Instrument and
Rhone-Poulenc Rorer for the initial purchase of the Fisons businesses.
Accordingly, the Company does not expect that this contingency will materially
affect its future results of operations or financial position.

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 paid Thermo Electron annually an amount equal to 1.0% of the
Company's revenues in 1997 and 1996 and 1.20% of the Company's revenues in 1995.
For these services, the Company was charged $270,000, $716,000 and $2,020,000 in
1995, 1996 and 1997, respectively. Beginning in fiscal 1998, the Company will
pay an annual fee equal to 0.8% of the Company's revenues. The annual fee is
reviewed and adjusted annually by mutual agreement of the parties. 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 affiliated with Thermo Electron. Sales of such products to
affiliated companies totaled $1,834,000, $6,298,000 and $16,667,000 in 1995,
1996 and 1997, respectively. Purchases of products from affiliated companies
totaled $212,000, $539,000 and $3,467,000 in 1995, 1996 and 1997, 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 under this arrangement in 1995.

In addition, a majority-owned subsidiary of Thermo Instrument assembles
certain of the Company's products. For these services, the Company paid
$600,000, $471,000 and $632,000 in 1995, 1996 and 1997, respectively.

Operating Leases

In addition to the operating leases discussed in Note 5, the Company leases
certain manufacturing space from ThermoQuest Corporation, a majority-owned
subsidiary of Thermo Instrument, as a tenant-at-will,

F-18
<PAGE> 78
THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

subject to a six-month cancellation provision. The accompanying statement of
operations includes expenses from this operating lease of $105,000, $105,000 and
$74,000 in 1995, 1996 and 1997, respectively.

Repurchase Agreement

The Company invests excess cash in a repurchase agreement with Thermo
Electron as discussed in Note 1.

Short- and Long-term Obligations

In May 1998, the Company agreed to acquire the Clinical Products Group of
LSI from Thermo Instrument (Note 2). The purchase price included the assumption
of approximately $37,861,000 of existing indebtedness owed by the Clinical
Products Group of LSI to Thermo Instrument. Such debt, which is included in due
to parent company and affiliated companies in the accompanying 1997 balance
sheet, bears interest at the 90-day Commercial Paper Composite Rate plus 25
basis points, set at the beginning of each quarter, and is due on January 2,
1999. The fair value of this debt approximates its carrying value due to its
variable interest rate.

In May 1997, the Company agreed to purchase Labsystems OY and Hybaid from
Thermo Instrument (Note 2). The purchase price for such businesses included a
$50,000,000 promissory note that bears interest at the 90-day Commercial Paper
Composite Rate plus 25 basis points, set at the beginning of each quarter, and
which is due on July 15, 1999. The fair value of this promissory note
approximates its carrying value due to its variable interest rate.

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 was $62,500,000 at year-end 1997, primarily
due to the market price of the Company's common stock exceeding the conversion
price of the note, and approximated its carrying value at year-end 1996,
primarily due to 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 January 3, 1998, the Company had reserved 4,303,203 unissued shares of
its common stock for possible issuance under stock-based compensation plans and
for issuance upon possible conversion of the 4.875% subordinated convertible
note.

F-19
<PAGE> 79
THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. GEOGRAPHICAL INFORMATION AND SIGNIFICANT CUSTOMER

The following table shows data for the Company by geographical area.

<TABLE>
<CAPTION>
1995 1996 1997
------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
United States............................................. $17,741 $ 43,098 $ 96,146
Finland................................................... -- -- 40,520
United Kingdom............................................ 4,793 27,817 61,457
Other Europe.............................................. -- 11,228 42,080
Asia...................................................... -- 3,381 12,118
Other..................................................... -- -- 897
Transfers among geographical areas(a)..................... -- (13,875) (51,220)
------- -------- --------
$22,534 $ 71,649 $201,998
======= ======== ========
Income before provision for income taxes:
United States............................................. $ 3,321 $ 3,398 $ 16,401
Finland................................................... -- -- 11,199
United Kingdom(b)......................................... 360 (1,061) (914)
Other Europe.............................................. -- 621 550
Asia...................................................... -- 577 136
Other..................................................... -- -- 212
Corporate and eliminations(c)............................. (312) (1,478) (4,415)
------- -------- --------
Total operating income.................................... 3,369 2,057 23,169
Interest income (expense), net............................ 819 (593) (5,294)
------- -------- --------
$ 4,188 $ 1,464 $ 17,875
======= ======== ========
Identifiable assets:
United States............................................. $29,022 $ 47,096 $108,969
Finland................................................... -- -- 82,621
United Kingdom............................................ 3,885 27,720 86,025
Other Europe.............................................. -- 6,467 30,934
Asia...................................................... -- 1,149 4,060
Other..................................................... -- -- 278
Corporate(d).............................................. -- 40,565 9,552
------- -------- --------
$32,907 $122,997 $322,439
======= ======== ========
Export revenues included in United States revenues
above(e).................................................. $ 2,741 $ 3,432 $ 9,060
======= ======== ========
</TABLE>

- ---------------
(a) Transfers among geographical areas are accounted for at prices that are
representative of transactions with unaffiliated parties.

(b) Includes a write-off of acquired technology in 1996 of $3,500,000 related to
the acquisitions of Affinity Sensors and LabSystems.

(d) Primarily cash and cash equivalents.

(e) In general, export sales are denominated in U.S. dollars.

F-20
<PAGE> 80

THERMO BIOANALYSIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)

U.S. government agencies accounted for 24% of the Company's total revenues
in 1995. No customer accounted for 10% or more of the Company's total revenues
in 1996 or 1997.

9. EARNINGS (LOSS) PER SHARE

Basic and diluted earnings (loss) per share were calculated as follows:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
--------------------
MARCH 29, APRIL 4,
1995 1996 1997 1997 1998
------ ------ ------- --------- --------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Basic
Net income (loss)................................... $2,514 $ (436) $11,340 $ 1,582 $ 3,202
------ ------ ------- ------- -------
Weighted average shares............................. 7,694 8,542 9,772 9,772 9,778
Shares issuable for acquisition of the Labsystems OY
and Hybaid divisions of LSI (Note 2).............. -- -- 1,044 257 1,300
Shares issuable for the acquisition of the Clinical
Products Group of LSI (Note 2).................... -- -- 2,416 595 3,008
------ ------ ------- ------- -------
Weighted average shares, as adjusted................ 7,694 8,542 13,232 10,624 14,086
------ ------ ------- ------- -------
Basic earnings (loss) per share..................... $ .33 $ (.05) $ .86 $ .15 $ .23
====== ====== ======= ======= =======
Diluted
Net income (loss)................................... $2,514 $ (436) $11,340 $ 1,582 $ 3,202
Effect of:
Convertible note.................................. -- -- 1,560 390 390
------ ------ ------- ------- -------
Income (loss) available to common shareholders, as
adjusted.......................................... $2,514 $ (436) $12,900 $ 1,972 $ 3,592
------ ------ ------- ------- -------
Basic weighted average shares....................... 7,694 8,542 13,232 10,624 14,086
Effect of:
Convertible note.................................. -- -- 3,030 3,030 3,030
Stock options..................................... -- -- 105 40 183
------ ------ ------- ------- -------
Weighted average shares, as adjusted................ 7,694 8,542 16,367 13,694 17,299
------ ------ ------- ------- -------
Diluted earnings (loss) per share................... $ .33 $ (.05) $ .79 $ .14 $ .21
====== ====== ======= ======= =======
</TABLE>

The computation of diluted loss per share for 1996 excludes the effect of
assuming the conversion of the Company's $50,000,000 principal amount 4.875%
subordinated convertible note because the effect would be antidilutive.

10. SUBSEQUENT EVENTS

Joint Venture

In April 1998, the Company announced its intention to contribute in July
1998 the assets and liabilities of its health physics division to a joint
venture the Company is forming with Thermo Instrument. The Company will receive
a 49% equity interest in the joint venture, and will initially receive 67% of
the profit and losses of the joint venture.

Comprehensive Income

During the first quarter of 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income." This pronouncement sets forth requirements for
disclosure of the Company's comprehensive income and accumulated other
comprehensive items. In general, comprehensive income combines net income and
"other comprehensive items" which represent foreign currency translation
adjustments, reported as a component of shareholders' investment in the
accompanying balance sheet. During the first quarter of 1997 and 1998, the
Company's unaudited comprehensive income was $1,823,000 and $2,235,000,
respectively.

F-21
<PAGE> 81

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the DYNEX Technologies Division of Dynatech Corporation:

We have audited the accompanying consolidated balance sheet of the DYNEX
Technologies Division of Dynatech Corporation as of March 31, 1995 and February
7, 1996, and the related consolidated statements of operations, cash flows, and
shareholder's investment for each of the two years in the period ended March 31,
1995 and the period from April 1, 1995 through February 7, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the financial
statements of Dynatech Medical Products Limited, which statements reflect 14
percent and 16 percent of consolidated assets as of March 31, 1995 and February
7, 1996, respectively, and 35 percent, 32 percent and 41 percent of consolidated
cost of revenues for each of the two years in the period ended March 31, 1995
and the period from April 1, 1995 through February 7, 1996, respectively. Those
statements were audited by other auditors whose report has been furnished to us
and our opinion, insofar as it relates to the amounts included for that entity,
is based solely on the report of the other auditors.

In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of the DYNEX Technologies Division of
Dynatech Corporation as of March 31, 1995 and February 7, 1996 and the results
of their operations and their cash flows for each of the two years in the period
ended March 31, 1995 and for the period from April 1, 1995 through February 7,
1996, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Boston, Massachusetts
July 19, 1996

F-22
<PAGE> 82

REPORT OF THE AUDITORS TO THE MEMBERS OF

DYNATECH MEDICAL PRODUCTS LIMITED

We have audited the accounts.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

The company's directors are responsible for the preparation of the
accounts. It is our responsibility to form an independent opinion, based on our
audit, on those accounts and to report our opinion to you.

BASIS OF OPINION

We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the accounts. It also
includes an assessment of the significant estimates and judgements made by the
directors in the preparation of the accounts, and of whether the accounting
policies are appropriate to the company's circumstances, consistently applied
and adequately disclosed.

We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the accounts are free from
material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion, we also evaluated the overall adequacy of the
presentation of information in the accounts.

OPINION

In our opinion the accounts give a true and fair view of the state of the
company's affairs as at March 31, 1995 and at February 7, 1996 and of its income
and cash flows for the years ended March 31, 1994 and 1995 and the period from
April 1, 1995 through February 7, 1996 and have been properly prepared in
accordance with the Companies (Guernsey) Law, 1994.

Coopers & Lybrand
Chartered Accountants
Guernsey, Channel Islands
July 19, 1996

F-23
<PAGE> 83

DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
-------------------- FEBRUARY 7,
1994 1995 1996
------- ------- -------------
<S> <C> <C> <C>
Revenues (Note 6)........................................ $30,130 $37,328 $28,503
------- ------- -------
Costs and Operating Expenses:
Cost of revenues....................................... 15,476 20,297 15,783
Selling, general and administrative expenses (includes
$2,515, $2,182 and $2,152 to Dynatech Corporation)
(Note 5)............................................ 12,203 12,636 11,402
Research and development expenses...................... 2,483 2,467 2,297
------- ------- -------
30,162 35,400 29,482
------- ------- -------
Operating Income (Loss).................................. (32) 1,928 (979)
Interest Income.......................................... 154 156 146
Interest Expense (includes $1,353, $1,050 and $1,427 to
Dynatech Corporation) (Note 5)......................... (1,662) (1,312) (1,610)
------- ------- -------
Income (Loss) Before Provision for Income Taxes.......... (1,540) 772 (2,443)
Provision for Income Taxes (Note 3)...................... 228 436 320
------- ------- -------
Net Income (Loss)........................................ $(1,768) $ 336 $(2,763)
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-24
<PAGE> 84

DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION

CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)

<TABLE>
<CAPTION>
MARCH 31, FEBRUARY 7,
1995 1996
--------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 5,269 $ 1,232
Accounts receivable, less allowances of $293 and $174..... 5,435 4,923
Inventories............................................... 5,861 6,737
Prepaid expenses.......................................... 585 866
Prepaid income taxes (Note 3)............................. 130 170
------- -------
17,280 13,928
------- -------
Property and Equipment, at Cost, Net........................ 2,080 2,138
------- -------
$19,360 $16,066
======= =======

LIABILITIES AND SHAREHOLDER'S INVESTMENT
Current Liabilities:
Short-term debt........................................... $ 3,732 $ --
Accounts payable.......................................... 1,670 1,094
Accrued payroll and employee benefits..................... 1,681 825
Accrued installation and warranty expenses................ 270 270
Customer deposits......................................... 479 483
Accrued income taxes...................................... 436 320
Deferred revenue.......................................... 106 189
Accrued sales commissions................................. 427 264
Other accrued expenses.................................... 781 564
------- -------
9,582 4,009
------- -------
Deferred Income Taxes (Note 3).............................. 130 170
------- -------
Commitments (Note 4)
Shareholder's Investment:
Net parent company investment............................. 9,292 12,056
Cumulative translation adjustment......................... 356 (169)
------- -------
9,648 11,887
------- -------
$19,360 $16,066
======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-25
<PAGE> 85

DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
------------------ FEBRUARY 7,
1994 1995 1996
------- ------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)........................................ $(1,768) $ 336 $(2,763)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization....................... 1,255 1,103 874
Provision for losses on accounts receivable......... 36 74 41
Changes in current accounts:
Accounts receivable.............................. 1,462 (634) 333
Inventories...................................... 320 (887) (1,152)
Other current assets............................. 75 75 (301)
Accounts payable................................. (980) 693 (531)
Other current liabilities........................ 1,115 (721) (1,184)
------- ------- -------
Net cash provided by (used in) operating
activities..................................... 1,515 39 (4,683)
------- ------- -------
INVESTING ACTIVITIES:
Purchases of property and equipment...................... (892) (1,127) (975)
------- ------- -------
FINANCING ACTIVITIES:
Net transfer from Dynatech Corporation................... 895 1,746 5,527
Dividends paid to Dynatech Corporation................... (600) (400) --
Increase (decrease) in short-term debt................... 685 156 (3,652)
------- ------- -------
Net cash provided by financing activities........ 980 1,502 1,875
------- ------- -------
Exchange Rate Effect on Cash............................... 716 (489) (254)
------- ------- -------
Increase (Decrease) in Cash and Cash Equivalents........... 2,319 (75) (4,037)
Cash and Cash Equivalents at Beginning of Period........... 3,025 5,344 5,269
------- ------- -------
Cash and Cash Equivalents at End of Period................. $ 5,344 $ 5,269 $ 1,232
======= ======= =======
CASH PAID FOR:
Interest................................................. $ 311 $ 260 $ 193
======= ======= =======
Income taxes............................................. $ 315 $ 305 $ 78
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-26
<PAGE> 86

DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION

CONSOLIDATED STATEMENT OF SHAREHOLDER'S INVESTMENT
(IN THOUSANDS)

<TABLE>
<CAPTION>
NET PARENT CUMULATIVE
COMPANY TRANSLATION
INVESTMENT ADJUSTMENT
---------- -----------
<S> <C> <C>
BALANCE MARCH 31, 1993...................................... $ 9,083 $ 41
Net loss.................................................... (1,768) --
Net transfer from Dynatech Corporation...................... 895 --
Dividends paid to Dynatech Corporation...................... (600) --
Translation adjustment...................................... -- 759
------- -----
BALANCE MARCH 31, 1994...................................... 7,610 800
Net income.................................................. 336 --
Net transfer from Dynatech Corporation...................... 1,746 --
Dividends paid to Dynatech Corporation...................... (400) --
Translation adjustment...................................... -- (444)
------- -----
BALANCE MARCH 31, 1995...................................... 9,292 356
Net loss.................................................... (2,763) --
Net transfer from Dynatech Corporation...................... 5,527 --
Translation adjustment...................................... -- (525)
------- -----
BALANCE FEBRUARY 7, 1996.................................... $12,056 $(169)
======= =====
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-27
<PAGE> 87

DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

DYNEX Technologies (the "Company") designs, manufactures and markets
products used in the immunoassay segment of the bioinstrumentation market. The
Company is a division of Dynatech Corporation ("Dynatech"), and was formerly
known as Dynatech Laboratories.

Principles of Consolidation

The accompanying financial statements include the accounts of the Company
and its wholly owned subsidiaries. All material intercompany accounts and
transactions have been eliminated.

Revenue Recognition

The Company recognizes revenues upon shipment of its products. The Company
provides a reserve for its estimate of warranty and installation costs at the
time of shipment. Deferred revenue in the accompanying balance sheet consists of
unearned revenue on service contracts which is recognized as revenue over the
life of the service contract. Substantially all of the deferred revenue included
in the accompanying balance sheet as of February 7, 1996, will be recognized
within one year.

Income Taxes

In accordance with Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes," the Company recognizes deferred income taxes
based on the expected future tax consequences of differences between the
financial statement basis and the tax basis of assets and liabilities,
calculated using enacted tax rates in effect for the year in which the
differences are expected to be reflected in the tax return.

Inventories

Inventories are stated at the lower of cost (on a first-in, first-out
basis) or market value and include materials, labor, and manufacturing overhead.
The components of inventories are as follows:

<TABLE>
<CAPTION>
MARCH 31, FEBRUARY 7,
1995 1996
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Raw materials and supplies.................................. $2,191 $2,054
Work in process............................................. 559 581
Finished goods.............................................. 3,111 4,102
------ ------
$5,861 $6,737
====== ======
</TABLE>

F-28
<PAGE> 88
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Property and Equipment

The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the estimated
useful lives of the property as follows: machinery and equipment, 3 to 10 years;
and leasehold improvements, the shorter of the term of the lease or the life of
the asset. Property and equipment consist of the following:

<TABLE>
<CAPTION>
MARCH 31, FEBRUARY 7,
1995 1996
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Machinery, equipment and leasehold improvements............. $6,782 $6,807
Less: Accumulated depreciation and amortization............. 4,702 4,669
------ ------
$2,080 $2,138
====== ======
</TABLE>

Foreign Currency

All assets and liabilities of the Company's foreign subsidiaries are
translated at year-end exchange rates, and revenues and expenses are translated
at average exchange rates for the year, in accordance with SFAS No. 52, "Foreign
Currency Translation." Resulting translation adjustments are reflected as a
separate component of shareholder's investment titled "Cumulative translation
adjustment." Foreign currency transaction gains and losses are included in the
accompanying statement of operations and are not material for all periods
presented.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

2. 401(k) SAVINGS PLAN

Substantially all of the Company's full-time U.S. employees are eligible to
participate in Dynatech's 401(k) savings plan. Contributions to the 401(k)
savings plan are made by both the employee and the Company. Company
contributions are based upon the level of employee contributions. In addition,
the Company may provide a discretionary contribution which is allocated based on
each employee's salary and length of service. Contributions charged to expense
were $66,000, $113,000, and $103,000 for the years ended March 31, 1994 and 1995
and for the period from April 1, 1995 through February 7, 1996, respectively.

3. INCOME TAXES

The components of income (loss) before provision for income taxes are as
follows:

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
---------------- FEBRUARY 7,
1994 1995 1996
------- ----- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic................................................... $(1,094) $(163) $(1,926)
Foreign.................................................... (446) 935 (517)
------- ----- -------
$(1,540) $ 772 $(2,443)
======= ===== =======
</TABLE>

F-29
<PAGE> 89
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
------------ FEBRUARY 7,
1994 1995 1996
---- ---- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Currently payable
Foreign................................................... $228 $436 $320
==== ==== ====
</TABLE>

The provision for income taxes in the accompanying statement of operations
differs from the provision calculated by applying the statutory federal income
tax rate of 35% to income (loss) before provision for income taxes due to the
following:

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
---------------- FEBRUARY 7,
1994 1995 1996
----- ------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Provision (benefit) for income taxes at statutory rate..... $(539) $ 270 $ (855)
Increases (decreases) resulting from:
Net foreign losses not benefited and tax rate
differential.......................................... 384 109 501
Net operating loss not benefited......................... 613 366 1,014
Other, net............................................... (230) (309) (340)
----- ------- -------
$ 228 $ 436 $ 320
===== ======= =======
</TABLE>

Prepaid income taxes and deferred income taxes in the accompanying balance
sheet consist of the following:

<TABLE>
<CAPTION>
MARCH 31, FEBRUARY 7,
1995 1996
--------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Prepaid income taxes:
Reserves and accruals.......................................... $ 146 $ 192
Inventory basis difference..................................... 4 5
Net operating loss carryforwards............................... 5,003 5,397
------- -------
5,153 5,594
Less: Valuation allowance...................................... 5,023 5,424
------- -------
$ 130 $ 170
======= =======
Deferred income taxes:
Depreciation................................................... $ 127 $ 167
Other.......................................................... 3 3
------- -------
$ 130 $ 170
======= =======
</TABLE>

The valuation allowance relates to uncertainty concerning the realization
of $13,875,000 of federal net operating loss carryforwards, the realization of
which is limited to the future income of the Company's U.S. subsidiary. The loss
carryforwards will expire in the years 2004 through 2011. Any tax benefit
resulting from use of the loss carryforwards will be recorded as a reduction to
the provision for income taxes.

F-30
<PAGE> 90
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A provision has not been made for U.S. or additional foreign taxes on
$2,164,000 of undistributed earnings in foreign subsidiaries that could be
subject to taxation if remitted to the U.S. because the Company currently plans
to keep these amounts permanently reinvested overseas.

4. COMMITMENTS

The Company leases portions of its office and operating facilities under
various operating lease arrangements. The accompanying statement of operations
includes expenses from operating leases of $977,000, $948,000 and $688,000 for
the years ended March 31, 1994 and 1995 and for the period from April 1, 1995
through February 7, 1996, respectively. Future minimum payments due under
noncancelable operating leases are $736,000 in the remainder of calendar 1996;
$600,000 in 1997; $371,000 in 1998; $376,000 in 1999; $383,000 in 2000; and
$29,000 in 2001 and thereafter. Total future minimum lease payments are
$2,495,000.

5. RELATED PARTY TRANSACTIONS

Corporate Services Agreement

The Company and Dynatech have corporate services agreements under which
Dynatech provides certain administrative services, including risk management,
administration for certain employee benefits, tax advice and preparation of tax
returns, centralized cash management and certain other services. For these
services, the Company paid fees of approximately 1.2% of budgeted revenue and
2.6% of actual expenses incurred. In addition, Dynatech charged the Company an
interest allocation. The corporate service fees and the interest allocation
totaled $2,515,000, $2,182,000, and $2,152,000 for the years ended March 31,
1994 and 1995 and for the period from April 1, 1995 through February 7, 1996,
respectively. Management believes that the corporate service fee and interest
allocation are reasonable and representative of the expenses the Company would
have incurred on a stand-alone basis.

6. GEOGRAPHICAL INFORMATION

The Company is engaged in one business segment: developing, manufacturing,
and marketing products used in the immunoassay segment of the bioinstrumentation
market. The following table shows data for the Company by geographical area.

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
------------------- FEBRUARY 7,
1994 1995 1996
------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
United States........................................ $15,541 $ 18,428 $13,250
Germany.............................................. 7,212 9,962 7,169
Guernsey Channel Islands............................. 6,591 8,163 7,547
United Kingdom....................................... 3,519 3,833 2,689
France............................................... 1,907 3,064 3,617
Other................................................ 3,827 4,907 3,806
Transfers among geographical areas (a)............... (8,467) (11,029) (9,575)
------- -------- -------
$30,130 $ 37,328 $28,503
======= ======== =======
</TABLE>

F-31
<PAGE> 91

DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
------------------- FEBRUARY 7,
1994 1995 1996
------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Income (loss) before provision for income taxes:
United States................................ $ (335) $ 395 $(1,257)
Germany...................................... (220) 439 286
Guernsey, Channel Islands.................... (253) 145 (573)
United Kingdom............................... 180 336 98
France....................................... (247) 125 313
Other........................................ 843 488 154
------- -------- -------
Total operating income (loss)................ (32) 1,928 (979)
Interest expense, net........................ (1,508) (1,156) (1,464)
------- -------- -------
$(1,540) $ 772 $(2,443)
======= ======== =======
Identifiable assets:
United States................................ $ 5,212 $ 5,800 $ 2,619
Germany...................................... 3,743 3,537 3,456
Guernsey, Channel Islands.................... 1,792 2,601 2,759
United Kingdom............................... 3,414 4,441 4,060
France....................................... 1,304 1,509 1,647
Other........................................ 1,506 1,472 1,525
------- -------- -------
$16,971 $ 19,360 $16,066
======= ======== =======
Export revenues included in United States
revenues above (b):
Europe....................................... $ 1,612 $ 2,519 $ 1,544
Other........................................ 1,148 1,243 878
------- -------- -------
$ 2,760 $ 3,762 $ 2,422
======= ======== =======
</TABLE>

- ---------------

(a) Transfers among geographical areas are accounted for at prices that are
representative of transactions with unaffiliated parties.

(b) In general, export sales are denominated in U.S. dollars.

7. SUBSEQUENT EVENT

On February 7, 1996, the Company was sold to Thermo BioAnalysis
Corporation.

F-32
<PAGE> 92

AUDITORS' REPORT

The Board of Directors and Shareholders
Life Sciences International PLC:

We have audited the accompanying combined balance sheets of the Biosystems
Group of Life Sciences International PLC as of 31 December 1995 and 1996, and
the related combined profit and loss accounts, statements of total recognized
gains and losses, and cash flow statements for each of the years in the
three-year period ended 31 December 1996. These combined financial statements
are the responsibility of the management of Life Sciences International PLC. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards in the United Kingdom and the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the 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 combined financial statements referred to above present
fairly, in all material respects, the financial position of the Biosystems Group
of Life Sciences International PLC as of 31 December 1995 and 1996, and the
results of their operations and their cash flows for each of the years in the
three-year period ended 31 December 1996 in conformity with generally accepted
accounting principles in the United Kingdom.

Accounting principles generally accepted in the United Kingdom vary in
certain respects from accounting principles generally accepted in the United
States of America. Application of accounting principles generally accepted in
the United States of America would have affected the net profit for the years
ended 31 December 1995 and 1996, and equity shareholders' funds as of 31
December 1995 and 1996 to the extent summarised in note 24 to the combined
financial statements.

KPMG AUDIT PLC

London, England
10 February 1997, except with
respect to note 23 which is
of 6 May 1997

F-33
<PAGE> 93

BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

COMBINED PROFIT AND LOSS ACCOUNTS
FOR THE THREE YEARS ENDED 31 DECEMBER 1996
(IN THOUSANDS OF BRITISH POUNDS STERLING)

<TABLE>
<CAPTION>
NOTE 1994 1995 1996
---- ------- ------- -------
<S> <C> <C> <C> <C>
Sales -- continuing operations......................... 2 32,239 39,494 41,384
Cost of sales -- continuing operations................. (17,097) (23,698) (24,261)
------- ------- -------
Gross profit........................................... 15,142 15,796 17,123
Distribution costs..................................... (5,465) (8,034) (7,580)
Administrative expenses................................ (2,681) (3,373) (7,148)
------- ------- -------
Operating profit -- continuing operations.............. 3 6,996 4,389 2,395
Net interest receivable/(payable)...................... 5 (2,042) (1,541) 1,599
------- ------- -------
Profit on ordinary activities before taxation.......... 4,954 2,848 3,994
Taxation............................................... 6 (1,100) (834) (1,783)
------- ------- -------
Profit on ordinary activities after taxation........... 3,854 2,014 2,211
Dividends.............................................. 7 (1,450) -- --
------- ------- -------
Retained profit for the year........................... 14 2,404 2,014 2,211
======= ======= =======
</TABLE>

There were no material acquisitions nor discontinued operations within the
meaning of the Financial Reporting Standards during the three years ended 31
December 1996.

F-34
<PAGE> 94

BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

COMBINED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE THREE YEARS ENDED 31 DECEMBER 1996
(IN THOUSANDS OF BRITISH POUNDS STERLING)

<TABLE>
<CAPTION>
1994 1995 1996
----- ----- ------
<S> <C> <C> <C>
Profit on ordinary activities after taxation................ 3,854 2,014 2,211
Unrealised currency retranslation........................... 1,475 1,571 (3,668)
----- ----- ------
Total gains and losses recognised in the year............... 5,329 3,585 (1,457)
===== ===== ======
</TABLE>

There is no material difference between the results reported and on an
unmodified historical cost basis. Accordingly, no note of historical cost
profits and losses has been prepared.

F-35
<PAGE> 95

BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

COMBINED BALANCE SHEETS
AT 31 DECEMBER 1995-96
(IN THOUSANDS OF BRITISH POUNDS STERLING)

<TABLE>
<CAPTION>
NOTE 1995 1996
---- ------- -------
<S> <C> <C> <C>
Fixed assets
Tangible assets........................................... 8 7,390 6,133
Investments............................................... 9 410 410
------- -------
7,800 6,543
------- -------
Current assets
Stock..................................................... 10 9,250 7,883
Debtors................................................... 11 24,125 24,206
Cash at bank and at hand.................................. 17 3,275 6,571
------- -------
36,650 38,660
------- -------
Current liabilities
Creditors: amounts falling due within one year............ 12 (42,313) (42,951)
------- -------
Net current liabilities........................... (5,663) (4,291)
------- -------
Total assets less current liabilities....................... 2,137 2,252
Creditors: amounts falling due after more than one year..... 13 (132) (218)
Provisions for liabilities and charges
Deferred tax........................................... (757) (868)
Restructuring costs.................................... -- (1,221)
------- -------
Net (liabilities)/assets.................................... 1,248 (55)
======= =======
Capital and reserves
Called-up share capital (aggregated)...................... 19 (2,948) (2,948)
Share premium account (aggregated)........................ 19 (1,642) (1,642)
Other reserves............................................ 19 12,518 16,032
Profit and loss account................................... 19 (9,176) (11,387)
------- -------
Equity shareholders' funds.................................. (1,248) 55
======= =======
</TABLE>

F-36
<PAGE> 96

BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

COMBINED CASH FLOW STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 1994-96
(IN THOUSANDS OF BRITISH POUNDS STERLING)

<TABLE>
<CAPTION>
NOTE 1994 1995 1996
---- ------ ------ ------
<S> <C> <C> <C> <C>
Net cash inflow from operating activities................. 15 6,254 5,630 4,514
Returns on investments and servicing of finance
Interest received......................................... 73 555 76
Interest paid............................................. (2,114) (2,085) (2,170)
Proceeds on liquidation of foreign exchange contracts..... -- -- 3,693
------ ------ ------
Net cash inflow/(outflow) from returns on investments
and servicing of finance............................. (2,041) (1,530) 1,599
Taxation
UK corporation tax paid................................. (628) (138) (96)
Overseas tax paid....................................... (261) (560) (631)
------ ------ ------
Tax paid................................................ (889) (698) (727)
------ ------ ------
Investing activities
Investment in joint venture............................. (251) (142) --
Purchase of subsidiary undertakings net of cash
acquired............................................. 16 -- -- (33)
Cash acquired through purchase of subsidiary undertaking
by other Life Sciences company....................... 672 32 --
Purchase of land and buildings.......................... (19) (659) (245)
Purchase of other tangible fixed assets................. (1,496) (2,300) (1,231)
Receipts from sale of other tangible fixed assets....... 35 31 --
------ ------ ------
Net cash outflow from investing activities.............. (1,059) (3,038) (1,509)
Net cash inflow before financing........................ 2,265 364 3,877
------ ------ ------
Financing
Drawdown/(repayment) of long term loans................. (7,525) (12) 136
Capital element of finance lease rental payment......... -- (6) --
------ ------ ------
Net cash outflow from financing......................... (7,525) (18) 136
------ ------ ------
Increase/(decrease) in cash and cash equivalents........ 17 (5,260) 346 4,013
====== ====== ======
</TABLE>

F-37
<PAGE> 97

BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 1994-96

1 ACCOUNTING POLICIES

a) Basis of preparation

The combined accounts of the Biosystems Group of Life Sciences have been
prepared under the historical cost convention and in accordance with generally
accepted accounting principles in the United Kingdom.

The combined accounts of the Biosystems Group of Life Sciences, which
reflect all costs of doing business, have been prepared by aggregating the
results of operations, cash flows and balance sheets of the following companies,
which are under common control of Life Sciences International PLC, a United
Kingdom corporation, as if it was a separate entity for the periods presented:

<TABLE>
<CAPTION>
COUNTRY OF
ENTITY INCORPORATION
------ --------------
<S> <C>
Labsystems Oy............................................... Finland
Labsystems Hong Kong Limited................................ Hong Kong
Fastighets AB Skrubba....................................... Sweden
Labsystems AB............................................... Sweden
Life Sciences International Benelux BV...................... Netherlands
Labsystems Espana SA........................................ Spain
Hybaid Limited.............................................. United Kingdom
Labsystems Inc.............................................. USA
Denley Instruments Inc...................................... USA
Labsystems Lenpipette....................................... Russia
</TABLE>

Where companies were purchased during the period, their results are
included from the effective date of acquisition.

b) Sales

Sales are those to third parties, net of trade discounts, VAT and similar
overseas sales taxes.

c) Stock

Stock is stated at the lower of cost and estimated net realisable value.
Cost comprises purchase price of materials, direct labour costs and an
appropriate proportion of overheads.

d) Depreciation

No depreciation is provided on freehold land. Leasehold expenditure is
amortised so as to write off such expenditure on a straight-line basis over the
life of the relevant lease or 65 years, whichever is the shorter. Depreciation
of other fixed assets is provided at various rates on a straight-line basis on
cost in order to write off the assets over their useful lives, estimated to be
between 3 and 15 years.

e) Research and development expenditure

Research and development expenditure is not capitalised but charged against
profit and loss account as it is incurred.

F-38
<PAGE> 98
BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

f) Foreign currencies

Assets and liabilities in foreign currencies are translated at the rates of
exchange ruling at each year end. Overseas companies' profit and loss accounts
are translated at average rates for the year. Exchange differences arising from
the retranslation at the closing rate of the opening net investment in overseas
subsidiaries and the profit and loss account for the year are shown as a
movement on reserves.

g) Taxation

The charge for taxation is based on the income for the year and takes into
account taxation deferred because of timing differences between the treatment of
certain items for taxation and accounting purposes. Provision is made for
taxation deferred in respect of timing differences where, in the opinion of the
directors, such timing differences are likely to reverse in the foreseeable
future.

h) Leased assets

Assets obtained under hire purchase contracts and finance leases are
capitalised and depreciated over their useful lives. The interest element of the
rentals is charged to profit and loss account over the period of the contract.
Rentals paid under operating leases are charged to income as incurred.

i) Pension benefits

The Biosystems Group of Life Sciences participated in a number of pension
schemes throughout the world, both defined benefit and defined contribution
schemes, including that of Life Sciences International PLC. The assets of these
schemes are not included in the combined accounts (see note 22). Contributions
to these schemes were made in accordance with local statutory legislation or
were based upon the recommendations of qualified actuaries. Contributions paid
to defined benefit schemes were based on actual pension costs as determined by
qualified actuaries and have been charged against profits on a systematic basis
over the expected remaining service lives of participating employees.
Independent actuarial valuations of defined benefit schemes are made at least
every three years. Contributions paid to defined contribution schemes are
charged to the profit and loss account in the period in which they arise.
Pension costs are calculated and incurred separately for each company within
Life Sciences International and within the Biosystems Group. Details of actual
charges incurred are provided in note 22 to the financial statements.

j) Presentation

Certain amounts in 1995 have been reclassified to conform to the 1996
financial statement presentation.

F-39
<PAGE> 99
BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

2 SEGMENTAL INFORMATION

All turnover and profit is derived from, and all net assets are
attributable to one business segment, being the manufacture and supply of
BioSystems Products.

<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
(IN THOUSANDS OF
BRITISH POUNDS STERLING)
<S> <C> <C> <C>
Geographical analysis of sales by location of customer
North America.......................................... 6,340 9,869 9,048
United Kingdom......................................... 2,904 3,738 4,168
Other Europe........................................... 18,634 21,748 21,048
All other areas........................................ 4,361 4,139 7,120
------ ------ ------
32,239 39,494 41,384
====== ====== ======
Geographical analysis of sales by origin
North America.......................................... 1,690 820 953
United Kingdom......................................... 6,391 9,275 9,198
Other Europe........................................... 24,158 29,399 31,233
------ ------ ------
32,239 39,494 41,384
====== ====== ======
Profit on ordinary activities before taxation
North America.......................................... 431 (127) 122
United Kingdom......................................... 754 317 (789)
Other Europe........................................... 5,811 4,178 3,115
All other areas........................................ -- 21 (53)
------ ------ ------
Operating profit....................................... 6,996 4,389 2,395
Net interest receivable/(payable)...................... (2,042) (1,541) 1,599
------ ------ ------
Profit on ordinary activities before taxation.......... 4,954 2,848 3,994
====== ====== ======
Net assets
North America.................................................. (4,349) (3,868)
United Kingdom................................................. 1,046 116
Other Europe................................................... 4,531 4,103
All other areas................................................ 20 (406)
------ ------
Net assets/(liabilities)............................... 1,248 (55)
====== ======
</TABLE>

F-40
<PAGE> 100
BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

3 OPERATING PROFIT

<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
(IN THOUSANDS OF
BRITISH POUNDS STERLING)
<S> <C> <C> <C>
Operating profit is stated after charging/(crediting):
Depreciation.............................................. 1,096 1,477 1,553
Research and development.................................. 2,641 3,377 3,126
Hire of plant and machinery............................... 80 162 111
Operating lease rentals................................... 523 160 348
Net loss/(profit) on sale of fixed assets................. (13) 36 25
Auditors' remuneration -- Audit........................... 38 46 54
Auditors' remuneration -- Other........................... 5 6 10
Charitable contributions.................................. -- 2 --
Net rental income......................................... 125 -- --
</TABLE>

In 1996, exceptional restructuring costs of 1,221,000 British pounds
sterling were charged to administrative expenses.

4 EMPLOYEE INFORMATION

<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
(IN THOUSANDS OF
BRITISH POUNDS STERLING)
<S> <C> <C> <C>
Staff costs during the year:
Wages and salaries..................................... 8,154 9,626 9,589
Social security costs.................................. 1,103 1,094 1,090
Other pension costs.................................... 991 1,134 1,130
------ ------ ------
10,248 11,854 11,809
====== ====== ======
Weighted average weekly number of employees:
Manufacturing.......................................... 271 279 281
Selling................................................ 86 100 98
Administration......................................... 55 68 67
------ ------ ------
412 447 446
====== ====== ======
</TABLE>

F-41
<PAGE> 101
BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

5 INTEREST

<TABLE>
<CAPTION>
1994 1995 1996
----- ----- ------
(IN THOUSANDS OF
BRITISH POUNDS STERLING)
<S> <C> <C> <C>
External interest payable
On loans from other Life Sciences' companies........... 2,049 2,046 2,118
On bank loans and overdrafts........................... 5 -- --
On other loans repayable in 5 years.................... 61 50 53
On other loans repayable after 5 years................. -- -- --
----- ----- ------
External interest payable................................ 2,115 2,096 2,171
External interest receivable............................. (73) (555) (77)
----- ----- ------
Net interest payable..................................... 2,042 1,541 2,094
Profit on liquidation of foreign exchange contracts
relating to future periods............................. -- -- (3,693)
----- ----- ------
Net interest (receivable)/payable.............. 2,042 1,541 (1,599)
===== ===== ======
</TABLE>

6 TAXATION

<TABLE>
<CAPTION>
1994 1995 1996
----- ---- -----
(IN THOUSANDS OF
BRITISH POUNDS STERLING)
<S> <C> <C> <C>
UK Corporation tax at 33%................................ 259 156 107
Overseas tax............................................. 395 423 1,600
Deferred tax............................................. 446 311 111
Adjustment for prior years............................... -- (56) (35)
----- --- -----
1,100 834 1,783
===== === =====
</TABLE>

7 DIVIDEND

In 1995 Hybaid Limited paid a dividend totaling 1,450,000 British pounds
sterling (18.05 British pounds sterling per 10 pence ordinary share) to its
parent company, Life Sciences International PLC.

F-42
<PAGE> 102
BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

8 TANGIBLE FIXED ASSETS

<TABLE>
<CAPTION>
LAND PLANT FIXTURES
AND AND AND
BUILDINGS MACHINERY FITTINGS TOTAL
--------- --------- -------- ------
(IN THOUSANDS OF BRITISH POUNDS STERLING)
<S> <C> <C> <C> <C>
Cost
At 1 January 1995.................................. 1,366 5,501 452 7,319
Additions arising from acquisitions............. -- 10 71 81
Other additions................................. 659 2,177 134 2,970
Disposals....................................... -- (114) (26) (140)
Currency retranslation.......................... 182 532 32 746
----- ------ ---- ------
At 31 December 1995 and 1 January 1996............. 2,207 8,106 663 10,976
Additions arising from acquisitions............. -- 32 47 79
Other additions................................. 244 1,093 133 1,470
Disposals....................................... -- (53) (28) (81)
Currency retranslation.......................... (306) (1,167) (88) (1,561)
----- ------ ---- ------
At 31 December 1996................................ 2,145 8,011 727 10,883
===== ====== ==== ======
Accumulated depreciation
At 1 January 1995.................................. (261) (1,510) (168) (1,939)
Charged in year................................. (128) (1,157) (192) (1,477)
Disposals....................................... -- 51 22 73
Currency retranslation.......................... (39) (192) (12) (243)
----- ------ ---- ------
At 31 December 1995 and 1 January 1996............. (428) (2,808) (350) (3,586)
Charged in year................................. (160) (1,260) (133) (1,553)
Disposals....................................... -- 40 16 56
Currency retranslation.......................... 70 436 44 550
Asset write down................................ (217) -- -- (217)
----- ------ ---- ------
At 31 December 1996................................ (735) (3,592) (423) (4,750)
===== ====== ==== ======
Net book value
At 31 December 1995................................ 1,779 5,298 313 7,390
At 31 December 1996................................ 1,410 4,419 304 6,133
</TABLE>

9 INVESTMENTS

Investments in joint ventures:

<TABLE>
<CAPTION>
PLACE OF
INCORPORATION EQUITY
INTEREST INTEREST 1995 1996
------------- -------- ---- ----
(IN THOUSANDS OF BRITISH POUNDS STERLING,
EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C>
JVC Feilong...................................... China 32.5% 201 201
Labsystems Pakistan.............................. Pakistan 33.3% 66 66
Labsystems Shanghai.............................. China 32.5% 143 143
--- ---
410 410
=== ===
</TABLE>

F-43
<PAGE> 103
BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The joint ventures have been shown as investments in the balance sheet at
cost. The differences between accounting for these investments at cost and under
the equity accounting method are, in the opinion of the directors, not material.

10 STOCK

<TABLE>
<CAPTION>
1995 1996
------ ------
(IN THOUSANDS OF
BRITISH POUNDS
STERLING)
<S> <C> <C>
Raw materials............................................... 2,099 1,563
Work in progress............................................ 1,284 1,067
Finished goods.............................................. 5,867 5,253
----- -----
9,250 7,883
===== =====
</TABLE>

11 DEBTORS

<TABLE>
<CAPTION>
1995 1996
------ ------
(IN THOUSANDS OF
BRITISH POUNDS
STERLING)
<S> <C> <C>
Amounts falling due within one year:
Trade debtors............................................. 6,636 7,223
Amounts owed by other Life Sciences companies............. 15,876 15,312
Other debtors............................................. 664 875
Prepayments and accrued income............................ 902 761
Overseas taxes recoverable................................ 16 --
------ ------
24,094 24,171
------ ------
Amounts falling due after more than one year:
Other debtors............................................. 31 35
------ ------
24,125 24,206
====== ======
</TABLE>

12 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

<TABLE>
<CAPTION>
1995 1996
---------- ----------
(IN THOUSANDS OF
BRITISH POUNDS STERLING)
<S> <C> <C>
Bank loans and overdrafts................................... (12) (10)
Trade creditors............................................. (2,842) (1,677)
Amounts owed to other Life Sciences companies............... (14,231) (17,200)
Loans from other Life Sciences companies.................... (21,602) (19,611)
UK Corporation tax.......................................... (138) (148)
Overseas taxes.............................................. (264) (1,558)
Other creditors and social security......................... (786) (378)
Accruals.................................................... (2,435) (2,369)
Obligations under finance leases............................ (3) --
------- -------
(42,313) (42,951)
======= =======
</TABLE>

F-44
<PAGE> 104
BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

13 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

<TABLE>
<CAPTION>
1995 1996
------ ------
(IN THOUSANDS OF
BRITISH POUNDS
STERLING)
<S> <C> <C>
Loans....................................................... (25) (126)
Obligations under finance leases............................ (1) --
Other creditors & accruals.................................. (106) (92)
---- ----
(132) (218)
==== ====
</TABLE>

14 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
(IN THOUSANDS OF
BRITISH POUNDS STERLING)
<S> <C> <C> <C>
Retained profit for the year............................. 2,404 2,014 2,211
Other gains and losses recognised during the year*....... 1,474 1,570 (3,667)
Acquired net assets/(liabilities)........................ 1,792 (407) --
Discount on acquisition of Labsystems Lenpipette......... -- -- 153
------ ------ ------
Net (reduction)/addition to shareholders' funds.......... 5,670 3,177 (1,303)
Opening shareholders' funds.............................. (7,599) (1,929) 1,248
------ ------ ------
Closing shareholders' funds.............................. (1,929) 1,248 (55)
====== ====== ======
</TABLE>

- ---------------
* This movement represents the retranslation of opening net assets and profits
for the year denominated in foreign currencies to year end exchange rates from
opening and average rates respectively.

15 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES

<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
(IN THOUSANDS OF
BRITISH POUNDS STERLING)
<S> <C> <C> <C>
Operating profit............................................ 6,996 4,389 2,395
Add back non cash items:
Write down of fixed assets................................ -- -- 217
Depreciation charges...................................... 1,096 1,477 1,553
(Profit)/loss on sale of fixed assets..................... (13) 36 25
(Increase)/decrease in stocks............................. (2,304) (957) 464
(Increase)/decrease in debtors............................ (852) 3,382 (1,630)
Increase/(decrease) in creditors and provisions........... (140) (477) 569
Movement in balances with other Life Sciences companies... 1,471 (2,220) 921
------ ------ ------
Net cash flow from operating activities........... 6,254 5,630 4,514
====== ====== ======
</TABLE>

F-45
<PAGE> 105
BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

16 PURCHASE OF SUBSIDIARY UNDERTAKINGS

<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ----
(IN THOUSANDS OF
BRITISH POUNDS STERLING)
<S> <C> <C> <C>
Net assets acquired
Discount on acquisition.................................. -- -- (153)
Tangible fixed assets.................................... -- -- 70
Stock.................................................... -- -- 211
Debtors.................................................. -- -- 8
Creditors................................................ -- -- (103)
Cash..................................................... -- -- 16
------ ------ ----
-- -- 49
====== ====== ====
Satisfied by
Cash..................................................... -- -- 49
Cash of acquired subsidiary undertaking.................. -- -- (16)
------ ------ ----
Net outflow of cash in respect of the purchase of
subsidiary undertaking......................... -- -- 33
====== ====== ====
</TABLE>

17 CASH AND CASH EQUIVALENTS

<TABLE>
<CAPTION>
1994 1995 1996
------ ----- -----
(IN THOUSANDS OF
BRITISH POUNDS STERLING)
<S> <C> <C> <C>
Changes during the year:
At 1 January............................................. 7,666 2,671 3,263
Net cash inflow before adjustments for the effects of
foreign exchange rates................................ (5,260) 346 4,013
Effect of foreign exchange rates......................... 265 246 (715)
------ ----- -----
At 31 December........................................... 2,671 3,263 6,561
====== ===== =====
Analysis of balances
Cash at bank and in hand................................. 2,682 3,275 6,571
Bank overdrafts.......................................... (11) (12) (10)
------ ----- -----
2,671 3,263 6,561
====== ===== =====
</TABLE>

F-46
<PAGE> 106
BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

18 ANALYSIS OF CHANGE IN FINANCING

<TABLE>
<CAPTION>
LOANS
DUE AFTER
SHARE SHARE MORE THAN
CAPITAL PREMIUM 3 MONTHS
------- ------- ---------
<S> <C> <C> <C>
Balance at 31 December 1994............................. 1,996 1,366 33
Cash inflow/(outflow) from financing.................. -- -- (12)
Effect of foreign exchange rates...................... -- -- 4
Acquisition of Denley................................. 952 276 --
------- ----- ---
Balance at 31 December 1995............................. 2,948 1,642 25
Cash inflow/(outflow) from financing.................. -- -- 136
Effect of foreign exchange rates...................... -- -- (35)
------- ----- ---
Balance at 31 December 1996............................. 2,948 1,642 126
======= ===== ===
</TABLE>

19 SHARE CAPITAL AND RESERVES

<TABLE>
<CAPTION>
SHARE PROFIT
SHARE PREMIUM OTHER AND LOSS
CAPITAL ACCOUNT RESERVES ACCOUNT
------- ------- -------- --------
(IN THOUSANDS OF BRITISH POUNDS STERLING)
<S> <C> <C> <C> <C>
At 1 January 1994..................................... (1,988) (980) 14,294 (3,727)
Acquisition of Hybaid Limited....................... (8) (386) 5 (1,403)
Retained profit..................................... -- -- -- (2,404)
Exchange difference on retranslation of closing
balance sheet on consolidation................... -- -- (1,474) --
------ ------ ------ -------
At 31 December 1994................................... (1,996) (1,366) 12,825 (7,534)
Acquisition of Denley Instruments Inc. ............. (952) (276) 1,263 372
Retained profit..................................... -- -- -- (2,014)
Exchange difference on retranslation of closing
balance sheet on consolidation................... -- -- (1,570) --
------ ------ ------ -------
At 31 December 1995................................... (2,948) (1,642) 12,518 (9,176)
Discount on acquisition of Labsystems Lenpipette.... -- -- (153) --
Retained profit..................................... -- -- -- (2,211)
Exchange difference on retranslation of closing
balance sheet on consolidation................... -- -- 3,667 --
------ ------ ------ -------
At 31 December 1996................................... (2,948) (1,642) 16,032 (11,387)
====== ====== ====== =======
Acquisition of Labsystems Lenpipette -- 1996
Fair value of assets acquired....................................................... 202
Cash consideration paid............................................................. (49)
-------
Discount on acquisition............................................................. 153
=======
</TABLE>

Impact on cash flows

In 1994 Hybaid Ltd contributed 65,000 British pounds sterling to the
Group's net operating cash flows, received 8,000 British pounds sterling in
respect of net returns on investments and servicing of finance, paid 628,000
British pounds sterling in respect of taxation, and utilised 204,000 British
pounds sterling for investing activities.

F-47
<PAGE> 107
BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

In 1995 Denley Inc contributed 42,000 British pounds sterling to the
group's net operating cash flows, paid 13,000 British pounds sterling in respect
of taxation and utilised 3,000 British pounds sterling for investing activities.

In 1996 Lenpipette contributed 4,000 British pounds sterling to the group's
net operating cash flows and received 1,000 British pounds sterling in respect
of net returns on investments and servicing of finance.

20 FINANCIAL COMMITMENTS

As at 31 December the companies had aggregate annual commitments under
non-cancellable operating leases as follows:

<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
(IN THOUSANDS OF BRITISH
POUNDS STERLING)
<S> <C> <C> <C>
Land and buildings
Expiring within one year.................................. -- -- 209
Expiring between two and five years inclusive............. 239 239 30
Expiring in over five years............................... 679 679 679
----- ----- -----
918 918 918
----- ----- -----
Other operating leases
Expiring within one year.................................. 86 98 113
Expiring between two and five years inclusive............. 163 204 218
Expiring in over five years............................... -- -- --
----- ----- -----
249 302 331
----- ----- -----
Total............................................. 1,167 1,220 1,249
===== ===== =====
</TABLE>

21 COMPANIES INCLUDED IN COMBINED ACCOUNTS

The financial statements presented above have been produced by aggregating
the results and assets of the following companies:

<TABLE>
<CAPTION>
NAME OF ENTITY COUNTRY OF INCORPORATION
-------------- ------------------------
<S> <C>
Labsystems Oy............................................... Finland
Labsystems Hong Kong Limited................................ Hong Kong
Fastighets AB Skrubba....................................... Sweden
Labsystems Sweden AB........................................ Sweden
Life Sciences International Benelux BV...................... Netherlands
Labsystems Espana SA........................................ Spain
Hybaid Limited.............................................. UK
Labsystems Inc.............................................. USA
Denley Instruments Inc...................................... USA
Labsystems Lenpipette....................................... Russia
</TABLE>

All companies listed above were either directly or indirectly owned by Life
Sciences International PLC between 1 January 1994 and 31 December 1996 with the
exception of Hybaid Limited which was acquired on 31 May 1994 and Denley
Instruments Inc which was acquired on 31 March 1995.

F-48
<PAGE> 108
BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Labsystems Lenpipette was acquired on 30 November 1996. Prior to this,
Labsystems Oy held a 50% stake in this company. The results and assets of
Labsystems Lenpipette have been consolidated into those of Labsystems Oy.

All the above companies operate principally in their country of
incorporation with the exception of Life Sciences International Benelux BV which
is based in Belgium and operates in Belgium, The Netherlands, and Luxembourg.

22 PENSION SCHEME AND OTHER POST RETIREMENT BENEFIT SCHEMES

Hybaid Limited is a participant in the Life Sciences International PLC
Pension Plan, which is a separate trust. This plan provides retirement benefits
for the majority of the Company's permanent UK employees. It is funded by
contributions both from participating companies and their employees and is
contracted out of the earnings related part of the State Pension arrangements.

The pension scheme is a defined benefits scheme whereby retirement benefits
are based on the employees' final remuneration and length of service.
Contributions to the scheme are based on pension costs for all members of the
scheme across the Life Sciences International PLC Group and are made in
accordance with the recommendation of an independent actuary who values the
scheme at regular triennial intervals, the last valuation being as at 1 April
1995. Full details relating to the pension scheme are disclosed in the financial
statements of Life Sciences International PLC. Due to a surplus in that plan's
assets over its projected liabilities, no charge to the profit and loss account
was made for the three years ended 31 December 1996.

In Finland the Group does not operate a pension plan, but made
contributions amounting to 933,000 British pounds sterling in 1994
(1995 -- 1,251,000 British pounds sterling; 1996 -- 1,079,000 British pounds
sterling) to the state pension scheme in accordance with Finnish legislation.

23 POST BALANCE SHEET EVENT

Following discussions between Life Sciences International PLC (Life
Sciences) and Thermo Instrument Systems Inc. (Thermo Instrument), a U.S. based
manufacturer of scientific instruments, Life Sciences received a proposal from
Thermo Instrument to combine their businesses, offering to acquire all of the
issued share capital of Life Sciences at 1.35 British pounds sterling per 10
pence ordinary share. This offer was recommended to shareholders by the Board of
the Company on 21 January 1997. The offer was accepted by the majority of
shareholders by 12 March 1997. On May 6, 1997, Thermo Instrument agreed to sell
the businesses comprising the Biosystems Group of Life Sciences to its
majority-owned subsidiary, Thermo BioAnalysis Corporation.

24 US GAAP RECONCILIATION

BASIS OF OPERATION

The above accounts have been prepared in accordance with generally accepted
accounting principles (GAAP) in the United Kingdom which differ in certain
material respects from US GAAP. The significant differences relate principally
to the following items and the adjustments necessary to restate net income and
shareholders' equity in accordance with US GAAP are shown below.

a) Goodwill

Under UK GAAP goodwill arising on acquisition is eliminated directly
against reserves. Amounts are transferred from reserves and charged through the
profit and loss account when the related investments are sold or written down as
a result of permanent diminutions in value. Under US GAAP goodwill is
capitalised

F-49
<PAGE> 109
BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

and amortised by charges against income over the period, not to exceed 40 years,
over which the benefit arises. For US GAAP goodwill has been amortised by the
Group over 40 years.

b) Restructuring costs

Under UK GAAP restructuring costs shown as exceptional items are charged to
the profit and loss account in full irrespective of whether they have been
agreed or incurred. Under US GAAP certain of these costs are only charged to the
profit and loss account when certain specific criteria have been met.

c) Forward exchange contracts

Certain outstanding foreign currency forward exchange contracts which hedge
anticipated future transactions and qualify as hedge contracts under UK GAAP
would not qualify as hedges under US GAAP. The Biosystems Group historically
used forward exchange contracts to hedge fluctuations in certain exchange rates
for anticipated but not contractually firm transactions such as expected
purchases of inventory over the next several months. US GAAP permits deferral of
gains and losses on forward exchange contracts only when firm commitments are
hedged. Such gains and losses are included in "Net interest receivable /
(payable)" in the accompanying Combined Profit and Loss Accounts. Such contracts
should be recorded at fair value at each balance sheet date based on the forward
rates of exchange existing at that date and the corresponding unrealized gain or
loss would be included in the determination of net income.

d) Acquisition accounting

Under UK GAAP, the fair value balance sheet of an acquired company can not
include a provision for restructuring costs set up by the acquiring company.
Under US GAAP, certain restructuring and reorganisation costs may be considered
liabilities assumed and included in the allocation of the acquisition cost.

e) Deferred taxes

Under UK GAAP, deferred taxes are accounted for to the extent that it is
considered probable that a liability or asset will crystallise in the
foreseeable future. Under US GAAP, deferred taxes are accounted for on all
timing differences and a valuation allowance is established in respect of those
deferred tax assets where it is more likely than not that some portion will
remain unrealised. No US GAAP adjustment arises as there are no unrecognised UK
GAAP deferred tax liabilities or assets. Deferred tax also arises in relation to
the tax effect of other US GAAP adjustments.

F-50
<PAGE> 110
BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The following is a summary of the significant adjustments to net income for
the years ended 31 December 1995 and 1996 and to parent company investment as of
31 December 1995 and 1996, which would have been required if the combined
financial statements had been reported in accordance with US GAAP instead of UK
GAAP.

<TABLE>
<CAPTION>
1995 1996
------ ------
(IN THOUSANDS OF
BRITISH POUNDS
STERLING)
<S> <C> <C>
Net income according to the consolidated financial
statements prepared under UK GAAP......................... 2,014 2,211
US GAAP adjustments:
Decrease due to effects of goodwill previously written
off.................................................... (782) (663)
Restructuring charges related to acquisition which should
have been included in goodwill......................... 235 --
Restructuring costs....................................... -- 1,186
Mark to market of foreign exchange contracts.............. 5,407 (6,726)
Deferred taxation on above adjustments.................... (1,288) 1,659
------ ------
Net income in accordance with US GAAP....................... 5,586 (2,333)
====== ======
Equity shareholders' funds under UK GAAP.................... 1,248 (55)
US GAAP adjustments:
Increase due to effects of goodwill previously written off
against reserves....................................... 25,026 24,364
Restructuring charges related to acquisition which should
have been included in goodwill......................... 235 235
Restructuring costs....................................... -- 1,186
Mark to market of foreign exchange contracts.............. 6,725 (1)
Deferred taxation on above adjustments.................... (1,521) 138
------ ------
Equity shareholders' funds under US GAAP.................... 31,713 25,867
====== ======
</TABLE>

CASH FLOWS

The above combined financial statements comply with Financial Reporting
Standard No. 1 -- "Cash flow statements" (FRS 1). Its objective and principles
are similar to those set out in SFAS No. 95 "Statement of Cash Flows." The
principal difference between the standards is in respect of classification.
Under FRS 1, cash flows are presented for (a) operating activities; (b) returns
on investments and servicing of finance; (c) taxation; (d) investing activities;
and (e) financing activities. SFAS No. 95 requires only three categories of cash
flow activity: (a) operating; (b) investing; and (c) financing.

Cash flows arising from taxation and returns on investments and servicing
of finance under FRS 1 would, with the exception of dividends paid, be included
as operating activities under SFAS No. 95; dividend payments would be included
as a financing activity under SFAS No. 95.

F-51
<PAGE> 111

BIOSYSTEMS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONCLUDED)

A summaried consolidated cash flow under US GAAP is as follows:

<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
(IN THOUSANDS OF BRITISH
POUNDS STERLING)
<S> <C> <C> <C>
Cash inflow from operating activities.................... 3,324 3,402 5,386
Cash outflow on investing activities..................... (1,059) (3,038) (1,509)
Cash (outflow)/inflow from financing activities.......... (7,525) (18) 136
------ ------ ------
Increase/(Decrease) in cash and cash equivalents......... (5,260) 346 4,013
Exchange adjustments..................................... 265 246 (715)
Cash and cash equivalents at beginning of year........... 7,666 2,671 3,263
------ ------ ------
Cash and cash equivalents at end of year................. 2,671 3,263 6,561
====== ====== ======
</TABLE>

F-52
<PAGE> 112

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Clinical Products Group of Life Sciences International PLC:

We have audited the accompanying combined balance sheet of the Clinical
Products Group of Life Sciences International PLC as of December 31, 1995 and
1996, and the related combined statements of operations, cash flows, and
shareholder's investment for each of the two years in the period ended December
31, 1996 and for the period from January 1, 1997 through March 12, 1997. These
combined financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these combined
financial statements based on our audits.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of the
Clinical Products Group of Life Sciences International PLC as of December 31,
1995 and 1996, and the results of its operations and its cash flows for each of
the two years in the period ended December 31, 1996 and for the period from
January 1, 1997 through March 12, 1997, in conformity with generally accepted
accounting principles.

ARTHUR ANDERSEN LLP

Boston, Massachusetts
May 5, 1998

F-53
<PAGE> 113

CLINICAL PRODUCTS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

COMBINED STATEMENT OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
JANUARY 1,
1997
THROUGH
MARCH 12,
1995 1996 1997
------- ------- ----------
<S> <C> <C> <C>
Revenues (includes $9,923, $9,820 and $1,085 to affiliated
companies; Notes 5 and 8)................................. $73,292 $80,757 $13,250
------- ------- -------
Costs and Operating Expenses:
Cost of revenues (includes $6,532, $6,424 and $656 for
affiliated company revenues; Note 5)................... 43,611 47,713 8,835
Selling, general and administrative expenses (Note 5)..... 25,772 25,217 4,545
Research and development expenses......................... 1,188 1,328 684
------- ------- -------
70,571 74,258 14,064
------- ------- -------
Operating Income (Loss)..................................... 2,721 6,499 (814)
Interest Income (includes $4,030, $3,869 and $393 from
affiliated companies)..................................... 4,349 4,193 454
Interest Expense (includes $5,869, $5,992 and $708 for
affiliated companies; Note 5)............................. (6,216) (6,210) (878)
Foreign Currency Exchange Gain (Loss) (Note 5).............. 807 (4,153) (186)
------- ------- -------
Income (Loss) Before Income Taxes........................... 1,661 329 (1,424)
Income Tax Provision (Benefit) (Note 3)..................... 661 243 (513)
------- ------- -------
Net Income (Loss)........................................... $ 1,000 $ 86 $ (911)
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.
F-54
<PAGE> 114

CLINICAL PRODUCTS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

COMBINED BALANCE SHEET
(IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 8,659 $12,455
Accounts receivable, less allowances of $1,025 and
$1,146................................................. 18,433 18,725
Inventories............................................... 15,631 16,849
Prepaid income taxes (Note 3)............................. 1,412 547
Prepaid expenses and other current assets................. 1,104 1,344
------- -------
45,239 49,920
------- -------
Property, Plant and Equipment, at Cost, Net................. 11,287 11,210
------- -------
Other Assets................................................ 713 518
------- -------
Cost in Excess of Net Assets of Acquired Companies.......... 6,974 6,736
------- -------
$64,213 $68,384
======= =======
LIABILITIES AND SHAREHOLDER'S INVESTMENT
Current Liabilities:
Notes payable and current maturities of long-term
obligations (Note 7)................................... $ 1,848 $ 200
Accounts payable.......................................... 6,414 6,316
Accrued payroll and employee benefits..................... 2,130 2,455
Other accrued expenses.................................... 7,760 5,162
Due to parent company and affiliated companies (Note 5)... 36,664 45,094
------- -------
54,816 59,227
------- -------
Deferred Income Taxes (Note 3).............................. 1,073 1,673
------- -------
Long-term Obligations (Note 7).............................. 2,361 2,172
------- -------
Commitments (Note 4)

Shareholder's Investment:
Net parent company investment............................. 6,167 5,318
Cumulative translation adjustment......................... (204) (6)
------- -------
5,963 5,312
------- -------
$64,213 $68,384
======= =======
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.
F-55
<PAGE> 115

CLINICAL PRODUCTS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

COMBINED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
JANUARY 1,
1997
THROUGH
MARCH 12,
1995 1996 1997
------- ------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)......................................... $ 1,000 $ 86 $ (911)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization.......................... 1,534 2,370 602
Provision for losses on accounts receivable............ 84 159 --
Increase in deferred income taxes...................... 1,073 600 --
Changes in current accounts:
Accounts receivable.................................. (115) (445) 7,498
Inventories.......................................... (949) (1,219) 1,324
Other current assets................................. (152) 797 (2,009)
Accounts payable..................................... 644 (98) (1,816)
Other current liabilities............................ 232 6,155 (7,893)
------- ------- -------
Net cash provided by (used in) operating activities......... 3,351 8,405 (3,205)
------- ------- -------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment................ (958) (1,844) (747)
Proceeds from sale of property, plant and equipment....... 599 17 --
------- ------- -------
Net cash used in investing activities....................... (359) (1,827) (747)
------- ------- -------
FINANCING ACTIVITIES:
Increase (decrease) in short-term obligations............. 739 (1,645) 3,504
Repayment of long-term obligations........................ (189) (189) --
Net transfers to parent company........................... (1,256) (935) --
------- ------- -------
Net cash provided by (used in) financing activities......... (706) (2,769) 3,504
------- ------- -------
Exchange Rate Effect on Cash................................ (400) (13) 6
------- ------- -------
Increase (Decrease) in Cash and Cash Equivalents............ 1,886 3,796 (442)
Cash and Cash Equivalents at Beginning of Period............ 6,773 8,659 12,455
------- ------- -------
Cash and Cash Equivalents at End of Period.................. $ 8,659 $12,455 $12,013
======= ======= =======
CASH PAID FOR:
Interest.................................................. $ 6,297 $ 6,297 $ 663
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.
F-56
<PAGE> 116

CLINICAL PRODUCTS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

COMBINED STATEMENT OF SHAREHOLDER'S INVESTMENT
(IN THOUSANDS)

<TABLE>
<CAPTION>
NET PARENT CUMULATIVE
COMPANY TRANSLATION
INVESTMENT ADJUSTMENT
---------- -----------
<S> <C> <C>
BALANCE DECEMBER 31, 1994................................... $ 6,423 $ 60
Net income................................................ 1,000 --
Net transfer from parent company.......................... (1,256) --
Translation Adjustment.................................... -- (264)
-------- --------
BALANCE DECEMBER 31, 1995................................... 6,167 (204)
Net income................................................ 86 --
Net transfer from parent company.......................... (935) --
Translation adjustment.................................... -- 198
-------- --------
BALANCE DECEMBER 31, 1996................................... 5,318 (6)
Net loss.................................................. (911) --
Translation adjustment.................................... -- 6
-------- --------
BALANCE MARCH 12, 1997...................................... $ 4,407 $ --
======== ========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.
F-57
<PAGE> 117

CLINICAL PRODUCTS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO COMBINED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

The Clinical Products Group of Life Sciences International PLC provides
equipment and consumables for the cytology, histology and pathology
applications. It also supplies consumables for blood gas and ion-selective
electrolyte analyzers.

Basis of Presentation and Combination

In May 1998, Thermo BioAnalysis Corporation, a subsidiary of Thermo
Instrument Systems Inc., entered into an agreement to acquire certain businesses
from Life Sciences International PLC ("Life Sciences"). Thermo Instrument
acquired Life Sciences as of March 12, 1997.

The accompanying combined financial statements include the following
businesses acquired by Thermo BioAnalysis: Shandon Inc. and certain related
businesses, including ALKO Diagnostic Corporation. The combination of these
businesses is collectively referred to herein as the Clinical Products Group of
Life Sciences International PLC or "the Company."

All material transactions between the businesses combined herein have been
eliminated. Transactions with other businesses within the Life Sciences group
are described as "affiliate" transactions.

The accompanying combined financial statements cover each of the years
ended December 31, 1995 and 1996 and the period from January 1, 1997 to March
12, 1997, the date on which Life Sciences was acquired by Thermo Instrument.

Revenue Recognition

Income Taxes

For the periods presented, the Company was included in the consolidated or
combined tax returns of other Life Sciences businesses. Life Sciences'
intercompany tax allocation policy has been based on the income taxes calculated
on a separate return basis for each subsidiary. Income taxes payable are
therefore included with accounts payable to affiliates in the accompanying
combined balance sheet.

Cash and Cash Equivalents

Cash equivalents include highly liquid debt instruments purchased with
original maturity dates of three months or less. Cash equivalents are carried at
cost, which approximates market value.

F-58
<PAGE> 118
CLINICAL PRODUCTS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Inventories

Inventories are stated at the lower of cost (on a first-in, first-out or
weighted average basis) or market value and include materials, labor and
manufacturing overhead. The components of inventories are as follows:

<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Raw materials and supplies.................................. $ 3,424 $ 3,722
Work in process............................................. 482 395
Finished goods.............................................. 11,725 12,732
------- -------
$15,631 $16,849
======= =======
</TABLE>

Property, Plant and Equipment

The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the estimated
useful lives of the property as follows: buildings and improvements, 25 to 30
years; machinery and equipment, 2 to 10 years; and leasehold improvements, the
shorter of the term of the lease or the life of the asset. Property, plant and
equipment consists of the following:

<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land........................................................ $ 404 $ 411
Buildings................................................... 4,452 4,458
Machinery, equipment and leasehold improvements............. 15,295 17,378
------- -------
20,151 22,247
Less: Accumulated depreciation and amortization............. 8,864 11,037
------- -------
$11,287 $11,210
======= =======
</TABLE>

Other Assets

Other assets in the accompanying balance sheet primarily represent
intangible assets related to distribution agreements and patents associated with
an acquisition in 1990. These assets are being amortized using the straight-line
method over their estimated useful lives of 15 to 20 years. These assets were
$756,000, net of accumulated amortization of $357,000 and $399,000, at year-end
1995 and 1996, respectively.

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 $2,962,000 and $3,200,000 at year-end 1995 and 1996,
respectively. The Company assesses the future useful life of this asset whenever
events or changes in circumstances indicate that the current useful life has
diminished. The Company considers the future undiscounted cash flows of the
acquired companies in assessing the recoverability of this asset. If impairment
has occurred, any excess of carrying value over fair value is recorded as a
loss.

Foreign Currency

F-59
<PAGE> 119
CLINICAL PRODUCTS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

component of shareholder's investment titled "Cumulative translation
adjustment." Foreign currency transaction gains and losses are included in the
accompanying statement of operations.

Use of Estimates

2. EMPLOYEE BENEFIT PLANS

Defined Contribution Plan

Shandon Inc. has a defined contribution plan covering all eligible
employees. Contributions by the Company are required based on a percentage of
eligible compensation annually. The plan does not provide for employee
contributions. The charge to operations for the Company's contributions was
$344,000, $532,000 and $129,000 for 1995, 1996 and the period from January 1,
1997 through March 12, 1997, respectively.

Defined Benefit Plan

Shandon Scientific UK Limited is a participant in the Life Sciences
International PLC Pension Plan, which is a separate trust. This plan provides
retirement benefits for the majority of the Company's permanent UK employees. It
is funded by contributions both from participating companies and their employees
and is contracted out of the earnings-related part of the State Pension
arrangements.

The pension plan is a defined benefit plan whereby retirement benefits are
based on the employees' final remuneration and length of service. Contributions
to the plan are based on pension costs for all members of the plan across the
Life Sciences International PLC Group and are made in accordance with the
recommendation of an independent actuary who values the plan at regular
triennial intervals, the last valuation being April 1, 1995. For the purposes of
these combined financial statements, this pension plan has been treated as a
multi-employer arrangement. Net periodic pension cost was not material to the
Company's results of operations for any period presented.

401(k) Savings Plan

The employees of the Company's ALKO Diagnostic subsidiary participate in a
401(k) savings plan. Contributions to the 401(k) savings plan are made by both
the employees and the Company. Company contributions are based upon the level of
employee contributions. For this plan, the Company contributed and charged to
expense $61,000, $66,000 and $28,000 for 1995, 1996 and the period from January
1, 1997 through March 12, 1997, respectively.

F-60
<PAGE> 120
CLINICAL PRODUCTS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

3. INCOME TAXES

The components of income (loss) before income taxes are as follows:

<TABLE>
<CAPTION>
JANUARY 1,
1997
THROUGH
MARCH 12,
1995 1996 1997
------ ------ ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic................................................ $4,084 $5,012 $ 544
Foreign................................................. (2,423) (4,683) (1,968)
------ ------ -------
$1,661 $ 329 $(1,424)
====== ====== =======
</TABLE>

The components of the income tax provision (benefit) are as follows:

<TABLE>
<CAPTION>
JANUARY 1,
1997
THROUGH
MARCH 12,
1995 1996 1997
------ ------ ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Currently payable:
Federal............................................... $1,127 $1,463 $ 41
State................................................. 302 335 1
Foreign............................................... (794) (1,545) (711)
------ ------ ------
635 253 (669)
------ ------ ------
Net deferred (prepaid):
Federal............................................... 21 (8) 129
State................................................. 5 (2) 27
------ ------ ------
26 (10) 156
------ ------ ------
$ 661 $ 243 $ (513)
====== ====== ======
</TABLE>

The income tax provision (benefit) in the accompanying statement of
operations differs from the provision (benefit) calculated by applying the
statutory federal income tax rate of 34% to income (loss) before income taxes
due to the following:

<TABLE>
<CAPTION>
JANUARY 1,
1997
THROUGH
MARCH 12,
1995 1996 1997
-------- -------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Income tax provision (benefit) at statutory rate... $ 565 $ 112 $ (484)
Increases (decreases) resulting from:
State income taxes, net of federal tax........... 203 220 15
Net foreign losses not benefited and tax rate
differential.................................. 29 47 (42)
Amortization of cost in excess of net assets of
acquired companies............................ (136) (136) (2)
-------- -------- --------
$ 661 $ 243 $ (513)
======== ======== ========
</TABLE>

F-61
<PAGE> 121
CLINICAL PRODUCTS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Prepaid income taxes and deferred income taxes in the accompanying balance
sheet consist of the following:

<TABLE>
<CAPTION>
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Prepaid income taxes:
Reserves and accruals..................................... $ 904 $ 16
Inventory basis difference................................ 416 432
Allowance for doubtful accounts........................... 92 99
------ ------
$1,412 $ 547
====== ======
Deferred income taxes:
Depreciation.............................................. $1,073 $1,673
====== ======
</TABLE>

4. COMMITMENTS

The Company leases portions of its office and operating facilities under
various noncancellable operating lease arrangements that expire at various dates
through 2014. The accompanying statement of operations includes expenses from
operating leases of $1,130,000, $1,309,000 and $275,000 in 1995, 1996 and the
period from January 1, 1997 through March 12, 1997, respectively. Future minimum
payments due under noncancellable operating leases as of December 31, 1996, are
$1,429,000 in 1997; $1,508,000 in 1998; $1,304,000 in 1999; $959,000 in 2000;
$804,000 in 2001; and $715,000 in 2002 and thereafter. Total future minimum
lease payments are $6,719,000.

5. RELATED-PARTY TRANSACTIONS

Due to Parent Company and Affiliated Companies

The Company has advances from its parent company and affiliated companies.
The advances are due on demand, and are interest-bearing. The Company had
$61,468,000 and $62,418,000 outstanding under interest-bearing advances from its
parent company and affiliated companies at year-end 1995 and 1996, respectively.
The interest rates for the loans ranged from 6.3% to 10.0% in 1995 and from 6.4%
to 10.0% in 1996. In addition, the Company had $19,412,000 and $23,490,000 of
noninterest-bearing advances from its parent company and affiliated companies at
year-end 1995 and 1996, respectively, which were due on demand.

The Company makes interest bearing advances to an affiliated company. Such
advances bore an interest rate of 10.0% and were $34,020,000 and $30,618,000 at
year-end 1995 and 1996, respectively. In addition, the Company had a $10,196,000
noninterest-bearing, due on demand, advance to an affiliated company at year-
end 1995 and 1996, respectively.

Certain borrowings from affiliated companies were denominated in currencies
other than functional currency of the subsidiary borrowing the funds. The
Company reported foreign currency transaction gains and losses associated with
such borrowings totaling a gain of $0.8 million in 1995, a loss of $4.2 million
in 1996, and a loss of $0.2 million in the period from January 1, 1997 through
March 12, 1997, respectively.

Management Fees

Life Sciences charged the Company for management fees totaling $584,000,
$457,000 and $414,000 for 1995, 1996 and the period from January 1, 1997 through
March 12, 1997, respectively.

Other Related-party Transactions

The Company purchases and sells products in the ordinary course of business
with other companies affiliated with Life Sciences. Sales of such products to
affiliated companies totaled $9,923,000, $9,820,000 and $1,085,000 in 1995, 1996
and the period from January 1, 1997 through March 12, 1997, respectively.
Purchases of products from affiliated companies totaled $5,657,000, $7,595,000
and $847,000 in 1995, 1996 and the period from January 1, 1997 through March 12,
1997, respectively.

F-62
<PAGE> 122
CLINICAL PRODUCTS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist primarily of cash and cash
equivalents, accounts receivable, notes payable and current maturities of
long-term debt, accounts payable, due to parent company and affiliated companies
and long-term obligations. The Company's long-term obligations (Note 7) bear
interest at a floating variable rate and therefore the carrying amounts
approximate fair value. The carrying amounts of the remaining financial
instruments, approximate fair value as a result of their short-term nature.

7. SHORT- AND LONG-TERM OBLIGATIONS

SHORT-TERM OBLIGATIONS

Notes payable and current maturities of long-term obligations in the
accompanying balance sheet includes $1,648,000 at year-end 1995 of amounts
borrowed under an overdraft agreement. The interest rate for these borrowings
was 8.75%.

LONG-TERM OBLIGATIONS

In July 1991, the Company borrowed $3,533,000 pursuant to two industrial
revenue bonds; payable in annual installments of $200,000. The balance
outstanding was $2,561,000 and $2,372,000 at year end 1995 and 1996,
respectively. The loan is secured by property at the Company's Shandon Inc.
division with a net book value of $3,300,000. The loan bears interest at a
variable floating rate, which was 4.4% and 3.8% at year-end 1995 and 1996,
respectively. The debt was repaid in June 1997.

8. GEOGRAPHICAL INFORMATION

The following table shows data for the Company by geographical area.

<TABLE>
<CAPTION>
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Revenues:
United States........................................ $ 40,239 $ 42,360
United Kingdom....................................... 22,746 29,472
France............................................... 13,010 13,029
Germany.............................................. 11,640 11,992
Transfers among geographical areas(a)................ (14,343) (16,096)
-------- --------
$ 73,292 $ 80,757
======== ========
Income (loss) before income taxes:
United States........................................ $ 5,620 $ 6,164
United Kingdom....................................... (3,417) (319)
France............................................... 796 582
Germany.............................................. (191) (223)
Corporate and eliminations(b)........................ (87) 295
-------- --------
Total operating income (loss)........................ 2,721 6,499
Interest and other expense, net...................... (1,060) (6,170)
-------- --------
$ 1,661 $ 329
======== ========
</TABLE>

F-63
<PAGE> 123
CLINICAL PRODUCTS GROUP OF LIFE SCIENCES INTERNATIONAL PLC

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Identifiable assets:
United States........................................ $ 27,982 $ 28,942
United Kingdom....................................... 21,667 24,071
France............................................... 9,529 10,766
Germany.............................................. 5,035 4,605
-------- --------
$ 64,213 $ 68,384
======== ========
</TABLE>

- ---------------
(a) Transfers among geographical areas are accounted for at prices that are
representative of transactions with unaffiliated parties.

(b) Primarily corporate general and administrative expenses.

F-64
<PAGE> 124

THERMO BIOANALYSIS CORPORATION

PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)

In March 1997, Thermo Instrument acquired approximately 95% of the
outstanding shares of Life Sciences International PLC ("LSI"), a London Stock
Exchange-listed company. Subsequently, Thermo Instrument acquired the remaining
shares of LSI capital stock. On May 6, 1997, the Company agreed to acquire
Labsystems OY and Hybaid, which comprised the Biosystems Group of LSI, from
Thermo Instrument for an aggregate purchase price of $102.5 million. The
purchase price for the net operating assets represents the sum of the net book
value, exclusive of cash, of the businesses as of the date that Thermo
Instrument acquired LSI, plus a percentage of Thermo Instrument's total cost in
excess of net assets acquired associated with its acquisition of LSI, based on
the aggregate 1996 revenues of Labsystems OY and Hybaid relative to LSI's 1996
consolidated revenues. Management believes such method of allocation is
reasonable. Of the $102.5 million purchase price, the Company paid approximately
$35.6 million in cash to Thermo Instrument in June 1997, issued a $50.0 million
promissory note to Thermo Instrument and issued to Thermo Instrument in April
1998 1,300,000 shares of Company common stock (valued at approximately $16.9
million at the time of the May 1997 agreement to acquire Labsystems OY and
Hybaid). The $50.0 million promissory note, which bears interest at the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter, is due on July 15, 1999. The acquisition of the Labsystems OY and
Hybaid divisions of LSI has been treated for accounting purposes in a manner
similar to a pooling-of-interests. Accordingly, the accompanying financial
statements include the results of Labsystems OY and Hybaid from March 12, 1997,
the date these businesses were acquired by Thermo Instrument, and the 1,300,000
shares issued to Thermo Instrument have been deemed outstanding from that date.

In May 1998, the Company agreed to acquire the Clinical Products Group of
LSI, which is comprised of Shandon Inc. and its related businesses, including
ALKO Diagnostic, from Thermo Instrument. The net purchase price for the Clinical
Products Group is approximately $66.7 million, which represents the sum of the
net book value of the businesses as of April 4, 1998, plus a percentage of
Thermo Instrument's total cost in excess of net assets acquired associated with
its acquisition of LSI, based on the 1996 revenues of the Clinical Products
Group relative to LSI's 1996 consolidated revenues. Management believes such
method of allocation is reasonable. The net purchase price for the Clinical
Products Group will be paid with 3,007,930 shares of Company common stock valued
at $66.7 million. In addition to the shares of Company common stock to be issued
to Thermo Instrument, the Company will assume approximately $37.9 million of
existing indebtedness owed by the Clinical Products Group to Thermo Instrument,
making the gross purchase price approximately $104.5 million. This amount
included $12.0 million for an equivalent amount of cash acquired. The existing
indebtedness owed to Thermo Instrument is due January 2, 1999 and bears interest
at the 90-day Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter. The acquisition of the Clinical Products Group has
been treated for accounting purposes in a manner similar to that for the
acquisition of Labsystems OY and Hybaid. Accordingly, the accompanying financial
statements include the results of the Clinical Products Group from March 12,
1997, and the shares issuable to Thermo Instrument have been deemed outstanding
from that date.

F-65
<PAGE> 125

THERMO BIOANALYSIS CORPORATION

PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 3, 1998
(UNAUDITED)

The following unaudited pro forma combined condensed statement of
operations sets forth the results of operations for the year ended January 3,
1998, as if the acquisitions of the Labsystems OY and Hybaid divisions of LSI
and the Clinical Products Group of LSI had occurred at the beginning of 1997. In
addition, the unaudited pro forma combined condensed statement of operations
sets forth the results of operations and the earnings per share as if the
issuance of the $50.0 million promissory note to Thermo Instrument, the issuance
of 1,300,000 shares of Company common stock to Thermo Instrument for the
acquisition of the Labsystems OY and Hybaid divisions of LSI and the issuance of
3,007,930 shares of Company common stock for the acquisition of the Clinical
Products Group of LSI had occurred at the beginning of 1997. The pro forma
results of operations are not necessarily indicative of future operations or the
actual results that would have occurred had these acquisitions and related
financing activities occurred at the beginning of 1997. These statements should
be read in conjunction with the accompanying notes and the respective historical
financial statements and related notes of the Company, the Labsystems OY and
Hybaid divisions of LSI and the Clinical Products Group of LSI appearing
elsewhere in this Prospectus. The historical statement of operations data for
the Labsystems OY and Hybaid divisions of LSI, originally prepared in accordance
with U.K. generally accepted accounting principles ("GAAP") and stated in
British pounds sterling, have been translated into U.S. dollars and presented in
a manner consistent with the financial statements of the Company, as described
in Note 1 to this pro forma combined condensed statement of operations. In
addition, the accompanying pro forma adjustments include those necessary to
conform such financial statements to U.S. GAAP.
<TABLE>
<CAPTION>
FOR THE ACQUISITION OF THE
LABSYSTEMS OY AND HYBAID DIVISIONS OF LSI
--------------------------------------------------------------
HISTORICAL PRO FORMA
----------------------------------------- ------------------
LABSYSTEMS OY AND
HYBAID DIVISIONS OF LSI
---------------------------
THERMO U.K. ADJUST- U.S. ADJUST-
BIOANALYSIS GAAP MENTS GAAP MENTS COMBINED
----------- ------- ------- ------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Revenues............................ $201,998 $11,136 $ -- $11,136 $ -- $213,134
-------- ------- ----- ------- ------- --------
Costs and Operating Expenses:
Cost of revenues................... 102,826 7,860 -- 7,860 -- 110,686
Selling, general and administrative
expenses......................... 61,946 5,307 -- 5,307 197 67,450
Research and development
expenses......................... 14,057 896 -- 896 -- 14,953
Restructuring costs................ -- 600 (600) -- -- --
-------- ------- ----- ------- ------- --------
178,829 14,663 (600) 14,063 197 193,089
-------- ------- ----- ------- ------- --------
Operating Income (Loss)............. 23,169 (3,527) 600 (2,927) (197) 20,045
Interest Income..................... 2,431 45 -- 45 -- 2,476
Interest Expense.................... (7,725) (694) -- (694) (1,061) (9,480)
Foreign Currency Exchange Loss...... -- (5) -- (5) -- (5)
Other Expense, Net.................. -- (87) -- (87) -- (87)
-------- ------- ----- ------- ------- --------
Income (Loss) Before Income Taxes... 17,875 (4,268) 600 (3,668) (1,258) 12,949
Income Tax Provision (Benefit)...... 6,535 (753) 198 (555) (445) 5,535
-------- ------- ----- ------- ------- --------
Net Income (Loss)................... $ 11,340 $(3,515) $ 402 $(3,113) $ (813) $ 7,414
======== ======= ===== ======= ======= ========
Earnings per Share:
Basic.............................. $ .86 $ .55
======== ========
Diluted............................ $ .79 $ .54
======== ========
Weighted Average Shares:
Basic.............................. 13,232 256 13,488
======== ======= ========
Diluted............................ 16,367 256 16,623
======== ======= ========

<CAPTION>
FOR THE ACQUISITION OF THE
CLINICAL PRODUCTS GROUP OF LSI
--------------------------------------
HISTORICAL PRO FORMA
----------------- ------------------

CLINICAL PRODUCTS ADJUST-
GROUP OF LSI MENTS COMBINED
----------------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Revenues............................ $13,250 $ -- $226,384
------- ------ -------
Costs and Operating Expenses:
Cost of revenues................... 8,835 -- 119,521
Selling, general and administrative
expenses......................... 4,545 5 72,000
Research and development
expenses......................... 684 -- 15,637
Restructuring costs................ -- --
------- ------ -------
14,064 5 207,158
------- ------ -------
Operating Income (Loss)............. (814) (5) 19,226
Interest Income..................... 454 -- 2,930
Interest Expense.................... (878) -- (10,358)
Foreign Currency Exchange Loss...... (186) -- (191)
Other Expense, Net.................. -- -- (87)
------- ------ -------
Income (Loss) Before Income Taxes... (1,424) (5) 11,520
Income Tax Provision (Benefit)...... (513) 112 5,134
------- ------ -------
Net Income (Loss)................... $ (911) $ (117) $ 6,386
======= ====== =======
Earnings per Share:
Basic.............................. $ .45
=======
Diluted............................ $ .45
=======
Weighted Average Shares:
Basic.............................. 591 14,079
====== =======
Diluted............................ (2,439) 14,184
====== =======
</TABLE>

F-66
<PAGE> 126

THERMO BIOANALYSIS CORPORATION
NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)

NOTE 1 -- BASIS OF PRESENTATION

The historical financial statements of the Labsystems OY and Hybaid
divisions of LSI are denominated in British pounds sterling. The Company used
the guidance of SFAS No. 52 in translating the financial statements of these
businesses for purposes of presenting the pro forma financial statements. The
Company does not believe that this had a material effect on the pro forma
results. The pro forma combined condensed statement of operations was translated
into U.S. dollars at the average exchange rate of approximately 1.60 U.S.
dollars per British pound sterling.

NOTE 2 -- PRO FORMA ADJUSTMENTS TO PRO FORMA COMBINED CONDENSED STATEMENT OF
OPERATIONS FOR THE YEAR ENDED JANUARY 3, 1998 (IN THOUSANDS, EXCEPT IN
TEXT)

<TABLE>
<CAPTION>
DEBIT (CREDIT)
--------------
<S> <C>
ACQUISITION OF THE LABSYSTEMS OY AND HYBAID DIVISIONS OF LSI
ADJUSTMENTS TO CONVERT U.K. GAAP TO U.S. GAAP
RESTRUCTURING COSTS
Eliminate restructuring costs included in the historical
profit and loss account of the Labsystems OY and Hybaid
divisions of LSI, as these costs would not have met the
U.S. GAAP criteria for such treatment pursuant to EITF
94-3...................................................... $ (600)
----------
INCOME TAX PROVISION (BENEFIT)
Income tax provision associated with the adjustment above... 198
----------
PRO FORMA ADJUSTMENTS
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Eliminate corporate service fees charged to the Labsystems
OY and Hybaid divisions of LSI by LSI..................... (60)
Service fee of 1.0% of the revenues of the Labsystems OY and
Hybaid divisions of LSI for services provided under a
services agreement between the Company and Thermo
Electron.................................................. 111
Amortization over 40 years of $71,721,000 of cost in excess
of net assets of acquired companies created by the
acquisition of the Labsystems OY and Hybaid divisions of
LSI....................................................... 146
----------
197
----------
INTEREST EXPENSE
Increase in interest expense as a result of a loan from
Thermo Instrument of $85,583,000 related to the
acquisition of the Labsystems OY and Hybaid divisions of
LSI, calculated using the 90-day Commercial Paper
Composite Rate plus 25 basis points, or 5.875%. The loan
from Thermo Instrument replaced existing indebtedness to
LSI....................................................... 1,755
Eliminate interest expense on indebtedness to LSI included
in the historical profit and loss account of the
Labsystems OY and Hybaid divisions of LSI, due to the
assumed repayment of such debt at the beginning of 1997... (694)
----------
1,061
----------
INCOME TAX PROVISION (BENEFIT)
Income tax benefit associated with the adjustments above
(excluding amortization of cost in excess of net assets of
acquired companies), calculated at the Company's statutory
income tax rate of 40%.................................... (445)
----------
</TABLE>

F-67
<PAGE> 127
THERMO BIOANALYSIS CORPORATION
NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS -- (CONCLUDED)
(UNAUDITED)

<TABLE>
<CAPTION>
DEBIT (CREDIT)
--------------
<S> <C>
WEIGHTED AVERAGE SHARES
Increase in weighted average shares outstanding due to the
assumed issuance at the beginning of 1997 of 1,300,000
shares of the Company's common stock related to the
acquisition of the Labsystems OY and Hybaid division of
LSI.
ACQUISITION OF THE CLINICAL PRODUCTS GROUP OF LSI
PRO FORMA ADJUSTMENTS
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Eliminate corporate service fees charged to the Clinical
Products Group of LSI by LSI.............................. (414)
Service fee of 1.0% of the revenues of the Clinical Products
Group of LSI for services provided under a services
agreement between the Company and Thermo Electron......... 133
Amortization over 40 years of $63,788,000 of cost in excess
of net assets of acquired companies created by the
acquisition of the Clinical Products Group of LSI......... 286
----------
5
----------
INCOME TAX PROVISION (BENEFIT)
Income tax provision associated with the adjustments above
(excluding amortization of cost in excess of net assets of
acquired companies), calculated at the Company's statutory
income tax rate of 40%.................................... 112
----------
WEIGHTED AVERAGE SHARES FOR BASIC EARNINGS PER SHARE
Increase in weighted average shares outstanding due to the
assumed issuance at the beginning of 1997 of 3,007,930
shares of the Company's common stock related to the
acquisition of the Clinical Products Group of LSI.
WEIGHTED AVERAGE SHARES FOR DILUTED EARNINGS PER SHARE
Decrease in weighted average shares due to the antidilutive
effect to the pro forma results of the Company's
Convertible Note.
</TABLE>

F-68
<PAGE> 128

[CHART DEPICTING COMPANY STRUCTURE, LINES OF BUSINESS AND TECHNOLOGIES]
<PAGE> 129

======================================================

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, IN ANY STATE OR TO ANY
PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE. THE DELIVERY
OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 14
Dividend Policy....................... 14
Price Range of Common Stock........... 14
Capitalization........................ 15
Selected Quarterly Financial Data..... 16
Selected Financial Information........ 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 18
Business.............................. 23
Relationship with Affiliates.......... 39
Management............................ 46
Security Ownership of Certain
Beneficial Owners and Management.... 53
Description of Capital Stock.......... 55
Underwriting.......................... 56
Legal Opinions........................ 57
Experts............................... 57
Available Information................. 58
Index to Financial Statements......... F-1
</TABLE>

======================================================
======================================================
4,500,000 SHARES

[THERMO BIOANALYSIS LOGO]
------------

PROSPECTUS
, 1998
------------
SALOMON SMITH BARNEY

CIBC OPPENHEIMER

LEHMAN BROTHERS

PRUDENTIAL SECURITIES INCORPORATED
======================================================
<PAGE> 130

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than the
underwriting discounts and commissions. All amounts shown are estimates except
for the Securities and Exchange Commission registration fee, the NASD filing fee
and the American Stock Exchange listing fee.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 33,586
NASD filing fee............................................. 11,885
American Stock Exchange listing fee......................... 17,500
Legal fees and expenses..................................... 130,000
Accounting fees and expenses................................ 400,000
Blue Sky fees and expenses (including legal fees)........... 10,000
Printing and engraving expenses............................. 100,000
Miscellaneous............................................... 47,029
----------
Total............................................. $ 750,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Delaware General Corporation Law and the Registrant's Certificate of
Incorporation and By-Laws limit the monetary liability of directors to the
Registrant and to its stockholders and provide for indemnification of the
Registrant's officers and directors for liabilities and expenses that they may
incur in such capacities. In general, officers and directors are indemnified
with respect to actions taken in good faith in a manner reasonably believed to
be in, or not opposed to, the best interests of the Registrant, and with respect
to any criminal action or proceeding, actions that the indemnitee had no
reasonable cause to believe were unlawful. The Registrant also has
indemnification agreements with its directors and officers that provide for the
maximum indemnification allowed by law. Reference is made to the Registrant's
Certificate of Incorporation, By-Laws and form of Indemnification Agreement for
Officers and Directors incorporated by reference as Exhibits 3.1, 3.2 and 10.10
hereto, respectively.

Thermo Electron has an insurance policy which insures the directors and
officers of Thermo Electron and its subsidiaries, including the Registrant,
against certain liabilities which might be incurred in connection with the
performance of their duties.

Under the Underwriting Agreement, the Underwriters are obligated, under
certain circumstances, to indemnify directors and officers of the Registrant
against certain liabilities, including liabilities under the Securities Act.
Reference is made to the form of Underwriting Agreement filed as Exhibit 1
hereto.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On February 24, 1995, Thermo Instrument transferred to the Registrant all
of the assets and operations relating to its bioinstruments business in exchange
for 6,500,000 shares of Common Stock of the Registrant and the assumption by the
Registrant of certain liabilities relating to such business. Exemption from
registration for this transaction is claimed under Section 4(2) of the
Securities Act.

On March 15, 1995, the Registrant sold an aggregate of 700,000 shares of
Common Stock to accredited investors for an aggregate purchase price of
$7,000,000 pursuant to Regulation D of the Commission promulgated under the
Securities Act. On April 19,1995, the Registrant sold an aggregate of 901,500
shares of Common Stock to accredited investors for an aggregate purchase price
of $9,015,000 pursuant to Regulation D of the Commission promulgated under the
Securities Act.

II-1
<PAGE> 131

On July 22, 1996, the Registrant issued to Thermo Instrument a $50,000,000
principal amount 4.875% subordinated convertible note, due July 2001,
convertible into approximately 3,030,303 shares of the Registrant's Common Stock
at $16.50 per share. Exemption from registration for this transaction is claimed
under Section 4(2) of the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS

See the Exhibit Index included immediately preceding the exhibits to this
Registration Statement.

(b) FINANCIAL STATEMENT SCHEDULES

Financial Statement Schedules as of January 3, 1998 and the Report of
Independent Accountants on such schedules are included in this Registration
Statement. All other schedules are omitted because they are not applicable or
are not required under Regulation S-X.

ITEM 17. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions contained in the Certificate of
Incorporation and By-Laws of the Registrant and the laws of the State of
Delaware, or otherwise, the Registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

II-2
<PAGE> 132

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Waltham,
Commonwealth of Massachusetts, on this 21st day of May, 1998.

THERMO BIOANALYSIS CORPORATION

By: /s/ COLIN MADDIX

--------------------------------------
Colin Maddix
President and Chief Executive Officer

Pursuant to the requirements of the Securities Act, this Amendment No. 1 to
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>

/s/ COLIN MADDIX President, Chief Executive Officer and May 21, 1998
- -------------------------------------- Director
Colin Maddix

JOHN N. HATSOPOULOS* Chief Financial Officer and Senior May 21, 1998
- -------------------------------------- Vice President
John N. Hatsopoulos

PAUL F. KELLEHER* Chief Accounting Officer May 21, 1998
- --------------------------------------
Paul F. Kelleher

EARL R. LEWIS* Chairman of the Board and Director May 21, 1998
- --------------------------------------
Earl R. Lewis

ELIAS P. GYFTOPOULOS* Director May 21, 1998
- --------------------------------------
Elias P. Gyftopoulos

BARRY S. HOWE* Director May 21, 1998
- --------------------------------------
Barry S. Howe

JONATHAN W. PAINTER* Director May 21, 1998
- --------------------------------------
Jonathan W. Painter

ARVIN H. SMITH* Director May 21, 1998
- --------------------------------------
Arvin H. Smith

ARNOLD N. WEINBERG* Director May 21, 1998
- --------------------------------------
Arnold N. Weinberg
</TABLE>

* The undersigned Sandra L. Lambert, by signing her name hereto, does hereby
execute this Amendment No. 1 to Registration Statement on behalf of each of the
above-named persons pursuant to powers of attorney executed by such persons and
filed with the Securities and Exchange Commission.

/s/ SANDRA L. LAMBERT

--------------------------------------

Sandra L. Lambert

Attorney-in-Fact

II-3
<PAGE> 133

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 Form S-1 and have issued our report thereon dated May 5, 1998. Our
audits were made for the purpose of forming an opinion on those statements taken
as a whole. Thermo BioAnalysis Corporation's schedule of Valuation and
Qualifying Accounts, included in Schedule II on page S-2, is the responsibility
of the company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
consolidated financial statements. 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
May 5, 1998

S-1
<PAGE> 134

THERMO BIOANALYSIS CORPORATION

VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE AT PROVISION BALANCE
BEGINNING CHARGED TO ACCOUNTS ACCOUNTS AT END
DESCRIPTION OF YEAR EXPENSE OTHER(A) RECOVERED WRITTEN OFF OF YEAR
----------- ---------- ---------- -------- --------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 30, 1995
Allowance for Doubtful Accounts..... $154 $ 2 $ -- $-- $ (2) $ 154
YEAR ENDED DECEMBER 28, 1996
Allowance for Doubtful Accounts..... $154 $210 $ 806 $ 9 $(188) $ 991
YEAR ENDED JANUARY 3, 1998
Allowance for Doubtful Accounts..... $991 $606 $5,004 $-- $(369) $6,232
</TABLE>

- ---------------
(a) Includes allowance of businesses acquired during the year as described in
Note 2 to Consolidated Financial Statements included elsewhere in this
Prospectus and the effect of foreign currency translation.

S-2
<PAGE> 135

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- -------- ----------------------
<C> <S>
1 * Form of Underwriting Agreement.
2.1 Purchase Agreement dated as of February 5, 1996, by and
among the Registrant, Dynatech Corporation, and certain of
their respective affiliates (incorporated by reference
herein from Exhibit 2.1 to the Registrant's Registration
Statement on Form S-1 [File No. 333-8697]).
2.2 Share Purchase Agreement dated as of May 6, 1997, between
the Registrant and Thermo Instrument Systems Inc., with
respect to Labsystems OY and Hybaid Limited (incorporated by
reference herein from Exhibit 2 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March
29, 1997 [File No. 1-12179]).
2.3 Share Purchase Agreement dated as of July 30, 1997, between
the Registrant and Thermo Instrument Systems Inc., with
respect to Labsystems Japan (incorporated by reference
herein from Exhibit 2 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 28, 1997 [File No.
1-12179]).
2.4 * Share Purchase Agreement dated as of May 11, 1998 by and
between the Registrant and Thermo Instrument Systems Inc.
Pursuant to Item 601(b)(2) of Regulation S-K, schedules to
this Agreement have been omitted. The Registrant hereby
undertakes to furnish supplementally a copy of such
schedules to the Commission upon request.
2.5 * Share Purchase Agreement dated as of May 11, 1998 by and
between the Registrant and ThermoQuest Corporation. Pursuant
to Item 601(b)(2) of Regulation S-K, schedules to this
Agreement have been omitted. The Registrant hereby
undertakes to furnish supplementally a copy of such
schedules to the Commission upon request.
3.1 Certificate of Incorporation of the Registrant (incorporated
by reference herein from Exhibit 3.1 to the Registrant's
Registration Statement on Form S-1 [File No. 333-8697]).
3.2 By-Laws of the Registrant (incorporated by reference herein
from Exhibit 3.2 to the Registrant's Registration Statement
on Form S-1 [File No. 333-8697]).
4 Form of Common Stock Certificate (incorporated by reference
herein from Exhibit 4 to the Registrant's Registration
Statement on Form S-1 [File No. 333-8697]).
5 * Opinion of Seth H. Hoogasian, Esq. with respect to the
validity of the securities being offered.
10.1 Corporate Services Agreement dated as of February 27, 1995,
between Thermo Electron and the Registrant (incorporated by
reference herein from Exhibit 10.1 to the Registrant's
Registration Statement on Form S-1 [File No. 333-8697]).
10.2 Thermo Electron Corporate Charter, as amended and restated
effective January 3, 1993 (incorporated by reference herein
from Exhibit 10.1 to Thermo Electron's Annual Report on Form
10-K for the fiscal year ended January 2, 1993 [File No.
1-8002]).
10.3 Tax Allocation Agreement dated as of February 27, 1995,
between Thermo Electron and the Registrant (incorporated by
reference herein from Exhibit 10.3 to the Registrant's
Registration Statement on Form S-1 [File No. 333-8697]).
10.4 Amended and Restated Master Repurchase Agreement dated as of
December 28, 1996, between Thermo Electron and the
Registrant (incorporated by reference herein from Exhibit
10.4 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 28, 1996 [File No. 1-12179]).
10.5 Amended and Restated Master Guarantee Reimbursement and Loan
Agreement dated as of December 2, 1997, between Thermo
Electron and the Registrant (incorporated by reference
herein from Exhibit 10.39 to Thermo Instrument's Annual
Report on Form 10-K for the fiscal year ended January 3,
1998 [File No. 1-9786]).
10.6 Amended and Restated Master Guarantee Reimbursement and Loan
Agreement dated as of December 2, 1997, between Thermo
Instrument and the Registrant (incorporated by reference
herein from Exhibit 10.6 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended January 3, 1998 [File
No. 1-12179]).
10.7 Equity Incentive Plan of the Registrant (incorporated by
reference herein from Exhibit 10.7 to the Registrant's
Registration Statement on Form S-1 [File No. 333-8697]).
In addition to the stock-based compensation plans of the
Registrant, the executive officers of the Registrant may be
granted awards under stock-based compensation plans of
Thermo Electron and Thermo Instrument for services rendered
to the Registrant or such affiliated corporations. The terms
of such plans are substantially the same as those of the
Registrant's Equity Incentive Plan.
</TABLE>

<PAGE> 136

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- -------- ----------------------
<C> <S>
10.8 Deferred Compensation Plan for Directors of the Registrant
(incorporated by reference herein from Exhibit 10.8 to the
Registrant's Registration Statement on Form S-1 [File No.
333-8697]).
10.9 Directors' Stock Option Plan of the Registrant (incorporated
by reference herein from Exhibit 10.9 to the Registrant's
Registration Statement on Form S-1 [File No. 333-8697]).
10.10 Form of Indemnification Agreement for Officers and Directors
(incorporated by reference herein from Exhibit 10.10 to the
Registrant's Registration Statement on Form S-1 [File No.
333-8697]).
10.11 Asset Transfer Agreement dated as of February 27, 1995,
between Thermo Instrument and the Registrant (incorporated
by reference herein from Exhibit 10.11 to the Registrant's
Registration Statement on Form S-1 [File No. 333-8697]).
10.12 Asset Transfer Agreement dated as of February 27, 1995,
between Thermo Separation Products Inc. and the Registrant
(incorporated by reference herein from Exhibit 10.12 to the
Registrant's Registration Statement on Form S-1 [File No.
333-8697]).
10.13 Exclusive License Agreement dated as of February 27, 1995,
between Thermo Separation Products Inc. and the Registrant
(incorporated by reference herein from Exhibit 10.13 to the
Registrant's Registration Statement on Form S-1 [File No.
333-8697]).
10.14 Exclusive License Agreement dated as of February 27, 1995,
between the Registrant and Thermo Separation Products Inc.
(incorporated by reference herein from Exhibit 10.14 to the
Registrant's Registration Statement on Form S-1 [File No.
333-8697]).
10.15 Manufacturing Agreement dated as of February 27, 1995,
between Thermo Separation Products Inc. and the Registrant
(incorporated by reference herein from Exhibit 10.15 to the
Registrant's Registration Statement on Form S-1 [File No.
333-8697]).
10.16 Note Purchase Agreement dated as of July 22, 1996, between
Thermo Instrument and the Registrant (incorporated by
reference herein from Exhibit 10.16 to the Registrant's
Registration Statement on Form S-1 [File No. 333-8697]).
10.17 $50,000,000 Principal Amount 4.875% Convertible Subordinated
Note due 2001 dated July 22, 1996 (incorporated by reference
herein from Exhibit 10.17 to the Registrant's Registration
Statement on Form S-1 [File No. 333-8697]).
10.18 Asset and Share Purchase Agreement dated as of July 22,
1996, among SID Instruments, Inc., HB Instruments Inc., the
Registrant, and Thermo Instrument (incorporated by reference
herein from Exhibit 10.18 to the Registrant's Registration
Statement on Form S-1 [File No. 333-8697]).
10.19 Asset Purchase Agreement dated as of July 22, 1996, among
Thermo LabSystems Limited, FI Instruments Inc., Thermo FAST
U.K. Limited, the Registrant, and Thermo Instrument
(incorporated by reference herein from Exhibit 10.19 to the
Registrant's Registration Statement on Form S-1 [File No.
333-8697]).
10.20 Restated Stock Holding Assistance Plan and Form of
Promissory Note (incorporated by reference herein from
Exhibit 10.20 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 28, 1996 [File No.
1-12179]).
10.21* $50,000,000 Principal Amount Promissory Note due 1999 dated
April 30, 1998.
21 * Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Coopers & Lybrand.
23.3 Consent of Arthur Andersen LLP.
23.4 Consent of KPMG Audit Plc.
23.5 Consent of Arthur Andersen LLP.
23.6 Consent of Seth H. Hoogasian, Esq. (included in Exhibit 5).
24 * Power of Attorney.
27 Financial Data Schedule.
</TABLE>

- ---------------

* Previously filed.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Thermo BioAnalysis Corporation:

As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Boston, Massachusetts
May 19, 1998

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1 of
our report dated July 19, 1996, on our audits of the financial statements of
Dynatech Medical Products Limited. We also consent to the reference to our firm
under the caption "Experts."

Guernsey, Channel Islands
May 18, 1998 COOPERS & LYBRAND

<PAGE> 1

EXHIBIT 23.3

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

To DYNEX Technologies Division of Dynatech Corporation:

As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Boston, Massachusetts
May 19, 1998

<PAGE> 1

EXHIBIT 23.4

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Biosystems Group of Life Sciences International PLC:

We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.

KPMG Audit Plc

London, England
May 20, 1998

<PAGE> 1

EXHIBIT 23.5

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Clinical Products Group of Life Sciences International PLC:

As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Boston, Massachusetts
May 19, 1998

<ARTICLE> 5
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-START> JAN-04-1998
<PERIOD-END> APR-04-1998
<CASH> 43,526
<SECURITIES> 0
<RECEIVABLES> 51,072
<ALLOWANCES> 5,926
<INVENTORY> 39,282
<CURRENT-ASSETS> 141,875
<PP&E> 35,274
<DEPRECIATION> 13,114
<TOTAL-ASSETS> 324,866
<CURRENT-LIABILITIES> 88,903
<BONDS> 198
0
0
<COMMON> 141
<OTHER-SE> 135,725
<TOTAL-LIABILITY-AND-EQUITY> 324,866
<SALES> 54,434
<TOTAL-REVENUES> 54,434
<CGS> 26,583
<TOTAL-COSTS> 26,583
<OTHER-EXPENSES> 3,923
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<INTEREST-EXPENSE> 2,003
<INCOME-PRETAX> 5,024
<INCOME-TAX> 1,822
<INCOME-CONTINUING> 3,202
<DISCONTINUED> 0
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<NET-INCOME> 3,202
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