<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
THERMO BIOANALYSIS CORPORATION
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
THERMO BIOANALYSIS CORPORATION
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
(3) Filing Party:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
<PAGE>
THERMO BIOANALYSIS CORPORATION
504 Airport Road
Santa Fe, New Mexico 87504-2108
April 23, 1998
Dear Stockholder:
The enclosed Notice calls the 1998 Annual Meeting of the Stockholders of
Thermo BioAnalysis Corporation. I respectfully request that all Stockholders
attend this meeting, if possible.
Our Annual Report for the year ended January 3, 1998, is enclosed. I hope
you will read it carefully. Feel free to forward any questions you may have if
you are unable to be present at the meeting.
Enclosed with this letter is a proxy authorizing three officers of the
Corporation to vote your shares for you if you do not attend the meeting.
Whether or not you are able to attend the meeting, I urge you to complete your
proxy and return it to our transfer agent, American Stock Transfer & Trust
Company, in the enclosed addressed, postage-paid envelope, as a quorum of the
Stockholders must be present at the meeting, either in person or by proxy.
I would appreciate your immediate attention to the mailing of this proxy.
Yours very truly,
COLIN MADDIX
President and Chief Executive Officer
<PAGE>
THERMO BIOANALYSIS CORPORATION
504 Airport Road
Santa Fe, New Mexico 87504-2108
April 23, 1998
To the Holders of the Common Stock of
THERMO BIOANALYSIS CORPORATION
NOTICE OF ANNUAL MEETING
The 1998 Annual Meeting of the Stockholders of Thermo BioAnalysis
Corporation (the "Corporation") will be held on Monday, June 1, 1998, at 9:00
a.m. at The Hyatt Regency Scottsdale Resort at Gainey Ranch, 7500 East
Doubletree Ranch Road, Scottsdale, Arizona, 85258. The purpose of the meeting
is to consider and take action upon the following matters:
1. Election of seven directors.
2. Such other business as may properly be brought before the meeting and
any adjournment thereof.
The transfer books of the Corporation will not be closed prior to the
meeting, but, pursuant to appropriate action by the board of directors, the
record date for the determination of the Stockholders entitled to receive notice
of and to vote at the meeting is April 3, 1998.
The By-laws require that the holders of a majority of the stock issued and
outstanding and entitled to vote be present or represented by proxy at the
meeting in order to constitute a quorum for the transaction of business. It is
important that your shares be represented at the meeting regardless of the
number of shares you may hold. Whether or not you are able to be present in
person, please sign and return promptly the enclosed proxy in the accompanying
envelope, which requires no postage if mailed in the United States.
This Notice, the proxy and proxy statement enclosed herewith are sent to
you by order of the board of directors.
SANDRA L. LAMBERT
Secretary
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the board of directors of Thermo
BioAnalysis Corporation (the "Corporation") for use at the 1998 Annual Meeting
of the Stockholders (the "Meeting") to be held on Monday, June 1, 1998, at 9:00
a.m. at The Hyatt Regency Scottsdale Resort at Gainey Ranch, Scottsdale,
Arizona, and any adjournment thereof. The mailing address of the executive
office of the Corporation is 504 Airport Road, Santa Fe, New Mexico 87504-2108.
This proxy statement and the enclosed proxy were first furnished to Stockholders
of the Corporation on or about April 29, 1998.
VOTING PROCEDURES
The board of directors intends to present to the Meeting the election of
seven directors, constituting the entire board of directors.
The representation in person or by proxy of a majority of the outstanding
shares of the common stock of the Corporation, $.01 par value ("Common Stock")
entitled to vote at the Meeting is necessary to provide a quorum for the
transaction of business at the Meeting. Shares can only be voted if the
Stockholder is present in person or is represented by returning a properly
signed proxy. Each Stockholder's vote is very important. Whether or not you plan
to attend the Meeting in person, please sign and promptly return the enclosed
proxy card, which requires no postage if mailed in the United States. All signed
and returned proxies will be counted towards establishing a quorum for the
Meeting, regardless of how the shares are voted.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted for the management nominees for directors,
and as the individuals named as proxy holders on the proxy deem advisable on all
other matters as may properly come before the Meeting.
In order to be elected a director, a nominee must receive the affirmative
vote of a majority of the shares of Common Stock present and entitled to vote on
the election. Withholding authority to vote for a nominee for director will be
treated as shares present and entitled to vote and, for purposes of determining
the outcome of the vote, will have the same effect as a vote against the
nominee. With respect to the election of directors, broker "non-votes" will not
be treated as shares present and entitled to vote on a voting matter and will
have no effect on the outcome of the vote. A broker "non-vote" occurs when a
nominee holding shares for a beneficial holder does not have discretionary
voting power and does not receive voting instructions from the beneficial owner.
A Stockholder who returns a proxy may revoke it at any time before the
Stockholder's shares are voted at the Meeting by written notice to the Secretary
of the Corporation received prior to the Meeting, by executing and returning a
later-dated proxy or by voting by ballot at the Meeting.
The outstanding stock of the Corporation entitled to vote (excluding shares
held in treasury by the Corporation) as of April 3, 1998, consisted of 9,783,148
shares of Common Stock. Only Stockholders of record at the close of business on
April 3, 1998, are entitled to vote at the Meeting. Each share is entitled to
one vote.
- PROPOSAL 1 -
ELECTION OF DIRECTORS
Seven directors are to be elected at the Meeting, each to hold office until
his successor is chosen and qualified or until his earlier resignation, death or
removal.
NOMINEES FOR DIRECTORS
Set forth below are the names of the persons nominated as directors, their
ages, their offices in the Corporation, if any, their principal occupation or
employment for the past five years, the length of their tenure as directors and
the names of other public companies in which such persons hold directorships.
Information regarding
1
<PAGE>
their beneficial ownership of the Corporation's Common Stock and of the common
stock of its parent company, Thermo Instrument Systems Inc. ("Thermo
Instrument"), a manufacturer of analytical, environmental-monitoring and process
control instruments, and Thermo Instrument's parent company, Thermo Electron
Corporation ("Thermo Electron"), a provider of diversified products and services
for biomedical, instrument and environmental markets, is reported under the
caption "Stock Ownership." All of the nominees are currently directors of the
Corporation.
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------
ELIAS P. GYFTOPOULOS Dr. Gyftopoulos, 70, has been a director of the Corporation since its
inception in February 1995. He is Professor Emeritus at the Massachusetts
Institute of Technology, where he was the Ford Professor of Mechanical
Engineering and of Nuclear Engineering for more than 20 years prior to his
retirement in 1996. Dr. Gyftopoulos is also a director of Thermo Electron,
Thermo Cardiosystems Inc., ThermoLase Corporation, Thermo Remediation Inc.,
ThermoSpectra Corporation, Thermo Vision Corporation, Thermo Voltek Corp.
and Trex Medical Corporation.
- ---------------------------------------------------------------------------------------------------------------------
BARRY S. HOWE Mr. Howe, 42, has been a director of the Corporation since its inception in
February 1995. He was president and chief executive officer of the
Corporation 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
Corporation. Mr. Howe is also a director of ThermoSpectra Corporation.
- ---------------------------------------------------------------------------------------------------------------------
EARL R. LEWIS Mr. Lewis, 54, has been a director of the Corporation 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
was also chief executive officer of Thermo Optek Corporation, 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
Corporation, ThermoQuest Corporation, ThermoSpectra Corporation and Thermo
Vision Corporation.
- ---------------------------------------------------------------------------------------------------------------------
COLIN MADDIX Mr. Maddix, 52, has been a director of the Corporation, 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, 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 Fisher Scientific International Inc., a manufacturer of
scientific instruments and consumables with scientific, clinical,
educational, occupational health and safety applications.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
2
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<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------
JONATHAN W. PAINTER Mr. Painter, 39, has been a director of the Corporation 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 Corporation 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 Mr. Smith, 68, has been a director of the Corporation 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 Corporation, Thermo Power
Corporation, ThermoQuest Corporation, ThermoSpectra Corporation and Thermo
Vision Corporation.
- ---------------------------------------------------------------------------------------------------------------------
ARNOLD N. WEINBERG Dr. Weinberg, 68, has been a director of the Corporation since November
1995. He has been Professor of Medicine at the Harvard Medical School and
Medical Director of the Medical Department of the Massachusetts Institute
of Technology for more than five years.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The board of directors has established an audit committee and a human
resources committee, each consisting solely of outside directors. The present
members of the audit committee are Dr. Gyftopoulos and Dr. Weinberg (Chairman).
The audit committee reviews the scope of the audit with the Corporation's
independent public accountants and meets with them for the purpose of reviewing
the results of the audit subsequent to its completion. The present members of
the human resources committee are Dr. Gyftopoulos (Chairman) and Dr. Weinberg.
The human resources committee reviews the performance of senior members of
management, approves executive compensation and administers the Corporation's
stock option and other stock-based compensation plans. The Corporation does not
have a nominating committee of the board of directors. The board of directors
met five times, the audit committee met twice and the human resources committee
met three times during fiscal 1997. Each director attended at least 75% of all
meetings of the board of directors and committees on which he served held during
fiscal 1997.
COMPENSATION OF DIRECTORS
CASH COMPENSATION
Directors who are not employees of the Corporation, of Thermo Electron or
of any other companies affiliated with Thermo Electron (also referred to as
"outside directors") receive an annual retainer of $2,000 and a fee of $1,000
per day for attending regular meetings of the board of directors and $500 per
day for participating in meetings of the board of directors held by means of
conference telephone and for participating in certain meetings of committees of
the board of directors. Payment of directors' fees is made quarterly. Messrs.
Howe, Lewis, Maddix, Painter and Smith are all employees of Thermo Electron
companies and do not receive any cash compensation from the Corporation for
their services as directors. Directors are also reimbursed for out-of-pocket
expenses incurred in attending such meetings.
3
<PAGE>
DEFERRED COMPENSATION PLAN
Under the Corporation'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 Corporation that is not approved by the board of directors,
deferred amounts become payable immediately. Either of the following is deemed
to be a change of control: (a) the 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
Corporation's Common Stock. When payable, amounts deferred may be disbursed
solely in shares of Common Stock accumulated under the Deferred Compensation
Plan. A total of 25,000 shares of Common Stock have been reserved for issuance
under the Deferred Compensation Plan. As of March 1, 1998, deferred units equal
to 892.03 shares of Common Stock were accumulated under the Deferred
Compensation Plan.
DIRECTORS STOCK OPTION PLAN
The Corporation's directors stock option plan (the "Directors Plan")
provides for the grant of stock options to purchase shares of Common Stock to
outside directors as additional compensation for their service as directors.
The Directors Plan provides for the grant of stock options upon a director's
initial appointment and, beginning in 2000, awards options to purchase 1,000
shares annually to outside directors. A total of 100,000 shares of Common Stock
have been reserved for issuance under the Directors Plan.
Under the Directors Plan, each eligible director and each new outside
director who joined the board of directors prior to or during 1996 was granted
an option to purchase 15,000 shares of Common Stock. The size of the award to
new directors appointed to the board of directors after 1996 is reduced by 3,750
shares in each subsequent year. Outside directors who join the board of
directors after 1999 would not receive an option grant upon their appointment or
election to the board of directors, but would be eligible to participate in the
annual option awards described below. Options evidencing initial grants to
directors are exercisable six months after the date of grant. The shares
acquired upon exercise are subject to restrictions on transfer and the right of
the Corporation to repurchase such shares at the exercise price in the event the
director ceases to serve as a director of the Corporation or any other Thermo
Electron company. The restrictions and repurchase rights lapse or are deemed to
have lapsed in equal annual installments of 3,750 shares per year, starting with
the first anniversary of the grant date, provided the director has continuously
served as a director of the Corporation or any other Thermo Electron company
since the grant date. These options expire on the fifth anniversary of the
grant date, unless the director dies or otherwise ceases to serve as a director
of the Corporation or any other Thermo Electron company prior to that date.
Outside directors will also receive an annual grant of options to purchase
1,000 shares of Common Stock, commencing with the Annual Meeting of the
Stockholders to be held in 2000. The annual grant will be made at the close of
business on the date of each Annual Meeting of the Stockholders of the
Corporation to each outside director then holding office. Options evidencing
annual grants may be exercised at any time from and after the six-month
anniversary of the grant date of the option and prior to the expiration of the
option on the third anniversary of the grant date. Shares acquired upon
exercise of the options would be subject to repurchase by the Corporation at the
exercise price if the recipient ceased to serve as a director of the Corporation
or any other Thermo Electron company prior to the first anniversary of the grant
date.
The exercise price for options granted under the Directors Plan is the
average of the closing prices of the common stock as reported on the American
Stock Exchange (or other principal market on which the common stock is then
traded) for the five trading days 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.
4
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STOCK OWNERSHIP POLICIES FOR DIRECTORS
During 1996, the human resources committee of the board of directors (the
"Committee") established a stock holding policy for directors. The stock
holding policy requires each director to hold a minimum of 1,000 shares of
Common Stock. Directors are requested to achieve this ownership level by the
1998 Annual Meeting of Stockholders. The chief executive officer of the
Corporation is required to comply with a separate stock holding policy
established by the Committee in 1996, which is described in "Committee Report on
Executive Compensation - Stock Ownership Policies."
In addition, the Committee adopted a policy requiring directors to hold
shares of the Corporation's Common Stock equal to one-half of their net option
exercises over a period of five years. The net option exercise is determined by
calculating the number of shares acquired upon exercise of a stock option, after
deducting the number of shares that could have been traded to exercise the
option and the number of shares that could have been surrendered to satisfy tax
withholding obligations attributable to the exercise of the option. This policy
is also applicable to executive officers and is described in "Committee Report
on Executive Compensation - Stock Ownership Policies."
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermo Instrument, the Corporation's parent company,
and of Thermo Electron, Thermo Instrument's parent company, as of March 1, 1998,
with respect to (i) each director, (ii) each executive officer named in the
summary compensation table under the heading "Executive Compensation" and (iii)
all directors and current executive officers as a group. In addition, the
following table sets forth the beneficial ownership of Common Stock, as of March
1, 1998 with respect to each person who was known by the Corporation to own
beneficially more than 5% of the outstanding shares of Common Stock.
While certain directors and executive officers of the Corporation are also
directors and executive officers of Thermo Electron or its subsidiaries other
than the Corporation, 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>
Thermo Electron Corporation (5) 11,797,202 N/A N/A
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 (6) 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, 50,000, 15,000, 20,000, 15,000 and 206,200 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 beneficially owned by Dr. Weinberg and all directors and current
executive
5
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officers as a group include 892 full shares allocated to Dr. Weinberg's
account under the Corporation'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, 292,968 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 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 of Thermo Instrument
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) Includes 3,030,303 shares of Common Stock that Thermo Electron, through its
majority-owned subsidiary Thermo Instrument, has the right to acquire
within 60 days of March 1, 1998, through the conversion of a convertible
note of the Corporation issued to Thermo Instrument in July 1996. As of
March 1, 1998, Thermo Electron, primarily through its majority-owned
subsidiary Thermo Instrument, beneficially owned 83.6% of the outstanding
Common Stock. Thermo Electron's address is 81 Wyman Street, Waltham,
Massachusetts, 02245-9046. As of March 1, 1998, Thermo Electron had the
power to elect all of the members of the Corporation's board of directors.
(6) Information as to Mr. Maddix's ownership is reported as of March 11, 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and beneficial owners of more
than 10% of the Common Stock, such as Thermo Electron, to file with the
Securities and Exchange Commission initial reports of ownership and periodic
reports of changes in ownership of the Corporation's securities. Based upon a
review of such filings, all Section 16(a) filing requirements applicable to such
persons were complied with during 1997, except in the following instances. Mr.
Earl R. Lewis, a director of the Corporation, filed one Form 4 late, reporting
one purchase of Common Stock. Thermo Electron filed five Forms 4 late, reporting
a total of 60 transactions, including 56 open market purchases of shares of
Common Stock and three
6
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transactions associated with the grant and lapse of options to purchase Common
Stock granted to employees under its stock option program and one acquisition of
shares in a liquidating distribution by a limited partnership of which Thermo
Electron was a limited partner.
EXECUTIVE COMPENSATION
NOTE: All share amounts reported below have, in all cases, been adjusted
as applicable to reflect a five-for-four stock split with respect to the common
stock of Thermo Instrument distributed in October 1997 in the form of a 25%
stock dividend.
SUMMARY COMPENSATION TABLE
The following table summarizes compensation for services to the Corporation
in all capacities awarded to, earned by or paid to the Corporation's chief
executive officer during 1997 and one other executive officer for the last three
fiscal years. No other executive officer of the Corporation met the definition
of "highly compensated" within the meaning of the Securities and Exchange
Commission's executive compensation disclosure rules.
The Corporation is required to appoint certain executive officers and full-
time employees of Thermo Electron as executive officers of the Corporation, in
accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's affairs is
provided to the Corporation under the Corporate Services Agreement between the
Corporation and Thermo Electron. Accordingly, the compensation for these
individuals is not reported in the following table.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM
COMPENSATION
--------------------
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>
Barry S. Howe 1997 $150,000 $110,000 1,100 (TMO) $14,923 (4)
President and Chief 1996 $145,000 $70,000 50,000 (TBA) $8,076 (4)
Executive Officer (3) 1,500 (TMO)
2,000 (TFG)
2,000 (TLT)
15,000 (TOC)
90,000 (TMQ)
2,000 (TSR)
4,000 (TXM)
1995 $134,000 $65,000 1,650 (TMO) $7,517
5,000 (TLZ)
- ----------------------------------------------------------------------------------------------------------
Donald W. Hanna 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)
1995 $95,000 $18,000 -- $7,461
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) In addition to receiving options to purchase Common Stock (designated in
the table as TBA), executive officers of the Corporation have been granted
options to purchase common stock of Thermo Electron and certain of Thermo
Electron's other subsidiaries as part of Thermo Electron's stock option
program. Options have been granted during the last three fiscal years to
the named executive officers in the following
7
<PAGE>
Thermo Electron companies: Thermo Electron (designated in the table as
TMO), Thermo Fibergen Inc. (designated in the table as TFG), ThermoLase
Corporation (designated in the table as TLZ), ThermoLyte Corporation
(designated in the table as TLT), Thermo Optek Corporation (designated in
the table as TOC), ThermoQuest Corporation (designated in the table as
TMQ), Thermo Sentron Inc. (designated in the table as TSR) and Trex Medical
Corporation (designated in the table as TXM).
(2) Represents the amount of matching contributions made on behalf of the named
executive officer by the individual's employer pursuant to the Thermo
Electron 401(k) plan.
(3) Mr. Howe resigned as president and chief executive officer of the
Corporation 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.
(4) 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 Corporation's stock holding assistance
plan. See "Relationship with Affiliates - Stock Holding Assistance Plan."
STOCK OPTIONS GRANTED DURING FISCAL 1997
The following table sets forth information concerning individual grants of
stock options made during fiscal 1997 to the Corporation's then chief executive
officer and the other named executive officer. It has not been the
Corporation's policy in the past to grant stock appreciation rights, and no such
rights were granted during fiscal 1997.
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1997
- -----------------------------------------------------------------------------------------------------------------
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>
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. For publicly traded companies,
the repurchase rights generally lapse ratably over a five- to ten-year
period, depending on the option term, which may vary from seven to twelve
years, provided that the optionee continues to be employed by the granting
corporation or another Thermo Electron company. For companies that are not
publicly traded, the repurchase rights lapse in their entirety on the ninth
anniversary of the grant date. Certain options granted as a part of Thermo
Electron's stock option program have three-year terms, and the repurchase
rights lapse in their entirety on the second anniversary of the grant date.
The granting corporation may permit the holders of options to exercise
options and satisfy tax withholding obligations by surrendering shares
equal in fair market value to the exercise price or withholding obligation.
(2) The amounts shown 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
8
<PAGE>
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 Corporation and accordingly are reported
as a percentage of total options granted to employees of Thermo Electron
and its subsidiaries.
STOCK OPTIONS EXERCISED DURING FISCAL 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 Corporation's then chief executive officer and the other
named executive officers. No stock appreciation rights were exercised or were
outstanding during fiscal 1997.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FISCAL 1997 YEAR-END OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------
NUMBER OF
UNEXERCISED
OPTIONS AT FISCAL VALUE OF
SHARES YEAR-END UNEXERCISED
ACQUIRED ON VALUE (EXERCISABLE/ IN-THE-MONEY
NAME COMPANY EXERCISE REALIZED (1) UNEXERCISABLE) (2) OPTIONS
- ---- ------- ---------- ------------ ------------------ ------------
<S> <C> <C> <C> <C> <C>
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
9
<PAGE>
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, the
repurchase rights lapse in their entirety on the ninth anniversary of the
grant date. Certain options 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.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
All decisions on compensation for the Corporation's executive officers are
made by the human resources committee of the board of directors (the
"Committee"). In reviewing and establishing total cash compensation and stock-
based compensation for executives, the Committee follows guidelines established
by the human resources committees of the board of directors of its parent
companies, Thermo Electron and Thermo Instrument. The executive compensation
program presently consists of annual base salary ("salary"), short-term
incentives in the form of annual cash bonuses, and long-term incentives in the
form of stock options (collectively referred to as "total compensation").
The Committee believes that the total compensation of executive officers
should reflect the scope of their responsibilities, the success of the
Corporation, and the contributions of each executive to that success. In
addition, the Committee believes that base salaries should approximate the mid-
point of competitive salaries derived from market surveys and that short-term
and long-term incentive compensation should reflect the performance of the
Corporation and the contributions of each executive.
ESTABLISHING COMPETITIVENESS
External competitiveness is an important element of the Committee's
compensation policy. The competitiveness of the Corporation's total compensation
for its executives is assessed by comparing it to market data provided by
compensation consultants and by participating in annual executive compensation
surveys, primarily "Project 777," an executive compensation survey prepared by
Management Compensation Services, a division of Hewitt Associates. The majority
of firms represented in the Project 777 survey are included in the Standard &
Poor's 500 Index, but do not necessarily correspond to the companies included in
the Corporation's peer group index, the Dow Jones Total Return Index for the
Diversified Technology Industry Group.
10
<PAGE>
Principles of internal equity are also central to the Committee's
compensation policies. Total compensation considered for the Corporation's
officers, whether cash or stock-based incentives, is also evaluated by comparing
it to total compensation of other executives within the Thermo Electron
organization with comparable levels of responsibility for comparably sized
business units.
The process for determining each of these elements for the Corporation's
executive officers is outlined below. For its review of the compensation of
the other officers of the Corporation, the Committee follows a substantially
similar process.
BASE SALARY
Base salaries are intended to approximate the mid-point of competitive
salaries for similar organizations of comparable size and complexity to the
Corporation. Executive salaries are adjusted gradually over time and only as
necessary to meet this objective. Increases in base salary may be moderated by
other considerations, such as geographic or regional market data, industry
trends or internal fairness within the Corporation and Thermo Electron. It is
the Committee's intention that over time the base salaries for the chief
executive officer and the other named executive officers will approximate the
mid-point of competitive data. The salary increases in 1997 for the chief
executive officer and the other named executive officers generally reflect this
practice of gradual increases and moderation.
CASH BONUS
The Committee establishes a median potential bonus for each executive by
using the market data on total cash compensation from the same executive
compensation surveys as used to determine salaries. Specifically, the median
potential bonus plus the salary of an executive officer is approximately equal
to the mid-point of competitive total cash compensation for a similar position
and level of responsibility in businesses having comparable sales and complexity
to the Corporation. The actual bonus awarded to an executive officer may range
from zero to three times the median potential bonus. The value within the range
(the bonus multiplier) is determined at the end of each year by the Committee in
its discretion. The Committee exercises its discretion by evaluating each
executive's performance using a methodology developed by its parent company,
Thermo Electron, and applied throughout the Thermo Electron organization. The
methodology incorporates measures of operating returns which are designed to
measure profitability and contributions to shareholder value, and are measures
of corporate and divisional performance that are evaluated using graphs
developed by Thermo Electron intended to reward performance that is perceived as
above average and to penalize performance that is perceived as below average.
The measures of operating returns used in the Committee's determinations in
fiscal 1997 measured return on net assets, growth in income and return on sales,
and the Committee's determinations also included a subjective evaluation of the
contributions of each executive that are not captured by operating measures but
are considered important to the creation of long-term value for the
Stockholders. These measures of achievements are not financial targets that are
met, not met or exceeded. The relative weighting of the operating measures and
the subjective evaluation varies among the executives, depending on their roles
and responsibilities within the organization.
The bonuses for named executive officers approved by the Committee with
respect to fiscal 1997 performance in each instance exceeded the median
potential bonus.
STOCK OPTION PROGRAM
The primary goal of the Corporation and its parent companies is to excel in
the creation of long-term value for the Stockholders. The principal incentive
tool used to achieve this goal is the periodic award to key employees of options
to purchase common stock of the Corporation and other Thermo Electron companies.
The Committee and management believe that awards of stock options to
purchase the shares of both the Corporation and other companies within the
Thermo Electron group of companies accomplish many objectives. The grant of
options to key employees encourages equity ownership in the Corporation, and
closely aligns management's interests to the interests of all the Stockholders.
The emphasis on stock options also results in management's compensation being
closely linked to stock performance. In addition, because they are subject to
vesting periods of varying durations and to forfeiture if the employee leaves
the Corporation prematurely, stock options are an incentive for key employees to
remain with the Corporation long-term. The Committee believes stock
11
<PAGE>
option awards in its parent companies, Thermo Electron and Thermo Instrument,
and the other majority-owned subsidiaries of Thermo Electron and Thermo
Instrument, are an important tool in providing incentives for performance within
the entire organization.
In determining awards, the Committee considers for each officer the annual
value of all options to purchase shares of the Corporation and other companies
within the Thermo Electron organization that vest in the next year and compares
the individual's total compensation using this value to competitive data. The
Committee uses a modified Black-Scholes option pricing model to determine the
value of an option award. In addition, the Committee considers the aggregate
amount of net awards to purchase shares of Common Stock granted to all employees
over the last five years to monitor the number of aggregate awards to all
employees. In reviewing the aggregate number of awards, the Committee considers
such factors as the size of the company, its stage of development, and its
growth strategy, as well as the aggregate awards and option practices of
comparably situated companies.
The Committee periodically awards options based on its assessment of the
total compensation of each executive, the actual and anticipated contributions
of each executive (which includes a subjective assessment by the Committee of
the value of the executive's future potential within the organization), as well
as the value of previously awarded options, as described above. The option
awards made to the named executive officers in 1997 with respect to the common
stock of Thermo Electron was made under a program that awards options to certain
eligible employees annually based on the number of shares of the common stock of
Thermo Electron held by the employees, as an incentive to buy and hold Thermo
Electron shares.
STOCK OWNERSHIP POLICIES
The Committee established a stock holding policy for executive officers of
the Corporation in 1996 that required executive officers to own a multiple of
their compensation in shares of the Corporation'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 Corporation
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. During 1996, Mr. Howe,
then the Corporation's chief executive officer, received loans in the principal
amounts of $164,375.52 under this plan, of which amount $130,500.42 was
outstanding as of April 23, 1998. 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 Corporation's Common Stock acquired upon the exercise of
stock options granted by the Corporation. 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.
POLICY ON DEDUCTIBILITY OF COMPENSATION
The Committee has also considered the application of Section 162(m) of the
Internal Revenue Code to the Corporation's compensation practices. Section
162(m) limits the tax deduction available to public companies for annual
compensation paid to senior executives in excess of $1 million unless the
compensation qualifies as "performance-based" or is otherwise exempt under
Section 162(m). The annual compensation paid to individual executives does not
approach the $1 million threshold, and it is believed that stock incentive plans
of the Corporation qualify as "performance-based." Therefore, the Committee does
not believe any further action is
12
<PAGE>
necessary in order to comply with Section 162(m). From time to time, the
Committee will reexamine the Corporation's compensation practices and the effect
of Section 162(m).
1997 CEO COMPENSATION
The salary and bonus of Mr. Howe, who served as the Corporation's chief
executive officer in fiscal 1997, were established using the same criteria as
for the salaries and bonuses for the Corporation's other named executive
officers. In determining Mr. Howe's compensation as reported, the Committee
considered as part of its subjective evaluation, among other things, his
leadership and general management of the Corporation.
No award of options to purchase shares of the Common Stock was made by the
committee to Mr. Howe in fiscal 1997. In addition to stock option awards by the
Committee, Mr. Howe was also eligible to receive awards to purchase shares of
the common stock of majority-owned subsidiaries of Thermo Electron from time to
time as part of Thermo Electron's stock option program due to his position as a
chief executive officer of a majority-owned subsidiary of Thermo Electron. No
stock option awards were made to Mr. Howe in fiscal 1997 under this stock option
program. The award to purchase shares of common stock of Thermo Electron
granted to Mr. Howe in fiscal 1997 was made by the Thermo Electron human
resources committee under a program which awards options to certain eligible
employees annually based on the number of shares of the common stock of Thermo
Electron held by the employee, as an incentive to buy and hold Thermo Electron
shares.
Elias P. Gyftopoulos (Chairman)
Arnold N. Weinberg
13
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Corporation
include in this proxy statement a line-graph presentation comparing cumulative,
five-year shareholder returns for the Corporation's Common Stock with a broad-
based market index and either a nationally recognized industry standard or an
index of peer companies selected by the Corporation. The Corporation's Common
Stock has been publicly traded only since September 18, 1996 and, as a result,
the following graph commences as of such date. The Corporation has compared its
performance with the American Stock Exchange Market Value Index and the Dow
Jones Total Return Index for the Diversified Technology Industry Group as of the
last trading day of the Corporation's fiscal year.
COMPARISON OF TOTAL RETURN AMONG THERMO BIOANALYSIS CORPORATION,
THE AMERICAN STOCK EXCHANGE MARKET VALUE INDEX
AND THE DOW JONES TOTAL RETURN INDEX
FOR THE DIVERSIFIED TECHNOLOGY INDUSTRY GROUP FROM
SEPTEMBER 18, 1996 TO JANUARY 2, 1998
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
-----------------------------------------------
9/18/96 12/27/96 1/2/98
-----------------------------------------------
<S> <C> <C> <C>
TBA 100 94 139
-----------------------------------------------
AMEX 100 103 124
-----------------------------------------------
DJ DTC 100 115 131
-----------------------------------------------
</TABLE>
The total return for the Corporation's Common Stock (TBA), the American
Stock Exchange Market Value Index (AMEX) and the Dow Jones Total Return Index
for the Diversified Technology Industry Group (DJ DTC) assumes the reinvestment
of dividends, although dividends have not been declared on the Corporation's
Common Stock. The American Stock Exchange Market Value Index tracks the
aggregate performance of equity securities of companies listed on the American
Stock Exchange. The Corporation's Common Stock is traded on the American Stock
Exchange under the ticker symbol "TBA."
RELATIONSHIP WITH AFFILIATES
Thermo Electron has adopted a strategy of selling a minority interest in
subsidiary companies to outside investors as an important tool in its future
development. As part of this strategy, Thermo Electron and certain of its
subsidiaries have created several privately and publicly held subsidiaries, and
Thermo Instrument has created the Corporation and other subsidiaries as publicly
held, majority-owned subsidiaries and privately held majority-owned
subsidiaries. From time to time, Thermo Electron and its subsidiaries will
create other majority-owned subsidiaries as part of its spinout strategy. (The
Corporation and such other majority-owned Thermo Electron subsidiaries are
hereinafter referred to as the "Thermo Subsidiaries.")
Thermo Electron and each of the Thermo Subsidiaries recognize that the
benefits and support that derive from their affiliation are essential elements
of their individual performance. Accordingly, Thermo Electron and each of the
Thermo Subsidiaries, including the Corporation, have adopted the Thermo Electron
Corporate Charter (the "Charter") to define the relationships and delineate the
nature of such cooperation among themselves. The purpose
14
<PAGE>
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 all covenants imposed by external
financing sources, including covenants related to borrowings of Thermo Electron
or other members of the Thermo Group, and for apportioning such constraints
within the Thermo Group. In addition, Thermo Electron establishes certain
internal policies and procedures applicable to members of the Thermo Group. The
cost of the services provided by Thermo Electron to the Thermo Subsidiaries is
covered under existing corporate services agreements between Thermo Electron and
each of the Thermo Subsidiaries.
The Charter presently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Corporation, can withdraw from participation in the Charter upon
30 days' prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement and tax allocation
agreement (if any) in effect between the withdrawing company and Thermo
Electron. The withdrawal from participation does not terminate outstanding
commitments to third parties made by the withdrawing company, or by Thermo
Electron or other members of the Thermo Group, prior to the withdrawal. 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.
As provided in the Charter, the Corporation and Thermo Electron have
entered into a Corporate Services Agreement (the "Services Agreement") under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management, employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and financial and other services to the Corporation. The
Corporation was assessed an annual fee equal to 1.0%, of the Corporation's
revenues for these services in fiscal 1996 and 1997. The annual fee has been
reduced to 0.8% of the Corporation's total revenues for fiscal 1998. The fee is
reviewed annually and may be changed by mutual agreement of the Corporation and
Thermo Electron. During fiscal 1997, Thermo Electron assessed the Corporation
$1,395,000 in fees under the Services Agreement. Management believes that the
charges under the Services Agreement are reasonable and that the terms of the
Services Agreement are fair to the Corporation. For items such as employee
benefit plans, insurance coverage and other identifiable costs, Thermo Electron
charges the Corporation based on charges attributable to the Corporation. The
Services Agreement automatically renews for successive one-year terms, unless
canceled by the Corporation upon 30 days' prior notice. In addition, the
Services Agreement terminates automatically in the event the Corporation ceases
to be a member of the Thermo Group or ceases to be a participant in the Charter.
In the event of a termination of the Services Agreement, the Corporation will be
required to pay a termination fee equal to the fee that was paid by the
Corporation for services under the Services Agreement for the nine-month period
prior to termination. Following termination, Thermo Electron may provide certain
administrative services on an as-requested basis by the Corporation or as
required in order to meet the Corporation's obligations under Thermo Electron's
policies and procedures. Thermo Electron will charge the Corporation a fee equal
to the market rate for comparable services if such services are provided to the
Corporation following termination.
15
<PAGE>
From time to time, the Corporation may transact business with other
companies in the Thermo Group.
Effective March 1997, the Corporation acquired the Biosystems Group of Life
Sciences International ("LSI"), a wholly owned subsidiary of 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
Corporation'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 debt to Thermo Instrument of $50,000,000.
The debt to Thermo Instrument 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 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.
Effective March 1997, the Corporation also acquired the Labsystems Japan
business of LSI from Thermo Instrument. The aggregate purchase price was
approximately $1,500,000 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.
In April 1998, the Corporation announced its intention to acquire the
Clinical Products Group of LSI from Thermo Instrument. The acquisition will be
effected through the issuance of shares of the Corporation's Common Stock to
Thermo Instrument and the assumption of debt. The purchase price will be
approximately $95 million, net of cash acquired. The closing of this
transaction is conditioned upon the receipt by the Corporation of shareholder
approval to issue its shares in the transaction. Due to the Corporation's
majority ownership by Thermo Instrument, the outcome of this vote is assured,
and accordingly, for accounting purposes this acquisition will be deemed
effective March 1997 when Thermo Instrument acquired LSI. The purchase price
represents the sum of (i) the net book value of the Clinical Products 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 Clinical Products Group relative to LSI's 1996 consolidated
revenues.
In April 1998, the Corporation announced its intention to form a health
physics joint venture with Thermo Instrument. The Corporation will contribute
its wholly owned Eberline health physics business, located in Santa Fe, New
Mexico, to the joint venture, and Thermo Instrument will contribute its wholly
owned Eberline Measurements and National Nuclear Corporation businesses, located
in Germany and Sunnyvale, California, respectively, along with $13 million in
cash. The joint venture will provide instruments for the detection and
monitoring of low-level radiation to ensure personal and environmental
protection at a range of government, medical and industrial facilities.
The Corporation has entered into a lease and services arrangement with
ThermoQuest under which ThermoQuest leases approximately 15,000 square feet of
space, and provides certain accounting and administrative services, to the
Corporation. The Corporation pays ThermoQuest rent in the amount of 3 British
Pounds Sterling per square foot and an allocated portion of ThermoQuest's costs
for providing such services. This arrangement may be terminated by the
Corporation or by ThermoQuest upon 30 days' prior notice. For the fiscal year
ended January 3, 1998, the Corporation paid ThermoQuest approximately $74,250
under this arrangement.
ThermoQuest acts as a distributor of certain of the Corporation's products,
is the exclusive distributor of the Corporation's MALDI-TOF products in Japan
and is the exclusive distributor of the Corporation'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. For the fiscal year ended January 3, 1998, the
Corporation sold $1,447,905 of products to ThermoQuest under these arrangements.
The Corporation has entered into an arrangement with ThermoQuest whereby
ThermoQuest provides assembly labor for the Corporation's CE products on a
contract basis. Under this arrangement, ThermoQuest
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assembles instruments as required by the Corporation for a charge based on the
sum of ThermoQuest's actual cost of materials and the allocable portion of its
labor, overhead and other indirect expenses. For the fiscal year ended January
3, 1998, the Corporation paid ThermoQuest approximately $631,655 under this
arrangement.
The Corporation's Eberline health physics subsidiary purchases certain
controllers and detectors from Thermo Instrument under an original equipment
manufacturer agreement. Under this agreement, the Corporation has the
exclusive right to sell these instruments in the United States, Canada and
Mexico. The Corporation is responsible for all warranty repair and maintenance
obligations at its expense, but obtains replacement parts from Thermo Instrument
without charge. For the fiscal year ended January 3, 1998, the Corporation
purchased $193,207 of instruments from Thermo Instrument under this agreement.
The Corporation'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. For
the fiscal year ended January 3, 1998, the Corporation purchased $178,740 of
instruments from Thermo Instrument under this arrangement.
The Corporation'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. For the
fiscal year ended January 3, 1998, the Corporation sold $620,000 of such
products to Thermo Remediation under this arrangement. The Corporation 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
Corporation's LabSystems and Affinity Sensors products under informal
arrangements. Under such arrangements, the respective Thermo Instrument
companies are generally responsible for warranty repair and maintenance
obligations. For the fiscal year ended January 3, 1998, LabSystems and
Affinity Sensors sold an aggregate of $1,835,708 of products to Thermo
Instrument companies under these arrangements.
Various Thermo Instrument companies act as distributors of certain products
of the Corporation's, Labsytems OY and Hybaid Limited subsidiaries under
informal distribution agreements. For the fiscal year ended January 3, 1998,
Labsystems OY and Hybaid Limited sold an aggregate of approximately $9,929,828
of products to Thermo Instrument companies under these arrangements.
In July 1996, the Corporation borrowed $50,000,000 from Thermo Instrument
pursuant to a subordinated convertible note, due in 2001, convertible into
shares of Common Stock at $16.50 per share, and bearing interest at an annual
rate of 4.875%. The Corporation also has $50,000,000 of debt to Thermo
Instrument, associated with the purchase of Labsystems OY and Hybaid Limited
from Thermo Instrument. Such debt bears interest at the 90-day commercial paper
composite rate plus 25 basis points, set at the beginning of each quarter.
The Corporation, 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 January
3, 1998, the Corporation had a negative cash balance of approximately
$2,464,607, based on an exchange rate of $1.65/(Pounds) 1.00 as of January 3,
1998. For 1997, the average annual interest rate earned on GBP 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 January 3, 1998, the Corporation owed Thermo Electron and its other
subsidiaries an aggregate of $4,315,000 for amounts due under the Corporate
Services Agreement and related administrative charges, for other products and
services and for miscellaneous items, net of amounts owed to the Corporation by
Thermo Electron and its other subsidiaries for products, services and for
miscellaneous items. The largest amount of net indebtedness
17
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owed by the Corporation to Thermo Electron and its other subsidiaries since
December 29, 1996 was $4,502,000. These amounts do not bear interest and are
expected to be paid in the normal course of business.
As of January 3, 1998, $10,158,000 of the Corporation's cash equivalents
were invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Corporation in effect lends excess cash to Thermo Electron, which
Thermo Electron collateralizes with investments principally consisting of
corporate notes, U.S. government agency securities, money market funds,
commercial paper and other marketable securities, in the amount of at least 103%
of such obligation. The Corporation's funds subject to the repurchase agreement
will be readily convertible into cash by the Corporation and have an original
maturity of three months or less. The repurchase agreement earns a rate based
on the 90-day Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter.
STOCK HOLDING ASSISTANCE PLAN
In 1996, the Corporation 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 Corporation 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 Corporation's chief executive
officer, received loans in the aggregate principal amount of $164,375.52 under
this plan to purchase 12,000 shares, of which amount $130,500.42 was outstanding
as of the date of April 23, 1998. 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 Corporation's board
of directors. No new loans were made under this plan in fiscal 1997. This policy
and plan were amended in 1998 to apply only to the chief executive officer of
the Corporation in the future.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1998. Arthur Andersen LLP has acted as independent
public accountants for the Corporation since its inception in 1995.
Representatives of that firm are expected to be present at the Meeting, will
have the opportunity to make a statement if they desire to do so and will be
available to respond to questions. The board of directors has established an
audit committee, presently consisting of two outside directors, the purpose of
which is to review the scope and results of the audit.
OTHER ACTION
Management is not aware at this time of any other matters that will be
presented for action at the Meeting. Should any such matters be presented, the
proxies grant power to the proxy holders to vote shares represented by the
proxies in the discretion of such proxy holders.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the 1999 Annual
Meeting of the Stockholders of the Corporation must be received by the
Corporation for inclusion in the proxy statement and form of proxy relating to
that meeting no later than December 29, 1998.
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SOLICITATION STATEMENT
The cost of this solicitation of proxies will be borne by the Corporation.
Solicitation will be made primarily by mail, but regular employees of the
Corporation may solicit proxies personally or by telephone, facsimile
transmission or telegram. Brokers, nominees, custodians and fiduciaries are
requested to forward solicitation materials to obtain voting instructions from
beneficial owners of stock registered in their names, and the Corporation will
reimburse such parties for their reasonable charges and expenses in connection
therewith.
Santa Fe, New Mexico
April 23, 1998
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FORM OF PROXY
THERMO BIOANALYSIS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 1, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints John N. Hatsopoulos, Colin Maddix and
Melissa F. Riordan, or any one of them in the absence of the others, as
attorneys and proxies of the undersigned, with full power of substitution, for
and in the name of the undersigned, to represent the undersigned at the Annual
Meeting of the Stockholders of Thermo BioAnalysis Corporation, a Delaware
corporation (the "Company"), to be held on Monday, June 1, 1998, at 9:00 a.m. at
The Hyatt Regency Scottsdale Resort at Gainey Ranch, Scottsdale, Arizona, and at
any adjournment or postponement thereof, and to vote all shares of common stock
of the Company standing in the name of the undersigned on April 3, 1998, with
all of the powers the undersigned would possess if personally present at such
meeting:
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
<PAGE>
Please mark your
[x] votes as in this
example.
1. ELECTION OF DIRECTORS OF THE COMPANY (see reverse).
FOR [_] WITHHELD [_]
______________________________________
FOR all nominees listed at right, except authority to vote withheld for the
following nominees (if any)
NOMINEES: Elias P. Gyftopoulos, Barry S. Howe, Earl R. Lewis, Colin Maddix,
Jonathan W. Painter, Arvin H. Smith and Arnold E. Weinberg.
2. In their discretion on such other matters as may properly come before the
Meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS SET FORTH
ABOVE IF NO INSTRUCTION TO THE CONTRARY IS INDICATED OR IF NO INSTRUCTION IS
GIVEN.
Copies of the Notice of Meeting and of the Proxy Statement have been received
by the undersigned.
SIGNATURE(S)_______________________________________ DATE_________________
NOTE: This proxy should be dated, signed by the shareholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.
