<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[_] 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, if other than the Registrant)
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:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[THERMO BIOANALYSIS LOGO APPEARS HERE]
504 Airport Road
Santa Fe, New Mexico 87504-2108
April 16, 1999
Dear Stockholder:
The enclosed Notice calls the 1999 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 2, 1999 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 LOGO APPEARS HERE]
504 Airport Road
Santa Fe, New Mexico 87504-2108
April 16, 1999
To the Holders of the Common Stock of
THERMO BIOANALYSIS CORPORATION
NOTICE OF ANNUAL MEETING
The 1999 Annual Meeting of the Stockholders of Thermo BioAnalysis
Corporation (the "Corporation") will be held on Thursday, May, 27, 1999, at
11:00 a.m. at The Westin Hotel, 70 Third Avenue, Waltham, Massachusetts.
The purpose of the meeting is to consider and take action upon the following
matters:
1. Election of five 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 March 30, 1999.
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 1999 Annual Meeting
of the Stockholders to be held on Thursday, May 27, 1999, at 11:00 a.m. at The
Westin Hotel, 70 Third Avenue, Waltham, Massachusetts, 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 19, 1999.
VOTING PROCEDURES
The board of directors intends to present to the meeting the election of
five directors, constituting the entire board of directors.
The representation in person or by proxy of a majority of the outstanding
shares of common stock, $.01 par value, of the Corporation ("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. Votes of
Stockholders of record who are present at the meeting in person or by proxy,
abstentions and broker non-votes (as defined below) are counted as present or
represented at the meeting for purposes of determining whether a quorum exists.
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.
Nominees for election as directors at the meeting will be elected by a
plurality of the votes of the shares present in person or represented by proxy
at the meeting. If you hold your shares of Common Stock through a broker, bank
or other nominee, generally the nominee may only vote the Common Stock that it
holds for you in accordance with your instructions. However, if it has not
timely received your instructions, the nominee may vote on certain matters for
which it has discretionary voting authority. If a nominee cannot vote on a
particular matter because it does not have discretionary voting authority, this
is a "broker non-vote" on that matter. With respect to the election of
directors, broker non-votes and withholdings of authority to vote will have no
effect on the outcome of the vote.
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 March 30, 1999 consisted of
17,562,976 shares of Common Stock. Only Stockholders of record at the close of
business on March 30, 1999, are entitled to vote at the meeting. Each share is
entitled to one vote.
- PROPOSAL 1 -
ELECTION OF DIRECTORS
Five directors are to be elected at the meeting, each to hold office until
his successor is elected and qualified or until his earlier resignation, death
or removal.
1
<PAGE>
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 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 measurement and detection
instruments, and Thermo Instrument's parent company, Thermo Electron Corporation
("Thermo Electron"), a provider of products and services in measurement
instrumentation, biomedical devices, energy, resource recovery, and emerging
technologies, is reported under the caption "Stock Ownership." All of the
nominees are currently directors of the Corporation.
- --------------------------------------------------------------------------------
Elias P. Gyftopoulos Dr. Gyftopoulos, 71, 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 Cardiosystems Inc., Thermo Electron,
ThermoLase Corporation, ThermoRetec Corporation,
ThermoSpectra Corporation, Thermo Vision Corporation
and Trex Medical Corporation.
- --------------------------------------------------------------------------------
Earl R. Lewis Mr. Lewis, 55, 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, and was chief operating
officer of Thermo Instrument from January 1996 to
January 1998. Prior to that time, he was executive
vice president of Thermo Instrument from January 1996
to March 1997, senior vice president of Thermo
Instrument from January 1994 to January 1996 and vice
president of Thermo Instrument from March 1992 to
January 1994. Mr. Lewis has been chief operating
officer, measurement and detection, of Thermo Electron
since September 1998. Prior to his appointment as
chief operating officer, Mr. Lewis served as senior
vice president of Thermo Electron from June 1998 to
September 1998 and vice president from September 1996
to June 1998. Mr. Lewis served as chief executive
officer of Thermo Optek Corporation, a majority owned
subsidiary of Thermo Instrument and a manufacturer of
analytical instruments that measure energy and light
for purposes of materials analysis, characterization
and preparation, from its inception in August 1995 to
January 1998, and served as 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., SpectRx Inc., Thermo Instrument, Thermo Optek
Corporation, ThermoQuest Corporation, ThermoSpectra
Corporation and Thermo Vision Corporation.
- --------------------------------------------------------------------------------
Colin Maddix Mr. Maddix, 53, has been a director of the
Corporation, as well as its president and chief
executive officer, since March 1998. Since 1996,
Mr. Maddix also 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 the
Corporation from Thermo Instrument effective March
1997. Mr. Maddix also 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
manufacturer of scientific instruments and consumables
with scientific, clinical, educational, occupational
health and safety applications.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
Jonathan W. Painter Mr. Painter, 40, 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 served as director
of strategic planning of Thermo Fibertek Inc. from
February 1993 through August 1994. For more than five
years 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.
- --------------------------------------------------------------------------------
Arnold N. Weinberg Dr. Weinberg, 69, has been a director of the
Corporation since November 1995. He has been Professor
of Medicine at the Harvard Medical School and Medical
Director of the Medical Department of the
Massachusetts Institute of Technology for more than
five years.
- --------------------------------------------------------------------------------
Committees of the Board of Directors and Meetings
The board of directors has established an audit committee and a human
resources committee, each consisting solely of 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"). The present members
of the audit committee are Dr. Weinberg (Chairman) and Dr. Gyftopoulos. 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 six times, the audit committee met twice and the human resources committee
met seven times during fiscal 1998. Each director attended at least 75% of all
meetings of the board of directors and committees on which he served that were
held during fiscal 1998, except Mr. Painter who attended 50% of such meetings.
Compensation of Directors
Cash Compensation
Outside directors receive an annual retainer of $2,000 and a fee of $1,000
per meeting for attending regular meetings of the board of directors and $500
per meeting 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. Lewis, Maddix, and Painter are all employees of Thermo
Electron companies and do not receive any cash compensation from the Corporation
for their services as directors. Directors are also reimbursed for out-of-
pocket expenses incurred in attending such meetings.
Deferred Compensation Plan
Under the Corporation's deferred compensation plan for directors (the
"Deferred Compensation Plan"), a director has the right to defer receipt of his
or her cash fees until he or she ceases to serve as a director, dies or retires
from his or her principal occupation. In the event of a change of control or
proposed change of 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 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 has been
3
<PAGE>
reserved for issuance under the Deferred Compensation Plan. As of January 2,
1999, deferred units equal to approximately 1,502 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, the annual award of options to
purchase 1,000 shares. A total of 100,000 shares of Common Stock has 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 January 31, 1999, 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.
Stock Ownership Policies for Directors
The human resources committee of the board of directors (the "Committee")
has 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 within a three-year period.
The chief executive officer of the Corporation is required to comply with a
separate stock holding policy established by the Committee, which is described
in "Committee Report on Executive Compensation - Stock Ownership Policies."
In addition, the Committee has a policy requiring directors to hold shares
of 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."
4
<PAGE>
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 January 31,
1999, with respect to (i) each director, (ii) each executive officer named in
the summary compensation table set forth below under the heading "Executive
Compensation" (the "named executive officers") 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 January 31, 1999 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 Thermo Thermo
BioAnalysis Instrument Electron
Name (1) Corporation (2) Systems Inc. (3) Corporation (4)
-------- --------------- ---------------- ---------------
<S> <C> <C> <C>
Thermo Electron Corporation (5)............ 17,754,619 N/A N/A
Elias P. Gyftopoulos....................... 16,019 57,743 71,856
Donald W. Hanna............................ 25,000 21,557 22,545
Barry S. Howe.............................. 64,900 138,389 75,570
Earl R. Lewis.............................. 72,500 338,250 204,878
Colin Maddix............................... 100,000 55,000 9,700
Jonathan W. Painter........................ 15,000 7,227 29,437
Arnold N. Weinberg......................... 16,483 0 0
All directors and current executive
officers as a group (9 persons) ......... 270,002 520,306 847,871
</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 Common Stock beneficially owned by Dr. Gyftopoulos, Mr. Hanna,
Mr. Howe, Mr. Lewis, Mr. Maddix, Mr. Painter, Dr. Weinberg and all
directors and current executive officers as a group include 15,000, 25,000,
50,000, 50,000, 95,000, 15,000, 15,000 and 311,000 shares, respectively,
that such person or group had the right to acquire within 60 days of
January 31, 1999, through the exercise of stock options. Shares of Common
Stock beneficially owned by Dr. Gyftopoulos, Dr. Weinberg and all directors
and current executive officers as a group include 19, 1,483 and 1,502
shares allocated through January 2, 1999, to accounts maintained under the
Deferred Compensation Plan. Shares of Common Stock beneficially owned by
Mr. Howe include 600 shares held in custodial accounts for the benefit of
two minor children. Shares of Common Stock beneficially owned by Mr. Lewis
include 1,000 shares held by his spouse. No director or named executive
officer beneficially owned more than 1% of the Common Stock outstanding as
of January 31, 1999; all directors and current executive officers as a
group beneficially owned 2.05% of the Common Stock outstanding as of such
date.
(3) Shares of the common stock of Thermo Instrument beneficially owned by
Dr. Gyftopoulos, Mr. Hanna, Mr. Howe, Mr. Lewis, Mr. Maddix, Mr. Painter
and all directors and current executive officers as a group include 12,648,
20,750, 113,750, 322,085, 55,000, 7,031 and 586,340 shares, respectively,
that such person or group had the right to acquire within 60 days of
January 31, 1999, through the exercise of stock options. Shares of the
common stock of Thermo Instrument beneficially owned by Mr. Painter and all
directors and current executive officers as a group include 196 and 1,159
shares, respectively, allocated through January 31, 1999, to their
respective accounts maintained pursuant to Thermo Electron's employee stock
ownership
5
<PAGE>
plan (the "ESOP"), of which the trustees, who have investment power over
its assets, are executive officers of Thermo Electron. Shares of the common
stock of Thermo Instrument beneficially owned by Mr. Howe include
374 shares held in custodial accounts for the benefit of two minor
children. Shares of the common stock of Thermo Instrument beneficially
owned by Mr. Lewis include 2,987 shares held by his spouse. No director or
named executive officer beneficially owned more than 1% of the common stock
of Thermo Instrument outstanding as of January 31, 1999; 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. Maddix, Mr. Painter
and all directors and current executive officers as a group include 9,125,
20,298, 69,787, 202,350, 7,200, 23,675 and 795,207 shares, respectively,
that such person or group had the right to acquire within 60 days of
January 31, 1999, through the exercise of stock options. Shares of the
common stock of Thermo Electron beneficially owned by Mr. Painter and all
directors and current executive officers as a group include 590 and 3,087
shares, respectively, allocated through January 31, 1999, to accounts
maintained pursuant to the ESOP. Shares of the common stock of Thermo
Electron beneficially owned by Dr. Gyftopoulos and all directors and
current executive officers as a group include 152 shares allocated through
January 2, 1999 to Dr. Gyftopoulos' account maintained pursuant to Thermo
Electron's deferred compensation plan for directors. No director or named
executive officer beneficially owned more than 1% of the common stock of
Thermo Electron outstanding as of January 31, 1999; all directors and
current executive officers as a group beneficially owned less than 1% of
the common stock of Thermo Electron outstanding as of such date.
(5) Includes 3,030,303 shares of Common Stock that Thermo Electron, through its
majority-owned subsidiary Thermo Instrument, had the right to acquire
within 60 days of January 31, 1999, through the conversion of a convertible
note of the Corporation issued to Thermo Instrument in July 1996. As of
January 31, 1999, Thermo Electron, primarily through its majority-owned
subsidiary Thermo Instrument, beneficially owned 89.52% of the outstanding
Common Stock. Thermo Electron's address is 81 Wyman Street, Waltham,
Massachusetts 02454-9046. As of January 31, 1999, Thermo Electron had the
power to elect all of the members of the Corporation's board of directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), 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 1998, except
in the following instances. Thermo Electron filed six Form 4s late, reporting a
total of 80 transactions, including 64 open market purchases of Common Stock and
16 transactions associated with the grant, exercise and lapse of options to
purchase Common Stock granted to employees under its stock option program.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation during the last three fiscal
years for services to the Corporation in all capacities awarded to, earned by or
paid to the Corporation's current chief executive officer, former chief
executive officer and one other executive officer. These executive officers are
collectively referred to as the "named executive officers." 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
6
<PAGE>
Agreement between the Corporation and Thermo Electron. See "Relationship with
Affiliates." Accordingly, the compensation for these individuals is not reported
in the following table.
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 (3) 1998 $150,000 $ 80,000 95,000(TBA) $ 2,363 (4)
President and 7,200(TMO)
Chief Executive Officer 15,000(THI)
- -----------------------------------------------------------------------------------------------------------------
Donald W. Hanna (5) 1998 $109,000 $ 30,450 4,000(TBA) $ 6,194
Former Vice President 1,900(TMO)
2,000(THI)
1997 $105,000 $ 23,000 400(TMO) $ 5,677
1996 $100,000 $ 19,500 21,000(TBA) $ 5,310
7,500(TOC)
5,000(TMQ)
- -----------------------------------------------------------------------------------------------------------------
Barry S. Howe (6) 1998 $ 75,075 $ 0 1,100(TMO) $11,003 (7)
Former President and 7,500(MKA)
Chief Executive Officer 7,500(ONX)
4,000(RGI)
2,000(TDX)
1,000(TISI)
20,000(THI)
100,000(THS)
2,000(TRIL)
7,500(VIZ)
2,000(TRCC)
1997 $150,000 $110,000 1,100(TMO) $14,923 (7)
1996 $145,000 $ 70,000 1,500(TMO) $ 8,076 (7)
50,000(TBA)
2,000(TFG)
2,000(TLT)
15,000(TOC)
90,000(TMQ)
2,000(TSR)
4,000(TXM)
</TABLE>
- --------------------------------------------------------------------------------
(1) Options granted by the Corporation are designated in the table as "TBA." In
addition, the named executive officers have also been granted options to
purchase the common stock of the following Thermo Electron companies during
the last three fiscal years as part of Thermo Electron's stock option
program: Thermo Electron (designated in the table as TMO), Metrika Systems
Corporation (designated in the table as MKA), ONIX Systems Inc. (designated
in the table as ONX), The Randers Killam Group Inc. (designated in the
table as RGI), Thermedics Detection Inc. (designated in the table as TDX),
Thermo Fibergen Inc. (designated in the table as TFG), Thermo Information
Solutions Inc. (designated in the table as TISI), Thermo Instrument
(designated in the table as THI), ThermoLyte Corporation (designated in the
table as
7
<PAGE>
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), ThermoSpectra Corporation
(designated in the table as THS), Thermo Trilogy Corporation (designated in
the table as TRIL), Thermo Vision Corporation (designated in the table as
VIZ), Trex Communications Corporation (designated in the table as TRCC) 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 was appointed president and chief executive officer of the
Corporation on March 11, 1998. The annual cash compensation (salary and
bonus) reported in the table for Mr. Maddix represents the amount paid by
the Corporation for Mr. Maddix's services as president and chief executive
officer of the Corporation. For fiscal 1998, approximately 75% of Mr.
Maddix's salary and all of his bonus earned from all sources within Thermo
Electron was paid by the Corporation.
(4) In addition to the matching contributions referred to in footnote (2), such
amount includes $2,363 for 1998, which reflects the amount of compensation
attributable to an interest-free loan provided to Mr. Maddix pursuant to
the Corporation's stock holding assistance plan. See "Relationship with
Affiliates - Stock Holding Assistance Plan."
(5) Mr. Hanna resigned as a vice president of the Corporation on January 1,
1999.
(6) Mr. Howe resigned as president and chief executive officer of the
Corporation on March 11, 1998 to accept a position with ThermoSpectra
Corporation, another majority-owned subsidiary of Thermo Instrument, as its
president and chief executive officer. For fiscal 1998, only the portion
of Mr. Howe's annual compensation (salary and bonus) paid by the
Corporation as compensation to Mr. Howe in his capacity as president and
chief executive officer of the Corporation has been included in the table.
The amount reported in the table under "Annual Compensation" for Mr. Howe
represented 21% of Mr. Howe's annual cash compensation from all sources
within Thermo Electron in fiscal 1998. For fiscal 1998, all options to
purchase common stock of Thermo Electron and its subsidiaries granted to
Mr. Howe in all capacities within the Thermo Electron organization have
been included under "Long Term Compensation." Prior to fiscal 1998, Mr.
Howe was granted options to purchase shares of the common stock of Thermo
Electron and certain of its subsidiaries other than the Corporation by
Thermo Electron and certain of its subsidiaries. These options are not
reported in this table as they were granted as compensation for service to
other Thermo Electron companies in capacities other than in his capacity as
the president and chief executive officer of the Corporation.
(7) In addition to the matching contribution referred to in footnote (2), such
amounts include $7,403, $8,173 and $1,444 for 1998, 1997 and 1996,
respectively, which amounts represent compensation attributable to
interest-free loans 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 1998
The following table sets forth information concerning individual grants of
stock options made during fiscal 1998 to the Corporation's named executive
officers. It has not been the Corporation's policy in the past to grant stock
appreciation rights, and no such rights were granted during fiscal 1998.
8
<PAGE>
Option Grants in Fiscal 1998
- --------------------------------------------------------------------------------
<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 and Company (1) Fiscal Year Share Date 5% 10%
---- ----------------------- ----------- ----- ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
Colin Maddix 75,000(TBA) 21.51% $21.93 05/20/10 $1,308,750 $3,517,500
20,000(TBA) 5.73% $12.25 09/25/03 $ 67,600 $ 149,600
7,200(TMO) 0.22% (3) $16.20 09/23/03 $ 32,256 $ 71,208
15,000(THI) 1.99% (3) $13.54 09/25/03 $ 56,100 $ 124,050
Donald W. Hanna 4,000(TBA) 1.15% $12.25 09/25/03 $ 13,520 $ 29,920
500(TMO) 0.02% (3) $34.50 06/02/03 $ 4,765 $ 10,530
1,400(TMO) 0.04% (3) $16.20 09/23/03 $ 6,272 $ 13,846
2,000(THI) 0.27% (3) $13.54 09/25/03 $ 7,480 $ 16,540
Barry S. Howe (4) 1,100(TMO) 0.03% (3) $34.50 06/02/03 10,483 $ 23,166
7,500(MKA) (5) 2.64% (3) $15.86 03/10/10 $ 94,650 $ 254,400
7,500(ONX) (5) 0.77% (3) $14.25 03/10/10 $ 85,050 $ 228,525
4,000(RGI) 0.75% (3) $ 4.00 01/21/05 $ 6,520 $ 15,160
2,000(TDX) 0.22% (3) $ 9.56 01/21/05 $ 7,780 $ 18,140
1,000(TISI) 1.67% (3) $10.00 01/21/08 $ 6,290 $ 15,940
20,000(THI) 2.90% (3) $13.54 09/25/03 $ 74,800 $ 165,400
100,000(THS) 27.17% (3) $10.68 05/20/10 $ 850,000 $2,284,000
2,000(TRIL) 1.11% (3) $ 8.25 01/21/08 $ 10,380 $ 26,300
7,500(VIZ) (5) 1.83% (3) $ 7.15 03/10/10 $ 42,675 $ 114,675
2,000(TRCC) 0.16% (3) $ 4.00 01/21/08 $ 5,040 $ 12,740
</TABLE>
- --------------------------------------------------------------------------------
(1) All of the options granted during the fiscal year are immediately
exercisable as of the end of the fiscal year, except options to purchase
shares of the common stock of Thermo Information Solutions Inc., Thermo
Trilogy Corporation and Trex Communications 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 or (ii) nine years after the grant date. In all cases, the
shares acquired upon exercise are subject to repurchase by the granting
company at the exercise price if the optionee ceases to be employed by, or
ceases to serve as a director of, such company or any other Thermo Electron
company. The granting company may exercise its repurchase rights within six
months after the termination of the optionee's employment or the cessation
of directorship, as the case may be. For publicly-traded companies, the
repurchase rights generally lapse ratably over a one- to ten-year period,
depending on the option term, which may vary from five to twelve years,
provided that the optionee continues to be employed by or serve as a
director of the granting company or any other Thermo Electron company. For
companies that are not publicly-traded, the repurchase rights lapse in
their entirety on the ninth anniversary of their grant date. The granting
company may permit the holder of options to exercise options and to satisfy
tax withholding obligations by surrendering shares equal in fair market
value to the exercise price or withholding obligation. Please see footnote
(1) on page 7 for the company abbreviations used in this table.
(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
applicable company, the optionee's continued employment or service as a
director through the option period and the date on which the options are
exercised.
9
<PAGE>
(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.
(4) In 1998, Mr. Howe was granted options to purchase common stock of Thermo
Electron and certain of its subsidiaries other than the Corporation as
compensation for services to other Thermo Electron companies in capacities
other than in his capacity as president and chief executive officer of the
Corporation.
(5) Options to purchase 7,500 shares of the common stock of Metrika Systems
Corporation, 7,500 shares of the common stock of ONIX Systems Inc. and
7,500 shares of the common stock of Thermo Vision Corporation granted to
Mr. Howe are subject to the same terms as described in footnote (1), except
that the repurchase rights are deemed to lapse 20% per year commencing on
the fifth anniversary of the grant date.
Stock Options Exercised During Fiscal 1998 and Fiscal Year-End Option Values
The following table reports certain information regarding stock option
exercises during fiscal 1998 and outstanding stock options held at the end of
fiscal 1998 by the Corporation's named executive officers. No stock appreciation
rights were exercised or were outstanding during fiscal 1998.
10
<PAGE>
Aggregated Option Exercises In Fiscal 1998
And Fiscal 1998 Year-End Option Values
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of
Unexercised Unexercised
Options at Fiscal In-the-Money
Shares Year-End Options at Fiscal
Acquired on Value (Exercisable/ Year-End (Exercisable/
Name Company Exercise Realized (1) Unexercisable) (2) Unexercisable)
---- ------- -------- ------------ ------------------ --------------
<S> <C> <C> <C> <C> <C>
Colin Maddix (TBA) -- -- 95,000/0 $ 8,760/--
(TMO) -- -- 7,200/0 $ 3,514/--
(THI) -- -- 55,000/0 $ 20,970/--
- --------------------------------------------------------------------------------------------------------------------------
Donald W. Hanna (TBA) -- -- 25,000/0 $ 58,200/--
(TMO) -- -- 20,298/0 (3) $ 21,489/--
(THI) -- -- 20,750/0 $ 41,385/--
(TOC) -- -- 7,500/0 $ 0/--
(TMQ) -- -- 5,000/0 $ 1,565/--
(THS) -- -- 1,500/0 $ 2,063/--
- --------------------------------------------------------------------------------------------------------------------------
Barry S. Howe (4) (TBA) -- -- 50,000/0 $134,400/--
(TMO) -- -- 69,787/0 (3) $ 36,160/--
(MKA) -- -- 7,500/0 (5) $ 0/--
(ONX) -- -- 7,500/0 (5) $ 0/--
(RGI) -- -- 4,000/0 $ 0/--
(TMD) -- -- 4,000/0 $ 0/--
(TDX) -- -- 2,000/0 $ 0/--
(TCK) -- -- 6,000/0 $ 30,750/--
(TFG) -- -- 2,000/0 $ 0/--
(TFT) -- -- 15,750/0 $ 34,382/--
(TISI) -- -- 0/1,000 -- /$0 (6)
(THI) 17,577 $126,294 113,750/0 $177,773/--
(TLZ) -- -- 5,000/0 $ 0/--
(TLT) -- -- 0/2,000 -- /$0 (6)
(TOC) -- -- 15,000/0 $ 0/--
(THP) -- -- 4,000/0 $ 0/--
(TMQ) -- -- 90,000/0 (7) $ 28,170/--
(TSR) -- -- 2,000/0 $ 0/--
(THS) -- -- 4,000/0 $ 69,500/--
(TTT) -- -- 4,000/0 $ 0/--
(TKN) -- -- 4,000/0 $ 0/--
(TRIL) -- -- 0/2,000 -- /$0 (6)
(VIZ) -- -- 7,500/0 (5) $ 0/--
(TRCC) -- -- 0/2,000 -- /$0 (6)
(TXM) -- -- 4,000/0 $ 0/--
</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 the end of the fiscal year, except options to
purchase shares of the common stock of Thermo Information Solutions Inc.,
ThermoLyte Corporation, Thermo Trilogy Corporation and Trex Communications
11
<PAGE>
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 or (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 company at
the exercise price if the optionee ceases to be employed by, or serve as a
director of, such company or another Thermo Electron company. The
granting company may exercise its repurchase rights within six months after
the termination of the optionee's employment or cessation of directorship,
as the case may be. 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 one- to ten-year period, depending on the option term, which
may vary from five to twelve years, provided that the optionee continues to
be employed by or serve as a director of the granting company or another
Thermo Electron company. The granting company may permit the holder of
options to exercise options and to satisfy tax withholding obligations by
surrendering shares equal in fair market value to the exercise price or
withholding obligation. Please see footnote (1) on page 7 for company
abbreviations used in this table as well as the following company
abbreviations: Thermo Ecotek Corporation (designated in the table as TCK),
Thermo Fibergen Inc. (designated in the table as TFG), Thermo Fibertek Inc.
(designated in the table as TFT), ThermoLase Corporation (designated in the
table as TLZ), ThermoLyte Corporation (designated in the table as TLT),
Thermo Power Corporation (designated in the table as THP), Thermo TerraTech
Inc. (designated in the table as TTT) and ThermoTrex Corporation
(designated in the table as TKN).
(3) Options to purchase 11,250 and 22,500 shares of the common stock of Thermo
Electron granted to Mr. Hanna and Mr. Howe, respectively, are subject to
the same terms described in footnote (2) above, except that the repurchase
rights of the granting company 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 company shall be deemed to have
lapsed ratably over a five-year period commencing with the fifth
anniversary of the grant date.
(4) Mr. Howe also holds other unexercised options to purchase common stock of
Thermo Electron and certain of its subsidiaries other than the Corporation.
These options are not reported in this table as they were granted as
compensation for services to other Thermo Electron companies in capacities
other than in his capacity as president and chief executive officer of the
Corporation.
(5) Options to purchase 7,500 shares of the common stock of Metrika Systems
Corporation, 7,500 shares of the common stock of ONIX Systems Inc. and
7,500 shares of the common stock of Thermo Vision Corporation granted to
Mr. Howe are subject to the same terms as described in footnote (2) above,
except that the repurchase rights are deemed to lapse 20% per year
commencing on the fifth anniversary of the grant date.
(6) No public market existed for the shares underlying these options as of
January 2, 1999. Accordingly, no value in excess of the exercise price has
been attributed to these options.
(7) Mr. Howe has two ThermoQuest Corporation options granted on January 10,
1996. Both options have a 12-year term. The repurchase rights are deemed
to lapse 100% on the tenth anniversary for the first option for 40,000
shares. The repurchase rights are deemed to lapse 18% on the first and
second anniversaries of the grant date and 8% annually starting at the
third anniversary of the grant date for the second option for 50,000
shares.
Executive Retention Agreements
Thermo Electron has entered into agreements with certain executive officers
and key employees of Thermo Electron and its subsidiaries that provide severance
benefits if there is a change in control of Thermo Electron and their employment
is terminated by Thermo Electron "without cause" or by the individual "for good
reason," as those terms are defined therein, within 18 months thereafter. For
purposes of these agreements, a change in control exists upon (i) the
acquisition by any person of 40% or more of the outstanding common stock or
voting securities of
12
<PAGE>
Thermo Electron; (ii) the failure of the Thermo Electron board of directors to
include a majority of directors who are "continuing directors", which term is
defined to include directors who were members of Thermo Electron's board on the
date of the agreement or who subsequent to the date of the agreement were
nominated or elected by a majority of directors who were "continuing directors"
at the time of such nomination or election; (iii) the consummation of a merger,
consolidation, reorganization, recapitalization or statutory share exchange
involving Thermo Electron or the sale or other disposition of all or
substantially all of the assets of Thermo Electron unless immediately after such
transaction (a) all holders of Thermo Electron common stock immediately prior to
such transaction own more than 60% of the outstanding voting securities of the
resulting or acquiring corporation in substantially the same proportions as
their ownership immediately prior to such transaction and (b) no person after
the transaction owns 40% or more of the outstanding voting securities of the
resulting or acquiring corporation; or (iv) approval by stockholders of a
complete liquidation or dissolution of Thermo Electron.
In 1998, Thermo Electron authorized an executive retention agreement with
Mr. Maddix. This agreement provides that in the event Mr. Maddix's employment
is terminated under the circumstances described above, he would be entitled to a
lump sum payment equal to the sum of (a) one times his highest annual base
salary in any 12 month period during the prior five-year period, plus (b) one
times his highest annual bonus in any 12 month period during the prior five-year
period. In addition, Mr. Maddix would be provided benefits for a period of one
year after such termination substantially equivalent to the benefits package he
would have been otherwise entitled to receive if he was not terminated.
Further, all repurchase rights of Thermo Electron and its subsidiaries shall
lapse in their entirety with respect to all options that Mr. Maddix holds in
Thermo Electron and its subsidiaries, including the Corporation, as of the date
of the change in control. Finally, Mr. Maddix would be entitled to a cash
payment equal to $15,000 to be used toward outplacement services.
Assuming that the severance benefits would have been payable as of
January 1, 1999, the lump sum salary and bonus payment under such agreement to
Mr. Maddix would have been approximately $260,000. In the event that payments
under these agreements are deemed to be so called "excess parachute payments"
under the applicable provisions of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), Mr. Maddix would be entitled to receive a gross-
up payment equal to the amount of any excise tax payable by him with respect to
such payment plus the amount of all other additional taxes imposed on him
attributable to the receipt of such gross-up payment.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
Decisions on compensation for the Corporation's executive officers are made
by the human resources committee of the board of directors (the "Committee").
The Committee follows guidelines established by the human resources committee of
the board of directors of its ultimate parent company, Thermo Electron. The
compensation policies followed by the Committee are designed to reward and
motivate executives in achieving long-term value for Stockholders and other
business objectives, to attract and retain dedicated, talented individuals to
accomplish the Corporation's objectives, to recognize individual contributions
as well as the performance of the Corporation and its subsidiaries, and to
encourage stock ownership by executives through stock-based compensation and
stock retention programs in order to link executive and Stockholder interests.
The Committee evaluates the competitiveness of its compensation practices
through the use of market surveys and competitive analyses prepared by its
outside compensation consultants and by participating in annual 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. Internal fairness of compensation within
the organization is also an important element of the Committee's compensation
philosophy. Compensation of executives is evaluated by comparing it to the
compensation of other executives within the Thermo Electron organization who
have responsibility to manage businesses of comparable size and complexity.
13
<PAGE>
The compensation program of the Corporation consists of annual cash
compensation and long-term incentive compensation. Annual cash compensation is
composed of base salary and performance-based incentive compensation, which is
reviewed and determined annually. Long-term incentive compensation is in the
form of stock-based compensation such as stock options and restricted stock
awards. The process for determining the components of executive compensation
for the named executive officers is described below.
Components of Executive Compensation
Annual Cash Compensation
Annual cash compensation consists of base salary and performance-based
incentive compensation. The cash incentive compensation paid to an executive
varies from year to year based on the performance of the Corporation and the
executive.
The Committee assesses the competitiveness of annual cash compensation by
establishing for each executive position at the beginning of each fiscal year a
salary and reference incentive compensation for the position that together are
intended to approximate the mid-point of competitive total annual cash
compensation for organizations that are of comparable size and complexity as the
Corporation.
Base Salary. Generally, executive salaries are adjusted gradually over
time to reflect competitive salary levels or other considerations, such as
geographic or regional market data, industry trends or internal fairness within
the Corporation. The Committee may also adjust individual salaries to reflect
the assumption of increased responsibilities. The salary increases in fiscal
1998 for the named executive officers generally reflect this practice of gradual
adjustment and moderation.
Performance-based Incentive Compensation. The amount of incentive
compensation actually earned by an executive from year to year varies with the
performance of the Corporation and the executive. The Committee evaluates
performance (1) by formula using financial measures of profitability and
contribution to Stockholder value and (2) by subjectively evaluating the
executive's contribution to the achievement of the Corporation's long-term
objectives. In fiscal 1998, the formula used by the Committee measured return
on net assets, return on sales, earnings improvement over a three-year period
for the Corporation and, to a lesser extent, the Corporation's parent companies,
and three-year growth in earnings per share for the same companies. The
financial measures are not financial targets that are met, not met or exceeded,
but assess the financial performance relative to the financial performance of
comparable companies and are designed to penalize below-average performance and
reward above-average performance. The relative weighting of the financial
measures and subjective evaluation varies depending on the executive's role and
responsibilities within the organization.
The incentive compensation granted to the named executive officers (other
than the chief executive officer, which is discussed below under the caption
"1998 CEO Compensation") reflected the financial performance in fiscal 1998 of
the businesses of the Corporation for which the executives were responsible.
Long-term Incentive Compensation
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 stock-
based compensation in shares of Common Stock and common stock of other Thermo
Electron companies.
The Committee and management believe that awards of stock-based
compensation in both the Corporation and other companies within the Thermo
Electron group of companies accomplish many objectives. The grant of stock-based
compensation 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-based compensation also results in
management's compensation being closely linked to stock performance. In
addition, because the employee's rights in stock-based compensation vest over
periods of varying durations and are subject to forfeiture if the employee
leaves the Corporation prematurely, stock-based compensation is an incentive for
key employees to remain with the Corporation long-term. The Committee believes
stock-based compensation awards in its parent
14
<PAGE>
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 executive officer
the annual value of stock-based compensation in 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 award. In addition, the Committee considers the
aggregate amount of outstanding awards granted to all employees to monitor the
number of outstanding awards under the Corporation's stock-based compensation
programs. In determining the appropriate number of outstanding 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
compensation practices of comparable companies.
The Committee periodically awards stock-based compensation in the form of
stock options or restricted stock based on an assessment of the total
compensation of the executive, the actual and anticipated contributions of the
executive (which includes a subjective assessment by the Committee of the
executive's future potential within the organization), as well as the value of
previously awarded stock-based compensation, as described above. Such stock-
based compensation awards were made to the named executive officers in 1998.
Stock Ownership Policies
The Corporation's compensation program is also designed to encourage
executives to own shares of the Corporation's Common Stock. The Committee
believes that encouraging executives to own and retain stock acquired through
its stock-based compensation program or otherwise provides additional incentive
for executive officers to follow strategies designed to maximize long-term value
to Stockholders.
The Committee established a stock holding policy for executive officers of
the Corporation 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 is one times his base salary and reference
incentive compensation 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 has been amended to apply only to the chief executive
officer.
In order to assist executive officers in complying with the policy, the
Committee also adopted a stock holding assistance plan under which the
Corporation was authorized to make interest-free loans to executive officers to
enable them to purchase shares of Common Stock in the open market. This plan
was also amended to apply only to the chief executive officer. The loans are
required to be repaid upon the earlier of demand or the fifth anniversary of the
date of the loan, unless otherwise determined by the Committee. In 1996,
Mr. Howe, then the Corporation's chief executive officer, received loans
totaling $164,375 under this plan, of which amount $131,500 was outstanding as
of January 31, 1999. In 1998, Mr. Maddix, Mr. Howe's successor as chief
executive officer of the Corporation, received a loan in the principal amount of
$91,706 under this plan, of which the entire amount was outstanding as of
January 31, 1999. See "Relationship with Affiliates - Stock Holding Assistance
Plan."
The Committee also has adopted a policy requiring its executive officers to
hold shares of 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.
Policy on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the tax deduction
available to public companies for annual compensation paid to executive officers
in excess of $1 million unless the compensation qualifies as "performance-based"
or is otherwise exempt under Section 162(m). The Committee considers the
potential effect of Section 162(m) in designing its compensation program, but
reserves the right to use its independent judgment to
15
<PAGE>
approve nondeductible compensation, while taking into account the financial
effects such action may have on the Corporation. From time to time, the
Committee reexamines the Corporation's compensation practices and the potential
effect of Section 162(m).
1998 CEO Compensation
Mr. Colin Maddix was appointed chief executive officer of the Corporation
in March 1998. The compensation of Mr. Maddix is established using the same
criteria as described above all executive officers. The Committee approved the
salary for Mr. Maddix for fiscal 1998 that had been set by his predecessor
employer, Thermo Instrument. This salary reflected the practice of gradual
adjustment followed by the Thermo Electron companies, taking into account the
factors described above under "Components of Executive Compensation - Annual
Cash Compensation - Base Salary." In determining Mr. Maddix's performance-based
compensation for fiscal 1998, the Committee considered the financial performance
of the Corporation and, to a lesser extent, its parent company, Thermo
Instrument, using the measures described above for all executive officers under
"Components of Executive Compensation - Annual Cash Compensation - Performance-
based Incentive Compensation." The Committee's subjective evaluation of
Mr. Maddix's performance considered, among other things, his effectiveness in
furthering the Corporation's business and financial objectives.
Awards to Mr. Maddix of stock-based compensation in Common Stock are
reviewed and determined periodically by the Committee using the criteria
described above under the caption "Components of Executive Compensation--
Long-term Incentive Compensation." An award of stock options to purchase
95,000 shares of Common Stock was made by the Committee to Mr. Maddix in fiscal
1998 in connection with his appointment as the Corporation's president and chief
executive officer. He was also awarded options to purchase 15,000 shares of the
common stock of Thermo Instrument and 7,200 shares of the common stock of Thermo
Electron which were made by the human resources committees of the board of
directors of the granting companies using a methodology similar to that
described for the Corporation.
Mr. Barry S. Howe served as the Corporation's chief executive officer until
March 1998, when he was appointed president and chief executive officer of
ThermoSpectra Corporation, another majority-owned subsidiary of Thermo
Instrument. The Committee, in December 1997, approved a salary increase for
Mr. Howe for fiscal 1998 consistent with its policy of gradual adjustment. None
of Mr. Howe's performance-based incentive compensation for fiscal 1998 was paid
by the Corporation.
Awards to Mr. Howe of stock-based compensation in Common Stock were
reviewed and determined periodically by the Committee using the criteria
described above under the caption "Components of Executive Compensation--
Long-term Incentive Compensation." No awards of stock options to purchase Common
Stock were made by the Committee to Mr. Howe in fiscal 1998. The awards to
Mr. Howe in fiscal 1998 of options to purchase 20,000 shares of the common stock
of Thermo Instrument, 7,500 shares of the common stock of Metrika Systems
Corporation, 7,500 shares of the common stock of ONIX Systems Inc. and
7,500 shares of the common stock of Thermo Vision Corporation were made by the
human resources committee of the board of directors of the granting companies
using a methodology similar to that described by for Corporation.
Due to Mr. Howe's position as a chief executive officer of a majority-owned
subsidiary of Thermo Electron, he also received awards to purchase shares of the
common stock of majority-owned subsidiaries of Thermo Electron as part of
Thermo Electron's stock option program. Awards of options to purchase
4,000 shares of common stock of The Randers Killam Group Inc., 2,000 shares of
common stock of Thermedics Detection Inc., 1,000 shares of common stock of
Thermo Information Solutions Inc., 2,000 shares of common stock of Thermo
Trilogy Corporation and 2,000 shares of common stock of Trex Communications
Corporation, were made to Mr. Howe under this program in fiscal 1998. An award
to purchase 1,100 shares of the common stock of Thermo Electron granted to Mr.
Howe in fiscal 1998 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 stock.
Elias P. Gyftopoulos (Chairman)
Arnold N. Weinberg
16
<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 December 31, 1998
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
<TABLE>
9/18/96 12/27/96 1/2/98 12/31/98
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
TBA 100 94 139 95
-----------------------------------------------------------------
AMEX 100 103 124 127
-----------------------------------------------------------------
DJ DTC 100 115 131 133
-----------------------------------------------------------------
</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, from time to time, caused certain subsidiaries to sell
minority interests to investors, resulting in several majority-owned, private
and publicly-held subsidiaries. Thermo Instrument has created the Corporation as
a majority-owned, publicly-held subsidiary. 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 of the Charter is to
ensure that (1) all of the companies and their stockholders are treated
consistently and fairly,
17
<PAGE>
(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 the Thermo Subsidiaries.
The Charter currently 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 general legal advice and services, risk management, employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and certain financial and other services to the Corporation.
The Corporation was assessed an annual fee equal to 0.8% of the Corporation's
revenues for these services in fiscal 1998. The annual fee will remain at 0.8%
of the Corporation's total revenues for fiscal 1999. The fee is reviewed
annually and may be changed by mutual agreement of the Corporation and Thermo
Electron. During fiscal 1998, Thermo Electron assessed the Corporation
$1,817,000 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. In 1998, the Corporation paid
Thermo Electron an additional $308,000 for certain administrative services
required by the Corporation that were not covered by the Services Agreement.
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.
18
<PAGE>
The Corporation has entered into a Tax Allocation Agreement with
Thermo Electron that outlines the terms under which the Corporation will be
included in Thermo Electron's consolidated Federal and state income tax returns.
Under current law, the Corporation will be included in such tax returns so long
as Thermo Electron owns at least 80% of the outstanding common stock of Thermo
Instrument and Thermo Instrument and Thermo Electron collectively own at least
80% of the outstanding Common Stock of the Corporation. In years in which the
Corporation has taxable income, it will pay to Thermo Electron amounts
comparable to the taxes the Corporation would have paid if it had filed its own
separate company tax returns. If Thermo Instrument's and Thermo Electron's
equity ownership of the Corporation were to drop below 80%, the Company would
file its own tax returns. In 1999, Thermo Instrument's and Thermo Electron's
combined equity ownership of the Corporation now exceeds 80%, the Corporation
will be included in Thermo Electron's consolidated tax returns and will be
assessed for amounts due to Thermo Electron in accordance with the Tax
Allocation Agreement.
From time to time, the Corporation may transact business with other
companies in the Thermo Group.
In June 1998, the Corporation acquired 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 net
purchase price for the Clinical Products Group was approximately $66,665,000
payable in 3,007,930 shares of the Corporation's Common Stock. The shares were
valued at $22.163 per share, which was the average of the closing prices of the
Corporation's Common Stock as reported by the American Stock Exchange 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 net
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 Corporation assumed approximately
$37,681,000 of existing indebtedness owed by the Clinical Products Group to
Thermo Instrument, making the gross purchase price approximately $104,526,000.
This amount includes approximately $12,013,000 for an equivalent amount of cash
acquired. This existing indebtedness owed to Thermo Instrument was repaid in
1998 and bore interest at the 90-day Commercial Paper Composite Rate plus 25
basis points, set at the beginning of each quarter. The methodology used to
determine the purchase price was approved by the boards of directors of the
Corporation and Thermo Instrument.
As of July 5, 1998, the Corporation contributed the assets and liabilities
of its Eberline health physics business, which is based in Santa Fe, New Mexico,
to a joint venture with Thermo Instrument, in exchange for a 49% equity interest
in the joint venture. As of the same date, Thermo Instrument contributed 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. Profits and losses from the joint venture are allocated (a) one-third
to Thermo Instrument and two-thirds to the Corporation 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.
ThermoQuest Corporation ("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. For the fiscal year ended January 2,
1999, the Corporation sold $1,251,000 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 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 2, 1999, the
Corporation paid ThermoQuest approximately $312,000 under this arrangement.
19
<PAGE>
Various Thermo Instrument companies act as distributors of certain products
for the Corporation under informal distribution agreements. For the fiscal year
ended January 2, 1999, the Corporation sold an aggregate of approximately
$3,576,000 of products to Thermo Instrument companies under these arrangements.
The Corporation acts as a distributor of certain products for various
Thermo Instrument companies under informal distribution agreements. For the
fiscal year ended January 2, 1999, Thermo Instrument companies sold an aggregate
of $457,000 of products to the Corporation under these arrangements. In
addition, the Corporation also purchases products in the ordinary course of
business from other companies affiliated with Thermo Electron. For the fiscal
year ended January 2, 1999, such additional purchases totaled approximately
$5,502,000.
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%. In May 1997, the Corporation also borrowed $50,000,000 from
Thermo Instrument, associated with the purchase of Labsystems Oy and Hybaid
Limited from Thermo Instrument, pursuant to a promissory note due July 1999.
This promissory note 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 $71,017,000
credit facility. The Corporation has access to $9,774,000 under this credit
facility. Only U.K.-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. As of January 2, 1999, the Corporation had a positive cash balance
of approximately $3,410,000, based on an exchange rate of $1.6708/GBP 1.00 as of
January 2, 1999. For 1998, the average annual interest rate earned on GBP
deposits by participants in this credit arrangement was approximately 7.7225%
and the average annual interest rate paid on overdrafts was approximately
7.485%.
Until mid-December 1998, the Corporation, along with certain other Thermo
Subsidiaries, participated in a notional pool arrangement with ABN AMRO, which
included a $29,719,000 credit facility. The Corporation had access to
$2,919,000 under this credit facility. Only European-based Thermo Subsidiaries
participated in this arrangement. Under this arrangement the Bank notionally
combined 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 was then allocated based on balances attributable to the
respective participants. Thermo Electron guaranteed all of the obligations of
each participant in this arrangement. For 1998, the average annual interest
rate earned on NLG deposits by participants in this credit arrangement was
approximately 5.00% and the average annual interest rate paid on overdrafts was
approximately 5.00%.
As of mid-December 1998, the Corporation, along with certain other Thermo
Subsidiaries, has entered into a modification of the above-described arrangement
with ABN AMRO. Only European-based Thermo Subsidiaries participate in this
arrangement. The new arrangement with ABN AMRO consists of a zero balance
arrangement, which includes a $29,719,000 credit facility. The Corporation has
access to $2,919,000 under this credit facility. Funds borrowed by the
Corporation under this arrangement pay interest at a rate set by Thermo Finance
B.V., a wholly-owned subsidiary of Thermo Electron, at the beginning of each
month, based on Netherlands market rates. Funds invested by the Corporation
under the arrangement earn a rate set by Thermo Finance B.V. at the beginning of
each month, based on Netherlands market rates, Such invested funds are
collateralized with investments principally consisting of corporate notes,
U.S. government-agency securities, commercial paper, money market funds, and
other marketable securities, in the amount of at least 103% of such obligation.
Thermo Electron guarantees all of the obligations of each participant in this
arrangement. As of January 2, 1999, the Corporation had a negative cash balance
of approximately $2,018,000, based on an exchange rate of $0.5307/NLG 1.00. As
of January 2, 1999, the average annual interest rate earned on NLG deposits by
participants in this credit arrangement was approximately 3.63% and the average
annual interest rate paid on overdrafts was approximately 4.50%.
As of January 2, 1999, an additional $40,339,000 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,
20
<PAGE>
U.S. government agency securities, money market funds, commercial paper and
other marketable securities, in the amount of at least 103% of such obligation.
Thermo Electron maintains possession of the underlying securities and has the
right of substitution at its discretion. The Corporation's funds subject to the
repurchase agreement will be readily convertible on demand 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.
As of January 2, 1999, the Corporation owed Thermo Electron and its other
subsidiaries an aggregate of $4,756,000, excluding the notes described above,
for amounts due under the 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 such net
indebtedness owed by the Corporation to Thermo Electron and its other
subsidiaries since January 3, 1998, was $35,846,000, which amount included the
indebtedness assumed in connection with the acquisition of the Clinical Products
Group described above that was repaid in 1998. These amounts do not bear
interest and are expected to be paid in the normal course of business.
Stock Holding Assistance Plan
The human resources committee of the Corporation's board of directors (the
"Committee") established a stock holding policy that required executive officers
of the Corporation to acquire and hold a minimum number of shares of Common
Stock. In order to assist the executive officers in complying with this policy,
the Committee also adopted a stock holding assistance plan under which the
Corporation may make interest-free loans to executive officers to enable them to
purchase shares of Common Stock in the open market. The stock holding policy
and the stock holding assistance plan were both subsequently amended to apply
only to the chief executive officer. In 1996, Mr. Barry S. Howe, then the
Corporation's chief executive officer, received loans in the aggregate principal
amount of $164,375 under this plan to purchase an aggregate of 12,000 shares of
Common Stock, of which amount $131,500 was outstanding as of January 31, 1999.
In 1998, Mr. Maddix, Mr. Howe's successor as chief executive officer of the
Corporation, received a loan in the principal amount of $91,706 under this plan
to purchase 5,000 shares of Common Stock, of which the entire amount was
outstanding as of January 31, 1999. These loans are repayable upon the earlier
of demand or the fifth anniversary of the date of the loan, unless otherwise
determined by the Committee.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1999. 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.
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 included in the proxy statement
and form of proxy relating to the 2000 Annual Meeting of the Stockholders of the
Corporation and to be presented at such meeting must be received by the
Corporation for inclusion in the proxy statement and form of proxy no later than
December 17, 1999. Notices of Stockholder proposals submitted outside the
processes of Rule 14a-8 of the Exchange Act (relating to proposals to be
presented at the meeting but not included in the Corporation's proxy statement
and form of proxy), will be considered untimely, and thus the Corporation's
proxy may confer discretionary voting authority on the persons named in the
proxy with regard to such proposals, if received after March 5, 2000.
21
<PAGE>
SOLICITATION STATEMENT
The cost of 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 16, 1999
22
<PAGE>
FORM OF PROXY
THERMO BIOANALYSIS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 27, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Earl R. Lewis, Colin Maddix and Theo
Melas-Kyriazi, 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 Thursday, May 27, 1999 at 11:00 a.m. at the Westin
Hotel, 70 Third Avenue, Waltham, Massachusetts, 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 March 30, 1999, 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, Earl R. Lewis, Colin Maddix, Jonathan W. Painter
and Arnold N. 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.
