SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------------------------
FORM 10-K
(mark one)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended January 3, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 1-10574
THERMO VOLTEK CORP.
(Exact name of Registrant as specified in its charter)
Delaware 13-1946800
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
470 Wildwood Street, P.O. Box 2878
Woburn, Massachusetts 01888-1578
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
---------------------------- -----------------------------------------
Common Stock, $.05 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to
the filing requirements for at least the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy
or information statements incorporated by reference into Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of
the Registrant as of January 30, 1998, was approximately $14,630,000.
As of January 30, 1998, the Registrant had 8,839,370 shares of Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year
ended January 3, 1998, are incorporated by reference into Parts I and II.
Portions of the Registrant's definitive Proxy Statement for the Annual
Meeting of Shareholders to be held on June 1, 1998, are incorporated by
reference into Part III.
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PART I
Item 1. Business
--------
(a) General Development of Business
-------------------------------
Thermo Voltek Corp. (the Company or the Registrant) designs,
manufactures, and markets test instruments and a range of products
related to power amplification, conversion, and quality. The Company's
test instruments simulate pulsed electromagnetic interference (pulsed
EMI), radio frequency interference (RFI), and changes in AC voltage, to
allow manufacturers of electronic systems and integrated circuits to test
for electromagnetic compatibility (EMC), to ensure product quality and to
meet certain regulatory requirements. The Company also provides EMC
consulting and systems-integration services and distributes EMC-related
products. The Company's power products include radio frequency (RF) and
microwave power amplifiers, power-conversion equipment, and high-voltage
and application-specific power supplies. These power products are used in
communications, broadcast, research, and medical imaging applications. In
July 1996, the Company acquired Pacific Power Source Corporation, a
manufacturer of power-conversion equipment and programmable power
amplifiers. In April 1997, the Company acquired Milmega Ltd., a
manufacturer of microwave amplifiers. During 1997, the Company
experienced lower demand for its EMC test products, due to the declining
influence of IEC 801, the European Union directive on electromagnetic
compatibility that took effect January 1, 1996, and, to a lesser extent,
a decline in the component-reliability market for ESD test equipment that
resulted from a slowdown in capital expenditures by the semiconductor
industry. Due in part to these developments, during 1997 the Company
implemented certain operational, organizational, and personnel changes.
The Company was originally incorporated in 1960 under the name
Universal Voltronics Corp. Thermedics Inc., a publicly traded subsidiary
of Thermo Electron Corporation, acquired a controlling interest in the
Company's common stock in March 1990. In November 1992, the Company's
name was changed to Thermo Voltek Corp. As of January 3, 1998, Thermedics
owned 5,771,208 shares of the Company's common stock, representing 65% of
such stock outstanding. In addition to the Company's products, Thermedics
develops, manufactures, and markets product quality-assurance systems,
precision-weighing and inspection equipment, electrochemistry and
microweighing products, security devices, and moisture-analysis systems,
as well as implantable heart-assist systems, whole blood coagulation
testing equipment, skin-incision devices, and other biomedical products.
As of January 3, 1998, Thermo Electron owned 238,200 shares of the
Company's common stock, representing 3% of such stock outstanding,
including 186,500 shares that were purchased during 1997* in the open
market for a total purchase price of $1,777,000. Thermo Electron provides
analytical and monitoring instruments; biomedical products including
heart-assist devices, respiratory-care equipment, and mammography
systems; paper recycling and papermaking equipment; alternative-energy
systems; industrial process equipment; and other specialized products.
Thermo Electron also provides a range of services that include industrial
* References to 1997, 1996, and 1995 herein are for the fiscal years
ended January 3, 1998, December 28, 1996, and December 30, 1995,
respectively.
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outsourcing, particularly in environmental-liability management,
laboratory analysis, and metallurgical processing; and conducts advanced-
technology research and development.
Thermedics intends, for the foreseeable future, to maintain at least
50% ownership of the Company. This may require the purchase by Thermedics
of additional shares (or convertible notes that are then converted) of
the Company from time to time as the number of outstanding shares of the
Company increases. These or any other purchases by Thermedics may be made
either in the open market or directly from the Company or Thermo Electron
or pursuant to conversions of the subordinated convertible notes issued
by the Company to Thermedics. During 1997, Thermedics purchased 799,875
shares of the Company's common stock in the open market for a total
purchase price of $7,376,000. See Notes 4 and 8 to Consolidated Financial
Statements in the Company's 1997 Annual Report to Shareholders for a
description of outstanding stock options and convertible obligations
issued by the Company.
Forward-looking Statements
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Annual Report
on Form 10-K. For this purpose, any statements contained herein that are
not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes,"
"anticipates," "plans," "expects," "seeks," "estimates," and similar
expressions are intended to identify forward-looking statements. There
are a number of important factors that could cause the results of the
Company to differ materially from those indicated by such forward-looking
statements, including those detailed under the heading "Forward-looking
Statements" in the Registrant's 1997 Annual Report to Shareholders, which
statements are incorporated herein by reference.
(b) Financial Information About Industry Segments
---------------------------------------------
The Company conducts business in one industry segment.
(c) Description of Business
-----------------------
The Company designs, manufactures, and markets test instruments and a
range of products related to power amplification, conversion, and
quality. The Company's test instruments simulate pulsed electromagnetic
interference (pulsed EMI), radio frequency interference (RFI), and
changes in AC voltage, to allow manufacturers of electronic systems and
integrated circuits to test for electromagnetic compatibility (EMC).
These products are used in the product-development, design-verification,
and quality-assurance stages, enabling customers to optimize performance,
reliability, and safety in the final design, and to meet industry
standards and regulatory requirements, including a European Union (EU)
directive that took effect in January 1996. The Company's power products
include radio frequency (RF) and microwave power amplifiers,
power-conversion equipment, and high-voltage and application-specific
power supplies. These power products are used in communications,
broadcast, research, and medical imaging applications.
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The Company's testing instruments fall into two main categories: (1)
equipment to test completed electronic products, and (2) equipment to
test individual electronic components such as integrated circuits.
Product Testing Equipment. The Company's EMC testing systems for
electronic products simulate pulsed EMI - including RFI, disturbances in
electrical power, and natural and man-made phenomena such as lightning
and static electricity - to allow manufacturers to check for resistance
to these and other forms of potentially troublesome electronic pollution.
These systems perform both immunity and emissions testing - to verify
that completed electronic products are not only immune to EMI, but also
that they are not emitting EMI. The Company's KeyTek Instrument
division's ECAT(R) system integrates comprehensive pulsed EMI and
power-quality failure simulation and testing with built-in diagnostic
capabilities. KeyTek also offers a range of lower-cost instruments
designed to test completed products for a particular type of pulsed EMI.
KeyTek also manufactures the G-Strip, an RFI immunity tester that
analyzes how effectively electronics resist the effects of radio
frequency emitted by other electronic devices.
Component-reliability Testing Equipment. KeyTek also manufactures EMC
testing instruments that allow manufacturers to test electronic
components and subassemblies, particularly integrated circuits and
printed circuit boards, for immunity to electrostatic discharge (ESD)
and electrical overstress (EOS). These products expose integrated
circuits and printed circuit boards to controlled and repeatable stress
levels, thereby determining their ability to withstand ESD and EOS.
These products also simulate the damage that can occur during normal
handling or operating procedures associated with the manufacturing,
testing, and transportation of such components.
The Company also provides EMC consulting and distribution services.
Through its Comtest subsidiary, the Company distributes EMC-testing
products for pulsed EMI and RFI immunity and emissions testing; provides
a wide range of testing, consulting, training, and systems-integration
services; and designs EMC test facilities. The Company also provides
on-site management and service, and maintains testing and training
facilities, at Comtest's Netherlands headquarters.
The Company's power products, described below, have applications in
both EMC and non-EMC areas. These include RF and microwave power
amplifiers, power-conversion equipment, and high-voltage and
application-specific power supplies.
Power Amplifiers. Through its Kalmus Engineering and Milmega Ltd.
divisions, the Company manufactures RF and microwave power amplifiers
that have applications in EMC testing and other areas. When used in EMC
test applications, the RF power amplifiers manufactured by Kalmus test
products for immunity to conducted and radiated RFI. They are also
suitable for a variety of laboratory and research applications where
precise control over power level and frequency are required; in medical
imaging applications; and in wireless communications applications,
broadcasting, and mobile data communications. Milmega, acquired in April
1997, designs and manufactures both RF and microwave power amplifiers.
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Microwave power amplifiers have frequencies of one gigaHertz and above.
Milmega's products are suitable for EMC test and other areas, including
research, communications, medical, and military applications.
Power-conversion Equipment. The Company's Pacific Power Source
Corporation division manufactures programmable power amplifiers that can
be incorporated into EMC test equipment to assess how well electronics
tolerate normal variations in the quality and quantity of AC voltage.
These amplifiers are also used in other kinds of testing equipment and in
application-specific power supplies. In October 1997, the Company
established a new division, Global Power Systems, to market specialized
power products, particularly for use in marine applications. Its initial
product line is a family of dock-to-yacht power systems that convert
power from an onshore source anywhere in the world to the voltage, phase,
and frequency required by luxury yachts.
High-voltage Power Supplies. Through its Universal Voltronics
division, the Company designs, manufactures, and markets high-voltage
power supplies, modulators, and related high-voltage equipment for
industrial, medical, and security processes, and defense and scientific
research applications. These systems transform utility-supplied AC power
into the DC voltages and currents required by the user and allow precise
control over the performance level desired for each application.
Raw Materials
A number of the components of the Company's EMC-testing products are
supplied by sole-source vendors. Although the Company has not experienced
significant difficulty in obtaining adequate supplies from these vendors,
and believes that it would be able to identify alternate suppliers if
necessary, there can be no assurance that the unanticipated loss of a
single vendor would not result in delays in shipments or in the
introduction of new products.
Backlog
The Company's backlog of firm orders is measured by the amount of
unshipped orders and, with respect to long-term contracts, the amount of
the contract reduced by the revenue that has been recognized to date on a
percentage-of-completion basis. Certain of these orders are cancellable
by the customer upon payment of a cancellation charge. The Company's
backlog was $10.2 million and $10.3 million as of January 3, 1998, and
December 28, 1996, respectively. The Company believes that substantially
all of the backlog at January 3, 1998, will be shipped or completed
during the next 12 months.
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Competition
The Company is a leading supplier of EMC testing equipment. There are
numerous companies worldwide that independently manufacture and market
pulsed EMC test equipment for electronic products, and several more that
independently manufacture and market component-reliability test
equipment. The Company competes in this market primarily on the basis of
performance, technical expertise, reputation, and price.
In the market for RF power amplifiers and programmable power
amplifiers, the Company competes with several companies worldwide based
primarily on technical expertise, reputation, and price.
In the market for high-voltage power supply systems of the general
type manufactured and marketed by the Company, the Company competes with
numerous companies for both contract and commercial sales primarily on
the basis of technical expertise, product performance, reputation, and
price.
Substantially all of the Company's contract and commercial revenues
are subject to intense competitive bidding. Some of the Company's
competitors have substantially greater financial resources than those of
the Company.
Research and Development
Research and development expenses for the Company were $3,620,000,
$3,618,000, and $2,349,000 in 1997, 1996, and 1995, respectively.
Environmental Protection Regulations
The Company believes that compliance by the Company with federal,
state, and local environmental protection regulations will not have a
material adverse effect on its capital expenditures, earnings, or
competitive position.
Number of Employees
As of January 3, 1998, the Company employed 278 people. Except for
seven employees at Universal Voltronics, none of the Company's employees
is represented by a union. The Company believes that relations with its
employees are good.
(d) Financial Information About Exports by Domestic Operations and
--------------------------------------------------------------
About Foreign Operations
------------------------
Financial information about exports by domestic operations and about
foreign operations is summarized in Note 11 to Consolidated Financial
Statements in the Registrant's 1997 Annual Report to Shareholders, which
information is incorporated herein by reference.
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(e) Executive Officers of the Registrant
------------------------------------
Present Title (Year First Became
Name Age Executive Officer)
------------------------ --- --------------------------------
John W. Wood Jr. 54 Chairman of the Board and Chief
Executive Officer (1990)
Colin I.W. Baxter 66 President and Chief Operating
Officer (1997)
John N. Hatsopoulos 63 Chief Financial Officer (1990)
Paul F. Kelleher 55 Chief Accounting Officer (1990)
Each executive officer serves until his successor is chosen or
appointed by the Board of Directors and qualified or until his earlier
resignation, death, or removal. Messrs. Wood, Hatsopoulos, and Kelleher
have held comparable positions for at least five years either with the
Company, Thermedics, or Thermo Electron. Mr. Baxter has been President
and Chief Operating Officer of the Company since January 1997. Mr. Baxter
has been President of the Company's Kalmus division since May 1995, and
from July 1996 to January 1997 was President of the Company's Pacific
Power division. Prior to joining the Company, Mr. Baxter was President
and Chief Executive Officer of Dranetz Technologies, Inc., a designer and
manufacturer of electronic instruments for measuring and monitoring
electrical power quality, demand, and sequence of events recorders. Mr.
Wood is a Senior Vice President of Thermo Electron and the Chairman of
the Board of Thermedics but devotes such portion of his time to the
affairs of the Company as the Company's needs reasonably require. Messrs.
Hatsopoulos and Kelleher are full-time employees of Thermo Electron but
devote such time to the affairs of the Company as the Company's needs
reasonably require.
Item 2. Properties
----------
The Company owns approximately 45,000 square feet of office,
engineering, laboratory, and production space in Mount Kisco, New York,
and leases approximately 110,000 square feet of office, engineering,
laboratory, and production space under leases expiring from 1998 to 2010,
principally in Massachusetts, Washington, California, The Netherlands,
the United Kingdom, and Italy. The Company believes that these facilities
are in good condition and are suitable and adequate for its present
operations, and that suitable space is readily available if any of such
leases are not extended.
Item 3. Legal Proceedings
-----------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
-------------------------------------------------------------
Matters
-------
Information concerning the market and market price for the
Registrant's common stock, $.05 par value, and dividend policy is
included under the sections labeled "Common Stock Market Information" and
"Dividend Policy" in the Registrant's 1997 Annual Report to Shareholders
and is incorporated herein by reference.
Item 6. Selected Financial Data
-----------------------
The information required under this item is included under the
sections labeled "Selected Financial Information" and "Dividend Policy"
in the Registrant's 1997 Annual Report to Shareholders and is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
The information required under this item is included under the
heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Registrant's 1997 Annual Report to
Shareholders and is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
The Registrant's Consolidated Financial Statements as of January 3,
1998, and Supplementary Data are included in the Registrant's 1997 Annual
Report to Shareholders and are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
Not applicable.
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PART III
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
The information concerning directors required under this item is
incorporated herein by reference from the material contained under the
caption "Election of Directors" in the Registrant's definitive proxy
statement to be filed with the Securities and Exchange Commission
pursuant to Regulation 14A, not later than 120 days after the close of
the fiscal year. The information concerning delinquent filers pursuant to
Item 405 of Regulation S-K is incorporated herein by reference from the
material contained under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance" under the caption "Stock Ownership" in the
Registrant's definitive proxy statement to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A, not later than 120
days after the close of the fiscal year.
Item 11. Executive Compensation
----------------------
The information required under this item is incorporated herein by
reference from the material contained under the caption "Executive
Compensation" in the Registrant's definitive proxy statement to be filed
with the Securities and Exchange Commission pursuant to Regulation 14A,
not later than 120 days after the close of the fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The information required under this item is incorporated herein by
reference from the material contained under the caption "Stock Ownership"
in the Registrant's definitive proxy statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, not later
than 120 days after the close of the fiscal year.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
The information required under this item is incorporated herein by
reference from the material contained under the caption "Relationship
with Affiliates" in the Registrant's definitive proxy statement to be
filed with the Securities and Exchange Commission pursuant to Regulation
14A, not later than 120 days after the close of the fiscal year.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
----------------------------------------------------------------
(a,d) Financial Statements and Schedules
----------------------------------
(1) The consolidated financial statements set forth in the list
below are filed as part of this Report.
(2) The consolidated financial statement schedule set forth in
the list below is filed as part of this Report.
(3) Exhibits filed herewith or incorporated herein by reference
are set forth in Item 14(c) below.
List of Financial Statements and Schedules Referenced in this
-------------------------------------------------------------
Item 14
-------
Information incorporated by reference from Exhibit 13 filed
herewith:
Consolidated Statement of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Shareholders' Investment
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
Financial Statement Schedules filed herewith:
Schedule II: Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable
or not required, or because the required information is shown
either in the financial statements or in the notes thereto.
(b)Reports on Form 8-K
-------------------
None.
(c)Exhibits
--------
See Exhibit Index on the page immediately preceding exhibits.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 16, 1998 THERMO VOLTEK CORP.
By: John W. Wood Jr.
-----------------------
John W. Wood Jr.
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated below, as of March 16,
1998.
Signature Title
--------- -----
By: John W. Wood Jr. Chairman of the Board, Chief Executive
------------------------- Officer, and Director
John W. Wood Jr.
By: John N. Hatsopoulos Chief Financial Officer and Senior
------------------------- Vice President
John N. Hatsopoulos
By: Paul F. Kelleher Chief Accounting Officer
-------------------------
Paul F. Kelleher
By Elias P. Gyftopoulos Director
-------------------------
Elias P. Gyftopoulos
By: William W. Hoover Director
-------------------------
William W. Hoover
By: Sandra L. Lambert Director
-------------------------
Sandra L. Lambert
By: Theo Melas-Kyriazi Director
-------------------------
Theo Melas-Kyriazi
By: Peter Richman Director
-------------------------
Peter Richman
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Report of Independent Public Accountants
To the Shareholders and Board of Directors of Thermo Voltek Corp.:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Thermo
Voltek Corp.'s Annual Report to Shareholders incorporated by reference in
this Form 10-K, and have issued our report thereon dated February 12,
1998. Our audits were made for the purpose of forming an opinion on those
statements taken as a whole. The schedule listed in Item 14 on page 10 is
the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic consolidated financial statements. This
schedule has been subjected to the auditing procedures applied in the
audits of the basic consolidated financial statements and, in our
opinion, fairly states in all material respects the consolidated
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
February 12, 1998
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SCHEDULE II
THERMO VOLTEK CORP.
Valuation and Qualifying Accounts
(In thousands)
Balance Provision
at Charged Accounts Balance
Beginning to Written at End
Description of Year Expense Off Other (a) of Year
---------------------------------------------------------------------------
Allowance for
Doubtful Accounts
Year Ended
January 3, 1998 $587 $326 $(90) $(24) $799
Year Ended
December 28, 1996 $446 $103 $(11) $ 49 $587
Year Ended
December 30, 1995 $343 $135 $(51) $ 19 $446
(a)Allowances of businesses acquired during the year as described in Note
3 to Consolidated Financial Statements in the Registrant's 1997 Annual
Report to Shareholders and the effect of foreign currency translation.
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
2.1 Asset Purchase Agreement dated March 1, 1995, among KeyTek
Instrument Division of Thermo Voltek Corp., Kalmus
Engineering Incorporated, RF Power Labs, Incorporated, and
Frank Kalmus (filed as Exhibit 2.4 to the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1994 [File No. 1-10574] and incorporated herein by
reference). Pursuant to Item 601(b)(2) of Regulation S-K,
schedules to this Agreement have been omitted. The Company
hereby undertakes to furnish supplementally a copy of such
schedules to the Commission upon request.
2.2 Asset Purchase Agreement dated as of July 3, 1996,
between the Registrant and Pacific Power Source
Corporation (filed as Exhibit 2.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
June 29, 1996 [File No. 1-10574] and incorporated
herein by reference). Pursuant to Item 601(b)(2) of
Regulation S-K, schedules to this Agreement have been
omitted. The Company hereby undertakes to furnish
supplementally a copy of such schedules to the
Commission upon request.
3.1 Restated Certificate of Incorporation of the
Registrant, as amended (filed as Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K for the year
ended January 2, 1993 [File No. 1-10574] and
incorporated herein by reference).
3.2 Composite Restatement of By-Laws, as amended (filed as
Exhibit 3.2 to the Registrant's Transition Report on
Form 10-K for the six months ended December 29, 1990
[File No. 1-10574] and incorporated herein by
reference).
4.1 Agreement between the Registrant and Thermedics dated
June 5, 1992, for Purchase of Note (filed as Exhibit 4
to the Registrant's Current Report on Form 8-K dated
June 5, 1992 [File No. 1-10574] and incorporated
herein by reference).
4.2 Fiscal Agency Agreement dated as of November 19, 1993,
among the Registrant, Thermo Electron, and Chemical
Bank (filed as Exhibit 4.3 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January
1, 1994 [File No. 1-10574] and incorporated herein by
reference).
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
4.3 Guarantee Reimbursement Agreement dated February 7, 1994,
among the Registrant, Thermedics, Thermo Cardiosystems
Inc., and Thermo Electron (filed as Exhibit 4.4 to
Thermedics' Annual Report on Form 10-K for the fiscal year
ended January 1, 1994 [File No. 1-9567] and incorporated
herein by reference).
10.1 Amended and Restated Corporate Services Agreement dated
January 3, 1993, between Thermo Electron and the Registrant
(filed as Exhibit 10.3 to the Registrant's Annual Report on
Form 10-K for the year ended January 2, 1993 [File No.
1-10574] and incorporated herein by reference).
10.2 Form of Indemnification Agreement for Directors and
Officers of the Registrant (filed as Exhibit 10.13 to the
Registrant's Transition Report on Form 10-K for the six
months ended December 29, 1990 [File No. 1-10574] and
incorporated herein by reference).
10.3 Thermo Electron Corporate Charter as amended and restated
effective January 3, 1993 (filed as Exhibit 10.5 to the
Registrant's Annual Report on Form 10-K for the year ended
January 2, 1993 [File No. 1-10574] and incorporated herein
by reference).
10.4 Consulting Agreement between the Registrant and Peter
Richman, as of August 5, 1993 (filed as Exhibit 10.25 to
the Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 3, 1993 [File No. 1-10574] and
incorporated herein by reference).
10.5 Lease Agreement dated August 2, 1993, between Comtest
Invest B.V. and Comtest Instrumentation B.V. (filed as
Exhibit 10.6 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended January 1, 1994 [File No.
1-10574] and incorporated herein by reference).
10.6 Note dated July 2, 1993, from the Registrant to Thermo
Electron Corporation (filed as Exhibit 10.7 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 1, 1994 [File No. 1-10574] and incorporated
herein by reference).
10.7 Amended and Restated Master Repurchase Agreement dated as
of July 2, 1996, between the Registrant and Thermo Electron
(filed as Exhibit 10.7 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 28, 1996 [File
No. 1-10574] and incorporated herein by reference).
10.8 - 10.18 Reserved.
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.19 1985 Stock Option Plan of the Registrant (filed as Exhibit
10.14 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended June 30, 1985 [File No. 0-8245] and
incorporated herein by reference). (Maximum number of
shares issuable is 300,000 shares, after adjustment to
reflect 1-for-3 reverse stock split effected in November
1992 and 3-for-2 stock splits effected in November 1993 and
August 1996.)
10.20 1990 Stock Option Plan, as amended, of the Registrant
(filed as Exhibit 10.2 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended July 2, 1994 [File No.
1-10574] and incorporated herein by reference). (Maximum
number of shares issuable is 600,000 shares, after
adjustment to reflect share increases in 1993 and 1994,
1-for-3 reverse stock split effected in November 1992, and
3-for-2 stock splits effected in November 1993 and August
1996.)
10.21 Equity Incentive Plan of the Registrant (filed as Exhibit
10.21 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1994 [File No. 1-10574] and
incorporated herein by reference).
In addition to the stock-based compensation plans of the
Registrant, the executive officers of the Registrant may be
granted awards under stock-based compensation plans of
Thermo Electron and Thermedics for services rendered to the
Registrant or such affiliated corporations. The terms of
such plans are substantially the same as those of the
Registrant's Equity Incentive Plan.
10.22 Deferred Compensation Plan for Directors of the Registrant
(filed as Exhibit 10.23 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended July 3, 1993
[File No. 1-10574] and incorporated herein by reference).
10.23 Directors' Stock Option Plan of the Registrant (filed as
Exhibit 10.23 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1994 [File No.
1-10574] and incorporated herein by reference).
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.24 Restated Stock Holdings Assistance Plan and Form of
Promissory Note.
10.25 Amended and Restated Master Guarantee Reimbursement and
Loan Agreement dated December 18, 1997, between the Company
and Thermo Electron.
10.26 Amended and Restated Master Guarantee Reimbursement and
Loan Agreement dated December 18, 1997, between the Company
and Thermedics.
13 Annual Report to Shareholders for the year ended January 3,
1998 (only those portions incorporated herein by
reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27.1 Financial Data Schedule for the year ended January 3, 1998.
27.2 Financial Data Schedule for the quarter ended March 30,
1996 (restated for the adoption of SFAS No. 128).
EXHIBIT 10.24
THERMO VOLTEK CORP.
RESTATED STOCK HOLDING ASSISTANCE PLAN
SECTION 1. Purpose.
The purpose of this Plan is to benefit Thermo Voltek Corp.
(the "Company") and its stockholders by encouraging Key Employees
to acquire and maintain share ownership in the Company, by
increasing such employees' proprietary interest in promoting the
growth and performance of the Company and its subsidiaries and by
providing for the implementation of the Stock Holding Policy.
SECTION 2. Definitions.
The following terms, when used in the Plan, shall have the
meanings set forth below:
Committee: The Human Resources Committee of the Board of
Directors of the Company as appointed from time to time.
Common Stock: The common stock of the Company and any
successor thereto.
Company: Thermo Voltek Corp., a Delaware corporation.
Stock Holding Policy: The Stock Holding Policy of the
Company, as adopted by the Committee and as in effect from time
to time.
Key Employee: Any employee of the Company or any of its
subsidiaries, including any officer or member of the Board of
Directors who is also an employee, as designated by the
Committee, and who, in the judgment of the Committee, will be in
a position to contribute significantly to the attainment of the
Company's strategic goals and long-term growth and prosperity.
Loans: Loans extended to Key Employees by the Company
pursuant to this Plan.
Plan: The Thermo Voltek Corp. Stock Holding Assistance
Plan, as amended from time to time.
SECTION 3. Administration.
The Plan and the Stock Holding Policy shall be administered
by the Committee, which shall have authority to interpret the
Plan and the Stock Holding Policy and, subject to their
provisions, to prescribe, amend and rescind any rules and
regulations and to make all other determinations necessary or
desirable for the administration thereof. The Committee's
interpretations and decisions with regard to the Plan and the
Stock Holding Policy and such rules and regulations as may be
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established thereunder shall be final and conclusive. The
Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or the Stock Holding
Policy, or in any Loan in the manner and to the extent the
Committee deems desirable to carry it into effect. No member of
the Committee shall be liable for any action or omission in
connection with the Plan or the Stock Holding Policy that is made
in good faith.
SECTION 4. Loans and Loan Limits.
The Committee has determined that the provision of Loans
from time to time to Key Employees in such amounts as to cause
such Key Employees to comply with the Stock Holding Policy is, in
the judgment of the Committee, reasonably expected to benefit the
Company and authorizes the Company to extend Loans from time to
time to Key Employees in such amounts as may be requested by such
Key Employees in order to comply with the Stock Holding Policy.
Such Loans may be used solely for the purpose of acquiring Common
Stock (other than upon the exercise of stock options or under
employee stock purchase plans) in open market transactions or
from the Company.
Each Loan shall be full recourse and evidenced by a
non-interest bearing promissory note substantially in the form
attached hereto as Exhibit A (the "Note") and maturing in
accordance with the provisions of Section 6 hereof, and
containing such other terms and conditions, which are not
inconsistent with the provisions of the Plan and the Stock
Holding Policy, as the Committee shall determine in its sole and
absolute discretion.
SECTION 5. Federal Income Tax Treatment of Loans.
For federal income tax purposes, interest on Loans shall be
imputed on any interest free Loan extended under the Plan. A Key
Employee shall be deemed to have paid the imputed interest to the
Company and the Company shall be deemed to have paid said imputed
interest back to the Key Employee as additional compensation.
The deemed interest payment shall be taxable to the Company as
income, and may be deductible to the Key Employee to the extent
allowable under the rules relating to investment interest. The
deemed compensation payment to the Key Employee shall be taxable
to the employee and deductible to the Company, but shall also be
subject to employment taxes such as FICA and FUTA.
SECTION 6. Maturity of Loans.
Each Loan to a Key Employee hereunder shall be due and
payable on demand by the Company. If no such demand is made,
then each Loan shall mature and the principal thereof shall
become due and payable on the fifth anniversary of the date of
the Loan, provided that the Committee may, in its sole and
absolute discretion, authorize such other maturity and repayment
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schedule as the Committee may determine. Each Loan shall also
become immediately due and payable in full, without demand, upon
the occurrence of any of the events set forth in the Note;
provided that the Committee may, in its sole and absolute
discretion, authorize an extension of the time for repayment of a
Loan upon such terms and conditions as the Committee may
determine.
SECTION 7. Amendment and Termination of the Plan.
The Committee may from time to time alter or amend the Plan
or the Stock Holding Policy in any respect, or terminate the Plan
or the Stock Holding Policy at any time. No such amendment or
termination, however, shall alter or otherwise affect the terms
and conditions of any Loan then outstanding to Key Employee
without such Key Employee's written consent, except as otherwise
provided herein or in the promissory note evidencing such Loan.
SECTION 8. Miscellaneous Provisions.
(a) No employee or other person shall have any claim or
right to receive a Loan under the Plan, and no employee shall
have any right to be retained in the employ of the Company due to
his or her participation in the Plan.
(b) No Loan shall be made hereunder unless counsel for the
Company shall be satisfied that such Loan will be in compliance
with applicable federal, state and local laws.
(c) The expenses of the Plan shall be borne by the Company.
(d) The Plan shall be unfunded, and the Company shall not
be required to establish any special or separate fund or to make
any other segregation of assets to assure the making of any Loan
under the Plan.
(e) Except as otherwise provided in Section 7 hereof, by
accepting any Loan under the Plan, each Key Employee shall be
conclusively deemed to have indicated his acceptance and
ratification of, and consent to, any action taken under the Plan
or the Stock Holding Policy by the Company, the Board of
Directors of the Company or the Committee.
(f) The appropriate officers of the Company shall cause to
be filed any reports, returns or other information regarding
Loans hereunder, as may be required by any applicable statute,
rule or regulation.
SECTION 9. Effective Date.
The Plan and the Stock Holding Policy shall become effective
upon approval and adoption by the Committee.
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EXHIBIT A TO STOCK HOLDING ASSISTANCE PLAN
THERMO VOLTEK CORP.
Promissory Note
$_________
Dated:____________
For value received, ________________, an individual whose
residence is located at _______________________ (the "Employee"),
hereby promises to pay to Thermo Voltek Corp. (the "Company"), or
assigns, ON DEMAND, but in any case on or before [insert date
which is the fifth anniversary of date of issuance] (the
"Maturity Date"), the principal sum of [loan amount in words]
($_______), or such part thereof as then remains unpaid, without
interest. Principal shall be payable in lawful money of the
United States of America, in immediately available funds, at the
principal office of the Company or at such other place as the
Company may designate from time to time in writing to the
Employee.
Unless the Company has already made a demand for payment in
full of this Note, the Employee agrees to repay to the Company
from the Employee's annual cash incentive compensation (referred
to as bonus), beginning with the first such bonus payment to
occur after the date of this Note and on each of the next four
bonus payment dates occurring prior to the Maturity Date, such
amount as may be designated by the Company. Any amount remaining
unpaid under this Note shall be due and payable on the Maturity
Date.
This Note may be prepaid at any time or from time to time,
in whole or in part, without any premium or penalty. The
Employee acknowledges and agrees that the Company has advanced to
the Employee the principal amount of this Note pursuant to the
Company's Stock Holding Assistance Plan, and that all terms and
conditions of such Plan are incorporated herein by reference.
The unpaid principal amount of this Note shall be and become
immediately due and payable without notice or demand, at the
option of the Company, upon the occurrence of any of the
following events:
(a) the termination of the Employee's employment with
the Company, with or without cause, for any reason or for no
reason;
(b) the death or disability of the Employee;
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(c) the failure of the Employee to pay his or her
debts as they become due, the insolvency of the Employee,
the filing by or against the Employee of any petition under
the United States Bankruptcy Code (or the filing of any
similar petition under the insolvency law of any
jurisdiction), or the making by the Employee of an
assignment or trust mortgage for the benefit of creditors or
the appointment of a receiver, custodian or similar agent
with respect to, or the taking by any such person of
possession of, any property of the Employee; or
(d) the issuance of any writ of attachment, by trustee
process or otherwise, or any restraining order or injunction
not removed, repealed or dismissed within thirty (30) days
of issuance, against or affecting the person or property of
the Employee or any liability or obligation of the Employee
to the Company.
In case any payment herein provided for shall not be paid
when due, the Employee further promises to pay all costs of
collection, including all reasonable attorneys' fees.
No delay or omission on the part of the Company in
exercising any right hereunder shall operate as a waiver of such
right or of any other right of the Company, nor shall any delay,
omission or waiver on any one occasion be deemed a bar to or
waiver of the same or any other right on any future occasion.
The Employee hereby waives presentment, demand, notice of
prepayment, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or
enforcement of this Note. The undersigned hereby assents to any
indulgence and any extension of time for payment of any
indebtedness evidenced hereby granted or permitted by the
Company.
This Note has been made pursuant to the Company's Stock
Holding Assistance Plan and shall be governed by and construed in
accordance with, such Plan and the laws of the State of Delaware
and shall have the effect of a sealed instrument.
_______________________________
Employee Name: _________________
________________________
Witness
EXHIBIT 10.25
AMENDED AND RESTATED MASTER GUARANTEE REIMBURSEMENT
AND LOAN AGREEMENT
This AGREEMENT is entered into as of the 18th day of
December, 1997 by and among Thermo Electron Corporation (the
"Parent") and those of its subsidiaries that join in this
Agreement by executing the signature page hereto (the "Majority
Owned Subsidiaries").
WITNESSETH:
WHEREAS, the Majority Owned Subsidiaries and their
wholly-owned subsidiaries wish to enter into various financial
transactions, such as convertible or nonconvertible debt, loans,
and equity offerings, and other contractual arrangements with
third parties (the "Underlying Obligations") and may provide
credit support to, on behalf of or for the benefit of, other
subsidiaries of the Parent ("Credit Support Obligations");
WHEREAS, the Majority Owned Subsidiaries and the Parent
acknowledge that the Majority Owned Subsidiaries and their
wholly-owned subsidiaries may be unable to enter into many kinds
of Underlying Obligations without a guarantee of their
performance thereunder from the Parent (a "Parent Guarantee") or
without obtaining Credit Support Obligations from other Majority
Owned Subsidiaries;
WHEREAS, the Majority Owned Subsidiaries and their
wholly-owned subsidiaries may borrow funds from the Parent, and
the Parent may loan funds or provide credit to the Majority Owned
Subsidiaries and their wholly-owned subsidiaries, on a short-term
and unsecured basis;
WHEREAS, certain Majority Owned Subsidiaries ("Second Tier
Majority Owned Subsidiaries ") may themselves be majority owned
subsidiaries of other Majority Owned Subsidiaries ("First Tier
Majority Owned Subsidiaries");
WHEREAS, for various reasons, Parent Guarantees of a Second
Tier Majority Owned Subsidiary's Underlying Obligations may be
demanded and given without the respective First Tier Majority
Owned Subsidiary also issuing a guarantee of such Underlying
Obligation;
WHEREAS, the Parent may itself make a loan or provide other
credit to a Second Tier Majority Owned Subsidiary or its
wholly-owned subsidiaries under circumstances where the
applicable First Tier Majority Owned Subsidiary does not provide
such credit; and
WHEREAS, the Parent is willing to consider continuing to
issue Parent Guarantees and providing credit, and the Majority
Owned Subsidiaries are willing to consider continuing to provide
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Credit Support Obligations and to borrow funds, on the terms and
conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by each party hereto, the parties
agree as follows:
1. If the Parent provides a Parent Guarantee of an Underlying
Obligation, and the beneficiary(ies) of the Parent Guarantee
enforce the Parent Guarantee, or the Parent performs under
the Parent Guarantee for any other reason, then the Majority
Owned Subsidiary that is obligated, either directly or
indirectly through a wholly-owned subsidiary, under such
Underlying Obligation shall indemnify and save harmless the
Parent from any liability, cost, expense or damage
(including reasonable attorneys' fees) suffered by the
Parent as a result of the Parent Guarantee. If the
Underlying Obligation is issued by a Second Tier Majority
Owned Subsidiary or a wholly-owned subsidiary thereof, and
such Second Tier Majority Owned Subsidiary is unable to
fully indemnify the Parent (because of the poor financial
condition of such Second Tier Majority Owned Subsidiary, or
for any other reason), then the First Tier Majority Owned
Subsidiary that owns the majority of the stock of such
Second Tier Majority Owned Subsidiary shall indemnify and
save harmless the Parent from any remaining liability, cost,
expense or damage (including reasonable attorneys' fees)
suffered by the Parent as a result of the Parent Guarantee.
If a Majority Owned Subsidiary or a wholly-owned subsidiary
thereof provides a Credit Support Obligation for any
subsidiary of the Parent, other than a subsidiary of such
Majority Owned Subsidiary, and the beneficiary(ies) of the
Credit Support Obligation enforce the Credit Support
Obligation, or the Majority Owned Subsidiary or its
wholly-owned subsidiary performs under the Credit Support
Obligation for any other reason, then the Parent shall
indemnify and save harmless the Majority Owned Subsidiary or
its wholly-owned subsidiary, as applicable, from any
liability, cost, expense or damage (including reasonable
attorneys' fees) suffered by the Majority Owned Subsidiary
or its wholly-owned subsidiary, as applicable, as a result
of the Credit Support Obligation. Without limiting the
foregoing, Credit Support Obligations include the deposit of
funds by a Majority Owned Subsidiary or a wholly-owned
subsidiary thereof in a credit arrangement with a banking
facility whereby such funds are available to the banking
facility as collateral for overdraft obligations of other
Majority Owned Subsidiaries or their subsidiaries also
participating in the credit arrangement with such banking
facility.
2. For purposes of this Agreement, the term "guarantee" shall
include not only a formal guarantee of an obligation, but
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also any other arrangement where the Parent is liable for
the obligations of a Majority Owned Subsidiary or its
wholly-owned subsidiaries. Such other arrangements include
(a) representations, warranties and/or covenants or other
obligations joined in by the Parent, whether on a joint or
joint and several basis, for the benefit of the Majority
Owned Subsidiary or its wholly-owned subsidiaries and (b)
responsibility of the Parent by operation of law for the
acts and omissions of the Majority Owned Subsidiary or its
wholly-owned subsidiaries, including controlling person
liability under securities and other laws.
3. Promptly after the Parent receives notice that a beneficiary
of a Parent Guarantee is seeking to enforce such Parent
Guarantee, the Parent shall notify the Majority Owned
Subsidiary(s) obligated, either directly or indirectly
through a wholly-owned subsidiary, under the relevant
Underlying Obligation. Such Majority Owned Subsidiary(s) or
wholly-owned subsidiary thereof, as applicable, shall have
the right, at its own expense, to contest the claim of such
beneficiary. If a Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is contesting the claim
of such beneficiary, the Parent will not perform under the
relevant Parent Guarantee unless and until, in the Parent's
reasonable judgment, the Parent is obligated under the terms
of such Parent Guarantee to perform. Subject to the
foregoing, any dispute between a Majority Owned Subsidiary
or wholly-owned subsidiary thereof, as applicable, and a
beneficiary of a Parent Guarantee shall not affect such
Majority Owned Subsidiary's obligation to promptly indemnify
the Parent hereunder. Promptly after a Majority Owned
Subsidiary or wholly-owned subsidiary thereof, as
applicable, receives notice that a beneficiary of a Credit
Support Obligation is seeking to enforce such Credit Support
Obligation, the Majority Owned Subsidiary shall notify the
Parent. The Parent shall have the right, at its own
expense, to contest the claim of such beneficiary. If the
Parent or the subsidiary of the Parent on whose behalf the
Credit Support Obligation is given is contesting the claim
of such beneficiary, the Majority Owned Subsidiary or
wholly-owned subsidiary thereof, as applicable, will not
perform under the relevant Credit Support Obligation unless
and until, in the Majority Owned Subsidiary's reasonable
judgment, the Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is obligated under the
terms of such Credit Support Obligation to perform. Subject
to the foregoing, any dispute between the Parent or the
subsidiary of the Parent on whose behalf the Credit Support
Obligation was given, on the one hand, and a beneficiary of
a Credit Support Obligation, on the other, shall not affect
the Parent's obligation to promptly indemnify the Majority
Owned Subsidiary or its wholly-owned subsidiary, as
applicable, hereunder.
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4. Upon the request of a Majority Owned Subsidiary, the Parent
may make loans and advances to the Majority Owned Subsidiary
or its wholly-owned subsidiaries on a short-term, revolving
credit basis, from time to time in such amounts as mutually
determined by the Parent and the Majority Owned Subsidiary.
The aggregate principal amount of such loans and advances
shall be reflected on the books and records of the Majority
Owned Subsidiary (or wholly-owned subsidiary, as applicable)
and the Parent. All such loans and advances shall be on an
unsecured basis unless specifically provided otherwise in
loan documents executed at that time. The Majority Owned
Subsidiary or its wholly-owned subsidiaries, as applicable,
shall pay interest on the aggregate unpaid principal amount
of such loans from time to time outstanding at a rate
("Interest Rate") equal to the rate of the Commercial Paper
Composite Rate for 90-day maturities as reported by Merrill
Lynch Capital Markets, as an average of the last five
business days of such Majority Owned Subsidiary's latest
fiscal quarter then ended, plus twenty-five (25) basis
points. The Interest Rate shall be adjusted on the first
business day of each fiscal quarter of such Majority Owned
Subsidiary pursuant to the Interest Rate formula contained
in the preceding sentence and shall be in effect for the
entirety of such fiscal quarter. Interest shall be computed
on a 360-day basis. The aggregate principal amount
outstanding and accrued interest thereon shall be payable on
demand. The principal and accrued interest may be paid by
the Majority Owned Subsidiaries or their wholly-owned
subsidiaries, as applicable, at any time or from time to
time, in whole or in part, without premium or penalty. All
payments shall be applied first to accrued interest and then
to principal. Principal and interest shall be payable in
lawful money of the United States of America, in immediately
available funds, at the principal office of the Parent or at
such other place as the Parent may designate from time to
time in writing to the Majority Owned Subsidiary. The
unpaid principal amount of any such borrowings, and accrued
interest thereon, shall become immediately due and payable,
without demand, upon the failure of the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, to
pay its debts as they become due, the insolvency of the
Majority Owned Subsidiary or its wholly-owned subsidiary, as
applicable, the filing by or against the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
any petition under the U.S. Bankruptcy Code (or the filing
of any similar petition under the insolvency law of any
jurisdiction), or the making by the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
an assignment or trust mortgage for the benefit of creditors
or the appointment of a receiver, custodian or similar agent
with respect to, or the taking by any such person of
possession of, any property of the Majority Owned Subsidiary
or its wholly-owned subsidiary, as applicable. In case any
payments of principal and interest shall not be paid when
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due, the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, further promises to pay all cost
of collection, including reasonable attorneys' fees.
5. If the Parent makes a loan or provides other credit ("Credit
Extension") to a Second Tier Majority Owned Subsidiary, the
First Tier Majority Owned Subsidiary that owns the majority
of the stock of such Second Tier Majority Owned Subsidiary
hereby guarantees the Second Tier Majority Owned
Subsidiary's obligations to the Parent thereunder. Such
guaranty shall be enforced only after the Parent, in its
reasonable judgment, determines that the Second Tier
Majority Owned Subsidiary is unable to fully perform its
obligations under the Credit Extension. If the Parent
provides Credit Extension to a wholly-owned subsidiary of a
Second Tier Majority Owned Subsidiary, the Second Tier
Majority Owned Subsidiary hereby guarantees it wholly-owned
subsidiary's obligations to the Parent thereunder and the
First Tier Majority Owned Subsidiary that owns the majority
of the stock of such Second Tier Majority Owned Subsidiary
hereby guarantees the Second Tier Majority Owned
Subsidiary's obligations to the Parent hereunder. Such
guaranty by the First Tier Majority Owned Subsidiary shall
be enforced only after the Parent, in its reasonable
judgment, determines that the Second Tier Majority Owned
Subsidiary is unable to fully perform its guaranty
obligation hereunder.
6. All payments required to be made by a Majority Owned
Subsidiary or its wholly-owned subsidiaries, as applicable,
shall be made within two days after receipt of notice from
the Parent. All payments required to be made by the Parent
shall be made within two days after receipt of notice from
the Majority Owned Subsidiary.
7. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of
Massachusetts applicable to contracts made and performed
therein.
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IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their duly authorized officers as of the date
first above written.
THERMO ELECTRON CORPORATION
By: _____________________________
Melissa F.Riordan
Title: Treasurer
THERMO VOLTEK CORP.
By: _____________________________
John W.Wood Jr.
Title: Chief Executive Officer
EXHIBIT 10.26
AMENDED AND RESTATED MASTER GUARANTEE REIMBURSEMENT
AND LOAN AGREEMENT
This AGREEMENT is entered into as of the 18th day of
December, 1997 by and among Thermedics Inc. (the "Parent") and
those of its subsidiaries that join in this Agreement by
executing the signature page hereto (the "Majority Owned
Subsidiaries").
WITNESSETH:
WHEREAS, the Majority Owned Subsidiaries and their
wholly-owned subsidiaries wish to enter into various financial
transactions, such as convertible or nonconvertible debt, loans,
and equity offerings, and other contractual arrangements with
third parties (the "Underlying Obligations") and may provide
credit support to, on behalf of or for the benefit of, other
subsidiaries of the Parent ("Credit Support Obligations");
WHEREAS, the Majority Owned Subsidiaries and the Parent
acknowledge that the Majority Owned Subsidiaries and their
wholly-owned subsidiaries may be unable to enter into many kinds
of Underlying Obligations without a guarantee of their
performance thereunder from the Parent (a "Parent Guarantee") or
without obtaining Credit Support Obligations from other Majority
Owned Subsidiaries;
WHEREAS, the Majority Owned Subsidiaries and their
wholly-owned subsidiaries may borrow funds from the Parent, and
the Parent may loan funds or provide credit to the Majority Owned
Subsidiaries and their wholly-owned subsidiaries, on a short-term
and unsecured basis; and
WHEREAS, the Parent is willing to consider continuing to
issue Parent Guarantees and providing credit, and the Majority
Owned Subsidiaries are willing to consider continuing to provide
Credit Support Obligations and to borrow funds, on the terms and
conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by each party hereto, the parties
agree as follows:
1. If the Parent provides a Parent Guarantee of an Underlying
Obligation, and the beneficiary(ies) of the Parent Guarantee
enforce the Parent Guarantee, or the Parent performs under
the Parent Guarantee for any other reason, then the Majority
Owned Subsidiary that is obligated, either directly or
indirectly through a wholly-owned subsidiary, under such
Underlying Obligation shall indemnify and save harmless the
Parent from any liability, cost, expense or damage
(including reasonable attorneys' fees) suffered by the
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Parent as a result of the Parent Guarantee. If a Majority
Owned Subsidiary or a wholly-owned subsidiary thereof
provides a Credit Support Obligation for any subsidiary of
the Parent, other than a subsidiary of such Majority Owned
Subsidiary, and the beneficiary(ies) of the Credit Support
Obligation enforce the Credit Support Obligation, or the
Majority Owned Subsidiary or its wholly-owned subsidiary
performs under the Credit Support Obligation for any other
reason, then the Parent shall indemnify and save harmless
the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, from any liability, cost, expense
or damage (including reasonable attorneys' fees) suffered by
the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, as a result of the Credit Support
Obligation. Without limiting the foregoing, Credit Support
Obligations include the deposit of funds by a Majority Owned
Subsidiary or a wholly-owned subsidiary thereof in a credit
arrangement with a banking facility whereby such funds are
available to the banking facility as collateral for
overdraft obligations of other Majority Owned Subsidiaries
or their subsidiaries also participating in the credit
arrangement with such banking facility.
2. For purposes of this Agreement, the term "guarantee" shall
include not only a formal guarantee of an obligation, but
also any other arrangement where the Parent is liable for
the obligations of a Majority Owned Subsidiary or its
wholly-owned subsidiaries. Such other arrangements include
(a) representations, warranties and/or covenants or other
obligations joined in by the Parent, whether on a joint or
joint and several basis, for the benefit of the Majority
Owned Subsidiary or its wholly-owned subsidiaries and (b)
responsibility of the Parent by operation of law for the
acts and omissions of the Majority Owned Subsidiary or its
wholly-owned subsidiaries, including controlling person
liability under securities and other laws.
3. Promptly after the Parent receives notice that a beneficiary
of a Parent Guarantee is seeking to enforce such Parent
Guarantee, the Parent shall notify the Majority Owned
Subsidiary(s) obligated, either directly or indirectly
through a wholly-owned subsidiary, under the relevant
Underlying Obligation. Such Majority Owned Subsidiary(s) or
wholly-owned subsidiary thereof, as applicable, shall have
the right, at its own expense, to contest the claim of such
beneficiary. If a Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is contesting the claim
of such beneficiary, the Parent will not perform under the
relevant Parent Guarantee unless and until, in the Parent's
reasonable judgment, the Parent is obligated under the terms
of such Parent Guarantee to perform. Subject to the
foregoing, any dispute between a Majority Owned Subsidiary
or wholly-owned subsidiary thereof, as applicable, and a
beneficiary of a Parent Guarantee shall not affect such
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Majority Owned Subsidiary's obligation to promptly indemnify
the Parent hereunder. Promptly after a Majority Owned
Subsidiary or wholly-owned subsidiary thereof, as
applicable, receives notice that a beneficiary of a Credit
Support Obligation is seeking to enforce such Credit Support
Obligation, the Majority Owned Subsidiary shall notify the
Parent. The Parent shall have the right, at its own
expense, to contest the claim of such beneficiary. If the
Parent or the subsidiary of the Parent on whose behalf the
Credit Support Obligation is given is contesting the claim
of such beneficiary, the Majority Owned Subsidiary or
wholly-owned subsidiary thereof, as applicable, will not
perform under the relevant Credit Support Obligation unless
and until, in the Majority Owned Subsidiary's reasonable
judgment, the Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is obligated under the
terms of such Credit Support Obligation to perform. Subject
to the foregoing, any dispute between the Parent or the
subsidiary of the Parent on whose behalf the Credit Support
Obligation was given, on the one hand, and a beneficiary of
a Credit Support Obligation, on the other, shall not affect
the Parent's obligation to promptly indemnify the Majority
Owned Subsidiary or its wholly-owned subsidiary, as
applicable, hereunder.
4. Upon the request of a Majority Owned Subsidiary, the Parent
may make loans and advances to the Majority Owned Subsidiary
or its wholly-owned subsidiaries on a short-term, revolving
credit basis, from time to time in such amounts as mutually
determined by the Parent and the Majority Owned Subsidiary.
The aggregate principal amount of such loans and advances
shall be reflected on the books and records of the Majority
Owned Subsidiary (or wholly-owned subsidiary, as applicable)
and the Parent. All such loans and advances shall be on an
unsecured basis unless specifically provided otherwise in
loan documents executed at that time. The Majority Owned
Subsidiary or its wholly-owned subsidiaries, as applicable,
shall pay interest on the aggregate unpaid principal amount
of such loans from time to time outstanding at a rate
("Interest Rate") equal to the rate of the Commercial Paper
Composite Rate for 90-day maturities as reported by Merrill
Lynch Capital Markets, as an average of the last five
business days of such Majority Owned Subsidiary's latest
fiscal quarter then ended, plus twenty-five (25) basis
points. The Interest Rate shall be adjusted on the first
business day of each fiscal quarter of such Majority Owned
Subsidiary pursuant to the Interest Rate formula contained
in the preceding sentence and shall be in effect for the
entirety of such fiscal quarter. Interest shall be computed
on a 360-day basis. The aggregate principal amount
outstanding and accrued interest thereon shall be payable on
demand. The principal and accrued interest may be paid by
the Majority Owned Subsidiaries or their wholly-owned
subsidiaries, as applicable, at any time or from time to
PAGE
<PAGE>
time, in whole or in part, without premium or penalty. All
payments shall be applied first to accrued interest and then
to principal. Principal and interest shall be payable in
lawful money of the United States of America, in immediately
available funds, at the principal office of the Parent or at
such other place as the Parent may designate from time to
time in writing to the Majority Owned Subsidiary. The
unpaid principal amount of any such borrowings, and accrued
interest thereon, shall become immediately due and payable,
without demand, upon the failure of the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, to
pay its debts as they become due, the insolvency of the
Majority Owned Subsidiary or its wholly-owned subsidiary, as
applicable, the filing by or against the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
any petition under the U.S. Bankruptcy Code (or the filing
of any similar petition under the insolvency law of any
jurisdiction), or the making by the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
an assignment or trust mortgage for the benefit of creditors
or the appointment of a receiver, custodian or similar agent
with respect to, or the taking by any such person of
possession of, any property of the Majority Owned Subsidiary
or its wholly-owned subsidiary, as applicable. In case any
payments of principal and interest shall not be paid when
due, the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, further promises to pay all cost
of collection, including reasonable attorneys' fees.
5. All payments required to be made by a Majority Owned
Subsidiary or its wholly-owned subsidiaries, as applicable,
shall be made within two days after receipt of notice from
the Parent. All payments required to be made by the Parent
shall be made within two days after receipt of notice from
the Majority Owned Subsidiary.
6. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of
Massachusetts applicable to contracts made and performed
therein.
PAGE
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their duly authorized officers as of the date
first above written.
THERMEDICS INC.
By: _____________________________
John W.Wood Jr.
Title: President
THERMO VOLTEK CORP.
By: _____________________________
Melissa F.Riordan
Title: Treasurer
Exhibit 13
THERMO VOLTEK CORP.
Consolidated Financial Statements
1997
PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Consolidated Statement of Income
(In thousands except per share amounts) 1997 1996 1995
------------------------------------------------------------------------
Revenues (Note 11) $44,648 $48,507 $36,326
------- ------- -------
Costs and Operating Expenses:
Cost of revenues 24,860 24,357 18,790
Selling, general, and administrative
expenses (Note 9) 15,992 14,889 11,766
Research and development expenses 3,620 3,618 2,349
------- ------- -------
44,472 42,864 32,905
------- ------- -------
Operating Income 176 5,643 3,421
Interest Income 1,247 1,774 2,073
Interest Expense (includes $605, $706, and
$706 to related parties; Note 9) (1,162) (1,408) (2,130)
Gain on Sale of Related-party Investments
(Notes 2 and 9) 180 - -
Other Income 53 - -
------- ------- -------
Income Before Provision for Income Taxes 494 6,009 3,364
Provision for Income Taxes (Note 6) 215 1,540 692
------- ------- -------
Net Income $ 279 $ 4,469 $ 2,672
======= ======= =======
Earnings per Share (Note 12):
Basic $ .03 $ .51 $ .41
======= ======= =======
Diluted $ .03 $ .38 $ .28
======= ======= =======
Weighted Average Shares (Note 12):
Basic 9,182 8,827 6,528
======= ======= =======
Diluted 9,305 13,628 13,512
======= ======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
2PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Consolidated Balance Sheet
(In thousands) 1997 1996
------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $14,608 $17,874
Available-for-sale investments, at quoted
market value (amortized cost of $3,041 and
$10,011; includes $1,399 of related-party
investments in 1996; Notes 2 and 9) 3,041 10,067
Accounts receivable, less allowances of $799 and
$587 10,388 12,123
Inventories 10,981 10,725
Prepaid income taxes and other current assets
(Note 6) 1,999 2,025
------- -------
41,017 52,814
------- -------
Property, Plant, and Equipment, at Cost, Net 3,682 4,151
------- -------
Long-term Prepaid Income Taxes and Other Assets 539 299
------- -------
Cost in Excess of Net Assets of Acquired
Companies (Note 3) 18,058 16,425
------- -------
$63,296 $73,689
======= =======
3PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Consolidated Balance Sheet (continued)
(In thousands except share amounts) 1997 1996
------------------------------------------------------------------------
Liabilities and Shareholders' Investment
Current Liabilities:
Notes payable (Note 8) $ 2,376 $ 1,666
Accounts payable 3,194 3,718
Accrued payroll and employee benefits 1,159 1,264
Accrued income taxes 489 1,244
Accrued commissions 1,080 1,063
Accrued warranty costs 624 449
Other accrued expenses 1,538 1,594
Due to parent company and affiliated companies 694 901
------- -------
11,154 11,899
------- -------
Subordinated Convertible Obligations
(includes $10,000 of related-party debt; Note 8) 17,750 19,345
------- -------
Commitments (Note 7)
Shareholders' Investment (Notes 4 and 5):
Common stock, $.05 par value, 25,000,000
shares authorized; 9,939,865 and 9,765,676
shares issued 497 488
Capital in excess of par value 38,799 37,762
Retained earnings 4,563 4,284
Treasury stock at cost, 1,098,912 and 6,438 shares (8,836) (69)
Cumulative translation adjustment (631) (56)
Net unrealized gain on available-for-sale
investments (Note 2) - 36
------- -------
34,392 42,445
------- -------
$63,296 $73,689
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
4PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Consolidated Statement of Cash Flows
(In thousands) 1997 1996 1995
-----------------------------------------------------------------------
Operating Activities:
Net income $ 279 $ 4,469 $ 2,672
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,117 1,636 1,529
Provision for losses on accounts
receivable 326 103 135
Gain on sale of investments (180) - -
Other (330) - (17)
Changes in current accounts,
excluding the effects of
acquisitions:
Accounts receivable 1,616 (3,552) (1,525)
Inventories 233 (903) (2,527)
Other current assets 25 (1,390) (44)
Accounts payable (625) (191) 968
Other current liabilities (1,386) 329 720
------- ------- -------
Net cash provided by operating
activities 2,075 501 1,911
------- ------- -------
Investing Activities:
Acquisitions, net of cash acquired
(Note 3) (2,820) (6,040) (4,127)
Purchases of available-for-sale
investments - (5,500) (7,500)
Proceeds from sale and maturities of
available-for-sale investments 6,980 21,009 10,000
Purchases of property, plant, and
equipment (938) (2,048) (1,364)
Other (171) 325 526
------- ------- -------
Net cash provided by (used in)
investing activities $ 3,051 $ 7,746 $(2,465)
------- ------- -------
5PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Consolidated Statement of Cash Flows (continued)
(In thousands) 1997 1996 1995
-----------------------------------------------------------------------
Financing Activities:
Net increase in short-term obligations $ 979 $ 510 $ 435
Net proceeds from issuance of Company
common stock 201 232 324
Repurchases of Company common stock and
long-term obligations (9,655) - (132)
------- ------- -------
Net cash provided by (used in) financing
activities (8,475) 742 627
------- ------- -------
Exchange Rate Effect on Cash 83 234 (377)
------- ------- -------
Increase (Decrease) in Cash and Cash
Equivalents (3,266) 9,223 (304)
Cash and Cash Equivalents at Beginning
of Year 17,874 8,651 8,955
------- ------- -------
Cash and Cash Equivalents at End of Year $14,608 $17,874 $ 8,651
======= ======= =======
Cash Paid For:
Interest $ 1,121 $ 1,311 $ 2,034
Income taxes $ 1,335 $ 2,604 $ 236
Noncash Activities:
Conversions of subordinated convertible
obligations (Note 8) $ 895 $17,395 $ 9,111
======= ======= =======
Fair value of assets of acquired
companies $ 4,807 $ 7,048 $ 5,228
Cash paid for acquired companies (3,248) (6,300) (4,157)
------- ------- -------
Liabilities assumed of acquired
companies $ 1,559 $ 748 $ 1,071
======= ======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
6PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Consolidated Statement of Shareholders' Investment
(In thousands) 1997 1996 1995
-----------------------------------------------------------------------
Common Stock, $.05 Par Value
Balance at beginning of year $ 488 $ 244 $ 202
Issuance of stock under
employees' and directors'
stock plans 3 3 3
Conversion of subordinated
convertible obligations
(Note 8) 6 83 39
Effect of three-for-two
stock split - 158 -
------- ------- -------
Balance at end of year 497 488 244
------- ------- -------
Capital in Excess of Par Value
Balance at beginning of year 37,762 20,545 11,237
Issuance of stock under
employees' and directors'
stock plans 10 279 291
Tax benefit related to
employees' and directors'
stock plans 153 112 166
Conversion of subordinated
convertible obligations
(Note 8) 874 16,984 8,851
Effect of three-for-two
stock split - (158) -
------- ------- -------
Balance at end of year 38,799 37,762 20,545
------- ------- -------
Retained Earnings (Accumulated
Deficit)
Balance at beginning of year 4,284 (185) (2,857)
Net income 279 4,469 2,672
------- ------- -------
Balance at end of year $ 4,563 $ 4,284 $ (185)
------- ------- -------
7PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Consolidated Statement of Shareholders' Investment (continued)
(In thousands) 1997 1996 1995
-----------------------------------------------------------------------
Treasury Stock
Balance at beginning of year $ (69) $ (20) $ (50)
Issuance of stock under
employees' and directors'
stock plans 188 (49) 30
Repurchase of Company common stock (8,955) - -
------- ------- -------
Balance at end of year (8,836) (69) (20)
------- ------- -------
Cumulative Translation Adjustment
Balance at beginning of year (56) 229 260
Translation adjustment (575) (285) (31)
------- ------- -------
Balance at end of year (631) (56) 229
------- ------- -------
Net Unrealized Gain (Loss) on
Available-for-sale Investments
Balance at beginning of year 36 146 (320)
Change in net unrealized gain
(loss) on available-for-sale
investments (Note 2) (36) (110) 466
------- ------- -------
Balance at end of year - 36 146
------- ------- -------
Total Shareholders' Investment $34,392 $42,445 $20,959
======= ======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
8PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Thermo Voltek Corp. (the Company) designs, manufactures, and markets
test instruments and a range of products related to power amplification,
conversion, and quality. The Company's test instruments simulate pulsed
electromagnetic interference (pulsed EMI), radio frequency interference
(RFI), and changes in AC voltage, to allow manufacturers of electronic
systems and integrated circuits to test for electromagnetic compatibility
(EMC) to ensure product quality and to meet certain regulatory
requirements. The Company also provides EMC consulting and
systems-integration services and distributes EMC-related products. The
Company's power products include radio frequency (RF) and microwave power
amplifiers, power-conversion equipment, and high-voltage and
application-specific power supplies. These power products are used in
communications, broadcast, research, and medical imaging applications.
Relationship with Thermedics Inc. and Thermo Electron Corporation
As of January 3, 1998, Thermedics Inc. owned 5,771,208 shares of the
Company's common stock, representing 65% of such stock outstanding.
Thermedics is a 58%-owned subsidiary of Thermo Electron Corporation. As
of January 3, 1998, Thermo Electron owned 238,200 shares of the Company's
common stock, representing 3% of such stock outstanding.
Principles of Consolidation
The accompanying financial statements include the accounts of the
Company and its wholly owned subsidiaries. All material intercompany
accounts and transactions have been eliminated.
Fiscal Year
The Company has adopted a fiscal year ending the Saturday nearest
December 31. References to 1997, 1996, and 1995 are for the fiscal years
ended January 3, 1998, December 28, 1996, and December 30, 1995,
respectively. Fiscal year 1997 included 53 weeks; 1996 and 1995 each
included 52 weeks.
Revenue Recognition
The Company recognizes product revenues upon shipment of its
products. The Company provides a reserve for its estimate of warranty
costs at the time of shipment. Revenues and profits on substantially all
contracts are recognized using the percentage-of-completion method.
Revenues recorded under the percentage-of-completion method were
$5,367,000 in 1997, $4,806,000 in 1996, and $2,884,000 in 1995. The
percentage of completion is determined by relating either the actual
costs or actual labor incurred to date to management's estimate of total
costs or total labor, respectively, to be incurred on each contract. If a
loss is indicated on any contract in process, a provision is made
currently for the entire loss. The Company's contracts generally provide
for billing of customers upon the attainment of certain milestones
specified in each contract. Revenues earned on contracts in process in
excess of billings are included in inventories in the accompanying
9PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
balance sheet and were not material at year-end 1997 and 1996. There are
no significant amounts included in the accompanying balance sheet that
are not expected to be recovered from existing contracts at current
contract values, or that are not expected to be collected within one
year, including amounts billed but not paid under retainage provisions.
Stock-based Compensation Plans
The Company applies Accounting Principles Board Opinion (APB) No. 25,
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its stock-based compensation plans (Note 4). Accordingly,
no accounting recognition is given to stock options granted at fair
market value until they are exercised. Upon exercise, net proceeds,
including tax benefits realized, are credited to equity.
Income Taxes
In accordance with Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," the Company recognizes deferred
income taxes based on the expected future tax consequences of differences
between the financial statement basis and the tax basis of assets and
liabilities calculated using enacted tax rates in effect for the year in
which the differences are expected to be reflected in the tax return.
Earnings per Share
During the fourth quarter of 1997, the Company adopted SFAS No. 128,
"Earnings per Share" (Note 12). As a result, all previously reported
earnings per share have been restated; however, basic earnings per share
equals the Company's previously reported primary earnings per share for
1996 and diluted earnings per share equals the Company's previously
reported fully diluted earnings per share for 1996 and 1995. Basic
earnings per share have been computed by dividing net income by the
weighted average number of shares outstanding during the year. Except
where the result would be antidilutive, diluted earnings per share have
been computed assuming the conversion of convertible obligations and the
elimination of the related interest expense, and the exercise of stock
options, as well as their related income tax effects (Note 12).
Stock Split
All share and per share information has been restated to reflect a
three-for-two stock split, effected in the form of a 50% stock dividend,
distributed in August 1996.
10PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Cash and Cash Equivalents
At year-end 1997 and 1996, $13,744,000 and $16,623,000, respectively,
of the Company's cash equivalents were invested in a repurchase agreement
with Thermo Electron. Under this agreement, the Company in effect lends
excess cash to Thermo Electron, which Thermo Electron collateralizes with
investments principally consisting of corporate notes, commercial paper,
U.S. government-agency securities, money market funds, and other
marketable equity securities, in the amount of at least 103% of such
obligation. The Company's funds subject to the repurchase agreement are
readily convertible into cash by the Company. The repurchase agreement
earns a rate based on the 90-day Commercial Paper Composite Rate plus 25
basis points, set at the beginning of each quarter. Cash equivalents are
carried at cost, which approximates market value.
Inventories
Inventories are stated at the lower of cost (on a first-in, first-out
basis) or market value and include materials, labor, and manufacturing
overhead. The components of inventories are as follows:
(In thousands) 1997 1996
-----------------------------------------------------------------------
Raw materials $ 5,100 $ 4,835
Work in process 4,089 3,097
Finished goods 1,792 2,793
------- -------
$10,981 $10,725
======= =======
Property, Plant, and Equipment
The costs of additions and improvements are capitalized, while
maintenance and repairs are charged to expense as incurred. The Company
provides for depreciation and amortization using the straight-line method
over the estimated useful lives of the property as follows: building and
improvements, 5 to 25 years; machinery and equipment, 2 to 10 years; and
leasehold improvements, the shorter of the term of the lease or the life
of the asset. Property, plant, and equipment consists of the following:
(In thousands) 1997 1996
-----------------------------------------------------------------------
Land and building $ 1,808 $ 1,806
Machinery, equipment, and leasehold improvements 8,829 7,933
------- -------
10,637 9,739
Less: Accumulated depreciation and amortization 6,955 5,588
------- -------
$ 3,682 $ 4,151
======= =======
11PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Cost in Excess of Net Assets of Acquired Companies
The excess of cost over the fair value of net assets of acquired
companies is amortized using the straight-line method over periods not
exceeding 40 years. Accumulated amortization was $1,886,000 and
$1,371,000 at year-end 1997 and 1996, respectively. The Company assesses
the future useful life of this asset whenever events or changes in
circumstances indicate that the current useful life has diminished. The
Company considers the future undiscounted cash flows of the acquired
companies in assessing the recoverability of this asset. If impairment
has occurred, any excess of carrying value over fair value is recorded as
a loss.
Foreign Currency
All assets and liabilities of the Company's foreign subsidiaries are
translated at year-end exchange rates, and revenues and expenses are
translated at average exchange rates for the year in accordance with SFAS
No. 52, "Foreign Currency Translation." Resulting translation adjustments
are reflected as a separate component of shareholders' investment titled
"Cumulative translation adjustment." Foreign currency transaction gains
and losses are included in the accompanying statement of income and are
not material for the three years presented.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Presentation
Certain amounts in 1996 have been reclassified to conform to the
presentation in the 1997 financial statements.
2. Available-for-sale Investments
In accordance with SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," the Company's debt and marketable equity
securities are considered available-for-sale investments in the
accompanying balance sheet and are carried at market value, with the
difference between cost and market value, net of related tax effects,
recorded currently as a component of shareholders' investment titled "Net
unrealized gain on available-for-sale investments."
12PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
2. Available-for-sale Investments (continued)
The aggregate market value, cost basis, and gross unrealized gains
and losses of available-for-sale investments by major security type are
as follows:
Gross Gross
Market Cost Unrealized Unrealized
(In thousands) Value Basis Gains Losses
-----------------------------------------------------------------------
1997
Corporate bonds $ 1,001 $ 1,001 $ - $ -
Other 2,040 2,040 - -
------- ------- ------- -------
$ 3,041 $ 3,041 $ - $ -
======= ======= ======= =======
1996
Government-agency
securities $ 4,501 $ 4,500 $ 1 $ -
Corporate bonds 2,379 2,314 65 -
Money market preferred
stock 1,060 1,070 - (10)
Other 2,127 2,127 - -
------- ------- ------- -------
$10,067 $10,011 $ 66 $ (10)
======= ======= ======= =======
All of the Company's available-for-sale investments in the
accompanying 1997 balance sheet had contractual maturities of one year or
less. Actual maturities may differ from contractual maturities as a
result of the Company's intent to sell these securities prior to maturity
and as a result of put and call options that enable the Company, the
issuer, or both to redeem these securities at an earlier date.
Gain on the sale of investments in the accompanying 1997 statement of
income represents the gross realized gains relating to the sale of
related-party available-for-sale investments (Note 9). To determine the
gain, the cost of such investments was based on specific identification.
3. Acquisitions
In April 1997, the Company acquired substantially all of the assets,
subject to certain liabilities, of Milmega Ltd. for approximately
$3,248,000 in cash. Milmega primarily manufactures and markets microwave
amplifiers that are suitable for EMC testing, physics research, and
communications, medical, and military applications.
13PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
3. Acquisitions (continued)
In July 1996, the Company acquired substantially all of the assets,
subject to certain liabilities, of Pacific Power Source Corporation for
$6,300,000 in cash, including the repayment of $800,000 in debt. Pacific
Power manufactures programmable power amplifiers that can be incorporated
into EMC test equipment to assess how well electronics tolerate normal
variations in the quality and quantity of AC voltage. These amplifiers
are also used in other kinds of test equipment and in
application-specific power supplies.
In March 1995, the Company acquired substantially all of the assets,
subject to certain liabilities, of Kalmus Engineering Incorporated and
R.F. Power Labs, Incorporated (collectively, Kalmus) for $3,755,000 in
cash. Kalmus is a manufacturer of radio frequency power amplifiers and
systems used to test products for immunity to RFI and in medical imaging
and telecommunications applications.
Additionally, the Company acquired a component-reliability product
line in 1995 for approximately $402,000 in cash.
These acquisitions have been accounted for using the purchase method
of accounting, and their results of operations have been included in the
accompanying financial statements from their respective dates of
acquisition. The aggregate cost of these acquisitions exceeded the
estimated fair value of the acquired net assets by $10,413,000, which is
being amortized over periods not exceeding 40 years. Allocation of the
purchase price for these acquisitions was based on estimates of the fair
value of the net assets acquired and, for Milmega, is subject to
adjustment upon finalization of the purchase price allocation. The
Company has gathered no information that indicates that the final
allocation will differ materially from the preliminary estimate.
Pro forma data is not presented for the Company's acquisitions since
they were not material to the Company's results of operations.
4. Employee Benefit Plans
Stock-based Compensation Plans
Stock Option Plans
------------------
The Company has stock-based compensation plans for its key employees,
directors, and others. Two of the plans, adopted in 1985 and 1990, permit
the grant of nonqualified and incentive stock options. The plan adopted
in 1985 expired in 1995, and no grants were made after that date. A third
plan, adopted in 1994, permits the grant of a variety of stock and
stock-based awards as determined by the human resources committee of the
Company's Board of Directors (the Board Committee), including restricted
stock, stock options, stock bonus shares, or performance-based shares. To
date, only nonqualified stock options have been awarded under this plan.
The option recipients and the terms of options granted under these plans
are determined by the Board Committee. Generally, options granted to date
are exercisable immediately, but are subject to certain transfer
restrictions and the right of the Company to repurchase shares issued
upon exercise of the options at the exercise price, upon certain events.
14PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
4. Employee Benefit Plans (continued)
The restrictions and repurchase rights generally lapse ratably over a
five to ten year period, depending on the term of the option, which may
range from five to twelve years. Nonqualified stock options may be
granted at any price determined by the Board Committee, although
incentive stock options must be granted at not less than the fair market
value of the Company's stock on the date of grant. To date, all options
have been granted at fair market value. The Company also has a directors'
stock option plan, adopted in 1993, that provides for the grant of stock
options to outside directors pursuant to a formula approved by the
Company's shareholders. Options awarded under this plan are exercisable
six months after the date of grant and expire three or seven years after
the date of grant. In addition to the Company's stock-based compensation
plans, certain officers and key employees may also participate in the
stock-based compensation plans of Thermo Electron and Thermedics.
A summary of the Company's stock option activity is as follows:
1997 1996 1995
---------------- ---------------- ----------------
Weighted Weighted Weighted
Number Average Number Average Number Average
(Shares of Exercise of Exercise of Exercise
in thousands) Shares Price Shares Price Shares Price
------------------------------------------------------------------------
Options outstanding,
beginning of year 782 $ 6.37 766 $ 5.22 740 $ 4.07
Granted 196 8.27 115 12.52 167 8.73
Exercised (95) 3.28 (55) 3.64 (98) 2.94
Forfeited (93) 9.06 (44) 5.74 (43) 4.30
----- ----- -----
Options outstanding,
end of year 790 $ 6.90 782 $ 6.37 766 $ 5.22
===== ====== ===== ====== ===== ======
Options exercisable 790 $ 6.90 782 $ 6.37 766 $ 5.22
===== ====== ===== ====== ===== ======
Options available
for grant 281 85 155
===== ===== =====
15PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
4. Employee Benefit Plans (continued)
A summary of the status of the Company's stock options at January 3,
1998, is as follows:
Options Outstanding and Exercisable
-----------------------------------
Weighted
Weighted Average Average
Number Remaining Exercise
Range of Exercise Prices Shares Contractual Life Price
----------------------------------------------------------------------
(Shares in thousands)
$ 1.59 - $ 4.70 221 2.0 years $ 3.30
4.71 - 7.82 324 6.7 years 6.33
7.83 - 10.93 173 5.6 years 10.15
10.94 - 14.05 72 6.0 years 12.60
---
$ 1.59 - $14.05 790 5.1 years $ 6.90
===
Employee Stock Purchase Program
-------------------------------
Substantially all of the Company's full-time U.S. employees are
eligible to participate in an employee stock purchase program sponsored
by the Company and Thermo Electron. Under this program, shares of the
Company's and Thermo Electron's common stock may be purchased at the end
of a 12-month period at 95% of the fair market value at the beginning of
the period, and the shares purchased are subject to a six-month resale
restriction. Prior to November 1, 1995, the applicable shares of common
stock could be purchased at 85% of the fair market value at the beginning
of the period, and the shares purchased were subject to a one-year resale
restriction. Shares are purchased through payroll deductions of up to 10%
of each participating employee's gross wages.
Pro Forma Stock-based Compensation Expense
In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock-based Compensation," which sets forth a
fair-value based method of recognizing stock-based compensation expense.
As permitted by SFAS No. 123, the Company has elected to continue to
apply APB No. 25 to account for its stock-based compensation plans. Had
compensation cost for awards in 1997, 1996, and 1995 under the Company's
stock-based compensation plans been determined based on the fair value at
16PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
4. Employee Benefit Plans (continued)
the grant dates consistent with the method set forth under SFAS No. 123,
the effect on the Company's net income and earnings per share would have
been as follows:
(In thousands except per share amounts) 1997 1996 1995
------------------------------------------------------------------------
Net income:
As reported $ 279 $4,469 $2,672
Pro forma 16 4,294 2,601
Basic earnings per share:
As reported .03 .51 .41
Pro forma - .49 .40
Diluted earnings per share:
As reported .03 .38 .28
Pro forma - .37 .28
Because the method prescribed by SFAS No. 123 has not been applied to
options granted prior to January 1, 1995, the resulting pro forma
compensation expense may not be representative of the amount to be
expected in future years. Pro forma compensation expense for options
granted is reflected over the vesting period; therefore, future pro forma
compensation expense may be greater as additional options are granted.
The weighted average fair value per share of options granted was
$3.41, $5.58, and $3.70 in 1997, 1996, and 1995, respectively. The fair
value of each option grant was estimated on the grant date using the
Black-Scholes option-pricing model with the following weighted-average
assumptions:
1997 1996 1995
------------------------------------------------------------------------
Volatility 37% 41% 41%
Risk-free interest rate 6.1% 6.6% 6.3%
Expected life of options 4.8 years 5 years 4.4 years
The Black-Scholes option-pricing model was developed for use in
estimating the fair value of traded options that have no vesting
restrictions and are fully transferable. In addition, option-pricing
models require the input of highly subjective assumptions, including
expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of
the fair value of its employee stock options.
17PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
4. Employee Benefit Plans (continued)
401(k) Savings Plan
Substantially all of the Company's full-time U.S. employees are
eligible to participate in Thermo Electron's 401(k) savings plan.
Contributions to the plan are made by both the employee and the Company.
Company contributions are based upon the level of employee contributions.
For this plan, the Company contributed and charged to expense $258,000,
$249,000, and $184,000 in 1997, 1996, and 1995, respectively.
5. Common Stock
At January 3, 1998, the Company had reserved 4,670,330 unissued
shares of its common stock for possible issuance under stock-based
compensation plans and for issuance upon possible conversion of the
Company's subordinated convertible obligations.
6. Income Taxes
The components of income before provision for income taxes are as
follows:
(In thousands) 1997 1996 1995
-----------------------------------------------------------------------
Domestic $ 1,805 $ 4,684 $ 2,616
Foreign (1,311) 1,325 748
------- ------- -------
$ 494 $ 6,009 $ 3,364
======= ======= =======
The components of the provision for income taxes are as follows:
(In thousands) 1997 1996 1995
-----------------------------------------------------------------------
Currently payable (receivable):
Federal $ 815 $1,554 $ 608
Foreign (540) 466 323
State 92 249 276
------ ------ ------
367 2,269 1,207
------ ------ ------
Net prepaid:
Federal (132) (689) (412)
State (20) (40) (103)
------ ------ ------
(152) (729) (515)
------ ------ ------
$ 215 $1,540 $ 692
====== ====== ======
18PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
6. Income Taxes (continued)
The Company receives a tax deduction upon exercise of nonqualified
stock options by employees for the difference between the exercise price
and the market price of the Company's common stock on the date of
exercise. The provision for income taxes that is currently payable does
not reflect $153,000, $112,000, and $166,000 of such benefits allocated
to capital in excess of par value in 1997, 1996, and 1995, respectively.
The provision for income taxes in the accompanying statement of
income differs from the provision calculated by applying the statutory
federal income tax rate of 34% to income before provision for income
taxes due to the following:
(In thousands) 1997 1996 1995
-----------------------------------------------------------------------
Provision for income taxes at
statutory rate $ 168 $2,043 $1,144
Increases (decreases) resulting from:
Decrease in valuation allowance - (684) (630)
State income taxes, net of federal tax 48 138 114
Nondeductible expenses 63 62 86
Foreign tax rate and tax regulation
differential 10 15 68
Foreign sales corporation (89) (123) (87)
Other 15 89 (3)
------ ------ ------
$ 215 $1,540 $ 692
====== ====== ======
Prepaid income taxes in the accompanying balance sheet consist of the
following:
(In thousands) 1997 1996
-------------------------------------------------------------
Prepaid (deferred) income taxes:
Tax loss and credit carryforwards $ 568 $ 652
Accruals and reserves 199 65
Inventory basis differences 875 693
Accrued compensation 470 290
Allowance for doubtful accounts 174 82
Other (108) 20
------ ------
$2,178 $1,802
====== ======
The Company had a valuation allowance at year-end 1995 that primarily
related to uncertainty surrounding the realization of tax loss and credit
carryforwards and certain other tax assets of the Company. The valuation
allowance was eliminated in 1996. Of the total decrease to the valuation
allowance, $684,000 related to reduced uncertainty surrounding the
realizability of the tax loss and credit carryforwards, and was recorded
19PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
6. Income Taxes (continued)
as a decrease in the provision for income taxes in 1996. The remaining
decrease in the valuation allowance primarily related to the elimination
of related tax loss and credit carryforwards due to the inability to
obtain a benefit prior to the expiration thereof. The provision for
income taxes was reduced by $630,000 in 1995 as a result of changes in
the amount of estimated tax assets and the utilization of a portion of
the Company's tax loss and credit carryforwards.
The Company has federal tax net loss carryforwards, subject to the
limitations described below. These net operating loss carryforwards will
begin to expire in 1999. Pursuant to U.S. Internal Revenue Code Sections
382 and 383, the utilization of the net operating loss carryforwards is
limited to the tax benefit of a deduction of approximately $240,000 per
year with any unused portion of this annual limitation carried forward to
future years. As of January 3, 1998, net operating loss carryforwards
totaled $2.5 million, including $0.6 million that have not been benefited
since they will expire unused.
A provision has not been made for U.S. or additional foreign taxes on
$0.6 million of undistributed earnings of foreign subsidiaries that could
be subject to tax if remitted to the U.S. because the Company currently
plans to keep these amounts permanently reinvested overseas.
7. Commitments
The Company occupies office and operating facilities under operating
leases expiring at various dates through 2010. The accompanying statement
of income includes expenses from operating leases of $886,000, $555,000,
and $381,000 in 1997, 1996, and 1995, respectively. The future minimum
payments due under noncancellable operating leases as of January 3, 1998,
are $814,000 in 1998; $745,000 in 1999; $655,000 in 2000; $312,000 in
2001; $149,000 in 2002; and $89,000 in 2003 and thereafter. Total future
minimum lease payments are $2,764,000.
8. Short- and Long-term Obligations
Short-term Obligations
The Company has lines of credit denominated in certain foreign
currencies to borrow up to approximately $3,638,000. Amounts borrowed
under these arrangements are classified as notes payable in the
accompanying balance sheet. The weighted average interest rate for these
borrowings at year-end 1997 and 1996 was 8.0% and 6.3%, respectively.
Unused lines of credit were $1,262,000 at January 3, 1998.
20PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
8. Short- and Long-term Obligations (continued)
Long-term Obligations
Long-term obligations of the Company are as follows:
(In thousands except per share amounts) 1997 1996
------------------------------------------------------------------------
3 3/4% Subordinated convertible debentures,
due 2000, convertible at $7.83 per share (a) $ 7,750 $ 9,345
5% Subordinated convertible note, due 2003,
convertible at $3.78 per share (b) 4,000 4,000
6 3/4% Subordinated convertible note, due 2002,
convertible at $4.27 per share (b) 6,000 6,000
------- -------
$17,750 $19,345
======= =======
___________
(a) In lieu of issuing shares of the Company's common stock upon
conversion, the Company has the option to pay holders of the
debentures cash equal to the weighted average market price of the
Company's common stock on the last trading date prior to conversion.
(b) Represents an obligation to Thermedics.
During 1997 and 1996, $895,000 and $17,395,000, respectively, of
convertible obligations were converted into shares of the Company's
common stock.
Short- and long-term obligations in the accompanying balance sheet
are guaranteed on a subordinated basis by Thermo Electron. Thermedics has
agreed to reimburse Thermo Electron in the event Thermo Electron is
required to make a payment under the guarantees.
See Note 10 for fair value information pertaining to the Company's
long-term obligations.
9. Related-party Transactions
Corporate Services Agreement
The Company and Thermo Electron have a corporate services agreement
under which Thermo Electron's corporate staff provides certain
administrative services, including certain legal advice and services,
risk management, certain employee benefit administration, tax advice and
preparation of tax returns, centralized cash management, and certain
financial and other services, for which the Company paid Thermo Electron
annually an amount equal to 1.0% of the Company's revenues in 1997 and
1996 and 1.20% of the Company's revenues in 1995. For these services, the
Company was charged $446,000, $485,000, and $436,000 in 1997, 1996, and
1995, respectively. Beginning in fiscal 1998, the Company will pay an
annual fee equal to 0.8% of the Company's revenues. The annual fee is
reviewed and adjusted annually by mutual agreement of the parties. The
corporate services agreement is renewed annually but can be terminated
upon 30 days' prior notice by the Company or upon the Company's
withdrawal from the Thermo Electron Corporate Charter (the Thermo
Electron Corporate Charter defines the relationship among Thermo Electron
21PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
9. Related-party Transactions (continued)
and its majority-owned subsidiaries). Management believes that the
service fee charged by Thermo Electron is reasonable and that such fees
are representative of the expenses the Company would have incurred on a
stand-alone basis. For additional items such as employee benefit plans,
insurance coverage, and other identifiable costs, Thermo Electron charges
the Company based upon costs attributable to the Company.
Repurchase Agreement
The Company invests excess cash in a repurchase agreement with Thermo
Electron as discussed in Note 1.
Available-for-sale Investments
At December 28, 1996, the Company's available-for-sale investments
included $1,399,000 (amortized cost of $1,336,000), of 6 1/2%
subordinated convertible debentures, which were purchased on the open
market. These debentures, which were sold in 1997 for a gain of $180,000,
had a par value of $1,300,000 and were issued by Thermo TerraTech Inc., a
majority-owned subsidiary of Thermo Electron.
Subordinated Convertible Notes
See Note 8 for subordinated convertible notes of the Company held by
Thermedics.
10. Fair Value of Financial Instruments
The Company's financial instruments consist mainly of cash and cash
equivalents, available-for-sale investments, accounts receivable, notes
payable, accounts payable, due to parent company and affiliated
companies, and subordinated convertible obligations. The carrying amounts
of these financial instruments, with the exception of available-for-sale
investments and subordinated convertible obligations, approximate fair
value due to their short-term nature.
Available-for-sale investments are carried at fair value in the
accompanying balance sheet. The fair values were determined based on
quoted market prices. See Note 2 for fair value information pertaining to
these financial instruments.
The fair value of the Company's subordinated convertible obligations
was determined based on quoted market prices. The carrying amount and
fair value of the Company's subordinated convertible obligations are as
follows:
1997 1996
--------------------- ---------------------
Carrying Fair Carrying Fair
(In thousands) Amount Value Amount Value
-----------------------------------------------------------------------
Subordinated convertible
obligations $17,750 $21,263 $19,345 $38,836
The fair value of subordinated convertible obligations exceeds the
carrying amount primarily due to the market price of the Company's common
stock exceeding the conversion price of the subordinated convertible
obligations.
22PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
11. Geographical Information
The following table shows data for the Company by geographical area.
(In thousands) 1997 1996 1995
------------------------------------------------------------------------
Revenues:
United States $31,415 $31,013 $23,375
The Netherlands 7,509 8,164 6,977
United Kingdom 4,621 8,565 6,967
Italy 2,421 3,460 2,143
Transfers among geographical areas (a) (1,318) (2,695) (3,136)
------- ------- -------
$44,648 $48,507 $36,326
======= ======= =======
Income before provision for income taxes:
United States $ 2,829 $ 5,045 $ 3,343
The Netherlands 247 798 405
United Kingdom (1,357) 370 388
Italy (231) 236 123
Corporate and eliminations (b) (1,312) (806) (838)
------- ------- -------
Total operating income 176 5,643 3,421
Interest and other income (expense), net 318 366 (57)
------- ------- -------
$ 494 $ 6,009 $ 3,364
======= ======= =======
Identifiable assets:
United States $33,731 $30,954 $21,816
The Netherlands 4,147 5,249 5,238
United Kingdom 5,099 6,561 5,015
Italy 1,115 1,643 1,914
Corporate (c) 19,204 29,282 34,862
------- ------- -------
$63,296 $73,689 $68,845
======= ======= =======
Export revenues included in United States
revenues above (d):
Europe $ 4,733 $ 2,150 $ 4,598
Asia 6,041 7,881 4,994
Other 1,249 1,513 330
------- ------- -------
$12,023 $11,544 $ 9,922
======= ======= =======
(a) Transfers among geographical areas are accounted for at prices that
are representative of transactions with unaffiliated parties.
(b) Primarily corporate general and administrative expenses.
(c) Primarily cash and cash equivalents and available-for-sale
investments.
(d) In general, export sales are denominated in U.S. dollars.
23PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
12. Earnings per Share
Basic and diluted earnings per share were calculated as follows:
(In thousands except per share amounts) 1997 1996 1995
-----------------------------------------------------------------------
Basic
Net income $ 279 $ 4,469 $ 2,672
------- ------- -------
Weighted average shares 9,182 8,827 6,528
------- ------- -------
Basic earnings per share $ .03 $ .51 $ .41
======= ======= =======
Diluted
Net income $ 279 $ 4,469 $ 2,672
Effect of:
Convertible obligations - 731 1,123
------- ------- -------
Income available to common
shareholders, as adjusted $ 279 $ 5,200 $ 3,795
------- ------- -------
Weighted average shares 9,182 8,827 6,528
Effect of:
Convertible obligations - 4,553 6,781
Stock options 123 248 203
------- ------- -------
Weighted average shares, as adjusted 9,305 13,628 13,512
------- ------- -------
Diluted earnings per share $ .03 $ .38 $ .28
======= ======= =======
The computation of diluted earnings per share in each period excludes
the effect of assuming the exercise of certain outstanding stock options
because the effect would be antidilutive. As of January 3, 1998, there
were 347,750 of such options outstanding, with exercise prices ranging
from $7.01 to $14.40 per share.
In addition, the computation of diluted earnings per share for 1997
excludes the effect of assuming the conversion of all of the Company's
convertible obligations (Note 8) because the effect would be
antidilutive.
24PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Notes to Consolidated Financial Statements
13. Unaudited Quarterly Information
(In thousands except per share amounts)
1997 First Second(a) Third Fourth
------------------------------------------------------------------------
Revenues $ 9,716 $11,888 $11,132 $11,912
Gross profit 4,265 5,446 4,983 5,094
Net income (loss) (333) 160 427 25
Basic and diluted earnings
(loss) per share (.03) .02 .05 -
1996 First Second Third(b) Fourth
------------------------------------------------------------------------
Revenues $10,621 $11,882 $12,800 $13,204
Gross profit 5,231 5,729 6,330 6,860
Net income 937 1,132 1,194 1,206
Earnings per share:
Basic .12 .13 .13 .13
Diluted .09 .10 .10 .10
(a) Reflects the April 1997 acquisition of Milmega.
(b)Reflects the July 1996 acquisition of Pacific Power.
25PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Thermo Voltek Corp.:
We have audited the accompanying consolidated balance sheet of Thermo
Voltek Corp. (a Delaware corporation and 65%-owned subsidiary of
Thermedics Inc.) and subsidiaries as of January 3, 1998, and December 28,
1996, and the related consolidated statements of income, shareholders'
investment, and cash flows for each of the three years in the period
ended January 3, 1998. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Thermo Voltek Corp. and subsidiaries as of January 3, 1998, and December
28, 1996, and the results of their operations and their cash flows for
each of the three years in the period ended January 3, 1998, in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
February 12, 1998
26PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations.
For this purpose, any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," "seeks," "estimates," and similar expressions are
intended to identify forward-looking statements. There are a number of
important factors that could cause the results of the Company to differ
materially from those indicated by such forward-looking statements,
including those detailed immediately after this Management's Discussion
and Analysis of Financial Conditions and Results of Operations under the
heading "Forward-looking Statements."
Overview
The Company designs, manufactures, and markets electromagnetic
compatibility (EMC) test instruments and a range of products related to
power amplification, conversion, and quality. The Company's test
instruments help manufacturers of electronic systems and integrated
circuits ensure product quality and meet certain regulatory requirements.
The Company's power products are used in communications, broadcast,
research, and medical imaging applications, as well as in EMC testing
applications.
The Company's KeyTek Instrument division manufactures instruments
that test for immunity to pulsed electromagnetic interference (pulsed
EMI) and systems used in reliability testing and characterization of
semiconductor devices. Through its Universal Voltronics division, the
Company manufactures high-voltage power supplies and related equipment
that transform utility-supplied AC power into DC voltages and currents
required by the user, while allowing precise control over the performance
level desired for each application. The Company's Kalmus division
manufactures radio frequency (RF) power amplifiers and systems used to
test products for immunity to conducted and radiated radio frequency
interference (RFI) and in communications, medical, and research
applications. Comtest Europe B.V. distributes a range of EMC-related
products, and provides EMC consulting and systems-integration services.
Acquired in July 1996, Pacific Power Source Corporation manufactures
power-conversion equipment for use in a variety of commercial
applications and programmable power amplifiers that can be incorporated
into EMC test equipment to assess tolerance to normal variances in the
quality and quantity of AC voltage. Acquired in April 1997, Milmega Ltd.
primarily manufactures and markets microwave amplifiers that are suitable
for EMC testing, physics research, and communications, medical, and
military applications. In October 1997, the Company established its
Global Power Systems division to market specialized power products,
particularly for use in boating and marine applications.
27PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Overview (continued)
During 1997, the Company experienced lower demand for its EMC test
products, as described below. Due in part to these developments, during
1997 the Company implemented certain operational, organizational, and
personnel changes.
The Company's strategy is to expand through a combination of internal
product development and the acquisition of new businesses and
technologies. As discussed above, the Company acquired Pacific Power in
July 1996 and Milmega Ltd. in April 1997 (Note 3).
Approximately 57%, 60%, and 63% of the Company's revenues in 1997,
1996, and 1995, respectively, were derived from sales of products outside
the U.S., through export sales and sales by the Company's European
operations. During 1997, the Company had exports from the Company's U.S.
and foreign operations to Asia of approximately 16% of total revenues,
primarily to Taiwan, Japan, and South Korea. Asia is experiencing a
severe economic crisis, which has been characterized by sharply reduced
economic activity and liquidity, highly volatile foreign-currency-
exchange and interest rates, and unstable stock markets. The Company's
export sales to Asia could be adversely affected by the unstable economic
conditions there.
Although the Company seeks to charge its customers in the same
currency as its operating costs, the Company's financial performance and
competitive position can be affected by currency exchange rate
fluctuations.
Results of Operations
1997 Compared With 1996
Revenues decreased to $44.6 million in 1997 from $48.5 million in
1996. The decrease was primarily due to lower demand for the Company's
EMC test products, resulting from the declining influence of IEC 801, the
European Union directive on electromagnetic compatibility that took
effect January 1, 1996, and, to a lesser extent, a decline in the
component-reliability market for ESD test equipment that resulted from a
slowdown in capital expenditures by the semiconductor industry. These
decreases in revenues were offset in part by an increase in revenues of
$5.8 million due to the acquisitions of Pacific Power in July 1996 and
Milmega in April 1997.
The gross profit margin decreased to 44% in 1997 from 50% in 1996,
primarily due to a decrease in the sale of certain higher-margin EMC test
products, as well as the effect of the Company's decrease in total
revenues.
Selling, general, and administrative expenses as a percentage of
revenues increased to 36% in 1997 from 31% in 1996, primarily due to the
effect of the Company's decrease in revenues, offset in part by the
effect of the acquisitions of Pacific Power and Milmega, which have lower
costs as a percentage of revenues. In addition, during the second quarter
of 1997, the Company incurred $0.4 million of severance and related costs
associated with reductions in personnel, as part of a continuing
28PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
1997 Compared With 1996 (continued)
evaluation of its lines of business. Research and development expenses
were $3.6 million in both periods, primarily due to an increase of $0.4
million related to the acquisitions of Pacific Power and Milmega, offset
by the completed development of certain new products in the third and
fourth quarters of 1996.
Interest income decreased to $1.2 million in 1997 from $1.8 million
in 1996, primarily due to lower average invested balances. Interest
expense decreased to $1.2 million in 1997 from $1.4 million in 1996,
primarily due to conversions of the Company's subordinated convertible
obligations.
The effective tax rates were 44% and 26% in 1997 and 1996,
respectively. The effective tax rate exceeded the statutory federal
income tax rate in 1997, primarily due to the impact of nondeductible
expenses and state income taxes. The effective tax rate was below the
statutory federal income tax rate in 1996, primarily due to the
elimination of the tax valuation allowance that was no longer required
(Note 6), offset in part by the impact of state income taxes.
The Company is currently assessing the potential impact of the year
2000 on the processing of date-sensitive information by the Company's
computerized information systems and on products sold as well as
products purchased by the Company. The Company believes that its
internal information systems and current products are either year 2000
compliant or will be so prior to the year 2000 without incurring
material costs. There can be no assurance, however, that the Company
will not experience unexpected costs and delays in achieving year 2000
compliance for its internal information systems and current products,
which could result in a material adverse effect on the Company's future
results of operations.
The Company is presently assessing the effect that the year 2000
problem may have on its previously sold products. The Company is also
assessing whether its key suppliers are adequately addressing this issue
and the effect this might have on the Company. The Company has not
completed its analysis and is unable to conclude at this time that the
year 2000 problem as it relates to its previously sold products and
products purchased from key suppliers is not reasonably likely to have a
material adverse effect on the Company's future results of operations.
1996 Compared With 1995
Revenues increased 34% to $48.5 million in 1996 from $36.3 million in
1995, due to an increase in revenues at Comtest, the inclusion of $3.0
million in revenues from the July 1996 acquisition of Pacific Power, and
increased revenues at KeyTek and Kalmus. Revenues at Comtest increased
primarily due to an increase in demand for electrostatic-discharge test
equipment manufactured by its Verifier division, as well as an increase
in revenues from a product line for testing immunity to RFI that was
introduced in 1995. Increased revenues at KeyTek primarily resulted from
greater demand for its EMC test equipment. Revenues at Kalmus, acquired
in March 1995, increased $1.1 million due to the inclusion of revenues
29PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
1996 Compared With 1995 (continued)
for the full year in 1996 and $1.3 million primarily due to increased
shipments resulting from the implementation of manufacturing
efficiencies.
The gross profit margin increased to 50% in 1996 from 48% in 1995,
primarily due to an increase in higher-margin domestic sales at KeyTek
and an increase in the gross profit margin at Kalmus, primarily due to
implementation of manufacturing efficiencies.
Selling, general, and administrative expenses as a percentage of
revenues decreased to 31% in 1996 from 32% in 1995, primarily due to an
increase in revenues. Research and development expenses increased to $3.6
million in 1996 from $2.3 million in 1995, principally due to higher
research and development expenses at Comtest and KeyTek.
Interest income decreased to $1.8 million in 1996 from $2.1 million
in 1995, primarily due to lower average invested balances. Interest
expense decreased to $1.4 million in 1996 from $2.1 million in 1995,
primarily due to conversions of the Company's subordinated convertible
obligations during 1995 and 1996.
The effective tax rate was 26% in 1996 and 21% in 1995. The effective
tax rates were below the statutory federal income tax rate primarily due
to the elimination of the tax valuation allowance that was no longer
required (Note 6), offset in part by the impact of state income taxes.
The effective tax rate increased in 1996 primarily due to a decrease in
tax net operating loss carryforwards as a percentage of income before
provision for income taxes.
Liquidity and Capital Resources
Consolidated working capital was $29.9 million at January 3, 1998,
compared with $40.9 million at December 28, 1996. Included in working
capital are cash, cash equivalents, and available-for-sale investments of
$17.6 million at January 3, 1998, compared with $27.9 million at December
28, 1996. During 1997, $2.1 million of cash was provided by operating
activities. Cash of $1.6 million provided by a decrease in accounts
receivable as a result of the Company's decrease in revenues was offset
by cash of $1.4 million used to reduce other current liabilities.
Excluding available-for-sale investment activity, the Company's
investing activities in 1997 consisted primarily of the acquisition of
Milmega for $2.8 million, net of cash acquired (Note 3), and $0.9 million
of expenditures for purchases of property, plant, and equipment. The
Company expects to make capital expenditures of approximately $1.4
million during 1998.
The Company's financing activities used $8.5 million of cash during
1997. In April and December 1997, the Company's Board of Directors
authorized the repurchase, through various dates ending December 16,
1998, of up to $15.0 million of Company securities, to be funded from
working capital. During 1997, the Company expended $9.7 million under
these authorizations.
Although the Company expects to have positive cash flow from its
existing operations, the Company anticipates it will require significant
amounts of cash for the possible acquisition of complementary businesses
30PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources (continued)
and technologies. While the Company currently has no agreement to make
any acquisition, it expects that it will finance any acquisition through
a combination of internal funds, additional debt or equity financing,
and/or short-term borrowings from Thermo Electron or Thermedics, although
there is no agreement with these companies to ensure that funds will be
available on acceptable terms or at all. The Company believes that its
existing resources are sufficient to meet the capital requirements of its
existing operations for the foreseeable future.
31PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Forward-looking Statements
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company wishes to caution
readers that the following important factors, among others, in some cases
have affected, and in the future could affect, the Company's actual
results and could cause its actual results in 1998 and beyond to differ
materially from those expressed in any forward-looking statements made
by, or on behalf of, the Company.
Rapid Technological Change. The market for EMC testing products and
services is characterized by rapid technological change. No assurance can
be given that the Company will be able to develop new and enhanced
instruments that keep pace with technological developments and respond to
the increasingly complex requirements of electronics manufacturers.
Reliance on Electrical Standards. Demand for the Company's EMC
testing products and services is driven to a large extent by mandatory
government standards and voluntary industry standards relating to
electromagnetic compatibility. In particular, demand for many of the
Company's products results from efforts by manufacturers to comply with
IEC 801, an EC directive that became effective on January 1, 1996. As the
number of noncomplying manufacturers is reduced over time, demand for the
Company's products could be adversely affected. In addition, if new EMC
standards requiring new testing capabilities are enacted less frequently
or if EMC standards become less strict or are not strictly enforced,
demand for the Company's products could be adversely affected.
Sole Source Suppliers. A number of the components of the Company's
EMC testing products are supplied by single vendors. Although the Company
has not experienced significant difficulty in obtaining adequate supplies
from these vendors, and believes that it would be able to identify
alternative suppliers if necessary, there can be no assurance that the
unanticipated loss of a single vendor would not result in delays in
shipments or in the introduction of new products.
International Sales. International sales account for a significant
portion of the Company's revenues. Sales to customers in certain foreign
countries are subject to a number of risks, including the following:
agreements may be difficult to enforce, and receivables difficult to
collect, through a foreign country's legal system; foreign customers may
have longer payment cycles; foreign countries could impose withholding
taxes or otherwise tax the Company's foreign income, impose tariffs,
embargoes, or exchange controls, or adopt other restrictions on foreign
trade; and export licenses, if required, may be difficult to obtain. In
addition, fluctuations in foreign currency exchange rates could have an
adverse impact on international sales. A portion of the Company's
revenues is derived from exports to the Asia. Certain countries in Asia
are experiencing a severe economic crisis, which has been characterized
by sharply reduced economic activity and liquidity, highly volatile
foreign-currency-exchange and interest rates, and unstable stock markets.
The Company's export sales to Asia could be adversely affected by the
unstable economic conditions there.
32PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Forward-looking Statements
Risks Associated With Acquisition Strategy. The Company's strategy
includes the acquisition of businesses and technologies that complement
or augment the Company's existing product lines. Promising acquisitions
are difficult to identify and complete for a number of reasons, including
competition among prospective buyers and the need for regulatory
approval, including antitrust approvals. There can be no assurance that
the Company will be able to complete future acquisitions or that the
Company will be able to successfully integrate any acquired business. In
order to finance such acquisitions, it may be necessary for the Company
to raise additional funds through public or private financings. Any
equity or debt financing, if available at all, may be on terms that are
not favorable to the Company and, in the case of equity financing, may
result in dilution to the Company's stockholders.
Potential Impact of Year 2000 on Processing of Date-Sensitive
Information. The Company is currently assessing the potential impact of
the year 2000 on the processing of date-sensitive information by the
Company's computerized information systems and on products sold as well
as products purchased by the Company. The Company believes that its
internal information systems and current products are either year 2000
compliant or will be so prior to the year 2000 without incurring material
costs. There can be no assurance, however, that the Company will not
experience unexpected costs and delays in achieving year 2000 compliance
for its internal information systems and current products, which could
result in a material adverse effect on the Company's future results of
operations.
The Company is presently assessing the effect that the year 2000
problem may have on its previously sold products. The Company is also
assessing whether its key suppliers are adequately addressing this issue
and the effect this might have on the Company. The Company has not
completed its analysis and is unable to conclude at this time that the
year 2000 problem as it relates to its previously sold products and
products purchased from key suppliers is not reasonably likely to have a
material adverse effect on the Company's future results of operations.
33PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Selected Financial Information
(In thousands except
per share amounts) 1997(a) 1996(b) 1995(c) 1994(d) 1993
----------------------------------------------------------------------
Statement of Income Data:
Revenues $44,648 $48,507 $36,326 $23,641 $18,089
Net income 279 4,469 2,672 1,118 480
Earnings per share:
Basic .03 .51 .41 .19 .08
Diluted .03 .38 .28 .17 .08
Balance Sheet Data:
Working capital $29,863 $40,915 $41,826 $41,990 $42,023
Total assets 63,296 73,689 68,845 62,224 57,471
Long-term
obligations 17,750 19,345 36,740 46,000 46,000
Shareholders'
investment 34,392 42,445 20,959 8,472 7,097
(a)Reflects the April 1997 acquisition of Milmega.
(b)Reflects the July 1996 acquisition of Pacific Power.
(c)Reflects the March 1995 acquisition of Kalmus.
(d)Reflects the July 1994 acquisition of Verifier.
34PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Common Stock Market Information
The Company's common stock is traded on the American Stock Exchange
under the symbol TVL. The following table sets forth the high and low
sale prices of the Company's common stock for 1997 and 1996, as reported
in the consolidated transaction reporting system.
1997 1996
-------------------- --------------------
Quarter High Low High Low
------------------------------------------------------------------------
First $12 7/8 $ 9 3/8 $14 1/12 $10 1/4
Second 9 5/8 6 7/8 15 12 1/12
Third 7 9/16 6 14 1/8 10 1/3
Fourth 7 13/16 5 14 9 3/4
As of January 30, 1998, the Company had 330 holders of record of its
common stock. This does not include holdings in street or nominee names.
The closing market price on the American Stock Exchange for the Company's
common stock on January 30, 1998, was $5 5/16 per share.
Shareholder Services
Shareholders of Thermo Voltek Corp. who desire information about the
Company are invited to contact John N. Hatsopoulos, Chief Financial
Officer, Thermo Voltek Corp., 81 Wyman Street, P.O. Box 9046, Waltham,
Massachusetts 02254-9046, (781) 622-1111. A mailing list is maintained to
enable shareholders whose stock is held in street name, and other
interested individuals, to receive quarterly reports, annual reports, and
press releases as quickly as possible. Distribution of printed quarterly
reports is limited to the second quarter only. All material will be
available from Thermo Electron's Internet site (http://www.thermo.com/
subsid/tvl1.html).
Stock Transfer Agent
American Stock Transfer & Trust Company is the stock transfer agent
and maintains shareholder activity records. The agent will respond to
questions on issuance of stock certificates, change of ownership, lost
stock certificates, and change of address. For these and similar matters,
please direct inquiries to:
American Stock Transfer & Trust Company
Shareholder Services Department
40 Wall Street, 46th Floor
New York, New York 10005
(718) 921-8200
Dividend Policy
The Company has never paid cash dividends and does not expect to pay
cash dividends in the foreseeable future because its policy has been to
use earnings to finance expansion and growth. Payment of dividends will
rest within the discretion of the Board of Directors and will depend
upon, among other factors, earnings, capital requirements, and financial
condition.
35PAGE
<PAGE>
Thermo Voltek Corp. 1997 Financial Statements
Form 10-K Report
A copy of the Annual Report on Form 10-K for the fiscal year ended
January 3, 1998, as filed with the Securities and Exchange Commission,
may be obtained at no charge by writing to John N. Hatsopoulos, Chief
Financial Officer, Thermo Voltek Corp., 81 Wyman Street, P.O. Box 9046,
Waltham, Massachusetts 02254-9046.
Annual Meeting
The annual meeting of shareholders will be held on Monday, June 1,
1998, at 1:30 p.m., at the Hyatt Regency Hotel, Scottsdale, Arizona.
36<PAGE>
Exhibit 21
THERMO VOLTEK CORP.
Subsidiaries of the Registrant
At February 28, 1998, the Registrant owned the following companies:
State or Jurisdiction Registrant's %
Name of Incorporation of Ownership
-------------------------------------------------------------------------
Comtest Europe B.V. The Netherlands 100%
Comtest Instrumentation, B.V. The Netherlands 100%
Comtest Italia S.R.L. Italy 100%
Comtest Limited United Kingdom 100%
Milmega Limited United Kingdom 100%
TVL Securities Corporation Delaware 100%
UVC Realty Corp. New York 100%
Exhibit 23
Consent of Independent Public Accountants
-----------------------------------------
As independent public accountants, we hereby consent to the
incorporation by reference of our reports dated February 12, 1998,
included in or incorporated by reference into Thermo Voltek Corp.'s
Annual Report on Form 10-K for the year ended January 3, 1998, into the
Company's previously filed Registration Statements as follows:
Registration Statement No. 33-74484 on Form S-3, Registration Statement
No. 33-52802 on Form S-8, Registration Statement No. 33-71780 on Form
S-8, Registration Statement No. 33-70646 on Form S-8, Registration
Statement No. 33-71782 on Form S-8, Registration Statement No. 33-71784
on Form S-8, Registration Statement No. 33-85954 on Form S-8,
Registration Statement No. 033-65277 on Form S-8, and Registration
Statement No. 333-8835 on Form S-8.
Arthur Andersen LLP
Boston, Massachusetts
March 13, 1998
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
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