METRIKA SYSTEMS CORP, POS AM, 1998-04-30

METRIKA SYSTEMS CORP
POS AM, 1998-04-30
INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1998

REGISTRATION NO. 333-38371

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

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

POST-EFFECTIVE AMENDMENT NO. 1

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

METRIKA SYSTEMS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------

<TABLE>
<S> <C> <C>
DELAWARE 3823 33-0733537
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

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

5788 PACIFIC CENTER BOULEVARD
SAN DIEGO, CA 92121
(619) 450-9649
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

SANDRA L. LAMBERT, SECRETARY
METRIKA SYSTEMS CORPORATION
C/O THERMO ELECTRON CORPORATION
81 WYMAN STREET
P. O. BOX 9046
WALTHAM, MA 02254-9046

(781) 622-1000

(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

Copies to:

SETH H. HOOGASIAN, ESQ.

GENERAL COUNSEL

METRIKA SYSTEMS CORPORATION

C/O THERMO ELECTRON CORPORATION

81 WYMAN STREET

WALTHAM, MASSACHUSETTS 02254-9046

(781) 622-1000

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

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

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration number of the earlier effective registration
statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]

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

================================================================================
<PAGE> 2

PROSPECTUS

967,828 SHARES

METRIKA SYSTEMS CORPORATION

COMMON STOCK
($.01 PAR VALUE)

This Prospectus relates to the resale of 967,828 shares (the "Shares") of
Common Stock, par value $.01 per share (the "Common Stock"), of Metrika Systems
Corporation (the "Company") by certain shareholders of the Company (the "Selling
Shareholders"). The Shares may be offered from time to time in transactions on
the American Stock Exchange, in negotiated transactions, through the writing of
options on the Shares, or a combination of such methods of sale, at fixed prices
that may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Such
transactions may be effected by the sale of the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the sellers and/or the purchasers of
the Shares for whom such broker-dealers may act as agent or to whom they sell as
principal, or both (which compensation to a particular broker-dealer might be in
excess of customary commissions). The Selling Shareholders and any broker-dealer
who acts in connection with the sale of Shares hereunder may be deemed to be
"underwriters" as that term is defined in the Securities Act of 1933, as amended
(the "Securities Act"), and any commission received by them and profit on any
resale of the Shares as principal might be deemed to be underwriting discounts
and commissions under the Securities Act. The Shares were originally sold by the
Company in private placements pursuant to certain Stock Purchase Agreements with
the Company dated December 16, 1996 and December 27, 1996 (the "Purchase
Agreements"). See "Selling Shareholders."

SEE "RISK FACTORS" COMMENCING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

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

None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed to bear all
expenses (other than underwriting discounts and selling commissions, and fees
and expenses of counsel or other advisors to the Selling Shareholders) in
connection with the registration and sale of the Shares being registered hereby.
The Company has agreed to indemnify the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act as underwriter or
otherwise.

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

The Company is a majority-owned subsidiary of Thermo Instrument Systems
Inc. ("Thermo Instrument"), which is a majority-owned subsidiary of Thermo
Electron Corporation ("Thermo Electron"). The Common Stock is traded on the
American Stock Exchange under the symbol "MKA". On April 29, 1998, the reported
closing price of the Common Stock on the American Stock Exchange was $17.125 per
share.

The date of this Prospectus is April 30, 1998.

<PAGE> 3

THE COMPANY

Metrika Systems Corporation ("Metrika Systems" or the "Company") develops,
manufactures and markets on-line industrial process optimization systems that
employ proprietary ultra-high speed advanced scientific measurement technologies
for applications in raw materials analysis and finished materials quality
control. The Company operated as two divisions of Thermo Instrument Systems Inc.
("Thermo Instrument") until its incorporation as a Delaware corporation in
November 1996. In connection with the Company's incorporation, Thermo Instrument
transferred to the Company the assets, liabilities and business of its
Gamma-Metrics subsidiary and Radiometrie division ("Radiometrie") in exchange
for 5,000,000 shares of the Company's common stock. Unless the context otherwise
requires, references in this Prospectus to the Company or Metrika Systems refer
to Metrika Systems Corporation and its subsidiaries and the predecessor business
which constitute the Company. The Company's on-line raw materials analyzer
business is conducted by its Gamma-Metrics subsidiary based in San Diego,
California, and its on-line finished materials quality control business is
conducted by its Radiometrie division with operations in Erlangen, Germany and
Gloucester, England. As of April 29, 1998 Thermo Instrument beneficially owned
60.5% of the outstanding Common Stock. The Company's principal executive offices
are located at 5788 Pacific Center Boulevard, San Diego, California 92121, and
its telephone number is (619) 450-9649.

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<PAGE> 4

RISK FACTORS

In addition to the other information in this Prospectus, investors should
carefully consider the following risk factors when evaluating an investment in
the shares of Common Stock offered hereby. This Prospectus contains
forward-looking statements that involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations and intentions. The
cautionary statements made in this Prospectus should be read as being applicable
to all forward-looking statements wherever they appear in this Prospectus. The
Company's actual results could differ materially from those discussed herein.
Factors that could cause or contribute to such differences include those
discussed below, as well as those discussed elsewhere in this Prospectus.

Dependence on Capital Spending Policies. The Company's customers include
coal burning utilities, coal mines, cement manufacturers, and manufacturers of
web-type materials such as steel, plastic and rubber. The capital spending
policies of these companies can have a significant effect on the demand for the
Company's products. Such policies are based on a wide variety of factors,
including the resources available to make such purchases, the spending
priorities among various types of process control equipment or techniques and
policies regarding capital expenditures during recessions. Any decrease in
capital spending by these customers could have a material adverse effect on the
Company's business and results of operations. Further, the Company's growth is
dependent in part on construction and upgrade of manufacturing plants in the
basic materials industries. A recession in one or more markets could cause a
slowdown or reduction in capital spending and in new plant construction.

Uncertainty of Market Acceptance of New Products. Certain of the Company's
products represent alternatives to traditional instruments and methods. As a
result, such products may be slow to achieve, or may not achieve, market
acceptance, as customers may seek further validation of the efficiency and
efficacy of the Company's technology. This is particularly true where the
purchase of the product requires a significant capital commitment. Further,
because on-line process control systems are incorporated into a customer's
production line, a decision to invest in these systems involves significant
operating risks if the system fails or shuts down. The Company intends to expand
its product base by adapting its proprietary technologies for new applications
in broader industry segments including the pharmaceutical, agrochemical and
industrial chemical industries. The Company believes that, to a significant
extent, its growth prospects depend on the continuing acceptance by a broader
group of customers and by broader industry segments of its new products and
technologies. There can be no assurance that the Company will be successful in
adapting its proprietary technologies for new applications, in obtaining these
acceptances or, if obtained, that such acceptances will be sustained. The
failure of the Company to obtain and sustain such acceptances could have a
material adverse effect on the Company's business and results of operations.

Technological Change and New Products. The market for on-line process
optimization systems is characterized by changing technology, evolving industry
standards and new product introductions. The Company's future success will
depend in part upon its ability to enhance its existing products and to develop
and introduce new products and technologies to meet changing customer
requirements and to successfully serve broader industry segments. The Company is
currently devoting significant resources toward the enhancement of its existing
products and the development of new products and technologies. There can be no
assurance that the Company will successfully complete the enhancement and
development of these products in a timely fashion or that the Company's current
or future products will satisfy the needs of the on-line process optimization
systems markets. Any failure to complete the enhancement and development of
these products or the failure of the Company's current or future products to
satisfy market needs could have a material adverse effect on the Company's
business and results of operation.

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, the need for regulatory approvals,
including antitrust approvals, and the high valuations of businesses resulting
from historically high stock prices in many countries. There can be

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<PAGE> 5

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 which are not favorable to the
Company and, in the case of equity financing, may result in dilution to the
Company's stockholders.

International Operations and International Sales. In 1997, 1996 and 1995,
sales originating outside the U.S. accounted for 51%, 56% and 58%, respectively,
of the Company's total revenues. In addition, in 1997, 1996 and 1995, U.S.
export sales accounted for 33%, 26% and 23%, respectively, of the Company's
total revenues. The Company anticipates that sales outside the U.S. and U.S.
export sales will continue to account for a significant percentage of the
Company's total revenues. The Company intends to continue to expand its presence
in international markets. International revenues are subject to a number of
risks, including the following: agreements may be difficult to enforce and
receivables difficult to collect through a foreign country's legal system;
foreign customers may have longer payment cycles; foreign countries may impose
additional withholding taxes or otherwise tax the Company's foreign income,
impose tariffs or adopt other restrictions on foreign trade; U.S. export
licenses may be difficult to obtain; the protection of intellectual property in
foreign countries may be more difficult to enforce; and fluctuations in exchange
rates may affect product demand and may adversely affect the profitability in
U.S. dollars of products and services provided by the Company in foreign markets
where payment for the Company's products and services is made in the local
currency. In 1997, effects of currency translation, due to a stronger U.S.
dollar, decreased revenues by $2.3 million. Further, a significant portion of
the Company's business is conducted in foreign countries, particularly Germany.
Foreign operations are also subject to certain risks such as general economic
conditions in the countries in which the Company operates, unexpected changes in
regulatory requirements, compliance with a variety of foreign laws and
regulations and overlap of different tax structures. Tax rates in certain
foreign countries exceed that of the United States and foreign earnings may be
subject to withholding requirements or the imposition of tariffs, exchange
controls or other restrictions. There can be no assurance that any of these
factors will not have a material adverse effect on the Company's business and
results of operations.

Competition. The Company encounters intense competition in the sale of its
on-line finished materials quality control products. The Company believes that
the principal competitive factors affecting the market for on-line process
optimization systems include quality and reliability, accuracy, price, customer
service and support, ease of use, distribution channels, technical features and
compatibility with customers' manufacturing processes. Certain of the Company's
competitors have greater resources, manufacturing and marketing capabilities,
technical staff and production facilities than those of the Company. As a
result, they may be able to adapt more quickly to new or emerging technologies
and changes in customer requirements, or to devote greater resources to the
promotion and sale of their products than can the Company. Further, competition
with respect to all of the Company's products could increase if new companies
enter the market or if existing competitors expand their product lines. There
can be no assurance that competitors of the Company will not develop
technological innovations that will render products of the Company obsolete.

Proprietary Rights. Proprietary rights relating to the Company's products
will be protected from unauthorized use by third parties only to the extent that
they are covered by valid and enforceable patents or are maintained in
confidence as trade secrets. There can be no assurance that any patents now or
hereafter owned by the Company will afford protection against competitors.
Proceedings initiated by the Company to protect its proprietary rights could
result in substantial costs to the Company. Recently, the Company's
Gamma-Metrics subsidiary initiated a lawsuit in the Federal District Court in
San Diego, California, alleging among other things, patent infringement against
Scantech Limited and its subsidiary Mineral Control Instrumentation Ltd.
Scantech Limited has filed a counterclaim against Gamma-Metrics alleging
antitrust violations and unfair competition. There can be no assurance that
competitors of the Company, some of whom have substantially greater resources
than those of the Company, will not initiate litigation to challenge the
validity of the Company's patents, or that they will not use their resources to
design comparable products that do not infringe the Company's patents. The
Company could incur substantial costs and diversion of management resources with
respect to the

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<PAGE> 6

defense of any such claims, which could have a material adverse effect on the
Company's business, financial condition, and results of operation. Furthermore,
parties making such claims could secure a judgment awarding substantial damages,
as well as injunctive or other equitable relief, which could effectively block
the Company's ability to make, use, sell, distribute or market its products and
services in the U.S. and abroad. There may also be pending or issued patents
held by parties not affiliated with the Company that relate to the Company's
products or technologies. In the event that a claim relating to proprietary
technology or information is asserted against the Company, the Company may need
to acquire licenses to, or contest the validity of, any such competitor's
proprietary technology. It is likely that significant funds would be required to
contest the validity of any such competitor's proprietary technology. There can
be no assurance that any license required under any such competitor's
proprietary technology would be made available on acceptable terms or that the
Company would prevail in any such contest. There can be no assurance that the
steps taken by the Company to protect its proprietary rights will be adequate to
prevent misappropriation of its technology or independent development by others
of similar technology. In addition, the laws of some jurisdictions do not
protect the Company's proprietary rights to the same extent as the laws of the
U.S. There can be no assurance that these protections will be adequate.

Dependence on Sole-source Suppliers. Various components of the Company's
products are supplied by sole-source vendors. The Company has not experienced
significant difficulty in obtaining adequate supplies from these vendors, and
has identified alternate suppliers. However, there can be no assurance that the
unanticipated loss of a single vendor would not result in delays in shipment or
in the introduction of new products. Any such delays could have a material
adverse effect on the Company's business or results of operations.

Government Regulations and Approvals. The market for certain of the
Company's products, both in the U.S. and abroad, is subject to or influenced by
various domestic and foreign clean air and consumer protection laws. The Company
designs, develops and markets its products, in part, to meet customer needs
created by existing and anticipated regulations, and any changes in these
regulations may adversely affect consumer demand for the Company's products.

Potential Fluctuations in Quarterly Performance. Many of the Company's
products are large systems that may require significant capital expenditures.
Consequently, the timing of sales of these systems could affect the Company's
quarterly earnings. Further, the Company's quarterly operating results may also
vary significantly depending on a number of other factors, including the size,
timing and shipment of individual orders, changes in pricing by the Company or
its competitors, discount levels, seasonality of revenue, foreign currency
exchange rates, the mix of products sold, the timing of the announcement,
introduction and delivery of new product enhancements by the Company and its
competitors and general economic conditions. Generally, the Company recognizes
product revenues upon shipment of its products. Revenues on substantially all
contracts are recognized using the percentage-of-completion method. Typically,
the Company experiences higher revenues in the second half of each year due to
seasonality experienced by its on-line finished materials quality control
business primarily because customers tend to place their orders earlier in the
year so that they can have the systems installed either during the holiday
season in the third quarter or between Christmas and the New Year. Because
certain operating expenses of the Company are based on anticipated capacity
levels and a high percentage of the Company's expenses are fixed for the short
term, a small variation in the timing of recognition of revenue can cause
significant variations in operating results from quarter to quarter. There can
be no assurance that any of these factors will not have a material adverse
effect on the Company's business or results of operation.

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

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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.

Dependence on Key Personnel. The Company's success depends to a
significant extent upon a number of key employees, including members of senior
management. The loss of the services of one or more of these key employees could
have a material adverse effect on the Company. The Company has not obtained and
does not intend to obtain key-man life insurance policies for any key employee.
The Company believes that its future success will depend in part on its ability
to attract, motivate and retain highly skilled technical, managerial and
marketing personnel. Competition for such personnel is intense and there can be
no assurance that the Company will be successful in attracting, motivating and
retaining key personnel. The failure to hire and retain such personnel could
materially adversely affect the Company's business and results of operations.

Shares Eligible for Sale After this Offering. The 5,000,000 shares of
Common Stock owned by Thermo Instrument became eligible for sale under Rule 144
promulgated under the Securities Act commencing in November 1997. In addition,
subject to certain limitations described below under "Shares Eligible for Future
Sales," as long as Thermo Instrument is able to elect a majority of the
Company's Board of Directors, it will have the ability to cause the Company at
any time to register for resale all or a portion of the Common Stock owned by
Thermo Instrument. Additional shares of Common Stock issuable upon exercise of
options granted under the Company's stock-based compensation plans will become
available for future sale in the public market at prescribed times. Sales of a
significant number of shares of Common Stock in the public market following this
offering could adversely affect the market price of the Common Stock. See
"Relationship with Thermo Electron and Thermo Instrument," "Shares Eligible for
Future Sale."

Potential Conflict of Interest. For financial reporting purposes the
Company's financial results are included in the consolidated financial
statements of Thermo Instrument and Thermo Electron. The members of the Board of
Directors of the Company who are also affiliated with Thermo Electron or Thermo
Instrument will consider both the short-term and the long-term impact of
operating decisions on the Company as well as the impact of such decisions on
the consolidated financial results of Thermo Instrument and Thermo Electron. The
interest of Thermo Electron and Thermo Instrument on the one hand and the
Company on the other hand may differ. The Company is an indirect subsidiary of
Thermo Electron and is a party to various agreements with Thermo Electron. These
agreements may limit the Company's operating flexibility. See "Relationship with
Thermo Electron and Thermo Instrument."

Lack of Voting Control. The Company's shareholders do not have the right
to cumulate votes for the election of directors. Thermo Instrument beneficially
owns approximately 60.5% of the voting stock of the Company. Accordingly, Thermo
Instrument has the power to elect the entire Board of Directors of the Company
and to approve or disapprove any corporate actions submitted to a vote of the
Company's stockholders. See "Relationship with Thermo Electron and Thermo
Instrument" and "Security Ownership of Certain Beneficial Owners and
Management."

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

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<PAGE> 8

PRICE RANGE OF COMMON STOCK

The Company's Common Stock has been publicly traded on the American Stock
Exchange since June 20, 1997. The following table sets forth, for the periods
indicated, the high and low sales prices for the Common Stock as reported in the
consolidated transaction reporting system.

<TABLE>
<CAPTION>
FISCAL 1997 HIGH LOW
- ----------- ---- ---
<S> <C> <C>
Second Quarter (June 20, 1997 through June 28, 1997)........ $ 15 5/8 $15 1/2
Third Quarter............................................... $ 16 $13 7/8
Fourth Quarter.............................................. $ 18 1/2 $14
</TABLE>

<TABLE>
<CAPTION>
FISCAL 1998 HIGH LOW
- ----------- ---- ---
<S> <C> <C>
First Quarter............................................... $ 16 1/4 $12 7/8
Second Quarter (through April 29, 1998)..................... $ 17 3/8 $14 15/16
</TABLE>

As of April 29, 1998, there were 48 holders of record of Common Stock. This
figure does not reflect beneficial ownership of shares held in street or nominee
name.

DIVIDEND POLICY

The Company anticipates that for the foreseeable future the Company's
earnings, if any, will be retained for use in the business and that no cash
dividends will be paid on the Common Stock.

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<PAGE> 9

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
January 3, 1998.

<TABLE>
<CAPTION>
JANUARY 3, 1998
---------------------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C>
Notes Payable and Current Maturities of Long-term
Obligation................................................ $ 9,895
=======

Long-term Obligation........................................ $ 3,858
-------
Shareholders' Investment:
Common stock, $.01 par value, 25,000,000 shares
authorized; 8,267,828 shares issued and outstanding
(1).................................................... 83
Capital in excess of par value............................ 58,555
Retained earnings......................................... 6,157
Cumulative translation adjustment......................... (999)
Net unrealized gain on available-for-sale investments..... 9
-------
Total Shareholders' Investment.................... 63,805
-------
Total Capitalization (Long-term Obligation and
Shareholders' Investment)....................... $67,663
=======
</TABLE>

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

(1) Does not include 362,500 shares of Common Stock reserved for issuance under
the Company's stock-based compensation plans as of January 3, 1998. Options
to purchase 301,000 shares of Common Stock had been granted and were
outstanding under the Company's stock-based compensation plans as of January
3, 1998. See "Management -- Compensation of Directors" and "-- Compensation
of Executive Officers" and Notes 4 and 5 of Notes to Consolidated Financial
Statements.

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SELECTED FINANCIAL INFORMATION

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

<TABLE>
<CAPTION>
THE COMPANY(1)
-------------------------------------
FISCAL YEAR
------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.............................................. $56,714 $52,047 $46,032 $38,612 $ 19,809
------- ------- ------- ------- --------
Costs and Operating Expenses:
Cost of revenues.................................. 29,928 28,527 25,767 22,157 11,412
Selling, general and administrative expenses...... 14,367 13,395 11,640 10,256 5,582
Research and development expenses................. 3,815 3,024 2,580 2,259 1,344
------- ------- ------- ------- --------
48,110 44,946 39,987 34,672 18,338
------- ------- ------- ------- --------
Operating Income...................................... 8,604 7,101 6,045 3,940 1,471
Interest Expense...................................... (838) (796) (1,146) (718) (274)
Interest Income....................................... 2,013 101 21 34 36
------- ------- ------- ------- --------
Income Before Income Taxes............................ 9,779 6,406 4,920 3,256 1,233
Provision for Income Taxes............................ 3,920 2,561 2,068 1,489 642
------- ------- ------- ------- --------
Net Income............................................ $ 5,859 $ 3,845 $ 2,852 $ 1,767 $ 591
======= ======= ======= ======= ========
Basic and Diluted Earnings per Share(2)............... $ .82 $ .76 $ .57 $ .35 $ .12
======= ======= ======= ======= ========
Weighted Average Shares(2):
Basic............................................. 7,143 5,032 5,000 5,000 5,000
Diluted........................................... 7,147 5,032 5,000 5,000 5,000
======= ======= ======= ======= ========
BALANCE SHEET DATA (AT END OF PERIOD):
Working Capital....................................... $47,975 $ 8,705 $(8,070) $(4,665) $ (7,084)
Total Assets.......................................... 102,952 66,766 53,974 49,261 46,184
Long-term Obligation.................................. 3,858 5,223 6,470 6,780 --
Shareholders' Investment.............................. 63,805 24,861 9,382 14,095 19,113
</TABLE>

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

(1) The fiscal year ended January 1, 1994 represents the Company's results of
operations from January 14, 1993, the date Gamma-Metrics (the "Predecessor")
was acquired by Thermo Instrument, through January 1, 1994. In addition, the
results of operations for the fiscal year ended January 1, 1994 include the
results of operations from the Company's on-line finished materials quality
control business, acquired October 1993.

(2) Pursuant to Securities and Exchange Commission requirements, earnings per
share for the Company have been presented for all periods. Weighted average
shares for such periods represent 5,000,000 shares issued to Thermo
Instrument in connection with the initial capitalization of the Company, and
in fiscal 1996 the effect of shares sold through a private placement.
Weighted average shares for the year ended January 3, 1998 reflects shares
sold through a private placement and shares sold through the initial public
offering.

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

OVERVIEW

The Company develops, manufactures, and markets on-line process
optimization systems that employ proprietary ultra high-speed advanced
scientific measurement technologies for applications in raw-materials analysis
and finished-materials quality control. The Company is a pioneer in the
development of process optimization systems that provide real-time,
nondestructive analysis of the composition of raw materials in basic-materials
production processes, including coal, cement, and minerals. The Company also
manufactures advanced systems that are used to measure and control parameters
such as material thickness, coating thickness, and coating weight in web-type
materials, such as metal strip, rubber, and plastic foils. Customers use these
systems to improve product quality and consistency, lower material costs, reduce
energy consumption, and minimize waste.

The Company intends to supplement its internal growth with strategic
acquisitions of complementary businesses. There can be no assurance that such
businesses will be available at prices attractive to the Company. On December
31, 1996, the Company acquired the assets, subject to certain liabilities, of
the Autometrics division of Svedala Industries Inc. (Autometrics), a
manufacturer and marketer of on-line analysis instruments for the
minerals-processing industry.

A significant portion of the Company's sales are of large systems, the
timing of which can lead to variability in the Company's quarterly revenues and
income. In addition, in 1997, approximately 51% of the Company's revenues
originated outside the U.S. and approximately 33% of the Company's revenues were
exports from the U.S. Revenues originating outside the U.S. represent revenues
of the Company's on-line finished- materials quality-control business. The
operations of the on-line finished-materials quality-control business are
located in Germany, the United Kingdom, and France, which principally sell in
their local currencies.

Exports from the Company's U.S. operation are denominated in U.S. dollars.
The Company generally seeks to charge its customers in the same currency as its
operating costs. However, the Company's financial performance and competitive
position can be affected by currency- exchange-rate fluctuations. Since the
operations of the on-line finished-materials quality-control business are
conducted in Europe, principally Germany, the Company's operating results could
be adversely affected by capital spending and economic conditions in Europe. The
Company's strategy is to expand its on-line finished-materials quality-control
business in geographic areas outside of Europe with particular emphasis in North
America, which in turn may reduce the Company's exposure to European market
conditions.

RESULTS OF OPERATIONS

1997 Compared With 1996

Revenues increased 9% to $56,714,000 in 1997 from $52,047,000 in 1996,
reflecting an increase of $5,176,000 at the on-line raw-materials analysis
business, primarily due to increased sales in international markets and the
inclusion of $1,969,000 in revenues from Autometrics, acquired December 31,
1996. Revenues decreased at the on-line finished-materials quality-control
business principally due to the unfavorable effects of currency translation as a
result of the strengthening of the U.S. dollar relative to foreign currencies in
countries in which the Company operates, which decreased revenues by $2,259,000.
This was offset in part by an increase in demand in the U.S., which resulted
primarily from the strengthening of the U.S. dollar relative to the German
deutsche mark.

The gross profit margin increased to 47% in 1997 from 45% in 1996. The
gross profit margin at the on-line raw materials analysis business increased to
52% in 1997 from 51% in 1996, resulting principally from increased volume and a
change in product mix, offset in part by the inclusion in 1997 of lower-margin
revenues at Autometrics. The gross profit margin at the on-line
finished-materials quality-control business improved to 43% in 1997 from 41% in
1996 due to higher costs incurred in the 1996 period relating to the
introduction of new products, and an increase in higher-margin sales in 1997
resulting from sales of such new products.

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Selling, general, and administrative expenses as a percentage of revenues
decreased to 25% in 1997 from 26% in 1996. The decrease was due to an increase
in revenues, offset primarily by an increase in legal expenses in connection
with an ongoing patent infringement lawsuit initiated by the Company's
Gamma-Metrics subsidiary, relating to its on-line raw-materials cement-analysis
systems. Research and development expenses increased to $3,815,000 in 1997 from
$3,024,000 in 1996, primarily due to an increase in product development expenses
at the on-line raw-materials analysis business.

Interest income increased to $2,013,000 in 1997 from $101,000 in 1996,
primarily due to interest income earned on the invested proceeds from the
Company's December 1996 private placement and June 1997 initial public offering.

The effective tax rate was 40% in 1997 and 1996. The effective tax rate
exceeded the statutory federal income tax rate primarily due to the impact of
state income taxes, nondeductible amortization of cost in excess of net assets
of acquired companies, and foreign tax rate and tax law differences.

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.

1996 Compared With 1995

Revenues increased 13% to $52,047,000 in 1996 from $46,032,000 in 1995,
reflecting sales growth at both the on-line raw materials analysis and
finished-materials quality-control businesses. Revenues increased $3,383,000 at
the on-line raw-materials analysis business primarily due to growing acceptance
of its product line in international markets, and $3,581,000 at the on-line
finished-materials quality-control business largely due to the introduction of
its quality-control product line in Asia. Revenues decreased $949,000 due to the
unfavorable effect of currency translation as a result of the strengthening of
the U.S. dollar relative to foreign currencies in countries in which the Company
operates.

The gross profit margin increased to 45% in 1996 from 44% in 1995. The
gross profit margin at the on-line raw-materials analysis business improved to
51% in 1996 from 44% in 1995, primarily due to product redesign and increased
sales of products which have lower manufacturing costs. The improvement was
offset in part by a decrease in the gross profit margin at the on-line
finished-materials quality-control business to 41% in 1996 from 44% in 1995,
resulting principally from additional costs associated with the continued
introduction of new products in the German operations of this business.

Selling, general, and administrative expenses as a percentage of revenues
increased to 26% in 1996 from 25% in 1995, primarily due to increased marketing
efforts in international markets resulting in an increase in staffing and higher
travel expenses at the Company's on-line finished-materials quality-control
operations in Germany. Research and development expenses increased to $3,024,000
in 1996 from $2,580,000 in 1995, principally due to an increase in
product-development expenses at the on-line finished-materials quality-control
business in Germany.

Interest expense decreased to $796,000 in 1996 from $1,146,000 in 1995 due
to a decrease in short-term borrowings at the on-line finished-materials
quality-control business, as well as a decline in interest rates. Interest
income increased to $101,000 in 1996 from $21,000 in 1995, primarily due to

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<PAGE> 13

higher average invested balances at the Company's foreign operations, as well as
interest earned on the invested proceeds from the Company's December 1996
private placement.

The effective tax rates were 40% in 1996 and 42% in 1995. These rates
exceeded the statutory federal income tax rate primarily due to the impact of
state income taxes, nondeductible amortization of costs in excess of net assets
of acquired companies, and foreign tax rate and tax law differences. The
effective tax rate decreased in 1996 primarily due to proportionately less
income before provision for income taxes from Germany, which is taxed at a
higher rate.

LIQUIDITY AND CAPITAL RESOURCES

Consolidated working capital was $47,975,000 at January 3, 1998, compared
with $8,705,000 at December 28, 1996. Included in working capital are cash and
available-for-sale investments of $50,289,000 at January 3, 1998, compared with
$20,229,000 at December 28, 1996. Also included in working capital are
short-term borrowings and advances from parent company and affiliated companies
of $14,079,000 at January 3, 1998, and $18,895,000 at December 28, 1996.

During 1997, $3,099,000 of cash was provided by operating activities. The
Company funded a $6,987,000 increase in accounts receivable caused primarily by
a higher volume of shipments late in the fourth quarter of 1997. The Company
funded a $1,323,000 increase in inventories and unbilled contracts and fees,
primarily due to an increase in work in process at the Company's on-line
raw-material analysis business and, to a lesser extent, a higher volume of
contracts in process at the Company's on-line finished-materials quality-control
business. These uses of cash were offset in part by a $3,053,000 increase in
other current liabilities, primarily due to an increase in accrued income taxes.

During 1997, the Company's primary investing activities, excluding
purchases of available-for-sale investments, included an acquisition and capital
expenditures. On December 31, 1996, the Company acquired the assets, subject to
certain liabilities, of Autometrics for $1,347,000 in cash (Note 3). The Company
expended $674,000 for the purchase of property, plant, and equipment during 1997
and plans to make capital expenditures of approximately $700,000 during 1998.

The Company's financing activities provided $29,607,000 of cash in 1997. In
June 1997, the Company sold 2,300,000 shares of its common stock in an initial
public offering for net proceeds of $32,528,000. During 1997, the Company
increased its foreign short-term borrowings by $489,000 and repaid $662,000 of
its long-term obligation. A decrease in "Due to parent company and affiliated
companies" used $1,770,000 of cash in 1997.

Although the Company expects to have positive cash flow from its existing
operations, the Company may require significant amounts of cash for the
acquisition of complementary businesses. The Company expects that it will
finance any such acquisitions through a combination of internal funds,
additional debt or equity financing from the capital markets, or short-term
borrowings from Thermo Instrument or Thermo Electron, although it has no
agreement with these companies to ensure that funds will be available on
acceptable terms, or at all. The Company believes that its existing resources
are sufficient to meet the capital requirements of its existing businesses for
the foreseeable future.

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<PAGE> 14

BUSINESS

The Company develops, manufactures and markets on-line industrial process
optimization systems that employ proprietary ultra-high speed advanced
scientific measurement technologies for applications in raw materials analysis
and finished materials quality control. The Company is a pioneer in the
development of process optimization systems that provide real-time,
non-destructive analysis of the composition of raw materials in basic materials
production processes, including coal, cement and minerals. The Company also
manufactures advanced systems which are used to measure and control parameters
such as material thickness, coating thickness and coating weight in web-type
materials, such as metal strip, rubber and plastic foils. Customers use these
systems to improve product quality and consistency, lower material costs, reduce
energy consumption and minimize waste.

Global competition is driving participants in the basic materials
industries to increase quality and reduce production costs. The optimization of
industrial production processes requires the collection and analysis of data for
both the composition of the materials used in the process as well as for
measuring the variance of the output from composition targets. Manufacturers
traditionally have used off-line sampling techniques and laboratory instruments
to obtain this data. The delays associated with these techniques do not permit
real-time adjustments to the manufacturing process. In order to provide
real-time process and quality control, measurement systems must be integrated
into the customer's production line and must rapidly measure, on a continuous
basis, the stream of the materials used or product produced, rather than a
sample. The systems must also generate precise and reliable measurements of the
materials using non-invasive and non-destructive measuring techniques. Finally,
the systems must rapidly analyze the measurement data and, using this data,
adjust automatically the manufacturing process in real-time, and often under
harsh industrial conditions.

The Company's systems make real-time, on-line, non-invasive,
non-destructive, precise measurements of materials using advanced scientific
measurement techniques, including gamma spectroscopy, beta particle detection,
laser spectroscopy, x-ray fluorescence and ultrasound. The Company's systems
incorporate proprietary intelligent sensors that have been developed for
specific production processes along with ultra-high speed signal processing
electronics capable of processing, in some cases, up to one million electronic
impulses per second resulting from the detection of excited particles such as
photons. These systems can be combined with the Company's proprietary real-time
software to form integrated process optimization systems designed to fit the
customer's specific application. The Company has developed a reputation for
rugged and reliable sensor technology capable of operating in hostile industrial
environments. The Company's products can generate significant savings to the
customer as a result of reduced manufacturing costs, reduced material waste,
decreased energy costs and in some cases, savings in capital investment. In many
cases a customer can recoup its investment in one of the Company's systems
within six to eighteen months.

The advent of rugged high-speed analytical measurement instrumentation has
only recently allowed for the development of on-line industrial process
optimization. The markets for the Company's systems, therefore, consist
primarily of the existing industrial facility base which may be retrofitted or
upgraded to incorporate on-line analysis, as well as new industrial facilities
which are expected to be built in the future. The Company estimates that there
are several thousand web-type material production lines, many of which the
Company believes have obsolete measurement and control systems, which could be
upgraded by incorporating the Company's on-line finished materials quality
control systems. The Company believes that the current total annual worldwide
market for process optimization instruments and systems is in excess of $2
billion. The Company believes its process optimization products and systems
currently address an approximately $500 million annual market segment.

The Company's strategy is to capitalize on the large market opportunities
for advanced measurement systems in the basic materials industries and to
exploit its core competencies and proprietary technologies through an evolving
series of optimization systems. As part of this strategy, the Company intends to
expand the geographic scope of its addressed markets. In particular, the Company
intends to expand the market presence of its on-line finished materials quality
control products in Asia, the U.S. and Latin America by drawing on the global
market expertise and existing global sales force of its on-line raw

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<PAGE> 15

materials analyzer business. In addition, the Company intends to aggressively
pursue market opportunities for its on-line raw materials analyzer products
created by the rapid infrastructure development and new manufacturing capacity
occurring in Asia and Latin America. Further, the Company intends to pursue
opportunities to retrofit the large existing base of coal mines, coal-burning
utilities and cement plants with its on-line process optimization systems. The
Company also intends to target new industries such as the pharmaceutical,
agrochemical, industrial chemical and glass industries. For example, the Company
is developing a laser-based spectroscopy system to be used on-line to analyze
the complex molecular structures of chemicals, which the Company believes can be
adapted for use in the pharmaceutical industry. The Company also plans to make
strategic acquisitions of complementary businesses. On December 31, 1996, the
Company acquired substantially all of the assets, subject to certain
liabilities, of the Autometrics division of Svedala Industries, Inc. Autometrics
designs, manufactures and markets on-line analysis instruments for the minerals
processing industry.

In January 1993, Thermo Instrument acquired Gamma-Metrics, a manufacturer
and marketer of on-line raw materials analyzers and in October 1993, Thermo
Instrument acquired all of the assets, subject to certain liabilities, of
Radiometrie, a manufacturer and marketer of on-line finished materials quality
control systems. Gamma-Metrics and Radiometrie operated as two divisions of
Thermo Instrument until the Company's incorporation as a Delaware corporation in
November 1996. In connection with the Company's incorporation, Thermo Instrument
transferred to the Company the assets, liabilities and businesses of the
Gamma-Metrics subsidiary and Radiometrie division in exchange for 5,000,000
shares of the Company's common stock. In December 1996, the Company acquired the
Autometrics business. The Company's on-line raw materials analyzer business is
conducted by its Gamma-Metrics subsidiary based in San Diego, California, and
its on-line finished materials quality control business is conducted by its
Radiometrie division with operations in Erlangen, Germany and Gloucester,
England. The Company's principal executive offices are located at 5788 Pacific
Center Boulevard, San Diego, California 92121, and its telephone number is (619)
450-9649.

On-line Raw Materials Analyzer Business

The Company manufactures on-line process optimization systems which
non-invasively measure and analyze the physical and chemical properties of a
stream of bulk solid materials in real-time. The systems are primarily used to
analyze the composition of raw materials used in certain basic industries, such
as coal, cement and minerals. The analysis technique used in the Company's
process optimization systems involves neutron interrogation. Under neutron
interrogation each element, when activated by neutrons, emits gamma rays of
unique characteristics which allow identification and quantification of the
elements present. Neutron interrogation has a major advantage over other on-line
measuring technologies such as x-rays because neutrons can deeply penetrate the
materials being analyzed. As a result, neutron interrogation allows the entire
stream of the material to be analyzed and eliminates the need for sampling. In
addition, it provides a more accurate analysis of the materials, especially
non-homogeneous materials, and can be used to analyze an extremely broad range
of materials. The systems contain proprietary sensors that detect gamma rays
emitted from the material being analyzed, which is activated by the neutron
source within the analyzer, yielding a composite gamma ray spectrum of the
material analyzed. Through on-line high speed spectroscopy, this spectrum is
then decomposed into its constituent parts by using microprocessors and
sophisticated real-time analytical software. The analyzer can then translate
this data into the elemental composition of the raw materials and can also use
the information to infer certain quality control parameters specific to the
process.

The Company has developed extensive proprietary know-how and expertise
regarding the measuring capabilities of various on-line sensor technologies
based on the material being analyzed and the ultimate use of the material. The
Company draws on this expertise to modify and adapt its technology to maximize
the efficiency and performance of its sensors in each application. The Company's
systems also employ ultra-high speed microprocessors and electronic signaling
devices which enable the technology to be used on-line and in real-time. The
Company has developed proprietary high speed sophisticated software which
rapidly processes the collected data and compares it to input target parameters.
In this way, a control signal can be generated which is then used to modify
process variables to guide the

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process to the target parameters. In order to provide real-time analysis, the
Company's systems must be integrated with the customer's production process,
thus subjecting them to hostile conditions. In response, the Company has
designed its systems to be extremely rugged, durable and accurate despite these
demanding conditions.

Continuous on-line full-stream materials analysis provides faster and more
accurate analysis information than is possible with any conventional analysis
system. Traditional methods require numerous samples to be taken mechanically
from the materials at various stages of the production process, followed by
labor intensive sample preparation and laboratory analysis. Conventional
analysis techniques lag the production process and cannot be used effectively
for process control. In contrast, on-line, real-time analysis of the materials,
when coupled with the Company's software products, provides the customer with
immediate data regarding material composition and allows customers to
automatically and continuously adjust their manufacturing processes.

The Company's systems can reduce operating costs through a decrease in raw
material waste and energy use. The continuous monitoring and adjustment of the
manufacturing process enable the customer to use its raw materials more
efficiently. Product quality and consistency are also improved with use of the
Company's systems. For example, one typical application enables customers in the
cement industry to regulate closely the raw mix proportions of cement materials
to produce a more consistent product. Customers building new facilities can save
on capital outlay by reducing their investment in homogenizing
stacker/reclaimers and homogenizing silos, the traditional methods of
homogenizing raw materials. The Company's systems also reduce pollution,
optimize recycling and reduce material waste.

The Company currently markets the following family of products based on its
neutron interrogation technology.

On-line Coal Analyzer. The Company's on-line coal analyzer analyzes
streams of coal at a rate of up to four hundred tons per hour. The analyzer uses
neutron interrogation to determine the sulfur and ash concentration of the coal
on a continuous basis, and can also simultaneously compute the calorific value
of the coal, among other quality parameters. Customers can use the data to blend
or sort the coal depending on its quality. The Company has developed proprietary
high speed software that can be incorporated into the system to enable the
customer to automatically adjust and control the coal blending and sorting
process on-line.

Coal analyzers are currently used by coal mines and coal-burning utilities.
Increased competition in the coal industry has forced coal producers to reduce
costs while meeting increasingly stringent quality specifications. Coal mines
can use the coal analyzer to improve profitability by blending coals of
different quality to meet specific contract requirements or environmental
regulatory standards, by sorting out low sulfur coal which can be sold for a
premium or by controlling the specific gravity of separation in a coal cleaning
plant to ensure that quality specifications are met without over-cleaning. In
addition to ensuring more consistent quality, on-line coal analysis improves
recovery or yield from the mine, thus extending the life of a mine by reducing
the risk of premature exhaustion of low sulfur reserves that are required to
balance high sulfur reserves. Utility market deregulation and privatization,
coupled with environmental emission standards, has forced coal-burning utilities
to reduce costs while satisfying environmental emissions regulations.
Coal-burning utilities benefit from using on-line coal analyzers by enabling the
utility to accurately and rapidly test the coal to verify that the specification
of coal received under contract meets its specifications; to burn a more
cost-effective blend of high and low sulfur coal without violating environmental
emissions standards; to avoid investment in costly scrubbers; to generate
emission credits by controlling emissions; to improve boiler performance by
burning consistent quality coal; and to provide data verification of continuous
emission monitors.

Fifty-five percent of electricity production today in the U.S. is derived
from coal, and coal is the primary source of electricity in the rest of the
world. Further, it is estimated that approximately 45 new coal mines and
coal-burning utilities will be built each year for the next several years. In
China alone it is estimated that over 140 coal-fired utility plants will be
built between 1995 and 2005. The price of an on-line coal analyzer system ranges
from $300,000 to $500,000.

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CrossBelt Analyzer. The Company's CrossBelt Analyzer ("CBA") is used
primarily by the cement industry to analyze the composition of cement raw
materials. The CBA is essentially a horizontal tunnel that is easily assembled
around the customer's conveyor belt. The CBA analyzes materials traveling on a
conveyor belt at speeds of up to 600 feet (200 meters) per minute and with
material flow rates in excess of 1,000 tons per hour. The CBA generates data
which provides the elemental composition of the entire stream of materials and
can also use the information to infer certain quality control parameters, such
as lime saturation factor and silica ratio. The CBA can incorporate high speed
proprietary software which allows the customer to automatically control
production processes.

Cement producers purchase the CBA to improve the economics of the plant by
reducing operating costs through the reduction in material waste and fuel costs.
The CBA is incorporated on-line into the customer's production process, which
enables the customer to control the mix of raw materials at the beginning of the
production line or to automatically control the blending of the cement additives
with crushed limestone and clay further down the production line. Both
approaches enable the producer to achieve more uniform cement quality. The CBA
controls the production process by using the analytical data it compiles to
automatically adjust the composition of the additive mix to achieve target
quality levels. This approach helps reduce variations in the materials fed into
the cement kiln yielding several benefits: lower energy consumption in the
cement mills, greater throughput and extended refractory life. Some customers
have reported that the use of the CBA has resulted in the reduction of fuel
costs. Fuel costs can constitute a significant percentage of a cement plant's
overall operating costs. For new plants, reduced variations in raw material
chemistry can also translate into major savings in the capital outlay for
homogenizing stacker/reclaimers and for homogenizing silos. This homogenizing
equipment is used to blend uneven raw materials. The price of a CBA system
ranges from $500,000 to $750,000.

The annual consumption of cement is expected to rise from the 1994 figure
of approximately 1.3 billion tons to approximately 1.8 billion tons by the year
2005. In addition, there are currently approximately 1,150 cement plants that
the Company has identified as potential customers for its CBA.

Mineral Slurry Analyzers. The Company recently developed an on-line
analyzer using neutron interrogation for use in the mineral extraction industry
for analyzing mineral slurry, a mixture of fine insoluble materials and water.
Virtually all mined minerals, including iron, copper, nickel and bauxite, must
be separated and purified through a process called beneficiation whereby the
mined minerals are milled and mixed with water to form a mineral slurry. The
mineral of interest is then concentrated through a variety of separation stages
using reagents. The Company's neutron-based mineral slurry analyzer, which
analyzes the entire elemental composition of the slurry, can greatly improve the
efficiency of the beneficiation process by using the collected data to
automatically adjust various process parameters, including the amount of
reagents used in the process. The Company believes its neutron-based mineral
slurry analyzer is suitable for controlling the beneficiation process for a wide
variety of minerals.

On December 31, 1996, the Company acquired substantially all of the assets,
subject to certain liabilities, of Autometrics. Autometrics is a manufacturer of
mineral slurry analyzers. The assets acquired included two complementary product
lines and a customer base of approximately 300 customers, the majority of which
are located in the U.S. The two product lines acquired were Autometrics' on-line
x-ray slurry analyzers and its on-line particle size analyzers.

The x-ray slurry analyzers are used in the mineral extraction industry,
primarily for copper, iron and gold extraction, to measure the percentage of
elements present in mineral slurries and can be designed to automatically
control and adjust the amount of reagents used in the mineral beneficiation
process. The x-ray slurry analyzer uses x-ray fluorescence as its energy source
which is a less expensive energy source than neutron interrogation, and does not
penetrate the materials being analyzed as deeply as neutron interrogation. The
x-ray slurry analyzer provides customers, who do not require a comprehensive
analysis system, a cost-effective alternative to the Company's neutron-based
mineral slurry analyzer.

The on-line particle size analyzers are on-line real-time particle size
measuring instruments which have been used for over 15 years in the mineral
extraction industry. The on-line particle size analyzers use

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ultrasound together with proprietary models to determine the particle size
distribution and percent solids in mineral slurries.

The price of the Company's mineral slurry analyzers ranges from $50,000 to
$500,000. The Company believes there are currently approximately 750 mineral
processing facilities worldwide for all of the Company's products.

Software Products. The Company complements its application specific sensor
technology with process optimization software. These systems use adaptive and
predictive controls to maximize material utilization, as well as to blend raw
materials to meet certain regulatory requirements in a cost-effective manner.
The process to extract, beneficiate and utilize raw materials is difficult to
control due to variances in chemistry, size and shape of the materials, and time
delays in the transport of materials from different points within the handling
system. Traditional process control methods cannot be utilized in these dynamic
and highly variable conditions. The Company's proprietary process control
software can accomplish these optimization tasks by performing model-based
estimation and by adaptively controlling source materials. The Company is the
only provider of process control software of this type for use by customers in
the raw materials segment of the basic materials industry.

A variety of products are manufactured and sold by the Company to address
the disparate needs of the cement, coal and energy industries. For the cement
industry, RAMOS(TM) achieves continuous blending for up to six sources of bulk
materials and three control parameters, while PREBOS(TM) is ideal for batch
blending, employing up to twelve sources. COBOS(TM) is used by coal producers
and coal-fired utilities to blend coal to a target composition defined by
sulfur, ash or calorific value and thus achieve optimum fuel composition while
meeting emission limits.

FastLab. The Company also offers its FastLab analyzer for rapid analysis
of samples off-line, with minimal sample preparation. The FastLab can be used
for numerous applications such as spot check analysis of raw materials, core
hole analysis, fuel analysis and chemical additives analysis. This product is
suitable for the same markets which use on-line elemental analysis. Its
advantages include its ease of use, its flexibility in handling multiple
material types and sampling locations and its low cost. The price of the
Company's FastLab analyzer ranges from $250,000 to $400,000.

Process Safety Instrumentation. Prior to entering the on-line process
optimization systems business, the Company's principal business was process
safety instrumentation for the nuclear power industry. The Company is a leading
supplier of process safety instrumentation in this industry. The Company's
instrumentation is designed to improve the safety and efficiency of nuclear
power plants. The Company produces several products for this market ranging in
price from $100,000 to $2.5 million. In addition, the Company offers automated
test equipment and some safety-related computer software for nuclear power
plants and other facilities where radioactive materials are used.

On-line Finished Materials Quality Control Business

The Company develops, manufactures and markets gauges and process
optimization systems for industrial manufacturing lines for continuous
production of certain web-type materials. Web-type materials are flat sheet
materials like paper, metal strip, plastic foil, rubber and glass. Typical high
volume products made from web-type materials include all types of vehicle body
and other parts, metals used for refrigerators and similar products,
beverage/food cans, cladding for buildings and rubber tires. The Company's
instruments measure the total thickness, basis weight and coating thickness of
web-type materials such as plastic foils, hot and cold metal strip, rubber,
glass and non-woven fabrics. The measuring technology incorporated in the
Company's products is based on partial absorption, reflection or change in
ionizing or infra-red radiation as well as of white light and laser beams, by
the materials to be measured. The Company's systems can measure a single point
on the material to be measured, several points or generate a "profile" of the
web. Measured values are acquired without contact and without interfering with
the production process, have high measurement accuracy and are extremely
reliable despite hostile environments. The Company offers its measuring gauges
with or without its process optimization systems. The customer's production
process can be regulated automatically by the Company's process optimization
system.

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The Company's products incorporate a variety of measurement gauges such as
x-ray thickness gauges, isotope thickness gauges, x-ray fluorescence coating
gauges or beta-backscatter gauges, depending on the application. One of the
Company's strengths is its proprietary know-how regarding application-specific
technology. The thickness gauges manufactured by the Company basically function
by measuring partial absorption of energy by the material to be measured. The
change in the intensity of the energy emitted is detected by application
specific sensors, then processed by high speed microprocessors, before emerging
as the measured value. These instruments can incorporate the Company's high
speed proprietary software to form a fully integrated process optimization
system for continuous manufacturing processes and improved product quality. The
Company's Fuzzy-Neurocontrol(TM) software provides predictive adaptive control
of the process. This proprietary software allows a more timely control of the
process, adapts the controls to the varying conditions in the process and offers
improved material savings. The Company's Spectracomp(TM) software automatically
and continuously compensates for variations in metal thickness measurements
resulting from changes in the composition of the alloy being measured.

Competitive pressures have necessitated that producers of web-type
materials reduce production costs. The Company's products not only save on raw
materials and energy but they also maximize productivity and product quality.
The total thickness of web-type material, or the coating on it, is measured
accurately at the point of manufacture by the Company's products and are
compared by the system with an input target value. Adjustments can be made to
the manufacturing process early in the process, thereby reducing material waste.
The Company's systems also provide several competitive advantages which afford
the customer additional cost savings. For example, the Company's products can
accurately measure materials closer to the edge of the strip thus reducing
material waste. The Company has developed a reputation for rugged and reliable
instruments that can withstand hostile conditions. Ruggedness is critical to
customers because the Company believes downtime of the production system could
cost a customer up to $100,000 an hour. The Company's proprietary hot gauges can
be placed closer to the actuator (air knife) than conventional cold gauges
allowing adjustments earlier in the production process thus decreasing material
waste. In addition, the Company's systems include an extremely short response
time gauge, sending control signals one inch(2.5 centimeters) after measurement,
while competitors' gauges typically require at least twice this distance. Costs
can also be reduced through reduced start-up and product change times using the
system's comprehensive organized display of the process parameters. Reducing
start-up times at the beginning of the production and product change saves
energy, reduces scrap and saves machine time. Depending on the circumstances,
most customers can recoup their investment in a Company system within six to
eighteen months of installation. Prices for the Company's gauges and process
optimization systems typically range from $50,000 to $1 million. Competitive
technologies enabling on-line measurement of the thickness, such as contacting
mechanical thickness gauges and pneumatic calipers, exist, however, the Company
believes that use of these technologies results in inferior accuracy when
compared with its own products.

The Company believes there is significant market potential for its products
resulting from several factors including increased demand for on-line
optimization, growing market opportunities in Asia and Latin America, increased
market penetration in the U.S. and the expansion of steel minimills. The Company
estimates that there are currently several thousand production lines worldwide
that currently use or could benefit from on-line process optimization. Asia and
Latin America are experiencing growth in infrastructure development and
manufacturing capacity which will drive demand for the Company's systems. The
Company also believes there are potential opportunities to penetrate the U.S.
markets which are dominated by few competitors. End users in the U.S. are
demanding alternative sources of on-line process optimization. Increased
emphasis on energy efficiency will also create demand for the Company's
products. For example, in the automotive industry, for a given load-carrying
capacity, all types of vehicles are being designed with a lower mass, with the
objective of reducing energy consumption. This leads directly to several trends:
for example, mass-produced road vehicles will use less steel and be made of
thinner steels, plastic sheet parts and even aluminum. (The Audi A8, for example
has an aluminum body.) Likewise, aircraft parts will be fabricated from more
exotic materials

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<PAGE> 20

such as composites and titanium. These trends indicate lower volume but higher
value manufacture of web-type products and, consequently, increased demand for
the Company's gauges and process optimization systems. The expansion of steel
minimills (recycling) has created competitive pressures in the steel industry
through increased demand for efficiency, which in turn will also stimulate
demand for the Company's gauges and process optimization systems.

COMPETITION

In the coal, cement and mineral industries, the Company competes primarily
on performance and to a lesser extent on price. Competition regarding on-line
coal and cement analyzers is limited at present. Scantech Limited (formerly
Mineral Control Instrumentation Ltd.) of Australia is the Company's principal
competitor in the on-line coal analyzer market. Scantech Limited, which entered
the cement industry market in 1993, is also the Company's principal competitor
in this industry. The Company is a recent entrant into the on-line mineral
slurry analyzers market where it competes primarily with Amdel of Australia. The
market for solids and multiphase analyzers for process control generally is
fragmented, with numerous competitors. The Company believes it is a market
leader in the segment of the solids and multiphase analyzer market for on-line
bulk materials analyzers using neutron interrogation.

Competition in the thickness-gauging business is highly fragmented with
numerous competitors competing in various end-use market segments. As a result,
competition varies according to the end-use segment. The Company competes based
upon quality, performance and price. The Company's largest competitors are
Honeywell (U.S.), Toshiba (Japan), and Yokogawa (Japan). Honeywell, through its
divisions, Data Measurement and Loral, offer systems to the metals industry and
through its Ohmart division is a supplier to the plastics industry. Toshiba and
Yokogawa are at present competing with the Company in Asia in the metals
industry. IMS (Germany) and IRM (Belgium/U.S.), compete with the Company
worldwide in the metals industry. There are a number of competitors such as NDC
(US), Eurotherm (U.K.), and Infrared Engineering (U.K.), which compete with the
Company in the plastics and rubber industry.

Certain of the Company's competitors have greater resources, manufacturing
and marketing capabilities, technical staff and production facilities than those
of the Company. As a result, they may be able to adapt more quickly to new or
emerging technologies and changes in customer requirements, or to devote greater
resources to the promotion and sale of their products than can the Company.
Further, competition with respect to all of the Company's products could
increase if new companies enter the market or if existing competitors expand
their product lines. There can be no assurance that competitors of the Company
will not develop technological innovations that will render products of the
Company obsolete.

MARKETING, SALES AND DISTRIBUTION

On-line Raw Materials Analyzer Business. The Company sells its on-line raw
material analyzer products directly to its customers worldwide through its sales
force consisting of 12 persons. The territories of this sales force are
primarily geographical with some segment specialization. In addition, the
Company uses a network of sales and service representatives in over 23 countries
around the world to facilitate product distribution worldwide. The primary
function of these representatives is to stay in close contact with customers or
potential customers, gather market information, translate, advertise,
participate in trade shows, arrange meetings and facilitate logistics. The
Company also sells some products to original equipment manufacturers ("OEMs")
who offer the Company's products along with their own or a third party's
products. Sales to OEMs represent approximately 10% of the Company's total
revenues.

On-line Finished Materials Quality Control Business. The Company sells its
on-line finished materials quality control systems primarily in Europe through a
direct sales force of 20 employees, and through a network of 14 distributors and
sales representatives in Europe. In Asia, a sales network has been established
with agents currently under contract covering China and Japan. The Company
employs three agents in Latin America covering Argentina, Brazil and Colombia.
The Company has established a sales and service operation addressing countries
participating in NAFTA. In addition, the Company sells its products to OEMs.
Sales to OEMs represented approximately 27% of the Company's total revenues

20
<PAGE> 21

from its on-line finished materials quality control business for 1997. The
Company intends to further extend its sales network in Asia, North America and
Latin America.

Customer Service and Support. The Company believes that high quality
customer service and support is critical to success in the process optimization
segment of the analytical instrumentation industry. The Company maintains a
staff of engineers to assist customers with installing and integrating their
process optimization system and to provide ongoing spare parts and calibration
services for its on-line raw materials analyzer business. In addition, modems
permit remote diagnostics by customer support personnel from the Company's
headquarters or from satellite support centers. The Company supports its
manufacturing operations for its on-line finished materials quality control
business with a full range of services including application and engineering
support, installation, supervision, commissioning, emergency field service by
remote diagnostics via modems, extensive customer training, consulting and spare
parts.

RESEARCH AND DEVELOPMENT

The Company maintains active programs for the development and introduction
of new products and improvements to existing products. The Company also seeks to
develop new applications for its existing products and technology. In
particular, the Company is actively seeking new applications for its non-
invasive, non-destructive analysis technologies. The Company is also in the
process of developing other applications for its CBA.

With respect to its on-line finished materials quality control business,
the Company is focused on two areas of commercial importance in the metals
industry, the measurement of metal coatings and the cross-profile thickness
measurement of hot steel strip, cold strip and plate. In both areas of
measurement, parameters, particularly accuracy and resolution, are being
tightened in response to end-user needs. In 1997, the Company introduced a hot
stripmill tomographic profile gauge, an x-ray based gauge for hot dip
galvanizing, a wedge pair gauge, and a compact fixed energy x-ray source for
thin films.

Research and development expenses for the Company were $3.8 million, $3.0
million and $2.6 million in fiscal 1997, 1996, and 1995, respectively. As of
January 3, 1998, the Company had 51 full time employees engaged in research and
development.

PATENTS

The Company's policy is to protect its intellectual property rights and to
apply for patent protection when appropriate. The Company is the owner of 12
United States patents as well as corresponding foreign patents having expiration
dates ranging from 1998 through 2014. Patent protection is believed to provide
the Company with competitive advantages with respect to certain instruments. The
Company also considers that technical know-how, trade secrets and trademarks are
important to its business.

There can be no assurance that any patents now or hereafter owned by the
Company will afford protection against competitors. Proceedings initiated by the
Company to protect its proprietary rights could result in substantial costs to
the Company. Recently, the Company's Gamma-Metrics subsidiary initiated a
lawsuit in the Federal District Court in San Diego, California, alleging, among
other things, patent infringement against Scantech Limited and its subsidiary
Mineral Control Instrumentation Ltd. Scantech Limited has filed a counterclaim
against Gamma-Metrics alleging antitrust violations and unfair competition.
There can be no assurance that competitors of the Company, some of whom have
substantially greater resources than those of the Company, will not initiate
litigation to challenge the validity of the Company's patents, use their
resources to design comparable products that do not infringe the Company's
patents or initiate claims that the Company's products infringe the competitors'
patents. The Company could incur substantial costs and diversion of management
resources with respect to the defense of any such challenges or claims, which
could have a material adverse effect on the Company's business, financial
condition, and results of operation. Furthermore, parties making such challenges
or claims could secure a judgment awarding substantial damages, as well as
injunctive or other equitable relief, which could effectively block the
Company's ability to make, use, sell, distribute or market its products and
services in the U.S. and abroad. See "Risk Factors -- Proprietary Rights."

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<PAGE> 22

FACILITIES

The Company's various businesses are operated from separate facilities. The
Company leases approximately 45,000 square feet in San Diego, California
pursuant to a lease that expires in 2003. The Company uses this facility for
manufacturing, sales and administration for its on-line raw materials analyzer
business. The Company also leases approximately 24,000 square feet in
Gloucester, England, pursuant to a lease expiring in 2001, and owns an
approximately 110,000 square foot facility in Erlangen, Germany, of which
approximately 55,100 square feet are utilized by the Company, with the balance
being used by another Thermo Instrument company. Both of these facilities are
used by the Company for manufacturing, sales and administration for its on-line
finished materials quality control business. In addition, the Company leases
office space throughout the world for its sales and service operations. The
Company believes that these facilities are adequate for its present operations.

PERSONNEL

As of January 3, 1998, the Company had a total of 323 employees, of whom 51
were engaged in research and product development and 272 were engaged in sales,
service, manufacturing and general management. The Company has had no work
stoppages and considers its relations with employees to be good.

BACKLOG

The Company's backlog of firm orders was approximately $26.9 million and
$24.6 million at January 3, 1998 and December 28, 1996, respectively. The
Company includes in backlog only those orders for which it has received firm
purchase orders and for which delivery has been specified within twelve months.
Because of the possibility of customer changes in delivery schedules,
cancellation of orders and potential delays in product shipments, the Company's
backlog as of any particular date may not be representative of actual sales for
any succeeding period.

RAW MATERIALS

Various components of the Company's products are supplied by sole-source
vendors. The Company has not experienced significant difficulty in obtaining
adequate supplies from these vendors, and has identified alternate suppliers.
However, there can be no assurance that the unanticipated loss of a single
vendor would not result in delays in shipments or the introduction of new
products.

SEASONALITY

The Company's on-line finished materials quality control business
experiences a slowdown in revenues during the first quarter of each calendar
year primarily because its customers tend to place their orders earlier in the
year so that they can have the systems installed either during the holiday
season in the third quarter or between Christmas and the New Year.

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<PAGE> 23

RELATIONSHIP WITH THERMO ELECTRON
AND THERMO INSTRUMENT

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

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

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

THE THERMO ELECTRON CORPORATE CHARTER

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

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

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<PAGE> 24

services provided by Thermo Electron to the Thermo Subsidiaries is covered under
existing corporate services agreements between Thermo Electron and each of the
Thermo Subsidiaries.

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

CORPORATE SERVICES AGREEMENT

As provided in the Charter, the Company and Thermo Electron have entered
into a Corporate Services Agreement (the "Services Agreement") under which
Thermo Electron's corporate staff provides certain administrative services,
including certain legal advice and services, risk management, certain employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and certain financial and other services to the Company. The
annual fee for these services was equal to 1.0% of the Company's revenues for
1997 and 1996 and will decrease to 0.8% of revenues for 1998. The fee is
reviewed annually and may be changed by mutual agreement of the Company and
Thermo Electron. During fiscal 1997 and 1996, Thermo Electron assessed the
Company fees of $567,000 and $520,000, respectively.

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

MASTER GUARANTEE REIMBURSEMENT AGREEMENTS

The Company has entered into a Master Guarantee Reimbursement Agreement
with Thermo Electron which provides that the Company will reimburse Thermo
Electron for any costs it incurs in the event it is required to pay third
parties pursuant to any guarantees it issues on the Company's behalf. Thermo
Instrument has entered into a similar agreement with Thermo Electron with regard
to the Company's obligations which are guaranteed by Thermo Electron. The
Company has also entered into a Master Guarantee Reimbursement Agreement with
Thermo Instrument which provides that the Company will reimburse Thermo
Instrument for any costs it incurs in the event that Thermo Instrument is
required to pay Thermo Electron or any other party pursuant to any guarantees it
issues on the Company's behalf.

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<PAGE> 25

MISCELLANEOUS

As of January 3, 1998, $40,173,000 of the Company's cash equivalents were
invested in a repurchase agreement with Thermo Electron. Under this agreement,
the Company in effect lends excess cash to Thermo Electron which Thermo Electron
collateralizes with investments principally consisting of corporate notes,
United States government agency securities, money market funds, commercial
paper, and other marketable securities, in the amount of at least 103% of such
obligation. The Company's funds subject to the repurchase agreement will be
readily convertible into cash by the Company. 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.

The Company leases approximately 54,900 square feet of its 110,000 square
foot facility in Erlangen, Germany on a month-to-month basis to another Thermo
Instrument company. The Thermo Instrument company is responsible for paying to
the Company its pro rata share of occupancy expenses, including utilities and
taxes, associated with the facility which payments in 1997 amounted to $472,000
in the aggregate.

In 1997, the Company paid a ten percent (10%) commission totaling $83,000
to Thermo Sentron Inc., a majority-owned subsidiary of Thermedics Inc., which is
in turn a majority-owned subsidiary of Thermo Electron, for assisting in the
sale by the Company of its products in Australia.

In 1997, the Company purchased several x-ray source components for $267,000
from Kevex X-Ray Inc., a wholly owned subsidiary of ThermoSpectra Corporation,
which in turn is a majority-owned subsidiary of Thermo Instrument.

The Corporation, along with certain other Thermo Subsidiaries, participates
in a notional pool arrangement with Barclays Bank, which includes a $150 million
credit facility. Only European-based Thermo Subsidiaries participate in this
arrangement. Under this arrangement the Bank notionally combines the positive
and negative cash balances held by the participants to calculate the net
interest yield/expense for the group. The benefit derived from this arrangement
is then allocated based on balances attributable to the respective participants.
Thermo Electron guarantees all of the obligations of each participant in this
arrangement. In addition, funds on deposit under this arrangement provide credit
support for overdraft obligations of other participants. As of January 3, 1998,
the Corporation had a negative cash balance of approximately $569,000, based on
an exchange rate of $1.65/L1.00 as of January 3, 1998. For 1997, the average
annual interest rate earned on GBP deposits by participants in this credit
arrangement was approximately 6.5% and the average annual interest rate paid on
GBP overdrafts was approximately 7.2%.

At January 3, 1998, the Corporation owed Thermo Electron and its other
subsidiaries an aggregate of $4,184,000 or amounts due under the Corporate
Services Agreement and related administrative charges, for other products and
services, and for miscellaneous items, excluding loans described above. The
largest amount of net indebtedness owed by the Corporation to Thermo Electron
and its other subsidiaries since December 29, 1996 was $4,184,000. These amounts
do not bear interest and are expected to be paid in the normal course of
business.

STOCK HOLDING ASSISTANCE PLAN

In 1997, the Corporation adopted a stock holding policy which requires its
chief executive officer to acquire and hold a minimum number of shares of Common
Stock. In order to assist the chief executive officer in complying with the
policy, the Corporation also adopted a stock holding assistance plan under which
it may make interest-free loans to the chief executive officer, to enable such
employees to purchase the Common Stock in the open market. During 1997, Mr.
Corte received a loan in the principal amount of $51,907.85 under this plan to
purchase 3,200 shares of the Common Stock. The loan to Mr. Corte is repayable
upon the earlier of demand or the fifth anniversary of the date of the loan,
unless otherwise authorized by the human resources committee of the
Corporation's board of directors.

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<PAGE> 26

MANAGEMENT

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

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Denis A. Helm................................ 59 Chairman of the Board and Director
Ernesto A. Corte............................. 59 President, Chief Executive Officer and
Director
Werner G. Kramer............................. 50 Executive Vice President
John N. Hatsopoulos.......................... 62 Senior Vice President and Chief Financial
Officer
Paul F. Kelleher............................. 54 Chief Accounting Officer
Joseph A. Baute.............................. 70 Director
Willard R. Becraft........................... 71 Director
Earl R. Lewis................................ 54 Director
John T. Keiser............................... 62 Director
Arvin H. Smith............................... 68 Director
</TABLE>

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

Denis A. Helm has been Chairman of the Board and Director of the Company
since its inception in November 1996 and was the Chief Executive Officer of the
Company from November 1996 to February 1998. Mr. Helm has been President of
Thermo Instrument's Thermo Environmental Instruments Inc. subsidiary since 1981.
Thermo Environmental designs, manufactures and distributes instruments and
systems for detecting and monitoring environmental pollutants. Mr. Helm has also
been a Senior Vice President of Thermo Instrument since 1994 and was a Vice
President of Thermo Instrument from 1986 until 1994.

Ernesto A. Corte has been President of the Company since its inception in
November 1996 and Chief Executive Officer and Director since February 1998. Mr.
Corte was chief operating officer of the Company from November 1996 to February
1998. Mr. Corte has been president of the Company's Gamma-Metrics subsidiary, a
manufacturer and marketer of on-line raw materials analyzers, since its
acquisition by Thermo Instrument in 1993. Mr. Corte founded Gamma-Metrics in
1980 and was Chairman of the Board, Chief Executive Officer and President of
Gamma-Metrics prior to its acquisition in 1993.

Werner G. Kramer has been Executive Vice President of the Company since its
inception in November 1996. Mr. Kramer has been President of the Company's
Eberline Radiometrie Instruments GmbH subsidiary and President of Radiometrie's
parent company, Thermo Instrument Systems GmbH, since 1993. Prior to that, Mr.
Kramer was Executive Vice President of the Industrial Gauging Division of FAG
Kugelfischer since 1983. FAG Kugelfischer is a large German company which
manufactures ball bearings.

John N. Hatsopoulos has been Senior Vice President of the Company since
1997 and Chief Financial Officer of the Company since its inception in November
1996 and was a Vice President of the Company and a Director of the Company from
November 1996 to September 1997. Mr. Hatsopoulos has been a Vice President and
Chief Financial Officer of Thermo Instrument since 1988. Mr. Hatsopoulos has
been President of Thermo Electron since January 1997, Chief Financial Officer of
Thermo Electron since 1988 and was an Executive Vice President of Thermo
Electron from 1986 until January 1997. He is also a Director of LOIS/USA Inc.,
Thermedics Inc., Thermo Ecotek Corporation, Thermo Electron Corporation, Thermo
Fibertek Inc., Thermo Instrument Systems Inc., Thermo Power Corporation, Thermo
TerraTech Inc. and Thermedics Detection Inc.

Paul F. Kelleher has been Chief Accounting Officer of the Company since its
inception in November 1996. Mr. Kelleher has been Senior Vice President, Finance
of Thermo Electron since June 1997, served

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<PAGE> 27

as its Vice President, Finance from 1987 to June 1997 and served as its
Controller from 1982 to January 1996. He is also a Director of ThermoLase
Corporation.

Willard R. Becraft has been a Director of the Company since May 1997. Mr.
Becraft is a consultant in advanced instrumentation and control technology
development. He was an executive vice president of Northwest Instrument Systems,
Inc., a business he co-founded to develop specific instrumentation services with
applications in the environmental field, for more than five years prior to his
retirement in July 1996. Mr. Becraft spent more than 30 years of his business
career with the General Electric Company in various management capacities, and
was responsible for managing research and development and product development
activities in instrumentation and control, fusion energy, solar energy, jet
engines and spacecraft systems.

Joseph A. Baute has been a Director of the Company since June 1997. Since
1993, Mr. Baute has been a consultant to Markem Corporation, a manufacturer of
marking and printing machinery, specialty inks and printing elements. Mr. Baute
was also the Chairman and Chief Executive Officer of Markem Corporation from
1977 and 1979, respectively, until his retirement in 1993. He is a director of
Cerion Technology, Houghton-Mifflin Company and INSO Corporation.

Earl R. Lewis has been a Director of the Company since its inception in
November 1996. Mr. Lewis has been President and chief executive officer of
Thermo Instrument since March 1997 and January 1998, respectively, and was Chief
Operating Officer of Thermo Instrument from January 1996 to January 1998. He was
an Executive Vice President of Thermo Instrument from January 1996 to March 1997
and was Vice President from March 1992 to January 1994. Mr. Lewis has been a
Vice President of Thermo Electron since September 1996. Mr. Lewis was Chief
Executive Officer of Thermo Optek, which is a majority-owned subsidiary of
Thermo Instrument that manufactures optical spectroscopy instruments and
affiliated components, from August 1995 until January 1998, and was President of
its predecessor, Thermo Jarrell Ash, for more than five years prior to that date
a manufacturer of atomic spectrometers. Mr. Lewis is also Director of Thermo
Optek, Thermo BioAnalysis Corporation, Thermo Instrument, Thermo Vision
Corporation, ONIX Systems Inc., ThermoQuest Corporation and ThermoSpectra
Corporation.

John T. Keiser has been a Director of the Company since its inception in
November 1996. Mr. Keiser has been President of the Thermo Biomedical subsidiary
of Thermo Electron since 1994, which manufactures a variety of medical equipment
and instruments. Mr. Keiser has been President of Thermedics Inc., a
majority-owned subsidiary of Thermo Electron which develops and manufactures
product quality assurance systems, precision weighing and inspection equipment,
electrochemistry and microweighing products, electronic-test instruments,
explosives-detection devices and moisture-analysis systems and implantable
heart-assist systems and other biomedical products. Mr. Keiser had been
President of the Eberline Instrument division of Thermo Instrument from 1985 to
July 1994, which is a manufacturer of radiation detection and counting
instrumentation and radiation monitoring systems. Mr. Keiser is also a Director
of Thermo Cardiosystems Inc., Thermedics Inc. and Trex Medical Corporation.

Arvin H. Smith has been a Director of the Company since its inception in
November 1996. Mr. Smith has been Chairman of the Board of Thermo Instrument
since March 1997 and was Chief Executive Officer and President of Thermo
Instrument from 1986 to January 1998 and March 1997, respectively. Mr. Smith has
been an Executive Vice President of Thermo Electron since 1991 and, prior to
that time, a Senior Vice President of that corporation from 1986 to 1991. Mr.
Smith is also a Director of Thermo BioAnalysis Corporation, Thermo Optek, Thermo
Power Corporation, ThermoQuest Corporation, Thermo Instrument, ONIX Systems
Inc., Thermo Vision and ThermoSpectra Corporation.

COMPENSATION OF DIRECTORS

All Directors who are not employees of the Company, Thermo Instrument or
Thermo Electron receive an annual retainer of $2,000 and a fee of $1,000 per day
for attending meetings of the Board of Directors and $500 per day for
participating in meetings of the Board of Directors held by means of conference
telephone and for participating in certain meetings of committees of the Board
of Directors. Payment of Directors fees is made quarterly. Messrs. Helm,
Hatsopoulos, Lewis, Keiser and Smith are all employees

27
<PAGE> 28

of Thermo Electron companies and do not receive any cash compensation from the
Company for their services as Directors. Directors are also reimbursed for
reasonable out-of-pocket expenses incurred in attending such meetings.

Directors Deferred Compensation Plan. Under the Company's Deferred
Compensation Plan for Directors (the "Deferred Compensation Plan"), a Director
has the right to defer receipt of his fees until he ceases to serve as a
Director, dies or retires from his principal occupation. In the event of a
change in control or proposed change in control of the Company that is not
approved by the Board of Directors, deferred amounts become payable immediately.
Either of the following is deemed to be a change of control: (a) the occurrence,
without the prior approval of the Board of Directors, of the acquisition,
directly or indirectly, by any person of 50% or more of the outstanding Common
Stock or the outstanding common stock of Thermo Instrument or 25% or more of the
outstanding common stock of Thermo Electron; or (b) the failure of the persons
serving on the Board of Directors immediately prior to any contested election of
directors or any exchange offer or tender offer for the Common Stock or the
common stock of Thermo Instrument or Thermo Electron to constitute a majority of
the Board of Directors at any time within two years following any such event.
Amounts deferred pursuant to the Deferred Compensation Plan are valued at the
end of each quarter as units of Common Stock. When payable, amounts deferred may
be disbursed solely in shares of Common Stock accumulated under the Deferred
Compensation Plan. The Company has reserved 12,500 shares under this plan. As of
June 28, 1997, no stock options have been granted under this plan. As of March
1, 1998, deferred units equal to 66.4 shares of Common Stock were accumulated
under the Deferred Compensation Plan.

STOCK-BASED COMPENSATION

Directors of the Company are also eligible for the grant of stock options
under the Company's equity incentive plan. The equity incentive plan is
administered by the human resources committee of the board of directors, which
determines the turn and terms of stock-based awards to be granted. To date, only
nonqualified stock options have been granted under this plan. In 1997, options
to purchase 10,000 shares of the Common Stock were granted to each of the
non-executive directors of the Company at an exercise price of $15.00 per share.
These options may be exercised at any time prior to the expiration of the option
on the seventh anniversary of the grant date. Shares acquired upon exercise of
the options are subject to restrictions on transfer and right of the Company to
repurchase such shares at the exercise price if the director ceases to serve as
a director of the Company or any other Thermo Electron company. The restrictions
and repurchase rights lapse or are deemed to have lapsed 20% per year, starting
with the first anniversary of the grant date, provided the director has
continuously served as a director of the Company or any other Thermo Electron
company since the grant date.

28
<PAGE> 29

COMPENSATION OF EXECUTIVE OFFICERS

SUMMARY COMPENSATION TABLE

The following table summarizes compensation for services to the Company in
all capacities awarded to, earned by or paid to the Company's chief executive
officer and two other executive officers for the fiscal year ended December 28,
1996. No other executive officer of the Company who held office at the end of
fiscal 1996 met the definition of "highly compensated" within the meaning of the
Securities and Exchange Commission's executive compensation disclosure rules for
this period. The Company is required to appoint certain executive officers and
full-time employees of Thermo Electron as executive officers of the Company, in
accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Company's affairs is
provided to the Company under the Services Agreement between the Company and
Thermo Electron. Accordingly, the compensation for these individuals is not
reported in the following table. See "Relationship with Thermo Electron and
Thermo Instrument."

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------------
SECURITIES
UNDERLYING
ANNUAL COMPENSATION OPTIONS
------------------- (NO. OF SHARES AND ALL OTHER
NAME AND PRINCIPAL POSITION FY SALARY BONUS COMPANY)(1) COMPENSATION(2)
--------------------------- ---- -------- ------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Denis A. Helm(3) 1997 $ 15,500 $ 9,200 25,000(MKA) $7,125
Chief Executive Officer

Ernesto A. Corte(4) 1997 $163,530 $55,000 35,000(MKA) $7,508(5)
President and Chief Operating 20,000(TMO)
Officer 1996 $163,530 $37,000 7,500(TOC) $6,750
5,000(TMQ)

Werner G. Kramer(4)(6) 1997 $282,325DM $48,055DM 30,000(MKA) --
Executive Vice President 1996 282,000DM 0 7,500(TOC) --
5,000(TMQ)
</TABLE>

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

(1) Options granted by the Corporation are designated in the table as "MKA." In
addition, the named executive officers have been granted options to purchase
shares of the common stock of Thermo Electron companies from time to time as
part of Thermo Electron's stock option program. Options have been granted to
the named executive officers during the last two fiscal years in the
following Thermo Electron companies: Thermo Electron (designated in the
table as TMO), Thermo Optek Corporation (designated in the table as TOC) and
ThermoQuest Corporation (designated in the table as TMQ).

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

(3) Mr. Helm was appointed chief executive officer of the Corporation at its
inception in November 1996 and served in that position until February 11,
1998. Mr. Helm has also served as a senior vice president of Thermo
Instrument since 1994, as a vice president of Thermo Instrument from 1986
through 1994 and as president of Thermo Instrument's Thermo Environmental
Inc. subsidiary since 1981. A portion or all of Mr. Helm's annual cash
compensation (salary and bonus) has been paid by Thermo Instrument in each
of the last two fiscal years for the time he devoted to his responsibilities
to this company. The annual cash compensation (salary and bonus) reported in
the table for Mr. Helm represents the amount paid by the Corporation for Mr.
Helm's services as its chief executive officer. For fiscal 1997 and 1996,
approximately 10% and 0%, respectively, of Mr. Helm's salary and bonus
earned in all capacities throughout the Thermo Electron organization was
paid by the Corporation for his services as chief executive officer. In
addition, Mr. Helm has been granted

29
<PAGE> 30

options to purchase shares of the common stock of Thermo Electron and
certain of its subsidiaries other than the Corporation from time to time by
Thermo Electron or such other subsidiaries. These options are not reported
in this table as they were granted as compensation for service to other
Thermo Electron companies in capacities other than in his capacity as the
chief executive officer of the Corporation.

(4) Compensation amounts for Messrs. Corte and Kramer for 1996 include
compensation received by each from Thermo Instrument prior to the
Corporation's inception in November 1996.

(5) In addition to the matching contribution referred to in footnote (2), such
amount includes $383, which represents the amount of compensation
attributable to an interest-free loan provided to Mr. Corte pursuant to the
Corporation's stock holding assistance plan. See "Relationship with
Affiliates -- Stock Holding Assistance Plan."

(6) Mr. Kramer is a citizen of Germany and all compensation received by him is
paid in deutschemarks. If his salary had been translated into U.S. dollars
using the average exchange rates for 1997 and 1996, Mr. Kramer would have
received an annual salary of $163,325 and $187,474, respectively, for fiscal
1997 and 1996 and an annual bonus of $27,800 and $0, respectively, for the
same years.

Stock Options Granted During Fiscal 1997

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

OPTION GRANTS IN FISCAL 1997

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

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SHARES % OF TOTAL STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED FOR OPTION TERM(2)
OPTIONS TO EMPLOYEES IN EXERCISE PRICE -------------------------
NAME GRANTED(1) FISCAL YEAR PER SHARE EXPIRATION DATE 5% 10%
---- ---------- --------------- -------------- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Denis A. Helm(3) 25,000(MKA) 13.70% $15.00 5/23/09 $298,500 $ 802,000
- -------------------------------------------------------------------------------------------------------------------------
Ernesto A. Corte 35,000(MKA) 19.20% $15.00 5/23/09 $417,900 $1,122,800
20,000(TMO) 1.40%(4) $39.39 9/24/09 $627,000 $1,684,600
- -------------------------------------------------------------------------------------------------------------------------
Werner G. Kramer 30,000(MKA) 16.40% $15.00 5/23/09 $358,200 $ 96,400
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

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

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

30
<PAGE> 31

(3) Mr. Helm has been granted options to purchase shares of the common stock of
Thermo Electron and its subsidiaries other than the Corporation. These
options are not reported in the table as they were granted as compensation
for service to other Thermo Electron companies in capacities other than in
his capacity as chief executive officer of the Corporation.

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

Stock Options Exercised During Fiscal 1997 and Fiscal Year-end Option
Values

The following table reports certain information regarding stock option
exercises during fiscal 1997 and outstanding stock options held at the end of
fiscal 1997 by the Company's chief executive and the other named executive
officers. No stock appreciation rights were exercised or were outstanding during
fiscal 1997.

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

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

<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
IN-THE-MONEY
NUMBER OF OPTIONS AT FISCAL
SHARES SECURITIES UNDERLYING YEAR-END
ACQUIRED UNEXERCISED OPTIONS -----------------
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME COMPANY EXERCISE REALIZED(1) UNEXERCISABLE(2) UNEXERCISABLE
---- ----------------- -------- ----------- ---------------------- -----------------
<S> <C> <C> <C> <C> <C>
Denis A. Helm(3) Metrika Systems -- -- 25,000/0 $ 9,375/--
- ----------------------------------------------------------------------------------------------------------------
Ernesto A. Corte Metrika Systems -- -- 35,000/0 $ 13,125/--
Thermo Electron -- -- 20,000/0 $ 75,960/--
Thermo Instrument -- -- 58,593/0 $1,322,936/--
Thermo Optek -- -- 7,500/0 $ 35,850/--
ThermoQuest -- -- 5,000/0 $ 25,000/--
ThermoSpectra -- -- 500/0 $ 32/--
- ----------------------------------------------------------------------------------------------------------------
Werner G. Kramer Metrika Systems -- -- 30,000/0 $ 11,250/(3)
Thermo Instrument 862 $11,706 6,263/0 $ 130,498/--
Thermo Optek -- -- 7,500/0 $ 35,850/--
ThermoQuest -- -- 5,000/0 $ 25,000/--
ThermoSpectra -- -- 700/0 $ 44/--
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

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

(2) All of the options reported outstanding at the end of the fiscal year were
immediately exercisable as of the end of the fiscal year. In all cases, the
shares acquired upon exercise of the options reported in the table are
subject to repurchase by the granting corporation at the exercise price if
the optionee ceases to be employed by such corporation or another Thermo
Electron company. The granting corporation may exercise its repurchase
rights within six months after the termination of the optionee's employment.
The repurchase rights generally lapse ratably over a five- to ten-year
period, depending on the option term, which may vary from seven to twelve
years, provided that the optionee continues to be employed by the
Corporation or another Thermo Electron company. The granting corporation may
permit the holder of such options to exercise options and to satisfy tax
withholding obligations by surrendering shares equal in fair market value to
the exercise price or withholding obligation.

31
<PAGE> 32

(3) Mr. Helm also holds other unexercised options to purchase common stock of
Thermo Electron and its subsidiaries other than the Corporation. These
options are not reported here as they were granted as compensation for
service to other Thermo Electron companies in capacities other than in his
capacity as chief executive officer of the Corporation.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

PRINCIPAL STOCKHOLDER

The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of March 1, 1998 with respect to each person who
was known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock.

<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE OF OUTSTANDING
OF BENEFICIAL OWNER BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
------------------- ------------------ -------------------------
<S> <C> <C>
Thermo Electron Corporation(1) 5,000,000 60.5%
81 Wyman Street
Waltham, MA 02254-9046
</TABLE>

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

(1) Thermo Electron through its majority owned subsidiary Thermo Instrument,
beneficially owns these shares of Common Stock.

Thermo Instrument intends to adopt a stock option plan with respect to the
Common Stock that it beneficially owns. Under this plan, options to purchase up
to 100,000 shares of such stock may be granted to any person within the
discretion of the human resources committee of the Board of Directors of Thermo
Instrument, including officers and key employees of Thermo Instrument.

MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of March 1, 1998 as well as information
regarding the beneficial ownership of the Stock and the common stock of Thermo
Instrument and Thermo Electron, as of March 1, 1998, with respect to (i) each
Director, (ii) each executive officer named in the summary compensation table
above, and (iii) all Directors and current executive officers as a group.

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

<TABLE>
<CAPTION>
METRIKA SYSTEMS THERMO INSTRUMENT THERMO ELECTRON
NAME(1) CORPORATION(2) SYSTEMS INC.(3) CORPORATION(4)
------- --------------- ----------------- ---------------
<S> <C> <C> <C>
Ernesto A. Corte 41,800 60,701 21,620
Denis A. Helm 26,000 197,644 163,353
John T. Keiser 12,000 154,212 175,283
Werner G. Kramer 31,000 6,378 0
Joseph A. Baute 10,533 0 0
Willard R. Becraft 11,033 0 0
Earl R. Lewis 20,000 203,726 84,037
Arvin H. Smith 10,000 539,583 519,038
All Directors and Current Executive
Officers as a Group (10 persons) 189,866 1,269,834 1,776,158
</TABLE>

- ---------------
(1) Except as reflected in the footnotes to this table, shares of Common Stock
and common stock of Thermo Instrument and Thermo Electron beneficially owned
include shares owned by the indicated person and by that person for the
benefit of minor children, and all share ownership involves sole voting and
investment power.

(2) Shares of Common Stock beneficially owned by Mr. Baute, Mr. Becraft, Mr.
Corte, Mr. Helm, Mr. Keiser, Mr. Kramer, Mr. Lewis, Mr. Smith and all
directors and executive officers as a group include 10,000, 10,000,

32
<PAGE> 33

35,000, 25,000, 12,000, 30,000, 20,000, 10,000 and 164,500 shares,
respectively, that such person or group has the right to acquire within 60
days of March 1, 1998, through the exercise of stock options. Shares of the
Common Stock beneficially owned by Mr. Baute, Mr. Becraft and all directors
and executive officers as a group include 33, 33 and 66 full shares
allocated to their respective accounts under the Corporation's Deferred
Compensation Plan for Directors. No director or executive officer
beneficially owned more than 1% of the Common Stock outstanding as of March
1, 1998; all directors and executive officers as a group beneficially owned
2.29% of the Common Stock outstanding as of such date.

(3) The shares of the common of Thermo Instrument shown in the table reflect a
five-for-four split of such stock distributed in October 1997 in the form of
a 25% stock dividend. Shares of the common stock of Thermo Instrument
beneficially owned by Mr. Corte, Mr. Helm, Mr. Keiser, Mr. Kramer, Mr.
Lewis, Mr. Smith and all directors and executive officers as a group include
58,593, 140,625, 70,312, 6,263, 172,085, 292,968, and 829,908 shares,
respectively, that such person or group had the right to acquire within 60
days after March 1, 1998, through the exercise of stock options. Shares of
the common stock of Thermo Instrument beneficially owned by Mr. Smith and
all directors and executive officers as a group include 663 and 1,819
shares, respectively, allocated through March 1, 1998, to their respective
accounts maintained pursuant to Thermo Electron's employee stock ownership
plan, of which the trustees, who have investment power over its assets, are
executive officers of Thermo Electron (the ("ESOP"). Shares of the common
stock of Thermo instrument beneficially owned by Mr. Helm include a total of
5,264 shares held in custodial accounts for the benefit of four minor
children. Shares of the Common Stock of Thermo Instrument beneficially owned
by Mr. Lewis include 2,987 shares held by his spouse. No director or
executive officer beneficially owned more than 1% of the common stock of
Thermo Instrument outstanding as of March 1, 1998; all directors and
executive officers as a group beneficially owned 1.04% of the common stock
of Thermo Instrument outstanding as of such date.

(4) Shares of the common stock of Thermo Electron beneficially owned by Mr.
Corte, Mr. Helm, Mr. Keiser, Mr. Lewis, Mr. Smith, and all directors and
executive officers as a group include 20,000, 105,322, 134,397, 84,037,
228,411, and 1,277,639 full shares, respectively, that such person or group
has the right to acquire within 60 days of March 1, 1998, through the
exercise of stock options. Shares of common stock of Thermo Electron
beneficially owned by Mr. Smith and all directors and executive officers as
a group include 1,717 and 5,179 full shares, respectively, allocated to
accounts maintained pursuant to the ESOP. No director or executive officer
beneficially owned more than 1% of common stock of Thermo Electron
outstanding as of March 1, 1998; all directors and executive officers as a
group beneficially owned 1.11% of the Thermo Electron common stock
outstanding as of such date.

33
<PAGE> 34

SELLING SHAREHOLDERS

The following table sets forth the names of the Selling Shareholders, the
number of shares of Common Stock owned by each Selling Shareholder, the number
of Shares that may be offered by each Selling Shareholder pursuant to this
Prospectus, and the number of Shares each Selling Shareholder will own after
completion of the offering, assuming all of the Shares being offered hereby are
sold.

<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK SHARES OWNED
OWNED AFTER
PRIOR TO THE SHARES BEING COMPLETION
SELLING SHAREHOLDER OFFERING(1) OFFERED OF THE OFFERING
------------------- ------------ ------------ ---------------
<S> <C> <C> <C>
Harrogate Holdings Ltd.............................. 5,000 5,000 0
Topaz Investments and Management Inc................ 1,500 1,500 0
Orsenna Ltd......................................... 3,000 3,000 0
Pavlos and Efstathia Servetopoulos.................. 2,000 2,000 0
Efal Investment Co. ................................ 4,000 4,000 0
Efimia Chryssi...................................... 500 500 0
Alexandros Chryssis................................. 500 500 0
Vasilios and Irini Lezos............................ 500 500 0
Aphrodite Trading Corp. ............................ 3,500 3,500 0
Richard H. Hochman.................................. 6,650 6,650 0
James J. Albertine.................................. 1,667 1,667 0
John M. Albertine(2)................................ 8,332 8,332 0
The Acorn Fund...................................... 232,500 32,500 200,000
Kemper Technology Fund.............................. 66,666 66,666 0
WNC Corporation..................................... 10,000 10,000 0
Bruce E. Toll....................................... 10,000 10,000 0
Harold S. Melcher................................... 20,000 20,000 0
Dinesh Sachdeva..................................... 2,500 2,500 0
Richard V. Aghababian............................... 6,666 6,666 0
Thermo Opportunity Fund............................. 66,666 66,666 0
W.H.I. Growth Fund, L.P. ........................... 50,000 50,000 0
Robert L. Rabuck.................................... 3,333 3,333 0
Edward Leshowitz Trustee of Angelo R. Cali
Irrevocable Trust Dated 07/01/79.................. 2,500 2,500 0
Decaudaveine........................................ 2,500 2,500 0
Oddo & Cie.......................................... 17,500 17,500 0
Ruffer Inv. Man. Ltd. .............................. 5,000 5,000 0
Prolific International Fund PLC TC PI Technology.... 5,000 5,000 0
Midland Bank Trust Company Limited.................. 17,500 17,500 0
NPI AM Re CD Marks Trust............................ 5,500 5,500 0
NPI AM Re IR & AD Marks............................. 2,750 2,750 0
NPI AM Re AIM Foundation............................ 5,500 5,500 0
NPI AM Re Beaie Marks............................... 2,750 2,750 0
NPI AM Re Marie Marks............................... 2,000 2,000 0
NPI AM Re NJ Marks.................................. 5,500 5,500 0
NPI AM Re CD Marks.................................. 2,000 2,000 0
Discount Bank and Trust Company..................... 25,000 25,000 0
</TABLE>

34
<PAGE> 35

<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK SHARES OWNED
OWNED AFTER
PRIOR TO THE SHARES BEING COMPLETION
SELLING SHAREHOLDER OFFERING(1) OFFERED OF THE OFFERING
------------------- ------------ ------------ ---------------
<S> <C> <C> <C>
Dresdner Bank (Switzerland) Ltd. ................... 15,000 15,000 0
ABN AMRO Bank (Schweiz)............................. 10,000 10,000 0
Soginvest Banca Lugano.............................. 6,000 6,000 0
Pilot Trading Trust(3).............................. 5,000 5,000 0
Michael R. Turner................................... 3,333 3,333 0
R. Hunter Morin..................................... 3,333 3,333 0
Darier, Hentsch & Cie............................... 33,333 33,333 0
Steven Ames......................................... 5,000 5,000 0
Myles H. Tanenbaum.................................. 25,000 25,000 0
Dr. Jondy L. Cohen.................................. 2,500 2,500 0
Jay A. Cohen........................................ 2,500 2,500 0
L & J Cohen Inc. ................................... 12,500 12,500 0
Leonard Cohen & Jean Cohen Trustees FBO Leonard
Cohen & Jean Cohen Revocable Trust UAD 12/19/93... 12,500 12,500 0
Atalanta Investment Co. Inc. ....................... 25,000 25,000 0
Philip H. Geier..................................... 25,000 25,000 0
Yiska Moser Trust................................... 8,000 8,000 0
HTOOB, Inc. ........................................ 5,000 5,000 0
Alex E. Booth, Jr................................... 5,000 5,000 0
Morris Weiser, Trustee Morris Trust U/A/D
12/31/92.......................................... 2,500 2,500 0
Julian I. Edison.................................... 20,000 20,000 0
Hope R. Edison...................................... 5,000 5,000 0
Eos Partners, LP.................................... 55,000 55,000 0
Harpel Family Partnership........................... 7,500 7,500 0
Rose Cali Custodian for Christopher J. Cali Unif.
Trans. Min. Act NJ................................ 1,500 1,500 0
Edward Leshowitz.................................... 2,000 2,000 0
John J. Cali........................................ 1,000 1,000 0
Jackie L. Stone..................................... 3,333 3,333 0
Seema Sachdeva and Rakesh Sachdeva.................. 1,350 1,350 0
William E. Phillips................................. 3,500 3,500 0
Donald E. Noble(4).................................. 1,500 1,500 0
The Benjamin Wood Painter Trust..................... 750 750 0
The Christopher Norwood Painter Trust............... 750 750 0
Werner Kramer(5).................................... 31,000 1,000 30,000
Comar Inc........................................... 1,500 1,500 0
Ernesto A. Corte(6)................................. 38,600 3,500 35,100
Gilcy Partners Ltd. L.P. ........................... 1,666 1,666 0
Bankers Trust, Trustee for Chrysler Corp. Emp. #1
Pension Plan dated April 1, 1989.................. 120,000 120,000 0
Denis A. Helm(7).................................... 26,000 1,000 25,000
Green Gentury Balanced Fund......................... 12,500 12,500 0
Essex Special Growth Opportunities Fund LP.......... 20,000 20,000 0
</TABLE>

35
<PAGE> 36

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

(1) Except as otherwise reflected in the footnotes to this table, all share
ownership includes Shares owned by the Selling Shareholders and shares that
the Selling Shareholders have the right to acquire within 60 days of
September 27, 1997, through the exercise of stock options.

(2) John M. Albertine is a Director of Thermo Electron.

(3) Pilot Trading Trust is controlled by Robert A. McCabe, a Director of Thermo
Electron, and members of his family.

(4) Donald E. Noble is a Director of Thermo Electron.

(5) Werner Kramer is Executive Vice President of the Company. See "Management"
and " Security Ownership of Certain Beneficial Owners and Management."

(6) Ernesto A. Corte is President and Chief Operating Officer of the Company.
See "Management" and "Security Ownership of Certain Beneficial Owners and
Management."

(7) Denis A. Helm is Chief Executive Officer and a Director of the Company. See
"Management" and "Security Ownership of Certain Beneficial Owners and
Management."

The Shares are being registered to permit public secondary trading of the
Shares from time to time by the Selling Shareholders. All of the Shares being
offered by the Selling Shareholders were sold by the Company in private
placement transactions pursuant to Stock Purchase Agreements with the Company
dated December 16, 1996 and December 27, 1996 (the "Purchase Agreements") for
cash.

In the Purchase Agreements, the Company agreed, among other things, to bear
all expenses (other than underwriting discounts, selling commissions, and fees
and expenses of counsel and other advisors to the Selling Shareholders) in
connection with the registration and sale of the Shares being offered by the
Selling Shareholders. See "Sale of Shares." The Company intends to prepare and
file such amendments and supplements to the Registration Statement of which this
Prospectus forms a part as may be necessary to keep the Registration Statement
effective until all the Shares registered thereunder have been sold pursuant
thereto or until, by reason of Rule 144(k) of the Commission under the
Securities Act or any other rule of similar effect, the Shares are no longer
required to be registered for the sale thereof by the Selling Shareholders.

SALE OF SHARES

The Company will not receive any of the proceeds from this offering. The
Shares offered hereby may be sold from time to time by or for the account of any
of the Selling Shareholders or by their pledgees, donees, distributees or
transferees or other successors in interest to the Selling Shareholders. The
Shares may be sold hereunder directly to purchasers by the Selling Shareholders
in negotiated transactions; by or through brokers or dealers in ordinary
brokerage transactions or transactions in which the broker solicits purchases;
block trades in which the broker or dealer will attempt to sell Shares as agent
but may position and resell a portion of the block as principal; transactions in
which a broker or dealer purchases as principal for resale for its own account;
or through underwriters or agents. The Shares may be sold at a fixed offering
price, which may be changed, at the prevailing market price at the time of sale,
at prices related to such prevailing market price or at negotiated prices. Any
brokers,

36
<PAGE> 37

dealers, underwriters or agents may arrange for others to participate in any
such transaction and may receive compensation in the form of discounts,
commissions or concessions from the Selling Shareholders and/or the purchasers
of the Shares. Each Selling Shareholder will be responsible for payment of any
and all commissions to brokers.

The aggregate proceeds to any Selling Shareholder from the sale of the
Shares offered hereby will be the purchase price of such Shares less any
broker's commission.

In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

Any Selling Shareholder and any broker-dealer, agent or underwriter who
acts in connection with the sale of Shares hereunder may be deemed to be an
"underwriter" as that term is defined in the Securities Act, and any commissions
received by them and profit on any resale of the Shares as principal might be
deemed to be underwriting discounts and commissions under the Securities Act.
The Company has agreed to indemnify the Selling Shareholder against certain
liabilities, including liabilities under the Securities Act as underwriters or
otherwise.

37
<PAGE> 38

DESCRIPTION OF CAPITAL STOCK

As of March 31, 1998, the Company had 25,000,000 shares of Common Stock
authorized for issuance, of which 8,267,828 were issued and outstanding. Each
share of Common Stock is entitled to pro rata participation in distributions
upon liquidation and to one vote on all matters submitted to a vote of
stockholders. Dividends may be paid to the holders of Common Stock when and if
declared by the Board of Directors out of funds legally available therefor.
Holders of Common Stock have no preemptive or similar rights. The outstanding
shares of Common Stock and the shares offered hereby are legally issued, fully
paid and nonassessable.

The shares of Common Stock have noncumulative voting rights, which means
that the holders of more than 50% of the shares voting can elect all the
Directors if they so choose, and in such event, the holders of the remaining
shares cannot elect any Directors. Thermo Instrument intends to continue to
beneficially own at least a majority of the outstanding Common Stock, and will
have the power to elect all of the members of the Company's Board of Directors.

In May 1997, the Company declared and effected a one-for-two reverse stock
split pursuant to an amendment to its Certificate of Incorporation filed with
the Delaware Secretary of State on May 27, 1997. As a result, each share of
Common Stock outstanding immediately prior to such split was automatically
converted into one-half of a share of Common Stock. No fractional shares of
Common Stock were issued upon effectiveness of such split and all shareholders
otherwise entitled to fractional shares are entitled to cash in lieu of such
fractional share in the sum of such fractional share multiplied by $15.00.

The Company's Certificate of Incorporation contains certain provisions
permitted under the General Corporation Law of Delaware relating to the
liability of Directors. The provisions eliminate a Director's liability for
monetary damages for a breach of fiduciary duty to the fullest extent permitted
by the General Corporation Law of Delaware. The Company's Certificate of
Incorporation also contains provisions to indemnify the Directors and officers
of the Company to the fullest extent permitted by the General Corporation Law of
Delaware. The Company believes that these provisions will assist the Company in
attracting and retaining qualified individuals to serve as Directors and
officers.

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

SHARES ELIGIBLE FOR FUTURE SALE

There are currently 8,267,828 shares of Common Stock of the Company
outstanding, of which 3,267,828 are freely tradable without restriction or
further registration under the Securities Act, except that any shares purchased
by affiliates of the Company, as that term is defined in Rule 144 under the
Securities Act, may generally only be resold in compliance with applicable
provisions of Rule 144.

Of such 8,267,828 outstanding shares, 5,000,000 are owned by Thermo
Instrument. Thermo Instrument may sell its shares of Common Stock in an offering
registered under the Securities Act or pursuant to an exemption from such
registration. So long as Thermo Instrument is able to elect a majority of the
Board of Directors it will be able to cause the Company at any time to register
under the Securities Act all or a portion of the Common Stock owned by Thermo
Instrument or its affiliates, in which case it would be able to sell such shares
without restriction upon effectiveness of the registration statement. In
general, under Rule 144 as currently in effect, a person (or persons whose
shares are aggregated) who has beneficially owned restricted shares for at least
one year is entitled to sell, within any three-month period, a number of such
shares that does not exceed the greater of (i) 1% of the then outstanding shares
of Common Stock or (ii) the average weekly trading volume in the Common Stock
during the four calendar weeks preceding the date of the notice filed pursuant
to Rule 144. Sales under Rule 144 are also subject to certain manner of sale
restrictions and notice requirements and to the availability of current public
information about the Company. In addition, a person who is deemed an
"affiliate" of the Company must comply with Rule 144 in any sale of shares of
Common Stock not covered by a registration statement (except, in the case of
registered shares acquired by the affiliate on the open market, for the holding
period requirement). A person (or person whose shares are aggregated) who is

38
<PAGE> 39

not deemed an "affiliate" of the Company and who has beneficially owned
restricted shares for at least two years is entitled to sell such shares under
Rule 144(k) without regard to the volume, notice and other limitations of Rule
144. In meeting the one and two year holding periods described above, a holder
of restricted shares can include the holding periods of a prior owner who was
not an affiliate.

The Company has reserved 362,500 shares for grants under its existing
stock-based compensation plans. As of March 31, 1998, the Company had options
outstanding to purchase up to 298,000 shares of Common Stock to its employees
and Directors at an exercise price of $15.00 per share. All of such options are
currently exercisable, subject to repurchase at the exercise price if the
optionee ceases to be employed by the Company. This repurchase right lapses
ratably (on an annual basis) over a five to ten year period depending upon the
term of the option. The Company intends to file registration statements under
the Securities Act to register all shares of Common Stock issuable under such
plans. Shares covered by these registration statements will be eligible for sale
in the public market after the effective date of such registration statements.

LEGAL OPINIONS

The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Seth H. Hoogasian, Esq., General Counsel of
Thermo Electron, Thermo Instrument and the Company. Mr. Hoogasian owns or has
the right to acquire 2,500 shares of Common Stock of the Company, 20,986 shares
of common stock of Thermo Instrument and 108,764 shares of common stock of
Thermo Electron.

EXPERTS

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

39
<PAGE> 40

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (together with all amendments
and exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended, with respect to the securities offered hereby. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information, reference is made to the
Registration Statement, copies of which may be obtained upon payment of the fees
prescribed by the Commission from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at 7 World Trade Center, New York, New York 10048
and at 500 West Madison Street, Chicago, Illinois 60661.

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite
1300, New York, New York 10048. Copies of such material can also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Commission also maintains a web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission,
including the Company. The address of such site is http://www.sec.gov. The
Common Stock of the Company is listed on the American Stock Exchange, and the
reports, proxy statements and other information filed by the Company with the
Commission can be inspected at the offices of the American Stock Exchange, 86
Trinity Place, New York, New York 10006.

40
<PAGE> 41

METRIKA SYSTEMS CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................... F-2
Consolidated Statement of Income for the years ended January
3, 1998, December 28, 1996 and December 30, 1995.......... F-3
Consolidated Balance Sheet as of January 3, 1998 and
December 28, 1996......................................... F-4
Consolidated Statement of Cash Flows for the years ended
January 3, 1998, December 28, 1996 and December 30,
1995...................................................... F-5
Consolidated Statement of Shareholders' Investment for the
years ended January 3, 1998, December 28, 1996 and
December 30, 1995......................................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>

F-1
<PAGE> 42

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of Metrika Systems Corporation:

We have audited the accompanying consolidated balance sheet of Metrika
Systems Corporation (a Delaware corporation and 60%-owned subsidiary of Thermo
Instrument Systems Inc.) and subsidiaries as of January 3, 1998, and December
28, 1996, and the related consolidated statements of income, cash flows, and
shareholders' investment for each of the three years in the period ended January
3, 1998. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Metrika
Systems Corporation 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 17, 1998

F-2
<PAGE> 43

METRIKA SYSTEMS CORPORATION

CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Revenues (Note 10).......................................... $56,714 $52,047 46,032
------- ------- -------
Costs and Operating Expenses:
Cost of revenues.......................................... 29,928 28,527 25,767
Selling, general, and administrative expenses (Note 7).... 14,367 13,395 11,640
Research and development expenses......................... 3,815 3,024 2,580
------- ------- -------
48,110 44,946 39,987
------- ------- -------
Operating Income............................................ 8,604 7,101 6,045
Interest Income............................................. 2,013 101 21
Interest Expense (Note 7)................................... (838) (796) (1,146)
------- ------- -------
Income Before Provision for Income Taxes.................... 9,779 6,406 4,920
Provision for Income Taxes (Note 6)......................... 3,920 2,561 2,068
------- ------- -------
Net Income.................................................. $ 5,859 $ 3,845 $ 2,852
======= ======= =======
Basic and Diluted Earnings per Share (Note 11).............. $ .82 $ .76 $ .57
======= ======= =======
Weighted Average Shares (Note 11):
Basic.................................................. 7,143 5,032 5,000
======= ======= =======
Diluted................................................ 7,147 5,032 5,000
======= ======= =======
</TABLE>

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

F-3
<PAGE> 44

METRIKA SYSTEMS CORPORATION

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
1997 1996
---- ----
(IN THOUSANDS EXCEPT
SHARE AMOUNTS)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 44,044 $20,229
Available-for-sale investments, at quoted market value
(amortized cost of $6,231) ............................ 6,245 --
Accounts receivable, less allowances of $671 and $440..... 17,377 10,896
Unbilled contract costs and fees.......................... 2,476 1,706
Inventories............................................... 7,145 6,347
Prepaid income taxes and other current assets (Note 6).... 1,621 1,457
-------- -------
78,908 40,635
-------- -------
Property, Plant, and Equipment, at Cost, Net................ 10,373 12,100
-------- -------
Other Assets................................................ 727 926
-------- -------
Cost in Excess of Net Assets of Acquired Companies (Note 3)
.......................................................... 12,944 13,105
-------- -------
$102,952 $66,766
======== =======

LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:

Notes payable and current maturities of long-term
obligation (Note 8) ................................... $ 9,895 $11,578
Accounts payable.......................................... 2,308 2,463
Accrued payroll and employee benefits..................... 2,322 2,225
Accrued income taxes...................................... 2,445 597
Customer deposits......................................... 3,576 3,377
Accrued installation and warranty costs................... 2,132 1,350
Other accrued expenses.................................... 4,071 3,023
Due to parent company and affiliated companies (Note 7)
....................................................... 4,184 7,317
-------- -------
30,933 31,930
-------- -------
Accrued Pension Costs (Note 4).............................. 4,356 4,752
-------- -------
Long-term Obligation (Note 8)............................... 3,858 5,223
-------- -------
Commitments (Note 9)
Shareholders' Investment (Notes 4 and 5):
Common stock, $.01 par value, 25,000,000 shares
authorized; 8,267,828 and 5,967,828 shares issued and
outstanding............................................ 83 60
Capital in excess of par value............................ 58,555 26,050
Retained earnings......................................... 6,157 298
Cumulative translation adjustment......................... (999) (1,547)
Net unrealized gain on available-for-sale investments
(Note 2)............................................... 9 --
-------- -------
63,805 24,861
-------- -------
$102,952 $66,766
======== =======
</TABLE>

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

F-4
<PAGE> 45

METRIKA SYSTEMS CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income................................................ $ 5,859 $ 3,845 $ 2,852
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 1,630 1,792 1,866
Provision for losses on accounts receivable............. 633 -- 225
Deferred income tax expense............................. 482 69 357
Other noncash items..................................... 104 (87) 597
Changes in current accounts, excluding the effects of
acquisition:
Accounts receivable................................... (6,987) 307 (2,031)
Inventories and unbilled contract costs and fees...... (1,323) 2,708 (1,905)
Other current assets.................................. (162) 208 (555)
Accounts payable...................................... (190) 842 458
Other current liabilities............................. 3,053 (1,878) 2,661
------- ------- -------
Net cash provided by operating activities...... 3,099 7,806 4,525
------- ------- -------
INVESTING ACTIVITIES:
Acquisition, net of cash acquired (Note 3)................ (1,344) -- --
Purchases of available-for-sale investments............... (6,091) -- --
Purchases of property, plant, and equipment............... (674) (671) (910)
Other..................................................... 63 26 28
------- ------- -------
Net cash used in investing activities.......... (8,046) (645) (882)
------- ------- -------
FINANCING ACTIVITIES:
Net proceeds from issuance of Company common stock (Note
5)...................................................... 32,528 13,528 --
Net transfers to parent company prior to capitalization of
the Company............................................. -- (2,398) (6,020)
Increase (decrease) in due to parent company and
affiliated companies.................................... (1,770) 2,683 1,418
Increase (decrease) in short-term obligations............. (489) (1,886) 2,855
Repayment of long-term obligation......................... (662) (791) (694)
------- ------- -------
Net cash provided by (used in) financing
activities.................................... 29,607 11,136 (2,441)
------- ------- -------
Exchange Rate Effect on Cash................................ (845) 630 (1,084)
------- ------- -------
Increase in Cash and Cash Equivalents....................... 23,815 18,927 118
Cash and Cash Equivalents at Beginning of Year.............. 20,229 1,302 1,184
------- ------- -------
Cash and Cash Equivalents at End of Year.................... $44,044 $20,229 $ 1,302
======= ======= =======
CASH PAID FOR:
Interest.................................................. $ 749 $ 794 $ 1,144
Income taxes.............................................. $ 2,314 $ 393 $ 55
NONCASH ACTIVITIES:
Fair value of assets of acquired company.................. $ 2,387 $ -- $ --
Cash paid for acquired company............................ (1,347) -- --
------- ------- -------
Liabilities assumed of acquired company........ $ 1,040 $ -- $ --
======= ======= =======
</TABLE>

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

F-5
<PAGE> 46

METRIKA SYSTEMS CORPORATION

CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT

<TABLE>
<CAPTION>
1997 1996 1995
------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
COMMON STOCK, $.01 PAR VALUE
Balance at beginning of year................................ $ 60 $ -- $ --
Capitalization of the Company............................... -- 50 --
Net proceeds from issuance of Company common stock (Note
5)........................................................ 23 10 --
------- -------- -------
Balance at end of year...................................... 83 60 --
------- -------- -------
CAPITAL IN EXCESS OF PAR VALUE
Balance at beginning of year................................ 26,050 -- --
Capitalization of the Company............................... -- 12,532 --
Net proceeds from issuance of Company common stock (Note
5)........................................................ 32,505 13,518 --
------- -------- -------
Balance at end of year...................................... 58,555 26,050 --
------- -------- -------
RETAINED EARNINGS
Balance at beginning of year................................ 298 -- --
Net income.................................................. 5,859 298 --
------- -------- -------
Balance at end of year...................................... 6,157 298 --
------- -------- -------
CUMULATIVE TRANSLATION ADJUSTMENT
Balance at beginning of year................................ (1,547) (2,051) (506)
Translation adjustment...................................... 548 504 (1,545)
------- -------- -------
Balance at end of year...................................... (999) (1,547) (2,051)
------- -------- -------
NET UNREALIZED GAIN ON AVAILABLE-FOR-SALE INVESTMENTS
Balance at beginning of year................................ -- -- --
Change in net unrealized gain on available-for-sale
investments............................................... 9 -- --
------- -------- -------
Balance at end of year...................................... 9 -- --
------- -------- -------
NET PARENT COMPANY INVESTMENT
Balance at beginning of year................................ -- 11,433 14,601
Net income prior to capitalization of the Company........... -- 3,547 2,852
Net transfer to parent company prior to capitalization of
the Company............................................... -- (2,398) (6,020)
Capitalization of the Company............................... -- (12,582) --
------- -------- -------
Balance at end of year...................................... -- -- 11,433
------- -------- -------
TOTAL SHAREHOLDERS' INVESTMENT.............................. $63,805 $ 24,861 $ 9,382
======= ======== =======
</TABLE>

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

F-6
<PAGE> 47

METRIKA SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Metrika Systems Corporation (the Company) develops, manufactures, and
markets on-line process optimization systems that employ proprietary ultra
high-speed advanced scientific measurement technologies for applications in
raw-materials analysis and finished-materials quality control. The Company
manufactures process optimization systems that provide real-time, nondestructive
analysis of the composition of raw materials in basic-materials production
processes, including coal, cement, and minerals. The Company also manufactures
advanced systems that are used to measure and control parameters such as
material thickness, coating thickness, and coating weight in web-type materials,
such as metal strip, rubber, and plastic foils. Customers use these systems to
improve product quality and consistency, lower material costs, reduce energy
consumption, and minimize waste.

Relationship with Thermo Instrument Systems Inc. and Thermo Electron
Corporation

The Company operated as two divisions of Thermo Instrument Systems Inc.
until its incorporation as a Delaware corporation in November 1996. In
connection with the Company's incorporation, Thermo Instrument transferred to
the Company the assets, liabilities, and businesses of its Gamma-Metrics
subsidiary and Radiometrie division in exchange for 5,000,000 shares of the
Company's common stock. As of January 3, 1998, Thermo Instrument owned 5,000,000
shares of the Company's common stock, representing 60% of such stock
outstanding. As of January 3, 1998, Thermo Instrument is an 82% owned subsidiary
of Thermo Electron Corporation.

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

Generally, the Company recognizes product revenues upon shipment of its
products. The Company provides a reserve for its estimate of warranty and
installation costs at the time of shipment. Revenues and profits on contracts,
which due to their complexity extend over multiple quarterly reporting periods,
are recognized using the percentage-of-completion method. Such contracts include
all manufacturing contracts of the Company's on-line finished-materials
quality-control business, which commonly are of 5 to 10 months duration, as well
as certain contracts of similar duration or longer at the Company's on-line
raw-materials analysis business. Revenues recorded under the
percentage-of-completion method were $20,421,000 in 1997, $18,611,000 in 1996,
and $17,523,000 in 1995. The percentage of completion is determined by relating
the actual costs incurred to date to management's estimate of total costs 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. Contracts generally provide for
the billing of customers upon the attainment of certain milestones in each
contract. Revenues earned on contracts in process in excess of billings are
classified as unbilled contract costs and fees in the accompanying balance
sheet. 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 that are billed but not paid under retainage provisions.

F-7
<PAGE> 48
METRIKA SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

The Company, Thermo Instrument, and Thermo Electron entered into a tax
allocation agreement under which the Company and Thermo Instrument were included
in Thermo Electron's consolidated federal and certain state income tax returns.
The agreement provided that in years in which the Company had taxable income, it
would pay to Thermo Electron amounts comparable to the taxes the Company would
have paid if it had filed separate tax returns. Subsequent to the Company's
initial public offering in June 1997, Thermo Instrument's ownership of the
Company was reduced below 80% and, as a result, the Company is required to file
its own federal income tax returns.

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 11). As a result, all previously reported earnings
per share have been restated and the Company is required to report diluted
earnings per share. Basic earnings per share have been computed by dividing net
income by the weighted average number of shares outstanding during the year. For
periods prior to the Company's November 1996 capitalization, shares issued in
connection with such capitalization have been shown as outstanding for purposes
of computing earnings per share. Diluted earnings per share have been computed
assuming the exercise of stock options, as well as their related income tax
effects.

Stock Split

In May 1997, the Company declared and effected a one-for-two reverse stock
split. All share and per share information has been restated to reflect the
stock split.

Cash and Cash Equivalents

At year-end 1997 and 1996, $40,173,000 and $15,672,000, respectively, of
the Company's cash equivalents were invested in a repurchase agreement with
Thermo Electron. Under this agreement, the Company in effect lends excess cash
to Thermo Electron, which Thermo Electron collateralizes with investments
principally consisting of corporate notes, commercial paper, U.S.
government-agency securities, money market funds, and other marketable
securities, in the amount of at least 103% of such obligation. The Company's
funds subject to the repurchase agreement are readily convertible into cash by
the Company. The repurchase agreement earns a rate based on the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter. At year-end 1997 and 1996, cash equivalents also included
investments in interest-bearing accounts at the Company's foreign operations,
which have an original maturity of three months or less. Cash and cash
equivalents are carried at cost, which approximates market value.

F-8
<PAGE> 49
METRIKA SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Inventories

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

<TABLE>
<CAPTION>
1997 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Raw material and supplies.............................. $4,077 $4,207
Work in process........................................ 2,416 1,230
Finished goods......................................... 652 910
------ ------
$7,145 $6,347
====== ======
</TABLE>

Property, Plant, and Equipment

The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the estimated
useful lives of the property as follows: buildings, 40 years; machinery and
equipment, 3 to 10 years; and leasehold improvements, the shorter of the term of
the lease or the life of the asset. Property, plant, and equipment consists of
the following:

<TABLE>
<CAPTION>
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land................................................ $ 1,613 $ 1,861
Buildings........................................... 7,534 8,594
Machinery, equipment, and leasehold improvements.... 5,622 5,501
------- -------
14,769 15,956
Less: Accumulated depreciation and amortization..... 4,396 3,856
------- -------
$10,373 $12,100
======= =======
</TABLE>

Other Assets

Other assets in the accompanying balance sheet consist primarily of
acquired technology and the cost of acquired patents that are being amortized
using the straight-line method over their estimated useful lives, ranging from 5
to 20 years. Accumulated amortization was $1,371,000 and $1,169,000 at year-end
1997 and 1996, respectively.

Cost in Excess of Net Assets of Acquired Companies

The excess of cost over the fair value of net assets of acquired companies
is amortized using the straight-line method over 40 years. Accumulated
amortization was $2,007,000 and $1,627,000 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

F-9
<PAGE> 50
METRIKA SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

currency transaction gains and losses are included in the accompanying statement
of income and are not material for the three years presented.

Fair Value of Financial Instruments

The Company's financial instruments consist primarily of cash and cash
equivalents, available-for-sale investments, accounts receivable, notes payable
and current maturities of long-term obligation, accounts payable, due to parent
company and affiliated companies, and long-term obligation. Available-for-sale
investments are carried at fair value in the accompanying balance sheet (Note
2). The fair values were determined based on quoted market prices. The Company's
long-term obligation bears interest at a variable market rate, therefore the
carrying amount approximates fair value (Note 8). The carrying amounts of the
Company's remaining financial instruments approximate fair value due to their
short-term nature.

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.

2. AVAILABLE-FOR-SALE INVESTMENTS

In accordance with SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities", the Company's debt 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."

The aggregate market value, cost basis, and gross unrealized gains of
available-for-sale investments by major security type are as follows:

<TABLE>
<CAPTION>
GROSS
MARKET COST UNREALIZED
VALUE BASIS GAINS
------ ----- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
1997
Corporate bonds............................ $6,105 $6,091 $14
Other...................................... 140 140 --
------ ------ ---
$6,245 $6,231 $14
====== ====== ===
</TABLE>

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 either the Company, the issuer, or both, to redeem
these securities at an earlier date.

3. ACQUISITION

On December 31, 1996, the Company acquired the assets, subject to certain
liabilities, of the Autometrics division of Svedala Industries Inc.
(Autometrics) for $1,347,000 in cash. Autometrics is a manufacturer and marketer
of on-line analysis instruments for the minerals-processing industry.

F-10
<PAGE> 51
METRIKA SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The acquisition has been accounted for using the purchase method of
accounting and its results of operations have been included in the accompanying
financial statements from its date of acquisition. The cost of the acquisition
exceeded the estimated fair value of the acquired net assets by $400,000, which
is being amortized over 40 years. Allocation of the purchase price was based on
an estimate of the fair value of the net assets acquired.

Based on unaudited data, the following table presents selected financial
information for the Company and Autometrics on a pro forma basis, assuming the
companies had been combined since the beginning of 1996.

<TABLE>
<CAPTION>
1996
----
(IN THOUSANDS EXCEPT
PER SHARE AMOUNT)
<S> <C>
Revenues.............................................. $54,746
Net income............................................ 3,170
Basic and diluted earnings per share.................. .63
</TABLE>

The pro forma results are not necessarily indicative of the actual results
that would have occurred had the acquisition of Autometrics been made at the
beginning of 1996.

4. EMPLOYEE BENEFIT PLANS

Stock-based Compensation Plans

Stock Option Plans

In November 1996, the Company adopted a stock-based compensation plan for
its key employees, directors, and others, which permits the grant 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 this plan are determined by
the Board Committee. Options granted prior to the Company's initial public
offering became exercisable in September 1997. 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. The
restrictions and repurchase rights generally lapse ratably over a five- to
ten-year period, depending on the term of the option, which generally ranges
from seven to twelve years. Nonqualified stock options may be granted at any
price determined by the Board Committee, although incentive stock options must
be granted at not less than the fair market value of the Company's stock on the
date of grant. To date, all options have been granted at fair market value. 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 Thermo Instrument.

F-11
<PAGE> 52
METRIKA SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

<TABLE>
<CAPTION>
1997
----------------------------
NUMBER OF WEIGHTED AVERAGE
SHARES EXERCISE PRICE
--------- ----------------
(SHARES IN THOUSANDS)
<S> <C> <C>
Options outstanding, beginning of year...................... -- -$-
Granted................................................ 303 15.00
Forfeited.............................................. (2) 15.00
---
Options outstanding, end of year............................ 301 $15.00
=== ======
Options exercisable......................................... 301 $15.00
=== ======
Options available for grant................................. 49
===
</TABLE>

As of January 3, 1998, the options outstanding were exercisable at prices
ranging from $15.00 to $15.34 and had a weighted-average remaining contractual
life of 8.3 years.

Employee Stock Purchase Program

Substantially all of the Company's full-time U.S. employees are eligible to
participate in an employee stock purchase program sponsored by Thermo Instrument
and Thermo Electron. Under this program, shares of Thermo Instrument's and
Thermo Electron's common stock can be purchased at the end of a 12-month period
at 95% of the fair market value at the beginning of the period, and the shares
purchased are subject to a six-month resale restriction. Prior to November 1,
1995, the applicable shares of common stock could be purchased at 85% of the
fair market value at the beginning of the period, and the shares purchased were
subject to a one-year resale restriction. Shares are purchased through payroll
deductions of up to 10% of each participating employee's gross wages.

Pro Forma Stock-based Compensation Expense

In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-based Compensation," which sets forth a fair-value
based method of recognizing stock-based compensation expense. As permitted by
SFAS No. 123, the Company has elected to continue to apply APB No. 25 to account
for its stock-based compensation plans. Had compensation cost for awards in 1997
under the Company's stock-based compensation plans been determined based on the
fair value at the grant dates consistent with the method set forth under SFAS
No. 123, the effect on the Company's net income and earnings per share would
have been as follows:

<TABLE>
<CAPTION>
1997
-------------
(IN THOUSANDS
EXCEPT PER
SHARE
AMOUNTS)
<S> <C>
Net income:
As reported........................................... $5,859
Pro forma............................................. 5,712
Basic and diluted earnings per share:
As reported........................................... .82
Pro forma............................................. .80
</TABLE>

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.

F-12
<PAGE> 53
METRIKA SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The weighted average fair value per share of options granted in 1997 was
$7.51. The fair value of each option grant was estimated on the grant date using
the Black-Scholes option-pricing model with the following weighted-average
assumptions:

<TABLE>
<CAPTION>
1997
---------
<S> <C>
Volatility.................................................. 29%
Risk-free interest rate..................................... 6.2%
Expected life of options.................................... 8.3 years
</TABLE>

The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options which 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.

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
401(k) savings plan are made by both the employee and the Company. Company
contributions are based upon the level of employee contributions. The Company
contributed and charged to expense $215,000, $176,000, and $178,000 in 1997,
1996, and 1995, respectively.

Defined Benefit Pension Plan

The Company's German subsidiary has a defined benefit pension plan covering
substantially all of its full-time employees. Benefits are based on a percentage
of eligible earnings for each year of service in excess of ten.

Net periodic pension costs included the following components:

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost................................................ $120 $186 $168
Interest cost on projected benefit obligation............... 203 293 257
Amortization of unrecognized obligations.................... (45) -- (13)
---- ---- ----
$278 $479 $412
==== ==== ====
</TABLE>

F-13
<PAGE> 54
METRIKA SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The funded status of the Company's defined benefit pension plan is as
follows:

<TABLE>
<CAPTION>
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits........................................ $2,842 $3,093
Nonvested benefits..................................... 59 77
------ ------
Accumulated benefit obligation.................... 2,901 3,170
Effect of projected future salary increases................. 395 307
------ ------
Projected benefit obligation................................ 3,296 3,477
Plan assets at fair value................................... -- --
------ ------
Plan assets less than projected benefit obligation.......... 3,296 3,477
Unrecognized net gain....................................... 1,060 1,275
------ ------
Accrued pension costs....................................... $4,356 $4,752
====== ======
</TABLE>

Actuarial assumptions used to determine the net periodic pension costs
were:

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Discount rate............................................... 6.5% 6.5% 6.7%
Rate of increase in salary levels........................... 2.5% 1.5% 3.6%
</TABLE>

Defined Contribution Pension Plan

In addition, the Company's United Kingdom subsidiary participates in a
multi-employer, defined contribution pension plan covering substantially all of
its full-time employees. The Company contributed to the plan and charged to
expense $161,000, $134,000, and $119,000 in 1997, 1996, and 1995, respectively.

5. COMMON STOCK

Sale of Common Stock

In June 1997, the Company sold 2,300,000 shares of its common stock in an
initial public offering at $15.50 per share, for net proceeds of $32,528,000.

In December 1996, the Company sold 967,828 shares of its common stock in a
private placement at $15.00 per share, for net proceeds of $13,528,000.

Reserved Shares

At January 3, 1998, the Company had reserved 362,500 unissued shares of its
common stock for possible issuance under stock-based compensation plans.

6. INCOME TAXES

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

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic.................................................... $6,460 $4,583 $2,845
Foreign..................................................... 3,319 1,823 2,075
------ ------ ------
$9,779 $6,406 $4,920
====== ====== ======
</TABLE>

F-14
<PAGE> 55
METRIKA SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Currently payable:
Federal................................................... $2,616 $1,864 $1,209
State..................................................... 134 363 226
Foreign................................................... 688 265 276
------ ------ ------
3,438 2,492 1,711
------ ------ ------
Net deferred (prepaid):
Federal................................................... (80) (273) (165)
State..................................................... (17) (40) (24)
Foreign................................................... 579 382 546
------ ------ ------
482 69 357
------ ------ ------
$3,920 $2,561 $2,068
====== ====== ======
</TABLE>

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:

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Provision for income taxes at statutory rate................ $3,325 $2,178 $1,673
Increase (decrease) resulting from:
State income taxes, net of federal tax.................... 77 213 133
Foreign tax rate and tax law differential................. 139 27 117
Tax benefit of foreign sales corporation.................. (173) (140) (113)
Amortization of cost in excess of net assets of acquired
companies.............................................. 117 111 111
Other..................................................... 435 172 147
------ ------ ------
$3,920 $2,561 $2,068
====== ====== ======
</TABLE>

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

<TABLE>
<CAPTION>
1997 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Prepaid income taxes:
Reserves and accruals..................................... $ 626 $ 577
Inventory basis difference................................ 381 307
Accrued compensation...................................... 219 105
------ ------
$1,226 $ 989
====== ======
</TABLE>

A provision has not been made for U.S. or additional foreign taxes on $4.6
million of undistributed earnings of foreign subsidiaries that could be subject
to taxation if remitted to the U.S. because the Company currently plans to keep
these amounts permanently reinvested overseas.

F-15
<PAGE> 56
METRIKA SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. 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 $567,000, $520,000, and $552,000 in
1997, 1996, and 1995, respectively. Beginning in 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
relationships among Thermo Electron and its majority owned subsidiaries).
Management believes that the service fee charged 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.

Due to Parent Company and Affiliated Companies

The Company borrowed funds from a wholly owned subsidiary of Thermo Optek
Corporation, a majority owned subsidiary of Thermo Instrument, pursuant to
certain promissory notes, which were repaid in February 1997. The Company had
$1,928,000 outstanding under the promissory notes at year-end 1996. The notes
bore interest at a variable rate. The weighted average interest rate for the
notes outstanding at year-end 1996 was 3.8%.

The Company had $4,184,000 and $5,389,000 of noninterest-bearing advances
from Thermo Instrument and affiliated companies at year-end 1997 and 1996,
respectively, which are due on demand.

Other Related-party Services

The Company leases office and manufacturing space in Germany to a wholly
owned subsidiary of Thermo Instrument pursuant to an arrangement whereby the
Company charges the Thermo Instrument subsidiary its allocated share of the
occupancy expenses of the Company's German facility, based on space utilized.
Pursuant to this arrangement, the Company recorded $472,000, $368,000, and
$367,000 in 1997, 1996, and 1995, respectively, as a reduction in selling,
general, and administrative expenses in the accompanying statement of income.

Other Related-party Transactions

In 1997 and 1996, the Company paid commissions totaling $83,000 and
$70,000, respectively, to Thermo Sentron Inc., an affiliated company.

In 1997, the Company purchased X-ray source components for $267,000 from
Kevex X-Ray Inc., a wholly owned subsidiary of ThermoSpectra Corporation, an
affiliated company.

F-16
<PAGE> 57
METRIKA SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. SHORT- AND LONG-TERM OBLIGATIONS

Short-term Obligations

Notes payable and current maturities of long-term obligation in the
accompanying balance sheet includes $9,233,000 and $10,813,000 at year-end 1997
and 1996, respectively, of amounts borrowed under lines of credit. The weighted
average interest rate for these borrowings at year-end 1997 and 1996 was 4.6%
and 4.1%, respectively. Unused lines of credit aggregated $7,437,000 at January
3, 1998. As of January 3, 1998, $1,876,000 of the total lines of credit are
secured by real estate at the Company's German subsidiary and the remainder is
guaranteed by Thermo Electron.

Long-term Obligation

In October 1994, the Company's German subsidiary borrowed 11,500,000 German
deutsche marks pursuant to a promissory note, payable in monthly installments of
99,200 German deutsche marks with a final payment in October 2004. The balance
outstanding was $4,520,000 and $5,988,000 at year-end 1997 and 1996,
respectively. The loan is secured by real estate at the Company's German
subsidiary with a net book value of $8,324,000 at year-end 1997. The note bears
interest at a variable rate, which was 4.0% and 3.75% at year-end 1997 and 1996,
respectively.

The annual repayment requirements of the long-term obligation as of January
3, 1998, are $662,000 in each year from 1998 through 2002 and $1,210,000 in 2003
and thereafter.

9. COMMITMENTS

The Company leases portions of its office and operating facilities under
various operating lease arrangements. The accompanying statement of income
includes expenses from operating leases of $882,000, $632,000, and $650,000 in
1997, 1996, and 1995, respectively. Future minimum payments due under
noncancelable operating leases at January 3, 1998, are $723,000 in 1998,
$675,000 in 1999, $653,000 in 2000, $577,000 in 2001, $509,000 in 2002, and
$1,017,000 in 2003 and thereafter. Total future minimum lease payments are
$4,154,000.

Outstanding letters of credit, principally related to performance bond
obligations, totaled $7,482,000 at January 3, 1998.

F-17
<PAGE> 58
METRIKA SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. CONCENTRATION OF RISK AND GEOGRAPHICAL INFORMATION

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

<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
United States........................................ $ 28,051 $22,875 $19,492
Germany.............................................. 16,934 18,279 18,205
United Kingdom....................................... 10,817 8,679 7,190
France............................................... 1,885 2,385 1,974
Transfers between geographical areas (a)............. (973) (171) (829)
-------- ------- -------
$ 56,714 $52,047 $46,032
======== ======= =======
Income before provision for income taxes:
United States........................................ $ 5,714 $ 5,084 $ 3,397
Germany.............................................. 1,702 593 1,653
United Kingdom....................................... 1,908 1,485 1,192
France............................................... 391 467 356
Corporate and eliminations (b)....................... (1,111) (528) (553)
-------- ------- -------
Total operating income............................... 8,604 7,101 6,045
Interest income (expense), net....................... 1,175 (695) (1,125)
-------- ------- -------
Income before provision for income taxes............. $ 9,779 $ 6,406 $ 4,920
======== ======= =======
Identifiable assets:
United States........................................ $ 23,389 $19,571 $23,313
Germany.............................................. 23,000 24,496 25,027
United Kingdom....................................... 6,978 5,176 3,748
France............................................... 1,881 1,745 1,886
Corporate (c)........................................ 47,704 15,778 --
-------- ------- -------
$102,952 $66,766 $53,974
======== ======= =======
Export revenues included in United States revenues above
(d):
Asia................................................. $ 4,673 $ 7,328 $ 3,528
Europe............................................... 7,350 1,277 2,682
Other................................................ 6,892 4,814 4,388
-------- ------- -------
$ 18,915 $13,419 $10,598
======== ======= =======
</TABLE>

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

(a) Transfers among geographical areas are accounted for at prices that are
representative of transactions with unaffiliated parties.
(b) Primarily general and administrative expenses.
(c) Primarily cash, cash equivalents, and available-for-sale investments.
(d) In general, export sales are denominated in U.S. dollars.

F-18
<PAGE> 59
METRIKA SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. EARNINGS PER SHARE

Basic and diluted earnings per share were calculated as follows:

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
(IN THOUSANDS EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C> <C>
Basic:
Net income............................................. $5,859 $3,845 $2,852
------ ------ ------
Weighted average shares................................ 7,143 5,032 5,000
------ ------ ------
Basic earnings per share............................... $ .82 $ .76 $ .57
====== ====== ======
Diluted:
Net income............................................. $5,859 $3,845 $2,852
------ ------ ------
Weighted average shares................................ 7,143 5,032 5,000
Effect of stock options................................ 4 -- --
------ ------ ------
Weighted average shares, as adjusted................... 7,147 5,032 5,000
------ ------ ------
Diluted earnings per share............................. $ .82 $ .76 $ .57
====== ====== ======
</TABLE>

12. UNAUDITED QUARTERLY INFORMATION

<TABLE>
<CAPTION>
FIRST(A) SECOND THIRD FOURTH
-------- ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
1997
Revenues......................................... $12,592 $14,133 $14,886 $15,103
Gross profit..................................... 5,556 6,504 7,268 7,458
Net income....................................... 715 1,227 1,843 2,074
Basic and diluted earnings per share............. .12 .20 .22 .25
</TABLE>

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
-------- ------- ------- -------
<S> <C> <C> <C> <C>
1996
Revenues......................................... $11,594 $12,589 $13,584 $14,280
Gross profit..................................... 4,779 5,464 6,202 7,075
Net income....................................... 449 830 1,146 1,420
Basic and diluted earnings per share............. .09 .17 .23 .28
</TABLE>

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

(a) Reflects the December 31, 1996, acquisition of Autometrics.

F-19
<PAGE> 60

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH
INFORMATION IS GIVEN IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH SOLICITATION.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company........................... 3
Risk Factors.......................... 4
Price Range of Common Stock........... 8
Dividend Policy....................... 8
Capitalization........................ 9
Selected Financial Information........ 10
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 11
Business.............................. 14
Relationship with Thermo Electron and
Thermo Instrument................... 23
Management............................ 26
Security Ownership of Certain
Beneficial Owners and Management.... 32
Selling Shareholders.................. 34
Sale of Shares........................ 36
Description of Capital Stock.......... 38
Shares Eligible for Future Sale....... 38
Legal Opinions........................ 39
Experts............................... 39
Additional Information................ 40
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

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

UNTIL MAY 25, 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS REQUIREMENT IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS OR WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

967,828 SHARES

METRIKA SYSTEMS
CORPORATION

COMMON STOCK
($.01 PAR VALUE)

PROSPECTUS

DATED APRIL 30, 1998

<PAGE> 61

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered. All amounts shown are
estimates except for the Securities and Exchange Commission (the "Commission")
registration fee.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 5,024
Legal fees and expenses..................................... 5,000
Accounting fees and expenses................................ 5,000
Printing and engraving expenses............................. 15,000
Miscellaneous............................................... 2,000
-------
Total............................................. $32,024
=======
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Delaware General Corporation Law and the Registrant's Certificate of
Incorporation and By-Laws limit the monetary liability of directors to the
Registrant and to its stockholders and provide for indemnification of the
Registrant's officers and directors for liabilities and expenses that they may
incur in such capacities. In general, officers and directors are indemnified
with respect to actions taken in good faith in a manner reasonably believed to
be in, or not opposed to, the best interests of the Registrant, and with respect
to any criminal action or proceeding, actions that the indemnitee had no
reasonable cause to believe were unlawful. The Registrant also has
indemnification agreements with its directors and officers that provide for the
maximum indemnification allowed by law. Reference is made to the Registrant's
Certificate of Incorporation, By-Laws and form of Indemnification Agreement for
Officers and Directors incorporated by reference as Exhibits 3.1, 3.2 and 10.12
hereto, respectively.

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

The Selling Shareholders are obligated under the Purchase Agreements to
indemnify Directors, officers and controlling persons of the Registrant against
certain liabilities, including liabilities under the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On November 26, 1996, the Registrant issued 5,000,000 shares of Common
Stock (adjusted to reflect a one-for-two reverse stock split effected in May
1997) to Thermo Instrument System Inc. in exchange for the assets, liabilities
and business of its Gamma-Metrics subsidiary and Radiometrie division at the
time of the incorporation of the Registrant. Exemption from registration of this
transaction is claimed under Section 4(2) of the Securities Act.

On December 16, 1996 the Registrant sold an aggregate of 833,333 shares of
Common Stock to accredited investors for an aggregate purchase price of
$12,500,000, pursuant to Regulation D of the Commission promulgated under the
Securities Act. On December 27, 1996, the Registrant sold an aggregate of
134,500 shares of Common Stock to accredited investors for an aggregate purchase
price of $2,017,500 pursuant to Regulation D of the Commission promulgated under
the Securities Act.

II-1
<PAGE> 62

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS

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

(b) FINANCIAL STATEMENT SCHEDULES

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

ITEM 17. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

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

II-2
<PAGE> 63

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Post-Effective Amendment No. 1 to Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Waltham, Commonwealth of Massachusetts, on this 30th day of April, 1998.

METRIKA SYSTEMS CORPORATION

By: /s/ ERNESTO A. CORTE

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

Ernesto A. Corte,

President and Chief Executive Officer

POWER OF ATTORNEY

Each of the undersigned Directors and Officers of Metrika Systems
Corporation hereby appoints John N. Hatsopoulos, Paul F. Kelleher, Melissa F.
Riordan, Seth H. Hoogasian and Sandra L. Lambert, and each of them, his true and
lawful attorneys-in-fact and agents, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

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

/s/ ERNESTO A. CORTE President, Chief Executive April 30, 1998
- --------------------------------------------------- Officer & Director
Ernesto A. Corte

/s/ JOHN N. HATSOPOULOS Senior Vice President & April 30, 1998
- --------------------------------------------------- Chief Financial Officer
John N. Hatsopoulos

/s/ PAUL F. KELLEHER Chief Accounting Officer April 30, 1998
- ---------------------------------------------------
Paul F. Kelleher

/s/ DENIS A HELM Chairman of the Board and April 30, 1998
- --------------------------------------------------- Director
Denis A. Helm

/s/ ARVIN H. SMITH Director April 30, 1998
- ---------------------------------------------------
Arvin H. Smith

/s/ EARL R. LEWIS Director April 30, 1998
- ---------------------------------------------------
Earl R. Lewis

/s/ JOHN T. KEISER Director April 30, 1998
- ---------------------------------------------------
John T. Keiser
</TABLE>

II-3
<PAGE> 64

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ WILLARD R. BECRAFT Director April 30, 1998
- ---------------------------------------------------
Willard R. Becraft

/s/ JOSEPH A. BAUTE Director April 30, 1998
- ---------------------------------------------------
Joseph A. Baute
</TABLE>

II-4
<PAGE> 65

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Metrika Systems Corporation:

We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Metrika Systems Corporation included in
Metrika Systems Corporation's Form S-1 and have issued our report thereon dated
February 17, 1998. Our audits were made for the purpose of forming an opinion on
the basic consolidated financial statements taken as a whole. Metrika Systems
Corporation's schedule of Valuation and Qualifying Accounts, included in
Schedule II on page S-2, is the responsibility of the Company's management and
is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. 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 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 17, 1998

S-1
<PAGE> 66

SCHEDULE II

METRIKA SYSTEMS CORPORATION

VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE AT PROVISION BALANCE
BEGINNING CHARGED ACCOUNTS ACCOUNTS AT END OF
OF YEAR TO EXPENSE RECOVERED WRITTEN-OFF OTHER(a) YEAR
---------- ---------- --------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Allowance for Doubtful Accounts
for the Fiscal Year Ended:
1997.......................... $440 $633 $209 $(713) $102 $671
1996.......................... $478 $ -- $ -- $ (36) $ (2) $440
1995.......................... $258 $225 $ -- $ (11) $ 6 $478
</TABLE>

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

(a) Allowance of business acquired during the year as described in Note 3 to
Consolidated Financial Statements and the effect of foreign currency
translation.

S-2
<PAGE> 67

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ---------------------- ----
<S> <C> <C>
3.1* Certificate of Incorporation, as amended, of the Registrant.
3.2* By-Laws of the Registrant.
4* Specimen Common Stock Certificate.
5+ Opinion of Seth H. Hoogasian, Esq.
10.1* Corporate Services Agreement dated as of November 26, 1996,
between Thermo Electron Corporation ("Thermo Electron") and
the Registrant.
10.2 Thermo Electron Corporate Charter, as amended and restated
effective January 3, 1993 (filed as Exhibit 10.1 to Thermo
Electron's Annual Report on Form 10-K for the fiscal year
ended January 3, 1993 [File No. 1-8002] and incorporated
herein by reference).
10.3* Tax Allocation Agreement dated as of November 26, 1996
between Thermo Electron Inc. and the Registrant.
10.4* Master Repurchase Agreement dated as of November 26, 1996
between Thermo Electron and the Registrant.
10.5 Amended and Restated Master Guarantee Reimbursement and Loan
Agreement dated as of December 3, 1997 between Thermo
Electron and the Registrant (filed as Exhibit 10.7 to Thermo
Instrument's Annual Report on Form 10-K for fiscal year
ended January 3, 1998 [File No. 1-9786] and incorporated
herein by reference).
10.6 Amended and Restated Master Guarantee Reimbursement and Loan
Agreement dated as of December 3, 1997 between Thermo
Instrument and the Registrant (filed as Exhibit 10.6 to the
Registrant's Annual Report on Form 10-K for fiscal year
ended January 3, 1998 [File No. 1-13085] and incorporated
herein by reference).
10.7* Deferred Compensation Plan for Directors of the Registrant.
10.8* Indemnification Agreement dated as of November 26, 1996
between Thermo Instrument and the Registrant.
10.9* Letter Agreement dated as of December 4, 1996 between Thermo
Instrument and the Registrant.
10.10* Indemnification Agreement dated as of December 4, 1996
between Thermo Instrument and the Registrant.
10.11* Triple Net Lease Agreement dated January 1, 1995 between
Gamma-Metrics, as lessee and Radnor/Collins/Sorrento
Partnership as lessor, for property located at 5788 Pacific
Center Boulevard, San Diego, California.
10.12* Form of Indemnification Agreement for Officers and
Directors.
10.13* Promissory Notes dated as of June 26, 1995, October 1, 1995,
December 1, 1995 and December 1, 1996 in the aggregate
principal amount of DM3,000,000 issued by Thermo Instrument
Systems GmbH, a wholly owned subsidiary of the Registrant to
Nicolet Instrument GmbH, a wholly owned subsidiary of Thermo
Optek Corporation.
10.14* Equity Incentive Plan of the Registrant.
In addition to the stock-based compensation plans of the
Registrant, the executive officers of the Registrant may be
granted awards under stock-based compensation plans of
Thermo Electron and Thermo Instrument for services rendered
to the Registrant or such affiliated corporations. The terms
of such plans are substantially the same as those of the
Registrant's Equity Incentive Plan.
10.15* Lease Agreement dated as of October 1, 1993 between Thermo
Instrument Systems GmbH (the Registrant's subsidiary), as
lessor, and ESM Eberline Instruments Strahlen und
Umweltmesstechnik GmbH, as lessee.
</TABLE>

<PAGE> 68

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ---------------------- ----
<S> <C> <C>
10.16 Restated Stock Holding Assistance Plan and Form of
Promissory Note (filed as Exhibit 10.16 to the Registrant's
Annual Report on Form 10-K for fiscal year ended January 3,
1998 [File No. 1-13085] and incorporated herein by
reference).
21 Subsidiaries of the Registrant (filed as Exhibit 21 to the
Registrant's Annual Report on Form 10-K for fiscal year
ended January 3, 1998 [File No. 1-13085] and incorporated
herein by reference).
23.1 Consent of Arthur Andersen LLP.
23.2+ Consent of Seth H. Hoogasian, Esq. (included in Exhibit 5).
24 Power of Attorney(contained on page II-3 of this
Registration Statement).
</TABLE>

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

Each exhibit listed above which is marked by an asterisk(*) is incorporated by
reference to the correspondingly numbered exhibit to the Company's Registration
Statement on Form S-1(File No. 333-25243).

+ Previously filed as part of this Registration Statement.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Metrika Systems Corporation:

As independent public accountants, we hereby consent to the use of our
reports dated February 17, 1998(and to all references to our Firm) included in
or made a part of this Registration Statement on Form S-1 and related Prospectus
of Metrika Systems Corporation.

/S/ ARTHUR ANDERSEN LLP

Boston, Massachusetts

April 24, 1998