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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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METRIKA SYSTEMS CORPORATION
(Name of Subject Company)
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METRIKA SYSTEMS CORPORATION
(Name of Person(s) Filing Statement)
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COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
59159 M 10 6
_________________________
(CUSIP Number of Class of Securities)
Joseph A. Baute
Member of the Special Committee of the Board of Directors
c/o Richard A. Soden, Esq.
James A. Matarese, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
(617) 570-1000
(Name and Address and Telephone Number of Person Authorized to Receive Notice
and Communications on Behalf of the Person(s) Filing Statement)
With copies to:
Richard A. Soden, Esq.
James A. Matarese, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
(617) 570-1000
[_] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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Item 1. Subject Company Information.
The name of the subject company is Metrika Systems Corporation, a Delaware
corporation (the "Company"), and the principal executive offices of the Company
are located at 5788 Pacific Center Boulevard, San Diego, California 92121. The
Company's phone number is (781) 622-1000.
The title of the class of equity securities to which this Schedule 14D-9
Solicitation/Recommendation Statement (this "Schedule 14D-9") relates is the
common stock, par value $.01 per share, of the Company (the "Shares" or the
"Common Stock"). As of January 28, 2000 there were 7,408,128 Shares issued and
outstanding and 409,198 shares reserved for issuance pursuant to options
outstanding under the Company's equity incentive plans.
Item 2. Identity and Background of Filing Person.
This Schedule 14D-9 is being filed by the subject company, Metrika Systems
Corporation. The contact information for the Company is listed in Item 1 above.
This Schedule 14D-9 relates to the tender offer by Metrika Acquisition Inc.
(the "Purchaser"), a Delaware corporation and a wholly-owned subsidiary of
Thermo Instrument Systems Inc. ("Thermo Instrument"), a Delaware corporation,
to purchase all of the outstanding Shares that Thermo Electron ("Thermo
Electron") or its direct and indirect subsidiaries, including its majority-
owned subsidiary, Thermo Instrument (the "Publicly Held Shares"), do not
currently own at a purchase price of $9.00 per Share (the "Offer Price"), net
to the seller in cash, without interest thereon, less applicable withholding
taxes, if any, and upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated March 31, 2000 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which, together with the Offer to Purchase,
constitutes the "Offer"). The Purchaser filed a Schedule TO Tender Offer
Statement (the "Schedule TO") with the Securities and Exchange Commission (the
"Commission") on March 31, 2000, which includes the Offer to Purchase as an
exhibit.
The Schedule TO states that if the tender offer by the Purchaser is
completed, Thermo Electron and its subsidiaries will own at least 90% of the
Company's outstanding Shares and will, promptly following the closing of the
Offer, contribute such Shares to the Purchaser. Thermo Electron and Thermo
Instrument would then cause the Purchaser to merge with and into the Company
(the "Merger"), making the Company jointly owned by Thermo Electron and Thermo
Instrument.
The Purchaser's principal executive offices, as set forth in the Schedule
TO, are located at 81 Wyman Street, P.O. Box 9046, Waltham, MA 02454-9046 and
its business phone is (781) 622-1000.
All information contained in this Schedule 14D-9 or incorporated herein by
reference concerning the Purchaser, Thermo Electron, Thermo Instrument or their
affiliates, or actions or events with respect to any of them, was provided for
inclusion herein by the Purchaser, Thermo Electron or Thermo Instrument or
obtained from reports or statements filed by the Purchaser with the Commission,
including, without limitation, the Schedule TO, and the Company takes no
responsibility for such information.
Item 3. Past Contacts, Transactions, Negotiations and Agreements.
History of the Company. The Company was incorporated 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 in exchange
for shares of common stock, and in 1997 the Company conducted an initial public
offering of its Common Stock. Following this offering, Thermo Electron, through
its ownership of Common Stock and the ownership of Common Stock by Thermo
Instrument, maintained a controlling stake in the Company. According to the
Offer to Purchase Thermo Instrument and Thermo Electron are global leaders in
the development, manufacture and sale of
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measurement and detection instruments used to monitor, collect and analyze data
that provide knowledge for the user. The instruments are used in a range of
industries, including industrial processing, food and beverage production, life
sciences research and medical diagnostics. Thermo Instrument is a majority-
owned subsidiary of Thermo Electron.
As described below under "Item 4--The Solicitation or Recommendation," on
January 31, 2000, Thermo Electron announced a restructuring plan pursuant to
which it expects to spin in, spin off and sell various businesses to focus
solely on its core measurement and detection instruments business. In that
announcement, Thermo Electron stated that it planned to take private certain of
its majority-owned subsidiaries, including Thermo Instrument and the Company.
On March 31, 2000, the Purchaser filed a Schedule TO with the Commission and
formally commenced the Offer. The Offer to Purchase also has been filed with
the Commission as an exhibit to the Schedule TO and as Exhibit 6 hereto.
Based on the Schedule TO, as of January 28, 2000, Thermo Instrument and
Thermo Electron beneficially owned 5,219,600 and 627,100 Shares, respectively,
representing approximately 70.5% and 8.5%, respectively, of the issued and
outstanding Shares.
Composition of the Company's Board of Directors. The Company's Board of
Directors currently consists of the following six members:
<TABLE>
<C> <S>
Joseph A. Baute Mr. Baute is the sole member of the Special Committee of
the Board of Directors, which was established to consider
the Offer (the "Special Committee") (See "Item 4--the
Solicitation or Recommendation"). He 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 the chairman and chief executive
officer of Markem Corporation from 1977 and 1979,
respectively, until his retirement in 1993. He is also a
director of Houghton-Mifflin Company and INSO Corporation.
Willard R. Becraft Mr. Becraft has been a director of the Company since May
1997. Mr. Becraft has been a consultant in advanced
instrumentation and control technology development since
1996. 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.
Ernesto A. Corte Mr. Corte has been a director of the Company since February
1998, was appointed chief executive officer of the Company
in February 1998, and has also served as president of the
Company since the Company's inception in November 1996.
Prior to his promotion to CEO, Mr. Corte served as chief
operating officer of the Company from November 1996 to
February 1998. Mr. Corte has also served as president of
the Company's Gamma-Metrics subsidiary 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 by Thermo Instrument in 1993.
Denis A. Helm Mr. Helm has been a director and chairman of the board of
the Company since its inception in November 1996, and
served as chief executive officer of the Company from
November 1996 until February 1998. Mr. Helm has been an
executive vice president of Thermo Instrument since January
1999, and was a senior vice president of Thermo
Instrument from 1994 to 1998, and a vice president from
1986 until 1994. Mr. Helm also served as president of
Thermo Instrument's Thermo Environmental Instruments Inc.
subsidiary from 1981 to 1998.
</TABLE>
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<TABLE>
<C> <S>
John T. Keiser Mr. Keiser has been a director of the Company since its
inception in November 1996. He has been the chief operating
officer, biomedical, of Thermo Electron since September 1998,
and was, prior to that time, a vice president commencing April
1997. Mr. Keiser has been the president and chief executive
officer of Thermedics Inc., a majority-owned subsidiary of
Thermo Electron, since March 1998 and December 1998,
respectively, and was a senior vice president of Thermedics
Inc. from 1994 until his promotion to president. He has also
been the president of Thermo Electron's wholly owned biomedical
group, a manufacturer of medical equipment and instruments,
since 1994. Mr. Keiser is also a director of Thermedics Inc.,
Thermedics Detection Inc., Thermo Cardiosystems Inc., Thermo
Sentron Inc., ThermoTrex Corporation, ThermoLase Corporation
and Trex Medical Corporation.
Earl R. Lewis Mr. 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. Prior
to that time, he was executive vice president of Thermo
Instrument from January 1996 to March 1997, senior vice
president of Thermo Instrument from January 1994 to January
1996, and vice president of Thermo Instrument from March 1992
to January 1994. Mr. Lewis has been chief operating officer,
measurement and detection, of Thermo Electron since September
1998. Prior to his appointment as chief operating officer, Mr.
Lewis served as senior vice president of Thermo Electron from
June 1998 to September 1998 and vice president from September
1996 to June 1998. Mr. Lewis served as chief executive officer
of Thermo Optek Corporation, a majority-owned subsidiary of
Thermo Instrument, from its inception in August 1995 to January
1998, and served as president of its predecessor, Thermo
Jarrell Ash Corporation, for more than five years prior to
1995. Mr. Lewis is a director of FLIR Systems, Inc., ONIX
Systems Inc., SpectRx Inc., Spectra-Physics Lasers, Inc.,
Thermedics Detection Inc., Thermo BioAnalysis Corporation,
Thermo Instrument, Thermo Optek Corporation and ThermoQuest
Corporation.
</TABLE>
Executive Officers of the Company. The following persons are currently
executive officers of the Company:
<TABLE>
<CAPTION>
Name Title
---- -----
<S> <C>
Ernesto A. Corte President and Chief Executive Officer
Theo Melas-Kyriazi Chief Financial Officer
Werner G. Kramer Executive Vice President
Paul F. Kelleher Chief Accounting Officer
</TABLE>
According to the Offer to Purchase, following consummation of the Offer and
the Merger, Thermo Instrument anticipates that the Board of Directors of the
Company will be comprised solely of members of the Company's and Thermo
Instrument's management.
Conflicts of Interest. Certain directors and the executive officers of the
Company have interests in connection with the Offer that present them with
actual or potential conflicts of interest, as summarized herein.
Mr. Baute, the sole member of the Special Committee, owns 1,000 Shares. As
discussed below, Mr. Baute does not intend to tender the 1,000 Shares which he
owns. In addition, Mr. Baute has options to acquire 10,000 Shares at an
exercise price of $15.00 per Share that are currently exerciseable. He also
holds 1,937 Shares under the Company's Deferred Compensation Plan for
directors, which Shares will be automatically converted into the right to
receive the Offer Price for each Share, totalling $17,433.
Officers and directors of the Company who own Shares and tender such Shares
will receive the same offer price on the same terms as set forth in the Offer
to Purchase. As of January 28, 2000, the members of the Board of Directors,
excluding Mr. Baute, and executive officers of the Company owned, in the
aggregate,
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12,700 Shares. Assuming all the members of the Board of Directors, excluding
Mr. Baute, and all executive officers actually tender their Shares as they have
indicated in the Offer to Purchase, they would receive an aggregate of $114,300
in exchange for their Shares.
In addition, as of January 28, 2000, the directors, including Mr. Baute, and
executive officers of the Company held options to acquire an aggregate of
185,500 Shares. Such options were issued under the Company's Equity Incentive
Plan and have exercise prices ranging from $8.45 to $15.00 per Share. Upon the
acquisition of the Shares and the subsequent Merger, Thermo Electron will
assume the options to acquire Shares and will convert such options into options
to acquire Thermo Electron common stock on the same terms or, in the case of
the vested options, at the election of the option holder, will pay the option
holder cash for each option equal to the Offer Price less the applicable
exercise price.
Certain directors and certain executive officers of the Company are
directors or officers of Thermo Electron and/or Thermo Instrument. Certain of
such directors and executive officers of the Company hold equity interests in
Thermo Electron and Thermo Instrument. Theo Melas-Kyriazi, the chief financial
officer of the Company, is also the chief financial officer of Thermo Electron
and Thermo Instrument. Earl R. Lewis, a director of the Company, is chief
operating officer, measurement and detection of Thermo Electron and is
President and chief executive officer of Thermo Instrument. Paul F. Kelleher,
the chief accounting officer of the Company, is also the chief accounting
officer of Thermo Electron and Thermo Instrument. John Keiser is the Chief
operating officer, biomedical of Thermo Electron. Consequently, certain of
these directors and officers receive or have received compensation not only
from the Company but also from Thermo Electron, Thermo Instrument and their
affiliates.
The members of the Boards of Directors of Thermo Electron and Thermo
Instrument own common stock, or hold options to purchase the common stock, of
Thermo Electron, Thermo Instrument and/or the Company. In addition, certain
members of the Boards of Directors of Thermo Electron and Thermo Instrument are
also officers of the Company. These positions and equity interests present
these directors with actual or potential conflicts of interest in determining
the fairness of the Offer and the Merger to the Public Shareholders. See
Schedule I to the Offer to Purchase, which is Exhibit 6 hereto and incorporated
herein by reference, for a listing of the positions that the members of the
Boards of Directors of Thermo Electron and Thermo Instrument hold with Thermo
Electron, Thermo Instrument and/or the Company and their ownership of the
common stock of Thermo Electron, Thermo Instrument and/or the Company.
Thermo Electron has entered into separate indemnification agreements with
each of the Company's executive officers and directors providing for the
indemnification and advancement of expenses to such person directly by Thermo
Electron in the event that such person, by reason of his or her status as a
director or officer of the Company (or service as a director, officer or
fiduciary of another entity at the request of Thermo Electron), is made or is
threatened to be made party to any threatened, pending or completed action,
suit or other proceeding, whether civil, criminal, administrative or
investigative, if such officer or director acted in good faith and in a manner
believed to be in or not opposed to the best interests of Thermo Electron and,
in the case of a criminal action or proceeding, had no reason to believe his or
her conduct was unlawful. A form of such indemnification agreement is attached
hereto as Exhibit 10.
Certain Compensation Matters; Agreements. Certain contracts, agreements,
arrangements and understandings between the Company or its affiliates and
certain of the Company's executive officers, directors or affiliates are
described at page 11 of the Company's Proxy Statement dated April 15, 1999
relating to its 1999 Annual Meeting of Stockholders (the "Proxy Statement") in
the section entitled "Executive Retention Agreements." A copy of such pages of
the Proxy Statement is filed as Exhibit 11 hereto and those portions of the
Proxy Statement are incorporated herein by reference.
In addition to the fees he receives for serving as a director of the
Company, Joseph A. Baute received a one time fee of $10,000 for serving on the
Special Committee. He also received an attendance fee of $1,000 for each in-
person Special Committee meeting, $500 for each telephonic meeting of the
Special Committee and reimbursement for out-of-pocket expenses.
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Transactions Between the Company and Thermo Electron or Thermo
Instrument. Certain contracts, agreements, arrangements and understandings
between the Company or its affiliates and the Purchaser, Thermo Instrument or
Thermo Electron are described at page 44 of the Purchaser's Offer to Purchase,
which is attached hereto as Exhibit 6 and incorporated herein by reference.
Material Agreements, Arrangements or Understandings Relating to the Company
and the Offer. Certain contracts, agreements, arrangements and understandings
relating to the Company and the Offer are described at pages 23 and 44 of the
Purchaser's Offer to Purchase, which is attached hereto as Exhibit 6 and
incorporated herein by reference. Other than as a result of being the subject
of the Purchaser's Offer, the Company is not a party to any of such contracts,
agreements, arrangements and understandings relating to the Company and the
Offer.
Intent to Tender. To the Company's knowledge, after reasonable inquiry, all
directors, except Mr. Baute, and all executive officers of the Company
currently intend to tender their Shares pursuant to the Offer. Mr. Baute, the
sole member of the Special Committee, will not tender his 1,000 Shares pursuant
to the Offer.
Item 4. The Solicitation or Recommendation.
Position of the Special Committee.
The Special Committee, whose only member consists of the sole independent
director of the Company, Joseph A. Baute, recommends that the holders of Shares
other than Thermo Electron and its affiliates, including Thermo Instrument and
the directors and executive officers of the Company (the "Public
Shareholders"), reject the Offer and not tender their Shares pursuant to the
Offer. At a meeting of the Special Committee held on March 28, 2000, the
Special Committee determined that the $9.00 per Share price proposed by the
Offeror was an inadequate price to be paid to the Public Shareholders and
resolved to recommend that the Public Shareholders reject the Offer and not
tender their Shares pursuant to the Offer. As a result of the conflict of
interest among the members of the Company's Board of Directors (other than Mr.
Baute) and Thermo Instrument and Thermo Electron, the Board of Directors of the
Company delegated to the Special Committee the sole and exclusive authority to
respond to the Offer and to either recommend for, recommend against or remain
neutral and express no opinion with respect to whether Public Shareholders
should accept or reject the Offer and tender their Shares pursuant to the
Offer.
Background; Reasons for the Special Committee's Position.
On January 31, 2000, as part of its overall restructuring plan pursuant to
which it expects to spin in, spin off and sell various businesses to focus
solely on its core measurement and detection instruments business, Thermo
Electron announced that it planned to take private certain of its majority-
owned subsidiaries, including Thermo Instrument and the Company. In particular,
Thermo Electron announced that, through the Purchaser, Thermo Instrument would
make a tender offer for all of the outstanding publicly traded shares of the
Company at a price of $9.00 per Share. According to the Offer to Purchase, the
Offer is conditioned upon the Purchaser acquiring sufficient number of Publicly
Held Shares such that Thermo Electron and its subsidiaries, including Thermo
Instrument, will together own at least 90% of the total outstanding Shares. As
stated in the Offer to Purchase, structuring the transaction as a tender offer
to acquire ownership of at least 90% of the outstanding Shares permits the
Purchaser to cause a merger of the Company and the Purchaser without any vote
of the stockholders of the Company pursuant to the "short-form"merger
provisions of the Delaware General Corporation Law. Pursuant to such a "short-
form" merger, the remaining Public Shareholders also would receive $9.00 per
Share.
As the controlling stockholder of the Company, Thermo Instrument could cause
the Company to call a special meeting of stockholders for the purpose of
seeking the approval of a merger of the Company and the Purchaser, pursuant to
which the holders of Publicly Held Shares would be paid $9.00 per Share. At
such a meeting, Thermo Electron and its affiliates would have sufficient votes
by virtue of their ownership of Shares to
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approve such a transaction regardless of how holders of Publicly Held Shares
vote their Shares. Such a transaction is commonly referred to as a "long-form"
merger because approval of the stockholders is required
to consummate the transaction. As set forth in the Offer to Purchase, Thermo
Instrument has chosen to pursue a tender offer followed by a "short-form"
merger rather than a "long-form" merger in an effort to acquire the Publicly
Held Shares in an expeditious manner and provide the Public Shareholders with a
prompt opportunity to receive the Offer Price. Because Thermo Instrument and
Thermo Electron collectively own approximately 79.0% of the total outstanding
Shares, the Purchaser only needs to acquire an additional 11.0% of the total
outstanding Shares, or approximately 52.4% of the total outstanding Publicly
Held Shares, in order for Thermo Electron and its subsidiaries to own
sufficient Shares to effect a "short-form" merger. According to the Offer to
Purchase, if the Offer is not successful, the Purchaser may make open market or
privately negotiated purchases of Publicly Held Shares to the extent necessary
in order for Thermo Electron and its subsidiaries, including Thermo Instrument,
collectively to own at least 90% of the total outstanding Shares. For
additional information about the terms and conditions of the Offer and the
Purchaser's reasons for making the Offer, stockholders should read the Offer to
Purchase, which has been mailed to stockholders directly by the Purchaser and
has been filed as an exhibit to the Schedule TO.
As a result of the conflict of interest between the Company and Thermo
Instrument and Thermo Electron by virtue of Thermo Instrument's and Thermo
Electron's control of the Company and its Board of Directors, the Board of
Directors established the Special Committee consisting of the only member of
the Board of Directors having no affiliation with Thermo Instrument or Thermo
Electron. The Special Committee was given the sole and exclusive authority to
respond to the Offer and to either recommend for, recommend against or remain
neutral and express no opinion with respect to whether Public Shareholders
should accept or reject the Offer and tender their Shares pursuant to the
Offer. Other than as described in the preceding sentence, the Special Committee
was given no other authority or responsibilities, and in particular, was not
given the authority to "shop" the Company to prospective third party purchasers
or explore other strategic alternatives that might enhance or maximize
shareholder value for the Public Shareholders. To assist it in performing its
responsibilities, the Special Committee retained Tucker Anthony Cleary Gull
("Tucker Anthony") as separate independent financial advisor and Goodwin,
Procter & Hoar LLP as separate independent legal counsel. The Special Committee
was familiar with both its legal counsel and financial advisor from a prior
transaction in which such legal counsel and financial advisor had advised the
independent special committee of another of Thermo Instrument's majority-owned
subsidiaries in connection with a similar transaction involving Thermo
Instrument's acquisition of the entire equity ownership of that subsidiary.
Pursuant to the authority granted to it by the Company's Board of Directors,
the Special Committee undertook to independently determine, with the advice of
its legal counsel and financial advisor, the adequacy of the terms of the Offer
and whether to recommend for, recommend against or remain neutral and express
no opinion with respect to the Offer based primarily on the information
furnished to the Special Committee by the Company's management and Thermo
Electron. The Special Committee also reviewed the information concerning the
Offer set forth in the Offer to Purchase and was given access to
representatives of Thermo Electron's and Thermo Instrument's financial
advisors, J.P. Morgan Securities Inc. ("J.P. Morgan") and The Beacon Group
Capital Services, LLC ("The Beacon Group"). After receiving advice from its
legal counsel and financial advisor concerning the adequacy of the Offer, the
Special Committee inquired as to whether Thermo Instrument would consider
increasing the Offer Price, but was informed that Thermo Electron and Thermo
Instrument believed that the terms of the Offer were fair to the Public
Shareholders from a financial point of view and would not engage in any
negotiations concerning the Offer Price. The Special Committee also discussed
with representatives of Thermo Electron the anticipated timing of the Offer and
other administrative matters relating to the Offer. Except as described above,
the Special Committee did not participate in any communications or negotiations
concerning the terms and conditions of the Offer, including the Offer Price,
with the Purchaser, Thermo Instrument or Thermo Electron.
The Special Committee, prior to expressing its position with respect to the
Offer, received advice, opinions, views or presentations from, and discussed
the Offer with the Company's management and Tucker Anthony. As noted above, the
Special Committee also was given access to representatives of J.P. Morgan and
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The Beacon Group, with whom Tucker Anthony, after completing its independent
analysis of the fairness from a financial point of view of the Offer Price,
discussed certain matters relating to such analysis. In expressing its position
with respect to the Offer, the Special Committee considered a number of
factors, including, but not limited to, the following:
(i) Business and Prospects. The Special Committee received advice from
Tucker Anthony concerning the Company's historical and current
financial condition and operating results, as well as the future
prospects of the Company, based on discussions with senior management
of the Company. In particular, the Special Committee considered the
following:
. Acquisition-Related Integration Issues. The Special Committee
considered the fact that the Company has completed the acquisition
of a number of domestic and international companies during the past
five fiscal years. The Special Committee believes that integrating
these companies with the Company's existing businesses has required
substantial management time and resources. The completion of such
integration should permit management to focus its attention on
increasing internal revenue growth and margin improvement. In
addition, the Special Committee noted the probable need for future
acquisitions to broaden the Company's product offerings and to
diversify its geographic revenue base.
. Industry-Related Cyclical Factors. The Special Committee considered
the fact that the Company's products are sold primarily to
participants in raw material production industries, including coal,
metals and cement manufacturers. In the last two fiscal years,
customers in the metals and cement industries accounted for a
majority of the Company's revenues. Demand for the Company's
products and services within the coal, metals and cement industries
is dependent on the level of capital spending by cement and metals
companies for production and distribution. The Special Committee
noted that current upward trends in the worldwide price of steel and
cement suggests that margin pressure on steel and cement
manufacturers is easing, which may lead to an increased demand for
the Company's products and therefore increased revenues.
. Geographic Diversification. The Special Committee considered the
fact that the Company derives significant revenues from European and
Asian customers. In 1997 and 1998 currency volatility placed
competitive pressure on foreign customers, which led to decreased
revenues and a lower gross profit margin for the Company. The
Special Committee noted management's plan to greater diversify the
Company's geographic revenue base, which, if successful, should
result in a less volatile revenue stream.
(ii) Market Information Regarding Publicly Held Shares. The Special
Committee considered historical market prices and trading information
with respect to the Publicly Held Shares and a comparison of these
market prices and trading information with those of selected publicly
held companies operating in industries similar to that of the Company
and the sales, earnings and price to earnings multiples at which the
Publicly Held Shares and the securities of these other companies
trade. See "Opinion of Financial Advisor" below.
(iii) Financial Analysis of Offer Price. The Special Committee considered a
financial analysis of the Offer Price performed by Tucker Anthony using
various methodologies, including a selected comparable public companies
analysis, a selected comparable transactions analysis and a discounted
cash flow analysis. A summary of Tucker Anthony's analysis appears on
pages 9 through 14 of this Schedule 14D-9 under the section entitled
"Opinion of Financial Advisor."
(iv) Market Price Considerations. The Special Committee considered the fact
that the $9.00 per Share Offer Price represents (A) no premium over
the $9.00 closing price of the Publicly Held Shares on the American
Stock Exchange (the "AMEX") one week prior to the public announcement
of the Offer on January 31, 2000, and (B) a premium of 46.9% over
$6.125, the closing price of the Publicly Held Shares on the AMEX four
weeks prior to the public announcement of the Offer on January 31,
2000. The Special Committee also considered the fact that in its
initial public offering in
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June 1997, the Company sold Shares to the public at a price of $15.50
per Share. The Special Committee noted that the Offer Price represents a
discount of 41.9% to the initial public offering price of $15.50 per
Share.
(v) Liquidity and Trading Volume. The Special Committee considered the fact
that historically there has been relatively low trading volume of the
Publicly Held Shares and that tendering Shares in the Offer would
result in immediate liquidity for the Public Shareholders. The Special
Committee believes that the Common Stock is an illiquid security and
that this lack of liquidity has had an adverse effect on the trading
price of the Publicly Held Shares. In this regard, the Special
Committee noted the limited trading volume of the Publicly Held Shares
on the AMEX, as evidenced by its average monthly trading volume
(approximately 95,442 per month over the twelve months prior to January
28, 2000, the last trading day prior to the first public announcement
of the Offer) and the limited public float of such shares resulting
from the majority ownership of the Company by Thermo Electron and its
subsidiaries.
(vi) Fairness Opinion. The Special Committee considered the opinion of
Tucker Anthony, delivered to the Special Committee on March 28, 2000,
that as of such date and based upon and subject to the limitations set
forth therein, the Offer Price of $9.00 per Share to be paid by the
Purchaser to the Public Shareholders was inadequate, from a financial
point of view, to such holders (a copy of such opinion is attached
hereto as Schedule I to this Schedule 14D-9 and is incorporated herein
by reference).
(vii) Participation in Future Growth. The Special Committee also considered
the fact that Public Shareholders who tender their shares in the Offer
will be precluded from having the opportunity to participate in the
future growth prospects of the Company. However, the Special Committee
noted that Public Shareholders who tender their shares in the Offer will
not be exposed to the possibility of future declines in the price at
which the Publicly Held Shares trade.
(viii) Inability to Negotiate Offer Price and "Shop" the Company. The
Special Committee considered the fact that Thermo Instrument and Thermo
Electron were not willing to negotiate the Offer Price, did not "shop"
the Company to prospective purchasers and did not authorize the Special
Committee to explore other strategic alternatives that might enhance or
maximize shareholder value for the Public Shareholders. The Special
Committee noted that receiving actual offers from unaffiliated third
parties might have been another means by which to determine the value of
the Publicly Held Shares.
(ix) Availability of Dissenters' Appraisal Rights. The Special Committee
considered the fact that Public Shareholders who do not tender their
shares in the Offer will have dissenters' appraisal rights under
Delaware law in connection with the merger of the Company with the
Purchaser. However, Public Shareholders who exercise their appraisal
rights may receive more or less for their Publicly Held Shares than
the Offer Price.
(x) Alternative Squeeze-Out Structures. The Special Committee considered
the fact that Thermo Instrument and Thermo Electron could also have
pursued, and could pursue if the Offer is not successful, a "long-form"
merger pursuant to which they could cause the Company to call a special
meeting of stockholders for the purpose of seeking the approval of a
merger of the Company and the Purchaser, at which meeting Thermo
Electron and its affiliates would have sufficient votes to obtain such
approval. If the Offer is not successful, the Purchaser also may make
open market or privately negotiated purchases of Publicly Held Shares
to the extent necessary in order for Thermo Electron and its
subsidiaries collectively to own at least 90% of the total outstanding
Shares and therefore effect a "short-form" merger.
In view of the variety of factors considered by the Special Committee, the
Special Committee did not find it practicable to and did not assign relative
weights to the factors set forth above. Rather, the Special Committee reached
its determination based on the totality of the circumstances and the advice
presented to it by its legal and financial advisors.
8
<PAGE>
In analyzing the Offer, the Special Committee was assisted and advised by
representatives of Tucker Anthony and the Special Committee's legal counsel,
who reviewed various financial, legal and other considerations. The full text
of the written opinion of Tucker Anthony, setting forth the procedures
followed, the matters considered, the scope of the review undertaken and the
assumptions made by Tucker Anthony in arriving at its opinion, is attached as
Schedule I to this Schedule 14D-9 and is incorporated herein by reference.
Public Shareholders are urged to, and should, read such opinion carefully and
in its entirety. The opinion was provided for the information and assistance of
the Special Committee in connection with its consideration of the Offer. Such
opinion addresses only the fairness, from a financial point of view, of the
Offer Price to the Public Shareholders and does not constitute a recommendation
to any such holder as to whether or not to tender Publicly Held Shares in the
Offer.
This Schedule 14D-9 and the documents which are incorporated by reference
herein include certain forward-looking statements. For this purpose, any
statements that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the foregoing, the words
"believes," "anticipates," "plans," "expects," "seeks," "estimates," and
similar expressions are intended to identify forward-looking statements.
Forward-looking statements are based on the intentions, beliefs, and current
expectations of the Company and involve risk and uncertainties. Actual results
could vary materially from estimates.
Opinion of Financial Advisor
The Special Committee retained Tucker Anthony to act as its financial
advisor and to render an opinion to the Special Committee as to the fairness,
from a financial point of view, of the Offer Price to be received by the Public
Shareholders who tender their Shares pursuant to the Offer.
The Special Committee selected Tucker Anthony for a number of reasons,
including its knowledge of the instrumentation segment of the technology
industry and its experience and reputation in the area of valuation and
financial advisory work generally, and in relation to transactions of the size
and nature of the proposed transaction specifically. Tucker Anthony is a
nationally recognized investment banking firm and is regularly engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, leveraged buyouts, negotiated underwritings, private placements
and valuations for corporate and other purposes. From time to time, Tucker
Anthony and its affiliates may hold long or short positions in the Common
Stock, the common stock of Thermo Electron or the common stock of Thermo
Instrument.
Tucker Anthony rendered its written opinion to the Special Committee on
March 28, 2000, to the effect that, as of that date, the Offer Price to be
received by the Public Shareholders pursuant to the Offer was inadequate, from
a financial point of view, to such holders.
The full text of the written opinion of Tucker Anthony dated March 28, 2000,
which sets forth the assumptions made, general procedures followed, matters
considered and limitations on the scope of review undertaken by Tucker Anthony
in rendering its opinion, is attached as Schedule I to this Schedule 14D-9 and
is incorporated herein by reference. The Tucker Anthony opinion is directed to
the Special Committee and relates only to the fairness, from a financial point
of view, of the Offer Price to be received by the Public Shareholders pursuant
to the Offer, and does not constitute a recommendation to any of the Public
Shareholders as to whether they should accept or reject the Offer. The summary
of Tucker Anthony's opinion set forth below is qualified in its entirety by
reference to the full text of the written opinion attached hereto as Schedule
I. Public Shareholders are urged to read the entire opinion carefully.
In conducting its investigation and analysis and in arriving at its opinion,
Tucker Anthony reviewed the information and took into account such financial
and economic factors as it deemed relevant and material under the
circumstances. The material actions Tucker Anthony undertook in its analysis
were as follows:
. reviewed internal financial information (including certain financial
projections, as described below) concerning the business and operations
of the Company that was furnished to Tucker Anthony by the Company's
management for purposes of its analysis, as well as publicly available
information, including but not limited to the Company's recent filings
with the Commission;
9
<PAGE>
. reviewed the March 27, 2000 draft of the Offer to Purchase;
. compared the historical market prices and trading activity of the Common
Stock with those of other publicly traded companies that Tucker Anthony
deemed relevant;
. compared the financial position and operating results of the Company with
those of other publicly traded companies that Tucker Anthony deemed
relevant;
. compared the proposed financial terms of the Offer with the financial
terms of other merger and acquisition transactions that Tucker Anthony
deemed relevant; and
. held discussions with members of the Company's senior management
concerning the Company's historical and current financial condition and
operating results, as well as the future prospects of the Company.
Tucker Anthony also reviewed relevant industry market research studies,
company research reports and key economic and market indicators, including
interest rates, inflation rates, consumer spending levels, manufacturing
productivity levels, coal and cement price levels, unemployment rates and
general stock market performance. Other than as set forth above, Tucker Anthony
did not review any additional information in preparing its opinion that,
independently, was material to its analysis. As a part of its engagement,
Tucker Anthony was not requested to, and did not, solicit third party
indications of interest in acquiring the Company. The Special Committee did not
place any limitation upon Tucker Anthony with respect to the procedures
followed or factors considered by Tucker Anthony in rendering its opinion.
In arriving at its opinion, Tucker Anthony assumed and relied upon the
accuracy and completeness of all of the financial and other information that
was publicly available or provided to Tucker Anthony by, or on behalf of, the
Company, and did not independently verify that information. Tucker Anthony
assumed, with the Special Committee's consent, that:
. all material assets and liabilities (contingent or otherwise, known or
unknown) of the Company are as set forth in its financial statements;
. obtaining all regulatory and other approvals and third party consents
required for consummation of the proposed Offer to Purchase would not
have a material effect on the anticipated benefits of the transaction;
and
. the Offer to Purchase would be consummated in accordance with the terms
set forth in the Offer to Purchase without any amendment thereto and
without waiver by the Company or Thermo Instrument of any of the
conditions to their respective obligations thereunder.
In performing its analysis, Tucker Anthony was given access to and relied
upon financial projections for fiscal 2000, 2001, 2002, 2003 and 2004, as well
as unaudited historical information for fiscal 1999 (the "Projections"). Tucker
Anthony assumed that the Projections were reasonably prepared based upon the
best available estimates and good faith judgments of the Company's senior
management as to the future performance of the Company. For information
concerning the Projections, see "Financial Projections" below on pages 14
through 17.
In conducting its review, Tucker Anthony did not obtain an independent
evaluation or appraisal of any of the assets or liabilities (contingent or
otherwise) of the Company. Tucker Anthony's opinion did not predict or take
into account any possible economic, monetary or other changes that may occur,
or information that may become available, after the date of its written
opinion.
Summary of Analyses. The following is a summary of the material financial
analyses performed by Tucker Anthony in connection with rendering its opinion.
10
<PAGE>
Analysis of Historical Trading Prices. Tucker Anthony reviewed the Company's
historical trading prices for the three months, six months and twelve months
preceding the announcement of the Offer on January 31, 2000, as follows:
<TABLE>
<CAPTION>
Stock Price during Period
--------------------------------------------
Trading Weighted
Period Trading Volume Average Low High
- ------- ---------------- -------- ----- -----
<S> <C> <C> <C> <C>
Three Months 282,400 shares $6.20 $5.19 $9.63
Six Months 475,900 shares $6.49 $5.19 $9.63
Twelve Months 1,145,300 shares $7.46 $5.19 $9.63
</TABLE>
Tucker Anthony compared these historical stock prices to the Offer Price of
$9.00. Tucker Anthony noted that for all periods the high price of $9.63 was
reached on January 28, 2000 the last trading day preceding the announcement of
the Offer.
Analysis of the Company's Valuation Premium. Tucker Anthony compared the
premium to be received by the Public Shareholders as represented by the Offer
Price of $9.00 per share in cash to the closing price of the Common Stock four
weeks prior to the January 31, 2000 date of the announcement of the Offer.
. Tucker Anthony calculated that the proposed Offer Price of $9.00 per
share represented a premium of 46.9% over the closing price of $6.13 for
the Common Stock on January 3, 2000, four weeks prior to the date of the
announcement of the Offer.
Tucker Anthony reviewed comparable transactions in the following categories:
(i) 31 acquisitions between January 1, 1994 and March 17, 2000 of a minority
interest (ranging from 10.0% to 29.5%) in a public company that remained a
public company following the transaction; and (ii) 14 acquisitions between
January 1, 1994 and March 17, 2000 of a remaining minority interest (ranging
from 8.0% to 35.1%) in a public company that went private as a result of the
transaction. Tucker Anthony noted that the transaction contemplated by the
Offer represents a 19% remaining minority interest transaction. Tucker Anthony
further noted that an acquisition of a minority interest or a remaining
minority interest differs from an acquisition of a 100% interest. In a 100%
interest acquisition, the acquiring company purchases control of the subject
company and, therefore, the financial terms of the transaction reflect a
control premium. The acquisition of a minority interest in, or the remaining
minority interest of, a public company does not generally involve a control
premium. However, unlike a transaction involving the acquisition of a minority
interest, in a transaction involving the acquisition of a remaining minority
interest stockholders do not have the alternative to retain their publicly
traded stock in the subject company. Accordingly, premiums paid in remaining
interest transactions generally are greater than premiums paid in minority
interest transactions. Tucker Anthony's analysis produced the following
adjusted mean premiums (the adjusted mean excludes the high and low values in
calculating the average) over the four-weeks-prior stock price in the
comparable transactions as compared to the 46.9% premium in the transaction
contemplated by the Offer:
. the adjusted mean premium over the stock price four weeks prior to the
announcement of the 31 acquisitions of a minority interest in a public
company was 12.8%, with a range of 1.6% to 30.1%; and
. the adjusted mean premium over the stock price four weeks prior to the
announcement of the 14 remaining minority interest transactions was
21.2%, with a range of 1.1% to 62.0%. Tucker Anthony again noted that
these transactions are most comparable to the transaction contemplated by
the Offer.
Analysis of Selected Publicly Traded Companies Comparable to the
Company. Tucker Anthony reviewed publicly available financial information as of
the most recently reported period and stock market information as of March 27,
2000 for publicly traded companies that Tucker Anthony deemed relevant to the
Company's business. For each comparable, Tucker Anthony calculated multiples of
enterprise value to the latest twelve months ("LTM") earnings before interest
and taxes ("EBIT"), LTM earnings before interest, taxes, depreciation and
amortization ("EBITDA") and LTM revenues. Tucker Anthony then calculated the
implied gross enterprise value for the Company based on the adjusted mean of
these comparable group
11
<PAGE>
multiples combined with data for the Company for the LTM period ending January
1, 2000; Tucker Anthony compared the financial characteristics of the Company
to the following companies:
<TABLE>
<S> <C>
1. BEI Thermo Electronhnologies, Inc. 4. K-Tron International, Inc.
2. CEM Corporation 5. Measurement Specialties, Inc.
3. Dionex Corporation 6. Moore Products Co.
</TABLE>
The following table sets forth the calculation of implied gross enterprise
values for the Company:
<TABLE>
<CAPTION>
Company Comparable Implied Gross
Financial Data Group Multiples Enterprise Values
-------------- --------------- -----------------
(In thousands) (In thousands)
<S> <C> <C> <C>
LTM EBIT....................... $ 4,664 12.5x $58,089
LTM EBITDA..................... $ 7,244 9.6x $69,347
LTM Revenues................... $72,007 1.1x $77,334
</TABLE>
Tucker Anthony then calculated the implied equity value per share of the
Company based on the above aggregate implied gross enterprise values by adding
the cash balance ($22,673,000) and subtracting the amount of outstanding debt
($19,900,000) of the Company, each as of January 1, 2000. The resulting amounts
were then divided by the number of outstanding shares of Common Stock as of
January 1, 2000 and shares added as the result of the exercise of options
pursuant to the Offer to Purchase. These calculations produced per share values
equal to $8.22, $9.73 and $10.81, based upon multiples of LTM EBIT, LTM EBITDA
and LTM Revenues, respectively. Tucker Anthony compared these amounts to the
Company's four-weeks-prior stock price of $6.13 and the Offer Price of $9.00
per share.
Analysis of Selected Comparable 100% Acquisition Transactions. Tucker
Anthony reviewed 24 transactions that Tucker Anthony deemed relevant. The
transactions were 100% acquisitions and were chosen based on a review of
acquired companies that possessed general business, operating and financial
characteristics representative of companies in the industries in which the
Company's businesses operate. Tucker Anthony noted that none of the selected
transactions reviewed were identical to the proposed transaction and that,
accordingly, the analysis of comparable transactions necessarily involves
complex consideration and judgments concerning differences in financial and
operating characteristics of the Company and other factors that would affect
the acquisition value of comparable transactions including, among others, the
general market conditions prevailing in the equity capital markets at the time
of such transactions.
For each comparable transaction, Tucker Anthony calculated multiples of
enterprise value to LTM EBIT, LTM EBITDA and LTM revenues. Tucker Anthony then
calculated the implied gross enterprise value of the Company based upon the
adjusted mean of these multiples. Tucker Anthony calculated the implied equity
value per share by adding the cash balance ($22,673,000) and subtracting the
amount of outstanding debt ($19,900,000) of the Company, each as of January 1,
2000. The resulting amounts were divided by the number of outstanding shares of
Common Stock as of January 1, 2000 and shares added as the result of the
exercise of options. These calculations produced per share values of $7.50,
$9.43 and $10.98 based upon the Company's LTM EBIT, LTM EBITDA and LTM revenues
for the twelve months ending January 1, 2000, respectively. While Tucker
Anthony noted that values associated with 100% acquisitions differed from those
in a remaining minority interest acquisition such as the transaction
contemplated by the Offer, Tucker Anthony compared these per share values to
the Offer Price of $9.00 per share.
Discounted Cash Flow Analysis. Tucker Anthony performed two discounted cash
flow analyses ("DCF") using two sets of the Projections which cover fiscal
years 2000 through 2004 (see "Financial Projections" below for information
concerning the Projections), without taking into account any potential cost
savings and efficiencies that may be realized following the consummation of the
proposed transaction. In such analysis, Tucker Anthony assumed terminal value
multiples of 9.8x to 11.8x EBIT in the year 2004 and discount rates of 14.7% to
18.7%. Selection of an appropriate discount rate is an inherently subjective
process and is affected by numerous factors. The discount rates used by Tucker
Anthony were selected based upon its
12
<PAGE>
calculation of the Company's weighted average cost of capital. The first DCF
analysis, based on the first set of Projections, which included the impact of
six future acquisitions that were projected to be made by the Company during
the period from 2000 through 2004, produced present values ranging from $23.76
to $31.51 per Share. The second DCF analysis, based on the second set of
Projections, which excluded the impact of the six future acquisitions assumed
to be made from 2000 through 2004, produced present values of the Common Stock
ranging from $12.15 to $16.26 per share.
Tucker Anthony compared both sets of Projections, together with the
associated assumptions, to the Company's historical results. Tucker Anthony
also compared the Company's operating budget for 1999 with the actual unaudited
results for 1999. Tucker Anthony noted that the projected internal revenue
growth in both sets of management projections was greater than those actually
realized in historical periods. As a result, Tucker Anthony prepared an
additional analysis taking into account the possibility that the Company may
only be able to attain a revenue growth rate in future years of 8% annually,
compared to historical internal growth rates (which exclude past acquisitions)
of 5.2% in 1997, -4.2% in 1998 and -22.0% in 1999, and growth rates (which
include past acquisitions) of 9.0% in 1997, 23.5% in 1998 and 2.8% in 1999. The
first set of Projections (which include future acquisitions) assumed a mean
projected annual revenue growth rate of 23.9%. The second set of Projections
(which exclude future acquisitions) assumed a mean projected annual revenue
growth rate of 9.7%. Tucker Anthony believes that the 8% annual revenue growth
rate used is consistent with third party market and industry research, which
was reviewed by Tucker Anthony. For this analysis Tucker Anthony used the gross
margins and EBIT margins in management's second set of Projections, the mean of
which was 43.4% and 12.8% from 2000 through 2004, respectively. The projected
margins approximate the Company's historic mean annual gross margins and EBIT
margins of 43.6% and 12.2%, respectively, achieved from 1996 through 1999. This
analysis produced present values ranging from $11.56 to $15.40 per Share.
Tucker Anthony noted that the per share present values in its DCF analysis
represented values attributable to a 100% acquisition. As such, these values
included a control premium that was not comparable to this remaining minority
interest transaction. While Tucker Anthony compared the above present values
per share to the Offer Price of $9.00 per share, it did so only with reference
to this context.
The foregoing summary does not purport to be a complete description of the
analyses performed by Tucker Anthony. The preparation of a fairness opinion is
a complex process and is not susceptible to partial analysis or summary
description. Tucker Anthony believes that its analyses must be considered as a
whole, and that selecting portions of such analysis without considering all
analyses and factors, would create an incomplete view of the processes
underlying its opinion. Tucker Anthony did not attempt to assign specific
weights to particular analyses. However, there were no specific factors
reviewed by Tucker Anthony that did not support its opinion. Any estimates
contained in Tucker Anthony's analyses are not necessarily indicative of actual
values, which may be significantly more or less favorable than as set forth
therein. Estimates of values of companies do not purport to be appraisals or
necessarily to reflect the prices at which companies may actually be sold.
Because such estimates are inherently subject to uncertainty, Tucker Anthony
does not assume responsibility for their accuracy.
Pursuant to the terms of Tucker Anthony's engagement letter dated February
16, 2000 with the Special Committee, the Company paid Tucker Anthony a retainer
fee of $75,000 and a fee of $120,000 for the preparation and delivery of its
written fairness opinion dated March 28, 2000 (which fee was payable regardless
of the conclusions expressed therein). In addition, the Company has agreed to
pay Tucker Anthony an additional $25,000 upon delivery of any updated fairness
opinion if required by a material change to the Offer to Purchase. The Company
has also agreed to reimburse Tucker Anthony up to $15,000 for its out-of-pocket
expenses, including the reasonable fees and disbursements of its counsel,
arising in connection with its engagement, and to indemnify Tucker Anthony, its
affiliates and their respective directors, officers, employees and agents to
the fullest extent permitted by law against certain liabilities, including
liabilities under the federal securities laws, relating to or arising out of
its engagement, except for liabilities found to have resulted from the bad
faith, gross negligence or intentional or reckless misconduct of Tucker
Anthony.
13
<PAGE>
In the past, Tucker Anthony has not performed investment banking services
for the Company or received any compensation from the Company, other than as
provided for in the engagement letter. Additionally, it has been over eight
years since Tucker Anthony has provided any investment banking services to
Thermo Electron. In May 1999, Tucker Anthony rendered an opinion (and was paid
a fee of $225,000 for such opinion) to the Special Committee of the Board of
Directors of ThermoSpectra Corporation ("ThermoSpectra") as to the fairness
from a financial point of view, of the consideration to be received by the
minority shareholders of ThermoSpectra pursuant to a proposed merger by and
between ThermoSpectra and Thermo Instruments Inc. Tucker Anthony is also
presently engaged in providing fairness opinions to the Special Committees of
both Thermo BioAnalysis Corporation and ONIX Systems Inc., both affiliates of
Thermo Instruments Inc., regarding transactions similar to the transaction
contemplated by the Offer. Tucker Anthony will receive a fee similar to that
described in the preceding paragraph for its services in both the proposed
Thermo BioAnalysis Corporation and ONIX Systems Inc. transactions.
Financial Projections
The Company does not, as a matter of course, make public forecasts or
projections as to future sales, earnings or other income statement data, cash
flows or balance sheet and financial position information. However, the Special
Committee had access to the Projections and made the Projections available to
Tucker Anthony.
The following summary of the Projections is included in this Schedule 14D-9
because the Projections were made available to the Special Committee and Tucker
Anthony. The Projections do not reflect any of the effects of the transaction
contemplated by the Offer or other changes that may in the future affect the
Company and its assets, business, operations, properties, policies, corporate
structure, capitalization and management in light of the circumstances then
existing.
To the Special Committee's knowledge, the Projections were not prepared with
a view toward public disclosure or compliance with published guidelines of the
Commission or the American Institute of Certified Public Accountants regarding
forward-looking information or generally accepted accounting principles. To the
Special Committee's knowledge, neither the Company's independent auditors, nor
any other independent accountants, have compiled, examined or performed any
procedures with respect to the prospective financial information contained in
the Projections nor have they expressed any opinion or given any form of
assurance with respect to such information or its achievability. Furthermore,
the Projections necessarily make numerous assumptions, many of which are beyond
the control of the Company and may prove not to have been, or may no longer be,
accurate. Additionally, this information, except as otherwise indicated, does
not reflect revised prospects for the Company's businesses, changes in general
business and economic conditions, or any other transaction or event that has
occurred or that may occur and that was not anticipated at the time such
information was prepared. Accordingly, such information is not necessarily
indicative of current values or future performance, which may be significantly
more favorable or less favorable than as set forth below, and should not be
regarded as a representation that they will be achieved.
THE PROJECTIONS ARE NOT GUARANTEES OF PERFORMANCE. THEY INVOLVE RISKS,
UNCERTAINTIES AND ASSUMPTIONS. THE FUTURE FINANCIAL RESULTS AND SHAREHOLDER
VALUE OF THE COMPANY MAY MATERIALLY DIFFER FROM THOSE EXPRESSED IN THE
PROJECTIONS. MANY OF THE FACTORS THAT WILL DETERMINE THESE RESULTS AND VALUES
ARE BEYOND THE COMPANY'S ABILITY TO CONTROL OR PREDICT. SHAREHOLDERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE PROJECTIONS. THERE CAN BE NO
ASSURANCE THAT THE PROJECTIONS WILL BE REALIZED OR THAT THE COMPANY'S FUTURE
FINANCIAL RESULTS WILL NOT MATERIALLY VARY FROM THE PROJECTIONS. THE COMPANY
DOES NOT INTEND TO UPDATE OR REVISE THE PROJECTIONS.
The Projections also include, for comparison purposes, certain selected
historical consolidated financial information with respect to the Company and
its subsidiaries excerpted or derived from the audited historical consolidated
financial statements contained in the Company's Annual Report on Form 10-K for
its fiscal year
14
<PAGE>
ended January 2, 1999. The selected historical consolidated financial
information with respect to the fiscal year ended January 1, 2000 (fiscal 1999)
was furnished to the Special Committee by the Company's management and is
unaudited; however, such information does not differ materially from that
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
January 1, 2000, which has been filed with the Commission. More comprehensive
historical financial information is included for fiscal periods ending on or
prior to January 1, 2000 in the Company's Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q (the "Company Reports") and in other documents
filed by the Company with the Commission, and the following historical
financial information for such periods is qualified in its entirety by
reference to the Company Reports and other documents and all of the financial
information (including any related notes) contained therein or incorporated
therein by reference.
15
<PAGE>
Metrika Systems Corporation
Selected Consolidated Historical and Projected Financial Information
(In thousands)
<TABLE>
<CAPTION>
Historical Projected
------------------------------------------- -----------------------------------------------
Income Statement Data 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
--------------------- ------- ------- ------- ------- ------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $46,032 $52,047 $56,714 $70,029 $72,007 $82,433 $113,038 $140,240 $172,544 $208,487
% Increase in Revenues.. -- 13.1% 9.0% 23.5% 2.8% 14.5% 37.1% 24.1% 23.0% 20.8%
Cost of Revenues........ 25,767 28,527 29,928 40,537 43,255 47,251 61,831 76,804 94,247 113,109
------- ------- ------- ------- ------- ------- -------- -------- -------- --------
Gross Profit............ $20,265 $23,520 $26,785 $29,492 $28,752 $35,182 $ 51,207 $ 63,436 $ 78,297 $ 95,378
Gross Profit%........... 44.0% 45.2% 47.2% 42.1% 39.9% 42.7% 45.3% 45.2% 45.4% 45.7%
Operating Expenses:
Corporate G&A........... NA NA 567 561 576 660 904 1,122 1,380 1,668
Goodwill Amortization
and Other Expenses..... NA NA 583 822 1,130 1,245 1,490 1,610 1,760 2,080
Research & Development
Expenses............... 2,580 3,024 3,815 4,773 5,537 5,448 7,467 9,148 11,241 13,666
Selling, General &
Administrative
Expenses............... 11,640 13,395 13,216 13,867 16,846 18,270 27,099 33,186 40,627 48,871
------- ------- ------- ------- ------- ------- -------- -------- -------- --------
Total Operating
Expenses.............. $14,220 $16,419 $18,181 $20,023 $24,089 $25,623 $ 36,960 $ 45,066 $ 55,008 $ 66,285
------- ------- ------- ------- ------- ------- -------- -------- -------- --------
Earnings Before Interest
and Taxes(/1/)......... 6,045 7,101 8,605 9,469 4,663 9,559 14,247 18,370 23,289 29,093
EBIT Margin............. 13.1% 13.6% 15.2% 13.5% 6.5% 11.6% 12.6% 13.1% 13.5% 14.0%
Interest Income......... 21 101 2,012 1,897 933 830 730 580 430 280
Interest (Expense)...... (1,146) (795) (838) (449) (621) (784) (775) (775) (775) (775)
Other Expense, Net -- -- -- -- -- -- -- -- -- --
Restructuring Costs..... -- -- -- -- (624) 402 -- -- -- --
------- ------- ------- ------- ------- ------- -------- -------- -------- --------
Total Other Income
(Expense)............. (1,125) (695) 1,175 824 714 46 (45) (195) (345) (495)
------- ------- ------- ------- ------- ------- -------- -------- -------- --------
Income Before Taxes..... 4,920 6,406 9,779 10,293 5,377 9,605 14,202 18,175 22,944 28,598
Provisions (Credit) for
Income Taxes........... 2,068 2,561 3,920 3,950 2,257 4,031 6,111 7,815 9,866 12,298
------- ------- ------- ------- ------- ------- -------- -------- -------- --------
Net Income.............. $ 2,852 $ 3,845 $ 5,860 $ 6,343 $ 3,120 $ 5,574 $ 8,091 $ 10,360 $ 13,078 $ 16,300
======= ======= ======= ======= ======= ======= ======== ======== ======== ========
Basic Earnings Per
Share.................. $ 0.57 $ 0.76 $ 0.82 $ 0.77 $ 0.42 $ 0.75 $ 1.09 $ 1.40 $ 1.77 $ 2.20
Weighted Average Shares
(Basic)................ 5,000 5,032 7,143 8,195 7,456 7,400 7,400 7,400 7,400 7,400
Depreciation and
Amortization........... 1,866 1,792 1,630 2,069 2,580 2,461 3,665 4,185 4,735 5,555
------- ------- ------- ------- ------- ------- -------- -------- -------- --------
EBITDA(/2/)............. $ 7,911 $ 8,893 $10,235 $11,538 $ 7,243 $12,020 $ 17,912 $ 22,555 $ 28,024 $ 34,648
======= ======= ======= ======= ======= ======= ======== ======== ======== ========
EBITDA Margin........... 17.2% 17.1% 18.0% 16.5% 10.1% 14.6% 15.8% 16.1% 16.2% 16.6%
</TABLE>
- -------
(/1/)EBIT represents earnings before interest and taxes and is derived from the
statements of income.
(/2/)EBITDA represents earnings before interest, taxes, depreciation and
amortization. EBITDA is presented because it is frequently used by
securities analysts, investors and other interested parties in the
evaluation of companies. Other companies may calculate EBITDA differently
than the Company. EBITDA is not a measurement of financial performance
under generally accepted accounting prinicples and should not be
considered as an alternative to cash flow from operating activities or as
a measure of liquidity or asan alterenative to net income as indicators of
the Companys operating performance or any other measure of performance
derived in accordance with generally accepted accounting principles.
16
<PAGE>
<TABLE>
<CAPTION>
Historical Projected
---------------------------------------------- ------------------------------------------------
Balance Sheet Data 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
- ------------------ ------- ------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and marketable
securities............ $ 1,302 $20,229 $ 50,289 $ 15,093 $ 22,673 $ 16,634 $ 11,090 $ 8,135 $ 4,248 $ 4,103
Accounts receivable.... 11,458 10,896 17,377 25,066 18,153 18,153 18,153 18,153 18,153 18,153
Unbilled contract costs
and fees.............. 5,285 1,706 2,476 7,224 9,367 9,367 9,367 9,367 9,367 9,367
Inventories............ 5,676 6,347 7,145 12,257 14,338 14,338 14,338 14,338 14,338 14,338
Prepaid income taxes... 1,058 989 1,226 4,439 4,341 4,341 4,341 4,341 4,341 4,341
Prepaid Expenses....... 737 468 395 806 565 565 565 565 565 565
Total property and
equipment, Net........ 13,527 12,100 10,373 11,824 9,994 9,717 8,772 7,727 6,582 5,337
Patents and other
assets................ 1,146 926 727 4,087 2,084 2,084 2,084 2,084 2,084 2,084
Existing goodwill...... 13,785 13,105 12,944 24,648 29,753 28,753 27,753 26,753 25,753 24,753
Net assets acquired
(projected
acquisitions)......... 6,840 15,640 24,440 35,440 46,440
Projected goodwill(from
projected
acquisitions)......... 6,050 12,830 19,390 27,500 35,190
TOTAL ASSETS.......... 53,974 66,766 102,952 105,444 111,267 116,841 124,932 135,292 148,370 164, 670
======= ======= ======== ======== ======== ======== ======== ======== ======== ========
CURRENT LIABILITIES
Notes payable/Current
maturities............ $14,351 $11,578 $ 9,895 $ 6,303 $ 15,347 $ 15,347 $ 15,347 $ 15,347 $ 15,347 $ 15,347
Accounts payable....... 1,642 2,463 2,308 3,291 2,714 2,714 2,714 2,714 2,714 2,714
Accrued payroll and
employee benefits..... 1,570 2,225 2,322 2,589 2,812 2,812 2,812 2,812 2,812 2,812
Accrued income taxes... NA 597 2,445 1,024 5,278 5,278 5,278 5,278 5,278 5,278
Customer deposits...... 5,057 3,377 3,576 1,302 1,644 1,644 1,644 1,644 1,644 1,644
Billings in excess of
contract fees......... 3,186 470 769 2,163 2,123 2,123 2,123 2,123 2,123 2,123
Accrued warranty costs NA 1,350 2,132 3,508 3,978 3,978 3,978 3,978 3,978 3,978
Due to parent and
affiliated companies.. 5,005 7,317 4,184 3,901 3,216 3,216 3,216 3,216 3,216 3,216
Other accrued
expenses.............. 2,775 2,553 3,302 4,986 3,756 3,756 3,756 3,756 3,756 3,756
Deferred Income Taxes.. -- -- -- 1,572 133 133 133 133 133 133
Accrued Pension Costs.. 4,536 4,752 4,356 4,983 4,563 4,563 4,563 4,563 4,563 4,563
Long-term obligations.. 6,470 5,223 3,858 3,437 -- -- -- -- -- --
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
TOTAL LIABILITIES..... $44,592 $41,905 $ 39,147 $ 39,059 $ 45,564 $ 45,564 $ 45,564 $ 45,564 $45, 564 $ 45,564
======= ======= ======== ======== ======== ======== ======== ======== ======== ========
STOCKHOLDERS' EQUITY
Common stock (par
value)................ -- 60 83 83 83 83 83 83 83 83
Capital in excess of
par value............. 11,433 26,050 58,555 58,641 58,649 58,649 58,649 58,649 58,649 58,649
Retained earnings...... -- 298 6,157 12,500 15,620 21,194 29,285 39,645 52,723 69,023
Treasury stock......... -- -- -- (4,620) (7,288) (7,288) (7,288) (7,288) (7,288) (7,288)
Accumulated other
comprehensive income.. (2,051) (1,547) (990) (219) (1,361) (1,361) (1,361) (1,361) (1,361) (1,361 )
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Total Stockholders'
equity................ 9,382 24,861 63,805 66,385 65,703 71,277 79,368 89,728 102,806 119,106
TOTAL LIABILITIES &
EQUITY............... $53,974 $66,766 $102,952 $105,444 $111,267 $116,841 $124,932 $135,292 $148,370 $164,670
======= ======= ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
17
<PAGE>
Item 5. Persons/Assets Retained, Employed, Compensated or Used.
The Company entered into a letter agreement with Tucker Anthony dated as of
February 16, 2000 (the "Engagement Letter"), pursuant to which the Special
Committee engaged Tucker Anthony to act as its financial advisor in connection
with the Offer. Subject to the terms and conditions of the Engagement Letter,
Tucker Anthony agreed to act as a financial advisor to the Special Committee
and render an opinion to the Special Committee with regard to the fairness,
from a financial point of view, to the holders of Shares, other than the
Purchaser, Thermo Electron and the officers and directors of the Company, of
the Offer Price. In connection with the Engagement Letter, the Company agreed
to pay Tucker Anthony an aggregate fee of $195,000, $75,000 of which was paid
upon the execution of the Engagement Letter and the balance of which was paid
upon the delivery by Tucker Anthony of the fairness opinion. In addition, the
Company has agreed to reimburse Tucker Anthony up to $15,000 for its
reasonable out-of-pocket expenses incurred in connection with its engagement
and to indemnify Tucker Anthony against certain liabilities incurred in
connection with its engagement, including liabilities under federal securities
laws.
The Special Committee also retained Goodwin, Procter & Hoar LLP to act as
the legal advisor to the Special Committee in connection with the Offer.
Except as disclosed herein, neither the Company nor any person acting on
its behalf currently intends to employ, retain or compensate any other person
to make solicitations or recommendations to holders of Shares on the Company's
behalf concerning the Offer.
Item 6. Interest in Securities of the Subject Company.
During the past 60 days no transaction in the Shares has been effected by
the Company, or to the Company's knowledge, by any executive officer,
director, affiliate or subsidiary of the Company.
Item 7. Purposes of the Transaction and Plans or Proposals.
(a) Except as indicated in Items 3 and 4 above, no negotiations are being
undertaken or are underway by the Company in response to the Offer which
relate to a tender offer or other acquisition of the Company's securities by
the Company, any subsidiary of the Company or any other person.
(b) Except as set forth in Items 3 and 4 above, the Company is not engaged
in any negotiation in response to the Offer which relates to or would result
in (i) an extraordinary transaction such as a merger or reorganization
involving the Company or any subsidiary of the Company; (ii) a purchase, sale
or transfer of a material amount of assets by the Company or any subsidiary of
the Company; (iii) a tender offer for or other acquisition of securities by or
of the Company; or (iv) any material change in the present capitalization,
indebtedness or dividend rate or policy of the Company.
(c) Except as set forth in Items 3 and 4 above, there are no transactions,
board resolutions, agreements in principle or signed contracts in response to
the Offer which relate to or would result in one or more of the events
referred to in this Item 7.
Item 8. Additional Information.
The information contained in the Exhibits referred to in Item 9 below is
incorporated herein by reference.
18
<PAGE>
Item 9. Exhibits.
<TABLE>
<C> <S>
Exhibit 1 Press Release issued by Thermo Instrument on January 31, 2000
(incorporated by reference to Exhibit 99 to the Current Report on
Form 8-K of Thermo Instrument filed with the Commission on February
1, 2000)
Exhibit 2 Press Release issued by the Company on January 31, 2000 (previously
filed)
Exhibit 3 Press Release of Thermo Electron issued on March 6, 2000
(incorporated by reference to Exhibit to the Purchaser's Schedule
TO dated March 31, 2000)
Exhibit 4 Press Release issued by Thermo Instrument on March 31, 2000
(incorporated by reference to Exhibit 12(a)(11) to the Purchaser's
Schedule TO dated March 31, 2000)
Exhibit 5 Press Release issued by the Company on March 31, 2000
Exhibit 6 Offer to Purchase issued by the Purchaser (incorporated by
reference to Exhibit 12(a)(1) to the Purchaser's Schedule TO dated
March 31, 2000)*
Exhibit 7 Letter to Stockholders dated March 31, 2000*
Exhibit 8 Opinion of Tucker Anthony Cleary Gull (included as Schedule I to
this Schedule 14D-9)*
Exhibit 9 Form of Indemnification Agreement by and between the Company and
directors of the Company (incorporated by reference to Exhibit
10.12 of the Company's registration statement on Form S-1 (File No.
333-25243))
Exhibit 10 Form of Indemnification Agreement by and between Thermo Electron
and the directors of the Company (incorporated by reference to
Exhibit 10.1 of Thermo Electron's registration statement on Form S-
4 (File No. 333-90661))
Exhibit 11 Selected Sections of the Company's Proxy Statement relating to its
1999 Annual Meeting of Stockholders
</TABLE>
- --------
* Included in materials being distributed to stockholders of the Company.
19
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Metrika Systems Corporation
By: /s/ Joseph A. Baute
----------------------------------
Name: Joseph A. Baute
Title: Sole Member of the Special
Committee of the Board of
Directors
Dated: March 31, 2000
<PAGE>
Schedule 1
TUCKER ANTHONY CLEARY GULL
March 28, 2000
Special Committee of the Board of Directors
Metrika Systems Corporation
5788 Pacific Center Boulevard
San Diego, CA 92121
Gentlemen:
We understand that Metrika Acquisition Inc., a Delaware corporation and a
wholly-owned subsidiary of Thermo Instrument System Inc., a Delaware
corporation ("Thermo Instrument"), has offered to purchase (the "Offer") all
outstanding shares of common stock, par value $0.01 per share (the "Common
Stock"), of Metrika Systems Corporation, a Delaware corporation (the
"Company"), that Thermo Electron Corporation, a Delaware corporation ("Thermo
Electron") and the majority owner of Thermo Instrument, and its affiliates,
including Thermo Instrument, do not currently own. At the consummation of the
Offer, each share of Common Stock validly tendered, other than shares by
dissenting shareholders, if any, will be converted into the right to receive
$9.00 per share net in cash (the "Offer Price").
You have requested our opinion (the "Opinion") as investment bankers as to
whether the Offer Price to be received by holders of Common Stock other than
Thermo Electron and its affiliates, including Thermo Instrument and the
officers and directors of the Company (the "Public Shareholders"), is fair from
a financial point of view to the Public Shareholders.
Tucker Anthony Cleary Gull ("Tucker Anthony"), as part of its investment
banking business, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for corporate and other
purposes. In the course of our ordinary business, we may trade the securities
of either Thermo Instrument or the Company for our own account or for the
accounts of our customers and, accordingly, may at any time hold a long or
short position in such securities. In connection with the procedures outlined
herein and in the preparation of this Opinion, Tucker Anthony was not
authorized by the Company to solicit, nor have we solicited, third party
indications of interest for the Company other than the Offer. Tucker Anthony
will receive fees for the rendering of this Opinion and any subsequent opinions
in connection with the Offer.
In arriving at our Opinion, we have among other things:
(i) Reviewed certain historical financial and other information concerning
the Company for the five fiscal years ended January 1, 2000;
(ii) Reviewed the most recent Offer to Purchase by Metrika Acquisition
Inc., dated March 27, 2000;
(iii) Held discussions with the senior management of the Company with
respect to the Company's past and current financial performance,
financial condition and future prospects;
(iv) Reviewed certain internal financial data and other information of the
Company, including financial projections prepared by management;
(v) Reviewed historical trading activity and ownership data of the Common
Stock and considered the prospects for dividends and price movement;
(vi) Analyzed certain publicly available information of other companies
that we deemed comparable or otherwise relevant to our inquiry, and
compared the Company, from a financial point of view, with certain of
these companies;
(vii) Compared the Offer Price to be received by the Public Shareholders
pursuant to the Offer with the consideration received by
stockholders in other acquisitions of companies that we deemed
comparable or otherwise relevant to our inquiry; and
ONE BEACON STREET BOSTON MA 02108 617-725-2200 BOSTON [ ] CHICAGO [ ] DENVER [
] MILWAUKEE [ ] NEW YORK [ ] PORLAND [ ] WASHINGTON D.C.
S-1
<PAGE>
Special Committee of the Board of Directors
Metrika Systems Corporation
March 28, 2000
Page 2
(viii) Conducted such other financial studies, analyses and investigations
and reviewed such other information as we deemed appropriate to
enable us to render our opinion.
In our review, we have also taken into account an assessment of general
economic, market and financial conditions and certain industry trends and
related matters. We reviewed relevant industry market research studies, company
research reports and key economic and market indicators, including interest
rates, inflation rates, consumer spending levels, manufacturing productivity
levels, coal and cement price levels, unemployment rates and general stock
market performance. In arriving at the Opinion, we have assumed and relied upon
the accuracy and completeness of all the financial information publicly
available or provided to us by the Company and have not attempted to verify any
of such information. We have assumed that (i) the financial projections of the
Company provided to us have been prepared on a basis reflecting the best
currently available estimates and judgments of the Company's management as to
the future financial performance and results and (ii) that such projections
will be realized in the amounts and time periods currently estimated by
management. We did not make or obtain any independent evaluations or appraisals
of any assets or liabilities of the Company, nor did we verify any of the
Company's books or records. Our Opinion is necessarily based upon market,
economic and other conditions as they exist and can be evaluated as of the date
of this letter.
This Opinion is being furnished for the use and benefit of the Special
Committee of the Board of Directors of the Company and is not a recommendation
to the Public Shareholders. Tucker Anthony has advised the Special Committee
that it does not believe any person other than the Special Committee has the
legal right to rely on the Opinion and, absent any controlling precedent, would
resist any assertion otherwise.
Based upon and subject to the foregoing, it is our Opinion that, as of the
date hereof, the Offer Price to be received by the Public Shareholders pursuant
to the Offer is inadequate from a financial point of view.
Very truly yours,
/s/ Tucker Anthony Cleary Gull
Tucker Anthony Cleary Gull
S-2
<PAGE>
EXHIBIT 5
SPECIAL COMMITTEE OF METRIKA SYSTEMS BOARD OF DIRECTORS
ADVISES STOCKHOLDERS TO REJECT THERMO INSTRUMENT TENDER OFFER
Metrika Systems Corporation (ASE:MKA) today announced that the Special Committee
of its Board of Directors, which consists of the sole director of having no
affiliation with Thermo Instrument Systems Inc. or its parent, Thermo Electron
Corporation, is recommending that shareholders reject the $9.00 per share cash
tender offer (the "Offer") made by Thermo Instrument on March 31, 2000 and not
tender their shares pursuant to the Offer. The Special Committee has determined
that the $9.00 per share price is an inadequate price to be paid to the
shareholders other than Thermo Electron and its affiliates (including Thermo
Instrument). The Special Committee strongly urges each shareholder to read the
factors considered by the Special Committee in the company's Schedule 14D-9,
which has been filed today with the Securities and Exchange Commission and
mailed to shareholders.
<PAGE>
EXHIBIT 7
METRIKA SYSTEMS CORPORATION
5788 Pacific Center Boulevard
San Diego, California 92121
March 31, 2000
Dear Shareholder:
On March 31, 2000, Metrika Acquisition Inc., a wholly-owned subsidiary of
Thermo Instrument Systems Inc. ("Thermo Instrument"), commenced a tender offer
to acquire for $9.00 per share in cash all of the issued and outstanding shares
of common stock of Metrika Systems Corporation (the "Company") not currently
owned by Thermo Electron Corporation ("Thermo Electron") and its affiliates,
including Thermo Instrument (the "Offer").
Because all of the current members of the Company's Board of Directors,
except the undersigned, are affiliated with Thermo Electron and/or Thermo
Instrument, the Company's Board of Directors appointed the undersigned as a
one-member Special Committee to respond to the Offer. Based on the factors
considered by the Special Committee and set forth in the attached
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which was filed today with the Securities and Exchange Commission, the Special
Committee is recommending that shareholders reject the Offer and not tender
their shares of common stock of the Company pursuant to the Offer.
You should make your decision as to whether or not to tender your shares
based on all of the information available to you, including the factors
considered by the Special Committee and described in the Schedule 14D-9, and,
to that end, the Special Committee strongly urges that you read the enclosed
materials carefully and in their entirety.
Very truly yours,
/s/ Joseph A. Baute
Joseph A. Baute
Sole Member of the Special Committee
of the Board
of Directors of Metrika Systems
Corporation
<PAGE>
EXHIBIT 11
SELECTED SECTIONS OF METRIKA SYSTEMS CORPORATION'S
PROXY STATEMENT FOR ITS 1999 ANNUAL SHAREHOLDER MEETING
Executive Retention Agreements
Thermo Electron has entered into agreements with certain executive officers
and key employees of Thermo Electron and its subsidiaries that provide severance
benefits if there is a change in control of Thermo Electron and their employment
is terminated by Thermo Electron "without cause" or by the individual "for good
reason", as those terms are defined therein, within 18 months thereafter. For
purposes of these agreements, a change in control exists upon (i) the
acquisition by any person of 40% or more of the outstanding common stock or
voting securities of Thermo Electron; (ii) the failure of the Thermo Electron
board of directors to include a majority of directors who are "continuing
directors", which term is defined to include directors who were members of
Thermo Electron's board on the date of the agreement or who subsequent to the
date of the agreement were nominated or elected by a majority of directors who
were "continuing directors" at the time of such nomination or election; (iii)
the consummation of a merger, consolidation, reorganization, recapitalization or
statutory share exchange involving Thermo Electron or the sale or other
disposition of all or substantially all of the assets of Thermo Electron unless
immediately after such transaction (a) all holders of Thermo Electron common
stock immediately prior to such transaction own more than 60% of the outstanding
voting securities of the resulting or acquiring corporation in substantially the
same proportions as their ownership immediately prior to such transaction and
(b) no person after the transaction owns 40% or more of the outstanding voting
securities of the resulting or acquiring corporation; or (iv) approval by
stockholders of a complete liquidation or dissolution of Thermo Electron.
In 1998, Thermo Electron authorized an executive retention agreement with
Mr. Corte. This agreement provides that in the event Mr. Corte's employment is
terminated under the circumstances described above, he would be entitled to a
lump sum payment equal to the sum of (a) one times his highest annual base
salary in any 12 month period during the prior five-year period, plus (b) one
times his highest annual bonus in any 12 month period during the prior five-year
period. In addition, Mr. Corte would be provided benefits for a period of one
year after such termination substantially equivalent to the benefits package he
would have been otherwise entitled to receive if he was not terminated. Further,
all repurchase rights of Thermo Electron and its subsidiaries shall lapse in
their entirety with respect to all options that he holds in Thermo Electron and
its subsidiaries, including the Corporation, as of the date of the change in
control. Finally, Mr. Corte would be entitled to a cash payment equal to $15,000
to be used toward outplacement services.
Assuming that the severance benefits would have been payable as of
January 1, 1999, the lump sum salary and bonus payment under such agreement to
Mr. Corte would have been approximately $240,000. In the event that payments
under this agreement are deemed to be so called "excess parachute payments"
under the applicable provisions of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), Mr. Corte would be entitled to receive a gross-up
payment equal to the amount of any excise tax payable by him with respect to
such payment, plus the amount of all other additional taxes imposed on him,
attributable to the receipt of such gross-up payment.
