SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 1 ON FORM 10-K/A
TO FORM 10-K
(mark one)
X Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
- ----- Act of 1934
- ----- Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-13085
METRIKA SYSTEMS CORPORATION
(Exact name of Registrant as specified in its character)
Delaware 33-0733537
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5788 Pacific Center Boulevard
San Diego, California 92121
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (781) 622-1000
Securities registered pursuant to Section 12(b)of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- ----------------------
Common Stock, $.01 par value American Stock Exchange
Securities registered pursuant to section 12(g)of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to the filing requirements for
at least the past 90 days. X No .
----- ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference into Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of January 28, 2000, was approximately $14,897,000.
As of January 28, 2000, the Registrant had 7,408,128 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended January 1, 2000, are incorporated by reference into Parts I and II.
<PAGE>
Items 10, 11, 12 and 13 of Part III of the Registrant's Annual Report on Form
10-K for the fiscal year ended January 1, 2000 are hereby amended and restated
in their entirety as follows:
PART III
Item 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
Set forth below are the names of the directors, their ages, their
offices in the Corporation, if any, their principal occupation or employment for
the past five years, the length of their tenure as directors and the names of
other public companies in which such persons hold directorships. Information
regarding their beneficial ownership of the Corporation's Common Stock and of
the common stock of its parent company, Thermo Instrument Systems Inc. ("Thermo
Instrument"), a manufacturer of measurement and detection instruments, and
Thermo Instrument's parent company, Thermo Electron Corporation ("Thermo
Electron"), a provider of products and services in measurement instrumentation,
medical devices, power generation and resource recovery, is reported in Item 12
- - "Security Ownership of Certain Beneficial Owners and Management."
- --------------------------------------------------------------------------------
Joseph A. Baute Mr. Baute, 72, has been a director of the Corporation
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, 74, has been a director of the Corporation
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, 61, has been a director of the Corporation
since February 1998. Mr. Corte was promoted to the
position of chief executive officer of the Corporation
in February 1998, and also serves as president of the
Corporation, a position he has held since the
Corporation's inception in November 1996. Prior to his
promotion, Mr. Corte served as chief operating officer
from November 1996 to February 1998. Mr. Corte also
serves as president of the Corporation's Gamma-Metrics
subsidiary, a manufacturer and marketer of on-line raw
materials analyzers, since its acquisition by Thermo
Instrument in 1993.
- --------------------------------------------------------------------------------
Denis A. Helm Mr. Helm, 61, has been chairman of the board and a
director of the Corporation since its inception in
November 1996, and served as chief executive officer of
the Corporation 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. Thermo Environmental Instruments Inc. designs,
manufactures and distributes instruments and systems for
detecting and monitoring environmental pollutants. He is
also a director of Spectra-Physics Lasers, Inc.
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
John T. Keiser Mr. Keiser, 64, has been a director of the Corporation
since its inception in November 1996. He has been the
chief operating officer, biomedical, of Thermo Electron
since September 1998, and a vice president from April
1997 until his promotion. 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 a director of
Thermedics Inc., Thermo Cardiosystems Inc., ThermoTrex
Corporation, ThermoLase Corporation and Trex Medical
Corporation.
- --------------------------------------------------------------------------------
Earl R. Lewis Mr. Lewis, 56, has been a director of the Corporation
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 and a manufacturer of
analytical instruments that measure energy and light for
purposes of materials analysis, characterization and
preparation, from its inception in August 1995 to
January 1998. Mr. Lewis is a director of FLIR Systems,
Inc., Spectra-Physics Lasers, Inc., SpectRx Inc., Thermo
Instrument, Thermo Optek Corporation and ThermoQuest
Corporation.
- --------------------------------------------------------------------------------
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The board of directors has established an audit committee and a human
resources committee, each consisting solely of directors who are not employees
of the Corporation, of Thermo Electron or of any other companies affiliated with
Thermo Electron (also referred to as "outside directors"). The present members
of the audit committee are Mr. Becraft (Chairman) and Mr. Baute. The audit
committee reviews the scope of the audit with the Corporation's independent
public accountants and meets with them for the purpose of reviewing the results
of the audit subsequent to its completion. The present members of the human
resources committee are Mr. Baute (Chairman) and Mr. Becraft. The human
resources committee reviews the performance of senior members of management,
approves executive compensation and administers the Corporation's stock option
and other stock-based compensation plans. The Corporation does not have a
nominating committee of the board of directors. The board of directors met five
times, the audit committee met twice and the human resources committee met five
times during fiscal 1999. Each director attended at least 75% of all meetings of
the board of directors and committees on which he served that were held during
fiscal 1999.
The board of directors has also established a special committee (the
"Special Committee") consisting solely of outside directors for the purpose of
evaluating the terms of the proposed transaction with Thermo Instrument pursuant
to which the Corporation would be taken private and making a recommendation to
the stockholders as to the advisability of such proposed transaction. See Item
13 - "Certain Relationships and Related Transactions - Thermo Electron Corporate
Reorganization". The sole member of the Special Committee is Mr. Baute.
<PAGE>
COMPENSATION OF DIRECTORS
CASH COMPENSATION
Outside directors receive an annual retainer of $2,000 and a fee of
$1,000 per meeting for attending regular meetings of the board of directors and
$500 per meeting for participating in meetings of the board of directors held by
means of conference telephone and for participating in certain meetings of
committees of the board of directors. Payment of directors' fees is made
quarterly. Mr. Corte, Mr. Helm, Mr. Keiser and Mr. Lewis are all employees of
Thermo Electron or its subsidiaries and do not receive any cash compensation
from the Corporation for their services as directors. Directors are also
reimbursed for out-of-pocket expenses incurred in attending such meetings.
In addition, the member of the Special Committee receives a one-time
retainer of $10,000 and a fee of $1,000 per day for attending regular meetings
of the Special Committee and $500 per day for participating in meetings of the
Special Committee held by means of conference telephone.
DEFERRED COMPENSATION PLAN
Under the Corporation's deferred compensation plan for directors (the
"Deferred Compensation Plan"), a director has the right to defer receipt of his
cash fees until he ceases to serve as a director, dies or retires from his
principal occupation. In the event of a change of control or proposed change of
control of the Corporation that is not approved by the board of directors,
deferred amounts become payable immediately. Any of the following are deemed to
be a change of control: (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 July 1, 1999 or who
subsequent to that date 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.
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. As of January 1, 2000 a total of 75,000 shares of Common
Stock has been reserved for issuance under the Deferred Compensation Plan and
deferred units equal to approximately 3,874 shares of Common Stock were
accumulated under the Deferred Compensation Plan.
STOCK-BASED COMPENSATION
Directors of the Corporation are also eligible for the grant of stock
options under the Corporation's stock-based compensation plans. These plans are
administered by the human resources committee of the board of directors, which
determines the form and terms of stock-based awards to be granted. To date, only
nonqualified stock options have been granted to directors under these plans. At
the time of the Corporation's initial public offering, directors received a
grant of options to purchase 10,000 shares of Common Stock, at an exercise price
of $15.00. 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 the right of
the Corporation to repurchase such shares at the exercise price if the director
ceases to serve as a director of the Corporation or any other Thermo Electron
company. The restrictions and repurchase rights lapse or are deemed to have
lapsed 20% per year, starting with the first anniversary of the grant date,
provided the director has continuously served as a director of the Corporation
or any other Thermo Electron company since the grant date.
STOCK OWNERSHIP POLICY FOR DIRECTORS
The human resources committee of the board of directors (the
"Committee") has established a stock holding policy for directors. The stock
holding policy requires each director to hold a minimum of 1,000 shares of
Common Stock. Directors are requested to achieve this ownership within a
three-year period. The chief
<PAGE>
executive officer of the Corporation is required to comply with a separate stock
holding policy established by the Committee, which is described below.
EXECUTIVE OFFICERS
Reference is made to Item 1(e) of this Annual Report on Form 10-K for
information regarding the Executive Officers of the Registrant.
Item 11 - EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes compensation during the last three
fiscal years for services to the Corporation in all capacities awarded to,
earned by or paid to the Corporation's chief executive officer and its executive
officers whose total annual salary and bonus, as determined in accordance with
the rules of the Securities and Exchange Commission, was greater than $100,000,
and who were employed by the Corporation as of the end of fiscal 1999. These
officers are together referred to as the "named executive officers."
The Corporation is required to appoint certain executive officers and
full-time employees of Thermo Electron as executive officers of the Corporation,
in accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's affairs is
provided to the Corporation under the Corporate Services Agreement between the
Corporation and Thermo Electron. See Item 13 - "Certain Relationships and
Related Transactions." Accordingly, the compensation for these individuals is
not reported in the following table.
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SUMMARY COMPENSATION TABLE
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Long Term Compensation
---------------------
Annual Compensation Restricted Securities
Name and Fiscal Stock Underlying All Other
Principal Position Year Salary Bonus Award (1) Options (2) Compensation (3)
- ------------------- ------ ------ ------ --------- ------------ ----------------
Ernesto A. Corte 1999 $185,000 $42,200 $24,288 (MKA) 40,000 (THI) $9,764 (4)
President and Chief 1998 $170,071 $50,000 -- 10,000 (MKA) $7,154 (4)
Executive Officer 3,949 (TMO)
7,500 (ONX)
2,000 (RGI)
1,000 (TDX)
14,999 (THI)
511 (TKN)
1,000 (TRIL)
1997 $163,530 $55,000 -- 35,000 (MKA) $7,508 (4)
20,000 (TMO)
- ----------------------------------------------------------------------------------------------------------------------
Werner G. Kramer (5) 1999 334,826 DM 60,736 DM -- -- -- --
Executive Vice President 1998 277,546 DM 52,165 DM -- 6,000 (MKA) --
1997 282,325 DM 48,055 DM -- 30,000 (MKA) --
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(1) In fiscal 1999, Mr. Corte was awarded 2,900 shares of restricted Common
Stock of the Corporation with a value of $24,288 on the grant date. The
restricted stock award vests 100% on the third anniversary of the grant
date. Any cash dividends paid on restricted shares are entitled to be
retained by the recipient without regard to vesting. Any non-cash
dividends paid on restricted shares are entitled to be retained by the
recipient subject to the same vesting restrictions as the underlying
stock. At the end of fiscal 1999, Mr. Corte held 2,900 restricted
shares with an aggregate value of $17,400.
(2) Options granted by the Corporation are designated in the table as
"MKA." In addition, the named executive officers have also been granted
options to purchase the common stock of the following Thermo Electron
companies during the last three fiscal years as part of Thermo
Electron's stock option program: Thermo Electron (designated in the
table as TMO), ONIX Systems Inc. (designated in the table as ONX), The
Randers Killam Group Inc. (designated in the table as RGI), Thermedics
Detection Inc. (designated in the table as TDX), Thermo Instrument
Systems Inc. (designated in the table as THI),
<PAGE>
ThermoTrex Corporation (designated in the table as TKN) and Thermo
Trilogy Corporation (designated in the table as TRIL).
(3) Represents the amount of matching contributions made by the
individual's employer on behalf of the named executive officers
participating in the Thermo Electron 401(k) plan.
(4) In addition to the matching contribution referred to in footnote (3),
such amount includes $2,564, $2,922 and $383, which represents the
amount of compensation in 1999, 1998 and 1997, respectively,
attributable to an interest-free loan provided to Mr. Corte pursuant to
the Corporation's stock holding assistance plan. See Item 13 - "Certain
Relationships and Related Transactions - Stock Holding Assistance
Plan."
(5) Mr. Kramer is a citizen of Germany. Beginning with fiscal 1998, Mr.
Kramer's compensation is determined in U.S. dollars and then converted
into deutsche marks and paid in deutsche marks. Prior to fiscal 1998,
Mr. Kramer's compensation was determined and paid in deutsche marks.
STOCK OPTIONS GRANTED DURING FISCAL 1999
The following table sets forth information concerning individual grants
of stock options made during fiscal 1999 to the Corporation's named executive
officers. It has not been the Corporation's policy in the past to grant stock
appreciation rights, and no such rights were granted during fiscal 1999.
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OPTION GRANTS IN FISCAL 1999
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Potential Realizable
Percent of Value at Assumed
Number of Securities Total Options Annual Rates of Stock
Underlying Options Granted to Exercise Price Appreciation for
Granted and Employees in Price Per Expiration Option Term (2)
Name Company (1) Fiscal Year Share Date 5% 10%
- ---- ----------- ------------ ----- ---- --- ----
Ernesto A. Corte 40,000 (THI) 3.4% (3) $11.95 9/15/04 $132,060 $291,824
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Werner G. Kramer -- -- -- -- -- -- --
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(1) All of the options granted during the fiscal year are immediately
exercisable as of the end of the fiscal year. Generally, the shares
acquired upon exercise are subject to repurchase by the granting
company at the exercise price if the optionee ceases to be employed by
such company or another Thermo Electron company. The granting company
may exercise its repurchase rights within six months after the
termination of the optionee's employment. The repurchase rights lapse
ratably over a two year period with a five year option term, provided
the optionee continues to be employed by the granting company or
another Thermo Electron company. The granting company may permit the
holder of options to exercise options and to satisfy tax withholding
obligations by surrendering shares equal in fair market value to the
exercise price or withholding obligation. Please see footnote (2) under
the Summary Compensation Table for the company abbreviations used in
this table.
(2) The amounts shown in this table represent hypothetical gains that could
be achieved for the respective options if exercised at the end of the
option term. These gains are based on assumed rates of stock
appreciation of 5% and 10% compounded annually from the date the
respective options were granted to their expiration date. The gains
shown are net of the option exercise price, but do not include
deductions for taxes or other expenses associated with the exercise.
Actual gains, if any, on stock option exercises will depend on the
future performance of the common stock of the granting company, the
optionee's continued employment through the option period and the date
on which the options are exercised.
(3) These options were granted under stock option plans maintained by
Thermo Electron companies other than the Corporation and, accordingly,
are reported as a percentage of total options granted to employees of
Thermo Electron and its subsidiaries.
STOCK OPTIONS EXERCISED DURING FISCAL 1999 AND FISCAL YEAR-END VALUES
The following table reports certain information regarding stock option
exercises during fiscal 1999 and outstanding stock options held at the end of
fiscal 1999 by the Corporation's named executive officers. No stock appreciation
rights were exercised or were outstanding during fiscal 1999.
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AGGREGATED OPTION EXERCISES IN FISCAL 1999 AND FISCAL 1999 YEAR-END OPTION VALUES
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Value of
Unexercised
Number of In-the-Money
Securities Options at
Underlying Fiscal at
Unexercised Options Fiscal Year
Shares at Fiscal Year-End -End
Acquired on Value (Exercisable/ (Exercisable/
Name Company (2) Exercise Realized (1) Unexercisable) (2) Unexercisable)
---- ----------- -------- ------------ ------------------ --------------
Ernesto A. Corte (MKA) -- -- 45,000 /0 $0 /--
(TMO) -- -- 43,949 /0 $237
/--
(ONX) -- -- 7,500 /0 $0 /--
(RGI) -- -- 2,000 /0 $500 /--
(TDX) -- -- 1,000 /0 $0 /--
(THI) 500 $3,000 113,592 /0 $30,521 /--
(TMO) -- -- 7,500 /0 $6,788 /--
(TMQ) -- -- 5,000 /0 $0 /--
(TKN) -- -- 511 /0 $28 /--
(TRIL) -- -- -- /1,000 -- /$0 (3)
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Werner G. Kramer (MKA) -- -- 36,000 /0 $0 /--
(TMO) -- -- 10,000 /0 $0 /--
(THI) -- -- 5,954 /0 $3,955 /--
(TOC) -- -- 7,500 /0 $6,788 /--
(TMQ) -- -- 5,000 /0 $0 /--
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(1) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the
option because in many cases the shares are not sold on exercise but
continue to be held by the executive officer exercising the option. The
amounts shown represent the difference between the option exercise
price and the market price on the date of exercise, which is the amount
that would have been realized if the shares had been sold immediately
upon exercise.
(2) All of the options reported outstanding at the end of the fiscal year
were immediately exercisable as of the end of the fiscal year, except
options to purchase the common stock of Thermo Trilogy Corporation,
which are not exercisable until the earlier of (i) 90 days after the
effective date of the registration of that company's common stock under
Section 12 of the Exchange Act or (ii) nine years after the grant date.
Generally, the shares acquired upon exercise of the options reported in
the table are subject to repurchase by the granting company at the
exercise price if the optionee ceases to be employed by, or ceases to
serve as a director of, such company or another Thermo Electron
company. The granting company may exercise its repurchase rights within
six months after the termination of the optionee's employment or the
cessation of directorship, as the case may be. The repurchase rights
generally lapse ratably over a one- to ten-year period, depending on
the option term, which may vary from three to twelve years, provided
that the optionee continues to be employed by or serve as a director of
the granting company or another Thermo Electron company. For companies
that are not publicly-traded, the repurchase rights lapse in their
entirety on the ninth anniversary of their grant date. The granting
company may permit the holder of 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.
Please see footnote (2) under the Summary Compensation Table above for
the company abbreviations used in this table in addition to the
following company abbreviations: Thermo Optek Corporation (designated
in the table as TOC) and ThermoQuest Corporation (designated in the
table as TMQ).
(3) No public market existed for the shares underlying these options as of
fiscal year-end. Accordingly, no value in excess of the exercise price
has been attributed to these options.
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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, 2000, 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.
STOCK OWNERSHIP POLICIES
The Committee has established a stock holding policy for the chief
executive officer of the Corporation that requires him to own a multiple of his
compensation in shares of the Corporation's Common Stock. The multiple is one
times his base salary and reference bonus for the fiscal year in which
compliance is achieved. The chief executive officer has three years from the
adoption of the policy to achieve this ownership level.
In order to assist the chief executive officer in complying with the
policy, the Committee also adopted a stock holding assistance plan under which
the Corporation is authorized to make interest-free loans to the chief executive
officer to enable him to purchase shares of Common Stock in the open market. Any
loans are required to be repaid upon the earlier of demand or the tenth
anniversary of the date of the loan, unless otherwise determined by the
Committee. In 1997, Mr. Corte received a loan in the principal amount of
$51,907.85 under this plan, of which the entire amount was outstanding as of
January 1, 2000. See Item 13 - "Certain Relationships and Related Transactions
Stock Holding Assistance Plan."
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common
Stock, as well as the common stock of Thermo Instrument, the Corporation's
parent company, and of Thermo Electron, Thermo Instrument's parent company, as
of January 31, 2000, with respect to (i) each director, (ii) each executive
officer named in the summary compensation table set forth below under the
heading "Executive Compensation" (the "named
<PAGE>
executive officers") and (iii) all directors and current executive officers as a
group. In addition, the following table sets forth the beneficial ownership of
Common Stock, as of January 31, 2000, with respect to each person who was known
by the Corporation to own beneficially more than 5% of the outstanding shares of
Common Stock.
While certain directors and executive officers of the Corporation are
also directors and executive officers of Thermo Electron or its subsidiaries
other than the Corporation, all such persons disclaim beneficial ownership of
the shares of Common Stock beneficially owned by Thermo Electron.
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Metrika Systems Thermo Instrument Thermo Electron
Name (1) Corporation (2) Systems Inc. (3) Corporation (4)
-------- --------------- ---------------- ---------------
Thermo Electron Corporation (5)......... 5,846,700 N/A N/A
Joseph A. Baute......................... 12,937 1,407 0
Willard R. Becraft...................... 12,937 0 0
Ernesto A. Corte........................ 54,700 87,575 23,949
Denis A. Helm........................... 26,000 278,638 167,163
John T. Keiser.......................... 12,000 155,211 331,636
Werner G. Kramer........................ 37,000 7,391 0
Earl R. Lewis........................... 20,000 436,499 215,477
All directors and current executive
officers as a group (8 persons).... 200,574 1,149,436 1,196,757
</TABLE>
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person
for the benefit of minor children, and all share ownership includes
sole voting and investment power.
(2) Shares of Common Stock beneficially owned by Mr. Baute, Mr. Becraft,
Mr. Corte, Mr. Helm, Mr. Keiser, Mr. Kramer, Mr. Lewis and all
directors and current executive officers as a group include 10,000,
10,000, 45,000, 25,000, 12,000, 36,000, 20,000 and 183,000 shares,
respectively, that such person or group had the right to acquire within
60 days of January 31, 2000, through the exercise of stock options.
Shares of Common Stock beneficially owned by Mr. Baute, Mr. Becraft and
all directors and current executive officers as a group include 1,937,
1,937 and 3,874 shares allocated through January 1, 2000 to their
respective accounts under the Deferred Compensation Plan. No director
or named executive officer beneficially owned more than 1% of Common
Stock outstanding as of January 31, 2000; all directors and current
executive officers as a group beneficially owned 2.70% of Common Stock
outstanding as of such date.
(3) Shares of the common stock of Thermo Instrument beneficially owned by
Mr. Baute, Mr. Corte, Mr. Helm, Mr. Keiser, Mr. Kramer, Mr. Lewis and
all directors and current executive officers as a group include 1,407,
85,467, 216,250, 71,311, 5,954, 409,081 and 953,157 shares,
respectively, that such person or group had the right to acquire within
60 days after January 31, 2000, through the exercise of stock options.
Shares of the common stock of Thermo Instrument beneficially owned by
all directors and current executive officers as a group include 468
shares, respectively, allocated through January 31, 2000, to their
respective accounts maintained pursuant to Thermo Electron's employee
stock ownership plan (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 his minor
children. Shares of the common stock of Thermo Instrument beneficially
owned by Mr. Lewis include 2,987 shares held by his spouse. No director
or named executive officer beneficially owned more than 1% of the
common stock of Thermo Instrument outstanding as of January 31, 2000;
all directors and current executive officers as a group did not
beneficially own more than 1% of the common stock of Thermo Instrument
outstanding as of such date.
(4) Shares of the common stock of Thermo Electron beneficially owned by Mr.
Corte, Mr. Helm, Mr. Keiser, Mr. Lewis and all directors and current
executive officers as a group include 23,949, 99,816, 263,230, 212,278
and 983,634 shares, respectively, that such person or group had the
right to acquire within 60 days of January 31, 2000, through the
exercise of stock options. Shares of the common stock of Thermo
Electron beneficially owned by all directors and current executive
officers as a group include 1,071 shares, respectively, allocated
through January 31, 2000, to accounts maintained pursuant to the
<PAGE>
ESOP. Shares of the common stock of Thermo Electron beneficially owned
by Mr. Helm include a total of 8,100 shares held in custodial accounts
for the benefit of his minor children. No director or named executive
officer beneficially owned more than 1% of the common stock of Thermo
Electron outstanding as of January 31, 2000; all directors and current
executive officers as a group did not beneficially own more than 1% of
the common stock of Thermo Electron outstanding as of such date.
(5) As of January 31, 2000, Thermo Electron, primarily through its
majority-owned subsidiary Thermo Instrument, beneficially owned 78.93%
of the outstanding Common Stock. Thermo Electron's address is 81 Wyman
Street, Waltham, Massachusetts 02454-9046. As of January 31, 2000,
Thermo Electron had the power to elect all of the members of the
Corporation's board of directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Corporation's directors and executive officers,
and beneficial owners of more than 10% of the Common Stock, such as Thermo
Electron, to file with the Securities and Exchange Commission initial reports of
ownership and periodic reports of changes in ownership of the Corporation's
securities. Based upon a review of such filings, all Section 16(a) filing
requirements applicable to such persons were complied with during 1999, except
in the following instance. Thermo Electron filed one Form 4 late reporting a
total of six transactions associated with the cancellation and grant of options
to purchase Common Stock granted to employees under its stock option program.
Item 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation and Thermo Electron have entered into a Corporate
Services Agreement (the "Services Agreement") under which Thermo Electron's
corporate staff provides certain administrative services, including general
legal advice and services, risk management, employee benefit administration, tax
advice and preparation of tax returns, centralized cash management and certain
financial and other services to the Corporation. The Corporation was assessed an
annual fee equal to 0.8% of the Corporation's revenues for these services in
fiscal 1999. The annual fee will remain at 0.8% of the Corporation's total
revenues for fiscal 2000. The fee is reviewed annually and may be changed by
mutual agreement of the Corporation and Thermo Electron. During fiscal 1999,
Thermo Electron assessed the Corporation $576,000 in fees under the Services
Agreement. Management believes that the charges under the Services Agreement are
reasonable and that the terms of the Services Agreement are fair to the
Corporation. In 1999, the Corporation paid Thermo Electron an additional $24,848
for certain administrative services required by the Corporation that were not
covered by the Services Agreement. The Services Agreement automatically renews
for successive one-year terms, unless canceled by the Corporation upon 30 days'
prior notice. In addition, the Services Agreement terminates automatically in
the event the Corporation ceases to be a Thermo subsidiary or ceases to be a
participant in the Thermo Electron Corporate Charter. In the event of a
termination of the Services Agreement, the Corporation will be required to pay a
termination fee equal to the fee that was paid by the Corporation for services
under the Services Agreement for the nine-month period prior to termination.
Following termination, Thermo Electron may provide certain administrative
services on an as-requested basis by the Corporation or as required in order to
meet the Corporation's obligations under Thermo Electron's policies and
procedures. Thermo Electron will charge the Corporation a fee equal to the
market rate for comparable services if such services are provided to the
Corporation following termination.
The Corporation leases approximately 54,900 square feet of its 110,000
square foot facility in Erlangen, Germany on a month-to-month basis to a wholly
owned subsidiary of Thermo Instrument. The Thermo Instrument company is
responsible for paying to the Corporation its pro rata share of occupancy
expenses, including utilities and taxes, associated with the facility, which
payments in 1999 amounted to $574,000 in the aggregate.
In 1999, the Corporation purchased several x-ray source components for
$178,000 from a subsidiary of Thermo Instrument.
The Corporation, along with other U.K.-based Thermo Electron companies,
participates in a notional pool arrangement in the U.K. with Barclays Bank,
which includes a $114,943,000 credit facility. The Corporation has access to
$4,690,000 under this credit facility. Under this arrangement, Barclays
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
<PAGE>
attributable to the respective participants. Thermo Electron guarantees all of
the obligations of each participant in this arrangement. As of January 1, 2000,
the Corporation had a negative cash balance of approximately $96,000 based on an
exchange rate of $1.6171/GBP 1.00. For 1999, the average annual interest rate
earned on GBP deposits by participants in this credit arrangement was
approximately 5.44% and the average annual interest rate paid on overdrafts was
approximately 5.8025%.
At year-end 1998, $12,752,000 of the Corporation's cash equivalents
were invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Corporation in effect lent excess cash to Thermo Electron, which
Thermo Electron collateralized with investments principally consisting of
corporate notes, U.S. government agency securities, commercial paper, money
market funds and other marketable securities, in the amount of at least 103% of
such obligation. The Corporation's funds subject to the repurchase agreement
were readily convertible into cash by the Corporation. The repurchase agreement
earned a rate based on the 90-day Commercial Paper Composite Rate plus 25 basis
points, set at the beginning of each quarter.
Effective June 1999, the Corporation and Thermo Electron commenced use
of a new domestic cash management arrangement. Under the new arrangement,
amounts advanced to Thermo Electron by the Corporation for domestic cash
management purposes bear interest at the 30-day Dealer Commercial Paper Rate
plus 50 basis points, set at the beginning of each month. Thermo Electron is
contractually required to maintain cash, cash equivalents, and/or immediately
available bank lines of credit equal to at least 50% of all funds invested under
this cash management arrangement by all Thermo Electron subsidiaries other than
wholly owned subsidiaries. The Corporation has the contractual right to withdraw
its funds invested in the cash management arrangement upon 30 days' prior
notice. At year-end 1999, the Corporation had invested $19,775,000 under this
arrangement. In addition, certain of the Corporation's European-based
subsidiaries participate in a new cash management arrangement with a wholly
owned subsidiary of Thermo Electron on terms similar to the domestic cash
management arrangement. The Corporation has access to a $11,327,000 line of
credit under this arrangement, of which the Corporation had borrowed $4,792,000
at year-end 1999. Interest under this arrangement is calculated based on Euro
market rates and was 3.95% on the negative balance at year-end 1999.
As of January 1, 2000, the Corporation owed Thermo Electron and its
other subsidiaries an aggregate of $3,216,000 for amounts due under the Services
Agreement and related administrative charges, for other products and services
and for miscellaneous items, net of amounts owed to the Corporation by Thermo
Electron and its other subsidiaries for products, services and for miscellaneous
items. The largest amount of net indebtedness owed by the Corporation to Thermo
Electron and its other subsidiaries since January 2, 1999, was $3,901,000. These
amounts do not bear interest and are expected to be paid in the normal course of
business.
THERMO ELECTRON CORPORATE REORGANIZATION
Thermo Electron has adopted a major reorganization plan under which,
among other things, it is acquiring the minority interest in most of its
subsidiaries that have minority investors. In furtherance of this plan, Thermo
Instrument commenced a cash tender offer for any and all of the outstanding
shares of Common Stock of the Corporation (other than shares owned by Thermo
Instrument and Thermo Electron) on March 31, 2000. The consideration being
offered in the tender offer is $9.00 per share in cash, without interest. The
goal of the tender offer is to bring Thermo Electron's and Thermo Instrument's
combined equity ownership in the Corporation to at least 90%. If Thermo Electron
and Thermo Instrument achieve this 90%-ownership level, the Corporation would
then be taken private through a "short-form" merger at the same cash price as
the tender offer.
Executive officers and directors of the Corporation who hold shares of
Common Stock in the Corporation will also receive $9.00 per share of Common
Stock on the same terms as all the other stockholders. See Item 12 - "Security
Ownership of Certain Beneficial Owners and Management."
In addition, certain executive officers and directors of the
Corporation hold options to acquire shares of Common Stock (See Item 12 -
"Security Ownership of Certain Beneficial Owners and Management"), which options
will be treated in the same manner as options held by other employees. In
general, all unvested options held by such persons will be assumed by Thermo
Electron and converted into options to acquire shares of Thermo Electron's
common stock. In the case of vested options held by such persons, the holders
will be given the opportunity to elect either to convert the options into vested
options for Thermo Electron common stock or to receive cash at the $9.00
transaction price less the applicable exercise price. Vested and unvested
options that are assumed by Thermo Electron will be converted as follows: The
number of shares of Thermo Electron common stock underlying each assumed option
will equal the number of shares of Common Stock underlying the option before the
transaction, multiplied by the "cash exchange ratio" described below, rounded
down to the nearest whole
<PAGE>
number of shares of Thermo Electron common stock. The exercise price for each
assumed option will be calculated by dividing the exercise price of the option
before the transaction by the "cash exchange ratio" set forth below, rounded up
to the nearest whole cent. The "cash exchange ratio" is a fraction, the
numerator of which is $9.00 and the denominator of which is the closing price of
Thermo Electron common stock on the day preceding the effective date of the
transaction.
In addition to the ownership information that appears in the Item 12 -
"Security Ownership of Certain Beneficial Owners and Management" table, Mr.
Melas-Kyriazi (who is not a named executive officer of the Corporation for
purposes of Securities and Exchange Commission regulations, and whose ownership
information therefore does not appear in such table) holds options to purchase
25,000 shares of Common Stock.
Additionally, certain directors participate in the Deferred
Compensation Plan. See Item 12 - "Security Ownership of Certain Beneficial
Owners and Management." On the effective date of the proposed transaction, the
Deferred Compensation Plan will terminate and the participants will receive cash
in an amount equal to the balance of such participant's stock units credited to
his account under the Deferred Compensation Plan, multiplied by $9.00.
STOCK HOLDING ASSISTANCE PLAN
The human resources committee of the Corporation's board of directors
(the "Committee") established a stock holding policy that 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 Committee also adopted a stock holding assistance plan under which
the Corporation may make interest-free loans to the chief executive officer, to
enable him to purchase Common Stock in the open market. In 1997, Mr. Corte
received a loan in the principal amount of $51,907.85 under the stock holding
assistance plan to purchase 3,200 shares of Common Stock, of which the entire
amount was outstanding as of January 1, 2000. The loan to Mr. Corte is repayable
upon the earlier of demand or the tenth anniversary of the date of the loan,
unless otherwise determined by the Committee.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Amendment No. 1 on Form 10-K/A
to be signed by the undersigned, duly authorized.
METRIKA SYSTEMS CORPORATION
By: / s / Sandra L. Lambert
--------------------------------
Sandra L. Lambert
Secretary
