THERMO VISION CORP, S-1/A, 1997-10-21

THERMO VISION CORP
S-1/A, 1997-10-21
LABORATORY ANALYTICAL INSTRUMENTS

Previous: HOTEL DISCOVERY INC, 8-A12G, 1997-10-21

Next: MYSTIC FINANCIAL INC, S-1/A, 1997-10-21

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 21, 1997

REGISTRATION NO. 333-38153

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

AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------

THERMO VISION CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------

<TABLE>
<S> <C> <C>
DELAWARE 3827 04-3296594
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

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

8E FORGE PARKWAY

FRANKLIN, MA 02038
(508) 553-1689
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

SANDRA L. LAMBERT, SECRETARY

THERMO VISION CORPORATION
C/O THERMO ELECTRON CORPORATION
81 WYMAN STREET
P. O. BOX 9046
WALTHAM, MA 02254-9046
(781) 622-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------

COPIES TO:

<TABLE>
<S> <C> <C>
SETH H. HOOGASIAN, ESQ. DAVID E. REDLICK, ESQ. EDWIN L. MILLER, JR., ESQ.
GENERAL COUNSEL HALE AND DORR LLP TESTA, HURWITZ & THIBEAULT, LLP
THERMO VISION CORPORATION 60 STATE STREET 125 HIGH STREET
C/O THERMO ELECTRON BOSTON, MASSACHUSETTS 02109 BOSTON, MASSACHUSETTS 02110
CORPORATION (617) 526-6000 (617) 248-7000
81 WYMAN STREET
WALTHAM, MASSACHUSETTS
02254-9046
(781) 622-1000
</TABLE>

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

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement has become effective.
------------------------

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
===============================================================================================================
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1) REGISTRATION FEE(1)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $.01 par value................................... $17,825,000 $5,402
===============================================================================================================
</TABLE>

(1) A fee of $5,402 was previously paid by the Registrant in connection with the
filing of the Registration Statement on Form S-1 on October 17, 1997.
Accordingly no fee is being paid in connection with this Amendment No. 1 to
Registration Statement on Form S-1.

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION

OCTOBER 21, 1997

PROSPECTUS

775,000 SHARES

THERMO VISION CORPORATION

COMMON STOCK
($.01 PAR VALUE)

All of the shares of Common Stock offered hereby are being sold by Thermo Vision
Corporation ("Vision" or the "Company"), a wholly owned subsidiary of Thermo
Optek Corporation ("Optek"), which is a majority-owned subsidiary of Thermo
Instrument Systems Inc. ("Thermo Instrument"), which is a majority-owned
subsidiary of Thermo Electron Corporation ("Thermo Electron"). Prior to the
closing of this offering, Optek will distribute all of the outstanding shares of
Common Stock of the Company to its stockholders in a tax-free dividend, and the
Company thereby will become a direct subsidiary of Thermo Instrument, which will
own approximately 80% of the outstanding shares of Common Stock of the Company
following this offering (assuming no exercise of the Underwriters'
over-allotment option).

Prior to this offering, there has been no public market for the Common Stock of
the Company. See "Underwriting" for information relating to the factors to be
considered in determining the initial public offering price. Application has
been made to list the Common Stock on the American Stock Exchange ("AMEX") under
the symbol "VIZ."

SEE "RISK FACTORS" COMMENCING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

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

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT COMPANY(1)
<S> <C> <C> <C>
Per Share....................... $ $ $
Total(2)........................ $ $ $
- -----------------------------------------------------------------------------------------------------
</TABLE>

(1) Before deducting expenses payable by the Company estimated at $ .
(2) The Company has granted to the Underwriters a 30-day option to purchase up
to an additional 116,250 shares of Common Stock solely to cover
over-allotments, if any. If this option is fully exercised, the total Price
to Public, Underwriting Discount and Proceeds to Company before estimated
expenses would be $ , $ and $ , respectively. See
"Underwriting."

The Common Stock is offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the shares of Common Stock will be made at the
office of Fahnestock & Co. Inc. or through the facilities of The Depository
Trust Company, on or about , 1997.

FAHNESTOCK & CO. INC.

The date of this Prospectus is , 1997.
<PAGE> 3

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

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SUCH TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES OF COMMON STOCK FOLLOWING
THE PRICING OF THE OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE COMMON
STOCK OR FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE COMMON STOCK, AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
------------------------

"CID(R)" is a registered trademark of the Company and "LifeSense(TM)," "MIR
8000(TM)," and "Accudose(TM)" are trademarks of the Company.

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the consolidated financial statements and notes thereto
appearing elsewhere in this Prospectus. Except as otherwise indicated, all
information in this Prospectus (i) assumes that the Underwriters' over-allotment
option will not be exercised and (ii) reflects a 4,845-for-one stock split of
the Common Stock effected on August 27, 1997, in the form of a stock dividend.

THE COMPANY

Thermo Vision Corporation ("Vision" or the "Company") designs,
manufactures, and markets a diverse array of photonics products, including
optical components, imaging sensors and systems, lasers, optically based
instruments, optoelectronics, and fiber optics. Vision sells photonics products
in multiple markets across a number of industries for research, testing,
detecting, and manufacturing applications. Vision's products range from optical
filters used in blood glucose monitoring, to charge-injection devices ("CIDs")
used in optical spectroscopy, to specialty light sources used for quality
assurance in semiconductor photolithography. Many of Vision's customers are
manufacturers that incorporate Vision's products into medical and dental
diagnostic instruments, analytical instruments, equipment for semiconductor
manufacturing, and X-ray screening devices. Vision estimates that the current
worldwide market for photonics products of all types is approximately $15.5
billion.

Photonics technologies involve the creation and manipulation of light and
other forms of radiant or electromagnetic energy. Photonics technologies use
light to detect, transmit, store, and process information and to generate
energy, as well as to capture and display images. Because photons are massless,
travel at the speed of light, and do not generate heat in travel, photonics
technologies potentially offer many advantages over electronics technologies,
including greater speed and miniaturization. Photonics technologies have many
familiar applications, including supermarket scanners, compact discs, laser
printers, and telecommunications, which use fiber optic technology extensively.
Photonics technologies also play a central role in machine vision, semiconductor
photolithography, electronic imaging, and phototherapeutics.

There are three key elements in Vision's business strategy. First, in order
to expand the markets that it addresses, Vision creates new products and
applications by building on its core photonics technologies. For example, under
an exclusive supply arrangement with a customer, Vision has recently designed
and developed a sensor based on Vision's CID technology for use in the
customer's dental X-ray imaging system. Second, Vision focuses its marketing
efforts on reaching technical users of photonics products so that Vision's
products will be incorporated into prototypes, ultimately resulting in new
supply relationships as the customers' products are commercialized. Vision uses
product catalogues, such as the well-known catalogues of Vision's Oriel
subsidiary, that provide detailed technical information in addition to product
specifications and highlights in order to maintain visibility with customers on
a cost-effective basis. In addition, Vision's subsidiaries and divisions
maintain networks of dealers and distributors both in the United States and in
over 35 foreign countries. Third, Vision continually monitors the photonics
industry to identify businesses with complementary products and technologies as
acquisition candidates. The photonics industry is highly fragmented, with
numerous competitors. Vision believes it is often more cost effective to target
an attractive market segment through the acquisition of established, smaller,
focused providers that enjoy favorable reputations and have developed
technological expertise than to enter the segment through internal product
development. Since February 1996, Vision has acquired four businesses from
unrelated third parties that currently comprise the bulk of its operations.

Vision offers products in all six segments of the photonics market.
Vision's principal product offerings in these segments are:

- Optical Components -- Light sources, optical filters, optical crystals,
and precision mechanical positioning devices used to create and
manipulate light.

3
<PAGE> 5

- Imaging Sensors and Systems -- CID digital sensors and cameras used to
absorb photons and convert them into electrical charges that comprise an
image.

- Lasers -- Pulsed nitrogen and carbon dioxide ("CO(2)") lasers used as
light sources.

- Optically Based Instruments -- Modular spectrophotometers for physics
research, mercury analyzers for environmental testing, and
fluorescence-lifetime measurement instruments for biological research.

- Optoelectronics -- Silicon photodiode detectors used for light sensing.

- Fiber Optics -- Specialized fiber optic cables for remote sensing.

Vision develops and manufactures most of the products that it sells, although it
also distributes photonics products manufactured by third parties.

The Company was incorporated in Delaware in November 1995 as a wholly owned
subsidiary of Optek. The Company initially was comprised of two businesses: CID
Technologies Inc., a manufacturer of CIDs used for imaging sensors and video
cameras ("CIDTEC"); and Scientific Measurement Systems Inc., a producer of
low-cost optically based components, instruments, and accessories, which now
conducts business under the name "Thermo Vision Colorado." The Company
subsequently acquired four additional businesses from unrelated third parties.
In February 1996, the Company acquired Oriel Instruments Corporation, a
manufacturer and distributor of photonics components and instruments ("Oriel"),
and the assets of Corion Corporation, a manufacturer of commercial optical
filters (the Company's Corion division being referred to herein as "Corion"). In
February 1997, the Company acquired Laser Science, Inc., a manufacturer of gas
lasers ("LSI"). In July 1997, the Company acquired the assets of Centronic, Inc.
("Centronic"), a manufacturer of silicon photodiodes, through the Company's
Centro Vision, Inc. ("Centro Vision") subsidiary. In addition, in August 1997,
the Company's wholly owned subsidiary Hilger Crystals Limited ("Hilger")
purchased the crystal-materials business of Hilger Analytical Limited ("Hilger
Analytical"), a wholly owned subsidiary of Optek and manufacturer of crystals
used for X-ray scintillation and infrared spectroscopy. From the time of the
Company's incorporation in November 1995, the crystal-materials business of
Hilger Analytical has been under the Company's management.

The principal executive office of the Company is located at 8E Forge
Parkway, Franklin, Massachusetts 02038, and its telephone number is (508)
553-1689. As used herein, "Vision" and the "Company" mean Thermo Vision
Corporation and its subsidiaries, unless the context otherwise requires.

THE OFFERING

Common Stock Offered by the
Company............................. 775,000 shares

Common Stock to be Outstanding after
the Offering(1)..................... 5,620,000 shares

AMEX Symbol......................... VIZ

Use of Proceeds..................... General corporate purposes, including
possible
acquisitions and research and
development funding.
- ---------------
(1) Based on the number of shares of Common Stock outstanding on September 27,
1997. Does not include an aggregate of shares of Common Stock reserved
for issuance under the Company's stock-based compensation plans. Prior to
the consummation of this offering, it is anticipated that options covering
an aggregate of shares of Common Stock will be granted pursuant to the
Company's Equity Incentive Plan at an exercise price of $ per share. See
"Capitalization," "Management -- Compensation of Executive Officers," and
"-- Planned Vision Stock Option Grants."

4
<PAGE> 6

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED (1)(2)
FISCAL YEAR(1) ------------------- PRO FORMA
------------------------------------------------------- JUNE 29, JUNE 28, COMBINED
1992(2)(3) 1993(2)(3)(4) 1994(3) 1995 1996(5) 1996(5) 1997(6) 1996(7)
---------- ------------- ------- ------ ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues................. $ 755 $ 2,397 $4,242 $6,026 $30,434 $14,168 $17,810 $33,940
Gross Profit............. 377 903 1,231 2,544 13,368 6,125 7,848 14,312
Operating Income (Loss).. (69) 239 261 282 2,467 1,199 1,995 831
Net Income (Loss)........ (71) 66 146 147 1,418 681 1,094 338
Earnings (Loss) per
Share(8)............... (.01) .01 .03 .03 .29 .14 .23 .07
Weighted Average
Shares(8).............. 4,845 4,845 4,845 4,845 4,845 4,845 4,845 4,845
</TABLE>

<TABLE>
<CAPTION>
JUNE 28, 1997(2)(6)
----------------------
AS
ACTUAL ADJUSTED(9)
-------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working Capital............................................................................ $ 9,223
Total Assets............................................................................... 33,123
Long-term Obligations...................................................................... 3,947
Shareholder's Investment................................................................... 23,242
</TABLE>

- ---------------
(1) All periods presented include the results of Thermo Vision Colorado.

(2) Derived from unaudited financial statements.

(3) Includes a pro rata share of equity in the losses of CIDTEC through the date
of the acquisition of its assets by Thermo Instrument in October 1994 and
the consolidated results of CIDTEC since October 1994.

(4) Includes the results of Hilger since its acquisition by Thermo Instrument in
July 1993.

(5) Includes the results of Oriel and Corion since their acquisition by the
Company in February 1996.

(6) Includes the results of LSI since its acquisition by the Company in February
1997.

(7) The pro forma combined statement of income data was derived from the pro
forma combined condensed statements of income included elsewhere in this
Prospectus. The pro forma combined statement of income data sets forth the
results of operations for the 1996 fiscal year as if the acquisitions of
Oriel and Corion had occurred on January 1, 1996.

(8) Pursuant to Securities and Exchange Commission requirements, earnings per
share have been presented for all periods. Weighted average shares for such
periods represent the 4,845,000 shares issued to Optek in connection with
the initial capitalization of the Company.

(9) Adjusted to reflect the sale by the Company of 775,000 shares of Common
Stock offered hereby at an assumed initial public offering price of
$ per share, after deducting the estimated underwriting discount and
offering expenses payable by the Company.

5
<PAGE> 7

THE DISTRIBUTION

All of the outstanding shares of the Company's Common Stock (4,845,000
shares) were held by Optek, a majority-owned subsidiary of Thermo Instrument. On
, 1997, (the "Declaration Date"), the Board of Directors of Optek
declared a dividend of one share of the Company's Common Stock for each ten
shares of the common stock of Optek held of record by Optek shareholders on
, 1997 (the "Record Date"). The distribution of the shares of the
Company's Common Stock by Optek (the "Distribution") will be effected prior to
the closing of this offering. As a result of the Distribution, 100% of the
outstanding shares of the Company's Common Stock will be distributed to Optek
shareholders. Following the Distribution and prior to the consummation of this
offering, approximately 93% of such shares will be held by Thermo Instrument.
Following this offering, Thermo Instrument will own approximately 80% of the
outstanding shares of Common Stock of the Company (assuming no exercise of the
Underwriters' over-allotment option).

Optek has received a favorable private letter ruling (the "Tax Ruling")
from the Internal Revenue Service to the effect that the Distribution qualifies
as a "tax-free" spinoff under Section 355 of the Internal Revenue Code of 1986,
as amended (a "Section 355 Spinoff"). As a Section 355 Spinoff, neither Optek
nor its shareholders will recognize gain or loss as a result of the Distribution
of the Company's Common Stock.

Optek and the Company have different business focuses and objectives. Optek
is engaged in the instruments business, and the Company is engaged in the
photonics products business. Optek is a worldwide leader in the development,
manufacture, and marketing of analytical instruments that use a range of optical
spectroscopy and other energy based techniques. The Company operates in all six
segments of the photonics market. In contrast, Optek offers products principally
in the optically based instruments segment of the photonics market and in other
closely aligned instruments markets. Optek's instruments range in price from
approximately $30,000 to $700,000. In contrast, most of the Company's products
range in price from approximately $0.10 to $12,000. The Board of Directors of
Optek believes that the Distribution is in the best interests of Optek, the
Company, and Optek shareholders because it will, by creating two separate public
companies, improve both companies' access to capital, improve the focus of
management and employees on the performance of their respective businesses, and
provide improved management incentives directly linked to the objective
performance of each company's stock in the public markets.

The general terms and conditions relating to the Distribution are set forth
in a Distribution Agreement and a Tax Matters Agreement between Optek and the
Company. The Distribution Agreement provides for, among other things: (a) the
principal corporate transactions required to effect the Distribution, including,
among other things, the preparation of the Registration Statement on Form 10
(the "Form 10") registering the Common Stock under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), (b) the conditions thereto, and (c)
certain other agreements governing the relationship between the Company and
Optek with respect to or resulting from the Distribution. Subject to certain
exceptions, the Distribution Agreement also provides for certain
cross-indemnification designed principally to place financial responsibility for
the liabilities of the Company's businesses with the Company and financial
responsibility for the liabilities of Optek's business with Optek. See "Certain
Transactions -- Relationship with Thermo Electron and Thermo Instrument." The
Tax Matters Agreement provides that each of Optek and the Company agrees to
indemnify the other for certain taxes incurred with respect to the Distribution
(and related transactions) as a result of certain post-Distribution actions. See
"Risk Factors -- Risk of Loss of "Tax-free" Treatment of Distribution."

6
<PAGE> 8

RISK FACTORS

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

Risks Associated with Technological Change, Obsolescence, and the
Development and Acceptance of New Products. The market for the Company's
products is characterized by rapid and significant technological change and
evolving industry standards. New product introductions responsive to these
factors require significant planning, design, development, and testing at the
technological, product, and manufacturing process levels, and may render
existing products and technologies uncompetitive or obsolete. There can be no
assurance that the Company's products will not become uncompetitive or obsolete.
In addition, industry acceptance of new applications for the Company's
technologies developed by the Company may be slow to develop due to, among other
things, the general unfamiliarity of users with new applications and
technologies. There can be no assurance that these factors will not have a
material adverse effect on the Company's results of operations, financial
condition, or business.

Risks Associated with Acquisition Strategy; No Assurance of a Successful
Acquisition Strategy. The Company's growth strategy is to supplement its
internal growth with the acquisition of businesses and technologies that
complement or augment the Company's existing product lines. Since February 1996,
the Company has acquired four companies from unrelated third parties that
comprise the bulk of its operations. Certain businesses that the Company may
seek to acquire in the future may be marginally profitable or unprofitable. In
order for any acquired businesses to achieve the level of profitability desired
by the Company, the Company must successfully reduce expenses and improve market
penetration. No assurance can be given that the Company will be successful in
this regard. In many instances, acquisitions by the Company will result in the
Company recording cost in excess of net assets of acquired companies on its
balance sheet. Such cost in excess of net assets of acquired companies will be
amortized as a non-cash expense over specified periods. In addition, promising
acquisitions are difficult to identify and complete for a number of reasons,
including competition among prospective buyers and the need for regulatory
approvals, including antitrust approvals. These factors may adversely affect
both the availability and price of prospective acquisition targets. There can be
no assurance that the Company will be able to complete pending or future
acquisitions. In order to finance any acquisitions, it may be necessary for the
Company to raise additional funds through public or private financings. Any
equity or debt financing, if available at all, may be on terms which are not
favorable to the Company and may result in dilution to the Company's
shareholders. In the past, a significant portion of the funding for the
Company's acquisitions has come from Optek, Thermo Instrument, or Thermo
Electron. Although Thermo Electron and Thermo Instrument regularly fund
acquisitions by their respective wholly and partially owned subsidiaries,
neither Thermo Electron nor Thermo Instrument has committed to fund any future
acquisitions by the Company. There can be no assurance that the Company will be
able to secure any such financing or that these factors will not have a material
adverse effect on the Company's results of operations, financial condition, or
business. See "Business -- Strategy."

Intense Competition. The Company encounters and expects to continue to
encounter intense competition in the sale of its products. The Company believes
that the principal competitive factors affecting the market for its products
include product performance, price, reliability, and customer service. The
Company's principal competitors include Melles Griot, Inc.; Optical Coating
Laboratory, Inc.; Newport Corporation; Coherent, Inc.; Corning OCA Corporation;
the Bicron Business Unit of Saint-Gobain Industrial Ceramics, Inc.; and UDT
Sensors, Inc. Certain of these companies and certain of the Company's other
competitors have substantially greater financial, marketing, and other resources
than those of the Company. As a result, they may be able to adapt more quickly
to new or emerging

7
<PAGE> 9

technologies and changes in customer requirements or to devote greater resources
to the promotion and sale of their products than the Company. In addition,
competition could increase if new companies enter the market or if existing
competitors expand their product lines or intensify efforts within existing
product lines. There can be no assurance that the Company's current products,
products under development, or ability to discover new technologies will be
sufficient to enable it to compete effectively with its competitors. In
addition, there can be no assurance that these factors will not have a material
adverse effect on the Company's results of operations, financial condition, or
business. See "Business -- Competition."

Possible Adverse Impact of Significant International Sales. Sales outside
the United States accounted for approximately 40%, 31%, and 37% of the Company's
revenues for the fiscal years ended December 31, 1994, December 30, 1995, and
December 28, 1996, respectively, and the Company expects that international
sales will continue to account for a significant portion of its revenues in the
future. Sales to customers in foreign countries are subject to a number of
risks, including the following: agreements may be difficult to enforce and
receivables difficult to collect through a foreign country's legal system;
foreign customers may have longer payment cycles; foreign countries could impose
withholding taxes or otherwise tax the Company's foreign income, impose tariffs,
or adopt other restrictions on foreign trade; fluctuations in exchange rates may
affect product demand and adversely affect the profitability in U.S. dollars of
products provided by the Company in foreign markets where payment for the
Company's products is made in the local currency; U.S. export licenses may be
difficult to obtain and the protection of intellectual property in foreign
countries may be more difficult to enforce. There can be no assurance that any
of these factors will not have a material adverse effect on the Company's
results of operations, financial condition, or business. See Note 7 to the
Company's Consolidated Financial Statements for data for the Company by
geographical area.

Risks Associated with Protection, Defense, and Use of Intellectual
Property. The Company holds a number of patents relating to various aspects of
its products and believes that proprietary technical know-how is critical to
many of its products. Proprietary rights relating to the Company's products are
protected from unauthorized use by third parties only to the extent that they
are covered by valid and enforceable patents or are maintained in confidence as
trade secrets. There can be no assurance that patents will issue from any
pending or future patent applications owned by or licensed to the Company or
that the claims allowed under any issued patents will be sufficiently broad to
protect the Company's technology. In the absence of patent protection, the
Company may be vulnerable to competitors who attempt to copy the Company's
products or gain access to its trade secrets and know-how. Proceedings initiated
by the Company to protect its proprietary rights could result in substantial
costs to the Company. There can be no assurance that competitors of the Company
will not initiate litigation to challenge the validity of the Company's patents
or that they will not use their resources to design comparable products that do
not infringe the Company's patents. There may also be pending or issued patents
held by parties not affiliated with the Company that relate to the Company's
products or technologies. The Company may need to acquire licenses to, or
contest the validity of, any such patents. There can be no assurance that any
license required under any such patent would be made available on acceptable
terms, if at all, or that the Company would prevail in any such contest. The
Company could incur substantial costs in defending itself in suits brought
against it or in suits in which the Company may assert its patent rights against
others. If the outcome of any such litigation is unfavorable to the Company, the
Company's results of operations, financial condition, and business could be
materially adversely affected. In addition, the Company relies on trade secrets
and proprietary know-how which it seeks to protect, in part, by confidentiality
agreements with its collaborators, employees, and consultants. There can be no
assurance that these agreements will not be breached, that the Company would
have adequate remedies for any breach, or that the Company's trade secrets will
not otherwise become known or be independently developed by competitors. See
"Business -- Intellectual Property."

Dependence on Key Personnel. The Company's success depends to a
significant extent upon a number of key employees, including Kristine S.
Langdon, the Company's President and Chief Executive Officer, and other members
of senior management. The loss of the services of one or more of these key
employees could have a material adverse effect on the Company. The Company
believes that its future

8
<PAGE> 10

success will depend in part on its ability to attract, motivate, and retain
highly skilled technical, managerial, and marketing personnel. Competition for
such personnel is intense and there can be no assurance that the Company will be
successful in attracting, motivating, and retaining key personnel. See
"Business -- Personnel" and "Management."

Potential Fluctuations in Quarterly Performance. The Company's quarterly
operating results may vary significantly depending on a number of factors,
including the timing of product development and introduction, size, timing, and
shipment of individual orders, seasonality of revenue, foreign currency exchange
rates, the mix of products sold, and general economic conditions. Because the
Company's operating expenses are based on anticipated revenue levels and a high
percentage of the Company's expenses are fixed for the short term, a small
variation in the timing of recognition of revenue can cause significant
variations in operating results from quarter to quarter. See Note 9 to the
Company's Consolidated Financial Statements for certain information concerning
the Company's quarterly operating results since the beginning of fiscal 1996.

Absence of Public Market; Possible Volatility of Stock Price; Possible
Delisting. Prior to the Distribution and this offering, there has been no
public market for the Common Stock, although a "when-issued" trading market may
develop prior to the Record Date of the Distribution, and there can be no
assurance that an active trading market will develop or be sustained after this
offering. The initial public offering price of the Common Stock will be
determined by negotiations between the Company and the Representatives of the
Underwriters and may not be indicative of future market prices. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price. There can be no assurance regarding the
prices at which the Common Stock will trade before or after the offering. The
market prices for securities of companies such as the Company have historically
been highly volatile. Announcements of technological innovations or new
commercial products by the Company or its competitors, disputes concerning
patent or proprietary rights, publicity regarding products under development by
the Company or its competitors, and economic and other external factors, as well
as period-to-period fluctuations in financial results, may have a significant
impact on the market price of the Common Stock and the Company's results of
operations, financial condition, or business.

Risk of Loss of "Tax-free" Treatment of Distribution. Although Optek
received the Tax Ruling stating that the Distribution will be considered
tax-free as of the Distribution Date, certain actions ("Post-Distribution Acts")
involving the Company, Optek, or their respective shareholders following the
Distribution Date could render the Distribution taxable. Any of the following
Post-Distribution Acts potentially could render the Distribution taxable: (i)
the transfer by the Company or Optek of a material portion of its assets (other
than a transfer of assets in the ordinary course of business); (ii) the merger
of the Company or Optek with or into another corporation in a transaction that
does not qualify as a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"); (iii) the discontinuance by the
Company or Optek of a material portion of its historical business activities;
(iv) the conversion (or redemption or exchange) of the Company's Common Stock
distributed in the Distribution into or for any other stock, security, property,
or cash; (v) the issuance of additional shares of stock by the Company pursuant
to negotiations, agreements, plans, or arrangements entered into before the
Distribution that causes the shareholders who receive their shares of the
Company's Common Stock in the Distribution to no longer have control of the
Company within the meaning of Section 368(c) of the Code; (vi) transfers of
stock of the Company and/or Optek by the Company's shareholders of sufficient
quantity to cause the historic shareholders of Optek not to be considered to
have maintained sufficient "continuity of proprietary interest" in one or both
of the companies; and (vii) the acquisition of a 50% or greater interest in
Optek or the Company pursuant to a plan (or deemed to be pursuant to a plan) in
existence on the Distribution Date. If the Distribution were rendered taxable as
a result of a Post-Distribution Act, then (x) the corporate-level taxable gain
would be recognized by the consolidated group of which Thermo Electron is the
parent, although the gain attributable to Thermo Instrument's ownership of Optek
(approximately 93%) would be deferred pursuant to applicable consolidated return
regulations, (y) each of Optek and the Company as a former member of that group,
would be severally liable for the corporate-level tax on such gain when such
gain becomes taxable under the consolidated

9
<PAGE> 11

return regulations, and (z) except in the case of an acquisition described in
clause (vii) of the preceding sentence, each holder of common stock of Optek who
received shares of the Company's Common Stock in the Distribution would be
treated as having received a taxable dividend in an amount equal to the fair
market value of the Company's Common Stock received (assuming that Optek had
sufficient current or accumulated "earnings and profits"). Under the
consolidated return regulations, Thermo Instrument will be entitled to exclude
100% of such dividends received. Under the Tax Matters Agreement, each of Optek
and the Company agrees to indemnify the other for certain taxes incurred with
respect to the Distribution as a result of its Post-Distribution Acts.

Potential Conflicts of Interest. For financial reporting purposes, the
Company's financial results are included in Thermo Instrument's and Thermo
Electron's consolidated financial statements. Certain officers and directors of
the Company, including John N. Hatsopoulos, Paul F. Kelleher, Earl R. Lewis, and
Arvin H. Smith, are also officers and directors of Thermo Instrument, Thermo
Electron, and/or other subsidiaries of Thermo Electron. These officers and
directors will devote only a small portion of their working time to the affairs
of the Company. Further, it is an essential element of Thermo Electron's career
development program that successful executives and managers be considered for
positions of increased responsibility anywhere within the Thermo Electron family
of companies. A number of the Company's executives and managers were promoted to
their present positions under this policy. There can be no assurance that the
Company's present executives and managers will not assume other positions within
the Thermo Electron family of companies, causing them to be unavailable to serve
the Company or to reduce the amount of time that they devote to the affairs of
the Company. The members of the Company's Board of Directors (the "Board") and
the officers of the Company who are also affiliated with Thermo Instrument or
Thermo Electron will consider not only the short-term and the long-term impact
of operating decisions on the Company, but also the impact of such decisions on
the consolidated financial results of Thermo Instrument and Thermo Electron. In
some cases the impact of such decisions could be disadvantageous to the Company
while advantageous to Thermo Instrument or Thermo Electron, or vice versa. For
example, conflicts may arise with respect to possible future acquisitions by the
Company of assets or businesses of Thermo Instrument or another Thermo Electron
affiliated company in which the purchase price to be paid by the Company is
subject to negotiation between the Company and Thermo Instrument or such other
Thermo Electron affiliated company. These negotiations will be subject to the
potential conflicts associated with related-party transactions. In addition, the
Company's operating flexibility may be limited because the Company is a party to
various agreements with Thermo Electron and sells products to and purchases
products from certain of Thermo Electron's other subsidiaries. There can be no
assurance that these factors will not have a material adverse effect on the
Company's results of operations, financial condition, or business. See "Certain
Transactions."

Control by Thermo Instrument. The Company's shareholders do not have the
right to cumulate votes for the election of directors and Thermo Instrument,
which will own approximately 80% of the voting stock of the Company and which
currently intends to maintain at least a majority interest in the Company in the
future, will have the power to elect the entire Board, and to approve or
disapprove any corporate actions submitted to vote of the Company's
shareholders. There can be no assurance that these factors will not have a
material adverse effect on the Company's results of operations, financial
condition, or business. See "Certain Transactions -- Relationship with Thermo
Electron and Thermo Instrument" and "Security Ownership of Certain Beneficial
Owners and Management."

Immediate and Substantial Dilution. Purchasers of the Common Stock offered
hereby will incur an immediate and substantial dilution in the net tangible book
value per share of the Common Stock from the initial public offering price.
Additional dilution is likely to occur upon the exercise of stock options
granted by the Company. See "Dilution."

Shares Eligible for Sale After this Offering. The 4,499,995 shares of the
Company's Common Stock owned by Thermo Instrument will become eligible for sale
under Rule 144 promulgated under the Securities Act commencing in ,
1998. In addition, as long as Thermo Instrument is able to elect a majority of
the Board, it will have the ability to cause the Company at any time to register
for resale all or a portion of the Common Stock owned by Thermo Instrument. Each
of the Company, Thermo Instrument,

10
<PAGE> 12

and Thermo Electron has agreed that it will not offer, sell, or grant any option
to purchase or otherwise dispose of any shares of Common Stock (except for the
grant of options and the sale of shares of Common Stock pursuant to stock-based
compensation plans, sales to Thermo Instrument, and the issuance of shares as
consideration for the acquisition of one or more businesses (provided that such
shares may not be resold prior to the expiration of 180 days after the date of
this Prospectus)) within 180 days after the date of this Prospectus, without the
prior consent of the Representative of the Underwriters.

Additional shares of Common Stock issuable upon exercise of options
expected to be granted under the Company's stock-based compensation plans will
become available for future sale in the public market at prescribed times. Sales
of a significant number of shares of Common Stock in the public market following
this offering could adversely affect the market price of the Common Stock. See
"Certain Transactions -- Relationship with Thermo Electron and Thermo
Instrument," "Shares Eligible for Future Sale," and "Underwriting."

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

USE OF PROCEEDS

The net proceeds to be received by the Company from this offering are
estimated to be $ ($ if the Underwriters' over-allotment
option is exercised in full) assuming an initial public offering price of $
per share and after deducting the estimated underwriting discount and offering
expenses. The Company intends to use the net proceeds from this offering for
general corporate purposes, including the possible acquisition of one or more
businesses, and to fund research and development with respect to new products.
The Company, however, has no specific agreements or commitments with respect to
any acquisitions that would be material to the Company. Pending these uses, the
Company expects to invest the net proceeds from this offering primarily in
investment-grade interest-bearing or dividend-bearing instruments, either
directly by the Company or pursuant to a repurchase agreement with Thermo
Electron in which the Company would in effect lend excess cash to Thermo
Electron, on a collateralized basis at market interest rates. See "Certain
Transactions -- Relationship with Thermo Electron and Thermo Instrument."

DIVIDEND POLICY

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

11
<PAGE> 13

CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
28, 1997, and as adjusted to give effect to the sale of the shares of Common
Stock offered hereby at an assumed initial public offering price of $
per share and after deducting the estimated underwriting discount and offering
expenses payable by the Company.

<TABLE>
<CAPTION>
JUNE 28, 1997
-----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Short-term Obligations:
Note payable....................................................... $ 843 $ 843
Capital lease obligation........................................... 22 22
------- -------
$ 865 $ 865
======= =======
Long-term Obligations, Due to Optek.................................. $ 3,947 $ 3,947
------- -------
Shareholder's Investment:
Common stock, $.01 par value, 20,000,000 shares authorized;
4,845,000 shares issued and outstanding(1)(2)................... 48 56
Capital in excess of par value..................................... 20,606
Retained earnings.................................................. 2,531 2,531
Cumulative translation adjustment.................................. 57 57
------- -------
Total Shareholder's Investment.................................. 23,242
------- -------
Total Capitalization (Long-term Obligations and
Shareholder's Investment)................................ $27,189 $
======= =======
</TABLE>

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

(1) Does not include shares of Common Stock reserved for issuance
under the Company's stock-based compensation plans. Options covering an
aggregate of shares of Common Stock are expected to be granted
prior to the consummation of this offering pursuant to the Company's Equity
Incentive Plan at an exercise price of $ per share. See
"Management -- Compensation of Executive Officers" and "-- Planned Vision
Stock Option Grants."
(2) Reflects an increase in authorized shares and stock split in the form of a
dividend effected in August 1997.

12
<PAGE> 14

DILUTION

As of June 28, 1997, the Company had a net tangible book value of
$20,281,000, or $4.19 per share. Net tangible book value per share is determined
by dividing net tangible book value (total tangible assets less total
liabilities) of the Company by the number of shares of Common Stock outstanding.
After giving effect to the sale by the Company of the 775,000 shares of Common
Stock offered hereby (at an assumed initial public offering price of $
per share and after deducting the estimated underwriting discount and offering
expenses payable by the Company), the pro forma net tangible book value of the
Company as of June 28, 1997, would have been $ , or $ per
share. This represents an immediate increase in net tangible book value of
$ per share to the existing shareholder and an immediate dilution in
net tangible book value of $ per share to investors purchasing Common
Stock in this offering. See "Risk Factors -- Immediate and Substantial
Dilution." The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed price to public.......................................... $
------
Net tangible book value per share as of June 28, 1997, before
this offering............................................... $ 4.19
Increase per share attributable to this offering...............
------
Pro forma net tangible book value per share as of June 28, 1997,
after this offering(1).........................................
------
Dilution per share to new investors(1)........................... $
======
</TABLE>

- ---------------
(1) If the Underwriters' over-allotment option were exercised in full, the pro
forma net tangible book value per share after this offering would be
$ , resulting in an immediate dilution of $ per share to
investors purchasing shares in this offering. See "Underwriting."

The following table sets forth as of June 28, 1997, the number of shares of
Common Stock purchased from the Company, the total consideration paid to the
Company, and the average price paid per share by the existing shareholder and by
investors purchasing shares of Common Stock in this offering:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------------- ----------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Optek(1).......................... 4,845,000 86.2% $20,654,000 % $4.26
New investors..................... 775,000 13.8
--------- -----------
Total................... 5,620,000 100% $ 100%
========= ==== =========== ====
</TABLE>

- ---------------
(1) Represents the book value of net assets transferred or contributed by Optek
to the Company in exchange for 4,845,000 shares of the Company's Common
Stock.

The foregoing assumes no exercise of any outstanding stock options. To the
extent such options are exercised, there may be further dilution to new
investors. See "Management -- Planned Vision Stock Option Grants."

13
<PAGE> 15

SELECTED FINANCIAL INFORMATION

The selected financial information presented below as of and for the fiscal
years ended December 30, 1995, and December 28, 1996, and for the fiscal year
ended December 31, 1994, has been derived from the Company's Consolidated
Financial Statements, which have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report included elsewhere
in this Prospectus. This information should be read in conjunction with the
Company's Consolidated Financial Statements and related notes included elsewhere
in this Prospectus. The selected financial information as of and for the fiscal
years ended January 2, 1993, and January 1, 1994, as of December 31, 1994, and
as of and for the six months ended June 29, 1996, and June 28, 1997, have not
been audited but, in the opinion of the Company, includes all adjustments
(consisting only of normal, recurring adjustments) necessary to present fairly
such information in accordance with generally accepted accounting principles
applied on a consistent basis. The results of operations for the six months
ended June 28, 1997, are not necessarily indicative of results for the entire
year.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED(1)
----------------- PRO
FISCAL YEAR(1) JUNE JUNE FORMA
------------------------------------------------- 29, 28, COMBINED
1992(2) 1993(2)(3) 1994(2) 1995 1996(4) 1996(4) 1997(5) 1996(6)
------- ---------- ------- ------ ------- ------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues................................. $ 755 $2,397 $ 4,242 $6,026 $30,434 $14,168 $17,810 $33,940
------ ------ ------ ------ ------ ------ ------ ------
Costs and Operating Expenses:
Cost of revenues....................... 378 1,494 3,011 3,482 17,066 8,043 9,962 19,628
Selling, general, and administrative
expenses............................. 370 580 826 1,519 7,402 3,358 3,986 9,440
Research and development expenses...... 76 84 144 743 3,499 1,568 1,867 4,041
------ ------ ------ ------ ------ ------ ------ ------
824 2,158 3,981 5,744 27,967 12,969 15,815 33,109
------ ------ ------ ------ ------ ------ ------ ------
Operating Income (Loss).................. (69) 239 261 282 2,467 1,199 1,995 831
Interest and Other Expense, Net.......... 46 145 28 31 44 28 110 78
------ ------ ------ ------ ------ ------ ------ ------
Income (Loss) Before Income Taxes........ (115) 94 233 251 2,423 1,171 1,885 753
Income Tax Provision (Benefit)........... (44) 28 87 104 1,005 490 791 415
------ ------ ------ ------ ------ ------ ------ ------
Net Income (Loss)........................ $ (71) $ 66 $ 146 $ 147 $ 1,418 $ 681 $ 1,094 $ 338
====== ====== ====== ====== ====== ====== ====== ======
Earnings (Loss) per Share(7)............. $ (.01) $ .01 $ .03 $ .03 $ .29 $ .14 $ .23 $ .07
====== ====== ====== ====== ====== ====== ====== ======
Weighted Average Shares(7)............... 4,845 4,845 4,845 4,845 4,845 4,845 4,845 4,845
====== ====== ====== ====== ====== ====== ====== ======
BALANCE SHEET DATA (AT END OF PERIOD):
Working Capital.......................... $ (315) $ (673) $ (359) $ 570 $ 5,601 $ 8,291 $ 9,223
Total Assets............................. 721 2,059 6,776 6,778 28,362 28,602 33,123
Long-term Obligations.................... -- -- -- -- -- -- 3,947
Shareholder's Investment................. (61) 240 4,083 4,697 20,252 22,907 23,242
</TABLE>

- ---------------
(1) All periods presented include the results of Thermo Vision Colorado.

(2) Includes a pro rata share of equity in the losses of CIDTEC through the date
of the acquisition of its assets by Thermo Instrument in October 1994 and
the consolidated results of CIDTEC since October 1994.

(3) Includes the results of Hilger since its acquisition by Thermo Instrument in
July 1993.

(4) Includes the results of Oriel and Corion since their acquisition by the
Company in February 1996.

(5) Includes the results of LSI since its acquisition by the Company in February
1997.

(6) The pro forma combined statement of income data was derived from the pro
forma combined condensed statements of income included elsewhere in this
Prospectus. The pro forma combined statement of income data sets forth the
results of operations for the 1996 fiscal year as if the acquisitions of
Oriel and Corion had occurred on January 1, 1996.

(7) Pursuant to Securities and Exchange Commission requirements, earnings per
share have been presented for all periods. Weighted average shares for such
periods represent the 4,845,000 shares issued to Optek in connection with
the initial capitalization of the Company.

14
<PAGE> 16

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

OVERVIEW

Results for Thermo Vision Colorado are included in the accompanying
financial statements for all periods. Thermo Vision Colorado manufactures
low-cost optically based components, instruments, and accessories. Since its
incorporation in November 1995 as a wholly owned subsidiary of Optek, the
Company has acquired four businesses from unrelated third parties that currently
comprise the bulk of its operations. In February 1996, the Company acquired
Oriel, a manufacturer and distributor of photonics components and instruments,
for $11.8 million in cash and the assumption of $0.7 million in debt, and
Corion, a manufacturer of commercial optical filters, for $5.1 million in cash.
The Company obtained the cash portions of the purchase prices of the Oriel and
Corion acquisitions from Optek in the form of capital contributions. In February
1997, the Company acquired LSI, a manufacturer of gas lasers, for $3.6 million
in cash. The Company borrowed $3.6 million from Optek to fund this acquisition.
In July 1997, the Company acquired Centronic, a manufacturer of silicon
photodiodes, for $3.8 million in cash. The Company borrowed $3.8 million from
Thermo Electron to fund this acquisition. In addition, in August 1997, the
Company acquired the crystal-materials business of Hilger Analytical, a wholly
owned subsidiary of Optek, in consideration for the assumption by the Company of
$908,000 of Optek's existing obligation under a line of credit. Because the
Company and Hilger were deemed for accounting purposes to be under control of
their common owner, Thermo Instrument, the transaction has been accounted for at
historical cost in a manner similar to a pooling of interests. Accordingly, all
historical information presented includes the results of operations of Hilger
since 1993, the year in which it was acquired by Thermo Instrument. From the
time of the Company's incorporation in November 1995, the crystal-materials
business of Hilger Analytical has been under the Company's management. All of
the Company's other acquisitions were accounted for using the purchase method of
accounting. See "Certain Transactions -- Other Relationships."

Approximately 5% of the Company's fiscal 1996 revenues originated outside
the U.S. and approximately 31% of the Company's fiscal 1996 revenues were
exports from the U.S. Revenues originating outside the U.S. represent revenues
of Hilger. Hilger's operations are located in the United Kingdom and principally
sell in the local currency. Exports from the Company's U.S. operations are
denominated in U.S. dollars. Although the Company seeks to charge its customers
in the same currency as its operating costs, the Company's financial performance
and competitive position can be affected by currency exchange rate fluctuations.

RESULTS OF OPERATIONS

Six Months Ended June 28, 1997, Compared With Six Months Ended June 29, 1996

Revenues increased 26% to $17.8 million in the six months ended June 28,
1997, from $14.2 million in the six months ended June 29, 1996, due primarily to
the inclusion of revenues for the full six-month period from Oriel and Corion,
acquired in February 1996, and the inclusion of revenues from LSI, acquired in
February 1997. These acquisitions added revenues of $3.4 million in 1997.
Revenues from the Company's existing operations increased $0.2 million.
Increased revenues at Hilger due to shipments under the Stanford Linear
Accelerator contract, which commenced in the second quarter of 1996 were offset
in part by an 8% decrease in revenues at Thermo Vision Colorado due to lower
product demand.

15
<PAGE> 17

The gross profit margin increased slightly to 44% in the six months ended
June 28, 1997, from 43% in the six months ended June 29, 1996, due primarily to
improved margins at Corion resulting from manufacturing efficiencies and cost
reductions.

Selling, general, and administrative expenses as a percentage of revenues
decreased to 22% in the six months ended June 28, 1997, from 24% in the six
months ended June 29, 1996, due primarily to increased revenues at Oriel.
Research and development expenses increased to $1.9 million in the six months
ended June 28, 1997, from $1.6 million in the six months ended June 29, 1996,
due primarily to the inclusion of research and development expenses at LSI.

Interest expense of $0.1 million in the six months ended June 28, 1997,
primarily represents interest incurred on a $3.6 million promissory note issued
to Optek for the purchase of LSI.

The effective tax rate was 42% in the six months ended June 28, 1997, and
June 29, 1996. The effective tax rates exceeded the statutory federal income tax
rate due primarily to the impact of nondeductible amortization of cost in excess
of net assets of acquired companies and state income taxes.

1996 Compared With 1995

Revenues increased to $30.4 million in 1996 from $6.0 million in 1995, due
primarily to the inclusion of $24.2 million of revenues from Oriel and Corion,
acquired in February 1996. Revenues from the Company's existing operations
increased $0.2 million, due primarily to the inclusion of a $0.5 million
nonrecurring sale at CIDTEC, offset in part by decreased revenues at Thermo
Vision Colorado due to lower demand.

The gross profit margin increased to 44% in 1996 from 42% in 1995, due
primarily to the inclusion of higher-margin revenues at Oriel, offset in part by
the inclusion of lower-margin revenues at Corion.

Selling, general, and administrative expenses as a percentage of revenues
decreased to 24% in 1996 from 25% in 1995, due primarily to lower costs as a
percentage of revenues at acquired businesses. Research and development expenses
increased to $3.5 million in 1996 from $0.7 million in 1995, due primarily to
the inclusion of $2.5 million of research and development expenses at acquired
businesses.

Interest expense in both periods represents interest incurred on short-term
borrowings at Hilger.

The effective tax rate was 41% in 1996 and 1995. The effective tax rates
exceeded the statutory federal income tax rate due primarily to the impact of
nondeductible amortization of cost in excess of net assets of acquired companies
in both years and state income taxes in 1996.

1995 Compared With 1994

Revenues increased 42% to $6.0 million in 1995 from $4.2 million in 1994,
due primarily to the inclusion of $1.7 million of revenues for the full period
from CIDTEC, acquired in October 1994.

The gross profit margin increased to 42% in 1995 from 29% in 1994, due
primarily to the inclusion of higher-margin revenues from CIDTEC for the full
period.

Selling, general, and administrative expenses as a percentage of revenues
increased to 25% in 1995 from 19% in 1994, due primarily to increased costs at
Thermo Vision Colorado for an advertising campaign completed in 1995. Research
and development expenses increased to $0.7 million in 1995 from $0.1 million in
1994, due primarily to the inclusion of research and development expenses at
CIDTEC.

Interest expense in both periods represents interest incurred on short-term
borrowings at Hilger.

The effective tax rate increased to 41% in 1995 from 37% in 1994. The
effective tax rates exceeded the statutory federal income tax rate due primarily
to the impact of nondeductible amortization of cost in

16
<PAGE> 18

excess of net assets of acquired companies. The effective tax rate increased in
1995 due primarily to higher nondeductible amortization of cost in excess of net
assets of acquired companies.

LIQUIDITY AND CAPITAL RESOURCES

Consolidated working capital was $9.2 million at June 28, 1997, compared
with $5.6 million at December 28, 1996. Included in working capital are cash and
cash equivalents of $0.2 million at June 28, 1997, compared with $0.3 million at
December 28, 1996. During the first six months of 1997, operating activities
provided $1.7 million of cash. Cash provided by the Company's operating results
was offset in part by the effect of a decrease in current liabilities, including
accrued payroll and employee benefits.

Investing activities used $4.4 million of cash during the first six months
of 1997. In February 1997, the Company acquired LSI for $3.5 million in cash,
net of cash acquired. In July 1997, the Company acquired Centronic for $3.8
million in cash. To finance the acquisition of Centronic, the Company borrowed
$3.8 million from Thermo Electron pursuant to a promissory note due July 2000,
bearing interest at the 90-day Commercial Paper Composite Rate plus 25 basis
points, set at the beginning of each quarter. In August 1997, the Company
acquired the crystal-materials business of Hilger Analytical in consideration
for the assumption by the Company of $0.9 million of Optek's existing obligation
under a line of credit. The Company expended $0.9 million on purchases of
property, plant, and equipment during the first six months of 1997 and plans to
expend approximately $0.4 million on such purchases during the remainder of
1997. In addition, Oriel leases its facilities under an agreement expiring in
early 1998 and has leased new premises to which it plans to relocate upon
expiration of the lease. In connection with this relocation, the Company expects
to make certain expenditures for leasehold improvements of approximately $0.4
million.

The Company's financing activities provided $2.6 million of cash during the
first six months of 1997, due primarily to borrowings for acquisitions. In
February 1997, the Company borrowed $3.6 million from Optek to fund the
acquisition of LSI. In June 1997, the Company borrowed an additional $0.3
million from Optek to fund certain property additions relating to its
acquisition of LSI. The Company issued promissory notes reflecting these
borrowings to Optek payable in 2000 and bearing interest at the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter.

During 1996, operating activities provided $1.7 million of cash. Cash
provided by the Company's operating results was limited in part by the use of
$0.7 million in cash to fund an increase in accounts receivable, due primarily
to a nonrecurring sale at CIDTEC.

Investing activities used $16.9 million of cash during 1996. In February
1996, the Company acquired Oriel and Corion for $15.5 million in cash, net of
cash acquired. The Company expended $1.5 million on purchases of property,
plant, and equipment during 1996.

The Company's financing activities provided $15.3 million of cash in 1996,
primarily due to transfers from Optek to fund acquisitions, net of the Company's
transfer of cash to Optek.

The Company's foreign subsidiary has a credit facility arrangement for
working capital needs. See Note 3 to the Company's Consolidated Financial
Statements. Although the Company generally expects to have positive cash flow
from its existing operations, the Company may require significant amounts of
cash for any acquisition of complementary businesses. The Company expects that
it will finance any such acquisitions through a combination of the net proceeds
from this offering, internally generated funds, additional debt or equity
financing from capital markets, and short- or long-term borrowings from Thermo
Instrument or Thermo Electron, although it has no agreement with these companies
or other parties to ensure that funds will be available on acceptable terms or
at all. See "Risk Factors -- Risks Associated with Acquisitions Strategy; No
Assurance of a Successful Acquisition Strategy." The Company believes its
existing resources are sufficient to meet the capital requirements of its
existing businesses for at least the next 24 months.

17
<PAGE> 19

BUSINESS

INTRODUCTION

Vision offers products in all six segments of the photonics market.
Vision's principal product offerings in these segments are:

- Optical Components -- Light sources, optical filters, optical crystals,
and precision mechanical positioning devices used to create and
manipulate light.

- Imaging Sensors and Systems -- CID digital sensors and cameras used to
absorb photons and convert them into electrical charges that comprise an
image.

- Lasers -- Pulsed nitrogen and carbon dioxide ("CO(2)") lasers used as
light sources.

18
<PAGE> 20

- Optoelectronics -- Silicon photodiode detectors used for light sensing.

- Fiber Optics -- Specialized fiber optic cables for remote sensing.

Vision develops and manufactures most of the products that it sells, although it
also distributes photonics products manufactured by third parties.

INDUSTRY OVERVIEW

Photonics involves the use of technologies to create, manipulate, and
measure light and other forms of radiant or electromagnetic energy, the basic
unit of which is the photon. Photons are the smallest units of energy by which
light is measured. They are massless and travel at the speed of light.

Photonics is directed at the portion of the electromagnetic spectrum
ranging from the ultraviolet through the infrared, including the relatively
narrow visible portion between the ultraviolet and infrared. Many substances
selectively emit or absorb energy at various wavelengths within this portion of
the electromagnetic spectrum. Photonics extends into the X-ray region of the
electromagnetic spectrum through the use of scintillators that convert X-rays
into lower-energy or longer-wavelength photons.

Photonics technologies use light to detect, transmit, store, and process
information and to generate energy as well as to capture and display images.
High-power applications of photonics technologies include welding, surgery, and
industrial metal cutting. Low-power applications include information processing
and imaging. Other applications include medical diagnostic and analytical
instruments, as well as semiconductor production. Because photons are massless,
travel at the speed of light, and do not generate heat in travel, photonics
technologies potentially offer many advantages over electronic technologies,
including greater speed and miniaturization.

As a result of advances in photonics technologies stemming from U.S.
government funding of programs involving photonics as well as advances in
computer technologies, beginning in the mid 1980s a range of new commercial
applications for photonics technologies have emerged. Photonics technologies
have many familiar applications, including supermarket scanners, compact discs,
laser printers, and telecommunications, which use fiber optic technology
extensively. Photonics technologies also play a central role in laser surgery,
machine vision, semiconductor photolithography, electronic imaging, and
phototherapeutics. Additional applications for photonics technologies are being
developed at an increasing rate. In the commercial arena, the growth of the
photonics industry has been in significant part a function of the performance of
the industries that use photonics products, including the semiconductor and
medical diagnostic instrument industries. According to industry sources, over
4,000 companies engage in business in the photonics industry.

The photonics industry is divided into six segments based on applicable
technologies. Vision offers products in each of these industry segments.

- Optical Components. Optical components include light sources, filters,
crystals, prisms, lenses, detectors, and mechanical positioning devices.
These components are used to create, manipulate, and measure light in all
optically based systems. Primary applications for optical components
include semiconductor production, medical and analytical instruments, and
telecommunications. Vision estimates that the current worldwide market
for optical components is approximately $2.0 billion.

- Imaging Sensors and Systems. Imaging sensors are photosensitive
materials that absorb light and convert photons into an electrical
charge. An imaging system is photosensitive material that is
electronically connected to a recording and/or display device. The use of
these sensors and systems has grown rapidly following the introduction of
low-cost digital sensors that provide real-time images. For example,
according to industry sources, the 1996 worldwide market for

19
<PAGE> 21

chargecoupled device ("CCD") imaging sensors, which are widely used for
consumer (camcorders), service (teleconferencing), and industry (machine
vision) applications, was approximately $700 million. Vision estimates
that the current worldwide market for imaging sensors and systems of all
types is approximately $2.5 billion.

- Lasers. Lasers are instruments that produce a brilliant beam of highly
monochromatic, coherent light. Lasers produce this light through
excitation of a gas or solid state material. The commercial applications
for lasers have grown as advances in electronic and laser technologies
have enabled the production of smaller and less expensive lasers that
provide light over a wide spectral range. Lasers are used in such
products as CD-ROMs, surgical devices, telecommunications equipment, and
analytical instruments. Vision estimates that the current worldwide
market for lasers is approximately $2.5 billion.

- Optically Based Instruments. Optically based instruments combine optical
components with signal processors and are used primarily in analytical
and medical diagnostic applications. These instruments range from
high-end flexible systems, such as elemental spectrometers, to low-cost
modular instruments used primarily by university and government
researchers. Vision estimates that the current worldwide market for
optically based instruments is approximately $2.0 billion.

- Optoelectronics. Optoelectronics are devices that function as
electrical-to-optical or optical-to-electrical converters. These devices
respond to light, emit or modify optical energy, or use optical energy
for their internal operations. A well-known example of an optoelectronic
device is the LED (light emitting diode) which is used in a wide variety
of applications, including consumer products (cellular phones and
calculators) and automotive products (center brake lights). These devices
have proliferated as a result of their low cost and small size. Vision
estimates that the current worldwide market for optoelectronic devices is
approximately $5.0 billion.

- Fiber Optics. Fiber optics are single or bundled fibers that reflect
light internally down their length. Specialized fibers made of different
materials have been developed to transmit light of particular
wavelengths, such as quartz fibers for use with ultraviolet light. Fiber
optics are primarily used to move light for telecommunications purposes.
In addition, fiber optics enable remote sensing by bringing light from an
instrument to a sample and routing the resulting signal to the detector.
As a result, fiber optics frequently are used for incoming material
inspection, process measurements, quality control of manufactured goods,
and testing in hostile environments and biological systems. Vision
estimates that the current worldwide market for fiber optics is
approximately $1.5 billion.

STRATEGY

Vision's goal is to become a leader in the photonics market. There are
three key elements in Vision's strategy to achieve this goal.

Create New Products and Applications by Building on Core Photonics
Technologies

Vision is expanding into new markets by building on its core technologies
to develop new products and applications. In order to reduce the development
costs borne by Vision and to obtain rapid market penetration, Vision often seeks
to undertake these development efforts on a collaborative basis with its
customers. For example, under an exclusive supply arrangement with a customer,
Vision has designed and developed a sensor based on Vision's CID technology for
use in the customer's dental X-ray imaging system. In other customer-sponsored
programs, Vision is developing a radiation-hardened, color CID camera for
inspection of nuclear facilities and a CID camera for use in aiming X-rays with
a high degree of precision at the cancerous area of a patient receiving
radiation therapy.

In 1996, building on its expertise in the design and manufacture of optical
components for incorporation into optical instrument subassemblies and modular
analytical instrument systems, Vision introduced its modular MIR 8000
spectrophotometer for physics research. While the MIR 8000 is a

20
<PAGE> 22

complete spectrophotometer that can be configured to meet individual customer
needs, Vision also manufactures and sells all of the subsystems of this
instrument individually.

Market to Technical Users on a Cost-effective Basis

Because of the technical sophistication of many purchasers of Vision's
products and the low unit prices of many of these products, key aspects of
Vision's marketing strategy are to provide prospective purchasers with technical
information (in addition to product information) and to maintain visibility with
its customer base while limiting expensive one-on-one contact primarily to
larger OEM customers. Vision's Oriel Instruments Corporation subsidiary
("Oriel"), Corion division ("Corion"), and Centro Vision subsidiary ("Centro
Vision") pursue this strategy through the use of catalogues that provide both
detailed technical information of interest to designers of systems that
incorporate photonics products and components, and product specifications and
highlights. Over the years, Oriel's informative series of photonics product
catalogues have become a staple on engineers' and scientists' bookshelves.
Vision plans to leverage these well-established distribution channels by adding
products of companies acquired by Vision to the catalogues. Vision makes its
catalogues widely available so that designers will incorporate Vision's products
into prototypes, ultimately resulting in new supply relationships as the
products are commercialized. In addition, Vision's subsidiaries and divisions
maintain networks of dealers and distributors both in the United States and in
over 35 foreign countries.

All seven Vision subsidiaries and divisions use Web sites to reach Vision's
large and technically sophisticated customer base. A number of Vision's Web
sites include virtual catalogues that are easy to update and portions of which
can be directly downloaded by a potential customer. The academic and
international segments of Vision's customer base frequently access this source
of information about Vision's products. Vision plans to produce certain of its
catalogues on CD-ROMs in order to further reduce marketing costs.

Acquire Businesses with Complementary Products and Technologies

Vision plans to combine internal growth with the acquisition of businesses
with complementary products and technologies in all six segments of the
photonics industry. The photonics industry is highly fragmented, with numerous
competitors within each of the six segments. Vision believes it is often more
cost effective to target an attractive market segment through the acquisition of
established, smaller, focused providers that enjoy favorable reputations and
have developed technological expertise than to enter the segment through
internal product development. Since February 1996, Vision has acquired four
businesses from unrelated third parties that currently comprise the bulk of its
operations.

Since January 1, 1992, Thermo Electron Corporation ("Thermo Electron") and
its subsidiaries have acquired over 90 businesses, of which over 30 were
acquired by Thermo Instrument Systems Inc. ("Thermo Instrument") and its
subsidiaries. Consistent with the approach of Thermo Electron and Thermo
Instrument, Vision seeks to strengthen each business that it acquires, while at
the same time providing the acquired business with flexibility in determining
how to achieve the goals set by Vision. Vision seeks to reduce the overhead of
acquired businesses through centralization of legal, financial, and employee
benefit services and to realize cost savings through economies of scale in areas
such as advertising and trade show participation. Vision believes that this
approach has played an important role in enabling Vision to improve the
financial performance of the companies it has acquired. Moreover, Vision
believes that businesses that it acquires may be able to enhance their market
penetration through access to Vision's distribution channels, such as the Oriel
catalogues, and may benefit from product development or marketing collaborations
with Vision's existing businesses.

PRODUCTS

Vision's products consist of optical components, imaging sensors and
systems, lasers, optically based instruments, optoelectronics, and fiber optics.
Vision manufactures most of the products that it sells, although it also
distributes products manufactured by third parties.

21
<PAGE> 23

OPTICAL COMPONENTS

Vision offers a broad line of optical components, including light sources,
filters, crystals, mirrors, prisms, lenses, and precision mechanical-positioning
devices. These optical components are used to create and manipulate light. They
are manufactured for use in much of the electromagnetic spectrum, including
X-ray, ultraviolet, visible, and infrared. Vision designs its optical components
both for specific applications and for use in modular systems. Revenues from the
sale of optical components by Oriel, Corion, Hilger, and Thermo Vision Colorado
(including in fiscal 1996 the periods prior to their acquisition by Vision in
the case of Oriel and Corion) totalled approximately $25.2 million in fiscal
1996 and approximately $12.4 million for the six months ended June 28, 1997.

The primary optical components offered by Vision are:

Light Sources. Vision's Oriel subsidiary designs, manufactures, and
markets a broad range of continuous and pulsed light sources, including
laboratory light sources, and specialty light sources for solar simulation and
photolithography. Vision's light sources produce light at a variety of energy
levels across the portion of the electromagnetic spectrum ranging from the
ultraviolet through the infrared. Vision also sells light source accessories
that complement its light source product line, including shutters, fiber optics,
relay optics, and safety equipment.

Vision's laboratory light source products include lamps, lamp housings, and
power supplies. Vision offers a variety of lamps, including xenon, mercury, and
quartz halogen. Vision's broad range of laboratory light source products allows
researchers and engineers to select a light source that provides the most
appropriate wattage and wavelength for a specific application. The primary
customers for Vision's laboratory light sources and accessories are
manufacturers of analytical instruments, semiconductor manufacturers, optical
equipment designers, and university and government researchers. Vision's
laboratory light sources range in price from approximately $150 to $7,500.

Vision's solar simulators are specially filtered arc sources that duplicate
all or part of the solar spectrum. Solar simulators are used to test the
efficacy of sunscreen products and photoinduced side effects of pharmaceuticals,
particularly new photoactivated drugs for the treatment of tumors. Scientists
also use Vision's solar simulators to test solar cells and to study the impact
of increased ultraviolet exposure on the biosystem, a field of growing interest
as a result of the damage that has occurred in the ozone layer. Semiconductor
manufacturers use Vision's deep ultraviolet photolithography light sources as
part of the etching process in the development and production of semiconductors.
Vision's solar simulator and photolithography light sources range in price from
approximately $8,000 to $100,000.

In 1996, Vision's Oriel subsidiary introduced a new instrument called
Accudose for use as a quality assurance tool in semiconductor photolithography.
This instrument uses a deep ultraviolet light source to test the exact energy
dose for the proper exposure of photoresist, an expensive chemical used in
etching semiconductor chips. Vision believes that Accudose provides
semiconductor manufacturers with significant savings in product waste and
machine time and that demand for the product will increase as the semiconductor
industry continues to move to smaller line widths. The price of Accudose is
approximately $65,000.

Optical Filters. Vision designs, manufactures, and markets most of its
optical filters through its Corion division. Vision manufactures its optical
filters by precisely coating up to 100 layers of specified materials onto a
glass substrate and then carefully cutting the resulting plate into pieces.
Optical filters provide a low-cost method of screening all but a particular
wavelength of light. They also can be used to control and enhance light by
altering the transmission, reflection, and absorption of light's various
wavelengths to achieve a desired effect, such as wavelength selection,
antireflection, antiglare, or electromagnetic shielding. Optical filters are
often used together with a light source, a detector, mirrors, lenses, and prisms
in an optical system. The primary customers for Vision's optical filters are
manufacturers of medical diagnostic and analytical instruments. For example,
Vision's optical filters are used to isolate a particular wavelength of light in
medical instruments that detect and measure various substances, such as glucose,
DNA, proteins, cholesterol, and steroids, in blood and other bodily fluids.

22
<PAGE> 24

Vision's filters are also used in agricultural applications such as sorting
fruit and grading rice. Vision's optical filter products range in price from
approximately $8 to $4,000.

Optical Crystals. Vision's Hilger Crystals Limited ("Hilger") subsidiary
manufactures and markets optical crystals. Vision manufactures its crystal
products through a process in which various types of salts are melted in a
furnace and then drawn and formed onto a seed crystal. Vision's crystals are
used primarily for scintillation (converting X-rays into photons that can be
detected and monitored by optical detectors) and infrared optical applications
(beam splitting). Manufacturers of X-ray baggage screening equipment are the
principal customers for Vision's crystals. Other customers include university
and government researchers. Vision recently began producing scintillator
crystals for the upgraded detector to be installed at the Stanford Linear
Accelerator ("SLAC"), a government-sponsored high-energy physics project. This
two-year contract commenced in 1996 and provides for payments of over
$2,000,000, of which approximately $260,000 had been received by Vision through
June 28, 1997. The crystals being supplied to SLAC involve complex geometries
and are significantly longer than crystals normally produced by Vision. Vision's
crystals range in price from approximately $100 to $1,500.

Precision Mechanical Positioning Devices. Vision markets various devices
for precision placement of optical components, including optical tables, benches
and related accessories, optical mounts, holders, and positioners. These devices
are used to stabilize, hold, and position various optical components, including
mirrors, prisms, polarizers, filters, lenses, sources, detectors, and sample
holders. Vision sells its precision mechanical-positioning devices to individual
researchers and increasingly to manufacturers of instruments used in X-ray
crystallography for pharmaceutical research and manufacturers of equipment used
in semiconductor manufacturing. Vision's precision mechanical positioning
devices range in price from $10 to $2,000.

IMAGING SENSORS AND SYSTEMS

Vision's CID Technologies Inc. ("CIDTEC") subsidiary designs, assembles,
and markets imaging sensors and complete video camera systems based on its
proprietary CID technology. Vision's CID sensor is a silicon wafer that is
processed into a semiconductor device comprised of an array of light-sensing
elements known as pixels. When a CID image sensor is exposed to light, each
pixel absorbs photons and converts them into an electrical charge. These charges
in the pixels comprise an image which is then processed into a computer readable
format. Vision's CID sensors are sensitive to the full range of the visible
light spectrum and into the shorter wavelengths of the ultraviolet and X-ray
regions. Vision's sensors can be designed to have very high dynamic range at low
light levels, which makes them attractive in demanding spectroscopy and
astronomy applications. Vision offers a number of proprietary sensors based on
its own designs and also customizes sensors to particular customer
specifications. Vision's CID camera systems are comprised of three main
components: a CID image sensor, video processing electronics, and a lens. The
camera's output is a digital electronic signal that is fed into a computer for
image-processing applications. Revenues from the sale of imaging sensors and
systems by CIDTEC totalled approximately $2.7 million in fiscal 1996 and
approximately $1.1 million for the six months ended June 28, 1997.

Vision believes that its CID sensor has several advantages in comparison
with other semiconductor image detectors, particularly CCDs. In contrast with
CCD sensors, CID sensors are capable of randomly addressing individual pixels,
which improves the speed and quality of imaging. In low-light applications, such
as the detection of trace levels of an element by an optical spectrometer,
Vision's CID technology permits pixels to be queried repeatedly and
nondestructively to determine whether sufficient light has been collected to
produce the requisite information. In contrast, when a pixel is read in a CCD
sensor, the charge is destroyed and the CCD sensor must reacquire a charge
before it is read again. Moreover, CID sensors potentially have higher silicon
manufacturing yields than comparably sized CCD sensors because CIDs have simpler
pixel structures and because single pixel defects occurring in CIDs do not
adversely affect the entire row of pixels in which the defective pixel is
located. As a result, Vision believes that it may be possible to produce CID
sensors at a lower cost than CCD sensors in manufacturing runs of a comparable
scale. CID sensors also have superior resistance to radiation than CCD sensors,
which is

23
<PAGE> 25

an advantage in environments such as nuclear power plants and space satellites.
Finally, CID sensors have greater sensitivity to ultraviolet light than CCDs.

Thermo Optek Corporation ("Optek") has used Vision's CID products in
Optek's optical spectrometers since 1992. Vision and Optek are parties to a
Supply Agreement (the "CID Supply Agreement") to be effective as of the
Distribution Date pursuant to which Vision has agreed to supply Optek with, and
Optek has agreed to purchase from Vision, all of Optek's requirements for CID
sensors for use in Optek's optical spectrometers. Under the CID Supply
Agreement, Vision is not permitted to sell CID sensors to any other manufacturer
of optical spectrometers. The CID Supply Agreement expires in 2007. Vision's CID
products also are used as the "eyes" in certain machine vision (robotics)
applications in industries such as automobile manufacturing and meat packaging.
Vision's CID sensors range in price from approximately $1,250 to $6,000 and its
CID cameras range in price from approximately $2,500 to $35,000.

Vision recently extended its CID technology to a new application by
developing a CID sensor for use in a dental X-ray imaging system. Vision
developed this sensor pursuant to an exclusive supply arrangement with a
customer. Vision expects to begin shipment of its CID sensor to this customer in
the fourth quarter of 1997. Vision's customer recently received FDA marketing
approval in connection with the dental X-ray imaging system. The customer's
dental X-ray imaging system is designed to replace conventional dental X-ray
film by providing a real-time X-ray video image of a patient's teeth. Vision
believes that the customer's system will permit faster diagnosis, reduce patient
X-ray exposure, and eliminate the need for X-ray supply storage and disposal of
chemicals used in X-ray film processing.

Vision believes its CID technology will be applicable in several new
contexts that offer significant market potential. For example, the semiconductor
industry is developing integrated circuits with increasing circuit density and
smaller features. Machine vision systems used for inspection and process control
in the production of these types of circuits are moving to increasingly shorter
wavelengths (i.e., deeper into the ultraviolet) to "see" these very small
features. Vision's CID technology is well suited for this application because it
provides greater ultraviolet light sensitivity than competing technologies. In
addition, because CID sensors allow random access to individual pixels and small
subarrays of pixels within the full frame, Vision's CID sensors are particularly
useful in astronomy applications and may have application in communications
lasers, security systems, and teleconferencing equipment. For example, because
CID sensors can scan an entire room and quickly switch to reading only a certain
area of pixels that include the subject of interest, use of CID sensors in
teleconferencing applications might eliminate the need for mechanical camera
movement. Because CID technology offers greater radiation resistance than
competing technologies, CID based products also may be desirable for use in the
harsh conditions above the earth's atmosphere.

Vision contracts with third parties for the fabrication of the silicon
wafers used in Vision's CID sensors. These manufacturers follow Vision's
proprietary designs and specifications. Upon receipt of the silicon wafers from
the manufacturer, Vision probes the wafers for quality control and assurance
purposes, transfers the wafers to a clean room where they are cut into
individual devices, packages the devices with a ceramic backing, and wire bonds
them.

LASERS

Vision's Laser Science, Inc. ("LSI") and Oriel subsidiaries design,
manufacture, and market pulsed gas lasers. Vision's lasers are comprised of a
plasma cartridge in which gas is ionized, resonating mirrors, and a power
supply. Vision's laser product line consists of pulsed nitrogen lasers, nitrogen
laser accessories, and pulsed CO(2) lasers. Pulsed lasers are preferable to
continuous lasers in measurement applications because the break in the laser
beam provides discrete time segments in which to perform measurements. Revenues
from the sale of lasers and laser accessories by Oriel (including in fiscal 1996
the period prior to its acquisition by Vision) and LSI (which was an independent
company throughout fiscal 1996 and through February 17, 1997) totalled
approximately $4.2 million in fiscal 1996 and approximately $2.1 million for the
six months ended June 28, 1997.

24
<PAGE> 26

Nitrogen Lasers. Vision's pulsed nitrogen lasers use electrical energy to
excite nitrogen gas in order to produce ultraviolet light. The primary customers
for these lasers are manufacturers of matrix-
assisted-laser-desorption-ionization time-of-flight ("MALDI-TOF") mass
spectrometers. Vision's nitrogen lasers are employed as the ionizing source in
these MALDI-TOF spectrometers. MALDI-TOF spectrometers are used principally for
biotechnology research in academia, government, and the pharmaceutical industry.
MALDI-TOF spectrometers determine the molecular weights of proteins, peptides,
and other complex biomolecules by measuring the time required for an ionized
molecule of the substance to reach a detector. The measurement of time is
converted into a measurement of mass. Vision is the leading supplier of pulsed
nitrogen lasers for use in MALDI-TOF spectrometers. According to industry
sources, worldwide sales of MALDI-TOF spectrometers are estimated to increase at
a rate of 20% per year through 1999. Vision also sells its pulsed nitrogen
lasers for incorporation into instruments employed in homogeneous time-resolved
fluorescence, a new technology used in high-throughput drug screening and
clinical diagnostic applications. Vision's nitrogen lasers range in price from
approximately $4,500 to $5,500.

Nitrogen Laser Accessories. Vision offers a line of optional accessories
to complement its pulsed nitrogen lasers. Vision believes that its expertise in
combining these accessories with its pulsed nitrogen lasers to configure laser
systems for specialized experiments is of particular value to the research
community. Among the most popular of these accessories are tunable dye modules
that can be used together with a Vision pulsed nitrogen laser to produce laser
light that is tunable over a range of visible wavelengths. Vision also offers
microscope adapters that couple Vision's pulsed nitrogen laser systems to a
variety of commercially available microscopes for experiments at the cellular
level or smaller. Laser systems, including accessories, typically range in price
from approximately $9,200 to $19,000.

Pulsed CO(2) Lasers. Vision's LSI subsidiary designs, manufactures, and
markets pulsed CO(2) lasers. LSI developed considerable expertise in the field
of CO(2) lasers as a result of work performed by it for the U.S. government in
the 1980s and early 1990s. Vision's primary pulsed CO(2) laser product offering
is a compact sealed laser that provides an infrared light source that broadens
the variety of large molecules that can be studied with MALDI-TOF spectrometers.
This laser is priced at approximately $7,500.

OPTICALLY BASED INSTRUMENTS

Vision's Oriel and Thermo Vision Colorado subsidiaries design, manufacture,
and market a variety of optically based instruments that perform measurement and
analysis functions. Vision focuses on the development of low-cost analyzers that
are appropriate for distribution through product catalogues, Web sites, and
other indirect distribution channels. These products use standard photonics
components as building blocks that are designed to work together in multiple
configurations and to be easily modified to accommodate changing end-user
requirements. Revenues from the sale of optically based instruments by Oriel
(including in fiscal 1996 the period prior to its acquisition by Vision) and
Thermo Vision Colorado totalled approximately $3.6 million in fiscal 1996 and
approximately $1.7 million for the six months ended June 28, 1997.

Vision's principal optically based instrument products are:

MIR 8000. Vision's MIR 8000 is a modular spectrophotometer. Vision
designed the MIR 8000 for the physics research market. Uses of the MIR 8000
include evaluating the performance of laser diodes, detectors, and other optical
components. The MIR 8000 is comprised of subsystems so that it can be modified
to meet the requirements of each user. The subsystems of the MIR 8000 include: a
source chamber or a chamber for light-emitting samples; a scanner or
interferometer chamber containing a beamsplitter and fixed and moving mirrors; a
detector chamber; a data-acquisition system; and software modules for physics
applications such as mathematical modeling. The sources, scanners, detectors,
and software modules may be interchanged as experimental needs evolve. Vision
believes that the modular nature of the MIR 8000 is particularly appealing to
university, government, and photonics industry researchers who require
economical and highly flexible research tools. The MIR 8000 ranges in price from
approximately $16,400 to $21,000.

25
<PAGE> 27

QS1E Mercury Analyzer. Vision's QS1E mercury analyzer is an instrument for
detecting the presence and level of mercury in water and bodily fluids.
Water-monitoring authorities and environmental laboratories use the QS1E to test
both drinking water and wastewater for compliance with government regulations
governing permissible levels of mercury. Other users include medical
laboratories, which test bodily fluids to determine exposure to mercury, and
researchers, who use the QS1E to examine foods and other biomatter to trace
mercury in the environment. The QS1E mercury analyzer sells for approximately
$15,000.

LifeSense. In 1997, Vision introduced its LifeSense low-cost,
fluorescence-lifetime sensor for the biological research market. LifeSense
excites a sample with a specific wavelength of light and measures the lifetime
of the resulting fluorescence in order to identify particular substances
contained in the sample. Vision's LifeSense instrument is operated from a
personal computer and consists of interchangeable modulated light sources,
including infrared diode lasers or blue or green light-emitting diodes, a sample
compartment, and a photodetector. Vision's LifeSense is used primarily in
medical, pharmaceutical, and other bioresearch applications, including detection
and identification of biological molecules in high-performance liquid
chromatography and capillary electrophoresis. LifeSense can use fiber optics for
remote sensing in bioprocess and process control applications. The price of
Vision's LifeSense instrument is approximately $20,000.

Accessories. Through Thermo Vision Colorado, Vision offers a number of
accessories related to its optically based instruments, including autosamplers
that automatically insert a substance, tissue, or other sample into an
analytical instrument for testing or monitoring. Vision's autosamplers range in
price from approximately $2,000 to $5,000.

OPTOELECTRONICS

Through its Centro Vision subsidiary, Vision designs, assembles, and
markets silicon photodiode detectors for ultraviolet, visible, and near-infrared
applications. Silicon photodiodes are light-sensing elements constructed from
silicon wafers similar to those used in the manufacture of integrated circuits.
These devices differ from CID and CCD devices in that photodiodes are single
light sensors, while CID and CCD devices are an array of light sensors. Revenues
from the sale of optoelectronic devices by Centro Vision (which was an
independent company throughout fiscal 1996 and through July 5, 1997) totalled
approximately $5.5 million in fiscal 1996 and approximately $2.8 million for the
six months ended June 28, 1997.

Vision customizes its photodiodes for specific applications by
incorporating particular materials into windows or filters placed in front of
the photodiodes. For example, because ordinary glass absorbs ultraviolet
wavelengths, Vision places a fused silica or ultraviolet transmitting window
over its photodiodes for ultraviolet-detection applications. Another type of
filter used by Vision modifies the normal silicon response to approximate the
spectral response of the human eye. In order to sense X-rays, Vision coats the
photodiode with scintillation crystals that convert X-ray radiation to
longer-wavelength radiation that can be detected by a silicon photodiode sensor.
To enhance a device's response at a desired wavelength, Vision applies an
antireflection coating directly to the silicon in some cases.

The primary customers for Vision's silicon photodiode detectors are
manufacturers of medical diagnostic and analytical instruments. In these
instruments, the Vision photodiode detectors are used to sense or measure the
light emitted by or passing through a sample. End-users employ these instruments
in applications such as blood oximetry (noninvasive monitoring of blood oxygen
saturation) and determination of various substances in bodily fluids. Vision
also offers photodiodes for use in a variety of space applications, such as in
NASA's sun trackers that are used to orient and stabilize satellites in orbit
and in the smoke sensors that have been approved for use in space station Alpha.
Other applications include monitoring ultraviolet sources in drinking water
purifiers that use ultraviolet radiation to kill impurities, computer security
code readers in financial institutions, "magic-eye" door openers, stamp
detectors for the U.S. Post Office, and flame detectors in gas furnaces.
Vision's silicon photodiode detectors range in price from approximately $0.10 to
$2,000.

26
<PAGE> 28

As with its CID sensors, Vision contracts with third parties for the
fabrication of the silicon wafers used in its photodiode sensors in accordance
with Vision's designs and specifications, and itself performs quality control
and assurance and product assembly.

FIBER OPTICS

Vision's Oriel subsidiary offers a line of specialty fiber optic cables for
the transmission of different wavelengths of light. Certain of these cables are
bifurcated to permit two-way transmittal of light or are bundled for special
applications. Most of the specialty fiber optic cable that Vision sells is used
for remote sensing applications. Vision's fiber optics products range in price
from approximately $30 per meter to $1,600 per meter. Revenues from the sale of
fiber optic cables by Oriel (including in fiscal 1996 the period prior to its
acquisition by Vision) totalled approximately $1.0 million in fiscal 1996 and
approximately $0.5 million for the six months ended June 28, 1997.

RESEARCH AND DEVELOPMENT

Vision maintains active programs for the development of new technologies
and the enhancement of its existing products. In addition, Vision seeks to
develop new applications for its products and technologies. Vision incurred
research and development expenses of $144,000; $743,000; and $3,499,000 in 1994,
1995, and 1996, respectively. In addition, Vision received $28,000; $490,000;
and $532,000 for customer-sponsored contract research and development expenses
in 1994, 1995, and 1996, respectively. Vision's principal research and
development projects in 1996 were directed at the development of its CID sensor
for use in a dental imaging system and the MIR 8000 modular spectrophotometer
and extending the life of its optical filter products by increasing humidity
resistance.

The current focus of Vision's research and development efforts include
developing a filter to isolate a particular ultraviolet wavelength from a
mercury lamp for use in semiconductor photolithography, continuing work on
extending the life of its optical filters through increased humidity resistance,
and improving the performance and reliability of its pulsed CO(2) laser
products.

Vision is seeking to leverage its CID technology by developing a
radiation-hardened, color CID camera for use in the inspection of nuclear power
plants. A customer is funding a portion of the costs of this project in exchange
for distribution rights in a specified territory. Vision believes that there may
be significant applications for color CID cameras in markets outside of nuclear
inspection. Because of the resistance of CID sensors to radiation, Vision also
is developing, in collaboration with a medical instrument manufacturer, a CID
camera for use in aiming X-rays with a high degree of precision at the cancerous
area of a patient receiving radiation therapy.

SALES AND MARKETING

Vision markets its products both in the U.S. and internationally by means
of technical catalogues and through the dealer and distributor networks of its
subsidiaries and divisions. Vision sells directly to larger OEM buyers through
the direct sales forces of its subsidiaries and divisions. Vision trains the
members of its sales forces on the technical aspects of its products so that
they are able to respond to questions and otherwise support customers, dealers,
and distributors. Vision holds a minority equity interest in LOT-Oriel Holding
GmbH ("LOT-Oriel"), a large European distributor of photonics products. A
representative of Vision serves as a member of LOT-Oriel's Board of Directors.
Vision believes that its relationship with LOT-Oriel enhances Vision's
visibility in and access to the European photonics market. In fiscal 1994, 1995,
and 1996, international sales comprised approximately 40%, 31%, and 37%
respectively, of Vision's total product sales.

Vision's Oriel, Corion, and Centro Vision businesses produce catalogues
used by Vision in marketing and selling its photonics products. These catalogues
provide both detailed technical information of interest to designers of systems
that incorporate photonics products and components along with product
specifications and highlights. Over the years, Oriel's informative series of
photonics product catalogues have become a staple on engineers' and scientists'
bookshelves. Oriel mails its catalogues without

27
<PAGE> 29

charge to more than 85,000 potential customers worldwide. Vision makes its
catalogues widely available so that designers will incorporate Vision's products
into prototypes, ultimately resulting in new supply relationships as the
products are commercialized.

All seven Vision subsidiaries and divisions use Web sites to reach Vision's
large and technically sophisticated customer base. A number of Vision's Web
sites include catalogues that are easy to update and portions of which can be
directly downloaded by a potential customer. Vision plans to produce certain
catalogues on CD-ROMs in order to further reduce marketing costs.

Vision's backlog was $10.0 million as of June 28, 1997, compared with $8.6
million as of June 29, 1996. Vision includes in its backlog only orders
confirmed with a purchase order for products scheduled to be shipped within one
year.

MANUFACTURING AND RAW MATERIALS

Vision designs and manufacturers most of its products internally. Vision's
manufacturing processes are diverse and range from the purchase of raw materials
and the performance of significant processing in the case of the production of
filters by Corion and optical crystals by Hilger, to outsourcing manufacture of
primary components to third parties in the case of the production of CID sensors
by CIDTEC and photodiodes by Centro Vision, to assembly and testing of purchased
components in the case of optical sources by Oriel, lasers by LSI, and
autosamplers by Thermo Vision Colorado. Vision believes that its in-house
manufacturing and assembly capabilities allow it to achieve highly competitive
delivery times and significantly reduces its time to introduce new products to
market.

Vision purchases the silicon wafers used in its CID sensors and silicon
photodiodes from third-party manufacturers that produce the wafers in accordance
with Vision's designs and specifications. Vision currently purchases CID wafers
from a single supplier, although it is exploring alternative sources of supply
and believes that a number of other qualified wafer fabricators are available.
Vision purchases CID wafers from its existing supplier on a purchase-order basis
and does not have a formal supply arrangement with this company. Vision believes
that outsourcing the production of these wafers enables it to avoid the
technological risks and significant capital costs associated with maintaining
its own fabrication lines.

INTELLECTUAL PROPERTY

Vision's success depends in part on the strength and protection of its
proprietary methodologies and designs and other proprietary intellectual rights.
Vision believes that its manufacturing know-how, particularly with respect to
its optical filters and crystals, provides it with a competitive advantage.
Vision relies upon a combination of patent, trade secret, nondisclosure and
other contractual arrangements, and copyright and trademark laws to protect its
proprietary rights. Vision seeks to limit access to and distribution of its
proprietary information. There can be no assurance that the steps taken by
Vision in this regard will be adequate to deter misappropriation of its
proprietary information, that Vision will be able to detect unauthorized use and
take appropriate steps to enforce its intellectual property rights, or that
competitors will not be able to develop similar technology independently.

Vision currently holds five issued U.S. patents expiring at various dates
ranging from 1999 to 2012. Vision also has six applications pending for
additional U.S. patents and a number of foreign counterparts for its patents in
various foreign countries. Vision also has certain registered and other
trademarks. In addition, Vision has entered into license agreements with other
companies pursuant to which it grants or receives the rights to certain
technology, know-how or patents. Three of the Company's issued U.S. patents and
four of its U.S. patent applications pertain to its CID technology. In addition,
the Company holds a nonexclusive license to certain additional patents relating
to CID technology. See "Risk Factors -- Risks Associated with Protection,
Defense, and Use of Intellectual Property."

28
<PAGE> 30

COMPETITION

The photonics industry is highly competitive. Vision competes with a number
of companies, many of which have substantially greater financial, marketing, and
other resources than Vision. Vision's principal competitors include
Melles-Griot, Inc.; Optical Coating Laboratory, Inc.; Newport Corporation;
Coherent, Inc.; Corning OCA Corporation; Bicron Business Unit of Saint-Gobain
Industrial Ceramics, Inc.; and UDT Sensors, Inc. Vision competes primarily in
each of the photonics market segments on the basis of product features,
performance, reliability, and price. Although Vision believes that its products
currently compete favorably with respect to such factors, there can be no
assurance that Vision can maintain its competitive position against current and
potential competitors, especially those with greater financial, manufacturing,
market, technical, and other competitive resources. Competition could increase
if new companies enter the market or if existing competitors expand their
product lines. See "Risk Factors -- Risks Associated with Technological Change,
Obsolescence, and the Development and Acceptance of New Products" and
"-- Intense Competition."

FACILITIES

Vision's various businesses are operated from separate facilities, as set
forth in the table below. All of these facilities are used for manufacturing,
research and development, sales and marketing, and administration purposes.

<TABLE>
<CAPTION>
APPROXIMATE
LOCATION SQUARE FEET OWNED/LEASED LEASE EXPIRATION
------------------------------------------- ----------- ------------ ----------------
<S> <C> <C> <C>
Franklin, MA .............................. 40,400 Leased 2006
Grand Junction, CO......................... 3,600 Owned --
Stratford, CT. ............................ 50,000 Leased 1998
Margate, England........................... 15,000 Leased 2002
Liverpool, NY. ............................ 11,000 Leased 2006
Newbury Park, CA........................... 18,400 Leased 1999
</TABLE>

With the exception of the Stratford, Connecticut, facility, Vision believes
that these facilities are adequate for its present operations and that suitable
additional space will be available as needed in the future. Vision has leased a
new facility in Stratford, Connecticut, to which it plans to relocate its Oriel
subsidiary's operations in the first quarter of 1998. The new premises consist
of approximately 30,000 square feet and the lease of these new premises will
expire in 2008.

PERSONNEL

As of June 28, 1997, Vision had a total of 217 employees. In July 1997,
Vision acquired Centronic, which had an additional 25 employees. Of these 242
total employees, 44 are engaged in research and development, 35 in sales and
marketing, 130 in manufacturing, and 33 in general administrative functions. To
date, Vision has been able to attract and retain the personnel required by its
business, but there can be no assurance that additional skilled personnel
necessary to successfully expand Vision's business and operations can be
recruited and retained. None of Vision's employees is subject to a collective
bargaining agreement, other than six employees of Hilger. Vision believes that
its relationships with employees are good.

LEGAL PROCEEDINGS

Vision is not a party to any litigation that it believes could have a
material adverse effect on Vision or its results of operations.

29
<PAGE> 31

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table provides information about the current executive
officers and directors of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
--------------------------------------- --- ---------------------------------------
<S> <C> <C>
Kristine S. Langdon.................... 38 President, Chief Executive Officer, and
Director
John N. Hatsopoulos.................... 63 Chief Financial Officer, Vice
President, and Director
Allen J. Smith......................... 49 Vice President
Paul F. Kelleher....................... 55 Chief Accounting Officer
Earl R. Lewis.......................... 53 Chairman of the Board and Director
Dr. D. Allan Bromley(1)................ 71 Director
Arvin H. Smith......................... 68 Director
</TABLE>

- ---------------
(1) Member of the Audit and Human Resources Committee

Kristine S. Langdon has been President, Chief Executive Officer, and a
director of the Company since its inception in November 1995. She served as
President of Thermo Jarrell Ash Corporation, a subsidiary of Optek that
manufactures elemental spectrometers, from January 1996 until October 1996 and
has served as Vice President of Optek since its inception in August 1995. Ms.
Langdon was Special Assistant to the Presidents of Thermo Electron and Thermo
Instrument from August 1991 to April 1994 and Director of Business Development
of Thermo Jarrell Ash Corporation from April 1994 until being named President
and Chief Executive Officer of that corporation. From 1987 to 1991, Ms. Langdon
was employed by McKinsey & Co., a management consulting firm, most recently as
an engagement manager.

John N. Hatsopoulos has been Chief Financial Officer, Vice President, and a
director of the Company since August 1997. Mr. Hatsopoulos has been Chief
Financial Officer, Vice President, and a director of Optek since its inception
in August 1995. Mr. Hatsopoulos has been Chief Financial Officer and a Vice
President of Thermo Instrument since 1988. Mr. Hatsopoulos has been President of
Thermo Electron since January 1997, Chief Financial Officer of Thermo Electron
since 1988, and was an Executive Vice President of Thermo Electron from 1986
until January 1997. He is also a director of Thermo Electron and of Thermo
Instrument, Metrika Systems Corporation, Thermedics Detection Inc., Thermedics
Inc., Thermo Ecotek Corporation, Thermo Fibertek Inc., Thermo Power Corporation,
Thermo TerraTech Inc., and ThermoTrex Corporation, all of which are subsidiaries
of Thermo Electron, and of LOIS/USA Inc.

Allen J. Smith has been Vice President of the Company since August 1997 and
Chairman of the Company's Oriel subsidiary since October 1994. Mr. Smith served
Oriel in various capacities, including Executive Vice President, Vice President,
general manager, and sales and marketing manager from February 1970 to October
1994.

Paul F. Kelleher has been Chief Accounting Officer of the Company since its
inception in November 1995. Mr. Kelleher has been the Chief Accounting Officer
of Optek since its inception in August 1995 and of Thermo Instrument since its
inception in 1986. Mr. Kelleher has been Senior Vice President, Finance and
Administration of Thermo Electron since June 1997 and served as its Vice
President, Finance from 1987 to 1997, and as its Controller from 1982 to January
1996. He is also a director of ThermoLase Corporation, a subsidiary of Thermo
Electron.

Earl R. Lewis has been a director of the Company since its inception in
November 1995. Mr. Lewis has been Chief Executive Officer and a director of
Optek since its inception in August 1995 and Chairman

30
<PAGE> 32

of the Board of Optek since April 1997. He also served as Optek's President from
August 1995 to April 1997. Mr. Lewis served as President of Thermo Jarrell Ash
Corporation through December 1995, and for more than five years prior to that
date. Mr. Lewis has been President and Chief Operating Officer of Thermo
Instrument since March 1997 and January 1996, respectively, was an Executive
Vice President of Thermo Instrument from January 1996 to March 1997, and was a
Vice President of Thermo Instrument from 1990 through 1995. Mr. Lewis has been
Vice President of Thermo Electron since September 1996. Mr. Lewis is also a
director of Metrika Systems Corporation, Thermo BioAnalysis Corporation,
ThermoQuest Corporation, and ThermoSpectra Corporation, all of which are
subsidiaries of Thermo Electron.

D. Allan Bromley has been a director of the Company since September 1997.
Dr. Bromley has held numerous positions at Yale University since 1960, including
Dean of Engineering since 1994, Sterling Professor of the Sciences since 1993,
Henry Ford II Professor of Physics from 1972 to 1993, Chairman of the Physics
Department from 1970 to 1977, and Founder and Director of the A.W. Wright
Nuclear Structure Laboratory from 1963 to 1989. He served in the Executive
Office of the President of the United States as Assistant to the President for
Science and Technology and as Director, Office of Science and Technology Policy,
from 1989 to 1993. He is also a director of numerous nonprofit organizations.
Dr. Bromley serves on many national scientific committees and panels, including
of the U.S. National Academy of Sciences, the American Academy of Arts and
Sciences, the American Physical Society, the American Institute of Physics, and
the Washington Advisory Group LLC, and has received numerous academic and
scientific awards and honors, including the National Medal of Science in 1988.

Arvin H. Smith has been a director of the Company since its inception in
November 1995. Mr. Smith has been a director of Optek since its inception in
August 1995. Mr. Smith has been the Chairman of the Board and Chief Executive
Officer of Thermo Instrument since March 1997 and 1986, respectively, has been a
director of Thermo Instrument since 1986, and was President of Thermo Instrument
from 1986 to March 1997. Mr. Smith has been an Executive Vice President of
Thermo Electron since 1991 and a Senior Vice President of Thermo Electron from
1986 to 1991. Mr. Smith is also a director of Metrika Systems Corporation,
Thermo BioAnalysis Corporation, Thermo Power Corporation, ThermoQuest
Corporation, and ThermoSpectra Corporation.

BOARD COMMITTEES

The Board has established an Audit Committee and a Human Resources
Committee, each composed solely of Dr. Bromley. The Audit Committee reviews the
scope of audits with the Company's independent public accountants and meets with
them for the purpose of reviewing the results of such audits subsequent to their
completion. The Human Resources Committee reviews the performance of senior
members of management, recommends executive compensation, and administers the
Company's stock option and other stock-based compensation plans. It is currently
anticipated that the Company will not establish a nominating committee of the
Board.

COMPENSATION OF DIRECTORS

All directors who are not employees of the Company, Thermo Electron, or
another company affiliated with Thermo Electron ("outside directors") will
receive an annual retainer of $2,000 and a fee of $1,000 per day for attending
regular meetings of the Board, and $500 per day for participating in meetings of
the Board held by means of conference telephone, and for participating in
certain meetings of committees of the Board. Payment of directors fees will be
made quarterly. Ms. Langdon and Messrs. Hatsopoulos, Lewis, and Arvin H. Smith
are all employees of Thermo Electron companies and do not receive any cash
compensation from the Company for their services as directors. Directors are
also reimbursed for reasonable out-of-pocket expenses incurred in attending
Board or committee meetings.

Directors Deferred Compensation Plan. Under the Company's Deferred
Compensation Plan for Directors (the "Deferred Compensation Plan"), a director
has the right to defer receipt of his fees until he ceases to serve as a
director, dies, or retires from his principal occupation. In the event of a
change in control or proposed change in control of the Company that is not
approved by the Board, deferred

31
<PAGE> 33

amounts become payable immediately. Either of the following is deemed to be a
change of control: (a) the occurrence, without the prior approval of the Board,
of the acquisition, directly or indirectly, by any person of 50% or more of the
Company's outstanding Common Stock or the outstanding common stock of Thermo
Instrument, or 25% or more of the outstanding common stock of Thermo Electron,
or (b) the failure of the persons serving on the Board immediately prior to any
contested election of directors, or any exchange offer or tender offer for the
Company's Common Stock, or the common stock of Thermo Instrument or Thermo
Electron to constitute a majority of the Board at any time within two years
following any such event. Amounts deferred pursuant to the Deferred Compensation
Plan are valued at the end of each quarter as units of Common Stock. When
payable, amounts deferred may be disbursed solely in shares of Common Stock
accumulated under the Deferred Compensation Plan. The Company has reserved
25,000 shares of Common Stock under this plan. The Deferred Compensation Plan
will become effective upon the Distribution Date. No units have been accumulated
under this plan.

STOCK OWNERSHIP POLICY FOR DIRECTORS

The Company 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 will be requested to achieve this ownership level by the
1999 Annual Meeting of Shareholders of the Company. This ownership level may be
achieved by purchases of shares of Common Stock of the Company in the open
market or through the exercise of stock options. Directors who are also
executive officers of the Company will be required to comply with a separate
stock holding policy that will be adopted for executive officers. See "Certain
Transactions -- Relationship with Thermo Electron and Thermo Instrument -- Stock
Holding Policy and Assistance Plan."

COMPENSATION OF EXECUTIVE OFFICERS

The following table summarizes compensation for services to the Company in
all capacities awarded to, earned by, or paid to the Company's Chief Executive
Officer and other most highly compensated executive officer for the fiscal year
ended December 28, 1996, and, in the case of the Chief Executive Officer only,
for the fiscal year ended December 30, 1995. No other executive officer of the
Company who held office at the end of fiscal 1996 met the definition of "highly
compensated" within the meaning of the Securities and Exchange Commission's (the
"Commission") executive compensation disclosure rules for this period.

The Company is required to appoint certain executive officers and full-time
employees of Thermo Electron as executive officers of the Company, in accordance
with the Thermo Electron Corporate Charter. The compensation for these executive
officers is determined and paid entirely by Thermo Electron. The time and effort
devoted by these individuals to the Company's affairs is provided to the Company
under the Corporate Services Agreement between the Company and Thermo Electron.
Accordingly, the compensation for these individuals is not reported in the
following table. See "Certain Transactions -- Relationship With Thermo Electron
and Thermo Instrument."

32
<PAGE> 34

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------
SECURITIES
ANNUAL UNDERLYING
COMPENSATION OPTIONS
FISCAL ------------------ (NO. OF SHARES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AND COMPANY)(1) COMPENSATION(2)
- ---------------------------------- ------ -------- ------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Kristine S. Langdon(3)............ 1996 $100,000 $40,000 75,000(TOC) $ 5,344
President and Chief Executive 1995 93,000 35,000 5,000(TMQ) 5,198
Officer
Allen J. Smith(4)................. 1996 98,932 30,000 22,500(TOC) 4,037
Vice President
</TABLE>

- ---------------
(1) No options to purchase shares of Common Stock had been granted as of October
17, 1997. See "Management -- Planned Vision Stock Option Grants." The named
executive officers have been granted options to purchase common stock of
certain subsidiaries of Thermo Electron as part of Thermo Electron's stock
option program. Options have been granted to the Chief Executive Officer
during the last two fiscal years and the other named executive officer
during the last fiscal year in the following Thermo Electron companies:
Optek (designated in the table as "TOC") and ThermoQuest Corporation
(designated in the table as "TMQ").

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

(3) Ms. Langdon was appointed President and Chief Executive Officer of the
Company in November 1995. Reported in the table under "Annual Compensation"
and "All Other Compensation" are the total amounts paid in fiscal 1995 for
her service in all capacities to Thermo Electron, Optek, and Optek's
subsidiaries.

(4) Mr. Smith was appointed Vice President of the Company in August 1997. He has
been Chairman of Oriel, which was acquired by the Company in February 1996,
since October 1994. Reported in the table under "Annual Compensation" and
"All Other Compensation" is Mr. Smith's compensation for fiscal 1996 paid
subsequent to the acquisition of Oriel by the Company.

Stock Options Granted During Fiscal 1996

The following table sets forth certain information concerning individual
grants of stock options made during fiscal 1996 to the Company's Chief Executive
Officer and other named executive officer. It has not been the policy of Thermo
Electron companies in the past to grant stock appreciation rights, and no such
rights were granted during fiscal 1996.

OPTION GRANTS IN FISCAL 1996

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------------------- ANNUAL RATES OF STOCK
NUMBER OF % OF TOTAL PRICE APPRECIATION
SHARES OPTIONS FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------------
NAME GRANTED(1)(2) FISCAL 1996 SHARE DATE 5% 10%
- ------------------------ ------------- ------------ --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kristine S. Langdon..... 75,000(TOC) 4.0%(4) $ 12.00 4/11/08 $716,250 $1,924,500
5,000(TMQ) 0.2%(4) 13.00 2/08/08 51,750 139,000
Allen J. Smith.......... 22,500(TOC) 1.2%(4) 12.00 4/11/08 214,875 577,350
</TABLE>

- ---------------
(1) No options to purchase shares of Common Stock had been granted as of October
17, 1997. See "Management -- Planned Vision Stock Option Grants."

33
<PAGE> 35

(2) All of the options granted during the fiscal year are immediately
exercisable as of the end of the fiscal year. In all cases, the shares
acquired upon exercise are subject to repurchase by the granting corporation
at the exercise price if the optionee ceases to be employed by the granting
corporation or another Thermo Electron company. The granting corporation may
exercise its repurchase rights within six months after the termination of
the optionee's employment. For publicly traded companies, the repurchase
rights generally lapse ratably over a five- to ten-year period, depending on
the option term, which may vary from seven to twelve years, provided that
the optionee continues to be employed by the granting corporation or another
Thermo Electron company. For companies that are not publicly traded, the
repurchase rights lapse in their entirety on the ninth anniversary of the
grant date. The granting corporation may permit the holders 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.

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

(4) These options were granted under stock option plans maintained by Thermo
Electron or its subsidiaries other than Optek as part of Thermo Electron's
compensation program, and accordingly, are reported as a percentage of total
options granted to employees of Thermo Electron and its subsidiaries.

Stock Options Exercised During Fiscal 1996 and Fiscal Year-End Option Values

The following table reports certain information regarding stock option
exercises during fiscal 1996 and outstanding stock options held at the end of
fiscal 1996 by the Company's Chief Executive Officer and other named executive
officer. No stock appreciation rights were exercised or were outstanding during
fiscal 1996.

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

<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY OPTIONS
SHARES UNEXERCISED OPTIONS AT FISCAL YEAR-END
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME COMPANY EXERCISE REALIZED UNEXERCISABLE(1) UNEXERCISABLE(1)
- ----------------------------- -------------- ----------- -------- --------------------- --------------------
<S> <C> <C> <C> <C> <C>
Kristine S. Langdon(2)....... Optek -- -- 75,000/ --/
ThermoQuest
Corporation -- -- 5,000/ --/
ThermoSpectra
Corporation -- -- 400/ $ 750/
Allen J. Smith............... Optek -- -- 22,500/ --/
</TABLE>

- ---------------
(1) All of the options reported outstanding at the end of the fiscal year were
immediately exercisable. In all cases, the shares acquired upon exercise of
the options reported in the table are subject to repurchase by the granting
corporation at the exercise price if the optionee ceases to be employed by
such corporation or another Thermo Electron company. The granting
corporation may exercise its repurchase rights within six months after the
termination of the optionee's employment. For publicly traded companies, the
repurchase rights generally lapse ratably over a five- to ten-year period,
depending on the option term, which may vary from seven to twelve years,
provided that the optionee continues to be employed by the granting
corporation or another Thermo Electron company. For companies the shares of
which are not publicly traded, the repurchase rights

34
<PAGE> 36
generally lapse in their entirety on the ninth anniversary of the grant
date. The granting corporation may permit the holder of such options to
exercise options and to satisfy tax-withholding obligations by surrendering
shares equal in fair market value to the exercise price or withholding
obligation.

(2) Ms. Langdon has been an employee of Thermo Instrument since April 1, 1994,
and was named President of the Company in November 1995. Prior to April 1,
1994, she was employed by Thermo Electron and holds unexercised options to
purchase shares of common stock of Thermo Electron and certain of its
subsidiaries other than Optek as compensation for her service to Thermo
Electron. These options are not reported in the table as they were granted
as compensation for service to other Thermo Electron companies and prior to
her service to Optek or the Company.

PLANNED VISION STOCK OPTION GRANTS

The Company has adopted an Equity Incentive Plan (the "EIP") and has
reserved an aggregate of shares of Common Stock for issuance to employees
and directors of and consultants to the Company pursuant thereto. Prior to
consummation of this offering, it is anticipated that options covering an
aggregate of shares of Common Stock will be granted pursuant to the EIP,
including options covering shares, shares and, shares of Common
Stock to be granted to Kristine S. Langdon, Allen J. Smith, and to each of the
Company's directors, respectively, at an exercise price of $ per share.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

PRINCIPAL STOCKHOLDER

The following table sets forth certain information regarding the number of
shares of the Company's Common Stock expected to be distributed on the
Distribution Date to Thermo Instrument, which is the only person or entity that
is expected by the Company to own beneficially more than five percent of the
outstanding shares of Common Stock.

<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE OF OUTSTANDING
OF BENEFICIAL OWNER BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
------------------------------------------- ------------------ -------------------------
<S> <C> <C>
Thermo Instrument Systems Inc.(1).......... 4,499,995 93%
1851 Central Drive
Suite 314
Bedford, Texas 76021
</TABLE>

- ---------------
(1) Thermo Electron beneficially owned approximately 83% of the common stock of
Thermo Instrument outstanding as of June 28, 1997. Accordingly, Thermo
Electron may be deemed to be a beneficial owner of the shares of the
Company's Common Stock beneficially owned by Thermo Instrument following the
Distribution. Thermo Electron disclaims beneficial ownership of these
shares. Following the Distribution, Thermo Instrument will have the power to
elect all of the members of the Board.

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

MANAGEMENT

The following table sets forth the number of shares of the Company's Common
Stock expected to be distributed on the Distribution Date to, as well as the
number of shares of Thermo Instrument common stock and Thermo Electron common
stock beneficially owned as of June 28, 1997, by (i) each executive officer
named in the summary compensation table under the heading "Compensation of
Executive Officers," (ii) each director of the Company, and (iii) all of the
Company's directors and executive officers as a group, following the
Distribution Date. The information set forth below with respect to the

35
<PAGE> 37

Company's Common Stock is based on certain information known to the Company with
respect to such persons' beneficial ownership of shares of common stock of Optek
as of June 28, 1997. The table assumes with respect to the Company's Common
Stock, that ownership of common stock of Optek by such persons will not change
before the Record Date of Distribution.

While certain directors and executive officers of the Company are also
directors and executive officers of Thermo Instrument or its subsidiaries other
than the Company, all such persons disclaim beneficial ownership of the shares
of the Company's Common Stock to be distributed to Thermo Instrument.

<TABLE>
<CAPTION>
THERMO THERMO
NAME(1) VISION(2) INSTRUMENT(3) ELECTRON(4)
--------------------------------------------------- --------- ------------- -----------
<S> <C> <C> <C>
D. Allan Bromley................................... 0 0 0
John N. Hatsopoulos................................ 3,000 81,204 632,768
Kristine S. Langdon................................ 50 7,417 16,452
Earl R. Lewis...................................... 2,900 178,233 124,184
Allen J. Smith..................................... 0 0 0
Arvin H. Smith..................................... 800 431,667 519,038
All directors and current executive officers as a
group (6 persons)................................ 6,750 717,213 1,427,936
</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) This table does not include options to purchase shares of the Company's
Common Stock anticipated to be granted prior to the consummation of this
offering. See "Management -- Planned Vision Stock Option Grants." Shares of
the Company's Common Stock beneficially owned by Ms. Langdon include a total
of 50 shares held by her as custodian for two minor children. Shares of the
Company's Common Stock beneficially owned by Earl R. Lewis include 250
shares owned by his spouse and a total of 200 shares owned by two sons.
Immediately following consummation of the Distribution, it is expected that
(i) Thermo Instrument will beneficially own 93% of the outstanding shares of
the Company's Common Stock and (ii) the directors and executive officers of
the Company will not individually or as a group beneficially own more than
1% of the outstanding shares of the Company's Common Stock.

(3) Shares of the common stock of Thermo Instrument beneficially owned by Mr.
Hatsopoulos, Ms. Langdon, Mr. Lewis, Mr. Arvin H. Smith, and all directors
and executive officers as a group include 65,625; 7,124; 162,500; 234,375;
and 484,624 shares, respectively, that such person or group had the right to
acquire within 60 days after June 28, 1997, through the exercise of stock
options. Shares of the common stock of Thermo Instrument beneficially owned
by Mr. Hatsopoulos, Mr. Arvin H. Smith, and all directors and executive
officers as a group include 529; 530; and 1,455 shares, respectively,
allocated through June 28, 1997, to their respective accounts maintained
pursuant to Thermo Electron's employee stock ownership plan, of which the
trustees, who have investment power over its assets, are executive officers
of Thermo Electron (the "ESOP"). Shares beneficially owned by Ms. Langdon
include 293 shares held by her as custodian for two minor children. Shares
beneficially owned by Mr. Lewis include 2,390 shares held by Mr. Lewis'
spouse. The directors and executive officers of the Company did not
individually or as a group beneficially own more than 1% of the common stock
of Thermo Instrument outstanding as of June 28, 1997.

(4) The shares of the common stock of Thermo Electron shown in the table reflect
a three-for-two split of such stock distributed in June 1996 in the form of
a 50% stock dividend. Shares of the common stock of Thermo Electron
beneficially owned by Mr. Hatsopoulos, Ms. Langdon, Mr. Lewis, Mr. Arvin H.
Smith, and all directors and executive officers as a group include 535,685;
15,750; 121,536; 228,411; and 996,519 shares, respectively, that such person
or group has the right to acquire within 60 days of June 28, 1997, through
the exercise of stock options. Shares beneficially

36
<PAGE> 38

owned by Ms. Langdon include 702 shares held by her as custodian for two
minor children. Shares of the common stock of Thermo Electron beneficially
owned by Mr. Hatsopoulos, Mr. Arvin H. Smith, and all directors and
executive officers as a group include 1,934; 1,717; and 4,975 full shares,
respectively, allocated to accounts maintained pursuant to the ESOP. The
directors and executive officers of the Company did not individually or as a
group beneficially own more than 1% of the common stock of Thermo Electron
outstanding as of June 28, 1997.

37
<PAGE> 39

CERTAIN TRANSACTIONS

The following is a description of the principal terms of the agreements and
arrangements involving the Company and Thermo Electron, Thermo Instrument,
Optek, and other members of the Thermo Group (as defined below).

RELATIONSHIP WITH THERMO ELECTRON AND THERMO INSTRUMENT

The Company was organized in November 1995 as a wholly owned subsidiary of
Optek. Following consummation of the Distribution, Optek will own no shares of
the Company's Common Stock and Thermo Instrument will own approximately 93% of
the outstanding shares of the Company's Common Stock. Following consummation of
this offering, Thermo Instrument will own approximately 80% of the outstanding
shares of the Company's Common Stock.

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

Thermo Instrument develops, manufactures, and markets analytical
instruments used to detect and monitor air pollution, radioactivity, complex
chemical compounds and toxic metals, and other elements in a broad range of
liquids, gases, and solids. For its fiscal years ended December 31, 1994,
December 30, 1995, and December 28, 1996, Thermo Instrument had consolidated
revenues of $649,992,000; $782,662,000; and $1,209,362,000; respectively, and
consolidated net income of $60,220,000; $79,306,000; and $132,751,000,
respectively.

Thermo Electron and its subsidiaries develop, manufacture, and market
environmental monitoring and analysis instruments and manufacture biomedical
products, including heart-assist devices and mammography systems, papermaking
and recycling equipment, alternative-energy systems, and other specialized
products and technologies. Thermo Electron and its subsidiaries also provide
environmental and metallurgical services and conduct advanced technology
research and development. For its fiscal years ended December 31, 1994, December
30, 1995, and December 28, 1996, Thermo Electron had consolidated revenues of
$1,729,191,000; $2,270,291,000; and $2,932,558,000; respectively, and
consolidated net income of $104,711,000; $139,582,000; and $190,816,000;
respectively.

See "Risk Factors -- Potential Conflicts of Interest."

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

To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies, and provides for centralized administrative, banking, and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and

38
<PAGE> 40

the Thermo Subsidiaries (the "Thermo Group") to external financing sources,
ensuring compliance with external financial covenants and internal financial
policies, assisting in the formulation of long-range planning, and providing
other banking and credit services. Pursuant to the Charter, Thermo Electron may
also provide guarantees of debt or other obligations of the Thermo Subsidiaries
or may obtain external financing at the parent level for the benefit of the
Thermo Subsidiaries. In certain instances, the Thermo Subsidiaries may provide
credit support to, or on behalf of, the consolidated entity or may obtain
financing directly from external financing sources. Under the Charter, Thermo
Electron is responsible for determining that the Thermo Group remains in
compliance with all covenants imposed by external financing sources, including
covenants related to borrowings of Thermo Electron or other members of the
Thermo Group, and for apportioning such constraints within the Thermo Group. In
addition, Thermo Electron establishes certain internal policies and procedures
applicable to members of the Thermo Group. The cost of the services provided by
Thermo Electron to the Thermo Subsidiaries is covered under existing corporate
services agreements between Thermo Electron and each of the Thermo Subsidiaries.

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

Corporate Services Agreement. As provided in the Charter, the Company and
Thermo Electron have entered into a Corporate Services Agreement (the "Services
Agreement") under which Thermo Electron's corporate staff provides certain
administrative services, including certain legal advice and services, risk
management, employee benefit administration, tax advice and preparation of tax
returns, centralized cash management, and certain financial and other services
to the Company. The Company was assessed an annual fee equal to 1.25%, 1.2%, and
1.0% of its revenues for these services in fiscal 1994, 1995, and 1996,
respectively. The fee is reviewed annually and may be changed by mutual
agreement of the Company and Thermo Electron. During fiscal 1994, 1995, and
1996, Thermo Electron assessed the Company $53,000; $72,000; and $304,000;
respectively.

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

Tax Allocation Agreement. The Tax Allocation Agreement between the Company
and Thermo Electron outlines the terms under which the Company is to be included
in Thermo Electron's consolidated Federal and state income tax returns. Under
current law, the Company will be included in such tax returns

39
<PAGE> 41

so long as Thermo Electron owns at least 80% of the outstanding common stock of
Thermo Instrument and Thermo Instrument owns at least 80% of the outstanding
Common Stock of the Company. In years in which the Company has taxable income,
it will pay to Thermo Electron amounts comparable to the taxes the Company would
have paid if it had filed its own separate-company tax returns. If Thermo
Instrument's equity ownership of the Company were to drop below 80%, the Company
would file its own tax returns.

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

Master Repurchase Agreement. The Company's cash equivalents are invested
in a Master Repurchase Agreement with Thermo Electron, pursuant to which the
Company in effect lends cash to Thermo Electron, which Thermo Electron
collateralizes with investments principally consisting of corporate notes,
United States government-agency securities, money market funds, commercial
paper, and other marketable securities, in the amount of at least 103% of such
obligation. The Company's funds subject to the Master Repurchase Agreement will
be readily convertible into cash by the Company and will have an original
maturity of three months or less. The Master Repurchase Agreement earns a rate
based on the 90-day Commercial Paper Composite Rate plus 25 basis points, set at
the beginning of each quarter.

Stock Holding Policy and Assistance Plan. The Company has adopted a stock
holding policy which requires its executive officers to acquire and hold a
minimum number of shares of Common Stock. This minimum ownership level may be
achieved by purchases of shares of Common Stock of the Company in the open
market or through the exercise of stock options. In order to assist the
executive officers in complying with the policy, the Company has also adopted a
stock holding assistance plan under which it may make interest-free loans to
certain key employees, including its executive officers, to enable such
employees to purchase the Common Stock in the open market.

OTHER RELATIONSHIPS

In August 1997, the Company's Hilger subsidiary purchased the
crystal-materials business of Hilger Analytical, a wholly owned subsidiary of
Optek, in consideration for the assumption by the Company of $908,000 of Optek's
existing obligation under a line of credit. The weighted average interest rate
for borrowings by Optek under the line of credit in fiscal 1995 and 1996 was
6.5% and 6.75%, respectively. The Company's current obligation under the line of
credit bears interest at a rate of 6.75%.

In February 1997, in connection with its acquisition of LSI, the Company
borrowed $3.6 million from Optek pursuant to a promissory note (the "Laser
Science Note"). The Laser Science Note bears interest at the 90-day Commercial
Paper Composite Rate plus 25 basis points, set at the beginning of each quarter,
and has a term of approximately three years. In June 1997, the Company borrowed
an additional $347,000 from Optek pursuant to a promissory note (the "Franklin
Note") in order to finance the renovation of its Franklin, Massachusetts,
facility in connection with the LSI acquisition. The Franklin Note bears
interest at the 90-day Commercial Paper Composite Rate plus 25 basis points, set
at the beginning of each quarter, and has a term of approximately three years.

In July 1997, in connection with its acquisition of Centronic, the Company
borrowed $3.8 million from Thermo Electron pursuant to a promissory note (the
"Centronic Note"). The Centronic Note bears interest at the 90-day Commercial
Paper Composite Rate plus 25 basis points, set at the beginning of each quarter,
and has a term of approximately three years.

40
<PAGE> 42

The Company and Optek are parties to a CID Contract R&D Agreement pursuant
to which Optek has contracted with the Company to develop certain CID sensors
and systems for use in optical spectroscopy products manufactured and sold by
Optek. Optek has paid the Company $672,000 under the CID Contract R&D Agreement
from fiscal 1995 through the first six months of fiscal 1997. Under the CID
Contract R&D Agreement, Optek owns the resulting technology. Optek has granted
the Company an exclusive, perpetual, fully paid license to such technology in
all fields other than optical spectroscopy. The CID Contract R&D Agreement
expires in November 1997. In fiscal 1994, 1995, and 1996 and for the six months
ended June 28, 1997, Optek paid approximately $24,000; $418,000; and $188,000;
and $80,000; respectively, for research and development services performed by
the Company in connection with CID sensors and systems.

The Company and Optek are also parties to a Supply Agreement (the "CID
Supply Agreement") to be effective as of the Distribution Date pursuant to which
the Company has agreed to supply Optek with, and Optek has agreed to purchase
from the Company, all of Optek's requirements for CID sensors for use in Optek's
optical spectrometers. Under the CID Supply Agreement, the Company is not
permitted to sell CID sensors to any other manufacturer of optical
spectrometers. The CID Supply Agreement expires in 2007.

See "The Distribution" for a description of the Distribution Agreement and
Tax Matters Agreement between the Company and Optek relating to the
Distribution.

The Company has leased its office and manufacturing space in Franklin,
Massachusetts, from Thermo Instrument since March 1996. The Company's rent
expense under this lease is determined on the basis of its allocated share of
total occupancy expenses. The Company made lease payments to Thermo Instrument
in fiscal 1996 of $197,000. Beginning in January 1997, the Company's annual
rental expense increased to $234,000. This lease expires in 2006.

The Company's Hilger subsidiary leases its office and manufacturing space
in Margate, England, from Optek. From January 1994 through August 1997, the
Company's rent expense under this lease was determined on the basis of its
allocated share of total occupancy expenses. The Company made lease payments to
a subsidiary of Thermo Instrument in fiscal 1994, 1995, and 1996 of $46,000;
$91,000; and $100,000; respectively. Effective September 1997, Hilger has leased
this space from Optek pursuant to the Hilger Lease for an annual rental fee of
$43,200, plus its pro rata share of certain related expenses. The Hilger Lease
expires in 2002.

From time to time, the Company may transact business with other companies
in the Thermo Group in the ordinary course of business. In fiscal 1994, 1995,
and 1996 and for the six months ended June 28, 1997, the Company sold a total of
$1,290,000; $2,514,000; and $1,786,000; and $645,000; respectively, of products
to Thermo Electron subsidiaries and purchased a total of $211,000; $1,465,000;
and $971,000; and $91,000; respectively, of products from such companies.

The Company believes that the terms of the various transactions and
agreements described above were no less favorable than the Company could have
obtained from unaffiliated third parties.

41
<PAGE> 43

DESCRIPTION OF CAPITAL STOCK

COMMON STOCK

As of the date of this Prospectus, the Company has 20,000,000 shares of
Common Stock authorized for issuance, of which 4,845,000 shares are issued and
outstanding. Each share of Common Stock is entitled to pro rata participation in
distributions upon liquidation and to one vote on all matters submitted to a
vote of shareholders. Dividends may be paid to the holders of Common Stock when
and if declared by the Board out of funds legally available therefor. Holders of
Common Stock have no preemptive or similar rights. The outstanding shares of
Common Stock are, and the shares offered hereby when issued will be, legally
issued, fully paid, and nonassessable.

DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS

The shares of Common Stock have noncumulative voting rights, which means
that the holders of more than 50% of the shares voting can elect all the
directors if they so choose, and in such event, the holders of the remaining
shares cannot elect any directors. Upon completion of the Distribution, Thermo
Instrument (and Thermo Electron through its majority ownership of Thermo
Instrument) will continue to beneficially own at least a majority of the
outstanding the Common Stock, and will have the power to elect all of the
members of the Board.

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

TRANSFER AGENT AND REGISTRAR

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

42
<PAGE> 44

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, there will be 5,620,000 shares of Common
Stock outstanding (assuming no exercise of the Underwriters' over-allotment
option). The shares issued in this offering will be freely tradable without
restriction or further registration under the Securities Act, except that any
shares purchased by affiliates of the Company, as that term is defined in Rule
144 under the Securities Act, may generally only be resold in compliance with
applicable provisions of Rule 144.

Of the 5,620,000 outstanding shares, 4,499,995 will be owned by Thermo
Instrument. Thermo Instrument has agreed that, without the prior written consent
of the Representatives (as defined below under the caption "Underwriters"), it
will not offer, sell, or grant any option to purchase or otherwise dispose of
any shares of the Common Stock within 180 days after the date of this
Prospectus, other than (i) shares of Common Stock to be sold to the Underwriters
in this offering, and (ii) the issuance of options and sales of shares of Common
Stock pursuant to existing stock-based compensation plans. Upon expiration of
this lock-up agreement, Thermo Instrument may sell its shares of Common Stock in
an offering registered under the Securities Act or pursuant to an exemption from
such registration. So long as Thermo Instrument is able to elect a majority of
the Board, it will be able to cause the Company at any time to register under
the Securities Act all or a portion of the Common Stock owned by Thermo
Instrument or its affiliates, in which case it would be able to sell such shares
without restriction upon effectiveness of the registration statement.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted shares for at
least one year is entitled to sell, within any three-month period, a number of
such shares that does not exceed the greater of (i) 1% of the then outstanding
shares of Common Stock or (ii) the average weekly trading volume in the Common
Stock during the four calendar weeks preceding the date of the notice filed
pursuant to Rule 144. Sales under Rule 144 are also subject to certain manner of
sale restrictions and notice requirements and to the availability of current
public information about the Company. In addition, a person who is deemed an
"affiliate" of the Company must comply with Rule 144 in any sale of shares of
Common Stock not covered by a registration statement (except, in the case of
registered shares acquired by the affiliate on the open market, for the holding
period requirement). A person (or person whose shares are aggregated) who is not
deemed an "affiliate" of the Company and who has beneficially owned restricted
shares for at least two years is entitled to sell such shares under Rule 144(k)
without regard to the volume, notice, and other limitations of Rule 144. In
meeting the one- and two-year holding periods described above, a holder of
restricted shares can include the holding periods of a prior owner who was not
an affiliate.

The Company has reserved shares for grant under its existing
stock-based compensation plans. As of the date of this Prospectus, the Company
has not granted any options to purchase shares of Common Stock to its employees
or directors. The Company intends to file registration statements under the
Securities Act to register all shares of Common Stock issuable under such plans.
Shares covered by these registration statements will be eligible for sale in the
public market after the effective date of such registration statements. Each of
the Company, Thermo Instrument, and Thermo Electron has agreed that it will not
offer, sell, or grant any option to purchase or otherwise dispose of any shares
of Common Stock (except for the grant of options and the sale of shares of
Common Stock pursuant to stock-based compensation plans, sales to Thermo
Instrument, and the issuance of shares as consideration for the acquisition of
one or more businesses (provided that such shares may not be resold prior to the
expiration of 180 days after the date of this Prospectus)) within 180 days after
the date of this Prospectus, without the prior consent of the Representatives of
the Underwriters.

Prior to this offering, there has been no public market for the Common
Stock. The effect, if any, of public sales or the availability of shares for
sale at prevailing market prices cannot be predicted. Nevertheless, sales of
substantial amounts of shares in the public market could adversely affect
prevailing market prices.

43
<PAGE> 45

UNDERWRITING

Subject to the terms and conditions set forth in an Underwriting Agreement
by and among the Company and each of the Underwriters named below, for whom
Fahnestock & Co. Inc. is acting as the representative (the "Representative"),
each of the Underwriters has severally agreed to purchase from the Company the
number of shares of Common Stock set forth opposite its name in the table below:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
-------------------------------------------------------------------- ----------------
<S> <C>
Fahnestock & Co. Inc................................................
-------
Total..................................................... 775,000
=======
</TABLE>

In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
shares of Common Stock offered hereby (other than those covered by the
over-allotment option described below) if any such shares of Common Stock are
purchased. In the event of a default by any Underwriter, the Underwriting
Agreement provides that, in certain circumstances, purchase commitments of the
nondefaulting Underwriters may be increased or the Underwriting Agreement may be
terminated. The Company has been advised by the Representative that the several
Underwriters propose initially to offer such shares of Common Stock at the
public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $ per
share. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $ per share to other dealers. After the initial
offering, the public offering price and such concessions may be changed.

The Company has granted to the Underwriters an option, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to 116,250
additional shares of Common Stock, at the public offering price less the
underwriting discount set forth on the cover page of this Prospectus. The
Underwriters may exercise such option only to cover over-allotments in the sale
of the shares of Common Stock that the Underwriters have agreed to purchase. To
the extent that the Underwriters exercise such option, each Underwriter will
have a firm commitment, subject to certain conditions, to purchase a number of
option shares proportionate to such Underwriter's initial commitment.

The Company, Thermo Instrument, and Thermo Electron have agreed that they
will not, without the prior written consent of Fahnestock & Co. Inc., offer,
sell, or contract to sell, or otherwise dispose of, directly or indirectly, or
announce an offer of any shares of Common Stock, options or any securities
convertible into, or exchangeable for, shares of Common Stock during the 180-day
period following the date of this Prospectus; provided, however, that the
Company may issue and sell Common Stock pursuant to any stock option plan in
effect at the date of this Prospectus. Fahnestock & Co. Inc. in its sole
discretion may release any of the shares subject to the lock-up at any time
without notice.

The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act, or contribute to payments the Underwriters may be required
to make in respect thereof.

44
<PAGE> 46

Until the distribution of the Common Stock is completed, rules of the
Commission may limit the ability of the Underwriters and certain selling group
members to bid for and purchase shares of Common Stock. As an exception to these
rules, the Representative is permitted to engage in certain transactions that
stabilize the price of the Common Stock. Such transactions may consist of bids
or purchases for the purpose of pegging, fixing, or maintaining the price of the
Common Stock.

In addition, if the Representative over-allots (i.e., if it sells more
shares of Common Stock than are set forth on the cover page of this Prospectus),
and thereby creates a short position in the Common Stock in connection with this
offering, the Representative may reduce that short position by purchasing Common
Stock in the open market. The Representative also may elect to reduce any short
position by exercising all or part of the over-allotment option described
herein.

The Representative also may impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representative purchases
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, it may reclaim the
amount of the selling concession from the Underwriters and selling group members
who sold those shares as part of this offering.

In general, purchases of a security for the purpose of stabilization to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
this offering.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Representative will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.

The Representative has informed the Company that it does not intend to
confirm sales to any account over which it exercise discretionary authority.

Prior to this offering, there has been no public market for the Common
Stock. The price to the public for the shares of Common Stock was determined by
negotiations between the Company and the Representatives. Among the factors
considered in determining the price to the public, in addition to prevailing
market conditions, were the Company's financial and operating history and
condition, the prospects of the Company and its industry in general, the
management of the Company, the market prices of securities of companies engaged
in businesses similar to those of the Company, and other factors deemed
relevant. There can, however, be no assurance that the prices at which the
shares of Common Stock will sell in the public market after this offering will
not be lower than the price at which it is sold by the Underwriters.

45
<PAGE> 47

LEGAL OPINIONS

The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Seth H. Hoogasian, Esq., General Counsel of
Thermo Electron, Thermo Instrument, and the Company, and certain legal matters
will be passed upon for the Underwriters by Testa, Hurwitz & Thibeault, LLP,
Boston, Massachusetts. Mr. Hoogasian owns or has the right to acquire 16,737
shares of common stock of Thermo Instrument and 108,058 shares of common stock
of Thermo Electron.

EXPERTS

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

ADDITIONAL INFORMATION

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

46
<PAGE> 48

THERMO VISION CORPORATION

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
THERMO VISION CORPORATION
Report of Independent Public Accountants............................................ F-2
Consolidated Statement of Income for the years ended December 31, 1994, December 30,
1995, and December 28, 1996, and for the six months ended June 29, 1996, and June
28, 1997......................................................................... F-3
Consolidated Balance Sheet as of December 30, 1995, December 28, 1996, and June 28,
1997............................................................................. F-4
Consolidated Statement of Cash Flows for the years ended December 31, 1994, December
30, 1995, and December 28, 1996, and for the six months ended June 29, 1996, and
June 28, 1997.................................................................... F-5
Consolidated Statement of Shareholder's Investment for the years ended December 31,
1994, December 30, 1995, and December 28, 1996, and for the six months ended June
28, 1997......................................................................... F-6
Notes to Consolidated Financial Statements.......................................... F-7
ORIEL CORPORATION
Report of Independent Public Accountants............................................ F-16
Consolidated Statement of Operations for the years ended September 30, 1994, and
September 30, 1995, and for the three months ended December 31, 1994, and
December 31, 1995................................................................ F-17
Consolidated Balance Sheet as of September 30, 1995................................. F-18
Consolidated Statement of Cash Flows for the years ended September 30, 1994, and
September 30, 1995, and for the three months ended December 31, 1994, and
December 31, 1995................................................................ F-19
Consolidated Statement of Changes in Stockholders' Equity for the years ended
September 30, 1994, and September 30, 1995, and for the three months ended
December 31, 1995................................................................ F-20
Notes to Consolidated Financial Statements.......................................... F-21
CORION CORPORATION
Report of Independent Public Accountants............................................ F-26
Statement of Operations for the year ended December 31, 1995, and the period from
January 1, 1996, through February 28, 1996....................................... F-27
Balance Sheet as of December 31, 1995............................................... F-28
Statement of Cash Flows for the year ended December 31, 1995, and for the period
from January 1, 1996, through February 28, 1996.................................. F-29
Statement of Stockholders' Equity for the year ended December 31, 1995, and the
period from January 1, 1996, through February 28, 1996........................... F-30
Notes to Financial Statements....................................................... F-31
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION OF THERMO VISION CORPORATION, ORIEL
CORPORATION, AND CORION CORPORATION (UNAUDITED)
Pro Forma Combined Condensed Statement of Income for the year ended December 28,
1996............................................................................. F-35
Notes to Pro Forma Combined Condensed Statement of Income........................... F-36
</TABLE>

F-1
<PAGE> 49

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Thermo Vision Corporation:

We have audited the accompanying consolidated balance sheet of Thermo
Vision Corporation (a Delaware corporation and 100%-owned subsidiary of Thermo
Optek Corporation) and subsidiaries as of December 30, 1995, and December 28,
1996, and the related consolidated statements of income, cash flows, and
shareholder's investment for each of the three years in the period ended
December 28, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Thermo
Vision Corporation and subsidiaries as of December 30, 1995, and December 28,
1996, and the results of their operations and their cash flows for each of the
three years in period ended December 28, 1996, in conformity with generally
accepted accounting principles.

/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 19, 1997 (except with respect to
certain matters discussed in Note 8,
as to which the date is August 31, 1997)

F-2
<PAGE> 50

THERMO VISION CORPORATION

CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------
JUNE JUNE
29, 28,
1994 1995 1996 1996 1997
------ ------ ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES (Notes 6 and 7)................ $4,242 $6,026 $30,434 $14,168 $17,810
------ ------ ------- ------- -------
Costs and Operating Expenses:
Cost of revenues...................... 3,011 3,482 17,066 8,043 9,962
Selling, general, and administrative
expenses (Note 6).................. 826 1,519 7,402 3,358 3,986
Research and development expenses..... 144 743 3,499 1,568 1,867
------ ------ ------- ------- -------
3,981 5,744 27,967 12,969 15,815
------ ------ ------- ------- -------
Operating Income........................ 261 282 2,467 1,199 1,995
Interest Expense........................ 28 31 44 28 110
------ ------ ------- ------- -------
Income Before Provision for Income
Taxes................................. 233 251 2,423 1,171 1,885
Provision for Income Taxes (Note 4)..... 87 104 1,005 490 791
------ ------ ------- ------- -------
NET INCOME.............................. $ 146 $ 147 $ 1,418 $ 681 $ 1,094
====== ====== ======= ======= =======
EARNINGS PER SHARE...................... $ .03 $ .03 $ .29 $ .14 $ .23
====== ====== ======= ======= =======
WEIGHTED AVERAGE SHARES................. 4,845 4,845 4,845 4,845 4,845
====== ====== ======= ======= =======
</TABLE>

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

F-3
<PAGE> 51

THERMO VISION CORPORATION

CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
JUNE 28,
1997
1995 1996 -----------
------ ------- (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................................... $ 171 $ 306 $ 194
Accounts receivable, less allowances of $24, $266, and
$276...................................................... 729 5,305 5,498
Inventories.................................................. 1,301 6,404 6,783
Prepaid expenses............................................. 34 521 766
Prepaid income taxes (Note 4)................................ 416 1,175 1,735
Due from Thermo Electron and affiliated companies (Note 6)... -- -- 181
------ ------- -------
2,651 13,711 15,157
------ ------- -------
Property, Plant, and Equipment, at Cost, Net................... 606 3,901 4,298
------ ------- -------
Other Assets................................................... -- 647 882
------ ------- -------
Cost in Excess of Net Assets of Acquired Companies (Note 2).... 3,521 10,103 12,786
------ ------- -------
$6,778 $28,362 $33,123
====== ======= =======
LIABILITIES AND SHAREHOLDER'S INVESTMENT
Current Liabilities:
Note payable and capital lease obligation (Note 6)........... $ 650 $ 866 $ 865
Accounts payable............................................. 255 2,796 3,359
Accrued payroll and employee benefits........................ 40 751 500
Other accrued expenses....................................... 198 929 1,210
Due to Thermo Electron and affiliated companies (Note 6)..... 938 2,768 --
------ ------- -------
2,081 8,110 5,934
------ ------- -------
Long-term Obligations, Due to Thermo Optek (Note 8)............ -- -- 3,947
------ ------- -------
Commitments (Note 5)
Shareholder's Investment (Note 3):
Common stock, $.01 par value, 20,000,000 shares authorized;
4,845,000 shares issued and outstanding................... 48 48 48
Capital in excess of par value............................... 4,628 18,713 20,606
Retained earnings............................................ 19 1,437 2,531
Cumulative translation adjustment............................ 2 54 57
------ ------- -------
4,697 20,252 23,242
------ ------- -------
$6,778 $28,362 $33,123
====== ======= =======
</TABLE>

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

F-4
<PAGE> 52

THERMO VISION CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------
JUNE
JUNE 29, 28,
1994 1995 1996 1996 1997
------ ----- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income....................................... $ 146 $ 147 $ 1,418 $ 681 $ 1,094
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization................. 87 182 1,251 536 781
Provision for losses on accounts receivable... 10 14 174 33 17
Deferred income tax expense (benefit)......... (59) 31 (79) -- --
Changes in current accounts, excluding the
effects of acquisitions:
Accounts receivable......................... (216) 67 (732) (571) 211
Inventories................................. (57) (301) 471 691 108
Other current assets........................ 9 (2) (253) (86) (226)
Accounts payable............................ 219 (128) (174) (567) 221
Other current liabilities................... (209) (136) (397) (532) (526)
------ ----- -------- -------- -------
Net cash provided by (used in) operating
activities............................. (70) (126) 1,679 185 1,680
------ ----- -------- -------- -------
INVESTING ACTIVITIES:
Acquisitions, net of cash acquired (Note 2)...... -- -- (15,528) (15,528) (3,545)
Purchases of property, plant, and equipment...... (96) (152) (1,450) (884) (875)
Other, net....................................... -- -- 92 -- --
------ ----- -------- -------- -------
Net cash used in investing activities.... (96) (152) (16,886) (16,412) (4,420)
------ ----- -------- -------- -------
FINANCING ACTIVITIES:
Net proceeds from issuance of notes payable to
parent company................................ -- -- -- -- 3,947
Transfer from parent company to fund
acquisitions.................................. -- -- 16,870 16,870 --
Net increase (decrease) in short-term borrowings
from Thermo Electron and affiliates........... 192 1 1,830 (190) (2,949)
Net increase (decrease) in short-term
borrowings.................................... (230) (65) (575) 514 (24)
Net transfer (to) from parent company............ 248 473 (2,785) (851) 1,893
Other............................................ -- -- -- -- (242)
------ ----- -------- -------- -------
Net cash provided by financing
activities............................. 210 409 15,340 16,343 2,625
------ ----- -------- -------- -------
Exchange Rate Effect on Cash....................... (7) (10) 2 6 3
------ ----- -------- -------- -------
Increase (Decrease) in Cash and Cash Equivalents... 37 121 135 122 (112)
Cash and Cash Equivalents at Beginning of Period... 13 50 171 171 306
------ ----- -------- -------- -------
Cash and Cash Equivalents at End of Period......... $ 50 $ 171 $ 306 $ 293 $ 194
====== ===== ======== ======== =======
CASH PAID FOR:
Interest......................................... $ 28 $ 31 $ 44 $ 28 $ 34
====== ===== ======== ======== =======
Income taxes..................................... $ -- $ -- $ 43 $ 38 $ --
====== ===== ======== ======== =======
NONCASH ACTIVITIES:
Transfer of acquired business from parent
company....................................... $3,401 $ -- $ -- $ -- $ --
====== ===== ======== ======== =======
Fair value of assets of acquired companies....... $ -- $ -- $ 22,480 $ 22,480 $ 4,519
Cash paid for acquired companies................. -- -- (16,870) (16,870) --
Due to parent company for acquired company....... -- -- -- -- (3,600)
------ ----- -------- -------- -------
Liabilities assumed of acquired companies..... $ -- $ -- $ 5,610 $ 5,610 $ 919
====== ===== ======== ======== =======
</TABLE>

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

F-5
<PAGE> 53

THERMO VISION CORPORATION

CONSOLIDATED STATEMENT OF SHAREHOLDER'S INVESTMENT
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
COMMON
NET PARENT STOCK, CAPITAL IN CUMULATIVE
COMPANY $.01 PAR EXCESS OF RETAINED TRANSLATION
INVESTMENT VALUE PAR VALUE EARNINGS ADJUSTMENT
---------- -------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE JANUARY 1, 1994............. $ 280 $ -- $ -- $ -- $ (2)
Net income........................ 146 -- -- -- --
Transfer of acquired business from
parent company................. 3,401 -- -- -- --
Net transfer from parent
company........................ 248 -- -- -- --
Translation adjustment............ -- -- -- -- 10
------- --- ------- ------ ---
BALANCE DECEMBER 31, 1994........... 4,075 -- -- -- 8
Net income before capitalization
of the Company................. 128 -- -- -- --
Net transfer from parent
company........................ 473 -- -- -- --
Capitalization of the Company..... (4,676) 48 4,628 -- --
Net income after capitalization of
the Company.................... -- -- -- 19 --
Translation adjustment............ -- -- -- -- (6)
------- --- ------- ------ ---
BALANCE DECEMBER 30, 1995........... -- 48 4,628 19 2
Net income........................ -- -- -- 1,418 --
Transfer from parent company to
fund acquisitions of Oriel and
Corion......................... -- -- 16,870 -- --
Net transfer to parent company.... -- -- (2,785) -- --
Translation adjustment............ -- -- -- -- 52
------- --- ------- ------ ---
BALANCE DECEMBER 28, 1996........... -- 48 18,713 1,437 54
(UNAUDITED)
Net income........................ -- -- -- 1,094 --
Net transfer from parent
company........................ -- -- 1,893 -- --
Translation adjustment............ -- -- -- -- 3
------- --- ------- ------ ---
BALANCE JUNE 28, 1997............... $ -- $ 48 $20,606 $2,531 $ 57
======= === ======= ====== ===
</TABLE>

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

F-6
<PAGE> 54

THERMO VISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Thermo Vision Corporation ("the Company") designs, manufactures, and
markets a diverse array of photonics products, including optical components,
imaging sensors and systems, lasers, optically based instruments,
optoelectronics, and fiber optics. The Company sells photonics products in
multiple markets across a number of industries for research, testing, detecting,
and manufacturing applications. The Company's products range from optical
filters used in blood glucose monitoring, to charge-injection devices ("CIDs")
used in optical spectroscopy, to specialty light sources used for quality
assurance in semiconductor photolithography. Many of the Company's customers are
manufacturers that incorporate the Company's products into medical and dental
diagnostic instruments, analytical instruments, equipment for semiconductor
manufacturing, and X-ray screening devices.

Relationship with Thermo Optek Corporation, Thermo Instrument Systems Inc., and
Thermo Electron Corporation

The Company was incorporated in November 1995 as a wholly owned subsidiary
of Thermo Optek Corporation ("Thermo Optek") at which time Thermo Optek
transferred to the Company all of the assets, liabilities, and businesses of two
subsidiaries of Thermo Jarrell Ash ("TJA") in exchange for 4,845,000 shares of
the Company's common stock. The companies transferred were CID Technologies Inc.
("CIDTEC") and Scientific Measurement Systems Inc., which now conducts business
under the name "Thermo Vision Colorado." In August 1997, the Company acquired
the crystal-materials business ("Hilger") of Hilger Analytical Limited, a wholly
owned subsidiary of Thermo Optek, and accounted for the transaction at
historical cost in a manner similar to a pooling of interests (Note 8). As of
December 28, 1996, Thermo Optek was a 93%-owned publicly traded subsidiary of
Thermo Instrument Systems Inc. ("Thermo Instrument"). Thermo Instrument is a
publicly traded, majority-owned subsidiary of Thermo Electron Corporation
("Thermo Electron").

The accompanying financial statements include the assets, liabilities,
income, and expenses of the Company as included in Thermo Optek's consolidated
financial statements. The accompanying financial statements do not include
Thermo Optek's general corporate debt, which is used to finance operations of
all of its respective business segments, or an allocation of Thermo Optek's
interest expense.

Principles of Consolidation

The accompanying financial statements include the accounts of the Company
and its wholly owned subsidiaries. All material intercompany accounts and
transactions have been eliminated.

Fiscal Year

The Company has adopted a fiscal year ending the Saturday nearest December
31. References to 1994, 1995, and 1996 are for the fiscal years ended December
31, 1994, December 30, 1995, and December 28, 1996, respectively.

Revenue Recognition

The Company recognizes revenues upon shipment of its products. The Company
provides a reserve for its estimate of warranty and installation costs at the
time of shipment.

F-7
<PAGE> 55

THERMO VISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Income Taxes

The Company, Thermo Optek, and Thermo Instrument have tax allocation
agreements under which the Company, Thermo Optek, and Thermo Instrument are
included in Thermo Electron's consolidated federal and certain state income tax
returns. The agreements provide that in years in which the Company has taxable
income, it will pay to Thermo Electron amounts comparable to the taxes the
Company would have paid if it had filed separate tax returns. If Thermo
Instrument's beneficial equity ownership of the Company were to drop below 80%,
the Company would be required to file its own federal tax return.

In accordance with Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes," the Company recognizes deferred income taxes
based on the expected future tax consequences of differences between the
financial statement basis and the tax basis of assets and liabilities,
calculated using enacted tax rates in effect for the year in which the
differences are expected to be reflected in the tax return.

Earnings per Share

Pursuant to Securities and Exchange Commission requirements, earnings per
share have been presented for all periods. Shares outstanding for such periods
represent the 4,845,000 shares issued to Thermo Optek in connection with the
initial capitalization of the Company.

Cash and Cash Equivalents

Prior to its incorporation, the cash receipts and disbursements of the
Company's domestic operations were combined with other Thermo Optek corporate
cash transactions and balances. Therefore, cash of the Company's domestic
operations through November 1995 is not included in the accompanying balance
sheet.

Inventories

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

<TABLE>
<CAPTION>
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Raw materials and supplies............................... $ 919 $3,142
Work in process.......................................... 70 806
Finished goods........................................... 312 2,456
------ ------
$1,301 $6,404
====== ======
</TABLE>

Property, Plant, and Equipment

The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the estimated
useful lives of the property as follows: buildings, 15 to 30 years; machinery

F-8
<PAGE> 56

THERMO VISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and equipment, 3 to 10 years; and leasehold improvements, the shorter of the
term of the lease or the life of the asset. Property, plant, and equipment
consists of the following:

<TABLE>
<CAPTION>
1995 1996
---- ------
(IN THOUSANDS)
<S> <C> <C>
Land and buildings......................................... $226 $ 277
Machinery and equipment.................................... 582 4,114
Leasehold improvements..................................... -- 554
---- ------
808 4,945
Less: Accumulated depreciation and amortization............ 202 1,044
---- ------
$606 $3,901
==== ======
</TABLE>

Other Assets

Other assets in the accompanying balance sheet consists primarily of a 10%
ownership interest in LOT-Oriel Holding GmbH ("LOT"). The carrying amount of the
investment, which is being accounted for under the cost method, is $500,000 in
the accompanying balance sheet.

As of December 28, 1996, the Company has an investment of less than 20% in
Andor Technology Limited ("Andor"). The carrying amount of the investment, which
is being accounted for under the cost method, is $84,000 in the accompanying
1996 balance sheet. Prior to October 1996, the Company owned approximately 51%
of Andor, and Andor's results were consolidated with those of the Company.
During the third quarter of 1996, the Company reduced its ownership interest in
Andor in a transaction with Andor's other stockholders. In consideration for the
sale of a portion of its interest in Andor, the Company received approximately
$159,000 in cash and a $147,000 principal amount 8% note, which was repaid in
September 1997. Andor's results were not material to the Company's results of
operations.

Cost in Excess of Net Assets of Acquired Companies

The excess of cost over the fair value of net assets of acquired companies
is amortized using the straight-line method over 40 years. Accumulated
amortization was $115,000 and $371,000 at year-end 1995 and 1996, respectively.

Foreign Currency

All assets and liabilities of the Company's foreign subsidiaries are
translated at year-end exchange rates, and revenues and expenses are translated
at average exchange rates for the year in accordance with SFAS No. 52, "Foreign
Currency Translation." Resulting translation adjustments are reflected as a
separate component of shareholder's investment titled "Cumulative translation
adjustment." Foreign currency transaction gains and losses are included in the
accompanying statement of income and are not material for the three years
presented.

Fair Value of Financial Instruments

The Company's financial instruments consist primarily of cash and cash
equivalents, accounts receivable, note payable, accounts payable, and due to
Thermo Electron and affiliated companies. The carrying amounts of these
financial instruments approximate fair value due to their short-term nature.

Impairment of Long-lived Assets

The Company assesses the future useful life of its long-lived assets
whenever events or changes in circumstances indicate that the current useful
life has diminished. The Company considers the future

F-9
<PAGE> 57

THERMO VISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

undiscounted cash flows pertaining to such assets in assessing the
recoverability. If impairment has occurred, any excess of carrying value over
fair value is recorded as a loss.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Interim Financial Statements

The financial statements as of June 28, 1997, and for the six-month periods
ended June 29, 1996, and June 28, 1997, are unaudited but, in the opinion of
management, reflect all adjustments of a normal recurring nature necessary for a
fair presentation of results for these interim periods. The results of
operations for the six-month period ended June 28, 1997, are not necessarily
indicative of the results to be expected for the entire year.

2. ACQUISITIONS

In October 1994, Thermo Instrument acquired CIDTEC, a manufacturer of
charge-injection devices used for imaging sensors and video cameras, for
$3,401,000 in cash. The cost of this acquisition exceeded the estimated fair
market value of the acquired net assets by $2,889,000, which is being amortized
over 40 years. Thermo Instrument transferred the assets, liabilities, and
businesses of CIDTEC to Thermo Optek after its formation in August 1995. Thermo
Optek transferred the assets, liabilities, and businesses of CIDTEC to the
Company after its formation in November 1995. Because the Company, CIDTEC, and
Thermo Optek were deemed for accounting purposes to be under control of their
common majority owner, Thermo Instrument, the accompanying 1994 and 1995
historical information includes the results of operations of CIDTEC from October
1994, the date this business was acquired by Thermo Instrument.

In February 1996, the Company acquired Oriel Corporation ("Oriel"), a
manufacturer and distributor of photonics components and instruments, for
$11,798,000 in cash, and Corion Corporation ("Corion"), a manufacturer of
commercial optical filters, for $5,072,000 in cash. The cost of Oriel and Corion
exceeded the estimated fair market value of the acquired net assets by
$4,736,000 and $2,056,000, respectively, which are being amortized over 40
years. These acquisitions have been accounted for using the purchase method of
accounting, and their results of operations have been included in the
accompanying financial statements from the respective dates of acquisition.

Based on unaudited data, the following table presents selected financial
information for the Company, CIDTEC, Oriel, and Corion on a pro forma basis,
assuming the Company and CIDTEC had been combined since the beginning of 1994
and the Company, Oriel, and Corion had been combined since the beginning of
1995. Additional pro forma financial information for the Company, Oriel, and
Corion is included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
1994 1995 1996
------ ------- -------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Revenues......................................... $5,366 $33,355 $33,940
Net income (loss)................................ (248) 145 532
Earnings (loss) per share........................ (.05) .03 .11
</TABLE>

F-10
<PAGE> 58

THERMO VISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The pro forma results are not necessarily indicative of future operations
or the actual results that would have occurred had the acquisition of CIDTEC
been made at the beginning of 1994 or the acquisitions of Oriel and Corion been
made at the beginning of 1995.

3. EMPLOYEE BENEFIT PLANS

Employee Stock Purchase Plan

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

401(k) Savings Plans

Substantially all of the Company's full-time U.S. employees are eligible to
participate in Thermo Electron's 401(k) savings plan. Contributions to the
401(k) savings plans are made by both the employee and the Company. Company
contributions are based upon the level of employee contributions. For these
plans, the Company contributed and charged to expense $4,000; $39,000; and
$182,000 in 1994, 1995, and 1996, respectively.

4. INCOME TAXES

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

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic........................................... $ 5 $ 9 $2,186
Foreign............................................ 228 242 237
---- ---- ------
$233 $251 $2,423
==== ==== ======
</TABLE>

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

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Currently payable:
Federal.......................................... $ 62 $(11) $ 895
State............................................ 7 (1) 105
Foreign.......................................... 77 85 84
---- ---- ------
146 73 1,084
---- ---- ------

Net deferred (prepaid):
Federal.......................................... (53) 28 (71)
State............................................ (6) 3 (8)
---- ---- ------
(59) 31 (79)
---- ---- ------
$ 87 $104 $1,005
==== ==== ======
</TABLE>

F-11
<PAGE> 59

THERMO VISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The provision for income taxes in the accompanying statement of income
differs from the provision calculated by applying the statutory federal income
tax rate of 34% to income before provision for income taxes due to the
following:

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Provision for income taxes at statutory rate............... $79 $ 85 $ 824
Increases (decreases) resulting from:
State income taxes, net of federal benefit............... 1 1 64
Foreign tax rate differential............................ (1) 3 3
Tax benefit of foreign sales corporation................. -- (2) (5)
Amortization of cost in excess of net assets of acquired
companies............................................. 8 16 80
Nondeductible expenses and other......................... -- 1 39
--- ---- ------
$87 $104 $1,005
=== ==== ======
</TABLE>

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

<TABLE>
<CAPTION>
1995 1996
---- ------
(IN THOUSANDS)
<S> <C> <C>
Prepaid income taxes:
Reserves and other accruals.............................. $ 47 $ 229
Inventory basis difference............................... 347 713
Accrued compensation..................................... 22 136
Other, net............................................... -- 97
---- ------
$416 $1,175
==== ======
Deferred income taxes:
Fixed assets............................................. $ 20 $ 20
Intangible assets........................................ 25 25
---- ------
$ 45 $ 45
==== ======
</TABLE>

A provision has not been made for U.S. or additional foreign taxes on
$707,000 of undistributed earnings of the Company's foreign subsidiary that
could be subject to taxation if remitted to the U.S. because the Company plans
to keep this amount permanently reinvested overseas. The Company believes that
any additional U.S. tax liability due upon remittance of such earnings would be
immaterial due to available U.S. foreign tax credits.

5. COMMITMENTS

The Company leases portions of its office and operating facilities under
various operating lease arrangements. The accompanying statement of income
includes expenses from operating leases of $20,000; $120,000; and $438,000 in
1994, 1995, and 1996, respectively. Future minimum payments due under
noncancellable operating leases at December 28, 1996, are $450,000 in 1997;
$165,000 in 1998; $129,000 in 1999; $120,000 in 2000; $120,000 in 2001; and
$631,000 in 2002; and thereafter. Total future minimum lease payments are
$1,615,000. The Company also has operating lease arrangements with related
parties as discussed in Note 6.

F-12
<PAGE> 60

THERMO VISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. RELATED-PARTY TRANSACTIONS

Corporate Services Agreement

The Company and Thermo Electron have a corporate services agreement under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management, certain
employee benefit administration, tax advice and preparation of tax returns,
centralized cash management, and certain financial and other services, for which
the Company pays Thermo Electron annually an amount equal to 1.0% of the
Company's revenues. The Company paid an annual fee equal to 1.25% and 1.20% of
the Company's revenues in 1994 and 1995, respectively. The annual fee is
reviewed and adjusted annually by mutual agreement of the parties. For these
services, the Company was charged $53,000; $72,000; and $304,000 in 1994, 1995,
and 1996, respectively. The corporate services agreement is renewed annually but
can be terminated upon 30 days' prior notice by the Company or upon the
Company's withdrawal from the Thermo Electron Corporate Charter (the Thermo
Electron Corporate Charter defines the relationship among Thermo Electron and
its majority-owned subsidiaries). Management believes that the service fee
charged by Thermo Electron is reasonable and that such fees are representative
of the expenses the Company would have incurred on a stand-alone basis. For
additional items such as employee benefit plans, insurance coverage, and other
identifiable costs, Thermo Electron charges the Company based upon costs
attributable to the Company.

Operating Leases

In addition to the operating leases described in Note 5, the Company leases
certain office and manufacturing space on a monthly basis from Thermo Optek and
Thermo Instrument. Prior to January 1, 1997, rent expense under these
arrangements was determined as the Company's allocated share of total occupancy
expenses. Effective for 1997, the rent expense is $308,000. The accompanying
statement of income includes expenses from these arrangements of $46,000;
$91,000; and $297,000 in 1994, 1995, and 1996, respectively.

Short-term Obligation

Note payable in the accompanying balance sheet represents short-term bank
borrowings at the Company's foreign subsidiary of $650,000 and $866,000 at
year-end 1995 and 1996, respectively. The Company has an arrangement under which
it may borrow on a bank line of credit arrangement held by Thermo Optek. The
weighted average interest rate for these borrowings was 6.50% and 6.75% at year-
end 1995 and 1996, respectively. Availability to the Company under this line of
credit totaled $1,659,000 as of December 28, 1996.

Distribution Agreement with LOT

The Company has a distribution agreement with LOT which allows LOT to be
Oriel's primary distributor in certain parts of Europe. Sales to LOT included in
the accompanying 1996 statement of income were $1,952,000. Accounts receivable
in the accompanying 1996 balance sheet includes $442,000 due from LOT.

Trademark License and Royalty Agreement

In September 1996, the Company agreed to license the use of a trademark to
Andor in exchange for a fee equal to the greater of 3.3% of the net sales
revenue, as defined, from sales of products sold under the trade name, or 10,000
British pounds sterling. The accompanying 1996 statement of income includes
revenues of $15,000 recorded under this agreement.

F-13
<PAGE> 61

THERMO VISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Contract Research and Development

In 1994, 1995, and 1996, the Company recorded revenues of $24,000;
$418,000; and $188,000, respectively, from Thermo Optek for contract research
and development services related to components used in certain products
manufactured by Thermo Optek.

Other Related-party Transactions

The Company purchases and sells products in the ordinary course of business
with other companies affiliated with Thermo Instrument. Sales of products to
such affiliated companies totaled $1,290,000, $2,514,000; and $1,786,000 in
1994, 1995, and 1996, respectively. Purchases of products from such affiliated
companies totaled $211,000; $1,465,000; and $971,000 in 1994, 1995, and 1996,
respectively.

7. GEOGRAPHICAL INFORMATION

The Company is engaged in one business segment: designing, manufacturing,
and marketing photonics products. The following table shows data for the Company
by geographical area.

<TABLE>
<CAPTION>
1994 1995 1996
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
United States............................................... $ 2,892 $ 4,453 $ 28,780
United Kingdom.............................................. 1,350 1,573 1,654
------ ------ -------
$ 4,242 $ 6,026 $ 30,434
====== ====== =======
Income before provision for income taxes:
United States(a)............................................ $ 50 $ 59 $ 2,247
United Kingdom.............................................. 211 223 220
------ ------ -------
Operating income............................................ 261 282 2,467
Interest expense............................................ 28 31 44
------ ------ -------
$ 233 $ 251 $ 2,423
====== ====== =======
Identifiable assets:
United States............................................... $ 5,585 $ 5,476 $ 26,429
United Kingdom.............................................. 1,191 1,302 1,933
------ ------ -------
$ 6,776 $ 6,778 $ 28,362
====== ====== =======
Export revenues included in United States revenues above(b):
Europe...................................................... $ 154 $ 140 $ 5,053
Other....................................................... 201 145 4,434
------ ------ -------
$ 355 $ 285 $ 9,487
====== ====== =======
</TABLE>

- ---------------
(a) Includes corporate general and administrative expenses.

(b) In general, export sales are denominated in U.S. dollars.

F-14
<PAGE> 62

THERMO VISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. SUBSEQUENT EVENTS

Acquisitions

In August 1997, the Company acquired Hilger from Thermo Optek for the
assumption of the short-term obligation discussed in Note 6. Because the Company
and Hilger were deemed for accounting purposes to be under control of their
common owner, Thermo Optek, the transaction has been accounted for at historical
cost in a manner similar to a pooling of interests. Accordingly, all historical
information presented includes the results of operations of Hilger since 1993,
the year in which it was acquired by Thermo Optek.

In July 1997, the Company acquired the assets of Centronic, Inc.
("Centronic"), a manufacturer of silicon photodiodes, for $3,800,000 in cash.
The acquisition was accounted for using the purchase method of accounting, and
the cost of this acquisition exceeded the estimated fair market value of the
acquired net assets by $2,576,000, which is being amortized over 40 years. To
finance this acquisition, the Company borrowed $3,800,000 from Thermo Electron
pursuant to a promissory note due July 2000, bearing interest at the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter.

In February 1997, the Company acquired all the outstanding stock of Laser
Science, Inc. ("LSI") for $3,600,000 in cash. LSI is a manufacturer of nitrogen
and tunable dye lasers as well as pulsed CO(2) lasers for industry, medicine,
education, and defense. The acquisition was accounted for using the purchase
method of accounting, and the cost of this acquisition exceeded the estimated
fair market value of the acquired net assets by $2,836,000, which is being
amortized over 40 years. To finance this acquisition, the Company borrowed
$3,600,000 from Thermo Optek. In addition, the Company borrowed an additional
$347,000 from Thermo Optek to fund certain property additions made in connection
with the acquisition of LSI. These borrowings were made through the issuance of
promissory notes due February 2000, bearing interest at the 90-day Commercial
Paper Composite Rate plus 25 basis points, set at the beginning of each quarter.
As of June 28, 1997, the interest rate on the promissory notes was 5.97%.

Stock Split

In August 1997, the Company declared and effected in the form of a dividend
a 4,845 for 1 stock split. All share and per share information has been restated
to reflect the stock split.

9. UNAUDITED QUARTERLY INFORMATION
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1996 FIRST(a) SECOND THIRD FOURTH
- --------------------------------------------------- -------- ------ ------ ------
<S> <C> <C> <C> <C>
Revenues........................................... $ 5,237 $8,931 $8,201 $8,065
Gross profit....................................... 2,221 3,904 3,580 3,663
Net income......................................... 201 480 368 369
Earnings per share................................. .04 .10 .08 .08
</TABLE>

<TABLE>
<CAPTION>
1997 FIRST(b) SECOND
- --------------------------------------------------- -------- ------
<S> <C> <C> <C> <C>
Revenues........................................... $ 8,585 $9,225
Gross profit....................................... 3,759 4,089
Net income......................................... 528 566
Earnings per share................................. .11 .12
</TABLE>

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

(a) Reflects the February 1996 acquisitions of Corion and Oriel.

(b) Reflects the February 1997 acquisition of LSI.

F-15
<PAGE> 63

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
of Oriel Corporation:

We have audited the accompanying consolidated balance sheet of Oriel
Corporation (a Delaware corporation) and subsidiaries as of September 30, 1995,
and the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for the two year period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, based on our audits, the financial statements referred to
above present fairly, in all material respects, the financial position of Oriel
Corporation and subsidiaries as of September 30, 1995, and the results of their
operations and their cash flows for the two-year period then ended, in
conformity with generally accepted accounting principles.

/s/ ARTHUR ANDERSEN LLP

Hartford, Connecticut
November 1, 1995

F-16
<PAGE> 64

ORIEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------- -----------------------
1994 1995 1994 1995
----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net sales................................ $16,206,925 $18,783,394 $3,991,662 $4,816,148
Cost of goods sold....................... 8,599,976 9,815,116 2,034,847 2,604,822
----------- ----------- ---------- ----------
Gross profit........................... 7,606,949 8,968,278 1,956,815 2,211,326
Expenses:
Selling, general, and administrative... 4,735,509 4,960,236 1,251,373 1,317,695
Research and development............... 2,037,168 2,706,932 674,549 770,541
----------- ----------- ---------- ----------
Income from operations.............. 834,272 1,301,110 30,893 123,090
Other Expense:
Interest Expense, Net.................. 51,640 41,753 853 10,937
Other, Net............................. 44,296 136,408 14,216 20,344
----------- ----------- ---------- ----------
Income Before Provision for Income Taxes
and Minority Interest in Net Earnings
(Loss) of Equity Investee.............. 738,336 1,122,949 15,824 91,809
Provision for Income Taxes............... 368,000 328,000 9,705 25,904
----------- ----------- ---------- ----------
Income Before Minority Interest in Net
Earnings (Loss) of Equity Investee..... 370,336 794,949 6,119 65,905
Minority Interest in Net Earnings (Loss)
of Equity Investee..................... -- 60,654 (3,288) 25,366
----------- ----------- ---------- ----------
Net Income............................... $ 370,336 $ 734,295 $ 9,407 $ 40,539
=========== =========== ========== ==========
</TABLE>

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

F-17
<PAGE> 65

ORIEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER
31,
SEPTEMBER 30, 1995
1995 -----------
------------- (UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................................................... $ 271,874 $ 535,431
Accounts receivable, net of allowance for doubtful accounts of approximately
$77,000........................................................................... 3,755,180 3,166,208
Inventories......................................................................... 4,294,761 4,589,359
Prepaid expenses.................................................................... 107,913 72,751
Deferred income taxes............................................................... 235,000 235,000
----------- -----------
Total current assets......................................................... 8,664,728 8,598,749
----------- -----------
Property, Plant, and Equipment, at Cost:
Machinery and equipment............................................................. 2,494,728 2,632,547
Furniture and fixtures.............................................................. 1,051,817 1,059,274
Leasehold improvements.............................................................. 493,343 493,343
----------- -----------
4,039,888 4,185,164
Less: Accumulated depreciation and amortization................................... (2,624,379) (2,761,542)
----------- -----------
1,415,509 1,423,622
----------- -----------
Other Assets:
Investments......................................................................... 500,000 500,000
Catalogue costs..................................................................... 212,853 180,504
Goodwill............................................................................ 120,763 117,163
Other............................................................................... 40,783 54,341
----------- -----------
874,399 852,008
----------- -----------
$10,954,636 $10,874,379
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Line of credit...................................................................... $ 480,915 $ 429,749
Accounts payable.................................................................... 1,607,384 1,571,061
Accrued liabilities................................................................. 238,229 355,645
Accrued employee benefits........................................................... 466,497 394,762
Income taxes payable................................................................ 92,750 --
----------- -----------
Total current liabilities.................................................... 2,885,775 2,751,217
----------- -----------
Benefits Payable...................................................................... 52,282 52,282
----------- -----------
Deferred Income Taxes................................................................. 41,000 41,000
----------- -----------
Minority Interest in Net Assets of Equity Investee.................................... 267,674 293,040
----------- -----------
Commitments and Contingencies (Notes 1, 7, and 8)
Stockholders' Equity:
Common stock, $.01 par value, 5,000,000 shares authorized; 3,419,643 shares
issued............................................................................ 34,197 34,197
Additional paid-in capital.......................................................... 4,945,931 4,945,931
Retained earnings................................................................... 2,933,617 2,974,156
Cumulative translation adjustment................................................... 3,937 (7,667)
Treasury stock, at cost............................................................. (209,777) (209,777)
----------- -----------
7,707,905 7,736,840
----------- -----------
$10,954,636 $10,874,379
=========== ===========
</TABLE>

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

F-18
<PAGE> 66

ORIEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------ ---------------------
1994 1995 1994 1995
----------- ---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income............................... $ 370,336 $ 734,295 $ 9,407 $ 40,539
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization......... 823,206 1,052,906 281,427 209,576
Deferred income taxes................. (55,000) (4,000) -- --
Minority interest in net earnings
(loss) of Equity Investee........... -- 60,654 (3,288) 25,366
Change in assets and liabilities, net
of acquisition:
Accounts receivable................. 58,158 (747,774) 472,525 588,972
Inventories......................... (119,437) (238,453) (197,149) (294,598)
Prepaid expense and other current
assets........................... 15,460 (39,751) 31,941 35,162
Catalogue costs..................... (134,876) (440,596) (191,720) (36,464)
Other assets........................ 9,208 10,137 12,673 (13,558)
Accounts payable and accrued
liabilities...................... 72,446 (5,373) (356,375) 9,358
Income taxes payable................ 135,216 (84,291) -- (92,750)
Other liabilities................... (9,564) (44,473) -- --
----------- --------- --------- ---------
Net cash provided by operating
activities..................... 1,165,153 253,281 59,441 471,603
----------- --------- --------- ---------
Cash Flows from Investing Activities:
Purchase of property, plant, and
equipment............................. (408,137) (711,360) (220,949) (145,276)
Equity investment (Note 1)............... (7,776) -- -- --
----------- --------- --------- ---------
Net cash used in investing
activities..................... (415,913) (711,360) (220,949) (145,276)
----------- --------- --------- ---------
Cash Flows from Financing Activities:
Net borrowings (repayments) on line of
credit................................ (1,500,000) 480,915 -- (51,166)
Cumulative translation adjustment........ -- 3,937 (3,171) (11,604)
----------- --------- --------- ---------
Net cash provided by (used in)
financing activities........... (1,500,000) 484,852 (3,171) (62,770)
----------- --------- --------- ---------
Net Increase (Decrease) in Cash and Cash
Equivalents.............................. (750,760) 26,773 (164,679) 263,557
Cash and Cash Equivalents, beginning of
period................................... 995,861 245,101 245,101 271,874
----------- --------- --------- ---------
Cash and Cash Equivalents, end of period... $ 245,101 $ 271,874 $ 80,422 $ 535,431
=========== ========= ========= =========
Supplemental Disclosure:
Cash paid during the period for:
Interest.............................. $ 59,242 $ 46,958 $ -- $ --
=========== ========= ========= =========
Income taxes.......................... $ 338,778 $ 390,469 $ 124,228 $ 125,204
=========== ========= ========= =========
</TABLE>

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

F-19
<PAGE> 67

ORIEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL CUMULATIVE TREASURY STOCK TOTAL
------------------- PAID-IN RETAINED TRANSLATION -------------------- STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT SHARES AMOUNT EQUITY
--------- ------- ---------- ---------- ---------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1993... 3,419,643 $34,197 $4,945,931 $1,828,986 $ -- (104,000) $(209,777) $ 6,599,337
Net income.................. -- -- -- 370,336 -- -- -- 370,336
--------- ------- ---------- ---------- -------- -------- --------- ----------
Balance, September 30, 1994... 3,419,643 34,197 4,945,931 2,199,322 -- (104,000) (209,777) 6,969,673
Net income.................. -- -- -- 734,295 -- -- -- 734,295
Translation adjustment...... -- -- -- -- 3,937 -- -- 3,937
--------- ------- ---------- ---------- -------- -------- --------- ----------
Balance, September 30, 1995... 3,419,643 34,197 4,945,931 2,933,617 3,937 (104,000) (209,777) 7,707,905
(UNAUDITED)
Net income.................. -- -- -- 40,539 -- -- -- 40,539
Translation adjustment...... -- -- -- -- (11,604) -- -- (11,604)
--------- ------- ---------- ---------- -------- -------- --------- ----------
Balance, December 31, 1995.... 3,419,643 $34,197 $4,945,931 $2,974,156 $ (7,667) (104,000) $(209,777) $ 7,736,840
========= ======= ========== ========== ======== ======== ========= ==========
</TABLE>

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

F-20
<PAGE> 68

ORIEL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business and Acquisition

Oriel Corporation (the "Company") designs, manufactures, and distributes
precision products, light sources, monochromators, detection systems, and optics
for use in laser and medical research.

On September 27, 1994, the Company increased its holdings in Andor
Technology Limited ("Andor") from 25% to 51.25% (the "Acquisition") through the
purchase of newly issued shares of Andor for a commitment to fund $300,000 over
the following 27 months. As of September 30, 1995, $100,000 had been paid
related to this commitment. The Acquisition was accounted for as a purchase with
the excess of the acquisition cost over the fair value of Andor's net assets
($131,303) assigned to goodwill. Goodwill will be amortized over an estimated
ten year life.

The Company purchases one of its product lines from Andor. During fiscal
1994 and 1995, the Company purchased approximately $539,000 and $1,458,000,
respectively, from Andor.

Accounting Pronouncements

In December 1991, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures About
Fair Value of Financial Instruments," which extends existing fair value
disclosure practices for some instruments by requiring all entities to disclose
the fair value of financial instruments, both assets and liabilities recognized
and not recognized in the statement of financial position, for which it is
practicable to estimate fair value. If estimating fair value is not practicable,
this Statement requires disclosure of descriptive information pertinent to
estimating the value of a financial instrument. This Statement is effective for
fiscal 1996. There will be no impact on the Company's financial position or
results of operations as the standard relates to footnote disclosure only.

In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of," which
established criteria for the recognition and measurement of impairment loss
associated with long-lived assets. The Company will be required to adopt this
standard in fiscal 1997. The Company has yet to consider adoption of this
standard, however, it is not expected to have a material impact on the Company's
financial position or results of operations.

In October 1995, the FASB also issued SFAS No. 123, "Accounting for
Stock-Based Compensation," which established financial accounting and reporting
standards for stock-based employee compensation plans. Companies are encouraged,
rather than required, to adopt a new method that accounts for stock compensation
awards based on their fair value using an option pricing model. Companies that
do not adopt this new method will have to make pro forma disclosures of net
income as if the fair value based method of accounting required by SFAS No. 123
had been applied. The pro forma disclosures are required for fiscal 1996. The
fair value-based method of accounting, if adopted by the Company, is effective
for fiscal year 1997. The Company does not expect this standard to have a
material impact on the Company's financial position or results of operations
because the Company intends to only make pro forma disclosures to comply with
this pronouncement.

Consolidation

The accompanying consolidated financial statements include the accounts of
the Company, Oriel Foreign Sales Corporation, and Andor (since the Acquisition).
All significant intercompany accounts and transactions have been eliminated in
consolidation. The minority interest reflected in the consolidated balance sheet
represents the 48.75% of Andor which is owned by third parties.

F-21
<PAGE> 69

ORIEL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Cash Equivalents

The Company considers all instruments with a maturity of three months or
less to be cash equivalents.

Inventories

The Company values its inventory at the lower of cost, using the first-in,
first-out method ("FIFO"), or market.

Property and Equipment

Property and equipment is recorded at cost and is depreciated, using the
straight-line method, over estimated useful lives of 3 to 8 years or, in the
case of leasehold improvements, over the shorter of the assets' useful life or
the term of the related lease.

Investments

The Company maintains a 10% ownership interest in LOT Holdings GmbH
("LOT"). The carrying amount of the investment, which is being accounted for
under the cost method, is $500,000 in the accompanying balance sheet.

The Company has entered into a distribution agreement with LOT which allows
LOT to be the Company's primary distributor in certain parts of Europe. Sales to
LOT for fiscal 1994 and 1995 were approximately $1,989,000 and $2,963,000,
respectively. The Company pays commissions to LOT on these sales and had
commissions payable of approximately $2,000 as of September 30, 1995, which is
included in the accompanying consolidated balance sheet. As of September 30,
1995, the Company had approximately $549,000 due from LOT for purchases from the
Company which are included in accounts receivable in the accompanying
consolidated balance sheet.

Catalogue Costs

Costs associated with the Company's sales catalogues are deferred and
amortized on a straight line basis over the estimated useful life of the
catalogues of between one and one-and-a-half years.

Benefits Payable

The Company provides certain medical and dental benefits for two previous
employees and their dependents. The estimated cost of such benefits is accrued
and reflected as deferred benefits payable in the accompanying consolidated
balance sheet.

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of temporary cash investments
and trade receivables. The Company holds principally all of its cash and cash
equivalents in one bank. Other than amounts due from LOT described above,
concentrations of credit risk with respect to trade receivables are limited due
to the large number of customers comprising the Company's customer base, which
primarily includes numerous universities and research and development ventures
in countries worldwide. The Company requires certain international customers to
furnish letters of credit. Management does not believe significant
concentrations of credit risk other than those due from LOT existed at September
30, 1995.

F-22
<PAGE> 70

ORIEL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Interim Financial Statements

The financial statements for the three-month periods ended December 31,
1994, and 1995 are unaudited but, in the opinion of management, reflect all
adjustments of a normal recurring nature necessary for a fair presentation of
results for these interim periods. The results of operations for the three month
period ended December 31, 1995, are not necessarily indicative of the results to
be expected for the entire year.

2. COMMON STOCK SUBJECT TO ISSUANCE

In connection with the 1994 acquisition of Andor stock (see Note 1), the
Company entered into an agreement with Andor whereby the remaining 48.25% of
outstanding stock of Andor would be converted into common stock of the Company.
The percentage of outstanding Company stock to be issued to Andor stockholders
in connection with this agreement would be based on the 1997 net revenue of
Andor, as defined, and would range from 10% to 60% based on net sales of
$3,000,000 to $15,000,000, respectively. This agreement was cancelled in
connection with the acquisition of the Company described in Note 8.

3. LINE OF CREDIT

In January 1995, the Company renegotiated its line of credit. Available
borrowings under the new agreement are limited to the lesser of (a) $2,000,000
or (b) 80% of eligible accounts receivable and the lesser of 25% of the value of
eligible inventory up to a maximum of $700,000. All outstanding borrowings bear
interest at prime. This line of credit expires on February 28, 1997. The use of
proceeds is for working capital purposes.

The Company is prohibited from merging or consolidating with or into any
other company nor can the Company purchase a material portion of any other
company. Since the Company has signed a letter of intent to be acquired by
another business and intends on completing this sale or another sale should this
transaction not be completed (see Note 8), the Company expects to be in default
of this covenant. As such, the outstanding borrowings against this line of
credit have been classified as currently payable in the accompanying balance
sheet.

The loan agreement also contains certain financial covenants which must be
met quarterly. In addition, the line of credit agreement contains a provision
whereby outstanding borrowings can be deemed to be currently due and payable if
the Company experiences a material adverse change, as defined, in its business
operations.

The line of credit is secured by a first priority security interest on all
assets of the Company and all letters of credit. As of September 30, 1995, the
Company had outstanding borrowings of $480,915 against this line of credit.

F-23
<PAGE> 71

ORIEL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. INCOME TAXES

The Company follows SFAS No. 109, "Accounting for Income Taxes," under
which the Company uses an asset and liability approach to recognize deferred tax
assets and liabilities for the future tax consequences of items that have
already been recognized in its financial statements and tax returns.

The provision for income taxes for fiscal 1994 and 1995 is as follows:

<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Current:
Federal............................................ $363,000 $297,000
State.............................................. 60,000 35,000
-------- --------
423,000 332,000
Deferred:
Federal............................................ (50,000) (3,000)
State.............................................. (5,000) (1,000)
-------- --------
$368,000 $328,000
======== ========
</TABLE>

<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Provision for income taxes at statutory rate................. $251,000 $382,000
Increases (decreases) resulting from:
State income taxes, net of federal benefit................. 36,000 23,000
Foreign tax rate differential.............................. 19,000 11,000
Tax benefit of foreign sales corporation................... (6,000) (20,000)
Other reserves and credits................................. 32,000 (78,000)
Amortization of cost in excess of net assets of acquired
companies............................................... 32,000 --
Nondeductible expenses..................................... 4,000 10,000
-------- --------
$368,000 $328,000
======== ========
</TABLE>

The appropriate tax effect of the temporary difference giving rise to the
Company's deferred tax assets and liabilities at September 30, 1995, result
primarily from allowances for doubtful accounts, inventory items, accrued
warranty, accrued vacation, deferred compensation, and different book and tax
treatments of depreciation. As of September 30, 1995, the Company had aggregate
deferred tax assets of $299,000, which was partially offset by a valuation
allowance of $27,000, and aggregate deferred tax liabilities of $78,000.

The Company also has foreign tax credit carryforwards of approximately
$19,000 at September 30, 1995, which are available to reduce future taxes on
foreign source income, if any, and which expire through 1996.

5. STOCK OPTION PLAN

The Company has established an employee Stock Option Plan which authorizes
the granting of options to purchase up to 450,000 shares of the Company's common
stock. Options are granted for a term of ten years, and are generally
exercisable at the rate of 2% per month commencing at the date of

F-24
<PAGE> 72

ORIEL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

grant. Additionally, a resolution was passed whereby all issued options are
exercisable in conjunction with any sale of the Company (see Note 8).

Information with respect to outstanding stock options is as follows:

<TABLE>
<CAPTION>
EXERCISE
SHARES PRICE
------- ----------
<S> <C> <C>
September 30, 1993................................... 222,500 $2.00-2.12
Canceled........................................... (12,500) 2.00-2.12
------- ----------
September 30, 1994................................... 210,000 2.00-2.12
Issued............................................. 148,000 2.00-2.12
------- ----------
September 30, 1995................................... 358,000 $2.00-2.12
======= ==========
</TABLE>

6. PROFIT SHARING PLAN

The Company has a profit sharing plan which was established for all
full-time U.S. employees and which provides for discretionary Company
contributions. Included in the accompanying statements of operations is
approximately $120,000 and $125,000 related to the Company's discretionary
contributions for fiscal 1994 and 1995, respectively.

7. COMMITMENTS

The Company leases offices and plant and equipment for various periods
through 2000. The approximate minimum annual rental commitments for the next
five years and thereafter are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR
---------------------------------------------------------
<S> <C>
1996..................................................... $333,000
1997..................................................... 317,000
1998..................................................... 118,000
1999..................................................... 16,000
2000..................................................... 16,000
--------
$800,000
========
</TABLE>

Rent expense for fiscal 1994 and 1995 was approximately $290,000 and
$342,000, respectively.

8. SUBSEQUENT EVENT

On February 20, 1996, all of the outstanding capital stock of the Company
was acquired by Thermo Vision Corporation, a wholly owned subsidiary of Thermo
Optek Corporation, for $11,798,000 in cash.

F-25
<PAGE> 73

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
of Corion Corporation:

We have audited the accompanying balance sheet of Corion Corporation as of
December 31, 1995, and the related statements of operations, changes in
stockholders' equity, and cash flows for 1995 and the period from January 1,
1996, through February 29, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Corion Corporation as of
December 31, 1995, and its results of operations and cash flows for 1995 and the
period from January 1, 1996, through February 29, 1996, in conformity with
generally accepted accounting principles.

/s/ ARTHUR ANDERSEN LLP

Boston, Massachusetts
November 12, 1996

F-26
<PAGE> 74

CORION CORPORATION

STATEMENT OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
JANUARY 1, 1996
THROUGH
1995 FEBRUARY 29, 1996
------- -----------------
<S> <C> <C>
Net sales (Note 9)................................................. $ 8,546 $ 968
Cost of goods sold................................................. (6,679) (506)
------- -----
Gross profit..................................................... 1,867 462
Selling, general, and administrative expense....................... 1,751 308
Research and development expense................................... 415 83
------- -----
Income (loss) from operations.................................... (299) 71
Interest Income.................................................... 7 3
Interest Expense................................................... (319) (46)
Other Expense, Net................................................. (34) --
------- -----
Net Income (Loss).................................................. $ (645) $ 28
======= =====
</TABLE>

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

F-27
<PAGE> 75

CORION CORPORATION

BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
1995
-------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents......................................................... $ 479
Trade accounts receivable, less allowance for doubtful accounts of $50............ 1,157
Other receivables................................................................. 101
Inventories....................................................................... 1,204
Other current assets.............................................................. 164
------
3,105
------
Property and Equipment.............................................................. 5,216
Less: Accumulated depreciation.................................................... 3,714
------
1,502
------
$ 4,607
======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable...................................................................... $ 1,616
Accounts payable.................................................................. 403
Accrued expenses.................................................................. 366
------
2,385
------
Long-term Note Payable.............................................................. 1,000
------
Commitments (Notes 5 and 7)
Stockholders' Equity (Notes 6 and 7):
Class A voting common stock, $1.00 par value, 1,000,000 shares authorized; 494,570
shares issued and outstanding.................................................. 495
Class B nonvoting common stock, $.10 par value, 3,000,000 shares authorized;
1,483,710 shares issued and outstanding........................................ 148
Retained earnings................................................................. 579
------
1,222
------
$ 4,607
======
</TABLE>

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

F-28
<PAGE> 76

CORION CORPORATION

STATEMENT OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
JANUARY 1, 1996
THROUGH
1995 FEBRUARY 29, 1996
----- -----------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss)................................................. $(645) $ 28
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization.................................. 369 60
Provision for doubtful accounts................................ 52 --
Loss on sale of property and equipment......................... 2 --
Changes in assets and liabilities:
Trade accounts receivable.................................... 419 407
Inventories.................................................. 894 (168)
Other current assets......................................... 20 (15)
Accounts payable............................................. (438) (101)
Accrued expenses............................................. 98 (113)
----- -----
Net cash provided by operating activities................. 771 98
----- -----
Cash Flows from Investing Activities:
Additions to property and equipment............................... (40) (8)
Proceeds from sale of property and equipment...................... 1 --
----- -----
Net cash used in investing activities..................... (39) (8)
----- -----
Cash Flows from Financing Activities:
Repayments of notes payable....................................... (480) (89)
----- -----
Net cash used in financing activities..................... (480) (89)
----- -----
Net Increase in Cash and Cash Equivalents........................... 252 1
Cash and Cash Equivalents at Beginning of Period.................... 227 479
----- -----
Cash and Cash Equivalents at End of Period.......................... $ 479 $ 480
===== =====
Supplemental Disclosure:
Cash paid during the period for:
Interest....................................................... $ 310 $ 59
===== =====
Income taxes................................................... $ 9 $ --
===== =====
</TABLE>

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

F-29
<PAGE> 77

CORION CORPORATION

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK TOTAL
------------------- RETAINED STOCKHOLDERS'
CLASS A CLASS B EARNINGS EQUITY
------- ------- -------- -------------
<S> <C> <C> <C> <C>
Balance December 31, 1994........................ $ 495 $ 148 $1,224 $ 1,867
Net loss....................................... -- -- (645) (645)
---- ---- ------ ------
Balance December 31, 1995........................ 495 148 579 1,222
Net income..................................... -- -- 28 28
---- ---- ------ ------
Balance February 29, 1996........................ $ 495 $ 148 $ 607 $ 1,250
==== ==== ====== ======
</TABLE>

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

F-30
<PAGE> 78

CORION CORPORATION

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Corion Corporation (the "Company") is engaged in the manufacturing and
marketing of optical filters and other coated optical products.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all
short-term investments with an original maturity date of three months or less to
be cash equivalents.

Inventories

Inventories are stated at the lower of cost or market, cost being
determined by the first-in, first-out ("FIFO") method.

Property and Equipment

Property, plant, and equipment are stated at cost. Depreciation is
calculated on the straight-line method over the estimated useful lives of the
assets. Leasehold improvements are amortized on the straight-line method over
the shorter of the lease term or estimated useful life of the asset.

Income Taxes

The Company is an S corporation for federal tax reporting purposes. Under
the applicable S corporation provisions, the Company does not incur federal
income taxes at the corporate level as such taxes are an obligation of the
stockholders. The Company does provide for state income taxes as necessary.

In accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("Statement 109"), deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

Use of Estimates

F-31
<PAGE> 79

CORION CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. INVENTORIES

Inventories consist of:

<TABLE>
<CAPTION>
1995
--------------
(IN THOUSANDS)
<S> <C>
Raw materials................................................. $ 182
Work in process............................................... 626
Finished goods................................................ 396
-----
$1,204
=====
</TABLE>

3. PROPERTY AND EQUIPMENT

Property and equipment consists of:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
1995 ------------
--------------
(IN THOUSANDS)
<S> <C> <C>
Machinery and equipment.......................... $4,860 4-12 years
Furniture and fixtures........................... 152 5 years
Leasehold improvements........................... 204 4 years
------
$5,216
======
</TABLE>

4. NOTES PAYABLE

Notes payable consists of the following:

<TABLE>
<CAPTION>
1995
--------------
(IN THOUSANDS)
<S> <C>
Note payable to bank with interest at the corporate base rate plus 1%
(9.50% at December 31, 1995), secured by all assets of the
Company............................................................. $1,616
Subordinated notes payable to stockholders, interest at 15%, payable
semiannually, principal payable in full on January 1, 2002.......... 1,000
------
Total notes payable.............................................. 2,616
Less currently payable................................................ 1,616
------
Long-term notes payable.......................................... $1,000
======
</TABLE>

The $1,616,000 note payable, which is contractually based on monthly
payments of principal and interest, requires the maintenance of certain minimum
levels of working capital and net worth and includes other covenants which,
among other items, restrict the Company's ability to borrow, pay dividends, and
make investments. At February 29, 1996, the Company was not in compliance with
certain of such covenants and had not obtained waivers from the lending bank.
However, this note was repaid in connection with the February 29, 1996, sale of
substantially all of the assets and certain liabilities of the Company, as
described in Note 10. Accordingly, this note payable is classified as a current
liability in the accompanying balance sheet.

5. LEASE COMMITMENTS

The Company leases its building from a trust, the primary beneficiaries of
which include certain principal stockholders and officers of the Company. The
building is leased under a rental agreement which expires on November 1, 1999.
The agreement provides for adjustments upwards on certain dates by a factor
equal to the change in the Consumer Price Index from August 1, 1984, to each of
the

F-32
<PAGE> 80

CORION CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

adjustment dates. The Company also leases vehicles and office equipment under
leases expiring at various dates through February 1998. Minimum lease
commitments under all operating leases are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996.................................................. $ 283
1997.................................................. 283
1998.................................................. 278
1999.................................................. 230
------
Total....................................... $1,074
======
</TABLE>

Rent expense under operating leases amounted to $305,000 and $50,000 for
1995 and the period from January 1, 1996, through February 29, 1996,
respectively. Of these amounts, approximately $271,000 and $45,000 was paid to
the trust in 1995 and the period from January 1, 1996, through February 29,
1996, respectively.

6. STOCKHOLDERS' EQUITY

Stock Option Plan

On November 9, 1989, the board of directors approved the 1989 Stock Option
Plan (the "Plan"), which provides that key employees may be granted nonqualified
stock options, enabling them to purchase shares of the Company's stock at a
price not less than 80% of the fair market value of the stock on the date of
grant. Subsequently, on May 20, 1992, and on October 27, 1993, the board amended
the Plan to increase the total number of shares which may be issued under the
Plan to 16,500 shares of Class A common stock and 49,500 shares of Class B
common stock, and to allow the administrative committee to determine at the time
of grant to make the options exercisable over various periods from the date of
grant including immediately upon the date of grant. A summary of the Company's
stock option information as of December 31, 1995, is as follows:

<TABLE>
<CAPTION>
CLASS OF NUMBER OF RANGE OF OPTION
COMMON STOCK SHARES PRICES PER SHARE
------------ --------- ----------------
<S> <C> <C> <C>
Outstanding........................... A 7,500 $ .82 - 1.58
Exercisable........................... A 7,500 .82 - 1.58
Outstanding........................... B 36,500 .78 - 1.58
Exercisable........................... B 22,500 .78 - 1.58
</TABLE>

Data concerning outstanding and exercisable options as of February 29,
1996, is not materially different from the data presented for December 31, 1995.

7. COMMON STOCK PURCHASE AGREEMENTS

The Company has entered into stock purchase agreements with various
officers of the Company which state that in the event of the officer's death,
the Company will purchase all outstanding shares of common stock owned by the
officer tendered by his legal representative. The purchase price has been
established at 1.075 times the adjusted net book value of such shares as shown
on the balance sheet of the Company as of the last day of the calendar quarter
immediately preceding the individual's death.

8. PROFIT-SHARING AND SAVINGS PLAN

The Company has a profit-sharing and savings plan covering substantially
all employees who have met eligibility requirements. The Company may contribute
any amount as determined by the board of

F-33
<PAGE> 81

CORION CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

directors under the profit-sharing plan. In addition, to encourage employee
saving, the Company had adopted a practice of matching employee contributions up
to $400 per plan year. Total profit-sharing plan expenses, including
administrative expenses and matching and discretionary grants for 1995 and the
period from January 1, 1996, through February 29, 1996, were $29,000 and $5,000,
respectively.

9. SIGNIFICANT CUSTOMERS

Net sales from government related contracts were approximately 33% of total
net sales in 1995 and were less than 10% of total net sales in the period from
January 1, 1996, through February 29, 1996. In addition, one commercial customer
accounted for approximately 11% of total net sales in the period from January 1,
1996, through February 29, 1996.

10. SUBSEQUENT EVENT

On February 29, 1996, the Company was sold to Thermo Vision Corporation.

F-34
<PAGE> 82

THERMO VISION CORPORATION

PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 28, 1996
(UNAUDITED)

In February 1996, Thermo Vision Corporation ("the Company") acquired Oriel
Corporation ("Oriel"), a manufacturer and distributor of photonics components
and instruments, for $11.8 million in cash, and Corion Corporation ("Corion"), a
manufacturer of commercial optical filters, for $5.1 million in cash. These
acquisitions have been accounted for using the purchase method of accounting,
and their results of operations have been included in the accompanying financial
statements from the respective dates of acquisition.

The following unaudited pro forma combined condensed statement of income
sets forth the results of operations for the year ended December 28, 1996, as if
the acquisitions of Oriel and Corion had occurred on January 1, 1996. Oriel and
Corion's historical statements of income represent their results for the period
from January 1, 1996, through February 20, 1996, and February 29, 1996, the
respective dates of acquisition by the Company. Oriel's historical statement of
income for the period from January 1, 1996, to February 20, 1996, includes
$581,000 of nonrecurring compensation costs incurred in connection with its
acquisition by the Company. The pro forma results of operations are not
necessarily indicative of future operations or the actual results that would
have occurred had the acquisitions of Oriel and Corion been made on January 1,
1996. This statement should be read in conjunction with the accompanying notes
and the respective historical financial statements and related notes of the
Company, Oriel, and Corion appearing elsewhere in this Prospectus

<TABLE>
<CAPTION>
HISTORICAL
------------------------------ PRO FORMA
THERMO -------------------------
VISION ORIEL CORION ADJUSTMENTS COMBINED
------- ------- ------ ------------ --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues............................ $30,434 $ 2,538 $968 $ -- $33,940
------- ------- ---- ---- ------
Costs and Operating Expenses:
Cost of revenues.................. 17,066 2,056 506 -- 19,628
Selling, general, and
administrative expenses........ 7,402 1,667 308 63 9,440
Research and development
expenses....................... 3,499 459 83 -- 4,041
------- ------- ---- ---- ------
27,967 4,182 897 63 33,109
------- ------- ---- ---- ------
Operating Income (Loss)............. 2,467 (1,644) 71 (63) 831
Interest Income..................... -- -- 3 -- 3
Interest Expense.................... (44) (5) (46) 46 (49)
Other Expense....................... -- (32) -- -- (32)
------- ------- ---- ---- ------
Income (Loss) Before Provision
(Benefit) for Income Taxes........ 2,423 (1,681) 28 (17) 753
Provision (Benefit) for Income
Taxes............................. 1,005 (602) -- 12 415
------- ------- ---- ---- ------
Net Income (Loss)................... $ 1,418 $(1,079) $ 28 $(29) $ 338
======= ======= ==== ==== ======
Earnings per Share.................. $ 0.29 $ 0.07
======= ======
Weighted Average Shares............. 4,845 4,845
======= ======
</TABLE>

F-35
<PAGE> 83

THERMO VISION CORPORATION

NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(UNAUDITED)

NOTE 1 -- PRO FORMA ADJUSTMENTS TO PRO FORMA COMBINED CONDENSED STATEMENT OF
INCOME FOR THE YEAR ENDED DECEMBER 28, 1996 (IN THOUSANDS, EXCEPT IN
TEXT)

<TABLE>
<CAPTION>
DEBIT
(CREDIT)
--------
<S> <C>
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Service fee of 1.0% of the revenues of Oriel and Corion for services provided under
a services agreement between the Company and Thermo Electron..................... $ 35
Amortization over 40 years of $4,736,000 and $2,056,000 of "Cost in excess of net
assets of acquired companies" created by the acquisitions of Oriel and Corion,
respectively..................................................................... 28
----
63
----
INTEREST EXPENSE
Reduction in Corion interest expense incurred on notes payable to related parties
that were not purchased by the Company........................................... (46)
----
PROVISION FOR INCOME TAXES
Income tax expense on earnings of Corion calculated at the Company's statutory
income tax rate of 40%........................................................... 11
Income tax benefit associated with the adjustments above (excluding amortization of
cost in excess of net assets of Oriel), calculated at the Company's statutory
income tax rate of 40%........................................................... 1
----
12
----
</TABLE>

F-36
<PAGE> 84

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

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
The Distribution...................... 6
Risk Factors.......................... 7
Use of Proceeds....................... 11
Dividend Policy....................... 11
Capitalization........................ 12
Dilution.............................. 13
Selected Financial Information........ 14
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 15
Business.............................. 18
Management............................ 30
Security Ownership of Certain
Beneficial Owners and Management.... 35
Certain Transactions.................. 38
Description of Capital Stock.......... 42
Shares Eligible for Future Sale....... 43
Underwriting.......................... 44
Legal Opinions........................ 46
Experts............................... 46
Additional Information................ 46
Index to Financial Statements......... F-1
</TABLE>

UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS REQUIREMENT
IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING
AS UNDERWRITERS OR WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
775,000 SHARES

THERMO VISION
CORPORATION

COMMON STOCK
($.01 PAR VALUE)

FAHNESTOCK & CO. INC.

PROSPECTUS
DATED , 1997
<PAGE> 85

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than the
underwriting discounts and commissions. All amounts shown are estimates except
for the Securities and Exchange Commission (the "Commission") registration fee,
the NASD filing fee, and the American Stock Exchange listing fee.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $ *
NASD filing...................................................... *
American Stock Exchange listing fee.............................. *
Legal fees and expenses.......................................... *
Blue Sky fees and expenses (including legal fees)................ *
Printing and engraving expenses.................................. *
Transfer agent fees.............................................. *
Miscellaneous.................................................... *
--------
Total.......................................................... $ *
========
</TABLE>

- ---------------
* To be completed by amendment

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

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

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

Under the Underwriting Agreement, the Underwriters are obligated, under
certain circumstances, to indemnify directors and officers of the Registrant
against certain liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act"). Reference is made to the form of
Underwriting Agreement filed as an exhibit hereto.

Under the Distribution Agreement, Thermo Optek Corporation ("Optek") is
obligated, under certain circumstances, to indemnify directors and officers of
the Registrant against certain liabilities. Reference is made to the form of
Distribution Agreement which is filed as an exhibit hereto.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In November 1995, the Registrant issued 4,845,000 shares of Common Stock to
Optek in exchange for $10 at the time of incorporation of the Registrant. No
person acted as an underwriter with respect to this transaction. The Registrant
relied on Section 4(2) of the Securities Act for the exemption from the
registration requirements of the Securities Act because no public offering was
involved. This transaction

II-1
<PAGE> 86

represents the only sale by the Registrant of securities that were not
registered under the Securities Act since its incorporation in November 1995.
The Board of Directors of the Registrant believes that the Registrant received
fair value for the 4,845,000 shares of Common Stock sold to Optek.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS

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

(b) FINANCIAL STATEMENT SCHEDULES

Financial Statement Schedule as of December 28, 1996, and the Report of
Independent Accountants on such schedule are included in this Registration
Statement. All other schedules are omitted because they are not applicable or
are not required under Regulation S-X.

ITEM 17. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement certificates
in such denominations and registered in such names as required by the
Underwriters to permit prompt delivery to each purchaser.

(b) The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

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

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

II-2
<PAGE> 87

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the Town of Franklin,
Commonwealth of Massachusetts, on this 21st day of October, 1997.

THERMO VISION CORPORATION

By: /s/ KRISTINE S. LANGDON
------------------------------------
Kristine S. Langdon
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------- -----------------
<C> <S> <C>
/s/ KRISTINE S. LANGDON President, Chief Executive October 21, 1997
- ------------------------------------------ Officer, and Director
Kristine S. Langdon (Principal Executive Officer)

* JOHN N. HATSOPOULOS Chief Financial Officer, Vice October 21, 1997
- ------------------------------------------ President, and Director
John N. Hatsopoulos (Principal Financial Officer)
* PAUL F. KELLEHER Chief Accounting Officer October 21, 1997
- ------------------------------------------ (Principal Accounting
Paul F. Kelleher Officer)

* EARL R. LEWIS Chairman of the Board and October 21, 1997
- ------------------------------------------ Director
Earl L. Lewis

* DR. D. ALLAN BROMLEY Director October 21, 1997
- ------------------------------------------
Dr. D. Allan Bromley

* ARVIN H. SMITH Director October 21, 1997
- ------------------------------------------
Arvin H. Smith

* By: /s/ MELISSA F. RIORDAN
- ------------------------------------------
Melissa F. Riordan
Attorney-in-Fact
</TABLE>

II-3
<PAGE> 88

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Thermo Vision Corporation:

We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Thermo Vision Corporation included in
Thermo Vision Corporation's Form S-1 and have issued our report thereon dated
May 19, 1997. Our audits were made for the purpose of forming an opinion on the
basic consolidated financial statements taken as a whole. Thermo Vision
Corporation's schedule of Valuation and Qualifying Accounts, included in
Schedule II on page S-2, is the responsibility of the Company's management and
is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic consolidated financial statements and, in our
opinion, fairly states, in all material respects, the financial data required to
be set forth therein in relation to the basic consolidated financial statements
taken as a whole.

ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 19, 1997

S-1
<PAGE> 89

SCHEDULE II

THERMO VISION CORPORATION

VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE AT PROVISION BALANCE
BEGINNING CHARGED TO ACCOUNTS AT END
OF YEAR EXPENSE WRITTEN OFF OTHER(A) OF YEAR
---------- ---------- ----------- -------- -------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
Allowance for Doubtful Accounts....... $ -- $ 10 $ -- $ -- $ 10
YEAR ENDED DECEMBER 30, 1995
Allowance for Doubtful Accounts....... $ 10 $ 14 $ -- $ -- $ 24
YEAR ENDED DECEMBER 28, 1996
Allowance for Doubtful Accounts....... $ 24 $174 $ (82) $150 $ 266
</TABLE>

- ---------------
(a) Includes allowance of businesses acquired during the year as described in
Note 2 to Consolidated Financial Statements.

S-2
<PAGE> 90

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<C> <S>
*1.1 Form of Underwriting Agreement.
*2.1 Form of Distribution Agreement between Thermo Optek Corporation ("Optek") and the
Registrant.
*2.3 Asset Purchase Agreement dated as of January 23, 1996, by and between the Registrant
and Corion Corporation.
*2.4 Purchase Agreement dated as of February 7, 1996, by and between the Registrant and
the shareholders and optionholders of Oriel Corporation as set forth therein.
*3.1 Certificate of Incorporation, as amended, of the Registrant.
*3.2 Bylaws of the Registrant.
*4.1 Specimen Common Stock Certificate of the Registrant.
*5.1 Opinion of Seth H. Hoogasian with respect to the validity of the securities being
offered.
*10.1 Form of Corporate Services Agreement between Thermo Electron Corporation ("Thermo
Electron") and the Registrant.
*10.2 Thermo Electron Corporate Charter, as amended and restated, effective January 3,
1993.
*10.3 Form of Tax Allocation Agreement between Thermo Electron and the Registrant.
*10.4 Form of Master Repurchase Agreement between Thermo Electron and the Registrant.
*10.5 Form of Master Guarantee Reimbursement Agreement between Thermo Electron and the
Registrant.
*10.6 Form of Master Guarantee Reimbursement Agreement between Thermo Instrument Systems
Inc. ("Thermo Instrument") and the Registrant.
*10.7 CID Contract Research and Development Agreement dated October 1994 between Optek and
the Registrant.
*10.8 Form of CID Supply Agreement between Optek and the Registrant.
*10.9 Equity Incentive Plan of the Registrant.
*10.10 Deferred Compensation Plan for Directors of the Registrant.
*10.11 Form of Indemnification Agreement for Officers and Directors of the Registrant.
*10.12 Sublease Agreement dated as of September 1, 1997, between the Registrant and Thermo
Instrument.
*10.13 Sublease Agreement effective as of February 1, 1984, between Oriel Corporation and
Osbrook Associates Limited Partnership, as modified.
*10.14 Form of Tax Matters Agreement between Optek and the Registrant.
*10.15 $3.8 Million Principal Amount Promissory Note due July 13, 2000, issued by the
Registrant to Thermo Electron.
*10.16 $3.6 Million Principal Amount Promissory Note and $347,438 Principal Amount
Promissory Note, both due February 18, 2000, issued by the Registrant to Optek.
10.17 Optek Equity Incentive Plan (filed as Exhibit 10.6 to Optek's Registration Statement
on Form S-1 [File No. 333-03630], and incorporated herein by reference).
10.18 Thermo Instrument Systems Inc. -- ThermoSpectra Corporation Nonqualified Stock
Option Plan (filed as Exhibit 10.51 to Thermo Instrument's Annual Report on Form
10-K for the fiscal year ended December 31, 1994, [File No. 1-9786] and incorporated
herein by reference).
10.19 Thermo Instrument Systems Inc. -- ThermoQuest Corporation Nonqualified Stock Option
Plan (filed as Exhibit 10.65 to Thermo Cardiosystems' Annual Report on Form 10-K for
the fiscal year ended December 30, 1995, [File No. 1-10114] and incorporated herein
by reference).
*21.1 Subsidiaries of the Registrant.
</TABLE>
<PAGE> 91

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<C> <S>
+23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of Seth H. Hoogasian, Esq. (included in Exhibit 5.1).
+24.1 Power of Attorney.
</TABLE>

- ---------------
* To be filed by amendment.

+ Previously filed.