<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 17, 1997
REGISTRATION NO. 333-38153
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
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. [ ]
------------------------
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
NOVEMBER 17, 1997
PROSPECTUS
1,075,000 SHARES
[THERMO VISION LOGO]
COMMON STOCK
All of the shares of Common Stock, $.01 par value per share (the "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 (the "Distribution"), 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). As a result, Thermo Instrument will have the power to
elect the entire Board of Directors of the Company and to approve or disapprove
any corporate actions submitted to a vote of the Company's shareholders. The
Distribution will not be effected unless this offering is scheduled to close
immediately thereafter.
Prior to this offering, there has been no public market for the Common Stock of
the Company. It is currently estimated that the initial public offering price
per share will be between $8.00 and $10.00. 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 (the "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>
- -----------------------------------------------------------------------------------------------------
UNDERWRITING PROCEEDS TO
PRICE TO PUBLIC DISCOUNT COMPANY(1)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share....................... $ $ $
- -----------------------------------------------------------------------------------------------------
Total(2)........................ $ $ $
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Before deducting expenses payable by the Company estimated at $915,000.
(2) The Company has granted to the Underwriters a 30-day option to purchase up
to an additional 161,250 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. HSBC SECURITIES, INC.
The date of this Prospectus is , 1997.
<PAGE> 3
[Picture of circular silicon wafer containing four CID devices and finished CID
sensor.]
Vision has developed a CID sensor for
use in a customer's dental X-ray imaging
system that is designed to replace
conventional dental X-ray film by
providing a real-time video image. A
silicon wafer containing four devices
and a finished sensor are shown.
Computer controlled
equipment is
utilized to remove
film from a plate
being scribed into
optical filters.
[Picture of woman (i) holding a
circular plate containing a number
of circular and square shaped
optical filters of different sizes
and (ii) observing computer
controlled equipment removing film
from a plate being scribed into
optical filters.]
[Picture of Oriel multichannel detectors, lasers, filter optic cables, micro
positioning devices and monochrometers.]
The cover photo from the Oriel
catalogue shows the range of its
photonics products, including
multichannel detectors, lasers,
fiber optic cables, micro
positioning devices and
monochrometers.
------------------------
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
and an approximate 7-for-5 stock split of the Common Stock effected on November
14, 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.
- 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.
3
<PAGE> 5
- 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 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............................. 1,075,000 shares
Common Stock to be Outstanding after
the Offering(1)..................... 7,858,783 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 November 14,
1997. Does not include an aggregate of 725,000 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 up to 350,000 shares of Common Stock will be granted pursuant to
the Company's Equity Incentive Plan at exercise prices equal to the fair
market value of the Common Stock on the respective dates of grant. See
"Capitalization," "Management -- Compensation of Executive Officers," and
"-- Vision Stock Option Grants."
4
<PAGE> 6
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED (1)(2)
FISCAL YEAR(1) ----------------------------- PRO FORMA
------------------------------------------------------- SEPTEMBER 28, SEPTEMBER 27, 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 $22,369 $28,445 $33,940
Gross Profit................ 377 903 1,231 2,544 13,368 9,705 12,654 14,312
Operating Income (Loss)..... (69) 239 261 282 2,467 1,839 3,110 831
Net Income (Loss)........... (71) 66 146 147 1,418 1,049 1,702 338
Earnings (Loss) per
Share(8).................. (.01) .01 .02 .02 .21 .15 .25 .05
Weighted Average
Shares(8)................. 6,784 6,784 6,784 6,784 6,784 6,784 6,784 6,784
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 27, 1997(2)(6)
---------------------------
AS
ACTUAL ADJUSTED(9)
------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working Capital.................................................................................... $10,461 $18,544
Total Assets....................................................................................... 38,698 46,781
Long-term Obligations.............................................................................. 7,747 7,747
Shareholder's Investment........................................................................... 23,379 31,462
</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 6,783,783 shares issued to Optek in connection with
the initial capitalization of the Company.
(9) Adjusted to reflect the sale by the Company of 1,075,000 shares of Common
Stock offered hereby at an assumed initial public offering price of $9.00
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 (approximately
6,783,800 shares) are held by Optek, a majority-owned subsidiary of Thermo
Instrument. On , 1997, (the "Declaration Date"), the Board of
Directors of Optek declared a dividend (the "Distribution") of 14 shares of the
Company's Common Stock for each 100 shares of the common stock of Optek held of
record by Optek shareholders on , 1997, which is the date that the
Board of Directors of Optek initially has fixed as the record for the
Distribution (such date, as it may be deferred, the "Record Date"). However, the
Record Date will be deferred by one day for each day that the pricing of this
offering is deferred beyond , 1997.
The Distribution will be effected immediately prior to the closing of this
offering. The shares of Common Stock to be distributed in the Distribution will
be subject to a restriction set forth in the Company's Certificate of
Incorporation that prohibits the sale, transfer, pledge, or other disposition of
such shares until the sooner to occur of (i) 60 days following the pricing of
this offering or (ii) March 1, 1998 (the "Charter Transfer Restriction"). See
"Description of Capital Stock." 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 technologies and changes in customer requirements or to
devote greater resources to the promotion and sale of their products than the
Company. In addition,
7
<PAGE> 9
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%, 37% and 34% of the
Company's revenues for the fiscal years ended December 31, 1994, December 30,
1995, and December 28, 1996, and the nine months ended September 27, 1997,
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 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."
8
<PAGE> 10
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. For example, since the
February 1996 acquisitions of Oriel and Corion, the Company's quarterly revenues
have ranged from a low of $8.1 million to a high of $10.6 million and its
quarterly net income has ranged from a low of $0.4 million to a high of $0.6
million. 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. It is possible that a "when-issued" trading
market may develop prior to the Record Date of the Distribution, although such
trading is not expected to occur because the shares of Common Stock to be
distributed in the Distribution are subject to the Charter Transfer Restriction.
See "Description of Capital Stock." 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 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
9
<PAGE> 11
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 (anticipated to
be less than 5% in the case of Messrs. Hatsopoulous, Kelleher, and Smith and
less than 10% in the case of Mr. Lewis) 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 of $6.90 per share in
the net tangible book value of the Common Stock from the initial public offering
price (based on an assumed initial public offering price of $9.00 per share).
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 approximate 6,300,000
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, and
10
<PAGE> 12
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 $8,082,750 ($9,432,413 if the Underwriters' over-allotment
option is exercised in full) assuming an initial public offering price of $9.00
per share and after deducting the estimated underwriting discount and offering
expenses. The principal purposes of this offering are to increase the Company's
equity capital, to create a public market for the Common Stock, and to
facilitate future access by the Company to public equity markets. 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
September 27, 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 $9.00
per share and after deducting the estimated underwriting discount and offering
expenses payable by the Company.
<TABLE>
<CAPTION>
SEPTEMBER 27, 1997
-----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Short-term Obligations:
Note payable......................................................... $ 729 $ 729
Capital lease obligation............................................. 18 18
------- -------
$ 747 $ 747
======= =======
Long-term Obligations, Due to Affiliates............................... $ 7,747 $ 7,747
------- -------
Shareholder's Investment:
Common stock, $.01 par value, 50,000,000 shares authorized;
6,783,783 shares issued and outstanding(1)(2)..................... 68 79
Capital in excess of par value....................................... 20,137 28,209
Retained earnings.................................................... 3,139 3,139
Cumulative translation adjustment.................................... 35 35
------- -------
Total Shareholder's Investment.................................... 23,379 31,462
------- -------
Total Capitalization (Long-term Obligations and Shareholder's
Investment)................................................ $31,126 $39,209
======= =======
</TABLE>
- ---------------
(1) Does not include 725,000 shares of Common Stock reserved for issuance under
the Company's stock-based compensation plans. Prior to consummation of this
offering, the Company plans to grant options pursuant to its Equity
Incentive Plan covering up to 350,000 shares of Common Stock with exercise
prices equal to the fair market value of the Common Stock on the respective
dates of grant. See "Management -- Compensation of Executive Officers" and
"-- Vision Stock Option Grants."
(2) Reflects an increase in authorized shares and stock splits in the form of
dividends effected in August 1997 and November 1997.
12
<PAGE> 14
DILUTION
As of September 27, 1997, the Company had a net tangible book value of
$8,391,000, or $1.24 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 1,075,000 shares of Common
Stock offered hereby (at an assumed initial public offering price of $9.00 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 September 27, 1997, would have been $16,474,000, or $2.10 per
share. This represents an immediate increase in net tangible book value of $0.86
per share to the existing shareholder and an immediate dilution in net tangible
book value of $6.90 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.............................................. $9.00
------
Net tangible book value per share as of September 27, 1997, before
this offering................................................... $1.24
Increase per share attributable to this offering................... 0.86
------
Pro forma net tangible book value per share as of September 27, 1997,
after this offering(1)............................................. 2.10
------
Dilution per share to new investors(1)............................... $6.90
======
</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 $2.22,
resulting in an immediate dilution of $6.78 per share to investors
purchasing shares in this offering. See "Underwriting."
The following table sets forth as of September 27, 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).............................. 6,783,783 86.3% $20,205,000 67.6% $2.98
New investors......................... 1,075,000 13.7 9,675,000 32.4 9.00
--------- ---- ----------- ----
Total....................... 7,858,783 100.0% $29,880,000 100.0%
========= ==== =========== ====
</TABLE>
- ---------------
(1) Represents the book value of net assets transferred or contributed by Optek
to the Company in exchange for 6,783,783 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 -- 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 nine months ended September 28, 1996, and September 27, 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 nine
months ended September 27, 1997, are not necessarily indicative of results for
the entire year.
<TABLE>
<CAPTION>
NINE MONTHS ENDED(1)
--------------------------- PRO
FISCAL YEAR(1) SEPTEMBER SEPTEMBER FORMA
------------------------------------------------- 28, 27, 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 $ 22,369 $ 28,445 $33,940
------ ------ ------ ------ ------ ------ ------ ------
Costs and Operating Expenses:
Cost of revenues.................... 378 1,494 3,011 3,482 17,066 12,664 15,791 19,628
Selling, general, and administrative
expenses.......................... 370 580 826 1,519 7,402 5,362 6,558 9,440
Research and development expenses... 76 84 144 743 3,499 2,504 2,986 4,041
------ ------ ------ ------ ------ ------ ------ ------
824 2,158 3,981 5,744 27,967 20,530 25,335 33,109
------ ------ ------ ------ ------ ------ ------ ------
Operating Income (Loss)............... (69) 239 261 282 2,467 1,839 3,110 831
Interest and Other Expense, Net....... 46 145 28 31 44 34 176 78
------ ------ ------ ------ ------ ------ ------ ------
Income (Loss) Before Income Taxes..... (115) 94 233 251 2,423 1,805 2,934 753
Income Tax Provision (Benefit)........ (44) 28 87 104 1,005 756 1,232 415
------ ------ ------ ------ ------ ------ ------ ------
Net Income (Loss)..................... $ (71) $ 66 $ 146 $ 147 $ 1,418 $ 1,049 $ 1,702 $ 338
====== ====== ====== ====== ====== ====== ====== ======
Earnings (Loss) per Share(7).......... $ (.01) $ .01 $ .02 $ .02 $ .01 $ .15 $ .25 $ .05
====== ====== ====== ====== ====== ====== ====== ======
Weighted Average Shares(7)............ 6,784 6,784 6,784 6,784 6,784 6,784 6,784 6,784
====== ====== ====== ====== ====== ====== ====== ======
BALANCE SHEET DATA (AT END OF PERIOD):
Working Capital....................... $ (315) $ (673) $ (359) $ 570 $ 5,601 $ 5,916 $ 10,461
Total Assets.......................... 721 2,059 6,776 6,778 28,362 28,451 38,698
Long-term Obligations................. -- -- -- -- -- -- 7,747
Shareholder's Investment.............. (61) 240 4,083 4,697 20,252 20,579 23,379
</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 6,783,783 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
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. The Company sells photonics
products in multiple markets across a number of industries for research,
testing, detecting, and manufacturing applications.
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 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
Nine Months Ended September 27, 1997, Compared With Nine Months Ended
September 28, 1996
Revenues increased 27% to $28.4 million in the nine months ended September
27, 1997, from $22.4 million in the nine months ended September 28, 1996, due
primarily to the inclusion of revenues for the full nine-month period from Oriel
and Corion, acquired in February 1996, and the inclusion of revenues from LSI,
acquired in February 1997, and Centronic, acquired in July 1997. These
acquisitions added revenues of $5.2 million in 1997. Revenues from the Company's
existing operations increased $0.8 million, primarily due to increased revenues
at Hilger from shipments under its Stanford Linear Accelerator contract, which
commenced in the second quarter of 1996.
The gross profit margin increased slightly to 44% in the nine months ended
September 27, 1997, from 43% in the nine months ended September 28, 1996, due
primarily to improved margins at Corion resulting from manufacturing
efficiencies and cost reductions.
15
<PAGE> 17
Selling, general, and administrative expenses as a percentage of revenues
decreased to 23% in the nine months ended September 27, 1997, from 24% in the
nine months ended September 28, 1996, due primarily to increased revenues at
Oriel. Research and development expenses increased to $3.0 million in the nine
months ended September 27, 1997, from $2.5 million in the nine months ended
September 28, 1996, due primarily to the inclusion of research and development
expenses at LSI.
Interest expense of $0.2 million in the nine months ended September 27,
1997, primarily represents interest incurred on the $3.6 million promissory note
issued to Optek for the purchase of LSI and the $3.8 million promissory note
issued to Thermo Electron for the purchase of Centronic.
The effective tax rate was 42% in the nine months ended September 27, 1997,
and September 28, 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 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 $10.5 million at September 27, 1997,
compared with $5.6 million at December 28, 1996. Included in working capital are
cash and cash equivalents of $0.2 million at Septem-
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ber 27, 1997, compared with $0.3 million at December 28, 1996. During the first
nine months of 1997, operating activities provided $2.6 million of cash.
Investing activities used $8.5 million of cash during the first nine 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. 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 $1.1 million on purchases of property, plant, and equipment
during the first nine 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 expend approximately
$0.4 million in 1998 for leasehold improvements.
The Company's financing activities provided $5.8 million of cash during the
first nine 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. In July 1997, the Company borrowed $3.8 million from Thermo
Electron to fund the acquisition of Centronic, pursuant to a promissory note
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.
Hilger, the Company's foreign subsidiary, has a credit facility arrangement
for working capital needs. See Note 6 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 the Company 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.
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BUSINESS
INTRODUCTION
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.
- 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 for light sensing.
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- 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 photonics-related businesses.
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
charge-coupled 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
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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 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
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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, Inc. 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 provide 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.
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 $18.7 million for the nine months ended September 27,
1997.
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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.
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 $2.0
million, of which approximately $488,000 had
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been received by Vision through September 27, 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 $1.8 million for the nine months ended September 27, 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 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, subject to certain limited exceptions, 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.
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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. This 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 $3.2 million for the
nine months ended September 27, 1997.
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.
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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 $2.6 million for the nine months ended September 27, 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.
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.
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<PAGE> 27
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 $4.1 million for the
nine months ended September 27, 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.
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 $0.7 million for the nine months ended September 27, 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
26
<PAGE> 28
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 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 $11.4 million as of September 27, 1997, compared with
$7.4 million as of September 28, 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
27
<PAGE> 29
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."
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.
28
<PAGE> 30
<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 September 27, 1997, Vision had a total of 237 employees, of which 46
are engaged in research and development, 32 in sales and marketing, 115 in
manufacturing, and 44 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 as of September 27, 1997:
<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 Committees
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 of the Board of Optek
since April 1997. He also served as Optek's President from August 1995 to April
1997.
30
<PAGE> 32
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, all of which are subsidiaries of
Thermo Electron.
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 amounts become payable immediately. Either of
the following is deemed to be a change of control: (a) the occurrence, without
31
<PAGE> 33
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 are required to comply with a separate stock
holding policy that has been 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
November 15, 1997. See "Management -- 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
November 15, 1997. See "Management -- 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 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.
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<PAGE> 36
(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.
VISION STOCK OPTION GRANTS
The Company has adopted an Equity Incentive Plan (the "EIP") and has
reserved an aggregate of 700,000 shares of Common Stock for issuance to
employees and directors of the Company and others pursuant thereto. Prior to
consummation of this offering, the Company plans to grant options pursuant to
the EIP covering up to 350,000 shares of Common Stock with exercise prices equal
to the fair market value of the Common Stock on the respective dates of grant.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDER
The following table sets forth certain information as of June 28, 1997,
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>
PERCENTAGE OF OUTSTANDING
SHARES BENEFICIALLY OWNED
NAME AND ADDRESS NUMBER OF SHARES ----------------------------------
OF BENEFICIAL OWNER BENEFICIALLY OWNED BEFORE OFFERING AFTER OFFERING
----------------------------------------- ------------------ --------------- --------------
<S> <C> <C> <C>
Thermo Instrument Systems Inc.(1)........ 6,300,720 93% 80%
860 West Airport Freeway
Suite 301
Hurst, Texas 76054
</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.
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 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.
35
<PAGE> 37
<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.................................. 4,200 81,204 632,768
Kristine S. Langdon.................................. 70 7,417 16,452
Earl R. Lewis........................................ 4,060 178,233 124,184
Allen J. Smith....................................... 0 0 0
Arvin H. Smith....................................... 1,120 431,667 519,038
All directors and current executive officers as a
group (7 persons).................................. 9,450 717,213 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 which will to be granted prior to the consummation of this
offering. See "Management -- Vision Stock Option Grants." Shares of the
Company's Common Stock beneficially owned by Ms. Langdon include a total of
70 shares held by her as custodian for two minor children. Shares of the
Company's Common Stock beneficially owned by Earl R. Lewis include 350
shares owned by his spouse and a total of 280 shares owned by two sons.
Immediately following consummation of the Distribution, it is expected that
(i) Thermo Instrument will beneficially own approximately 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 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.
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<PAGE> 38
CERTAIN TRANSACTIONS
The following is a description of the material 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 the Thermo Subsidiaries (the "Thermo Group")
to external financing sources, ensuring compliance with external financial
covenants and
37
<PAGE> 39
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 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
38
<PAGE> 40
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.
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.
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
39
<PAGE> 41
R&D Agreement from fiscal 1995 through the first nine 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
nine months ended September 27, 1997, Optek paid approximately $24,000;
$418,000; and $188,000; and $287,000; 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 nine months ended September 27, 1997, the Company sold a
total of $1,290,000; $2,514,000; and $1,786,000; and $1,768,000; respectively,
of products to Thermo Electron subsidiaries and purchased a total of $211,000;
$1,465,000; and $971,000; and $357,000; 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.
40
<PAGE> 42
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
As of the date of this Prospectus, the Company has 50,000,000 shares of
Common Stock authorized for issuance, of which 6,783,783 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.
The Company's Amended and Restated Certificate of Incorporation, as amended
(the "Certificate of Incorporation"), provides that all shares of Common Stock
issued on or before the occurrence of the Distribution (the "Restricted Shares")
are subject to the following restriction: the holder shall not sell, assign,
transfer, pledge, hypothecate, or otherwise dispose of, by operation of law or
otherwise, any shares of Common Stock (except that (i) Optek may distribute the
Restricted Shares to its shareholders in the Distribution, and (ii) the
Company's Distribution agent may sell fractions of Restricted Shares in order to
provide shareholders of Optek with cash in lieu of fractional Restricted Shares
in the Distribution), until the sooner to occur of (i) 60 days following the
execution of an underwriting agreement in connection with this offering
following the time at which the registration statement of which this Prospectus
is a part, is declared effective by the Commission, or (ii) March 1, 1998.
Because the closing of this offering will occur after the Distribution, the
shares of Common Stock to be issued in this offering will not be subject to the
Charter Transfer Restriction.
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.
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<PAGE> 43
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, there will be approximately 7,858,800
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 7,858,800 outstanding shares, approximately 6,300,000 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 725,000 shares for grant under its existing
stock-based compensation plans. As of the date of this Prospectus, the Company
has granted an aggregate of options to purchase shares of Common Stock
to its employees and 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.
42
<PAGE> 44
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. and HSBC Securities, Inc. are acting as the
representatives (the "Representatives"), 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. ...............................................
HSBC Securities, Inc. ...............................................
-------
Total...................................................... 1,075,000
=======
</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 Representatives 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 161,250
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.
43
<PAGE> 45
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.
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 Representatives are 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 Representatives over-allot (i.e., if they sell more
shares of Common Stock than are set forth on the cover page of this Prospectus),
and thereby create a short position in the Common Stock in connection with this
offering, the Representatives may reduce that short position by purchasing
Common Stock in the open market. The Representatives also may elect to reduce
any short position by exercising all or part of the over-allotment option
described herein.
The Representatives also may impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, they 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
Representatives will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The Representatives have informed the Company that they do not intend to
confirm sales to any account over which they 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.
44
<PAGE> 46
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.
45
<PAGE> 47
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 nine months ended September 28, 1996,
and September 27, 1997........................................................... F-3
Consolidated Balance Sheet as of December 30, 1995, December 28, 1996, and September
27, 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 nine months ended September 28,
1996, and September 27, 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 nine months ended
September 27, 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 for 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 for 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> 48
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.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 19, 1997 (except with respect to
certain matters discussed in Note 8,
as to which the date is November 14, 1997)
F-2
<PAGE> 49
THERMO VISION CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-------------------------------
SEPTEMBER 28, SEPTEMBER 27,
1994 1995 1996 1996 1997
------ ------ ------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES (Notes 6 and 7)............. $4,242 $6,026 $30,434 $22,369 $28,445
------ ------ ------- ------- -------
Costs and Operating Expenses:
Cost of revenues................... 3,011 3,482 17,066 12,664 15,791
Selling, general, and
administrative expenses (Note
6).............................. 826 1,519 7,402 5,362 6,558
Research and development
expenses........................ 144 743 3,499 2,504 2,986
------ ------ ------- ------- -------
3,981 5,744 27,967 20,530 25,335
------ ------ ------- ------- -------
Operating Income..................... 261 282 2,467 1,839 3,110
Interest Income...................... -- -- -- -- 16
Interest Expense..................... (28) (31) (44) (34) (192)
------ ------ ------- ------- -------
Income Before Provision for Income
Taxes.............................. 233 251 2,423 1,805 2,934
Provision for Income Taxes (Note
4)................................. 87 104 1,005 756 1,232
------ ------ ------- ------- -------
NET INCOME........................... $ 146 $ 147 $ 1,418 $ 1,049 $ 1,702
====== ====== ======= ======= =======
EARNINGS PER SHARE................... $ .02 $ .02 $ .21 $ .15 $ .25
====== ====== ======= ======= =======
WEIGHTED AVERAGE SHARES.............. 6,784 6,784 6,784 6,784 6,784
====== ====== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 50
THERMO VISION CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 27,
1997
1995 1996 -------------
------ ------- (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................................... $ 171 $ 306 $ 200
Accounts receivable, less allowances of $24, $266, and $369... 729 5,305 7,046
Inventories................................................... 1,301 6,404 7,931
Prepaid expenses.............................................. 34 521 812
Prepaid income taxes (Note 4)................................. 416 1,175 1,943
Due from Thermo Electron and affiliated companies (Note 6).... -- -- 101
------ ------- -------
2,651 13,711 18,033
------ ------- -------
Property, Plant, and Equipment, at Cost, Net.................... 606 3,901 4,715
------ ------- -------
Other Assets.................................................... -- 647 1,014
------ ------- -------
Cost in Excess of Net Assets of Acquired Companies (Note 2)..... 3,521 10,103 14,936
------ ------- -------
$6,778 $28,362 $38,698
====== ======= =======
LIABILITIES AND SHAREHOLDER'S INVESTMENT
Current Liabilities:
Note payable and capital lease obligation (Note 6)............ $ 650 $ 866 $ 747
Accounts payable.............................................. 255 2,796 4,517
Accrued payroll and employee benefits......................... 40 751 733
Other accrued expenses........................................ 198 929 1,575
Due to Thermo Electron and affiliated companies (Note 6)...... 938 2,768 --
------ ------- -------
2,081 8,110 7,572
------ ------- -------
Long-term Obligations, Due to Affiliates (Note 8)............... -- -- 7,747
------ ------- -------
Commitments (Note 5)
Shareholder's Investment (Note 3):
Common stock, $.01 par value, 50,000,000 shares authorized;
6,783,783 shares issued and outstanding.................... 68 68 68
Capital in excess of par value................................ 4,608 18,693 20,137
Retained earnings............................................. 19 1,437 3,139
Cumulative translation adjustment............................. 2 54 35
------ ------- -------
4,697 20,252 23,379
------ ------- -------
$6,778 $28,362 $38,698
====== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 51
THERMO VISION CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------------
SEPTEMBER 28, SEPTEMBER 27,
1994 1995 1996 1996 1997
------ ----- -------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.............................................. $ 146 $ 147 $ 1,418 $ 1,049 $ 1,702
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization......................... 87 182 1,251 879 1,298
Provision for losses on accounts receivable........... 10 14 174 186 42
Deferred income tax expense (benefit)................. (59) 31 (79) -- --
Changes in current accounts, excluding the effects of
acquisitions:
Accounts receivable................................. (216) 67 (732) (734) (425)
Inventories......................................... (57) (301) 471 201 (268)
Other current assets................................ 9 (2) (253) (228) (201)
Accounts payable.................................... 219 (128) (174) (1,024) 920
Other current liabilities........................... (209) (136) (397) (599) (515)
------ ----- -------- -------- -------
Net cash provided by (used in) operating
activities..................................... (70) (126) 1,679 (270) 2,553
------ ----- -------- -------- -------
INVESTING ACTIVITIES:
Acquisitions, net of cash acquired (Note 2)............. -- -- (15,528) (15,528) (7,345)
Purchases of property, plant, and equipment............. (96) (152) (1,450) (1,257) (1,142)
Other, net.............................................. -- -- 92 117 --
------ ----- -------- -------- -------
Net cash used in investing activities............ (96) (152) (16,886) (16,668) (8,487)
------ ----- -------- -------- -------
FINANCING ACTIVITIES:
Net proceeds from issuance of notes payable to parent
company............................................... -- -- -- -- 7,747
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 2,668 (2,868)
Net decrease in short-term borrowings................... (230) (65) (575) (604) (116)
Net transfer (to) from parent company................... 248 473 (2,785) (2,041) 1,444
Other................................................... -- -- -- -- (379)
------ ----- -------- -------- -------
Net cash provided by financing activities........ 210 409 15,340 16,893 5,828
------ ----- -------- -------- -------
Exchange Rate Effect on Cash.............................. (7) (10) 2 (1) --
------ ----- -------- -------- -------
Increase (Decrease) in Cash and Cash Equivalents.......... 37 121 135 (46) (106)
Cash and Cash Equivalents at Beginning of Period.......... 13 50 171 171 306
------ ----- -------- -------- -------
Cash and Cash Equivalents at End of Period................ $ 50 $ 171 $ 306 $ 125 $ 200
====== ===== ======== ======== =======
CASH PAID FOR:
Interest................................................ $ 28 $ 31 $ 44 $ 34 $ 52
====== ===== ======== ======== =======
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 $ 9,414
Cash paid for acquired companies........................ -- -- (16,870) (16,870) --
Notes payable to affiliates for acquired companies...... -- -- -- -- (7,400)
------ ----- -------- -------- -------
Liabilities assumed of acquired companies............. $ -- $ -- $ 5,610 $ 5,610 $ 2,014
====== ===== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 52
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) 68 4,608 -- --
Net income after capitalization of
the Company....................... -- -- -- 19 --
Translation adjustment............... -- -- -- -- (6)
------- --- ------- ------ ---
BALANCE DECEMBER 30, 1995.............. -- 68 4,608 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.............. -- 68 18,693 1,437 54
(UNAUDITED)
Net income........................... -- -- -- 1,702 --
Net transfer from parent company..... -- -- 1,444 -- --
Translation adjustment............... -- -- -- -- (19)
------- --- ------- ------ ---
BALANCE SEPTEMBER 27, 1997............. $ -- $ 68 $20,137 $3,139 $ 35
======= === ======= ====== ===
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 53
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 6,783,783 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> 54
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 6,783,783 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
and equipment,
F-8
<PAGE> 55
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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> 56
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 September 27, 1997, and for the nine-month
periods ended September 28, 1996, and September 27, 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 nine-month period ended September 27, 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> 57
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> 58
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> 59
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> 60
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> 61
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 $2,307,000, 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 September 27, 1997, the interest rate on the promissory notes was 5.87%.
Stock Split
In August 1997, the Company declared and effected a 4,845-for-1 stock split
in the form of a stock dividend. In November 1997, the Company declared and
effected an approximate 7-for-5 stock split in the form of a stock dividend. All
share and per share information has been restated to reflect these stock splits.
Stock-based Compensation Plans
In November 1997, the Company adopted a stock-based compensation plan for
its key employees, directors, and others, which permits the grant of stock and
stock-based awards, as determined by the human resources committee of the
Company's Board of Directors (the "Board Committee"), including restricted
stock, stock options, stock bonus shares or performance-based shares. The option
recipients and the terms of options granted under this plan are determined by
the Board Committee. Options granted generally vest and become immediately
exercisable on the sixth anniversary of the grant date, unless the Company's
common stock becomes publicly traded prior to such date. In such an event,
options become exercisable 90 days after the Company becomes subject to the
Securities Exchange Act of 1934, but will be subject to certain transfer
restrictions and the right of the Company to repurchase shares issued upon
exercise of the options at the exercise price, upon certain events. The
restrictions and repurchase rights generally will be deemed to have lapsed
ratably over a five-year period after the first anniversary of the grant date.
Nonqualified stock options may be granted at any price determined by the Board
Committee, although incentive stock options must be granted at not less than the
fair market value of the Company's stock on the date of grant. As of November
14, 1997, no options have been granted under this plan. In addition to the
Company's stock-based compensation plans, certain officers and key employees may
also participate in the stock-based compensation plans of Thermo Electron and
Thermo instrument.
F-15
<PAGE> 62
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Reserved Shares
As of November 14, 1997, the Company has reserved 725,000 unissued shares
of its common stock for possible issuance under stock-based compensation plans.
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................................... .03 .07 .05 .05
</TABLE>
<TABLE>
<CAPTION>
1997 FIRST(b) SECOND THIRD(c)
- ----------------------------------------------------- -------- ------ -------
<S> <C> <C> <C> <C>
Revenues............................................. $8,585 $9,225 $10,635
Gross profit......................................... 3,759 4,089 4,806
Net income........................................... 528 566 608
Earnings per share................................... .08 .08 .09
</TABLE>
- ---------------
(a) Reflects the February 1996 acquisitions of Corion and Oriel.
(b) Reflects the February 1997 acquisition of LSI.
(c) Reflects the July 1997 acquisition of Centronic.
F-16
<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.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
November 1, 1995
F-17
<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-18
<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-19
<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-20
<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-21
<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.
Cash Equivalents
The Company considers all instruments with a maturity of three months or
less to be cash equivalents.
F-22
<PAGE> 69
ORIEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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
F-23
<PAGE> 70
ORIEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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.
F-24
<PAGE> 71
ORIEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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>
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
-------- --------
<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 grant.
Additionally, a resolution was passed whereby all issued options are exercisable
in conjunction with any sale of the Company (see Note 8).
F-25
<PAGE> 72
ORIEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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-26
<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.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 12, 1996
F-27
<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-28
<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-29
<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-30
<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-31
<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
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.
F-32
<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 adjustment dates. The Company also
F-33
<PAGE> 80
CORION CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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 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
F-34
<PAGE> 81
CORION CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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-35
<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...................... $ .21 $ .05
======= ======
Weighted Average Shares................. 6,784 6,784
======= ======
</TABLE>
F-36
<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-37
<PAGE> 84
[Picture of a number of silicon photodiode dector
designs, including a 40-element array mounted on
a ceramic substrate with a circuit connector, a
detector/filter combination, an ultraviolet detector
and an X-ray detector.]
Vision offers silicon
photodiode detectors for
ultraviolet, visible, and
near-infrared applications.
(PHOTO 4)
[Picture of seven fiber optic cables.]
Vision offers a line
of specialty fiber
optic cables,
including bifurcated
and bundled cables
used primarily for
remote sensing
applications.
(PHOTO 5)
[Picture of (i) fingers holding a rectangular-
shaped optical crystal array and (ii) four rectangular-
shaped optical crystal arrays of different sizes.]
Vision's Hilger Crystals
subsidiary offers optical
crystal arrays used for
scintillation in X-ray baggage
screening equipment.
(PHOTO 6)
<PAGE> 85
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.................. 37
Description of Capital Stock.......... 41
Shares Eligible for Future Sale....... 42
Underwriting.......................... 43
Legal Opinions........................ 45
Experts............................... 45
Additional Information................ 45
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.
1,075,000 SHARES
[THERMO VISION LOGO]
COMMON STOCK
-------------------------------
PROSPECTUS
-------------------------------
FAHNESTOCK & CO. INC.
HSBC SECURITIES, INC.
, 1997
<PAGE> 86
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............... $ 5,402
NASD filing....................................................... 2,283
American Stock Exchange listing fee............................... 50,000
Legal fees and expenses........................................... 265,000
Accounting fees and expenses...................................... 300,000
Blue Sky fees and expenses (including legal fees)................. 5,000
Printing and engraving expenses................................... 225,000
Transfer agent fees............................................... 3,500
Miscellaneous..................................................... 58,815
--------
Total........................................................... $915,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law and the Amended and Restated
Certificate of Incorporation, as amended, (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 6,783,783 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> 87
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 6,783,783 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> 88
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 2 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 17th day of November, 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. 2 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 November 17, 1997
- ------------------------------------------ Officer, and Director
Kristine S. Langdon (Principal Executive
Officer)
* JOHN N. HATSOPOULOS Chief Financial Officer, Vice November 17, 1997
- ------------------------------------------ President, and Director
John N. Hatsopoulos (Principal Financial
Officer)
* PAUL F. KELLEHER Chief Accounting Officer November 17, 1997
- ------------------------------------------ (Principal Accounting
Paul F. Kelleher Officer)
* EARL R. LEWIS Chairman of the Board and November 17, 1997
- ------------------------------------------ Director
Earl L. Lewis
* DR. D. ALLAN BROMLEY Director November 17, 1997
- ------------------------------------------
Dr. D. Allan Bromley
* ARVIN H. SMITH Director November 17, 1997
- ------------------------------------------
Arvin H. Smith
* By: /s/ SETH H. HOOGASIAN
- ------------------------------------------
Seth H. Hoogasian
Attorney-in-Fact
</TABLE>
II-3
<PAGE> 89
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> 90
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> 91
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<C> <S>
*1.1 Form of Underwriting Agreement.
2.1 Form of Plan and Agreement of Distribution between Thermo Optek Corporation
("Optek") and the Registrant (filed as Exhibit 2.1 to the Registrant's Registration
Statement on Form 10 [File No. 1-13391], and incorporated herein by reference).
2.3 Asset Purchase Agreement dated as of January 23, 1996, by and between the Registrant
and Corion Corporation (filed as Exhibit 2.2 to the Registrant's Registration
Statement on Form 10 [File No. 1-13391], and incorporated herein by reference).
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 (filed
as Exhibit 2.3 to the Registrant's Registration Statement on Form 10 [File No.
1-13391], and incorporated herein by reference).
3.1 Amended and Restated Certificate of Incorporation of the Registrant (filed as
Exhibit 3.1 to the Registrant's Registration Statement on Form 10 [File No.
1-13391], and incorporated herein by reference).
3.2 Form of Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the Registrant (filed as Exhibit 3.2 to the Registrant's
Registration Statement on Form 10 [File No. 1-13391], and incorporated herein by
reference).
3.3 Bylaws of the Registrant (filed as Exhibit 3.3 to the Registrant's Registration
Statement on Form 10 [File No. 1-13391], and incorporated herein by reference).
4.1 Specimen Common Stock Certificate of the Registrant (filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form 10 [File No. 1-13391], and incorporated
herein by reference).
+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 (filed as Exhibit 10.1 to the Registrant's
Registration Statement on Form 10 [File No. 1-13391], and incorporated herein by
reference).
10.2 Thermo Electron Corporate Charter, as amended and restated, effective January 3,
1993 (filed as Exhibit 10.1 to Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended January 3, 1993 [File No. 1-8002] and incorporated herein by
reference).
10.3 Form of Tax Allocation Agreement between Thermo Electron and the Registrant (filed
as Exhibit 10.3 to the Registrant's Registration Statement on Form 10 [File No.
1-13391], and incorporated herein by reference).
10.4 Form of Master Repurchase Agreement between Thermo Electron and the Registrant
(filed as Exhibit 10.4 to the Registrant's Registration Statement on Form 10 [File
No. 1-13391], and incorporated herein by reference).
10.5 Form of Master Guarantee Reimbursement Agreement between Thermo Electron and the
Registrant (filed as Exhibit 10.5 to the Registrant's Registration Statement on Form
10 [File No. 1-13391], and incorporated herein by reference).
10.6 Form of Master Guarantee Reimbursement Agreement between Thermo Instrument Systems
Inc. ("Thermo Instrument") and the Registrant (filed as Exhibit 10.6 to the
Registrant's Registration Statement on Form 10 [File No. 1-13391], and incorporated
herein by reference).
10.7 CID Contract Research and Development Agreement dated October 1994 between Optek and
the Registrant (filed as Exhibit 10.8 to the Registrant's Registration Statement on
Form 10 [File No. 1-13391], and incorporated herein by reference).
10.8 Form of CID Supply Agreement between Optek and the Registrant (filed as Exhibit 10.9
to the Registrant's Registration Statement on Form 10 [File No. 1-13391], and
incorporated herein by reference).
10.9 Form of Equity Incentive Plan of the Registrant (filed as Exhibit 10.10 to the
Registrant's Registration Statement on Form 10 [File No. 1-13391], and incorporated
herein by reference).
10.10 Form of Deferred Compensation Plan for Directors of the Registrant (filed as Exhibit
10.11 to the Registrant's Registration Statement on Form 10 [File No. 1-13391], and
incorporated herein by reference).
</TABLE>
<PAGE> 92
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<C> <S>
10.11 Form of Indemnification Agreement for Officers and Directors of the Registrant
(filed as Exhibit 10.13 to the Registrant's Registration Statement on Form 10 [File
No. 1-13391], and incorporated herein by reference).
10.12 Sublease Agreement dated as of September 1, 1997, between the Registrant and Thermo
Instrument (filed as Exhibit 10.14 to the Registrant's Registration Statement on
Form 10 [File No. 1-13391], and incorporated herein by reference).
10.13 Sublease Agreement effective as of February 1, 1984, between Oriel Instruments
Corporation and Osbrook Associates Limited Partnership, as modified (filed as
Exhibit 10.15 to the Registrant's Registration Statement on Form 10 [File No.
1-13391], and incorporated herein by reference).
10.14 Form of Tax Matters Agreement between Optek and the Registrant (filed as Exhibit
10.7 to the Registrant's Registration Statement on Form 10 [File No. 1-13391], and
incorporated herein by reference).
10.15 $3.8 Million Principal Amount Promissory Note due July 13, 2000, issued by the
Registrant to Thermo Electron (filed as Exhibit 10.16 to the Registrant's
Registration Statement on Form 10 [File No. 1-13391], and incorporated herein by
reference).
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
(filed as Exhibit 10.17 to the Registrant's Registration Statement on Form 10 [File
No. 1-13391], and incorporated herein by reference).
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).
10.20 Indemnification Agreement effective as of December 31, 1995 between the Registrant
and Instrument (filed as Exhibit 10.12 to the Registrant's Registration Statement on
Form 10 [File No. 1-13391], and incorporated herein by reference).
10.21 Agreement of Lease dated as of October 6, 1997, between Oriel Instrument Corporation
and 1608 Development Limited Partnership (filed as Exhibit 10.21 to the Registrant's
Registration Statement on Form 10 [File No. 1-13391], and incorporated herein by
reference).
21.1 Subsidiaries of the Registrant (filed as Exhibit 21.1 to the Registrant's
Registration Statement on Form 10 [File No. 1-13391], and incorporated herein by
reference).
*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>
- ---------------
* Filed herewith.
+ To be filed by amendment.
All other exhibits either have been previously filed or are incorporated herein
by reference.
<PAGE> 1
Exhibit 1.1
1,075,000 Shares
THERMO VISION CORPORATION
Common Stock
($.01 par value)
UNDERWRITING AGREEMENT
December , 1997
FAHNESTOCK & CO. INC.
HSBC SECURITIES, INC.,
As Representatives of the several
Underwriters named in Schedule I hereto
c/o Fahnestock & Co. Inc.
110 Wall Street
New York, New York 10005
Thermo Vision Corporation, a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several underwriters named in Schedule I
hereto (the "UNDERWRITERS") 1,075,000 shares (the "FIRM SHARES") of Common
Stock, $.01 par value (such class of stock being herein called the "COMMON
STOCK"), of the Company. In addition, for the sole purpose of covering
over-allotments in connection with the sale of the Firm Shares, the Company
proposes to grant to the Underwriters an option to purchase up to an additional
161,250 shares (the "OPTION SHARES") of Common Stock. The Firm Shares and any
Option Shares purchased pursuant to this Agreement are referred to herein as the
"SHARES."
This is to confirm the agreement concerning the purchase of the Shares
from the Company by the Underwriters. You represent and warrant that you are
acting as the representatives (the "REPRESENTATIVES") of the Underwriters and
that you have been authorized by each of the other Underwriters to enter into
this Underwriting Agreement on its behalf and to act for it in the manner herein
provided.
The Company currently is a majority-owned subsidiary of Thermo Optek
Corporation, a Delaware corporation ("THERMO OPTEK"), which is in turn a
majority-owned subsidiary of Thermo Instrument Systems Inc., a Delaware
corporation ("THERMO INSTRUMENT"), which is in turn a majority-owned subsidiary
of Thermo Electron Corporation, a Delaware corporation ("THERMO ELECTRON"). To
the extent provided herein and for good and valuable consideration,
<PAGE> 2
-2-
each of Thermo Optek, Thermo Instrument and Thermo Electron has become a party
to this Underwriting Agreement.
Prior to the Closing Date, as defined herein, Thermo Optek will
distribute to its shareholders, including Thermo Instrument, all of the shares
of Common Stock owned by it in a tax-free pro rata distribution to its
shareholders of record on the related record date. This distribution is referred
to herein as the "SPIN-OFF TRANSACTION."
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY, THERMO OPTEK,
THERMO INSTRUMENT AND THERMO ELECTRON. The Company, Thermo Optek, Thermo
Instrument and Thermo Electron jointly and severally represent and warrant to,
and agree with, each Underwriter as follows. The following representations,
warranties and agreements shall be deemed to apply to each Subsidiary (as
defined in Section 13) of the Company, unless the context does not permit:
(a) A registration statement on Form S-1 (File No. 333-38153) with
respect to the Shares (i) has been prepared by the Company in material
conformity with the requirements of the Securities Act of 1933, as amended
(the "SECURITIES ACT"), and the rules and regulations (the "RULES AND
REGULATIONS") of the Securities and Exchange Commission (the "COMMISSION")
thereunder, (ii) has been filed with the Commission under the Securities
Act and (iii) has become effective under the Securities Act. If any
post-effective amendment to such registration statement has been filed
with the Commission prior to the execution and delivery of this Agreement,
the most recent such amendment has been declared effective by the
Commission. Copies of such registration statement as amended to date have
been delivered by the Company to the Representatives and, to the extent
applicable, were identical to the electronically transmitted copies
thereof filed with the Commission pursuant to the Commission's Electronic
Data Gathering, Analysis and Retrieval System ("EDGAR"), except to the
extent permitted by Regulation S-T. For purposes of this Agreement,
"EFFECTIVE TIME" means the date and the time as of which such registration
statement, or the most recent post-effective amendment thereto, if any,
was declared effective by the Commission; "EFFECTIVE DATE" means the date
of the Effective Time; "PRELIMINARY PROSPECTUS" means each prospectus
included in such registration statement, or amendments thereof, before it
became effective under the Securities Act and any prospectus filed with
the Commission by the Company pursuant to Rule 424(a) of the Rules and
Regulations; "REGISTRATION STATEMENT" means such registration statement,
as amended at the Effective Time, including all information deemed to be a
part thereof as of the Effective Time pursuant to paragraph (b) of
Rule 430A of the Rules and Regulations together with any registration
statement filed by the Company pursuant to Rule 462(b) of the Rules and
Regulations; and "PROSPECTUS" means (i) the form of prospectus relating to
the Shares, as first filed pursuant to paragraph (1) or (4) of Rule 424(b)
of the Rules and Regulations or (ii) the term sheet or abbreviated term
sheet described in Rule 434(b) of the Rules and Regulations, as first
filed pursuant to paragraph (7) of Rule 424(b) of the Rules and
Regulations together with the last preliminary prospectus included in the
Registration Statement filed prior to the Effective Time or filed pursuant
to Rule 424(a) of the Rules and Regulations that is delivered by the
Company to the Underwriters for delivery to purchasers of the Shares. The
Commission has not issued any order preventing or suspending the use
<PAGE> 3
-3-
of any Preliminary Prospectus or the Prospectus. For purposes of this
Agreement, all references to the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement to any of the
foregoing, shall be deemed to include the respective copies thereof filed
with the Commission pursuant to EDGAR.
(b) The Registration Statement complies in all material respects with
the Securities Act and the Rules and Regulations, and any post-effective
amendment to the Registration Statement filed with the Commission after
the Effective Time, the Prospectus and the Prospectus as amended or
supplemented will comply in all material respects with the Securities Act
and the Rules and Regulations; at the time of filing thereof, any
Preliminary Prospectus did not, and on the Effective Date, the
Registration Statement did not, and any post-effective amendment to the
Registration Statement filed with the Commission after the Effective Time,
the Prospectus and the Prospectus as amended or supplemented will not,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that the Company, Thermo
Optek, Thermo Instrument and Thermo Electron make no representation or
warranty as to information contained in or omitted from the Registration
Statement, the Preliminary Prospectus, the Prospectus, any amendment to
the Registration Statement or any amendment or supplement to the
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by you, or by any Underwriter through you,
specifically for inclusion therein. There is no contract or document
required to be described in the Registration Statement or the Prospectus
or to be filed as an exhibit to the Registration Statement which is not
described or filed as required.
(c) The accounting firms whose reports appear in the Prospectus are
independent certified public accountants as required by the Securities Act
and the Rules and Regulations. The financial statements and schedules
(including the related notes) included in the Registration Statement, any
Preliminary Prospectus or the Prospectus present fairly, in all material
respects, the financial condition, results of operations and cash flows of
the entities purported to be shown thereby at the dates and for the
periods indicated and have been prepared in accordance with generally
accepted accounting principles.
(d) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with full corporate power and authority to own or lease its
properties and conduct its business as described in the Prospectus, and is
duly qualified to do business and is in good standing in each jurisdiction
in which the character of the business conducted by it or the location of
the properties owned or leased by it makes such qualification necessary
except where the failure to so qualify or be in good standing would not
have a material adverse effect on the Company and its Subsidiaries taken
as a whole; and, except as described in the Prospectus, the Company holds
all material licenses, certificates and permits from governmental
authorities necessary for the conduct of its business as described in the
Prospectus.
<PAGE> 4
-4-
(e) All of the outstanding shares of Common Stock have been, and the
Shares, upon issuance and delivery and payment therefor in the manner
herein described, will be, duly authorized, validly issued, fully paid and
nonassessable. Other than as described in the Prospectus, there are no
preemptive rights or other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, any shares of Common Stock
pursuant to the Company's corporate charter, by-laws or other governing
documents or any agreement or other instrument to which the Company is a
party or by which it may be bound. Neither the filing of the Registration
Statement nor the offering or sale of the Shares as contemplated by this
Agreement, nor the Spin-Off Transaction, gives rise to any rights, other
than those which have been waived or satisfied and other than as described
in the Prospectus, for or relating to the registration of any shares of
Common Stock or other securities of the Company. The capitalization of the
Company, on an actual and as adjusted basis, is as set forth in the
Prospectus as of the date so set forth, and the Common Stock conforms, in
all material respects, to the description thereof contained in the
Prospectus. All of the outstanding shares of capital stock of each
Subsidiary (as defined in Section 13) of the Company have been duly
authorized and validly issued, are fully paid and nonassessable and are
owned directly or indirectly by the Company, free and clear of any claim,
lien, encumbrance, security interest, restriction upon voting or transfer
or any other claim of any third party.
(f) Except as described in or contemplated by the Registration
Statement and the Prospectus, there has not been any material adverse
change in, or any adverse development which materially affects, the
condition (financial or other), results of operations, business or
prospects of the Company and its Subsidiaries on a consolidated basis from
the date as of which information is given in the Prospectus.
(g) The Company is not, and would not be with the giving of notice or
lapse of time or both, in violation of or in default under, nor will the
execution or delivery hereof or consummation of the transactions
contemplated hereby, including the Spin-Off Transaction, result in a
violation of, or constitute a default under, the corporate charter,
by-laws or other governing documents of the Company, or any material
agreement, indenture or other instrument to which the Company is a party
or by which it is bound, or to which any of its properties is subject, nor
will the performance by the Company of its obligations hereunder violate
any existing law, rule, administrative regulation or decree of any court
or any governmental agency or body having jurisdiction over the Company or
any of its properties, or result in the creation or imposition of any
lien, charge, claim or encumbrance upon any property or asset of the
Company, which would be material to the Company and its Subsidiaries taken
as a whole. The consummation of the transactions contemplated hereby,
including the Spin-Off Transaction, have been duly authorized by all
necessary corporate action, and, except for permits and similar
authorizations required under the Securities Act and the securities or
"Blue Sky" laws of certain jurisdictions and for such permits and
authorizations as have been obtained, no consent, approval, authorization
or order of any U.S. court, governmental agency or body or any financial
institution is required in connection with the consummation by the Company
of the transactions contemplated by this Agreement, including the Spin-Off
Transaction.
<PAGE> 5
-5-
(h) This Agreement has been duly authorized, executed and delivered by
the Company.
(i) The Company owns, or has valid rights to use, all items of real
and personal property which are material to the business of the Company
and its Subsidiaries taken as a whole, free and clear of all liens,
encumbrances and claims which may materially interfere with the business,
properties, financial condition or results of operations of the Company on
a consolidated basis.
(j) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which the Company, Thermo Optek, Thermo
Instrument or Thermo Electron is a party or to which any property of the
Company is subject or which is pending or, to the knowledge of the
Company, Thermo Optek, Thermo Instrument or Thermo Electron, contemplated
against the Company, Thermo Optek or Thermo Instrument that is required to
be disclosed in the Prospectus and that is not so disclosed.
(k) The Company is not in violation of any law, ordinance,
governmental rule or regulation or court decree to which it is subject,
which violation could have a material adverse effect on the condition
(financial or other), results of operations, business or prospects of the
Company and its Subsidiaries on a consolidated basis.
(l) Except as described in the Prospectus, the Company owns or
possesses adequate licenses or other rights to use all intellectual
property rights, including patents and trademarks, service marks, trade
names, copyrights or know-how, necessary to conduct its business as
described or referred to in the Prospectus, except where such failure,
singularly or in the aggregate would not have a material adverse effect on
the Company and its Subsidiaries on a consolidated basis, and, except as
disclosed in the Prospectus, neither Thermo Electron, Thermo Optek, Thermo
Instrument nor the Company has received any notice of infringement of or
conflict with (or knows of any such infringement of or conflict with)
rights or claims of others with respect to any patents, trademarks,
service marks, trade names, copyrights or know-how, that is reasonably
likely to result in a material adverse effect upon the Company and its
Subsidiaries on a consolidated basis.
(m) Each of the Distribution Agreement and the Tax Matters Agreement
between the Company and Thermo Optek (the "SPIN-OFF AGREEMENTS"), and the
other agreements between the Company and Thermo Optek, Thermo Instrument
or Thermo Electron pursuant to which the Company was initially organized
and capitalized (collectively, the
<PAGE> 6
-6-
"ORGANIZATION AGREEMENTS") (all of the foregoing agreements being referred
to herein as the "INTER-CORPORATE AGREEMENTS") has been duly and validly
authorized, executed and delivered by the Company and is the valid and
binding agreement of the Company enforceable in accordance with its terms,
except as provided by bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, or other similar laws affecting creditors' rights
generally and subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law)
(collectively, "APPLICABLE BANKRUPTCY LAWS"). The execution, delivery and
performance of the Inter-corporate Agreements by the Company, the
consummation of the transactions therein contemplated and compliance with
the terms thereof do not and will not result in a violation of, or
constitute a default under, the corporate charter, by-laws or other
governing documents of the Company, or any agreement, indenture or other
instrument to which the Company is a party or by which it is bound, or to
which any of its properties is subject, and do not and will not violate
any existing law, rule, administrative regulation or decree of any court
or any governmental agency or body having jurisdiction over the Company or
any of its properties, or result in the creation or imposition of any
lien, charge, claim or encumbrance upon any property or asset of the
Company, which would be material to the Company and its Subsidiaries taken
as a whole. No consent, approval, authorization or order of any court,
governmental agency or body or financial institution is required in
connection with the consummation of the transactions contemplated by such
Inter-corporate Agreements.
(n) Neither the Company, Thermo Optek, Thermo Instrument nor Thermo
Electron or any other Subsidiary of Thermo Electron has taken and none of
such companies shall take, directly or indirectly, any action designed to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of
the shares of Common Stock to facilitate the sale or resale of the Shares.
(o) The Shares have been approved for listing on the American Stock
Exchange, subject only to official notice of issuance.
(p) The Form 10 of the Company (the "FORM 10") and any amendments
thereto filed pursuant to the Exchange Act complied as of their respective
dates in all material respects with the Exchange Act and the rules and
regulations thereunder.
1A. REPRESENTATIONS AND WARRANTIES OF THERMO OPTEK, THERMO INSTRUMENT
AND THERMO ELECTRON. Thermo Optek, Thermo Instrument and Thermo Electron each
represent and warrant to, and agree with, each Underwriter that:
(a) Each of Thermo Optek, Thermo Instrument and Thermo Electron has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, with
full power and authority (corporate and other) to own or lease its
properties and conduct its business, and is duly qualified to do business
and is in good standing in each jurisdiction in which the character of the
business conducted by it or the location of the properties owned or leased
by it makes such qualification necessary,
<PAGE> 7
-7-
except where the failure to so qualify or be in good standing would not
have a material adverse effect on Thermo Electron and its Subsidiaries
taken as a whole.
(b) There has not been any material adverse change in, or any adverse
development which materially affects, the condition (financial or other),
results of operations, business or prospects of Thermo Electron and its
Subsidiaries taken as a whole, from the date as of which information is
given in the most recent quarterly or annual report filed by Thermo
Electron pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), except any as may have been disclosed to the public.
(c) Except as described in their filings with the Commission under the
Exchange Act, neither Thermo Optek, Thermo Instrument nor Thermo Electron
is, nor with the giving of notice or lapse of time or both would be, in
violation of or in default under, nor will the execution or delivery
hereof or consummation of the transactions contemplated hereby, including
the Spin-Off Transaction, result in a violation of, or constitute a
default under, the corporate charter, by-laws or other governing documents
of Thermo Optek, Thermo Instrument or Thermo Electron, or any material
agreement, indenture or other instrument to which Thermo Optek, Thermo
Instrument or Thermo Electron is a party or by which any of them is bound,
or to which any of their properties is subject, nor will the performance
by Thermo Optek, Thermo Instrument or Thermo Electron of its obligations
hereunder violate any existing law, rule, administrative regulation or
decree of any court or any governmental agency or body having jurisdiction
over Thermo Optek, Thermo Instrument or Thermo Electron or any of their
respective properties, or result in the creation or imposition of any
lien, charge, claim or encumbrance upon any property or asset of Thermo
Optek, Thermo Instrument or Thermo Electron, which would be material to
Thermo Electron and its Subsidiaries taken as a whole. The consummation of
the transactions contemplated hereby, including the Spin-Off Transaction,
have been duly authorized by all necessary corporate action, and except
for permits and similar authorizations required under the Securities Act
and the securities or "Blue Sky" laws of certain jurisdictions and for
such permits and authorizations as have been obtained, no consent,
approval, authorization or order of any court, governmental agency or body
or financial institution is required in connection with the consummation
by Thermo Optek, Thermo Instrument and Thermo Electron of the transactions
contemplated by this Agreement, including the Spin-Off Transaction.
(d) This Agreement has been duly authorized, executed and delivered by
Thermo Optek, Thermo Instrument and Thermo Electron.
(e) Thermo Instrument will own as of the Closing Date (as defined
below), of record and beneficially, the number of shares of Common Stock
of the Company set forth in the Prospectus, free and clear of any liens,
encumbrances, claims or restrictions, except as set forth in the
Prospectus and except that certain of such shares are reserved for
issuance pursuant to stock option and other benefit plans under which
options to purchase Common Stock of the Company owned by Thermo Instrument
are granted to certain employees, directors or consultants of Thermo
Electron and its Subsidiaries.
<PAGE> 8
-8-
(f) The most recent Annual Report on Form 10-K of each of Thermo
Optek, Thermo Instrument and Thermo Electron and any subsequent reports
filed pursuant to the Exchange Act complied as of the date thereof in all
material respects with the Exchange Act and the rules and regulations
thereunder.
(g) Each of the Inter-corporate Agreements to which Thermo Optek,
Thermo Instrument or Thermo Electron is a party has been duly and validly
authorized, executed and delivered by Thermo Optek, Thermo Instrument or
Thermo Electron, as the case may be, and is the valid and binding
agreement of Thermo Optek, Thermo Instrument or Thermo Electron, as the
case may be, enforceable in accordance with its terms, except as provided
by applicable bankruptcy laws. The execution, delivery and performance of
each of the Inter-corporate Agreements to which Thermo Optek, Thermo
Instrument or Thermo Electron is a party by such corporation, the
consummation of the transactions therein contemplated and compliance with
the terms thereof do not and will not result in a violation of, or
constitute a default under, the corporate charter, by-laws or other
governing documents of any such corporation, or any agreement, indenture
or other instrument to which any such corporation is a party or by which
it is bound, or to which any of its properties is subject, and do not and
will not violate any existing law, rule, administrative regulation or
decree of any court or any governmental agency or body having jurisdiction
over any such corporation or any of its properties, or result in the
creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of any such corporation which would be material to any
such corporation on a consolidated basis. No consent, approval,
authorization or order of any court, governmental agency or body or
financial institution is required in connection with the consummation by
Thermo Optek, Thermo Instrument or Thermo Electron of the transactions
contemplated by the Inter-corporate Agreements to which it is a party,
except such as have been obtained.
2. PURCHASE OF THE SHARES BY THE UNDERWRITERS. (a) Subject to the
terms and conditions and upon the basis of the representations and warranties
herein set forth, the Company agrees to issue and sell to the Underwriters the
Firm Shares and each of the Underwriters agrees, severally and not jointly, to
purchase at a price of $_____ per Share, the number of Firm Shares set forth
opposite such Underwriter's name in Schedule I hereto. The Underwriters agree to
offer the Firm Shares to the public as set forth in the Prospectus.
(b) Subject to the terms and conditions set forth herein, the Company
hereby grants to the Underwriters an option to purchase from the Company, solely
for the purpose of covering over-allotments in the sale of Firm Shares, all or
any portion of the Option Shares for a period of thirty (30) days from the date
hereof at the purchase price per Share set forth above. Option Shares shall be
purchased from the Company, severally and not jointly, for the accounts of the
several Underwriters in proportion to the number of Firm Shares set forth
opposite such Underwriter's name in Schedule I hereto, except that the
respective purchase obligations of each Underwriter shall be adjusted by the
Representatives so that no Underwriter shall be obligated to purchase Option
Shares other than in 100-share quantities.
<PAGE> 9
-9-
3. DELIVERY OF AND PAYMENT FOR THE SHARES. Delivery of certificates
for the Firm Shares and certificates for the Option Shares, if the option to
purchase the same is exercised on or before the second Business Day (as defined
in Section 13 hereof) prior to the First Closing Date (as defined below), to be
purchased by the Underwriters from the Company and payment therefor shall be
made at the offices of Testa, Hurwitz & Thibeault, LLP, 125 High Street, Boston,
Massachusetts 02110 (or such other place as mutually may be agreed upon), at
10:00 A.M., Eastern time, on the [ ] business day after the date of this
Agreement (the "FIRST CLOSING DATE").
The option to purchase Option Shares from the Company granted in
Section 2 hereof may be exercised during the term thereof by written notice to
the Company from the Representatives. Such notice shall set forth the aggregate
number of Option Shares as to which the option is being exercised and the time
and date, not earlier than either the First Closing Date or the second Business
Day after the date on which the option shall have been exercised nor later than
the third Business Day after the date of such exercise, as determined by the
Representatives, when the Option Shares are to be delivered (the "OPTION CLOSING
DATE"). Delivery and payment for such Option Shares are to be at the offices set
forth above for delivery and payment of the Firm Shares. (The First Closing Date
and the Option Closing Date are herein individually referred to as a "CLOSING
DATE" and collectively referred to as the "CLOSING DATES.")
Delivery of certificates for the Shares shall be made by or on behalf
of the Company to you, for the respective accounts of the Underwriters, against
payment by you, for the several accounts of the Underwriters, of the purchase
price therefor by certified or official bank check payable in New York Clearing
House funds to the order of the Company or by wire transfer to an account
specified by the Company. The certificates for the Shares shall be registered in
such names and denominations as you shall have requested at least two full
Business Days prior to the applicable Closing Date, and shall be made available
for checking and packaging at a location in New York, New York as may be
designated by you at least one full Business Day prior to such Closing Date.
Time shall be of the essence and delivery at the time and place specified in
this Agreement is a further condition to the obligations of each Underwriter.
4. COVENANTS OF THE COMPANY, THERMO OPTEK, THERMO INSTRUMENT AND
THERMO ELECTRON. The Company, Thermo Optek, Thermo Instrument and Thermo
Electron, jointly and severally, covenant and agree with each Underwriter that:
(a) The Company shall comply with the provisions of, and make all
requisite filings with the Commission pursuant to, Rule 430A and
Rule 424(b) of the Rules and Regulations and shall notify you promptly (in
writing, if requested) of all such filings. The Company shall notify you
promptly of any request by the Commission for any amendment of or
supplement to the Registration Statement or the Prospectus or for
additional information; the Company shall prepare and file with the
Commission, promptly upon your request, any amendments or supplements to
the Registration Statement or the Prospectus which, in your opinion, may
be necessary or advisable in connection with the distribution of the
Shares; and the Company shall not file any amendment or supplement to the
Registration Statement or the Prospectus, which filing is not consented to
by you after reasonable notice thereof,
<PAGE> 10
-10-
such consent not to be unreasonably withheld or delayed. The Company shall
advise you promptly of its receipt of notice of the issuance by the
Commission or any state or other regulatory body of any stop order or
other order suspending the effectiveness of the Registration Statement,
suspending or preventing the use of any Preliminary Prospectus or the
Prospectus or suspending the qualification of the Shares for offering or
sale in any jurisdiction, or of the institution of any proceedings for any
such purpose; and the Company shall use its best efforts to prevent the
issuance of any stop order or other such order and, should a stop order or
other such order be issued, to obtain as soon as possible the lifting
thereof.
(b) The Company shall furnish to each of the Representatives and to
counsel for the Underwriters a signed copy of the Registration Statement
as originally filed and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith, and shall furnish to
the Underwriters such number of conformed copies of the Registration
Statement, as originally filed and each amendment thereto (excluding
exhibits other than this Agreement), the Prospectus and all amendments and
supplements to any of such documents in each case as soon as available and
in such quantities as the Representatives may from time to time reasonably
request. To the extent applicable, the copies of the Registration
Statement and each amendment thereto (including all exhibits filed
therewith), any Preliminary Prospectus or Prospectus (in each case, as
amended or supplemented) furnished to the Representative and counsel to
the Underwriters will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(c) Within the time during which a prospectus relating to the Shares
is required to be delivered under the Securities Act, the Company shall
comply with all requirements imposed upon it by the Securities Act, as now
and hereafter amended, and by the Rules and Regulations, as from time to
time in force, so far as is necessary to permit the continuance of sales
of or dealings in the Shares as contemplated by the provisions hereof and
by the Prospectus. If during such period any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, or if during such period it
is necessary to amend the Registration Statement or to supplement the
Prospectus in order to comply with the Securities Act or to file any
document, the Company shall promptly notify you and shall amend the
Registration Statement or supplement the Prospectus or file such document
(at the expense of the Company) so as to correct such statement or
omission or to effect such compliance.
(d) The Company shall take or cause to be taken all necessary action
and furnish to whomever you may direct such information as may be required
in qualifying the Shares for sale under the laws of such jurisdictions as
you shall designate, and to continue such qualifications in effect for as
long as may be necessary for the distribution of the Shares; except that
in no event shall the Company be obligated in connection therewith to
qualify as a foreign corporation or to execute a general consent to
service of process.
<PAGE> 11
-11-
(e) The Company shall make generally available to its security holders
(and shall deliver to the Representatives), in the manner contemplated by
Rule 158(b) of the Rules and Regulations or otherwise, as soon as
practicable but in any event not later than 45 days after the end of its
fiscal quarter in which the first anniversary date of the Effective Date
occurs, an earnings statement satisfying the requirements of Section 11(a)
of the Securities Act and covering a period of at least 12 consecutive
months beginning after the Effective Date.
(f) The Company, Thermo Instrument and Thermo Electron shall not,
during the 180-day period following the date of the Prospectus, except
with your prior written consent, offer for sale, sell or otherwise dispose
of, directly or indirectly, any shares of Common Stock (except for the
issuance of shares of Common Stock pursuant to existing stock option,
purchase and compensation plans, or upon conversion of any currently
outstanding convertible securities described in the Prospectus, except for
sales of shares of Common Stock by the Company to Thermo Instrument or
Thermo Electron, and except for shares issued as consideration for the
acquisition of one or more businesses provided that such shares may not be
resold or transferred within such 180-day period), or sell or grant
options, rights or warrants with respect to any shares of Common Stock
(other than the grant of options pursuant to existing stock option,
purchase and compensation plans), otherwise than in accordance with this
Agreement or as contemplated in the Prospectus. The Company, Thermo
Instrument and Thermo Electron will not permit any employee stock option,
director stock option or other stock option to purchase Common Stock of
the Company granted by it to be exercised, and the Common Stock issued
upon exercise of the stock option to be sold, prior to the expiration of
the 180-day period following the date of this Prospectus, without your
prior written consent. The Company will not take any action to accelerate
the date on which the restrictions on transfer contained in its corporate
charter relating to the shares of Common Stock to be distributed in the
Spin-Off shall expire without your prior written consent.
(g) The Company shall take such steps as shall be necessary to ensure
that neither the Company nor any Subsidiary shall become an "investment
company" within the meaning of such term under the Investment Company Act
of 1940, as amended, and the rules and regulations thereunder.
(h) Whether or not this Agreement is terminated or the sale of the
Shares to the Underwriters is consummated, the Company shall pay or cause
to be paid (A) all expenses (including stock transfer taxes) incurred in
connection with the delivery to the several Underwriters of the Shares,
(B) all fees and expenses (including, without limitation, fees and
expenses of the Company's accountants and counsel, but excluding fees and
expenses of counsel for the Underwriters) in connection with the
preparation, printing, filing, delivery and shipping of the Registration
Statement (including the financial statements therein and all amendments
and exhibits thereto), each Preliminary Prospectus, the Prospectus and any
amendments or supplements of the foregoing and the printing, delivery and
shipping of this Agreement and other underwriting documents, including,
but not limited to, any Underwriters' Questionnaires, Underwriters' Powers
of Attorney, Blue Sky Memoranda,
<PAGE> 12
-12-
Agreements Among Underwriters and Selected Dealer Agreements, (C) all
filing fees and fees and disbursements of counsel to the Underwriters
incurred in connection with qualification of the Shares under state
securities laws as provided in Section 4(d) hereof, (D) the filing fee of
the National Association of Securities Dealers, Inc., (E) any applicable
listing or other fees, (F) the cost of printing certificates representing
the Shares, (G) the cost and charges of any transfer agent or registrar,
and (H) all other costs and expenses incident to the performance of its
obligations hereunder for which provision is not otherwise made in this
Section. It is understood, however, that, except as provided in this
Section, Section 6 and Section 8 hereof, the Underwriters shall pay all of
their own costs and expenses, including the fees of their counsel, stock
transfer taxes due upon resale of any of the Shares by them and any
advertising expenses incurred in connection with any offers they may make.
If the sale of the Shares provided for herein is not consummated by reason
of any failure, refusal or inability on the part of the Company, Thermo
Optek, Thermo Instrument or Thermo Electron to perform any agreement on
its part to be performed or because any other condition of the
Underwriters' obligations hereunder is not fulfilled or if the
Underwriters shall decline to purchase the Shares for any reason permitted
under this Agreement, the Company shall reimburse the several Underwriters
for all reasonable out-of-pocket disbursements (including fees and
disbursements of counsel) incurred by the Underwriters in connection with
any investigation or preparation made by them in respect of the marketing
of the Shares or in contemplation of the performance by them of their
obligations hereunder.
(i) The Company shall on or prior to each Closing Date use its best
efforts to cause the Shares to be purchased on such date by the
Underwriters to be approved for listing on the American Stock Exchange,
subject only to official notice of issuance, and shall take such action as
shall be necessary to comply with the rules and regulations of the
American Stock Exchange with respect to such Shares.
(j) During a period of five years from the Effective Date, the Company
shall furnish to the Representatives copies of all reports or other
communications furnished to shareholders and copies of any reports or
financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the
Company is listed. To the extent applicable, such reports or documents
shall be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters hereunder are subject to the accuracy, as of the date
hereof and each Closing Date (as if made at such Closing Date), of the
representations and warranties of the Company, Thermo Optek, Thermo Instrument
and Thermo Electron contained herein, to the performance by the Company, Thermo
Optek, Thermo Instrument and Thermo Electron of their respective obligations
hereunder and to the following additional conditions:
(a) The Prospectus shall have been filed with the Commission in a
timely fashion in accordance with Section 4(a) hereof, all post-effective
amendments to the Registration
<PAGE> 13
-13-
Statement shall have become effective, all filings required by Rule 430A
and Rule 424 of the Rules and Regulations shall have been made and no such
filings shall have been made without the consent of the Representatives;
no stop order suspending the effectiveness of the Registration Statement
or any amendment or supplement thereto shall have been issued; no
proceedings for the issuance of any such order shall have been initiated
or threatened; and any request of the Commission for additional
information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been disclosed to you and complied
with to your satisfaction.
(b) No Underwriter shall have been advised by the Company, Thermo
Optek, Thermo Instrument or Thermo Electron or shall have discovered and
disclosed to the Company that the Registration Statement, or the
Prospectus or any amendment or supplement thereto, contains an untrue
statement of fact which in your reasonable opinion, or in the reasonable
opinion of counsel for the Underwriters, is material, or omits to state a
fact which, in your reasonable opinion, or in the reasonable opinion of
counsel to the Underwriters, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) On or prior to each Closing Date, you shall have received from
Testa, Hurwitz & Thibeault, LLP, counsel for the Underwriters, such
opinion or opinions with respect to corporate proceedings by the Company,
Thermo Optek, Thermo Instrument and Thermo Electron, the form of the
Registration Statement and Prospectus (other than financial statements and
other financial or statistical data), the validity of the Shares, and
other related matters as you may reasonably request and such counsel shall
have received such documents and information as they reasonably request to
enable them to pass upon such matters.
(d) On each Closing Date there shall have been furnished to you the
opinion (addressed to the Underwriters) of Seth H. Hoogasian, Esq.,
General Counsel of Thermo Electron, Thermo Optek, Thermo Instrument and
the Company, dated such Closing Date and in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) Each of the Company and its Significant Subsidiaries has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, with
full corporate power and authority to own or lease its properties and
conduct its business as described in the Prospectus, and is duly
qualified to do business and is in good standing in each jurisdiction
in which the character of the business conducted by it or the location
of the properties owned or leased by it makes such qualification
necessary, except where the failure to so qualify or be in good
standing would not have a material adverse effect on the Company and
its Subsidiaries taken as a whole.
(ii) Each of Thermo Electron and its Significant Subsidiaries
(as defined in Section 13) has been duly organized and is validly
existing as a corporation in good
<PAGE> 14
-14-
standing under the laws of the jurisdiction of its incorporation, with
full corporate power and authority to own or lease its properties and
conduct its business as described in the Prospectus, and is duly
qualified to do business and is in good standing in each jurisdiction
in which the character of the business conducted by it or the location
of the properties owned or leased by it makes such qualification
necessary, except where the failure to so qualify or be in good
standing would not have a material adverse effect on Thermo Electron
and its Subsidiaries taken as a whole.
(iii) All of the outstanding shares of Common Stock have been and
the Shares, upon issuance and delivery and payment therefor in the
manner herein described, will be, duly authorized, validly issued,
fully paid and nonassessable. There are no preemptive or other rights
to subscribe for or to purchase, or any restriction upon the voting or
transfer of, any of the Shares pursuant to the Company's corporate
charter, by-laws, other governing documents, or any agreement or other
instrument known to such counsel to which the Company or a Subsidiary
thereof is a party or by which the Company or a Subsidiary thereof may
be bound or to which any of their respective properties is subject;
and, to the best of such counsel's knowledge, neither the filing of the
Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement nor the Spin-Off gives rise to any
rights for or relating to the registration of any shares of Common
Stock except such as have been waived or satisfied, other than as
described in the Prospectus. The Common Stock conforms in all material
respects to the description thereof contained in the Prospectus. All of
the outstanding shares of capital stock of each Significant Subsidiary
of the Company have been duly authorized and validly issued, are fully
paid and nonassessable and are owned directly or indirectly by the
Company free and clear of any claim, lien, encumbrance or security
interest known to such counsel (except for certain obligations of the
Company pursuant to stock and benefit plans maintained primarily for
the benefit of employees, officers, directors and consultants of the
Company and its Subsidiaries).
(iv) Each of the Company and its Significant Subsidiaries is
not, nor with the giving of notice or lapse of time or both would be,
in violation of or in default under, nor will the execution or delivery
hereof or consummation of the transactions contemplated hereby,
including the Spin-Off Transaction, result in a violation of, or
constitute a default under, the corporate charter, by-laws or other
governing documents of the Company or any of its Significant
Subsidiaries or, to the best knowledge of such counsel, any material
agreement, indenture or other instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries may be bound, or to which any of the properties of the
Company or any of its Subsidiaries is subject, nor, to best of such
counsel's knowledge, will the performance by the Company of its
obligations hereunder or the Spin-Off Transaction violate any existing
law, rule, administrative regulation or decree of any court or any
governmental agency or body having jurisdiction over the Company or any
of its Subsidiaries or the properties of the Company or any of its
Subsidiaries, or, to the best knowledge of such counsel, result in the
creation or imposition of any lien, charge, claim or encumbrance upon
the properties or assets of the Company or any of its Subsidiaries
which would be material to the Company and its
<PAGE> 15
-15-
Subsidiaries taken as a whole. The consummation of the transactions
contemplated hereby, including the Spin-Off Transaction, have been duly
authorized by all necessary corporate action on the part of the
Company, Thermo Optek, Thermo Instrument and Thermo Electron, and,
except for permits and similar authorizations required under the
Securities Act and the securities or "Blue Sky" laws of certain
jurisdictions or the National Association of Securities Dealers, Inc.
and for such permits and authorizations as have been obtained, no
consent, approval, authorization or order of any court, governmental
agency or body or financial institution is required in connection with
the consummation by the Company, Thermo Optek, Thermo Instrument or
Thermo Electron of the transactions contemplated by this Agreement,
including the Spin-Off Transaction.
(v) Each of Thermo Optek, Thermo Instrument and Thermo Electron
is not, nor with the giving of notice or lapse of time or both would
be, in violation of or in default under, nor will the execution or
delivery hereof or consummation of the transactions contemplated
hereby, including the Spin-Off Transaction, result in a violation of,
or constitute a default under, the corporate charter, by-laws or other
governing documents of Thermo Optek, Thermo Instrument or Thermo
Electron or, except as described in the Exchange Act filings of Thermo
Optek, Thermo Instrument and Thermo Electron, to the best knowledge of
such counsel, any material agreement, indenture, or other instrument to
which Thermo Optek, Thermo Instrument or Thermo Electron is a party or
by which Thermo Optek, Thermo Instrument or Thermo Electron may be
bound, or to which any of the properties of Thermo Optek, Thermo
Instrument or Thermo Electron is subject, nor will the performance by
Thermo Optek, Thermo Instrument or Thermo Electron of its obligations
hereunder violate any existing law, rule, administrative regulation or
decree of any court or any governmental agency or body having
jurisdiction over Thermo Optek, Thermo Instrument or Thermo Electron or
the properties of Thermo Optek, Thermo Instrument or Thermo Electron,
or, to the best knowledge of such counsel, result in the creation or
imposition of any lien, charge, claim or encumbrance upon the
properties or assets of Thermo Optek, Thermo Instrument or Thermo
Electron, which would be material to any of such corporations on a
consolidated basis.
(vi) This Agreement has been duly authorized, executed and
delivered by the Company, Thermo Optek, Thermo Instrument and Thermo
Electron.
(vii) Each of the Inter-corporate Agreements has been duly
authorized, executed and delivered by the Company, Thermo Optek, Thermo
Instrument and Thermo Electron, as the case may be, and is the valid
and binding agreement of the Company, Thermo Optek, Thermo Instrument
and Thermo Electron enforceable in accordance with its terms except as
provided by applicable bankruptcy laws. The execution, delivery and
performance of each of the Inter-corporate Agreements by each of the
parties thereto, the consummation of the transactions therein
contemplated and compliance with the terms thereof do not and will not
result in a violation of, or constitute a default under the corporate
charter, by-laws or other governing documents of the Company, Thermo
Optek, Thermo Instrument or Thermo Electron, or any material agreement,
indenture or other
<PAGE> 16
-16-
instrument known to such counsel to which the Company, Thermo Optek,
Thermo Instrument or Thermo Electron is a party or by which any of them
is bound, or to which any of their properties is subject and do not and
will not violate any existing law, rule, administrative regulation or
decree of any court or any governmental agency or body having
jurisdiction over the Company, Thermo Optek, Thermo Instrument or
Thermo Electron or any of their properties, or, to the best of such
counsel's knowledge, result in the creation or imposition of any lien,
charge, claim or encumbrance upon any property or asset of the Company,
Thermo Optek, Thermo Instrument or Thermo Electron, which would be
material to any of such corporations on a consolidated basis. Except
for permits and similar authorizations required under the Securities
Act and the securities or "Blue Sky" laws of certain jurisdictions or
by the National Association of Securities Dealers, Inc. and for such
permits and authorizations as have been obtained, no consent, approval,
authorization or order of any court, governmental agency or body or, to
the knowledge of such counsel, financial institution is required in
connection with the consummation of the transactions contemplated by
the Inter-corporate Agreements.
(viii) The Registration Statement and all post-effective
amendments thereto have become effective under the Securities Act and,
to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending before
or contemplated by the Commission. All filings required by Rule 424 and
Rule 430A of the Rules and Regulations have been made; the Registration
Statement as of the Effective Date, and the Prospectus and any
amendment or supplement thereto as of their respective dates, complied
as to form in all material respects with the requirements of the
Securities Act and the Rules and Regulations (it being understood that
such counsel need express no opinion on the financial statements or
other financial and statistical data included therein). Such counsel
has no reason to believe that (i) the Registration Statement, as of its
Effective Date, or any amendment thereto, at the time it became
effective contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading, or (ii) the
Prospectus or any supplement or amendment thereto, or any supplement or
amendment thereto, on such Closing Date or at the time such Prospectus
or supplement or amendment thereto was issued contains or contained any
untrue statement of a material fact or omits or omitted to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading (it being understood that such counsel
need express no opinion with respect to the financial statements or
other financial and statistical data included in the Registration
Statement and the Prospectus).
(ix) To the best knowledge of such counsel, all descriptions in
the Prospectus of statutes, regulations, legal or governmental
proceedings, contracts and other documents are accurate in all material
respects, and fairly present in all material respects the information
required to be shown and such counsel does not know of any contracts or
documents of a character required to be summarized or described therein
or to be filed as exhibits thereto that are not so summarized,
described or filed, nor does such counsel
<PAGE> 17
-17-
know of any pending or threatened litigation or any governmental
proceeding, statute or regulation required to be described in the
Prospectus that is not so described.
In rendering the foregoing opinion, counsel may rely, as to matters of
fact, upon certificates of officers of the Company, Thermo Optek, Thermo
Instrument and Thermo Electron and certificates of public officials.
Certificates so relied upon shall be furnished to you and shall be
satisfactory to you and your counsel.
(e) There shall have been furnished to you a certificate, dated such
Closing Date and addressed to you, signed by the President or a Vice
President and by the Treasurer or Secretary of the Company to the effect
that: (i) the representations and warranties of the Company contained in
this Agreement are true and correct, as if made at and as of such Closing
Date, and the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior to
such Closing Date; (ii) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that
purpose have been initiated or, to the knowledge of the signers of such
certificate, threatened; (iii) all filings required by Rule 424 and
Rule 430A of the Rules and Regulations have been made; (iv) the signers of
said certificate have carefully examined the Registration Statement and
the Prospectus, and any amendments or supplements thereto and such
documents contain all statements and information required to be included
therein, and do not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading; and (v) since the effective
date of the Registration Statement, there has occurred no event required
to be set forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not been so set forth.
(f) There shall have been furnished to you certificates, dated such
Closing Date and addressed to you, signed by the President or a Vice
President and by the Treasurer or Secretary of each of Thermo Optek,
Thermo Instrument and Thermo Electron to the effect that: (i) the
representations and warranties of Thermo Optek, Thermo Instrument and
Thermo Electron (as applicable) contained in this Agreement are true and
correct, as if made at and as of such Closing Date, and Thermo Optek,
Thermo Instrument and Thermo Electron (as applicable) has complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date; (ii) the signers
of said certificate have carefully examined the Registration Statement and
the Prospectus, and any amendments or supplements thereto, and such
documents contain all statements and information required to be included
therein and do not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; and (iii) since the effective
date of the Registration Statement, there has occurred no event required
to be set forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not been so set forth.
(g) Since the Effective Time, neither the Company nor any of the
Subsidiaries of the Company shall have sustained any loss by fire, flood,
accident or other calamity, or shall
<PAGE> 18
-18-
have become a party to or the subject of any litigation, which is material
to the Company and its Subsidiaries taken as a whole, nor shall there have
been a material adverse change in the general affairs, operations,
business, prospects, key personnel, capitalization, financial condition or
net worth of the Company and its Subsidiaries taken as a whole, whether or
not arising in the ordinary course of business, which loss, litigation or
change, in your judgment, shall render it inadvisable to proceed with the
payment for and delivery of the Shares.
(h) On the date of this Agreement and on each Closing Date you shall
have received a letter from each accounting firm whose report appears in
the Prospectus, dated the date of this Underwriting Agreement or such
Closing Date, as the case may be, and addressed to you, confirming that
they are independent certified public accountants within the meaning of
the Securities Act and the applicable published Rules and Regulations, and
stating, as of the date of such letter (or, with respect to matters
involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date
not more than five days prior to the date of each such letter), the
conclusions and findings of each such firm with respect to the financial
information and other matters covered by its letter delivered to you
concurrently with the execution of this Agreement, and with respect to
each letter delivered on a Closing Date confirming the conclusions and
findings set forth in such prior letter.
(i) You shall have been furnished with such additional documents and
certificates as you or counsel for the Underwriters may reasonably
request.
(j) The Shares to be purchased on such Closing Date by the
Underwriters shall be approved for listing on the American Stock Exchange,
subject only to official notice of issuance.
(k) The Spin-Off shall have been completed substantially as described
in the Form 10.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you and to counsel for the Underwriters. The Company,
Thermo Optek, Thermo Instrument and Thermo Electron shall furnish to you such
conformed copies of such opinions, certificates, letters and other documents as
you shall reasonably request. If any of the conditions specified in this Section
5 shall not have been fulfilled when and as required by this Agreement, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, such Closing Date, by you. Any such cancellation shall
be without liability of the Underwriters to the Company, Thermo Optek, Thermo
Instrument or Thermo Electron. Notice of such cancellation shall be given to the
Company in writing, or by telegraph or telephone and confirmed in writing.
6. INDEMNIFICATION AND CONTRIBUTION.
<PAGE> 19
-19-
(a) The Company, Thermo Optek, Thermo Instrument and Thermo Electron,
jointly and severally, shall indemnify and hold harmless each Underwriter
against any loss, claim, damage or liability (or any action in respect
thereof), joint or several, to which such Underwriter may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage
or liability (or action in respect thereof) arises out of or is based upon
(i) any untrue statement or alleged untrue statement made by the Company,
Thermo Optek, Thermo Instrument or Thermo Electron in Section 1 hereof or
by Thermo Optek, Thermo Instrument or Thermo Electron in Section 1A
hereof, or (ii) any untrue statement or alleged untrue statement of a
material fact contained (A) in the Registration Statement, any Preliminary
Prospectus, the Prospectus, the Form 10, or any amendment or supplement to
any thereof, or (B) in any "Blue Sky" application or other document
executed by the Company specifically for that purpose or based upon any
written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Shares under the
securities laws thereof (any such application, document or information
being hereinafter called "BLUE SKY INFORMATION"), or (iii) the omission or
alleged omission to state in the Registration Statement, any Preliminary
Prospectus, the Prospectus, the Form 10, or any amendment or supplement to
any thereof, or in any Blue Sky Information a material fact required to be
stated therein or necessary to make the statements therein not misleading
or (iv) any act or failure to act or any alleged act or failure to act by
any Underwriter in connection with, or relating in any manner to, the
Shares or the offering contemplated hereby or the Spin-Off, and which is
included as part of or referred to in any loss, claim, damage, liability
or action arising out of or based upon matters covered by clause (ii) or
(iii) above (provided that the Company, Thermo Optek, Thermo Instrument
and Thermo Electron shall not be liable under this clause (iv) to the
extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action resulted
directly or indirectly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriter through its gross negligence,
willful misconduct or breach of this Agreement); and shall reimburse each
Underwriter promptly after receipt of invoices from such Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending against or appearing as a
third-party witness in connection with any such loss, claim, damage,
liability or action, notwithstanding the possibility that payments for
such expenses might later be held to be improper, in which case the person
receiving them shall promptly refund them; provided, however, that the
Company, Thermo Optek, Thermo Instrument and Thermo Electron shall not be
liable in any such case to the extent, but only to the extent, that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company through you by or on behalf of any Underwriter
specifically for use in the preparation of the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement to
any thereof, or any Blue Sky Information; and provided, further, that as
to any Preliminary Prospectus this indemnity agreement shall not inure to
the benefit of any Underwriter on account of any loss, claim, damage,
liability or action arising from the sale of Shares to any person by that
Underwriter if that Underwriter failed to send or give a copy of the
Prospectus, as the same may be amended or supplemented, to that person
within the time required by the Securities
<PAGE> 20
-20-
Act and the Rules and Regulations, and the untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact in such Preliminary Prospectus was corrected in the
Prospectus, unless such failure resulted from non-compliance by the
Company with Section 4(b).
(b) Each Underwriter severally, but not jointly, shall indemnify and
hold harmless the Company, Thermo Optek, Thermo Instrument and Thermo
Electron against any loss, claim, damage or liability (or action in
respect thereof) to which the Company, Thermo Optek, Thermo Instrument or
Thermo Electron may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage or liability (or action in respect
thereof) arises out of or is based upon (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement to any thereof, or (B) in any Blue Sky
Information, or (ii) the omission or alleged omission to state in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement to any thereof, or in any Blue Sky Information a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and shall reimburse any legal or other
expenses reasonably incurred by the Company, Thermo Optek, Thermo
Instrument or Thermo Electron promptly after receipt of invoices from the
Company, Thermo Optek, Thermo Instrument or Thermo Electron in connection
with investigating or defending against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or
action, notwithstanding the possibility that payments for such expenses
might later be held to be improper, in which case the Company, Thermo
Optek, Thermo Instrument and Thermo Electron shall promptly refund them;
provided, however, that such indemnification shall be available in each
such case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished
to the Company through you by or on behalf of such Underwriter
specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 6 except to the extent it has been prejudiced in any material
respect by such failure or from any liability which it may have to an
indemnified party otherwise than under this Section 6. If any such claim
or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it or they wish,
jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified
party under such subsection for any legal or other expenses subsequently
incurred by the indemnified
<PAGE> 21
-21-
party in connection with the defense thereof other than reasonable costs
of investigation, except that the Representatives shall have the right to
employ counsel to represent you and those other Underwriters who may be
subject to liability arising out of any claim in respect of which
indemnity may be sought by the Underwriters against the Company, Thermo
Optek, Thermo Instrument or Thermo Electron under such subsection if, in
your reasonable judgment, it is advisable for you and those Underwriters
to be represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the indemnifying party
or parties; provided, however, in no event, shall the indemnifying party
or parties be responsible for the expenses of more than one separate
counsel for all such indemnified parties.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or
(b) above (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, Thermo Optek, Thermo Instrument and
Thermo Electron on the one hand and the Underwriters on the other from the
offering of the Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company, Thermo Optek,
Thermo Instrument and Thermo Electron on the one hand and the Underwriters
on the other in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, Thermo Optek, Thermo Instrument and Thermo Electron on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Shares
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus.
Relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by one of the parties and such parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company, Thermo Optek,
Thermo Instrument, Thermo Electron and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this
subsection (d) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this subsection (d).
The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim which is the
subject of this subsection (d), subject to the proviso in the last
sentence of subsection (c). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the
<PAGE> 22
-22-
public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters' obligations in this subsection (d) to contribute are
several in proportion to their respective underwriting obligations and not
joint. Each party entitled to contribution agrees that upon the service of
a summons or other initial legal process upon it in any action instituted
against it in respect of which contribution may be sought, it shall
promptly give written notice of such service to the party or parties from
whom contribution may be sought, but the omission so to notify such party
or parties of any such service shall not relieve the party from whom
contribution may be sought from any obligation it may have hereunder or
otherwise (except as specifically provided in subsection (c) hereof).
(e) The obligations of the Company, Thermo Optek, Thermo Instrument
and Thermo Electron under this Section 6 shall be in addition to any
liability which the Company, Thermo Optek, Thermo Instrument and Thermo
Electron may otherwise have, and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within
the meaning of the Securities Act or the Exchange Act; and the obligations
of the Underwriters under this Section 6 shall be in addition to any
liability that the respective Underwriters may otherwise have, and shall
extend, upon the same terms and conditions, to each director of the
Company (including any person who, with his consent, is named in the
Registration Statement as about to become a director of the Company), to
each officer of the Company who has signed the Registration Statement and
to Thermo Optek, Thermo Instrument and Thermo Electron, and each other
person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act.
7. SUBSTITUTION OF UNDERWRITERS. If any Underwriter defaults in its
obligation to purchase the number of Shares which it has agreed to purchase
under this Agreement, the non-defaulting Underwriters shall be obligated to
purchase (in the respective proportions which the number of Shares set forth
opposite the name of each non-defaulting Underwriter in Schedule I hereto bears
to the total number of Shares set forth in Schedule I hereto) the Shares which
the defaulting Underwriter agreed but failed to purchase; except that the
non-defaulting Underwriters shall not be obligated to purchase any of the Shares
if the total number of Shares which the defaulting Underwriter or Underwriters
agreed but failed to purchase exceed 9.09% of the total number of Shares, and
any non-defaulting Underwriters shall not be obligated to purchase more than
110% of the number of Shares set forth opposite its name in Schedule I hereto
plus the total number of Option Shares purchasable by it pursuant to the terms
of Section 2. If the foregoing maximums are exceeded, the non-defaulting
Underwriters, and any other underwriters satisfactory to you that so agree,
shall have the right, but shall not be obligated, to purchase (in such
proportions as may be agreed upon among them) all of the Shares. If the
foregoing maximums are exceeded and the non-defaulting Underwriters or the other
underwriters satisfactory to you do not elect to purchase the Shares which the
defaulting Underwriter or Underwriters agreed but failed to purchase, the
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter, the Company, Thermo Optek, Thermo Instrument or
<PAGE> 23
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Thermo Electron except for the payment of expenses to be borne by the Company,
Thermo Optek, Thermo Instrument and Thermo Electron and the Underwriters as
provided in Section 4(h) hereof and the indemnity and contribution agreements of
the Company, Thermo Optek, Thermo Instrument, Thermo Electron and the
Underwriters contained in Section 6 hereof.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have for damages caused by its default. If the other
underwriters satisfactory to you are obligated or agree to purchase the Shares
of a defaulting Underwriter, either you or the Company may postpone the First
Closing Date for up to seven full Business Days in order to effect any changes
that may be necessary in the Registration Statement or the Prospectus or in any
other document or agreement, and to file promptly any amendments or any
supplements to the Registration Statement or the Prospectus which in your
opinion may thereby be made necessary.
8. TERMINATION.
(a) Until the First Closing Date, this Agreement may be terminated by
you by giving notice as hereinafter provided to the Company, if (i) the
Company, Thermo Optek, Thermo Instrument or Thermo Electron shall have
failed, refused or been unable, at or prior to the First Closing Date, to
perform any agreement on its part to be performed hereunder, (ii) any
other condition of the obligations of the Underwriters hereunder is not
fulfilled, (iii) trading in securities generally on the New York Stock
Exchange or the American Stock Exchange or the over-the-counter market
shall have been suspended or minimum prices shall have been established on
any of such exchanges or such market by the Commission or by such exchange
or other regulatory body or governmental authority having jurisdiction,
(iv) a banking moratorium shall have been declared by Federal, New York or
Massachusetts authorities, or (v) the United States is or becomes engaged
in hostilities which result in the declaration of a national emergency or
war, or (vi) there shall have been such a material adverse change in
general economic, political or financial conditions, or the effect of
international conditions on the financial markets in the United States
shall be such, as to, in the judgment of a majority in interest of the
several Underwriters, make it inadvisable or impracticable to proceed with
the delivery of the Shares. Any termination of this Agreement pursuant to
this Section 8 shall be without liability on the part of the Company,
Thermo Optek, Thermo Instrument, Thermo Electron or any Underwriter,
except as otherwise provided in Sections 4(h) and 6 hereof.
Any notice referred to above may be given at the address specified in
Section 10 hereof in writing or by telegraph or telephone, and if by telegraph
or telephone, shall be immediately confirmed in writing.
9. SURVIVAL OF INDEMNITIES, CONTRIBUTION, WARRANTIES AND
REPRESENTATIONS. The agreements contained in Section 6 and the representations,
warranties and agreements of the Company, Thermo Optek, Thermo Instrument and
Thermo Electron in Sections 1, 1A and 4 shall survive the delivery of the Shares
to the Underwriters hereunder and shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any indemnified party.
<PAGE> 24
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10. NOTICES. Except as otherwise provided in this Agreement, (a)
whenever notice is required by the provisions of this Agreement to be given to
the Company, Thermo Optek, Thermo Instrument or Thermo Electron, such notice
shall be in writing addressed to the Company, Thermo Optek, Thermo Instrument or
Thermo Electron at 81 Wyman Street, P.O. Box 9046, Waltham, Massachusetts
02254-9046; and (b) whenever notice is required by the provisions of the
Agreement to be given to the several Underwriters, such notice shall be in
writing addressed to you in care of Fahnestock & Co. Inc., 110 Wall Street, New
York, New York 10005, Attention: Syndicate Department.
11. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set
forth in the last paragraph on the outside cover page, the paragraph containing
stabilization information on the inside front cover page and the statements
under the caption "Underwriting" in any Preliminary Prospectus and in the
Prospectus, constitute the only written information furnished by or on behalf of
any Underwriter referred to in paragraph (b) of Section 1 hereof and in
paragraphs (a) and (b) of Section 6 hereof.
12. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters, the Company, Thermo Optek, Thermo
Instrument and Thermo Electron, and their respective successors. This Agreement
and the terms and provisions hereof are for the sole benefit of only those
persons, except that (a) the representations, warranties, indemnities and
agreements of the Company, Thermo Optek, Thermo Instrument and Thermo Electron
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control any Underwriter within the meaning of the
Securities Act or the Exchange Act and (b) the indemnity agreement of the
Underwriters contained in Section 6 hereof shall be deemed to be for the benefit
of directors of the Company, officers of the Company who signed the Registration
Statement, and any person controlling the Company, including Thermo Optek,
Thermo Instrument and Thermo Electron. Nothing in this Agreement shall be
construed to give any person, other than the persons referred to in this
paragraph, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein.
13. DEFINITION OF "BUSINESS DAY", "SUBSIDIARY" AND "SIGNIFICANT
SUBSIDIARY". For purposes of this Agreement, (a) "BUSINESS DAY" means any day on
which the American Stock Exchange is open for trading, (b) "SUBSIDIARY" has the
meaning set forth in Rule 405 of the Rules and Regulations and (c) "SIGNIFICANT
SUBSIDIARY" has the meaning set forth in Item 1-02(v) of the Regulation S-X of
the Rules and Regulations.
14. PERFORMANCE BY THE COMPANY. Thermo Optek, Thermo Instrument and
Thermo Electron agree to cause the Company to perform each of the agreements and
obligations of the Company contained in this Agreement.
15. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
the choice of law or conflict of law principles thereof.
<PAGE> 25
-25-
16. COUNTERPARTS. This Agreement may be signed in one or more
counterparts, each of which together shall constitute one and the same
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 26
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Please confirm, by signing and returning to us eight counterparts of
this Agreement, that you are acting on behalf of yourselves and the other
several Underwriters and that the foregoing correctly sets forth the agreement
among the Company, Thermo Optek, Thermo Instrument, Thermo Electron and the
several Underwriters.
Very truly yours,
THERMO VISION CORPORATION
By:___________________________
Title:
THERMO OPTEK INC.
By:___________________________
Title:
THERMO INSTRUMENT SYSTEMS INC.
By:___________________________
Title:
THERMO ELECTRON CORPORATION
By:___________________________
Title:
Confirmed and accepted as of the
date first above mentioned:
FAHNESTOCK & CO. INC.
HSBC SECURITIES, INC.
as Representatives of the several
Underwriters named in Schedule I hereto
By: FAHNESTOCK & CO. INC.
By:_____________________________
Authorized Signatory
<PAGE> 27
-27-
SCHEDULE I
<TABLE>
<CAPTION>
Number of Firm
Shares To Be
Underwriter Purchased
----------- --------------
<S> <C>
Fahnestock & Co. Inc...........................
HSBC Securities, Inc...........................
Total................................. 1,075,000
=========
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Thermo Vision Corporation:
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
Amendment No. 2 to Registration Statement on Form S-1 and related Prospectus of
Thermo Vision Corporation.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 14, 1997
