THERMEDICS INC, DEF 14A, 1998-04-29

THERMEDICS INC
DEF 14A, 1998-04-29
MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT

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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

THERMEDICS INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)

THERMEDICS INC.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (check the appropriate box):

[X] No fee required

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

________________________________________________________________________

(2) Aggregate number of securities to which transaction applies:

________________________________________________________________________

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

________________________________________________________________________

(4) Proposed maximum aggregate value of transaction:

________________________________________________________________________

(5) Total fee paid:

________________________________________________________________________

[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

________________________________________________________________________

(2) Form, Schedule or Registration Statement No.:

________________________________________________________________________

(3) Filing Party:

________________________________________________________________________

(4) Date Filed:

________________________________________________________________________
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THERMEDICS INC.

470 Wildwood Street
Post Office Box 2999
Woburn, MA 01888-1799

April 23, 1998

Dear Stockholder:

The enclosed Notice calls the 1998 Annual Meeting of the Stockholders of
Thermedics Inc. We respectfully request that all Stockholders attend this
meeting, if possible.

Our Annual Report for the year ended January 3, 1998, is enclosed. We hope
you will read it carefully. Feel free to forward any questions you may have if
you are unable to be present at the meeting.

Enclosed with this letter is a proxy authorizing three officers of the
Corporation to vote your shares for you if you do not attend the meeting.
Whether or not you are able to attend the meeting, we urge you to complete your
proxy and return it to our transfer agent, Bank Boston, N.A., in the enclosed
addressed, postage-paid envelope, as a quorum of the Stockholders must be
present at the meeting, either in person or by proxy.

We would appreciate your immediate attention to the mailing of this proxy.

Yours very truly,

JOHN W. WOOD JR.
Chairman of the Board

JOHN T. KEISER
President
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THERMEDICS INC.
470 Wildwood Street
Post Office Box 2999
Woburn, Massachusetts 01888-1799

April 23, 1998

To the Holders of the Common Stock of
THERMEDICS INC.

NOTICE OF ANNUAL MEETING

The 1998 Annual Meeting of the Stockholders of Thermedics Inc. (the
"Corporation") will be held on Monday, June 1, 1998, at 1:30 p.m. at The Hyatt
Regency Scottsdale Resort at Gainey Ranch, 7500 East Doubletree Ranch Road,
Scottsdale, Arizona, 85258. The purpose of the meeting is to consider and take
action upon the following matters:

1. Election of seven directors.

2. Such other business as may properly be brought before the meeting and
any adjournment thereof.

The transfer books of the Corporation will not be closed prior to the
meeting, but, pursuant to appropriate action by the board of directors, the
record date for the determination of the Stockholders entitled to receive notice
of and to vote at the meeting is April 3, 1998.

The By-laws require that the holders of a majority of the stock issued and
outstanding and entitled to vote be present or represented by proxy at the
meeting in order to constitute a quorum for the transaction of business. It is
important that your shares be represented at the meeting regardless of the
number of shares you may hold. Whether or not you are able to be present in
person, please sign and return promptly the enclosed proxy in the accompanying
envelope, which requires no postage if mailed in the United States.

This Notice, the proxy and proxy statement enclosed herewith are sent to
you by order of the board of directors.

SANDRA L. LAMBERT
Clerk
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PROXY STATEMENT

The enclosed proxy is solicited by the board of directors of Thermedics
Inc. (the "Corporation") for use at the 1998 Annual Meeting of the Stockholders
(the "Meeting") to be held on Monday, June 1, 1998, at 1:30 p.m. at The Hyatt
Regency Scottsdale Resort at Gainey Ranch, Scottsdale, Arizona, and any
adjournment thereof. The mailing address of the executive office of the
Corporation is 470 Wildwood Street, P.O. Box 2999, Woburn, Massachusetts 01888-
1799. This proxy statement and the enclosed proxy were first furnished to
Stockholders of the Corporation on or about April 29, 1998.

VOTING PROCEDURES

The board of directors intends to present to the Meeting the election of
seven directors, constituting the entire board of directors.

The representation in person or by proxy of a majority of the outstanding
shares of the common stock of the Corporation, $.10 par value, (the "Common
Stock") entitled to vote at the Meeting is necessary to provide a quorum for the
transaction of business at the Meeting. Shares can be voted only if the
Stockholder is present in person or is represented by returning a properly
signed proxy. Each Stockholder's vote is very important. Whether or not you plan
to attend the Meeting in person, please sign and promptly return the enclosed
proxy card, which requires no postage if mailed in the United States. All signed
and returned proxies will be counted toward establishing a quorum for the
Meeting, regardless of how the shares are voted.

Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted for the management nominees for directors and
as the individuals named as proxy holders on the proxy deem advisable on all
other matters as may properly come before the Meeting.

In order to be elected a director, a nominee must receive the affirmative
vote of a majority of the shares of Common Stock present and entitled to vote on
the election. Withholding authority to vote for a nominee for director will be
treated as shares present and entitled to vote and, for purposes of determining
the outcome of the vote, will have the same effect as a vote against the
nominee. With respect to the election of directors, broker "non-votes" will not
be treated as shares present and entitled to vote on a voting matter and will
have no effect on the outcome of the vote. A broker "non-vote" occurs when a
nominee holding shares for a beneficial holder does not have discretionary
voting power and does not receive voting instructions from the beneficial owner.

A Stockholder who returns a proxy may revoke it at any time before the
Stockholder's shares are voted at the Meeting by written notice to the Clerk of
the Corporation received prior to the Meeting, by executing and returning a
later dated proxy or by voting by ballot at the Meeting.

The outstanding stock of the Corporation entitled to vote (excluding shares
held in treasury by the Corporation) as of April 3, 1998, consisted of
36,792,977 shares of Common Stock. Only Stockholders of record at the close of
business on April 3, 1998, are entitled to vote at the Meeting. Each share is
entitled to one vote.

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PROPOSAL 1 -

ELECTION OF DIRECTORS

Seven directors are to be elected at the Meeting, each to hold office until
his successor is chosen and qualified or until his earlier resignation, death or
removal.

NOMINEES FOR DIRECTORS

Set forth below are the names of the persons nominated as directors, their
ages, their offices in the Corporation, if any, their principal occupation or
employment for the past five years, the length of their tenure as directors and
the names of other public companies in which such persons hold directorships.
Information regarding their beneficial ownership of the Common Stock of the
Corporation, its majority-owned subsidiaries, Thermo Cardiosystems Inc.,
Thermedics Detection Inc., Thermo Sentron Inc. and Thermo Voltek Corp., and of
its parent company, Thermo Electron Corporation ("Thermo Electron"), a provider
of diversified products and services for biomedical, instrument and
environmental markets, is reported under the caption "Stock Ownership." All of
the nominees are currently directors of the Corporation.

<TABLE>
<S> <C>
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PETER O. CRISP Mr. Crisp, 65, has been a director of the Corporation since 1983. Mr. Crisp was
a general partner of Venrock Associates, a venture capital investment firm, for
over five years until his retirement in September 1997. Mr. Crisp is also a
director of American Superconductor Corporation, Evans & Sutherland Computer
Corporation, Thermo Electron, Thermo Power Corporation, ThermoTrex Corporation
and United States Trust Corporation.
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PAUL F. FERRARI Mr. Ferrari, 67, has been a director of the Corporation since 1991. Since 1991,
he has been a consultant to various companies, including Thermo Electron and its
subsidiaries. Mr. Ferrari was a vice president of Thermo Electron from 1988
until his retirement at the end of 1990, its secretary from 1981 to 1990, and its
treasurer from 1967 to 1988. He served as the Corporation's clerk from 1983 to
1990 and its treasurer from 1983 to 1988. Mr. Ferrari is also a director of
General Scanning Inc. and ThermoTrex Corporation.
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GEORGE N. HATSOPOULOS Dr. Hatsopoulos, 71, has been a director of the Corporation since 1983. Dr.
Hatsopoulos has been the chairman of the board and chief executive officer of
Thermo Electron since he founded that company in 1956, and was president of
Thermo Electron from 1956 to January 1997. Dr. Hatsopoulos is also a director of
Photoelectron Corporation, Thermo Ecotek Corporation, Thermo Electron, Thermo
Fibertek Inc., Thermo Instrument Systems Inc., Thermo Optek Corporation,
ThermoQuest Corporation and ThermoTrex Corporation. Dr. Hatsopoulos is the
brother of Mr. John N. Hatsopoulos, a director, senior vice president and chief
financial officer of the Corporation.
- ---------------------------------------------------------------------------------------------------------------
JOHN N. HATSOPOULOS Mr. Hatsopoulos, 63, has been a director of the Corporation since March 1995.
Mr. Hatsopoulos was chairman of the board of the Corporation from March 1995 to
March 1998. He has served as the Corporation's chief financial officer since
1988 and its senior vice president since December 1997. He was a vice president
of the Corporation from 1986 through December 1997. Mr. Hatsopoulos has been the
president and the chief financial officer of Thermo Electron since January 1997
and 1988, respectively, and was an executive vice president of Thermo Electron
from 1986 to January 1997. Mr. Hatsopoulos is also a director of LOIS/USA Inc.,
ONIX Systems Inc., Thermo Ecotek Corporation, Thermo Fibertek Inc., Thermo
Instrument Systems Inc., Thermo Power Corporation, Thermo TerraTech Inc. and
ThermoTrex Corporation. Mr. Hatsopoulos is the brother of Dr. George N.
Hatsopoulos, a director of the Corporation.
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</TABLE>

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<TABLE>
<S> <C>
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JOHN T. KEISER Mr. Keiser, 62, has been a director of the Corporation since April 1997. Mr.
Keiser was promoted to the position of president of the Corporation in March
1998, and was a senior vice president of the Corporation from 1994 until his
promotion. He has also been the president of Thermo Biomedical Inc., a wholly
owned subsidiary of Thermo Electron, a manufacturer of medical equipment and
instruments, since 1994. Mr. Keiser was president of the Eberline Instrument
division of Thermo Instrument Systems Inc., a majority-owned subsidiary of Thermo
Electron, from 1985 to July 1994. The Eberline Instrument division manufactures
radiation detection and counting instrumentation and radiation monitoring
systems. Mr. Keiser is also a director of Metrika Systems Corporation,
Thermedics Detection Inc. and Thermo Cardiosystems Inc.
- ---------------------------------------------------------------------------------------------------------------
JOHN W. WOOD JR. Mr. Wood, 54, has been a director of the Corporation since 1984 and chairman of
the board since March 1998. Mr. Wood has been a senior vice president of Thermo
Electron since December 1995, and, prior to that promotion, was a vice president
of Thermo Electron from September 1994 to December 1995. Mr. Wood was president
and chief executive officer of the Corporation from 1984 to March 1998. Mr. Wood
is also a director of Thermedics Detection Inc., Thermo Cardiosystems Inc.,
Thermo Sentron Inc. and Thermo Voltek Corp.
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NICHOLAS T. ZERVAS Dr. Zervas, 69, has been a director of the Corporation since 1987. Dr. Zervas
has been Chief of Neurosurgical Service, Massachusetts General Hospital, since
1977. Dr. Zervas is also a director of Thermo Cardiosystems Inc., ThermoLase
Corporation and ThermoTrex Corporation.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS

The board of directors has established an audit committee and a human
resources committee, each consisting solely of outside directors. The present
members of the audit committee are Mr. Ferrari (Chairman), Mr. Crisp and Dr.
Zervas. The audit committee reviews the scope of the audit with the
Corporation's independent public accountants and meets with them for the purpose
of reviewing the results of the audit subsequent to its completion. The present
members of the human resources committee are Mr. Crisp (Chairman) and Dr.
Zervas. The human resources committee reviews the performance of senior members
of management, approves executive compensation and administers the Corporation's
stock option and other stock-based compensation plans. The Corporation does not
have a nominating committee of the board of directors. The board of directors
met nine times, the audit committee met twice and the human resources committee
met four times during fiscal 1997. Each director attended at least 75% of all
meetings of the board of directors and committees on which he served held during
fiscal 1997.

COMPENSATION OF DIRECTORS

CASH COMPENSATION

Directors who are not employees of the Corporation, of Thermo Electron or
of any other companies affiliated with Thermo Electron (also referred to as
"outside directors") receive an annual retainer of $4,000 and a fee of $1,000
per day for attending regular meetings of the board of directors and $500 per
day for participating in meetings of the board of directors held by means of
conference telephone and for participating in certain meetings of committees of
the board of directors. Payment of directors' fees is made quarterly. Dr. G.
Hatsopoulos, Mr. J. Hatsopoulos, Mr. Keiser and Mr. Wood are all employees of
Thermo Electron or its subsidiaries and do not receive any cash compensation
from the Corporation for their services as directors. Directors are also
reimbursed for out-of-pocket expenses incurred in attending such meetings.

DEFERRED COMPENSATION PLAN

Under the Corporation's deferred compensation plan for directors (the
"Deferred Compensation Plan"), a director has the right to defer receipt of his
cash fees until he ceases to serve as a director, dies or retires from his
principal occupation. In the event of a change in control or proposed change in
control of the Corporation that is not approved by the board of directors,
deferred amounts become payable immediately. Either of the following is

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deemed to be a change of control: (a) the acquisition, without the prior
approval of the board of directors, directly or indirectly, by any person of 50%
or more of the outstanding Common Stock or 25% or more of the outstanding common
stock of Thermo Electron; or (b) the failure of the persons serving on the board
of directors immediately prior to any contested election of directors or any
exchange offer or tender offer for the Common Stock or the common stock of
Thermo Electron to constitute a majority of the board of directors at any time
within two years following any such event. Amounts deferred pursuant to the
Deferred Compensation Plan are valued at the end of each quarter as units of the
Corporation's Common Stock. When payable, amounts deferred may be disbursed
solely in shares of Common Stock accumulated under the Deferred Compensation
Plan. A total of 30,000 shares of Common Stock have been reserved for issuance
under the Deferred Compensation Plan. As of March 1, 1998, deferred units equal
to 18,705.36 shares of Common Stock were accumulated under the Deferred
Compensation Plan.

DIRECTORS STOCK OPTION PLAN

The Corporation's directors stock option plan (the "Directors Plan")
provides for the grant of stock options to purchase shares of common stock of
the Corporation and its majority-owned subsidiaries to outside directors as
additional compensation for their service as directors. Under the Directors
Plan, outside directors are automatically granted options to purchase 1,000
shares of the Common Stock annually. In addition, the Directors Plan provides
for the automatic grant every five years of options to purchase 1,500 shares of
the common stock of a majority-owned subsidiary of the Corporation that is "spun
out" to outside investors.

Pursuant to the Directors Plan, outside directors receive an annual grant
of options to purchase 1,000 shares of Common Stock at the close of business on
the date of each Annual Meeting of the Stockholders of the Corporation. Options
evidencing annual grants may be exercised at any time from and after the six-
month anniversary of the grant date of the option and prior to the expiration of
the option on the third anniversary of the grant date. Shares acquired upon
exercise of the options are subject to repurchase by the Corporation at the
exercise price if the recipient ceases to serve as a director of the Corporation
or any other Thermo Electron company prior to the first anniversary of the grant
date.

In addition, under the Directors Plan, outside directors are automatically
granted every five years options to purchase 1,500 shares of common stock of
each majority-owned subsidiary of the Corporation that is "spun out" to outside
investors. The grant occurs on the close of business on the date of the first
Annual Meeting of the Stockholders next following the subsidiary's spinout,
which is the first to occur of either an initial public offering of the
subsidiary's common stock or a sale of such stock to third parties in an arms-
length transaction, and also as of the close of business on the date of every
fifth Annual Meeting of the Stockholders of the Corporation that occurs
thereafter during the duration of the Plan. The options granted vest and become
exercisable on the fourth anniversary of the date of grant, unless prior to such
date the subsidiary's common stock is registered under Section 12 of the
Securities Exchange Act of 1934, as amended ("Section 12 Registration"). In the
event that the effective date of Section 12 Registration occurs before the
fourth anniversary of the grant date, the option will become immediately
exercisable and the shares acquired upon exercise will be subject to
restrictions on transfer and the right of the Corporation to repurchase such
shares at the exercise price in the event the director ceases to serve as a
director of the Corporation or any other Thermo Electron company. In the event
of Section 12 Registration, the restrictions and repurchase rights shall lapse
or be deemed to lapse at the rate of 25% per year, starting with the first
anniversary of the grant date. These options expire after five years.

The exercise price for options granted under the Directors Plan is the
average of the closing prices of the common stock as reported on the American
Stock Exchange (or other principal market on which the common stock is then
traded) for the five trading days immediately preceding and including the date
of grant, or, if the shares are not then traded, at the last price per share
paid by third parties in an arms-length transaction prior to the option grant.
As of March 1, 1998, options to purchase 29,700 shares of Common Stock were
outstanding under the Directors Plan, no options had lapsed or been exercised,
and options to purchase 7,800 shares of Common Stock were available for future
grant.

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STOCK OWNERSHIP POLICIES FOR DIRECTORS

During 1996, the human resources committee of the board of directors (the
"Committee") established a stock holding policy for directors. The stock
holding policy requires each director to hold a minimum of 1,000 shares of
Common Stock. Directors are requested to achieve this ownership level by the
1998 Annual Meeting of Stockholders. The chief executive officer of the
Corporation is required to comply with a separate stock holding policy
established by the Committee in 1996, which is described in "Committee Report on
Executive Compensation - Stock Ownership Policies."

In addition, the Committee adopted a policy requiring directors to hold
shares of the Corporation's Common Stock equal to one-half of their net option
exercises over a period of five years. The net option exercise is determined by
calculating the number of shares acquired upon exercise of a stock option, after
deducting the number of shares that could have been traded to exercise the
option and the number of shares that could have been surrendered to satisfy tax
withholding obligations attributable to the exercise of the option. This policy
is also applicable to executive officers and is described in "Committee Report
on Executive Compensation - Stock Ownership Policies."

STOCK OWNERSHIP

The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermo Electron, the Corporation's parent company,
and of Thermedics Detection Inc. ("Thermedics Detection"), Thermo Cardiosystems
Inc. ("Thermo Cardiosystems"), Thermo Sentron Inc. ("Thermo Sentron") and Thermo
Voltek Corp. ("Thermo Voltek"), each a publicly traded majority-owned subsidiary
of the Corporation, as of March 1, 1998, with respect to (i) each director, (ii)
each executive officer named in the summary compensation table under the heading
"Executive Compensation" and (iii) all directors and current executive officers
as a group. In addition, the following table sets forth the beneficial
ownership of Common Stock, as of March 1, 1998, with respect to each person who
was known by the Corporation to own beneficially more than 5% of the outstanding
shares of Common Stock.

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

<TABLE>
<CAPTION>
THERMO THERMEDICS THERMO THERMO THERMO
THERMEDICS ELECTRON DETECTION CARDIOSYSTEMS SENTRON VOLTEK
NAME (1) INC. (2) CORPORATION (3) INC. (4) INC. (5) INC. (6) CORP. (7)
-------- ---------- --------------- ---------- ------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Thermo Electron Corporation (8) 21,224,090 -- -- -- -- --
The Capital Group Companies, Inc. (9) 1,900,000 -- -- -- -- --
Peter O. Crisp 35,602 100,644 1,500 24,750 1,500 2,250
Paul F. Ferrari 16,457 17,229 1,500 11,500 1,500 5,998
David H. Fine 115,487 70,814 101,667 207 7,500 0
George N. Hatsopoulos 63,681 3,423,423 21,197 11,599 17,000 0
John N. Hatsopoulos 64,630 681,072 21,262 432 41,900 7,668
John T. Keiser 21,093 175,283 2,000 35,750 7,500 0
Jeffrey L. Langan 0 300 10,000 50 0 0
Victor L. Poirier 71,195 51,398 3,333 201,127 7,500 0
John W. Wood Jr. 188,406 272,157 47,854 60,332 33,400 96,971
Nicholas T. Zervas 27,873 0 1,500 48,418 1,500 2,250
All directors and current executive
officers as a group (10 persons) 624,784 4,923,775 206,913 396,104 124,300 125,137

</TABLE>

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(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for
the benefit of minor children, and all share ownership includes sole voting
and investment power.

(2) Shares of the Common Stock beneficially owned by Mr. Crisp, Mr. Ferrari,
Dr. Fine, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Keiser, Mr. Poirier,
Mr. Wood, Dr. Zervas and all directors and current executive officers as a
group include 10,050, 10,000, 91,100, 50,000, 50,000, 17,300, 30,100,
130,700, 9,650 and 417,900 shares, respectively, that such person or group
has the right to acquire within 60 days of March 1, 1998, through the
exercise of stock options. Shares beneficially owned by Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos and all directors and current executive officers as a
group include 1,635, 1,737 and 4,666 full shares, respectively, allocated
through March 1, 1998, to their respective accounts maintained pursuant to
Thermo Electron's employee stock ownership plan (the "ESOP"), of which the
trustees, who have investment power over its assets, are executive officers
of Thermo Electron. Shares beneficially owned by Mr. Crisp, Dr. Zervas and
all directors and current executive officers as a group include 7,447,
7,723, and 15,170 full shares, respectively, that had been allocated
through March 1, 1998, to their respective accounts maintained under the
Corporation's deferred compensation plan for directors. Shares
beneficially owned by Dr. G. Hatsopoulos include 562 shares held by Dr. G.
Hatsopoulos' spouse and 92 shares allocated to his spouse's account
maintained pursuant to the ESOP. Shares beneficially owned by Mr. Wood
include 2,600 shares held in custodial accounts for the benefit of two
minor children. No director or executive officer beneficially owned more
than 1% of the Common Stock outstanding as of March 1, 1998; all directors
and current executive officers as a group beneficially owned 1.7% of the
Common Stock outstanding as of such date.

(3) Shares of the common stock of Thermo Electron beneficially owned by Mr.
Crisp, Dr. Fine, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Keiser, Mr.
Poirier, Mr. Wood and all directors and current executive officers as a
group include 10,375, 53,012, 1,649,500, 615,435, 134,397, 46,250, 230,458
and 2,879,464 shares, respectively, that such person or group has the right
to acquire within 60 days of March 1, 1998, through the exercise of stock
options. Shares beneficially owned by Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos and all directors and current executive officers as a group
include 2,266, 2,036 and 5,728 full shares, respectively, allocated to
their respective accounts maintained pursuant to the ESOP. Shares
beneficially owned by Mr. Crisp and all directors and current executive
officers as a group include 45,625 full shares allocated through March 1,
1998, to Mr. Crisp's account maintained pursuant to Thermo Electron's
deferred compensation plan for directors. Shares beneficially owned by Mr.
Ferrari include 10,062 shares held by his spouse. Shares beneficially
owned by Dr. G. Hatsopoulos include 89,601 shares held by his spouse,
168,750 shares held by a QTIP trust of which his spouse is a trustee,
39,937 shares held by a family trust of which his spouse is the trustee,
4,000 shares held by a second family trust of which Dr. Elias P.
Gyftopoulos is a trustee and 153 shares allocated to his spouse's account
maintained pursuant to the ESOP. Shares beneficially owned by Dr. G.
Hatsopoulos also include 50,000 shares that a family trust, of which Dr. G.
Hatsopoulos' spouse is the trustee, has the right to acquire within 60 days
of March 1, 1998, through the exercise of stock options. Except for Dr.
Hatsopoulos, who beneficially owned 2.1% of the Thermo Electron common
stock outstanding as of March 1, 1998, no director or executive officer
beneficially owned more than 1% of such common stock outstanding as of such
date; all directors and current executive officers as a group beneficially
owned approximately 3.1% of the Thermo Electron common stock outstanding as
of March 1, 1998.

(4) Shares of the common stock of Thermedics Detection beneficially owned by
Mr. Crisp, Mr. Ferrari, Dr. Fine, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos,
Mr. Keiser, Mr. Poirier, Mr. Wood, Dr. Zervas and all directors and current
executive officers as a group include 1,500, 1,500, 91,667, 20,000, 20,000,
2,000, 3,333, 43,333, 1,500 and 189,833 shares, respectively, that such
person or group has the right to acquire within 60 days of March 1, 1998,
through the exercise of stock options. Shares beneficially owned by Dr. G.
Hatsopoulos include 57 shares held by his spouse. No director or executive
officer beneficially owned more than 1% of the Thermedics Detection common
stock outstanding as of March 1, 1998; all directors and current executive
officers as a group beneficially owned approximately 1.5% of such common
stock outstanding as of such date.

(5) Shares of the common stock of Thermo Cardiosystems beneficially owned by
Mr. Crisp, Mr. Ferrari, Mr. Keiser, Mr. Poirier, Mr. Wood, Dr. Zervas and
all directors and current executive officers as a group include 24,750,
2,250, 35,750, 158,750, 53,450, 13,700 and 288,650 shares, respectively,
that such person or group has the right to acquire within 60 days of March
1, 1998, through the exercise of stock options.

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Shares beneficially owned by Dr. Zervas and all directors and current
executive officers as a group include 7,268 shares allocated through March
1, 1998, to Dr. Zervas' account maintained pursuant to Thermo
Cardiosystems' deferred compensation plan for directors. Shares
beneficially owned by Mr. Wood include 1,122 shares held in custodial
accounts for the benefit of for two minor children. Shares beneficially
owned by Dr. Zervas include 19,000 shares held by his spouse. No director
or executive officer beneficially owned more than 1% of the Thermo
Cardiosystems common stock outstanding as of March 1, 1998; all directors
and current executive officers as a group beneficially owned approximately
1.0% of such common stock outstanding on such date.

(6) Shares of the common stock of Thermo Sentron beneficially owned by Mr.
Crisp, Mr. Ferrari, Dr. Fine, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr.
Keiser, Mr. Poirier, Mr. Wood, Dr. Zervas and all directors and current
executive officers as a group include 1,500, 1,500, 7,500, 15,000, 15,000,
7,500, 7,500, 30,400, 1,500 and 92,400 shares, respectively, that such
person or group has the right to acquire within 60 days of March 1, 1998,
through the exercise of stock options. No director or executive officer
beneficially owned more than 1% of the Thermo Sentron common stock
outstanding as of March 1, 1998; all directors and current executive
officers as a group beneficially owned approximately 1.3% of such common
stock outstanding as of such date.

(7) Shares of the common stock of Thermo Voltek beneficially owned by Mr.
Crisp, Mr. Ferrari, Mr. Wood, Dr. Zervas and all directors and current
executive officers as a group include 2,250, 2,250, 82,350, 2,250 and
89,100 shares, respectively, that such person or group has the right to
acquire within 60 days of March 1, 1998, through the exercise of stock
options. The directors and current executive officers as a group
beneficially owned 1.4% of the Thermo Voltek common stock outstanding as of
March 1, 1998.

(8) Shares of the Common Stock beneficially owned by Thermo Electron include
82,619 shares of Common Stock issuable upon conversion of certain
convertible notes of the Corporation held by Thermo Electron. Thermo
Electron beneficially owned approximately 57.6% of the Common Stock
outstanding as of March 1, 1998. Thermo Electron's address is 81 Wyman
Street, Waltham, Massachusetts 02254-9046.

(9) Information regarding the number of shares of the Common Stock beneficially
owned by The Capital Group Companies, Inc. is based on the most recent
Schedule 13G of The Capital Group Companies Inc. received by the
Corporation, which reported such ownership as of December 31, 1997. The
address of The Capital Group Companies, Inc. is 333 South Hope Street, Los
Angeles, California 90071. As of December 31, 1997, The Capital Group
Companies, Inc. beneficially owned approximately 5.2% of the outstanding
Common Stock.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and beneficial owners of more
than 10% of the Common Stock, such as Thermo Electron, to file with the
Securities and Exchange Commission initial reports of ownership and periodic
reports of changes in ownership of the Corporation's securities. Based upon a
review of such filings, all Section 16(a) filing requirements applicable to such
persons were compiled during 1997, except in the following instances. Thermo
Electron filed four Forms 4 late, reporting a total of 42 transactions,
including 33 open market purchases of shares of Common Stock and seven
transactions associated with the grant and exercise of options to purchase
Common Stock granted to employees under its stock option program.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table summarizes compensation for services to the Corporation
in all capacities awarded to, earned by or paid to the Corporation's chief
executive officer and its four other most highly compensated executive officers
for the last three fiscal years.

7
<PAGE>

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

SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES UNDERLYING
NAME AND FISCAL ------------------- OPTIONS (No. OF SHARES ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AND COMPANY) (1) COMPENSATION (2)
------------------ ------ ------ ----- ----------------------- ----------------
<S> <C> <C> <C> <C> <C>
John W. Wood Jr. (3) 1997 $132,000 $97,200 5,200 (TMD) $7,125
President and 20,000 (TDX)
Chief Executive Officer 20,000 (TCA)
400 (TSR)
2,100 (TVL)
1996 $117,000 $103,200 5,400 (TMD) $6,750
30,000 (TSR)
2,100 (TVL)
1995 $108,000 $96,000 4,900 (TMD) $6,750
3,450 (TCA)
1,350 (TVL)
- ------------------------------------------------------------------------------------------------------------
John T. Keiser (4) 1997 $3,875 $4,000 800 (TMD) $7,125
Senior Vice President 20,000 (TCA)
1996 $14,500 $13,000 800 (TMD) $6,750
3,750 (TMO)
7,500 (TSR)
20,000 (TXM)
1995 $13,700 $9,100 700 (TMD) $7,764
10,950 (TMO)
- ------------------------------------------------------------------------------------------------------------

</TABLE>

8
<PAGE>

SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------
LONG TERM
COMPENSATION
------------
SECURITIES UNDERLYING
NAME AND FISCAL ANNUAL COMPENSATION OPTIONS (NO. OF SHARES ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AND COMPANY) (1) COMPENSATION (2)
------------------ ------ ------ ----- ----------------------- ----------------
<S> <C> <C> <C> <C> <C>
Victor L. Poirier 1997 $160,000 $108,000 3,600 (TMD) $7,125
Senior Vice President 800 (TMO)
34,500 (TCA)
1996 $150,000 $164,500 4,000 (TMD) $6,750
900 (TMO)
4,500 (TCA)
2,000 (TBA)
2,000 (TFG)
2,000 (TLT)
6,000 (TOC)
6,000 (TMQ)
7,500 (TSR)
4,000 (TXM)
1995 $141,000 $113,000 15,750 (TMO) $6,750
5,550 (TCA)
5,000 (TLZ)
- ------------------------------------------------------------------------------------------------------------------
David H. Fine (5) 1997 $134,000 $78,800 3,500 (TMD) $7,200
Vice President 1,900 (TMO)
30,000 (TDX)
15,000 (TLZ)
1996 $128,000 $45,000 3,000 (TMD) $6,603
1,950 (TMO)
20,000 (TDX)
30,000 (TLZ)
7,500 (TSR)
1995 $124,000 $23,500 2,500 (TMD) $6,750
1,500 (TMO)
- ----------------------------------------------------------------------------------------------------------------
Jeffrey J. Langan (6) 1997 $153,085 $0 15,000 (TMD) $6,588 (7)
Former Vice President 20,100 (TMO)
50,000 (TDX)
10,000 TCA)
20,000 (TLZ)
10,000 (TSR)
10,000 (TVL)
1996 $165,000 $100,000 75,000 (TMD) $4,463
15,000 (TMO)
50,000 (TDX)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

9
<PAGE>

(1) In addition to grants of options to purchase Common Stock of the
Corporation (designated in the table as TMD), executive officers of the
Corporation have been granted options to purchase common stock of Thermo
Electron and certain of its other subsidiaries as part of Thermo Electron's
stock option program. Options have been granted during the last three
fiscal years to the chief executive officer and the other named executive
officers in the following Thermo Electron companies: Thermo Electron
(designated in the table as TMO), Thermedics Detection Inc. (designated in
the table as TDX), Thermo BioAnalysis Corporation (designated in the table
as TBA), Thermo Cardiosystems Inc. (designated in the table as TCA), Thermo
Fibergen Inc. (designated in the table as TFG), ThermoLase Corporation
(designated in the table as TLZ), ThermoLyte Corporation (designated in the
table as TLT), Thermo Optek Corporation (designated in the table as TOC),
ThermoQuest Corporation (designated in the table as TMQ), Thermo Sentron
Inc. (designated in the table as TSR), Thermo Voltek Corp. (designated in
the table as TVL) and Trex Medical Corporation (designated in the table as
TXM).

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

(3) During the three-year period reported, Mr. Wood provided services in
different capacities to the Corporation and its parent company, Thermo
Electron. Mr. Wood is a senior vice president of Thermo Electron and the
chairman and chief executive officer of Thermo Voltek, and served as the
president and chief executive officer of the Corporation until March 5,
1998, when he was named chairman of the board. A portion of Mr. Wood's
annual cash compensation (salary and bonus) has been paid by Thermo
Electron in each of the last three fiscal years as compensation for the
services provided to Thermo Electron based on the time he devoted to his
responsibilities as a senior vice president of Thermo Electron. The annual
cash compensation (salary and bonus) reported in the table for Mr. Wood
represents the amount paid by the Corporation and its subsidiaries for Mr.
Wood's services as chief executive officer of the Corporation and as chief
executive officer of Thermo Voltek. For each of 1997, 1996 and 1995, 50%
of Mr. Wood's annual cash compensation (salary and bonus) was paid by the
Corporation for his service as the Corporation's chief executive officer,
and an additional 10% of Mr. Wood's annual cash compensation was paid by
Thermo Voltek in each of these years for Mr. Wood's service as its chief
executive officer. The options reported in the table have been granted by
the Corporation or its majority-owned subsidiaries to Mr. Wood as
compensation for his services as the Corporation's chief executive officer
or as a director of its subsidiaries. Mr. Wood was appointed a vice
president of Thermo Electron on September 2, 1994, and currently serves as
a senior vice president, and from time to time after that date has been,
and in the future may be, granted options to purchase common stock of
Thermo Electron and its subsidiaries other than the Corporation. These
options are not reported in the table as they are granted as compensation
for service to such other Thermo Electron companies in capacities other
than in his capacity as chief executive officer of the Corporation.

(4) During the three-year period reported, Mr. Keiser provided services in
different capacities to the Corporation and its parent company, Thermo
Electron. Mr. Keiser was appointed a vice president of Thermo Electron on
April 17, 1997 and was appointed president of the Corporation on March 5,
1998. Prior to that time, he served as a senior vice president from July
28, 1994 through March 5, 1998, and since July 1, 1994, has also served as
the president of the Thermo Biomedical Inc., a majority-owned subsidiary of
Thermo Electron. Prior to July 1, 1994, he served as a vice president of
Thermo Instrument Systems Inc., another majority-owned subsidiary of Thermo
Electron. A portion of Mr. Keiser's annual cash compensation (salary and
bonus) has been paid by Thermo Electron in each of the last three fiscal
years as compensation for the services provided to Thermo Electron based on
the time he devoted to his responsibilities as president of Thermo
Biomedical and vice president of Thermo Electron. The annual cash
compensation (salary and bonus) reported in the table for Mr. Keiser
represents the amount paid by the Corporation for Mr. Keiser's services as
a senior vice president of the Corporation. For the first three months of
1997, and for all of 1996 and 1995, 10% of Mr. Keiser's annual cash
compensation (salary and bonus) was paid by the Corporation for his service
as a senior vice president of the Corporation. The

10
<PAGE>

options reported in the table have been granted by the Corporation or its
majority-owned subsidiaries to Mr. Keiser as compensation for his services
as the Corporation's chief executive officer or as a director of its
subsidiaries.

(5) In addition to his services to the Corporation, Dr. Fine also served as
interim director of research for ThermoLase Corporation, an indirect
subsidiary of Thermo Electron, for portions of fiscal 1997 and 1996. For
1997 and 1996, 35% and 14%, respectively, of Dr. Fine's annual cash
compensation (salary and bonus) was paid by ThermoLase Corporation. Salary
and bonus reported in the table for Dr. Fine for fiscal 1997 and 1996
include salary in the amounts of $46,900 and $17,920, respectively, and
bonus in the amounts of $27,580 and $6,300, respectively, paid to Dr. Fine
by ThermoLase Corporation for his services to that company. Options to
purchase shares of the common stock of ThermoLase received by Dr. Fine in
fiscal 1997 and 1996 were awarded in connection with his services to
ThermoLase.

(6) Mr. Langan was appointed a vice president of the Corporation on September
11, 1996 and resigned from that position on November 10, 1997.

(7) In addition to a $5,215 matching contribution referred to in footnote (2),
this amount includes $1,373, representing the then market value of 45
shares of Thermo Electron common stock received by Mr. Langan in March 1998
at Thermo Electron's annual management conference in recognition of his
managerial achievements.

STOCK OPTIONS GRANTED DURING FISCAL 1997

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

11
<PAGE>

OPTION GRANTS IN FISCAL 1997
- ------------------------------------------------------------------------------------------------------------------------------------

POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF STOCK
TOTAL OPTIONS PRICE APPRECIATION FOR
NUMBER OF SECURITIES GRANTED TO EXERCISE OPTION TERM (2)
UNDERLYING OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ------------------------
NAME GRANTED (1) FISCAL YEAR SHARE DATE 5% 10%
---- ----------- ----------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
John W. Wood Jr. (3) 5,200 (TMD) 2.40% $19.03 3/20/00 $15,600 $32,760
20,000 (TDX) 3.(4) $11.99 5/23/09 $190,800 $512,800
20,000 (TCA) 2.(4) $27.60 6/17/09 $439,400 $1,180,400
400 (TSR) 0.(4) $9.80 3/19/00 $616 $1,296
2,100 (TVL) 0.(4) $10.28 3/13/00 $3,402 $7,140
- ----------------------------------------------------------------------------------------------------------------------
John T. Keiser (5) 800 (TMD) 0.40% $19.03 3/20/00 $2,400 $5,040
20,000 (TCA) 2.(4) $27.60 6/17/09 $439,400 $1,180,400
- ----------------------------------------------------------------------------------------------------------------------
Victor L. Poirier 3,600 (TMD) 1.70% $19.03 3/20/00 $10,800 $22,680
800 (TMO) 0.(4) $34.20 6/3/00 $4,312 $9,056
4,500 (TCA) 0.(4) $26.48 3/13/00 $18,765 $39,420
30,000 (TCA) 3.(4) $27.60 6/17/09 $659,100 $1,770,600
- ----------------------------------------------------------------------------------------------------------------------
David H. Fine 3,500 (TMD) 1.60% $19.03 3/20/00 $10,500 $22,050
1,900 (TMO) 0.(4) $34.20 6/3/00 $10,241 $21,508
30,000 (TDX) 5.(4) $11.99 5/23/09 $286,200 $769,200
15,000 (TLZ) 2.(4) $13.65 3/5/09 $162,900 $437,850
- ----------------------------------------------------------------------------------------------------------------------
Jeffrey J. Langan 15,000 (TMD) 7.00% $19.03 3/20/09 $0 $0
20,000 (TMO) 1.(4) $34.20 6/3/09 $0 $0
100 (TMO) 0.(4) $34.20 6/3/00 $0 $0
50,000 (TDX) 9.(4) $11.99 5/23/09 $0 $0
10,000 (TCA) 1.(4) $21.21 7/22/09 $0 $0
20,000 (TLZ) 3.(4) $17.10 9/19/09 $0 $0
10,000 (TSR) 4.(4) $11.43 7/22/09 $0 $0
10,000 (TVL) 4.(4) $6.13 7/22/09 $0 $0
- ----------------------------------------------------------------------------------------------------------------------

</TABLE>

(1) All of the options granted during the fiscal year are immediately
exercisable as of the end of the fiscal year. In all cases, the shares
acquired upon exercise are subject to repurchase by the granting
corporation at the exercise price if the optionee ceases to be employed by
the granting corporation or any other Thermo Electron company. The granting
corporation may exercise its repurchase rights within six months after the
termination of the optionee's employment. The repurchase rights generally
lapse ratably over a five- to ten-year period, depending on the option
term, which may vary from seven to twelve years, provided that the optionee
continues to be employed by the granting corporation or another Thermo
Electron company. Certain options have three-year terms and the repurchase
rights lapse in their entirety on the second 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.

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

12
<PAGE>

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.

(3) Mr. Wood was appointed a vice president of Thermo Electron on September 2,
1994, and currently serves as a senior vice president, and from time to
time after that date has been, and in the future may be, granted options to
purchase common stock of Thermo Electron and its subsidiaries other than
the Corporation. These options are not reported in the table as they are
granted as compensation for services provided to such other Thermo Electron
companies in capacities other than in his capacity as president of the
Corporation.

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

(5) Mr. Keiser has served as a vice president of Thermo Electron since April
17, 1997, and as president of the Thermo Biomedical group since July 1,
1994. From time to time after July 1, 1994, he has been, and in the future
may be, granted options to purchase common stock of Thermo Electron and its
subsidiaries other than the Corporation. These options are not reported in
the table as they are granted as compensation for service to such other
Thermo Electron companies in capacities other than in his capacity as
senior vice president of the Corporation.

STOCK OPTIONS EXERCISED DURING FISCAL 1997 AND FISCAL YEAR-END OPTION VALUES

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

13
<PAGE>

AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FISCAL 1997 YEAR-END OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------------------------

NUMBER OF
UNEXERCISED
SHARES OPTIONS AT FISCAL VALUE OF
ACQUIRED VALUE YEAR-END UNEXERCISED
ON REALIZED (EXERCISABLE/ IN-THE-MONEY
NAME COMPANY EXERCISE (1) UNEXERCISABLE) (2) OPTIONS
---- ------- -------- --- ------------------ ------------
<S> <C> <C> <C> <C> <C>
John W. Wood Jr. (3) Thermedics -- -- 130,700 /0 $362,415 /--
Thermedics Detection -- -- 43,333 /0 $167,718 /--
Thermo Cardiosystems -- -- 53,450 /0 $686,914 /--
Thermo Sentron -- -- 30,400 /0 $0 /--
Thermo Voltek -- -- 80,550 /0 $0 /--
- ------------------------------------------------------------------------------------------------------------------------------------

John T. Keiser (4) Thermedics -- -- 17,300 /0 $54,650 /--
Thermo Electron -- -- 35,625 /0 $573,915 /--
Thermo Cardiosystems -- -- 24,500 /0 $223,618 /--
Thermo Sentron -- -- 7,500 /0 $0 /--
- ------------------------------------------------------------------------------------------------------------------------------------

Victor L. Poirier Thermedics -- -- 30,100 /0 $213,743 /--
Thermo Electron -- -- 46,250 /0 (5) $911,987 /--
Thermedics Detection -- -- 3,333 /0 $23,958 /--
Thermo BioAnalysis -- -- 2,000 /0 $19,000 /--
Thermo Cardiosystems 300 $4,598 155,550 /0 $1,906,076 /--
Thermo Ecotek 3,750 $40,313 0 /0 -- /--
Thermo Fibergen -- -- 2,000 /0 $0 /--
Thermo Fibertek -- -- 4,500 /0 $41,346 /--
ThermoLase -- -- 5,000 /0 $0 /--
ThermoLyte -- -- 0 /2,000 -- /$0(6)
Thermo Optek -- -- 6,000 /0 $28,680 /--
ThermoQuest -- -- 6,000 /0 $30,000 /--
Thermo Sentron -- -- 7,500 /0 $0 /--
ThermoSpectra -- -- 500 /0 $32 /--
ThermoTrex 360 $7,241 0 /0 -- /--
Trex Medical -- -- 4,000 /0 $12,500 /--
- ------------------------------------------------------------------------------------------------------------------------------------

David H. Fine Thermedics -- -- 91,100 /0 $463,683 /--
Thermo Electron -- -- 56,537 /0(5) $1,260,597 /--
Thermedics Detection -- -- 91,667 /0 $299,502 /--
Thermo Cardiosystems 1,530 $42,037 0 /0 -- /--
Thermo Ecotek 1,500 $16,875 0 /0 -- /--
Thermo Fibertek -- -- 4,500 /0 $41,346 /--
ThermoLase -- -- 45,000 /0 $0 /--
Thermo Sentron -- -- 7,500 /0 $0 /--
ThermoSpectra -- -- 1,000 /0 $63 /--
- ------------------------------------------------------------------------------------------------------------------------------------

Jeffrey J. Langan (7) Thermedics -- -- 90,000 /0 $0 /--
Thermo Electron -- -- 35,100 /0 $186,629 /--
Thermedics Detection -- -- 100,000 /0 $9,400 /--
Thermo Cardiosystems -- -- 10,000 /0 $51,650 /--
ThermoLase -- -- 20,000 /0 $0 /--
Thermo Sentron -- -- 10,000 /0 $0 /--
Thermo Voltek -- -- 10,000 /0 $0 /--
- ------------------------------------------------------------------------------------------------------------------

</TABLE>

14
<PAGE>

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

(2) All of the options reported outstanding at the end of the fiscal year were
immediately exercisable as of the end of the fiscal year, except options to
purchase the common stock of ThermoLyte Corporation, which are not
exercisable until the earlier of (i) 90 days after the effective date of
the registration of the company's common stock under Section 12 of the
Exchange Act and (ii) nine years after the grant date. 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 any other 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 Corporation or another Thermo Electron
company. For companies whose shares are not publicly traded, the
repurchase rights lapse in their entirety on the ninth anniversary of the
grant date. Certain options have three-year terms and the repurchase
rights lapse in their entirety on the second anniversary of the grant date.
The granting corporation may permit the holder of options to exercise
options and to satisfy tax withholding obligations by surrendering shares
equal in fair market value to the exercise price or withholding obligation.

(3) Mr. Wood was appointed a vice president of Thermo Electron on September 2,
1994, and currently serves as a senior vice president, and holds options to
purchase common stock of Thermo Electron and its subsidiaries other than
the Corporation granted after that date. These options are not reported in
the table as they were granted as compensation for service to such other
Thermo Electron companies other than in his capacity as chief executive
officer of the Corporation.

(4) Mr. Keiser was appointed a vice president of Thermo Electron on April 17,
1997, and was appointed president of the Corporation on March 5, 1998.
Prior to that time, he served as a senior vice president from July 28, 1994
to March 5, 1998, and since July 1, 1994, has also served as the president
of Thermo Biomedical Inc., a subsidiary of Thermo Electron. Prior to July
1, 1994, he served as a vice president of Thermo Instrument Systems Inc.
and holds options to purchase common stock of Thermo Electron and its
subsidiaries other than the Corporation granted prior to that date. These
options are not reported in the table as they were granted as compensation
for service other than as an employee of the Corporation.

(5) Options to purchase 22,500 and 45,000 shares, respectively, of the common
stock of Thermo Electron granted to Messrs. Poirier and Fine, respectively,
are subject to the same terms as described in footnote (2), except that the
repurchase rights of the granting corporation generally do not lapse until
the tenth anniversary of the grant date. In the event of the employee's
death or involuntary termination prior to the tenth anniversary of the
grant date, the repurchase rights of the granting corporation shall be
deemed to have lapsed ratably over a five-year period commencing with the
fifth anniversary of the grant date.

(6) No public market existed for the shares underlying these options as of
January 3, 1998. Accordingly, no value in excess of the exercise price has
been attributed to these options.

(7) Mr. Langan resigned as president and chief executive officer on November
10, 1997.

SEVERANCE AGREEMENTS

In 1988, Thermo Electron entered into severance agreements with several of
its key employees, including key employees of the Corporation and other
majority-owned subsidiaries. These agreements provide severance benefits if
there is a change of control of Thermo Electron that is not approved by the
board of directors of Thermo Electron and the employee's employment with Thermo
Electron or the majority-owned subsidiary is terminated, for whatever reason,
within one year thereafter. For purposes of the agreement a change of control
exists upon (i) the acquisition of 50% or more of the outstanding common stock
of Thermo Electron by any person without the prior approval of the board of
directors of Thermo Electron, (ii) the failure of the board of directors of
Thermo Electron, within two years after any contested election of directors or
tender or exchange offer not approved by the board of

15
<PAGE>

directors, to be constituted of a majority of directors holding office prior to
such event or (iii) any other event that the board of directors of Thermo
Electron determines constitutes an effective change of control of Thermo
Electron. Each of the recipients of these agreements would receive a lump-sum
benefit at the time of a qualifying severance equal to the highest total cash
compensation paid to the employee by Thermo Electron or the majority-owned
subsidiary in any 12-month period during the three years preceding the severance
event. A qualifying severance exists (i) if the employment of the executive
officer is terminated for any reason within one year after a change in control
of Thermo Electron or (ii) a group of directors of Thermo Electron consisting of
directors of Thermo Electron on the date of the severance agreement or, if an
election contest or tender or exchange offer for Thermo Electron's common stock
has occurred, the directors of Thermo Electron immediately prior to such
election contest or tender or exchange offer, and any future directors who are
nominated or elected by such directors, determine that any other termination of
the executive officer's employment should be treated as a qualifying severance.
The benefits to be provided are limited so that the payments would not
constitute so-called "excess parachute payments" under applicable provisions of
the Internal Revenue Code of 1986. Assuming that severance benefits would have
been payable under these agreements as of January 3, 1998, Mr. Wood would have
received approximately $382,000.

COMMITTEE REPORT ON EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

All decisions on compensation for the Corporation's executive officers are
made by the human resources committee of the board of directors (the
"Committee"). In reviewing and establishing total cash compensation and stock-
based compensation for executives, the Committee follows guidelines established
by the human resources committee of the board of directors of its parent
company, Thermo Electron. The executive compensation program presently consists
of annual base salary ("salary"), short-term incentives in the form of annual
cash bonuses, and long-term incentives in the form of stock options
(collectively referred to as "total compensation").

The Committee believes that the total compensation of executive officers
should reflect the scope of their responsibilities, the success of the
Corporation, and the contributions of each executive to that success. In
addition, the Committee believes that base salaries should approximate the mid-
point of competitive salaries derived from market surveys and that short-term
and long-term incentive compensation should reflect the performance of the
Corporation and the contributions of each executive.

ESTABLISHING COMPETITIVENESS

External competitiveness is an important element of the Committee's
compensation policy. The competitiveness of the Corporation's total compensation
for its executives is assessed by comparing it to market data provided by
compensation consultants and by participating in annual executive compensation
surveys, primarily "Project 777," an executive compensation survey prepared by
Management Compensation Services, a division of Hewitt Associates. The majority
of firms represented in the Project 777 survey are included in the Standard &
Poor's 500 Index, but do not necessarily correspond to the companies included in
the Corporation's peer group index, the Dow Jones Total Return Index for the
Diversified Technology Industry Group.

Principles of internal equity are also central to the Committee's
compensation policies. Total compensation considered for the Corporation's
officers, whether cash or stock-based incentives, is also evaluated by comparing
it to total compensation of other executives within the Thermo Electron
organization with comparable levels of responsibility for comparably sized
business units. The process for determining each of these elements for the
Corporation's executive officers is outlined below. For its review of the
compensation of the other officers of the Corporation, the Committee follows a
substantially similar process.

BASE SALARY

Base salaries are intended to approximate the mid-point of competitive
salaries for similar organizations of comparable size and complexity to the
Corporation. Executive salaries are adjusted gradually over time and only as
necessary to meet this objective. Increases in base salary may be moderated by
other considerations, such as geographic or regional market data, industry
trends or internal fairness within the Corporation and Thermo Electron.

16
<PAGE>

It is the Committee's intention that over time the base salaries for the chief
executive officer and the other named executive officers will approximate the
mid-point of competitive data. The salary increases in 1997 for the chief
executive officer and the other named executive officers generally reflect this
practice of gradual increases and moderation.

CASH BONUS

The Committee establishes a median potential bonus for each executive by
using the market data on total cash compensation from the same executive
compensation surveys as used to determine salaries. Specifically, the median
potential bonus plus the salary of an executive officer is approximately equal
to the mid-point of competitive total cash compensation for a similar position
and level of responsibility in businesses having comparable sales and complexity
to the Corporation. The actual bonus awarded to an executive officer may range
from zero to three times the median potential bonus. The value within the range
(the bonus multiplier) is determined at the end of each year by the Committee in
its discretion. The Committee exercises its discretion by evaluating each
executive's performance using a methodology developed by its parent company,
Thermo Electron, and applied throughout the Thermo Electron organization. The
methodology incorporates measures of operating returns which are designed to
measure profitability and contributions to shareholder value, and are measures
of corporate and divisional performance that are evaluated using graphs
developed by Thermo Electron intended to reward performance that is perceived as
above average and to penalize performance that is perceived as below average.
The measures of operating returns used in the Committee's determinations in
fiscal 1997 measured return on net assets, growth in income, and return on
sales, and the Committee's determinations also included a subjective evaluation
of the contributions of each executive that are not captured by operating
measures but are considered important to the creation of long-term value for the
Stockholders. These measures of achievements are not financial targets that are
met, not met or exceeded. The relative weighting of the operating measures and
subjective evaluation varies among the executives, depending on their roles and
responsibilities within the organization.

The bonuses for named executive officers approved by the Committee with
respect to fiscal 1997 performance in each instance exceeded the median
potential bonus.

STOCK OPTION PROGRAM

The primary goal of the Corporation and its parent company, Thermo
Electron, is to excel in the creation of long-term value for the Stockholders.
The principal incentive tool used to achieve this goal is the periodic award to
key employees of options to purchase common stock of the Corporation and other
Thermo Electron companies.

The Committee and management believe that awards of stock options to
purchase the shares of both the Corporation and other companies within the
Thermo Electron group of companies accomplish many objectives. The grant of
options to key employees encourages equity ownership in the Corporation, and
closely aligns management's interests to the interests of all the Stockholders.
The emphasis on stock options also results in management's compensation being
closely linked to stock performance. In addition, because they are subject to
vesting periods of varying durations and to forfeiture if the employee leaves
the Corporation prematurely, stock options are an incentive for key employees to
remain with the Corporation long-term. The Committee believes stock option
awards in its parent corporation, Thermo Electron, and the other majority-owned
subsidiaries of Thermo Electron, are an important tool in providing incentives
for performance within the entire organization.

In determining awards, the Committee considers for each officer the annual
value of all options to purchase shares of the Corporation and other companies
within the Thermo Electron organization that vest in the next year and compares
the individual's total compensation using this value to competitive data. The
Committee uses a modified Black-Scholes option pricing model to determine the
value of an option award. In addition, the Committee considers the aggregate
amount of net awards to purchase shares of Common Stock granted to all employees
over the last five years to monitor the number of aggregate awards to all
employees. In reviewing the aggregate number of awards, the Committee considers
such factors as the size of the company, its stage of development, and its
growth strategy, as well as the aggregate awards and option practices of
comparably situated companies.

The Committee periodically awards stock options based on its assessment of
the total compensation of each executive, the actual and anticipated
contributions of each executive (which includes a subjective assessment by the

17
<PAGE>

Committee of the value of the executive's future potential within the
organization), as well as the value of previously awarded options as described
above. The option awards made to the named executive officers in 1997 with
respect to the common stock of the Corporation's parent, Thermo Electron, or its
subsidiaries, were made as part of Thermo Electron's overall stock option
program and are determined by the human resources committees of the board of
directors of the granting company using a similar analysis.

The Corporation's compensation program is also designed to encourage
executives to own shares of the Corporation's Common Stock. The Committee
believes that encouraging executives to retain stock acquired through its stock
option program provides additional incentive for executive officers to follow
strategies designed to maximize long-term value to Stockholders.

There are several elements to the Corporation's stock retention program.
For example, the Committee annually awards stock options based upon an
executive's ownership of the Corporation's Common Stock and unexercised, vested
rights to acquire such stock during the prior year. These option awards are
independent of the award of stock options as an incentive for management
performance. In 1997, the Committee granted options to purchase Common Stock to
the named executive officers under this program. These options have three-year
terms and vest 100% on the second anniversary of the date of grant. Certain
options awarded in 1997 to the named executive officers with respect to the
common stock of Thermo Electron were made under a program that awards options to
certain eligible employees annually based on the number of shares of the common
stock of Thermo Electron held by the employee, as an incentive to buy and hold
Thermo Electron shares.

STOCK OWNERSHIP AND RETENTION POLICIES

During 1996, the Committee also established a stock holding policy for
executive officers of the Corporation that required executive officers to own a
multiple of their compensation in shares of the Corporation's Common Stock. For
the chief executive officer, the multiple was one times his base salary and
reference bonus for the calendar year. For all other officers, the multiple was
one times the officer's base salary. The Committee deemed it appropriate to
permit officers to achieve these ownership levels over a three-year period. The
policy was amended in 1998 to apply only to the chief executive officer.

In order to assist officers in complying with the policy, the Committee
also adopted in 1996 a stock holding assistance plan under which the Corporation
was authorized to make interest-free loans to officers to enable them to
purchase shares of the Common Stock in the open market. The loans are required
to be repaid upon the earlier of demand or the fifth anniversary of the date of
the loan, unless otherwise authorized by the Committee. No loans were
outstanding under this program in 1997. This plan was also amended in 1998 to
apply only to the chief executive officer. See "Relationship with Affiliates -
Stock Holding Assistance Plan."

The Committee also has adopted a policy requiring its executive officers to
hold shares of the Corporation's Common Stock acquired upon the exercise of
stock options granted by the Corporation. Under this policy, executive officers
are required to hold one-half of their net option exercises over a period of
five years. The net option exercise is determined by calculating the number of
shares acquired upon exercise of a stock option, after

18
<PAGE>

deducting the number of shares that could have been traded to exercise the
option and the number of shares that could have been surrendered to satisfy tax
withholding obligations attributable to the exercise of the options.

POLICY ON DEDUCTIBILITY OF COMPENSATION

The Committee has also considered the application of Section 162(m) of the
Internal Revenue Code to the Corporation's compensation practices. Section
162(m) limits the tax deduction available to public companies for annual
compensation paid to senior executives in excess of $1 million unless the
compensation qualifies as "performance-based" or is otherwise exempt under
Section 162(m). The annual compensation paid to individual executives does not
approach the $1 million threshold, and it is believed that the stock incentive
plans of the Corporation qualify as "performance-based." Therefore, the
Committee does not believe any further action is necessary in order to comply
with Section 162(m). From time to time, the Committee will reexamine the
Corporation's compensation practices and the effect of Section 162(m).

1997 CEO COMPENSATION

Cash compensation for Mr. John W. Wood Jr. is reviewed by both the
Committee and the human resources committee of the board of directors of Thermo
Electron, due to his responsibilities as both the Corporation's chief executive
officer and as a senior vice president of Thermo Electron, the Corporation's
parent company. Each committee evaluates Mr. Wood's performance and proposed
compensation using a process similar to that used for the other executive
officers of the Corporation. At the Thermo Electron level, Mr. Wood is evaluated
on his performance related to the Corporation, as well as other operating units
of Thermo Electron for which he is responsible, weighted in accordance with the
amount of time and effort devoted to each operation. Approximately 50% of Mr.
Wood's bonus for 1997 performance was attributable to his responsibilities at
the Corporation. The Corporation's Committee then reviews the analysis and
determinations of the Thermo Electron committee, makes an independent assessment
of Mr. Wood's performance as it relates to the Corporation using criteria
similar to that used for the other executive officers of the Corporation, and
then agrees to an appropriate allocation of Mr. Wood's compensation to be paid
by the Corporation.

In December 1997, the Committee conducted its review of Mr. Wood's proposed
salary for 1998 and bonus for 1997 performance. The Committee concurred in the
recommendation made by the Thermo Electron committee and agreed to an allocation
of 50% of Mr. Wood's total cash compensation for 1997 to the Corporation, based
on his relative responsibilities at the Corporation and Thermo Electron. An
additional 10% of Mr. Wood's total cash compensation for 1997 was allocated to
the Corporation's majority-owned subsidiary, Thermo Voltek, for his services as
its chief executive officer.

In 1997, the Committee also approved stock option awards to Mr. Wood with
respect to the Corporation's Common Stock. The Committee annually considers an
award of stock options to executive officers of the Corporation, which are
generally based upon the number of shares of Common Stock and unexercised,
vested stock options held by the executive during the year, as an incentive for
executives to buy and hold Common Stock. The award of stock options to purchase
shares of Common Stock to Mr. Wood in 1997 was made under this program. The
awards of stock options to purchase shares of the Corporation's majority-owned
subsidiaries, Thermo Voltek and Thermo Sentron, to Mr. Wood in 1997 were made by
the human resources committees of the boards of directors of those companies
under a similar program to that described above. Mr. Wood was also granted
options to purchase shares of the common stock of two of the Corporation's
majority-owned subsidiaries, Thermedics Detection Inc. and Thermo Cardiosystems
Inc., in 1997. These options were awarded by the human resources committees of
the boards of directors of those companies in connection with Mr. Wood's
position as a director and chairman of the board of each of these entities, and
were determined in a manner consistent with awards to other officers, as
described above under "Stock Option Program."

Mr. Peter O. Crisp (Chairman)
Dr. Nicholas T. Zervas

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<PAGE>

COMPARATIVE PERFORMANCE GRAPH

The Securities and Exchange Commission requires that the Corporation
include in this proxy statement a line-graph presentation comparing cumulative,
five-year shareholder returns for the Corporation's Common Stock with a broad-
based market index and either a nationally recognized industry standard or an
index of peer companies selected by the Corporation. The Corporation has
compared its performance with the American Stock Exchange Market Value Index and
the Dow Jones Total Return Index for the Diversified Technology Industry Group
as of the last trading day of the Corporation's fiscal year.

COMPARISON OF TOTAL RETURN AMONG THERMEDICS INC.,
THE AMERICAN STOCK EXCHANGE MARKET VALUE INDEX AND THE
DOW JONES TOTAL RETURN INDEX FOR THE DIVERSIFIED TECHNOLOGY INDUSTRY GROUP
FROM DECEMBER 31, 1992 TO JANUARY 2, 1998

[GRAPH APPEARS HERE]

- -----------------------------------------------------------------------
12/31/92 12/31/93 12/30/94 12/29/95 12/28/96 1/2/98
- -----------------------------------------------------------------------
TMD 100 193 163 354 238 215
- -----------------------------------------------------------------------
AMEX 100 120 109 137 146 177
- -----------------------------------------------------------------------
DJ DIV 100 117 121 165 213 243
- -----------------------------------------------------------------------

The total return for the Corporation's Common Stock (TMD), the American
Stock Exchange Market Value Index (AMEX) and the Dow Jones Total Return Index
for the Diversified Technology Industry Group (DJ DIV) assumes the reinvestment
of dividends, although dividends have not been declared on the Corporation's
Common Stock. The American Stock Exchange Market Value Index tracks the
aggregate performance of equity securities of companies listed on the American
Stock Exchange. The Corporation's Common Stock is traded on the American Stock
Exchange under the ticker symbol "TMD."

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<PAGE>

RELATIONSHIP WITH AFFILIATES

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 several privately and publicly held subsidiaries. The
Corporation has created Thermedics Detection Inc., Thermo Cardiosystems and
Thermo Sentron Inc. as publicly held subsidiaries, and the Corporation has
acquired the majority interest in a previously unaffiliated public company,
Thermo Voltek Corp. From time to time, Thermo Electron and its subsidiaries
will create other majority-owned subsidiaries as part of its spinout strategy.
(The Corporation and such other majority-owned Thermo Electron subsidiaries are
hereinafter referred to as the "Thermo Subsidiaries.")

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

To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")
to external financing sources, ensuring compliance with external financial
covenants and internal financial policies, assisting in the formulation of long-
range planning and providing other banking and credit services. Pursuant to
the Charter, Thermo Electron may also provide guarantees of debt 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 Corporation, 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 and tax
allocation agreement (if any) 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.

As provided in the Charter, the Corporation and Thermo Electron have
entered into a Corporate Services Agreement (the "Services Agreement") under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management, employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and financial and other

21
<PAGE>

services to the Corporation. The Corporation was assessed an annual fee equal to
1.0% of the Corporation's revenues for these services for fiscal 1996 and 1997.
The annual fee has been reduced to 0.8% of the Corporation's total revenues for
fiscal 1998. The fee is reviewed annually and may be changed by mutual agreement
of the Corporation and Thermo Electron. During fiscal 1997, Thermo Electron
assessed the Corporation $3,143,000 in fees under the Services Agreement.
Management believes that the charges under the Services Agreement are reasonable
and that the terms of the Services Agreement are fair to the Corporation. For
items such as employee benefit plans, insurance coverage and other identifiable
costs, Thermo Electron charges the Corporation based on charges attributable to
the Corporation. The Services Agreement automatically renews for successive one-
year terms, unless canceled by the Corporation upon 30 days' prior notice. In
addition, the Services Agreement terminates automatically in the event the
Corporation ceases to be a 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 Corporation will be required to pay a termination fee equal to
the fee that was paid by the Corporation for services under the Services
Agreement for the nine-month period prior to termination. Following termination,
Thermo Electron may provide certain administrative services on an as-requested
basis by the Corporation or as required in order to meet the Corporation's
obligations under Thermo Electron's policies and procedures. Thermo Electron
will charge the Corporation a fee equal to the market rate for comparable
services if such services are provided to the Corporation following termination.

From time to time the Corporation may transact business with other
companies in the Thermo Group.

X-ray sources used in certain products are manufactured for the
Corporation's Thermedics Detection Inc. subsidiary ("Thermedics Detection") by
Trex Medical Corporation, a subsidiary of Thermo Electron's ThermoTrex
Corporation subsidiary. During 1997, Thermedics Detection paid $47,965 to Trex
Medical Corporation for these x-ray sources. Thermo Electron's Tecomet division
provides metal fabrication services in connection with the manufacture of the
heart-assist devices sold by Thermo Cardiosystems and certain products sold by
Thermedics Detection. During 1997, the Corporation paid Tecomet $1,872,308 for
these services. Pursuant to a subcontract entered into in October 1993,
Thermedics Detection performs research and development services for Coleman
Corporation ("Thermo Coleman"), whose wholly owned subsidiary Coleman Research
Corporation is the prime contractor under a contract with the U.S. Department of
Energy. Thermo Coleman is a majority-owned subsidiary of Thermo Electron and
was acquired by Thermo Electron in March 1995. Thermo Coleman paid Thermedics
Detection $533,000 for services rendered in 1997.

Thermo Sentron acts as a distributor for another Thermo Subsidiary. In
1997, Thermo Sentron purchased products from this subsidiary for $583,000.

In 1997, Thermo Sentron received a ten percent (10%) commission totaling
$83,000 from another Thermo Subsidiary, which Thermo Sentron earned in
connection with assisting in the sale by this subsidiary of its products in
Australia.

Thermedics Detection entered into a funded research and development
arrangement with ThermoLase Corporation ("ThermoLase"), a publicly traded,
majority-owned subsidiary of ThermoTrex, in December 1997 to develop a cryogenic
cooling device for ThermoLase. ThermoLase agreed to purchase five prototype
devices for an aggregate purchase price of $270,000. Thermedics Detection
expects to complete the prototype devices in the second quarter of 1998.

Pursuant to an international distributorship agreement, Thermedics
Detection appointed Arabian Business Machines Co. ("ABM") as its exclusive
distributor of Thermedics Detection's security instruments in certain Middle
Eastern countries. ABM is a member of The Olayan Group. Ms. Hutham S. Olayan,
a director of Thermo Electron, is the president and a director of Olayan
American Corporation, a member of The Olayan Group, which is indirectly
controlled by Suliman S. Olayan, Ms. Olayan's father. Revenues recorded under
this agreement totaled $480,000 in fiscal 1997.

On February 5, 1998, the Corporation's board of directors voted to issue
4,880,553 shares of its Common Stock to Thermo Electron in exchange for 100% of
the stock of TMO TCA Holdings Inc., which is the beneficial owner of 3,355,705
shares of Thermo Cardiosystems' common stock. The issuance of the 3,355,705
shares of Thermo Cardiosystems' common stock is subject to the approval of
Thermo Cardiosystems' stockholders of the

22
<PAGE>

listing of such shares for trading on the American Stock Exchange, which was
obtained at a special meeting of the stockholders of Thermo Cardiosystems held
on April 13, 1998. The Corporation's issuance of the 4,880,533 shares of its
Common Stock to Thermo Electron is subject to approval by the Corporation's
stockholders. The shares of common stock will be exchanged at their respective
fair market values as of February 5, 1998.

Thermo Electron owned approximately 57.6% of the Corporation's outstanding
Common Stock on March 1, 1998. Thermo Electron intends for the foreseeable
future to maintain at least 50% ownership of the Corporation. This may require
the purchase by Thermo Electron of additional shares of the Corporation's Common
Stock from time to time as the number of outstanding shares issued by the
Corporation increases. These purchases may be made either in the open market or
directly from the Corporation.

The Corporation, along with certain other Thermo Subsidiaries, participates
in a notional pool arrangement with Barclays Bank, which includes a $150 million
credit facility. Only European-based Thermo Subsidiaries participate in this
arrangement. Under this arrangement the Bank notionally combines the positive
and negative cash balances held by the participants to calculate the net
interest yield/expense for the group. The benefit derived from this arrangement
is then allocated based on balances attributable to the respective participants.
Thermo Electron guarantees all of the obligations of each participant in this
arrangement. In addition, funds on deposit under this arrangement provide
credit support for overdraft obligations of other participants. As of January
3, 1998, the Corporation had a negative cash balance of approximately
$2,477,000, based on an exchange rate of $1.65/(Pounds)1.00 as of January 3,
1998. For 1997, the average annual interest rate earned on GBP deposits by
participants in this credit arrangement was approximately 6.5% and the average
annual interest rate paid on overdrafts was approximately 7.2%.

The Corporation, along with certain other Thermo Subsidiaries, also
participates in a notional pool arrangement with ABN AMRO, which includes a $50
million credit facility. Only European-based Thermo Subsidiaries participate in
this arrangement. Under this arrangement the Bank notionally combines the
positive and negative cash balances held by the participants to calculate the
net interest yield/expense for the group. The benefit derived from this
arrangement is then allocated based on balances attributable to the respective
participants. Thermo Electron guarantees all of the obligations of each
participant in this arrangement. In addition, funds on deposit under this
arrangement provide credit support for overdraft obligations of other
participants. As of January 3, 1998, the Corporation had a positive cash
balance of approximately $301,333 based on an exchange rate of $0.495/NLG 1.00.
For 1997, the average annual interest rate earned on NGL deposits by
participants in this credit arrangement was approximately 4.8% and the average
annual interest rate paid on overdrafts was approximately 4.8%.

At January 3, 1998, the Corporation owed Thermo Electron and its other
subsidiaries an aggregate of $2,266,000, for amounts due under the Corporate
Services Agreement and related administrative charges, for other products and
services and for miscellaneous items, excluding loans described above. The
largest amount of net indebtedness owed by the Corporation to Thermo Electron
and its other subsidiaries since December 29, 1996, was $3,111,000. These
amounts do not bear interest and are expected to be paid in the normal course of
business.

As of January 3, 1998, $175,101,000 of the Corporation's cash equivalents
were invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Corporation in effect lends excess cash to Thermo Electron, which
Thermo Electron collateralizes with investments principally consisting of
corporate notes, U.S. government agency securities, money market funds,
commercial paper and other marketable securities, in the amount of at least 103%
of such obligation. The Corporation's funds subject to the repurchase agreement
are readily convertible into cash by the Corporation and have a maturity of
three months or less. The repurchase agreement earns a rate based on the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter.

STOCK HOLDING ASSISTANCE PLAN

In 1996, the Corporation adopted a stock holding policy which requires its
executive officers to acquire and hold a minimum number of shares of Common
Stock. In order to assist the executive officers in complying with the policy,
the Corporation also adopted a stock holding assistance plan under which it may
make interest-free loans to certain key employees, including its executive
officers, to enable such employees to purchase the Common Stock in

23
<PAGE>

the open market. No such loans were outstanding under the plan in 1997. This
policy and plan were amended in 1998 to apply only to the chief executive
officer of the Corporation in the future.

APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1998. Arthur Andersen LLP has acted as
independent public accountants for the Corporation since 1983. Representatives
of that firm are expected to be present at the Meeting, will have the
opportunity to make a statement if they desire to do so and will be available to
respond to questions. The board of directors has established an audit
committee, presently consisting of three outside directors, the purpose of which
is to review the scope and results of the audit.

OTHER ACTION

Management is not aware at this time of any other matters that will be
presented for action at the Meeting. Should any such matters be presented, the
proxies grant power to the proxy holders to vote shares represented by the
proxies in the discretion of such proxy holders.

STOCKHOLDER PROPOSALS

Proposals of Stockholders intended to be presented at the 1999 Annual
Meeting of the Stockholders of the Corporation must be received by the
Corporation for inclusion in the proxy statement and form of proxy relating to
that meeting no later than December 29, 1998.

SOLICITATION STATEMENT

The cost of this solicitation of proxies will be borne by the Corporation.
Solicitation will be made primarily by mail, but regular employees of the
Corporation may solicit proxies personally or by telephone, facsimile
transmission or telegram. Brokers, nominees, custodians and fiduciaries are
requested to forward solicitation materials to obtain voting instructions from
beneficial owners of stock registered in their names, and the Corporation will
reimburse such parties for their reasonable charges and expenses in connection
therewith.

Woburn, Massachusetts
April 23, 1998

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<PAGE>

FORM OF PROXY

THERMEDICS INC.

PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 1, 1998

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints John N. Hatsopoulos, Melissa F. Riordan and
John W. Wood Jr., or any one of them acting in the absence of the others, as
attorneys and proxies of the undersigned, with full power of substitution, for
and in the name of the undersigned, to represent the undersigned at the Annual
Meeting of the Stockholders of Thermedics Inc., a Massachusetts corporation (the
"Company") to be held on Monday, June 1, 1998 at 1:30 p.m. at The Hyatt Regency
Scottsdale Resort at Gainey Ranch, Scottsdale, Arizona, and at any adjournment
or postponement thereof, and to vote all shares of common stock of the Company
standing in the name of the undersigned on April 3, 1998, with all of the powers
the undersigned would possess if personally present at such meeting.

(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)

<PAGE>

Please mark your
[ X ] votes as in this
example.

1. ELECTION OF DIRECTORS OF THE COMPANY (see reverse).

FOR [ ] WITHHELD [ ]

FOR all nominees listed at right, except authority to vote withheld for the
following nominees (if any): ______________________________________

NOMINEES: Peter O. Crisp, Paul F. Ferrari, George N. Hatsopoulos, John N.
Hatsopoulos, John T. Keiser, John W. Wood Jr. and Nicholas T. Zervas.

2. In their discretion on such other matters as may properly come before the
Meeting.

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE PROPOSAL SET FORTH
ABOVE IF NO INSTRUCTION TO THE CONTRARY IS INDICATED OR IF NO INSTRUCTION IS
GIVEN.

Copies of the Notice of Meeting and of the Proxy Statement have been received by
the undersigned.

PLEASE DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.

SIGNATURE(S)_______________________________________ DATE_________________

NOTE: This proxy should be dated, signed by the shareholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are
held by joint tenants or as community property, both should sign.