SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 1 ON FORM 10-K/A
TO FORM 10-K
(mark one)
X Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
- ----- Act of 1934
- ----- Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-9567
THERMEDICS INC.
(Exact name of Registrant as specified in its character)
Delaware 04-2788806
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
470 Wildwood Street
Post Office Box 2999
Woburn, MA 01888-1799
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (781) 622-1000
Securities registered pursuant to Section 12(b)of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- ---------------------
Common Stock, $.10 par value American Stock Exchange
Securities registered pursuant to section 12(g)of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to the filing requirements for
at least the past 90 days. X No .
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference into Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of January 28, 2000, was approximately $61,227,000.
As of January 28, 2000, the Registrant had 41,945,661 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended January 1, 2000, are incorporated by reference into Parts I and II.
<PAGE>
Items 10, 11, 12 and 13 of Part III of the Registrant's Annual Report on Form
10-K for the fiscal year ended January 1, 2000 are hereby amended and restated
in their entirety as follows:
Part III
Item 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
Set forth below are the names of the directors, their ages, their
offices in the Corporation, if any, their principal occupation or employment for
the past five years, the length of their tenure as directors and the names of
other public companies in which such persons hold directorships. Information
regarding their beneficial ownership of the Corporation's Common Stock and the
common stock of its subsidiaries and its parent company, Thermo Electron
Corporation ("Thermo Electron"), a provider of products and services in
measurement instrumentation, medical devices, power generation and resource
recovery is reported in Item 12 - "Security Ownership of Certain Beneficial
Owners and Management."
- --------------------------------------------------------------------------------
T. Anthony Brooks Mr. Brooks, 60, has been a director of Thermedics since
September 1998. Mr. Brooks was a managing director and
member of the operating committee of Lehman Brothers
Inc. from 1991 until his retirement in 1997. While at
Lehman Brothers Inc., Mr. Brooks was the head of the
European equity division from 1995 to 1996.
- --------------------------------------------------------------------------------
Peter O. Crisp Mr. Crisp, 67, has been a director of Thermedics since
1983. Mr. Crisp was a general partner of Venrock
Associates, for more than five years until his
retirement in September 1997. He has been the
vice-chairman of Rockefeller Financial Services, Inc.
since December 1997. Mr. Crisp is also a director of
American Superconductor Corporation, Evans & Sutherland
Computer Corporation, Thermo Electron Corporation,
ThermoTrex Corporation and United States Trust
Corporation.
- --------------------------------------------------------------------------------
Paul F. Ferrari Mr. Ferrari, 69, has been a director of Thermedics since
1991. Mr. Ferrari was a vice president of Thermo
Electron from 1988 until his retirement at the end of
1990. Mr. Ferrari is also a director of General Scanning
Inc. and ThermoTrex Corporation.
- --------------------------------------------------------------------------------
John T. Keiser Mr. Keiser, 64, has been a director of Thermedics since
April 1997. He has been the president and chief
executive officer of Thermedics since March 1998 and
December 1998, respectively. From 1994 until March 1998,
Mr. Keiser was a senior vice president of Thermedics.
Mr. Keiser has been the chief operating officer,
biomedical, of Thermo Electron since September 1998, and
a vice president from April 1997 until his promotion. He
has also been the president of Thermo Electron's wholly
owned biomedical group, a manufacturer of medical
equipment and instruments, since 1994. Mr. Keiser is a
director of Metrika Systems Corporation, Thermo
Cardiosystems Inc., ThermoLase Corporation, ThermoTrex
Corporation and Trex Medical Corporation.
- --------------------------------------------------------------------------------
John W. Wood Jr. Mr. Wood, 56, has been a director of Thermedics since
1984 and chairman of the board since March 1998. Mr.
Wood was president and chief executive officer of
Thermedics from 1984 to March 1998. Mr. Wood has been a
senior vice president of Thermo Electron since December
1995, and was a vice president of Thermo Electron from
September 1994 to December 1995.
- --------------------------------------------------------------------------------
Nicholas T. Zervas Dr. Zervas, 70, has been a director of Thermedics since
1987. Dr. Zervas was Chief of Neurosurgical Service,
Massachusetts General Hospital, from 1977 until 2000.
Dr. Zervas is also a director of Thermo Cardiosystems
Inc., ThermoLase Corporation and ThermoTrex Corporation.
- --------------------------------------------------------------------------------
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The board of directors has established an audit committee and a human
resources committee, each consisting solely of directors who are not employees
of the Corporation, of Thermo Electron or of any other companies affiliated with
Thermo Electron ("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 five times, the
audit committee met twice and the human resources committee met three times
during fiscal 1999. Each director attended at least 75% of all meetings of the
board of directors and committees on which he served that were held during
fiscal 1999, except Mr. Ferrari who attended 71% of all meetings of the board of
directors and committees on which he served that were held during fiscal 1999.
In 1998, the board of directors established a special committee (the
"Special Committee") consisting solely of outside directors for the purpose of
evaluating the merits and negotiating the terms of the proposed transactions
with Thermo Electron pursuant to which the Company would be taken private,
considering such alternatives as the Special Committee deems appropriate and
making a recommendation to the full board of directors on whether or not to
approve any such proposed transaction. In January 2000, Thermo Electron
determined not to proceed with this proposed transaction, but instead decided to
proceed with an exchange offer and merger. See Item 13 - "Certain Relationships
and Related Transactions." As a result, the duties of the Special Committee were
modified to review the terms of the proposed exchange offer and merger and
either recommend, reject or take no position with respect to the proposed
exchange offer and merger. The members of the Special Committee are Mr. Brooks
and Dr. Zervas.
COMPENSATION OF DIRECTORS
CASH COMPENSATION
Outside directors receive an annual retainer of $4,000 and a fee of
$1,000 per meeting for attending regular meetings of the board of directors and
$500 per meeting for participating in meetings of the board of directors held by
means of conference telephone and for participating in certain meetings of
committees of the board of directors. Payment of directors' fees is made
quarterly. Mr. Keiser and Mr. Wood are both employees of Thermo Electron or its
subsidiaries and do not receive any cash compensation from the Corporation for
their services as directors. Directors are also reimbursed for out-of-pocket
expenses incurred in attending such meetings.
In addition, the members of the Special Committee receive a quarterly
fee of $15,000 and a fee of $1,000 per day for attending regular meetings of the
Special Committee and $500 per day for participating in meetings of the Special
Committee held by means of conference telephone.
DEFERRED COMPENSATION PLAN
Under the Corporation's deferred compensation plan for directors (the
"Deferred Compensation Plan"), a director has the right to defer receipt of his
cash fees until he ceases to serve as a director, dies or retires from his
principal occupation. In the event of a change of control or proposed change of
control of the Corporation that is not approved by the board of directors,
deferred amounts become payable immediately. Any of the following are deemed to
be a change of control: (i) the acquisition by any person of 40% or more of the
outstanding common stock or voting securities of Thermo Electron; (ii) the
failure of the Thermo Electron board of directors to include a majority of
directors who are "continuing directors", which term is defined to include
directors who were members of Thermo Electron's board on July 1, 1999 or who
subsequent to that date were nominated or elected by a majority of directors who
were "continuing directors" at the time of such nomination or election; (iii)
the consummation of a merger, consolidation, reorganization, recapitalization or
statutory share exchange involving Thermo Electron or the sale or other
disposition of all or substantially all of the assets of Thermo Electron unless
immediately after such transaction (a) all holders of Thermo Electron common
stock immediately prior to such transaction own more than 60% of the outstanding
voting securities of the resulting or acquiring corporation in substantially the
same proportions as their ownership immediately prior to such transaction and
(b) no person after the transaction owns 40% or more of the outstanding voting
securities of the
<PAGE>
resulting or acquiring corporation; or (iv) approval by stockholders of a
complete liquidation or dissolution of Thermo Electron. Amounts deferred
pursuant to the Deferred Compensation Plan are valued at the end of each quarter
as units of Common Stock. When payable, amounts deferred may be disbursed solely
in shares of Common Stock accumulated under the Deferred Compensation Plan. As
of January 1, 2000 a total of 30,000 shares of Common Stock has been reserved
for issuance under the Deferred Compensation Plan and deferred units equal to
25,238 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 and
the common stock of its majority-owned subsidiaries to outside directors as
additional compensation for their service as directors. Under 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
are immediately exercisable at any time from and after the grant date of the
option and generally on the third anniversary of the grant date.
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 January 31, 2000, options to purchase 20,800 shares of Common Stock were
outstanding under the Directors Plan, options to purchase 36,700 shares of
Common Stock had been granted, options to purchase 12,600 shares of Common Stock
had lapsed, options to purchase 3,300 shares of Common Stock had been exercised,
and options to purchase 13,400 shares of Common Stock were available for future
grant.
STOCK OWNERSHIP POLICY FOR DIRECTORS
The human resources committee of the board of directors (the
"Committee") has established a stock holding policy for directors. The stock
holding policy requires each director to hold a minimum of 1,000 shares of
Common Stock. Directors are requested to achieve this ownership level within a
three-year period. The chief executive officer of the Corporation is required to
comply with a separate stock holding policy established by the Committee, which
is described below.
EXECUTIVE OFFICERS
Reference is made to Item 1(e) of this Annual Report on Form 10-K for
information regarding the Executive Officers of the Registrant.
Item 11 - EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes compensation during the last three
fiscal years for services to the Corporation in all capacities awarded to,
earned by or paid to the Corporation's chief executive officer, and its
executive officers whose total annual salary and bonus, as determined in
accordance with the rules of the Securities and Exchange Commission, was greater
than $100,000, and who were employed by the Corporation as of the end of fiscal
1999. These officers are together referred to as the "named executive officers."
The Corporation is required to appoint certain executive officers and
full-time employees of Thermo Electron as executive officers of the Corporation,
in accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's affairs is
provided to the Corporation under the Corporate Services Agreement between the
Corporation and Thermo Electron. See Item 13 - "Certain Relationships and
Related Transactions." Accordingly, the compensation for these individuals is
not reported in the following table.
<PAGE>
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SUMMARY COMPENSATION TABLE
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Long Term Compensation
---------------------
Annual Compensation Restricted Securities
Name and Fiscal Stock Underlying All Other
Principal Position Year Salary Bonus Award (1) Options (2) Compensation (3)
- ------------------- ------ ------ ------ --------- ------------ ----------------
John T. Keiser (3) 1999 $45,000 $21,000 $28,689 (TMD) (4) 110,700 (TMD) $7,200
President and Chief 700 (TCA)
Executive Officer 1998 $63,000 $42,000 -- 60,700 (TMD) $7,200
17,000 (TDX)
25,000 (TCA)
12,000 (TSR)
- -------------------------------------------------------------------------------------------------------------------
Victor L. Poirier 1999 $200,000 $110,000 $185,625 (TCA) (5) 3,300 (TMD) $7,200
Senior Vice President 1,100 (TMO)
3,200 (TCA)
1998 $170,000 $100,000 -- 3,100 (TMD) $7,200
3,798 (TMO)
2,000 (MKA)
2,000 (ONX)
4,000 (RGI)
93,200 (TCA)
999 (THI)
1,023 (TKN)
2,000 (TRIL)
1997 $160,000 $108,000 -- 3,600 (TMD) $7,125
800 (TMO)
34,500 (TCA)
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</TABLE>
(1) Options granted by the Corporation are designated as "TMD." In
addition, the named executive officers have also been granted options
to purchase common stock of the following Thermo Electron companies
during the last three fiscal years as part of Thermo Electron's stock
option program: Thermo Electron (designated in the table as TMO),
Metrika Systems Corporation (designated in the table as MKA), ONIX
Systems Inc. (designated in the table as ONX), The Randers Killam Group
Inc. (designated in the table as RGI), Thermedics Detection Inc.
(designated in the table as TDX), Thermo Cardiosystems Inc. (designated
in the table as TCA), Thermo Instrument Systems Inc. (designated in the
table as THI), Thermo Sentron Inc. (designated in the table as TSR),
ThermoTrex Corporation (designated in the table as TKN) and Thermo
Trilogy Corporation (designated in the table as TRIL).
(2) Represents the amount of matching contributions made by the
individual's employer on behalf of the named executive officers
participating in the Thermo Electron 401(k) plan.
(3) Mr. Keiser was appointed president of the Corporation in March 1998 and
chief executive officer in December 1998. The annual cash compensation
(salary and bonus) reported in the table for Mr. Keiser represents the
amount paid by the Corporation solely for Mr. Keiser's services as
president and chief executive officer of the Corporation in fiscal 1999
and 1998. For fiscal 1999, 15% of Mr. Keiser's annual cash compensation
(salary and bonus) was paid by the Corporation solely for his service
as president and chief executive officer of the Corporation, the
remainder of Mr. Keiser's compensation was paid by Thermo Electron and
ThermoTrex Corporation for Mr. Keiser's services in various management
capacities. For the last three fiscal quarters of 1998, 35% of Mr.
Keiser's annual cash compensation (salary and bonus) was paid by the
Corporation solely for his service as president and chief executive
officer of the Corporation, the remainder of Mr. Keiser's compensation
was paid by Thermo Electron for Mr. Keiser's services in various
management capacities. The options reported in the table have been
granted by the Corporation or its majority-owned subsidiaries to Mr.
Keiser as compensation solely for his services as the Corporation's
chief executive officer or as a director of its subsidiaries. From time
to time Mr. Keiser 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
<PAGE>
Thermo Electron companies in capacities other than in his capacity as
an executive officer of the Corporation.
(4) In fiscal 1999, Mr. Keiser was awarded 3,000 shares of restricted
Common Stock of the Corporation with a value of $28,689 on the grant
date. The restricted stock award vests 100% on the third anniversary of
the grant date. Any cash dividends paid on restricted shares are
entitled to be retained by the recipient without regard to vesting. Any
non-cash dividends paid on restricted shares are entitled to be
retained by the recipient subject to the same vesting restrictions as
the underlying stock. At the end of fiscal 1999, Mr.
Keiser held 3,000 restricted shares with an aggregate value of $16,314.
(5) In fiscal 1999, Mr. Poirier was awarded 19,800 shares of restricted
common stock of Thermo Cardiosystems Inc. with a value of $185,625 on
the grant date. The restricted stock award vests 33% per year beginning
on the first anniversary of the grant date. Any cash dividends paid on
restricted shares are entitled to be retained by the recipient without
regard to vesting. Any non-cash dividends paid on restricted shares are
entitled to be retained by the recipient subject to the same vesting
restrictions as the underlying stock. At the end of fiscal 1999, Mr.
Poirier held 19,800 restricted shares with an aggregate value of
$129,947.
STOCK OPTIONS GRANTED DURING FISCAL 1999
The following table sets forth information concerning individual grants
of stock options made during fiscal 1999 to the Corporation's named executive
officers. It has not been the Corporation's policy in the past to grant stock
appreciation rights, and no such rights were granted during fiscal 1999.
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OPTION GRANTS IN FISCAL 1999
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Potential Realizable
Percent of Value at Assumed
Number of Securities Total Options Annual Rates of Stock
Underlying Options Granted to Exercise Price Appreciation for
Granted and Employees in Price Per Expiration Option Term (2)
Name Company (1) Fiscal Year Share Date 5% 10%
- ---- ----------- ------------ ----- ---- --- ----
John T. Keiser (3) 110,000 (TMD) 68.6% $9.64 1/27/06 $431,680 $1,006,016
700 (TMD) 0.4% $7.14 3/30/02 $790 $1,654
700 (TCA) 0.5% $9.39 3/4/02 $1,040 $2,176
- -------------------------------------------------------------------------------------------------------------------
Victor L. Poirier 3,300 (TMD) 2.1% $7.14 3/30/02 $3,710 $7,799
1,100 (TMO) 0.04% (4) $14.81 9/22/04 $4,500 $9,946
3,200 (TCA) 2.1% $9.39 3/4/02 $4,740 $9,946
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</TABLE>
(1) All of the options granted during the fiscal year are immediately
exercisable as of the end of the fiscal year. Generally, the shares
acquired upon exercise are subject to repurchase by the granting
company at the exercise price if the optionee ceases to be employed by
the granting company or any other Thermo Electron company. The granting
company may exercise its repurchase rights within six months after the
termination of the optionee's employment. The repurchase rights
generally lapse ratably over a one- to five-year period, depending on
the option term, which may vary from three- to seven- years, provided
that the optionee continues to be employed by the granting company 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 company 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. Please see footnote (1) under
the Summary Compensation Table for the company abbreviations used in
this table.
(2) The amounts shown in this table represent hypothetical gains that could
be achieved for the respective options if exercised at the end of the
option term. These gains are based on assumed rates of stock
appreciation of 5% and 10% compounded annually from the date the
respective options were granted to their expiration date. The gains
shown are net of the option exercise price, but do not include
deductions for taxes or other expense associated with the exercise.
Actual gains, if any, on stock option exercises will depend on the
future performance of the common stock of the granting company, the
optionee's continued employment through the option period and the date
on which the options are exercised.
<PAGE>
(3) Mr. Keiser 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 an
executive officer 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.
STOCK OPTIONS EXERCISED DURING FISCAL 1999 AND FISCAL YEAR-END OPTION VALUES
The following table reports certain information regarding stock option
exercises during fiscal 1999 and outstanding stock options held at the end of
fiscal 1999 by the Corporation's named executive officers. No stock appreciation
rights were exercised or were outstanding during fiscal 1999.
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AGGREGATED OPTION EXERCISES IN FISCAL 1999 AND FISCAL 1999 YEAR-END OPTION VALUES
- ----------------------------------------------------------------------------------------------------------------------
Value of
Number of Unexercised
Securities In-the-Money
Underlying Options at
Unexercised Options Fiscal Year
Shares at Fiscal Year-End -End
Acquired on Value (Exercisable/ (Exercisable/
Name Company (1) Exercise Realized (2) Unexercisable) (1) Unexercisable)
---- ----------- -------- ------------ ------------------ --------------
John T. Keiser (3) (TMD) -- -- 187,900 /0 $0 /--
(TDX) -- -- 17,000 /0 $0 /--
(TCA) -- -- 50,200 /0 $0 /--
(TSR) -- -- 19,500 /0 $32,790 /--
- ----------------------------------------------------------------------------------------------------------------------
Victor L. Poirier (TMD) -- -- 25,000 /0 $0 /--
(TMO) -- -- 46,123 /0 (4) $684 /--
(MKA) -- -- 2,000 /0 $0 /--
(ONX) -- -- 2,000 /0 $0 /--
(RGI) -- -- 4,000 /0 $1,000 /--
(TBA) -- -- 2,000 /0 $16,750 /--
(TCA) 36,000 $125,640 211,450 /0 (5) $0 /--
(TFG) -- -- 2,000 /0 $4,376 /--
(TFT) 4,500 $20,250 -- /-- -- /--
(THI) -- -- 1,702 /0 $3,067 /--
(TLZ) -- -- 5,000 /0 $0 /--
(TLT) -- -- -- /2,000 -- /$0 (6)
(TOC) -- -- 6,000 /0 $5,430 /--
(TMQ) -- -- 6,000 /0 $0 /--
(TSR) -- -- 7,500 /0 $3,750 /--
(TKN) -- -- 1,023 /-- $56 /--
(TRIL) -- -- -- /2,000 -- /$0 (6)
(TXM) -- -- 4,000 /0 $0 /--
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(1) 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 ThermoLyte Corporation and Thermo
Trilogy 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 or (ii) nine years
after the grant date. Generally, the shares acquired upon exercise of
the options reported in the table are subject to repurchase by the
granting company at the exercise price if the optionee ceases to be
employed by, or serve as a director of, such company or any other
Thermo Electron company. The granting company may exercise its
repurchase rights within six months after the termination of the
optionee's employment or cessation of directorship, as the case may be.
For publicly-traded companies,
<PAGE>
the repurchase rights generally lapse ratably over a one- to ten-year
period, depending on the option term, which may vary from three to
twelve years, provided that the optionee continues to be employed by or
serve as a director of the granting company or another Thermo Electron
company. For companies 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 company may permit the holder of options
to exercise options and to satisfy tax withholding obligations by
surrendering shares equal in fair market value to the exercise price or
withholding obligation. Please see footnote (1) under the Summary
Compensation Table for the company abbreviations used in this table in
addition to the following company abbreviations: Thermo BioAnalysis
Corporation (designated in the table as TBA), Thermo Fibergen Inc.
(designated in the table as TFG), Thermo Fibertek Inc. (designated in
the table as TFT), 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), Thermo Quest
Corporation (designated in the table as TMQ) and Trex Medical
Corporation (designated in the table as TXM).
(2) 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 after 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.
(3) Mr. Keiser was first appointed an officer of the Corporation in July
1994. From time to time after that date, 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 an executive officer of the Corporation.
(4) Options to purchase 22,500 shares of the common stock of Thermo
Electron granted to Mr. Poirier are subject to the same terms as
described in footnote (1), except that the repurchase rights of the
granting company 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 company shall be deemed to have
lapsed ratably over a five-year period commencing with the fifth
anniversary of the grant date.
(5) Options to purchase 30,000 shares of the common stock of Thermo
Cardiosystems Inc. granted to Mr. Poirier are subject to the same terms
as described in footnote (1), except that the repurchase rights lapse
20% per year commencing on the sixth anniversary of the grant date.
(6) No public market existed for the shares underlying these options as of
January 1, 2000. Accordingly, no value in excess of the exercise price
has been attributed to these options.
EXECUTIVE RETENTION AGREEMENTS
Thermo Electron has entered into agreements with certain executive
officers and key employees of Thermo Electron and its subsidiaries that provide
severance benefits if there is a change in control of Thermo Electron and their
employment is terminated by Thermo Electron "without cause" or by the individual
for "good reason," as those terms are defined therein, within 18 months
thereafter. For purposes of these agreements, a change in control exists upon
(i) the acquisition by any person of 40% or more of the outstanding common stock
or voting securities of Thermo Electron; (ii) the failure of the Thermo Electron
board of directors to include a majority of directors who are "continuing
directors", which term is defined to include directors who were members of
Thermo Electron's board on the date of the agreement or who subsequent to the
date of the agreement were nominated or elected by a majority of directors who
were "continuing directors" at the time of such nomination or election; (iii)
the consummation of a merger, consolidation, reorganization, recapitalization or
statutory share exchange involving Thermo Electron or the sale or other
disposition of all or substantially all of the assets of Thermo Electron unless
immediately after such transaction (a) all holders of Thermo Electron common
stock immediately prior to such transaction own more than 60% of the outstanding
voting securities of the resulting or acquiring corporation in substantially the
same proportions as their ownership immediately prior
<PAGE>
to such transaction and (b) no person after the transaction owns 40% or more of
the outstanding voting securities of the resulting or acquiring corporation; or
(iv) approval by stockholders of a complete liquidation or dissolution of Thermo
Electron.
In 1998, Thermo Electron authorized an executive retention agreement
with each of Mr. John T. Keiser and Mr. Victor L. Poirier. These agreements
provide that in the event the individual's employment is terminated under
circumstances described above, the individual would be entitled to a lump sum
payment equal to the sum of (a) in the case of Mr. Keiser two times, and in the
case of Mr. Poirier, one times, the individual's highest annual base salary in
any 12 month period during the prior five-year period, plus (b) in the case of
Mr. Keiser, two times, and in the case of Mr. Poirier, one times, the
individual's highest annual bonus in any 12 month period during the prior
five-year period. In addition, the individual would be provided benefits for a
period of, in the case of Mr. Keiser, two years, and in the case of Mr. Poirier,
one year, after such termination substantially equivalent to the benefits
package the individual would have been otherwise entitled to receive if the
individual was not terminated. Further, all repurchase rights of Thermo Electron
and its subsidiaries shall lapse in their entirety with respect to all options
and restricted stock that the individual holds in Thermo Electron and its
subsidiaries, including the Corporation, as of the date of the change in
control. Finally, the individual would be entitled to a cash payment equal to,
in the case of Mr. Keiser, $20,000, and in the case of Mr. Poirier, $15,000, to
be used toward outplacement services. These executive retention agreements
supercede and replace any and all prior severance arrangements which these
individuals had with Thermo Electron.
Assuming that the severance benefits would have been payable as of
January 1, 2000, the lump sum salary and bonus payment under such agreement to
Messrs. Keiser and Poirier would have been approximately $920,000 and $364,500,
respectively. In the event that payments under these agreements are deemed to be
so called "excess parachute payments" under the applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), the
individuals would be entitled to receive a gross-up payment equal to the amount
of any excise tax payable by such individual with respect to such payment plus
the amount of all other additional taxes imposed on such individual attributable
to the receipt of such gross-up payment.
STOCK OWNERSHIP POLICY
The Committee has established a stock holding policy for the chief
executive officer of the Corporation that requires him to own a multiple of his
compensation in shares of the Corporation's Common Stock. The multiple is one
times his base salary and reference bonus for the fiscal year in which
compliance is achieved. The chief executive officer has three years from the
adoption of the policy to achieve this ownership level.
In order to assist the chief executive officer in complying with the
policy, the Committee also adopted a stock holding assistance plan under which
the Corporation is authorized to make interest-free loans to the chief executive
officer to enable him to purchase shares of Common Stock in the open market. Any
loans are required to be repaid upon the earlier of demand or the tenth
anniversary of the date of the loan, unless otherwise determined by the
Committee. No loans were outstanding under this program in 1999. See Item 13 -
"Certain Relationships and Related Transactions - Stock Holding Assistance
Plan."
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of January 31, 2000, 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"), and Thermo
Sentron Inc. ("Thermo Sentron"), each a majority-owned subsidiary of the
Corporation, with respect to (i) each director, (ii) each executive officer
named in the summary compensation table under the heading "Executive
Compensation" (the "named executive officers") and (iii) all directors and
current executive officers as a group. The common stock of each of the
majority-owned subsidiaries is publicly traded except for the common stock of
Thermedics Detection and Thermo Sentron which have, subsequent to January 31,
2000, been taken private. In addition, the following table sets forth the
beneficial ownership of Common Stock, as of January 31, 2000, with respect to
each person who was known by the Corporation to own beneficially more than 5% of
the outstanding shares of Common Stock.
While certain directors and executive officers of the Corporation are
also directors and executive officers of Thermo Electron or its subsidiaries
other than the Corporation, all such persons disclaim beneficial ownership of
the shares of Common Stock owned by Thermo Electron.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Thermo Thermedics Thermo
Thermedics Electron Detection Cardiosystems Thermo Sentron
Name (1) Inc.(2) Corporation (3) Inc. (4) Inc. (5) Inc. (6)
-------- ------- --------------- -------- -------- ---------
Thermo Electron Corporation (7)....... 31,759,424 N/A N/A N/A N/A
T. Anthony Brooks..................... 5,367 0 0 0 0
Peter O. Crisp........................ 37,076 121,767 0 2,250 0
Paul F. Ferrari....................... 11,050 16,482 599 11,500 0
John T. Keiser........................ 194,693 331,636 17,000 57,473 19,500
Victor L. Poirier..................... 69,455 53,880 0 283,772 7,500
John W. Wood Jr....................... 233,200 293,550 37,251 46,207 35,000
Nicholas T. Zervas.................... 22,064 0 0 44,924 0
All directors and current executive
officers as a group (8 persons).... 584,766 1,275,847 54,850 469,672 62,000
</TABLE>
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person
for the benefit of minor children, and all share ownership includes
sole voting and investment power.
(2) Shares of the Common Stock beneficially owned by Mr. Brooks, Mr. Crisp,
Mr. Ferrari, Mr. Keiser, Mr. Poirier, Mr. Wood and all directors and
current executive officers as a group include 1,000, 9,000, 8,950,
187,900, 25,000, 174,150 and 406,000 shares, respectively, that such
person or group had the right to acquire within 60 days of January 31,
2000, through the exercise of stock options. Shares beneficially owned
by all directors and current executive officers as a group include
1,119 shares allocated through January 31, 2000, to their respective
accounts maintained pursuant to Thermo Electron's employee stock
ownership plan (the "ESOP"). Shares beneficially owned by Mr. Brooks,
Mr. Crisp, Dr. Zervas and all directors and current executive officers
as a group include 1,367, 9,971, 10,364 and 21,702 shares,
respectively, that had been allocated through January 1, 2000, to their
respective accounts maintained under the Deferred Compensation Plan.
Shares beneficially owned by Mr. Wood include 2,600 shares held in
custodial accounts for the benefit of his minor children. No director
or named executive officer beneficially owned more than 1% of the
Common Stock outstanding as of January 31, 2000; all directors and
current executive officers as a group beneficially owned 1.39% of the
Common Stock outstanding as of such date.
(3) Shares of the common stock of Thermo Electron beneficially owned by Mr.
Crisp, Mr. Keiser, Mr. Poirier, Mr. Wood and all directors and current
executive officers as a group include 25,596, 263,230, 46,123, 249,298
and 968,608 shares, respectively, that such person or group has the
right to acquire within 60 days of January 31, 2000, through the
exercise of stock options. Shares beneficially owned by all directors
and current executive officers as a group include 1,071 shares
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 each include 49,277 allocated through
January 1, 2000, to Mr. Crisp's account maintained pursuant to Thermo
Electron's deferred compensation plan for directors. No director or
named executive officer beneficially owned more than 1% of the Thermo
Electron common stock outstanding as of January 31, 2000; all directors
and current executive officers as a group beneficially owned less than
1% of such common stock outstanding as of such date.
(4) Shares of the common stock of Thermedics Detection beneficially owned
by Mr. Keiser, Mr. Wood and all directors and current executive
officers as a group include 20,000, 17,000 and 37,000 shares,
respectively, that such person or group has the right to acquire within
60 days of January 31, 2000, through the exercise of stock options. No
director or named executive officer beneficially owned more than 1% of
the Thermedics Detection common stock outstanding as of January 31,
2000; all directors and current executive officers as a group
beneficially owned less than 1% 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 2,250, 2,250, 50,200, 211,450, 23,450, 6,600 and 316,200
shares, respectively, that such person or group has the right to
acquire within 60 days of January 31, 2000, through the exercise of
stock options. Shares beneficially owned by Dr. Zervas and all
directors and current executive officers as a group each include 9,074
shares allocated through January 1, 2000, to Dr. Zervas' account
maintained pursuant to Thermo Cardiosystems' deferred compensation plan
for directors. Shares
<PAGE>
beneficially owned by Mr. Wood include 1,122 shares held in custodial
accounts for the benefit of his minor children. Shares beneficially
owned by Dr. Zervas include 19,000 shares held by his spouse. No
director or named executive officer beneficially owned more than 1% of
the Thermo Cardiosystems common stock outstanding as of January 31,
2000; all directors and current executive officers as a group
beneficially owned approximately 1.22% of such common stock outstanding
on such date.
(6) Shares of the common stock of Thermo Sentron beneficially owned by Mr.
Keiser, Mr. Poirier, Mr. Wood and all directors and current executive
officers as a group include 19,500, 7,500, 31,000 and 58,000 shares,
respectively, that such person or group has the right to acquire within
60 days of January 31, 2000, through the exercise of stock options. No
director or named executive officer beneficially owned more than 1% of
the Thermo Sentron common stock outstanding as of January 31, 2000; all
directors and current executive officers as a group beneficially owned
less than 1% of such common stock outstanding as of such date.
(7) Thermo Electron beneficially owned approximately 75.72% of the Common
Stock outstanding as of January 31, 2000. Thermo Electron's address is
81 Wyman Street, Waltham, Massachusetts 02454-9046.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's directors
and executive officers, and beneficial owners of more than 10% of the Common
Stock, such as Thermo Electron, to file with the Securities and Exchange
Commission initial reports of ownership and periodic reports of changes in
ownership of the Corporation's securities. Based upon a review of such filings,
all Section 16(a) filing requirements applicable to such persons were complied
with during 1999, except in the following instance. Thermo Electron filed one
Form 4 late reporting a total of 17 transactions associated with the
cancellation and grant of options to purchase Common Stock granted to employees
under its stock option program.
Item 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The 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 services to the Corporation. The Corporation
was assessed an annual fee equal to 0.8% of the Corporation's revenues for these
services for fiscal 1999. The annual fee will remain at 0.8% of the
Corporation's total revenues for fiscal 2000. The fee is reviewed annually and
may be changed by mutual agreement of the Corporation and Thermo Electron.
During fiscal 1999, Thermo Electron assessed the Corporation $1,788,000 in fees
under the Services Agreement. Management believes that the charges under the
Services Agreement are reasonable and that the terms of the Services Agreement
are fair to the Corporation. In fiscal 1999, the Corporation was billed an
additional $56,318 by Thermo Electron for certain administrative services
required by the Corporation that were not covered by the Services Agreement. The
Services Agreement automatically renews for successive one-year terms, unless
canceled by the Corporation upon 30 days' prior notice. In addition, the
Services Agreement terminates automatically in the event the Corporation ceases
to be a Thermo subsidiary or ceases to be a participant in the Thermo Electron
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.
As of January 1, 2000, the Corporation owed Thermo Electron and its
other subsidiaries an aggregate of $3,121,000 for amounts due under the Services
Agreement and related administrative charges, for other products and services
and for miscellaneous items, net of amounts owed to the Corporation by Thermo
Electron and its other subsidiaries for products, services and for miscellaneous
items. The largest amount of such net indebtedness owed by the Corporation to
Thermo Electron and its other subsidiaries since January 2, 1999 was $7,138,000.
These amounts do not bear interest and are expected to be paid in the normal
course of business.
<PAGE>
Thermedics Detection purchases an X-ray source that is used as a
component in its InScan systems from Trex Medical Corporation, a publicly
traded, majority-owned subsidiary of ThermoTrex Corporation ("ThermoTrex"),
which is itself a publicly traded, majority-owned subsidiary of Thermo Electron.
Thermedics Detection paid Trex Medical Corporation $81,000 for these products in
fiscal 1999.
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 America
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 $147,000 in fiscal 1999.
In June 1998, Thermo Sentron borrowed $21 million from Thermo Electron
pursuant to a promissory note due December 1998, bearing interest at the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter. Thermo Sentron entered into this note in order to partially
finance its acquisition of the three businesses that constituted the
product-monitoring group of Graseby Limited, a subsidiary of Smiths Industries
plc ("Graseby"), for $44 million in cash, net of cash acquired, and the
assumption of certain liabilities. In December 1998, Thermo Sentron repaid $2
million of this amount and issued Thermo Electron a new promissory note for $19
million in exchange for the initial note. This note is due June 1999 and bears
interest under the same terms as the initial note. Subsequently, in June 1999,
Thermo Sentron repaid $6million of this amount and issued a new note for $13
million. Thermo Sentron repaid an additional $1 million under the note in each
of the third and fourth quarters of 1999. In March 2000, Thermo Sentron
refinanced the note under the Thermo Electron Cash Management arrangement which
bears interest at a rate equal to the 30-day Dealer Commercial Paper Rate plus
150 basis points set at the beginning of each month and was 7.55% at April 1,
2000.
In January 2000, Thermo Sentron entered into a fifteen year lease
arrangement with Thermo Electron with respect to Thermo Sentron's principal
executive offices in Minneapolis, Minnesota. The rent payable by Thermo Sentron
to Thermo Electron under the lease is $50,000 per month for the first five years
of the lease, $55,000 per month for the second five years of the lease and
$60,000 per month for the final fives years of the lease.
Thermo Sentron acts as a distributor in Europe for process measurement
instruments manufactured by another Thermo Subsidiary. In 1999, Thermo Sentron
purchased such products from this Thermo Subsidiary for $326,000.
Thermo Electron's Tecomet division provides metal fabrication services
in connection with the manufacture of the heart assist devices sold by Thermo
Cardiosystems. During 1999, Thermo Cardiosystems paid Tecomet $3,651,000 for
these services.
On February 5, 1998, the Corporation's board of directors voted to
issue 4,880,533 shares of 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. Thermo Electron had
acquired such shares of Thermo Cardiosystems common stock as consideration for
the acquisition by Thermo Cardiosystems of International Technidyne Corporation
("ITC") from Thermo Electron in May 1997. The Thermo Cardiosystems shares were
valued at $75,000,000 at the time of the acquisition by Thermo Cardiosystems of
ITC. The issuance of the 3,355,705 shares of Thermo Cardiosystems' common stock
was subject to the approval of Thermo Cardiosystems' stockholders of the 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 Common Stock to
Thermo Electron was subject to approval by the Corporation's stockholders, which
was obtained at a special meeting of the Stockholders held on March 31, 1999.
The number of shares of Common Stock was determined based on the respective fair
market values of the Common Stock and the Thermo Cardiosystems common stock as
of February 5, 1998. The fair market values of the 4,880,553 shares of Common
Stock and the 3,355,705 shares of Thermo Cardiosystems common stock as of
February 5, 1998 were each $75,587,000.
The Corporation, along with other U.K.-based Thermo Electron companies,
participates in a notional pool arrangement in the U.K. with Barclays Bank,
which includes a $114,943,000 credit facility. The Corporation has access to
$6,065,000 under this credit facility. Under this arrangement, Barclays
notionally combines the positive and negative cash balances held by the
participants to calculate the net interest
<PAGE>
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. As of January 1, 2000, the Corporation had a positive cash balance
of approximately and a $1,441,000 and a negative cash balance of approximately
$2,640,000 based on an exchange rate of $1.6171/GBP 1.00. For 1999, the average
annual interest rate earned on GBP deposits by participants in this credit
arrangement was approximately 5.44% and the average annual interest rate paid on
overdrafts was approximately 5.8025%.
At year-end 1998, $35,256,000 of the Corporation's cash equivalents
were invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Corporation in effect lent excess cash to Thermo Electron, which
Thermo Electron collateralized with investments principally consisting of
corporate notes, U.S. government agency securities, commercial paper, money
market funds and other marketable securities, in the amount of at least 103% of
such obligation. The Corporation's funds subject to the repurchase agreement
were readily convertible into cash by the Corporation. The repurchase agreement
earned a rate based on the 90-day Commercial Paper Composite Rate plus 25 basis
points, set at the beginning of each quarter.
Effective June 1999, the Corporation and Thermo Electron commenced use
of a new domestic cash management arrangement. Under the new arrangement,
amounts advanced to Thermo Electron by the Corporation for domestic cash
management purposes bear interest at the 30-day Dealer Commercial Paper Rate
plus 50 basis points, set at the beginning of each month. Thermo Electron is
contractually required to maintain cash, cash equivalents, and/or immediately
available bank lines of credit equal to at least 50% of all funds invested under
this cash management arrangement by all Thermo Electron subsidiaries other than
wholly owned subsidiaries. The Corporation has the contractual right to withdraw
its funds invested in the cash management arrangement upon 30 days' prior
notice. At year-end 1999, the Corporation had invested $46,285,000 under this
arrangement. In addition, certain of the Corporation's European-based
subsidiaries participate in a new cash management arrangement with a wholly
owned subsidiary of Thermo Electron on terms similar to the domestic cash
management arrangement. The Corporation has access to a $36,473,000 line of
credit under this arrangement, of which the Corporation had invested $411,000
and had borrowed $34,600,000 at year-end 1999. Interest under this arrangement
is calculated based on Euro market rates and was 3.95% on the negative balance
at year-end 1999.
The Corporation, along with certain other Thermo subsidiaries, has
entered into a cash management arrangement with ABN AMRO. Only European-based
Thermo Subsidiaries participate in this arrangement. The new arrangement with
ABN AMRO consists of a zero balance arrangement, which includes a $25,417,000
credit facility. The Corporation has access to $2,280,000 under this credit
facility. Funds borrowed by the Corporation under this arrangement pay interest
at a rate set by Thermo Finance B.V., a wholly-owned subsidiary of Thermo
Electron, at the beginning of each month, based on Netherlands market rates.
Funds invested by the Corporation under the arrangement earn a rate set by
Thermo Finance B.V. at the beginning of each month, based on Netherlands market
rates. Such invested funds are collateralized with investments principally
consisting of corporate notes, U.S. government-agency securities, commercial
paper, money market funds, and other marketable securities, in the amount of at
least 103% of such obligation. Thermo Electron guarantees all of the obligations
of each participant in this arrangement. As of January 2, 1999, the Corporation
had a negative cash balance of approximately $698,000, based on an exchange rate
of $0.4599/NLG 1.00. As of January 1, 2000, the average annual interest rate
earned on NLG deposits by participants in this credit arrangement was
approximately 3.19% and the average annual interest rate paid on overdrafts was
approximately 3.74%.
THERMO ELECTRON CORPORATE REORGANIZATION
Thermo Electron has adopted a major reorganization plan under which,
among other things, it is acquiring the minority interest in most of its
subsidiaries that have minority investors. In furtherance of this plan, Thermo
Electron intends to commence an exchange offer for any and all of the
outstanding shares of common stock of the Corporation that it does not own. The
consideration being offered in the exchange offer is .45 shares of Thermo
Electron common stock for each share of the Corporation's common stock. The goal
of the exchange offer is to bring Thermo Electron's equity ownership in the
Corporation to at least 90%. If Thermo Electron achieves this 90%-ownership
level, the Corporation would then be taken private through a "short-form" merger
at the same exchange ratio as the exchange offer. In addition, as part of this
reorganization plan, the Corporation completed the acquisition of the minority
interest in each of its Thermo Voltek, Thermo Sentron and Thermedics Detection
subsidiaries. The consideration paid in each of these transactions was $7.00,
$15.50 and $8.00 per share in cash, respectively, without interest.
<PAGE>
Executive officers and directors of the Corporation who held shares of
common stock in the Corporation's subsidiaries described above that were taken
private received the same cash consideration per share of subsidiary stock as
all other stockholders of such subsidiaries. In addition, the executive
officers' and directors' options to acquire shares of such subsidiaries' common
stock, for which the granting corporation's repurchase rights had not lapsed
("unvested options"), were automatically assumed by either the Corporation or
Thermo Electron, as applicable, and converted into options to purchase shares of
the Corporation's common stock or Thermo Electron's common stock on the same
terms as were applicable to all the other holders of such subsidiary's options,
as described below. In the case of options to acquire shares of such
subsidiaries' common stock, for which the granting corporation's repurchase
rights had lapsed ("vested options"), the holders were given the opportunity to
elect either to convert the options into vested options to acquire shares of the
Corporation's common stock or Thermo Electron's common stock, as applicable, or
to receive cash at the applicable cash transaction price less the applicable
exercise price, on the same terms as were applicable to all the other holders of
such subsidiary's options.
Vested and unvested options that were assumed by the Corporation or
Thermo Electron in these completed transactions generally were converted as
follows: The number of shares of the Corporation's common stock or Thermo
Electron's common stock underlying each assumed option equaled the number of
shares of subsidiary common stock underlying the option before the transaction,
multiplied by the applicable "cash exchange ratio" described below, rounded down
to the nearest whole number of shares of the Corporation's common stock or
Thermo Electron's common stock. The exercise price for each assumed option was
calculated by dividing the exercise price of the subsidiary stock option before
the transaction by the applicable "cash exchange ratio" described below, rounded
up to the nearest whole cent. The applicable "cash exchange ratio" for each
transaction was a fraction, the numerator of which was the applicable cash price
described above and the denominator of which was the closing price of the
Corporation's common stock or Thermo Electron's common stock, as applicable, on
the day preceding the effective date of the transaction.
Additionally, certain directors participated in the deferred
compensation plans of the various subsidiaries. On the effective date of each of
the completed cash transactions listed above, each of the affected subsidiaries'
deferred compensation plans terminated and the participants received cash in an
amount equal to the balance of such participant's stock units credited to his or
her account under the respective deferred compensation plan, multiplied by the
applicable cash price described above. Any such stock units held by directors
are included in their stock ownership information described below.
In the Thermo Voltek Corp. transaction, Mr. Melas-Kyriazi (who is not a
named executive officer of the Corporation for purposes of Securities and
Exchange Commission regulations, and whose ownership information therefore does
not appear in such stock ownership table)and Mr. Wood received a cash payment of
$7.00 per share for 5,581 and 14,621 shares of common stock of Thermo Voltek
Corp. held by such individuals, respectively. Additionally, Mr. Crisp, Mr.
Ferrari, Mr. Wood and Mr. Zervas held options to acquire 2,250, 2,250, 82,350
and 2,250 shares of Thermo Voltek Corp. common stock, respectively, that were
converted into options to acquire shares of common stock of the Corporation, as
described above.
In the Thermedics Detection Inc. transaction, Mr. Ferrari and Mr. Wood
received a cash payment of $8.00 per share for 599 and 17,251 shares of common
stock of Thermedics Detection Inc. held by such individuals, respectively.
Additionally, Mr. Keiser and Mr. Wood held options to acquire 17,000 and 20,000
shares of Thermedics Detection Inc. common stock, respectively, that were
converted into options to acquire shares of Thermo Electron common stock, as
described above.
In the Thermo Sentron Inc. transaction, Mr. Wood received a cash
payment of $15.50 per share for 4,000 shares of common stock of Thermo Sentron
Inc. held by Mr. Wood. Additionally, Mr. Keiser, Mr. Poirier and Mr. Wood held
options to acquire 19,500, 7,500 and 31,000 shares of Thermo Sentron Inc. common
stock, respectively, that were converted into options to acquire shares of
Thermo Electron common stock, as described above.
Executive officers and directors of the Corporation who hold shares of
the Corporation's common stock will receive the same consideration per share for
such stock as all other stockholders of the Corporation. See Item 12 "Security
Ownership of Certain Beneficial Owners and Management."
In addition, certain executive officers and directors of the
Corporation hold options to acquire shares of common stock of the Corporation
(See Item 12 - "Security Ownership of Certain Beneficial Owners and
Management"), which options will be treated in the same manner as options held
by other employees. All options held by such persons will be assumed by Thermo
Electron and converted into options to acquire shares
<PAGE>
of Thermo Electron's common stock on the same terms as are applicable to all the
other holders of the Corporation's options.
Specifically, vested and unvested options that are being assumed by
Thermo Electron in the proposed transaction will be converted as follows: The
number of shares of Thermo Electron common stock underlying each assumed option
will equal the number of shares of the Corporation common stock underlying the
option before the transaction, multiplied by the exchange ratio, rounded down to
the nearest whole number of shares of Thermo Electron common stock. The exercise
price for each assumed option will be calculated by dividing the exercise price
of the Corporation stock option before the transaction by the exchange ratio,
rounded up to the nearest whole cent.
In addition to the ownership information that appears in the Item 12 -
"Security Ownership of Certain Beneficial Owners and Management" table, Mr.
Melas-Kyriazi holds 11,861 shares of common stock of the Corporation.
On the effective date of the proposed transaction, the Corporation's
deferred compensation plan will be assumed by Thermo Electron, and the stock
units credited to each participant's account under the deferred compensation
plan will be converted into stock units for Thermo Electron common stock at the
exchange ratio.
STOCK HOLDING ASSISTANCE PLAN
The human resources committee of the Corporation's board of directors
(the "Committee") established a stock holding policy that requires its chief
executive officer to acquire and hold a minimum number of shares of Common
Stock. In order to assist the chief executive officer in complying with the
policy, the Committee also adopted a stock holding assistance plan under which
the Corporation may make interest-free loans to the chief executive officer, to
enable him to purchase Common Stock in the open market. Loans will be repayable
upon the earlier of demand or the tenth anniversary of the date of the loan,
unless otherwise determined by the Committee. No such loans were outstanding in
1999.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Amendment No. 1 on Form 10-K/A
to be signed by the undersigned, duly authorized.
THERMEDICS INC.
By: / s / Sandra L. Lambert
------------------------------
Sandra L. Lambert
Clerk
