SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------------------------
FORM 10-K
(mark one)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended January 1, 1994
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-9786
THERMO INSTRUMENT SYSTEMS INC.
(Exact name of Registrant as specified in its charter)
Delaware 04-2925809
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
504 Airport Road, Post Office Box 2108
Santa Fe, New Mexico 87504-2108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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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. Yes [ 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, 1994 was approximately $285,535,000.
As of January 28, 1994, the Registrant had 46,487,606 shares of Common Stock
outstanding.
Documents Incorporated by Reference
Portions of the Registrant's Annual Report to Shareholders for the year ended
January 1, 1994, are incorporated by reference into Parts I and II.
Portions of the Registrant's definitive Proxy Statement for the Annual Meeting
of Shareholders to be held on May 23, 1994, are incorporated by reference into
Part III.PAGE
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PART I
Item 1. Business
(a) General Development of Business.
Thermo Instrument Systems Inc. (the Company or the Registrant) is a worldwide
leader in the development, manufacture, and marketing of analytical instruments
used to detect and measure air pollution, nuclear radioactivity, complex
chemical compounds, toxic metals, and other elements in a wide variety of
materials. The Company also provides laboratory-based environmental and
radiochemical analytical testing, nuclear health physics, and environmental
science and engineering services. The Company was incorporated in Delaware in
May 1986 as a wholly owned subsidiary of Thermo Electron Corporation (Thermo
Electron) to succeed to instruments businesses that were previously conducted by
several Thermo Electron subsidiaries.
The Company historically has expanded both through the acquisition of
companies and product lines and through internal development of new products and
technologies. During the past several years the Company has completed several
complementary acquisitions that have provided additional technologies,
specialized manufacturing or product development expertise, and broader
capabilities in marketing and distribution. In 1993*, the Company's acquisitions
included the radiation safety measurement and radiometry divisions of FAG
Kugelfischer George Shafer AG for a purchase price of $12.6 million; Hilger
Analytical Ltd. for a purchase price of $2.9 million; Spectra-Physics Analytical
for a purchase price of $67.3 million; and Gamma-Metrics for a purchase price of
$20.1 million. In 1992 the Company's acquisitions included Nicolet Instrument
Corporation for a purchase price of $179 million and Gas Tech Inc. for a
purchase price of $28.1 million. In 1990 the Company acquired Finnigan
Corporation for a purchase price of $110 million. Also, effective April 5, 1993,
the Company sold the biomedical and clinical products business of its Nicolet
Instrument Corporation subsidiary to Thermo Electron for approximately $67.9
million in cash. On January 31, 1994, the Company announced its intention to
acquire, subject to regulatory approvals and the satisfaction of certain
conditions to closing, several businesses within the EnviroTech Measurements &
Controls group of Baker Hughes Incorporated for a cash purchase price of
approximately $93 million. The businesses to be acquired manufacture products
used for process control, process measurement, and laboratory analysis.
As of January 1, 1994, Thermo Electron owned 81% of the Company's common
stock outstanding and, therefore, has the power to elect all of the Company's
Directors. Thermo Electron intends for the foreseeable future to maintain at
least 80% ownership of the Company so that it may continue to file consolidated
U.S. federal income tax returns with the Company. This will require the purchase
by Thermo Electron of additional shares and/or convertible debentures of the
Company from time to time as the number of outstanding shares issued by the
Company increases. These purchases may be made either on the open market or
directly from the Company at prevailing market prices, or pursuant to
conversions of the Company's 7% subordinated convertible note due 1996 or the
3 3/4% senior convertible note due 2000 held by Thermo Electron. See Notes 3 and
8 to Consolidated Financial Statements in the Registrant's 1993 Annual Report to
Shareholders for a description of the Company's outstanding stock options and
convertible debentures. During 1993, Thermo Electron purchased 1,754,100 shares
of the Company's common stock, on the open market, for a total price of $48.4
million.
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*References to 1993, 1992, and 1991 herein are for the fiscal years ended
January 1, 1994, January 2, 1993, and December 28, 1991, respectively.
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(b) Financial Information About Industry Segments.
The Company's products and services are divided into two segments:
Instruments and Services. The principal products and services rendered by the
Company in these two segments are described in detail below (see "Principal
Products and Services").
Financial information concerning the Company's industry segments is provided
in Note 10 to Consolidated Financial Statements in the Registrant's 1993 Annual
Report to Shareholders and is incorporated herein by reference.
(c) Description of Business.
(i) Principal Products and Services
Instruments
Instruments manufactured and marketed by the Company employ a variety of
advanced technologies and spectral, electroanalytical, and separation techniques
to determine the composition or structure and physical properties of natural and
synthetic substances. The Company's instruments can be broadly categorized by
their uses as analytical or monitoring instruments.
Analytical Instruments
The Company's principal analytical instrument products are atomic emission
and absorption spectrometers, Fourier transform infrared (FT-IR) and FT-Raman
spectrometers, mass spectrometers, and high performance liquid chromatographs.
Atomic Emission (AE) and Atomic Absorption (AA) Spectrometers identify and
measure trace quantities of metals, and other elements in a wide variety of
materials, including environmental samples (such as soil, water, and wastes),
foods, drugs, cosmetics, and alloys. The Company sells its products to a wide
range of customers in manufacturing industries such as producers of aircraft,
automobiles and trucks, computers, chemicals, food, pharmaceuticals, and primary
metals; service industries such as waste management companies and commercial
testing laboratories; and government and university laboratories.
The Company is a leading manufacturer of sequential AE spectrometers, in
which elements are analyzed one at a time, and simultaneous AE spectrometers, in
which many elements can be measured at one time. The Company produces AA
spectrometers in single-, double- and four-channel models. The Company is the
only major producer of multichannel AA spectrometers, which provide several
operational advantages over single-channel instruments, including speed of
analysis, increased accuracy, reduced sample consumption, and analysis over an
extended range of concentrations.
The Company's FT-IR and FT-Raman spectrometers are designed to
nondestructively determine the chemical composition and physical properties of
materials. These instruments are used in many areas of chemical research,
industrial quality control and process monitoring, and for solving a wide
variety of materials analysis problems. The Company offers a variety of models
ranging from newly introduced models designed for routine applications to highly
advanced research-grade FT-IR spectrometers.
The Company is a leading manufacturer of commercial mass spectrometers and
has pioneered many of the significant developments and applications of mass
spectrometry. The Company's mass spectrometry products identify and measure the
components of a sample for organic chemical compounds or for inorganic
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compounds. These instruments are used by customers in environmental analysis and
pollution control; in research and production of pharmaceuticals; in
biochemistry; in analysis of foods, chemicals, and petrochemicals; and in health
and forensic science. The Company provides both stand-alone mass spectrometers
and combined systems that use chromatographs purchased from other companies.
These products span a range of sensitivity, specificity, separation
technologies, data-handling capabilities, sizes, and prices.
The Company also sells high performance liquid chromatography, capillary
electrophoresis, and related instruments and equipment used principally in the
research and development production monitoring of pharmaceuticals, chemicals,
and personal-care products, and for environmental monitoring. These instruments
separate the chemical components of substances for purposes of identification
and measurement. Capillary electrophoresis is a relatively new separation
technique that is based on a combination of chromatographic and
electroanalytical technologies and is particularly useful in biochemical,
pharmaceutical, and environmental research. In addition, the Company
manufactures and markets digital oscilloscopes and multichannel transient
recorders, as well as X-ray imaging systems used for quality control in the
electronics industry.
Monitoring Instruments
The Company also manufactures monitoring instruments for two principal
markets: the detection and measurement of nuclear radiation, and the monitoring
of air pollutants including toxic and combustible gases.
The Company's nuclear radiation monitoring instruments detect and measure
alpha, beta, gamma, neutron, and X-ray radiation emitted by natural sources and
by radioactive materials used in nuclear power plants and certain governmental,
industrial, and medical facilities. The Company is a leading manufacturer of a
broad range of stand-alone and portable instruments and computer-integrated
instrument systems used to ensure the safety of personnel from exposure to
nuclear radiation. Nuclear power plants and U.S Department of Energy (DOE)
facilities purchase approximately 85% of the radiation monitoring instruments
sold by the Company. In addition, a key product line made available through the
Gamma-Metrics acquisition is equipment that provides on-line, real-time analysis
of elements in bulk raw materials, such as coal and cement. These analyzers are
used by utilities to determine the sulfur content of coal to ensure compliance
with air quality standards and by the cement industry to test raw materials to
assure product quality and uniformity. The businesses acquired from FAG
Kugelfischer Georg Schafer AG provide two classes of products. The radiation
safety-measurement products division is a major supplier of instruments and
systems that are manufactured to European standards for personnel protection and
environmental monitoring. The radiometry division manufactures industrial
gauging and process control instruments used principally by manufacturers of
flat sheet materials, including metals, plastics, rubber, paper, and fibers.
The Company's air-monitoring instruments measure pollutants in ambient air
and from stationary sources such as industrial smokestacks. The principal
pollutants measured are oxides of nitrogen, sulfur dioxide, carbon monoxide,
ozone, and volatile organic compounds (VOCs). These instruments are used by
utility and industrial customers to ensure compliance with environmental
regulations, by government agencies to monitor air quality, and by research
facilities. The Occupational Safety and Health Administration's safety
requirements for protecting workers from toxic or explosive atmospheres in
confined spaces are addressed with detectors, instruments, and systems for
sensing, monitoring, and warning of such dangers. These worker-safety products
are used in a wide range of applications, from large petrochemical plants,
utilities, and industrial manufacturing facilities to commercial buildings.
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In addition to analytical and monitoring instruments, the Company supplies
related accessories, spare parts, and instrument maintenance and training
programs at its own and its customers' facilities.
Services
Through a network of facilities in the United States, the Company provides
comprehensive laboratory-based environmental testing, analysis, and related
services to detect and measure hazardous wastes and radioactive materials,
on-site sampling and analysis in support of decontamination programs, and
dosimetry services to measure personnel exposure to radiation. In addition, the
Company provides a range of environmental consulting and engineering services to
private- and public-sector clients, including environmental impact studies,
surveying and site planning, transportation engineering and construction
inspection.
Customers and Marketing
Instruments
The Company sells many of its products and services to customers whose
activities are subject to numerous environmental quality, pollution control, and
occupational safety and health regulations and laws enacted by federal, state,
and local governments and by international accord. Customers include industrial
manufacturers, environmental laboratories, utilities, waste management and
treatment facilities, and government agencies. The Company's analytical
instruments also are used in biomedical applications such as analysis of drugs
and drug metabolites; and in academic and industrial chemical research; in
forensic science; in energy and mineral resource exploration and production; in
metals processing; and in a range of product quality assurance and process
monitoring applications.
The Company sells its products through its own marketing and sales force in
North America, Europe, and Asia and receives additional market coverage through
authorized representatives throughout the world. Some products are distributed
through original equipment manufacturer (OEM) agreements. The Company's products
are installed and serviced in most major markets by the Company's personnel.
Installation and service in some countries is provided by authorized
representatives. Customers may purchase service contracts from the Company to
cover equipment no longer under warranty, and service work also is provided on a
time, materials, and expense basis. Training courses on both the operation and
maintenance of the Company's products are conducted for customers and authorized
representatives who service the products.
Services
The market for the Company's services results primarily from customers who
need to comply with federal, state, and local regulations that relate to
environmental protection, the management and treatment of hazardous wastes, and
the need to upgrade and expand infrastructure in response to economic
development. These customers typically rely on independent laboratories and
environmental science and engineering consultants, such as the Company's, for
ongoing analysis and monitoring of such wastes and direction for compliance with
various environmental regulations.
A substantial portion of the Company's analytical laboratory and
environmental science services sales are made to existing customers on a repeat
basis. Environmental science services are often performed as multiyear studies.
In addition to federal, state, and local governments, customers include public
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utilities, consulting and construction engineers, waste management companies,
oil refineries, mining companies, chemical manufacturers, architects and
engineering firms, and a variety of service companies involved with real estate
transactions. The Company participates in industrial trade shows and technical
conferences concerning pollution control, water quality, environmental
management, specific cleanup efforts (e.g. Superfund), and industrial hygiene.
(ii) & (xi) New Products; Research and Development
The Company maintains active programs for the development of new products
using both new and existing technologies and for enhancing existing products by
improving their price-performance ratio. The development of new applications for
analytical instrument products is an especially important element of the growth
strategy for these products. Although the Company's products are subject to
obsolescence due to technological developments, sudden obsolescence is not
characteristic of the Company's business.
Research and development expenses for the Company were $34,510,000,
$26,138,000, and $16,318,000 in 1993, 1992, and 1991, respectively.
(iii) Raw Materials
The Company manufactures many of the parts and subsystems used in its
products, including optical components and proprietary circuitry. Other
components, including packaging materials, integrated circuits, microprocessors,
and computers, are manufactured by others. The raw materials, components, and
supplies purchased by the Company are either available from a number of
different suppliers or from alternative sources that could be developed without
a material adverse effect upon the Company's business.
(iv) Patents, Licenses, and Trademarks
The Company's policy is to protect its intellectual property rights,
including applying for and obtaining patents when appropriate. The Company also
enters into licensing agreements with other companies in which it grants or
receives rights to specific patents and technical know-how. Patent protection is
believed to provide the Company with competitive advantages with respect to
certain instruments such as its mass spectrometers with ion traps. The Company
also considers technical know-how, trade secrets, and trademarks to be important
to its business.
(v) Seasonal Influences
There are no significant seasonal influences on the Company's Instruments
segment revenues. Certain environmental services, such as field sampling, may
decline in winter months, but such seasonal influences are not expected to have
a material effect on Services segment revenues.
(vi) Working Capital Requirements
There are no special inventory requirements or credit terms extended to
customers that would have a material adverse effect on the Company's working
capital requirements.
(vii) Dependency on a Single Customer
The Company's Instruments segment is not dependent upon any single customer,
or a few customers. The Company's Services segment derived approximately 31%,
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30%, and 21% of its revenues in 1993, 1992, and 1991, respectively, from
contracts or subcontracts with the federal government. No single customer
accounted for more than 10% of the Company's revenues in any of the past three
years.
(viii) Backlog
The backlog of firm orders for the Instruments segment at the end of 1993 and
1992 was $115,620,000 and $98,067,000, respectively. The backlog of firm orders
for the Services segment at the end of 1993 and 1992 was $26,196,000 and
$34,061,000, respectively. The Company anticipates that substantially all of the
backlog at the end of 1993 will be shipped or completed within the current
fiscal year.
(ix) Government Contracts
Approximately 31% of the Company's Services segment revenue in 1993 was
derived from contracts or subcontracts with the federal government that are
subject to renegotiation of profits or termination. The Company does not have
any knowledge of threatened or pending renegotiation or termination of any
material contract or subcontract.
(x) Competition
Instruments
The Company generally competes on the basis of technical advances that result
in new products and improved price-performance ratios, reputation among
customers as a quality leader for products and services, and active research and
application-development programs. To a lesser extent, the Company competes on
the basis of price.
The Company believes it is among the principal manufacturers specializing in
analytical instrumentation, although it faces significant competition from other
companies and technologies in most of its product lines and its relative
position in certain markets cannot be determined due to insufficient data. The
Company believes it is the leading supplier of mass spectrometers, FT-IR
spectrometers, FT-IR and FT-Raman microscopes, and optical plasma-emission
spectrometers and a major supplier of atomic absorption spectrometers. In liquid
chromatography, the Company believes its competitors include several larger
companies and numerous specialty manufacturers. In its remaining analytical
instrument product lines, the Company believes its competitors are mainly
smaller, specialized firms.
The Company is a leading manufacturer of ambient air monitoring instruments
and a major manufacturer of source monitoring and worker-safety monitoring
instruments. Some engineering companies compete for large ambient air monitoring
installations, but they do not manufacture the individual instruments that form
a major part of the system, therefore, they will often buy these from the
Company on an OEM basis.
Services
Hundreds of independent analytical testing laboratories and engineering and
consulting firms compete for environmental services business nationwide. Many of
these firms use equipment and processes similar to those of the Company.
Competition is based not only on price, but also on reputation for accuracy,
quality, and the ability to respond rapidly to customer requirements. In
addition, many industrial companies have their own in-house analytical testing
capabilities.
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(xii) Environmental Protection Regulations
The Company believes that compliance with federal, state, and local
environmental regulations will not have a materially adverse effect on its
capital expenditures, earnings, or competitive position.
(xiii) Number of Employees
As of January 1, 1994, the Company's Instruments and Services segments
employed 3,326 and 707 people, respectively.
(d) Financial Information about Exports by Domestic Operations and about
Foreign Operations.
Financial information about exports by domestic operations and about foreign
operations is summarized in Note 10 to Consolidated Financial Statements in the
Registrant's 1993 Annual Report to Shareholders and is incorporated herein by
reference.
(e) Executive Officers of the Registrant.
President Title (Year First Became
Name Age Executive Officer)
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Arvin H. Smith 64 President and Chief Executive Officer
(1986)
John N. Hatsopoulos* 59 Vice President and Chief Financial
Officer (1988)
Denis A. Helm 54 Senior Vice President (1986)
Earl R. Lewis 50 Senior Vice President (1990)
Richard W. K. Chapman 49 Vice President (1994)
Barry S. Howe 38 Vice President (1994)
John T. Keiser 57 Vice President (1986)
Paul F. Kelleher 51 Chief Accounting Officer (1986)
* John N. Hatsopoulos and George N. Hatsopoulos, a director of the Company,
are brothers.
Each executive officer serves until his successor is chosen or appointed and
qualified or until earlier resignation, death, or removal. All executive
officers, except Mr. Chapman, have held comparable positions for at least five
years either with the Company or with its parent company, Thermo Electron. For
the past five years, Mr. Chapman has held management positions at the Company's
Finnigan subsidiary, first as marketing manager and, beginning in 1992, as
president. Messrs. Helm, Lewis, Chapman, Howe, and Keiser are full-time
employees of the Company. Messrs. Smith, Hatsopoulos, and Kelleher are full-time
employees of Thermo Electron, but devote such time to the affairs of the Company
as the Company's needs reasonably require.
Item 2. Properties
The location and general character of the Company's principal properties as
of January 1, 1994, are as follows:
Instruments
The Company owns approximately 697,000 square feet of office, engineering,
laboratory, and production space, principally in California, Colorado, Florida,
New Mexico, Wisconsin, Germany, and England, and leases approximately 694,000
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square feet of office, engineering, laboratory, and production space under
leases expiring from 1994 to 2017, principally in California, Massachusetts,
Connecticut, Wisconsin, Japan, and Germany. As of January 1, 1994, the Company
has an $11,536,000 mortgage loan which is secured by 200,000 square feet of
property in California which has a net book value of $16,826,000.
Services
The Company owns approximately 44,000 square feet of office, engineering,
laboratory, and production space, principally in California and New Mexico, and
leases approximately 195,000 square feet of office, engineering, laboratory, and
production space under leases expiring from 1994 to 2008, principally in
Massachusetts, New Hampshire, New Jersey, New Mexico, New York, and Vermont.
The Company believes that its facilities are in good condition and are
suitable and adequate to meet current needs, and that suitable replacements are
available on commercially reasonable terms for any leases which expire in 1994
in the event that the Company is unable to renew such leases on reasonable
terms.
Item 3. Legal Proceedings
The Company has been notified that the Environmental Protection Agency has
determined that a release or a substantial threat of a release of a hazardous
substance, as defined in the Comprehensive Environmental Response Compensation
and Liability Act of 1980 (CERCLA or the Superfund law), occurred at two sites
to which chemical or other wastes generated by the manufacturing operations of
subsidiaries of the Company (including Nicolet) were sent. These notifications
allege that these subsidiaries may be potentially responsible parties with
respect to the remedial actions needed to control or clean up any such releases.
Under CERCLA, responsible parties can include current and previous owners of the
site, generators of hazardous substances disposed of at the site, and
transporters of hazardous substances to the site. Each responsible party can be
jointly and severally liable, without regard to fault or negligence, for all
costs associated with the remediation of the site. In each instance the Company
believes that its subsidiary is only one of several companies which received
such notification and who may likewise be held liable for any such remedial
costs. The Company also is involved with one site under California law where the
Company may be required to participate in remediation.
The Company evaluates its potential liability as a responsible party for
these environmental matters on an ongoing basis based upon factors such as the
estimated remediation costs, the nature and duration of the Company's
involvement with the site, the financial strength of other potentially
responsible parties, and the availability of indemnification from previous
owners of acquired businesses. Estimated liabilities are accrued in accordance
with Statement of Financial Accounting Standards No. 5, "Accounting for
Contingencies." To date, the Company has not incurred any significant liability
with respect to any of these sites and the Company anticipates that future
liabilities related to sites with which the Company is currently involved will
not have a materially adverse effect on the Company's business, results of
operations or financial condition.
On September 27, 1993, Analytica of Branford, Inc. (Analytica) filed a
complaint against the Company's Finnigan Corporation subsidiary (Finnigan) in
U.S. District Court for the District of Connecticut. The complaint alleges that
Finnigan has used apparatus, and has manufactured and sold products which aid
and instruct end-purchasers to use the apparatus, in a manner so as to infringe
a U.S. patent entitled "Method of Producing Multiply Charged Ions and For
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Determining Molecular Weights of Molecules By Use of the Multiply Charged Ions
of Molecules", and asks for injunctive relief, profits, unspecified damages, and
attorney's fees. The Company believes that the Finnigan products and
applications which Analytica seeks to challenge may include mass spectrometers
equipped with electrospray ionization sources which are used for multiple
charged ion analysis of high molecular weight compounds. Finnigan has filed its
answer denying infringement and also has counterclaimed for a declaration that
the Analytica patent be held invalid and not infringed. Discussions between the
parties and discovery has begun. No trial date has been set.
Item 4. Submission of Matters to a Vote of Security Holders
On December 30, 1993, at a Special Meeting of Shareholders, the shareholders
approved an amendment to the Corporation's Restated Certificate of Incorporation
that increased the authorized common stock of the Corporation to 125 million
shares. The vote was as follows: 37,635,472 shares voted in favor, 7,398 shares
voted against and 562 shares abstained. There were no broker "non-votes"
recorded on the proposal. In addition, the shareholders approved an increase of
two million shares in the number of shares reserved for issuance under the
Corporation's equity incentive plan. The vote was as follows: 37,536,834 shares
voted in favor, 106,261 shares voted against and 337 shares abstained. There
were no broker "non-votes" recorded on the proposal.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Information concerning the market and market price for the Registrant's
Common Stock, $.10 par value, and dividend policy is included under the sections
entitled "Common Stock Market Information" and "Dividend Policy" in the
Registrant's 1993 Annual Report to Shareholders and is incorporated herein by
reference.
Item 6. Selected Financial Data
The information required under this item is included under the sections
entitled "Selected Financial Information" and "Dividend Policy" in the
Registrant's 1993 Annual Report to Shareholders and is incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required under this item is included under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Registrant's 1993 Annual Report to Shareholders and is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The Registrant's Consolidated Financial Statements as of January 1, 1994 are
included in the Registrant's 1993 Annual Report to Shareholders and are
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
Not applicable.
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PART III
Item 10. Directors and Executive Officers of the Registrant
The information concerning directors required under this item is incorporated
herein by reference from the material contained under the caption "Election of
Directors" in the Registrant's definitive proxy statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, not later than
120 days after the close of the fiscal year. The information concerning
delinquent filers pursuant to Item 405 of Regulation S-K is incorporated herein
by reference from the material contained under the heading "Disclosure of
Certain Late Filings" under the caption "Stock Ownership" in the Registrant's
definitive proxy statement to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A, not later than 120 days after the close
of the fiscal year.
Item 11. Executive Compensation
The information required under this item is incorporated herein by reference
from the material contained under the caption "Executive Compensation" in the
Registrant's definitive proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A, not later than 120 days after
the close of the fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required under this item is incorporated herein by reference
from the material contained under the caption "Stock Ownership" in the
Registrant's definitive proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A, not later than 120 days after
the close of the fiscal year.
Item 13. Certain Relationships and Related Transactions
The information required under this item is incorporated herein by reference
from the material contained under the caption "Relationship with Affiliates" in
the Registrant's definitive proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A, not later than 120 days after
the close of the fiscal year.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a), (d) Financial Statements and Schedules.
(1) The consolidated financial statements set forth in the list below are
filed as part of this Report.
(2) The consolidated financial statement schedules set forth in the list
below are filed as part of this Report.
(3) Exhibits filed herewith or incorporated herein by reference are set
forth in Item 14(c) below.
List of Financial Statements and Schedules Referenced in this Item
14.
Information incorporated by reference from Exhibit 13 filed
herewith:
Consolidated Statement of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Shareholders' Investment
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
Certain Financial Statement Schedules filed herewith:
Schedule I: Marketable Securities
Schedule IV: Indebtedness of and to Related Parties
Non-current
Schedule VIII: Valuation and Qualifying Accounts
Schedule IX: Short-term Borrowings
All other schedules are omitted because they are not applicable or
not required, or because the required information is shown either in
the financial statements or the notes thereto.
(b) Reports on Form 8-K.
During the quarter ended January 1, 1994 the Registrant was not required to
file, and did not file, any Current Report on Form 8-K.
(c) Exhibits.
See Exhibit Index on the page immediately preceding exhibits.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: March 8, 1994 THERMO INSTRUMENT SYSTEMS INC.
By: Arvin H. Smith
Arvin H. Smith
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, as of March 8, 1994.
Signature Title
By: Arvin H. Smith President, Chief Executive Officer
Arvin H. Smith
By: John N. Hatsopoulos Vice President, Chief Financial Officer
John N. Hatsopoulos
By: Paul F. Kelleher Chief Accounting Officer
Paul F. Kelleher
By: Marshall J. Armstrong Director
Marshall J. Armstrong
By: Frank Borman Director
Frank Borman
By: Elias P. Gyftopoulos Director
Elias P. Gyftopoulos
By: George N. Hatsopoulos Chairman of the Board and Director
George N. Hatsopoulos
By: Robert C. Howard Director
Robert C. Howard
By: Frank Jungers Director
Frank Jungers
By: Robert A. McCabe Director
Robert A. McCabe
By: Director
Polyvios C. Vintiadis
13PAGE
<PAGE>
Report of Independent Public Accountants
----------------------------------------
To the Shareholders and Board of Directors of
Thermo Instrument Systems Inc.
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in Thermo Instrument Systems Inc.'s
Annual Report to Shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated February 17, 1994. Our audits were made for
the purpose of forming an opinion on those statements taken as a whole. The
schedules listed in Item 14 on page 12 are the responsibility of the Company's
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic consolidated financial
statements. These schedules have been subjected to the auditing procedures
applied in the audits of the basic consolidated financial statements and, in our
opinion, fairly state in all material respects the financial data required to be
set forth therein in relation to the basic consolidated financial statements
taken as a whole.
Arthur Andersen & Co.
Boston, Massachusetts,
February 17, 1994.
14PAGE
<PAGE>
SCHEDULE I
THERMO INSTRUMENT SYSTEMS INC.
MARKETABLE SECURITIES
as of
January 1, 1994
(In thousands)
Amount at
Which Each
Issue is
Carried in
Market the
Name of Issuer and Title of Each Principal Cost of Value of Balance
Issue Amount Each Issue Each Issue Sheet
- -------------------------------- --------- ---------- ---------- ---------
Funds invested in a repurchase
agreement with
Thermo Electron (a) $148,975 $148,975 $148,975 $148,975
Corporate Bonds:
Thermedics Inc. (b) 6,323 5,805 9,138 6,145
Other:
Time deposits 8,466 8,466 8,466 8,466
Cash 20,001 20,001 20,001 20,001
-------- -------- -------- --------
28,467 28,467 28,467 28,467
-------- -------- -------- --------
Total Cash, Cash
Equivalents, and
Short-term
Investments $183,765 $183,247 $186,580 $183,587
======== ======== ======== ========
(a) As described in Note 1 to Consolidated Financial Statements in the
Registrant's 1993 Annual Report to Shareholders.
(b) As described in Note 7 to Consolidated Financial Statements in the
Registrant's 1993 Annual Report to Shareholders. Thermedics Inc. is a
majority-owned subsidiary of Thermo Electron.
15PAGE
<PAGE>
SCHEDULE IV
THERMO INSTRUMENT SYSTEMS INC.
INDEBTEDNESS OF AND TO RELATED PARTIES NON-CURRENT
(In thousands)
Balance at Balance at
Beginning Deductions End of
Name of Creditor (a) of Year Additions (b) Year
- ------------------------------ ---------- --------- ---------- ----------
Year Ended January 1, 1994
Thermo Electron - Promissory
Note - Due 1995 $ 48,000 $ - $ (48,000) $ -
Thermo Electron - Promissory
Note - Due 1995 $ - $ 20,000 $ (20,000) $ -
Thermo Electron - 3 3/4%
Subordinated Convertible
Note - Due 2000 $ - $140,000 $ - $140,000
Thermo Electron - 7%
Subordinated Convertible
Note - Due 1996 $ 3,434 $ - $ (700) $ 2,734
Year Ended January 2, 1993
Thermo Electron - Promissory
Note - Due 1995 $ - $ 48,000 $ - $ 48,000
Thermo Electron - 7%
Subordinated Convertible
Note - Due 1996 $ 3,434 $ - $ - $ 3,434
Year Ended December 28, 1991
Thermo Electron - 6 5/8%
Subordinated Convertible
Note - Due 2001 $ - $ 15,000 $ (15,000) $ -
Thermo Electron - 7%
Subordinated Convertible
Note - Due 2000 $ 6,000 $ - $ (6,000) $ -
Thermo Electron - 7%
Subordinated Convertible
Note - Due 1996 $ 6,434 $ - $ (3,000) $ 3,434
(a) As described in Note 8 to Consolidated Financial Statements in the
Registrant's 1993 Annual Report to Shareholders.
(b) Deductions represent conversions of subordinated convertible notes into
common stock of the Registrant and payment of promissory notes.
16PAGE
<PAGE>
SCHEDULE VIII
THERMO INSTRUMENT SYSTEMS INC.
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Balance Charges
at to Dis- Bad Less:
Begin- Costs Acqui- posi- Debts Accounts Balance
ning of and sitions tions Recov- Written at End
Description Year Expenses (a) (a) ered off of Year
- ------------------- ------- -------- ------- ------ ------ -------- -------
Year Ended
January 1, 1994
Allowance for
Doubtful Accounts $7,276 $ 970 $1,322 $(586) $1,241 $(1,767) $8,456
Year Ended
January 2, 1993
Allowance for
Doubtful Accounts $7,096 $ 666 $ 985 $ - $ (42) $(1,429) $7,276
Year Ended
December 28, 1991
Allowance for
Doubtful Accounts $6,924 $1,156 $ - $ - $ 89 $(1,073) $7,096
(a) As described in Note 2 to Consolidated Financial Statements in the
Registrant's 1993 Annual Report to Shareholders.
17PAGE
<PAGE>
SCHEDULE IX
THERMO INSTRUMENT SYSTEMS INC.
SHORT-TERM BORROWINGS
(In thousands except percentages)
Year-End During the Year
--------------- -------------------------
Weight- Average Weight-
ed Highest of ed
Average Quarter- Quarter- Average
Interest end end Interest
Year Ended Category (a) Balance Rate Balance Balances Rate (b)
- ----------------- ------------------ ------- ------- -------- -------- -------
January 1, 1994 Thermo Electron(c) $ - - $93,172 $28,414 3.6%
Bank $37,516 6.5% $37,516 $21,894 7.3%
January 2, 1993 Thermo Electron(c) $28,127 3.5% $46,913 $18,760 3.1%
Bank $14,037 9.3% $19,399 $11,119 9.8%
December 28, 1991 Bank $ 4,419 8.8% $ 5,604 $ 4,486 8.8%
(a) This schedule does not include current maturities of long-term
obligations.
(b) Calculations are based on the average daily interest rates in effect
during the periods the loans were outstanding.
(c) As described in Note 8 to Consolidated Financial Statements in the
Registrant's 1993 Annual Report to Shareholders.
18PAGE
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Reference Page
- ------- --------- ----
3.1 Restated Certificate of Incorporation of the Registrant,
as amended.
3.2 By-Laws of the Registrant (filed as Exhibit 3(b) to the
Registrant's Annual Report on Form 10-K for the year
ended January 2, 1993 [File No. 1-9786] and incorporated
herein by reference).
4.1 Fiscal Agency Agreement dated as of August 2, 1991 among
the Registrant, Thermo Electron Corporation, and Chemical
Bank as fiscal agent, relating to $86,250,000 principal
amount 6 5/8% subordinated convertible debentures due
2001 (filed as Exhibit 4(a) to the Registrant's Annual
Report on Form 10-K for the year ended December 28, 1991
[File No. 1-9786] and incorporated herein by reference).
4.2 Fiscal Agency Agreement dated as of September 15, 1993,
among the Registrant, Thermo Electron Corporation and
Chemical Bank as fiscal agent, relating to the
$70,000,000 principal amount of 3 3/4% senior convertible
debentures due 2000 (filed as Exhibit 4 to the
Registrant's Form 10-Q for the quarter ended October 2,
1993 [File No. 1-9786] and incorporated by reference).
4.3 Subordinated convertible note purchase agreement by and
between the Registrant and Thermo Electron Corporation as
of August 2, 1991 (filed as Exhibit 10(h) to the
Registrant's Form 10-Q for the quarter ended September
28, 1991, and incorporated herein by reference).
4.4 Senior convertible note purchase agreement by and between
the Registrant and Thermo Electron Corporation as of
September 15, 1993 (filed as Exhibit 10(a) to the
Reistrant's Form 10-Q for the quarter ended October 2,
1993 [File No. 1-9786] and incorporated by reference).
4.5 Promissory Note to Thermo Electron Corporation in the
original principal amount of $48,000,000 (filed as
Exhibit 10 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended September 26, 1992,
incorporated herein by reference).
The Registrant hereby agrees, pursuant to Item 601(b) (4)
(iii) (A) of Regulation S-K, to furnish to the Commission
upon request, a copy of each instrument with respect to
other long-term debt of the Registrant or its
subsidiaries.
10.1 Amended and Restated Corporate Services Agreement, dated
as of January 3, 1993, between Thermo Electron
Corporation and the Registrant (filed as Exhibit 10(a) to
the Registrant's Annual Report on form 10-K for the year
ended January 2, 1993 [File No. 1-9786] and incorporated
herein by reference).
19PAGE
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Reference Page
- ------- --------- ----
10.2 Tax Allocation Agreement dated as of May 29, 1986,
between Thermo Electron and the Registrant (filed as
Exhibit 10(b) to the Registrant's Registration Statement
on Form S-1 [Reg. No. 33-6762] and incorporated herein by
reference).
10.3 Thermo Electron Corporate Charter, as amended and
restated effective January 3, 1993 (filed as Exhibit
10(f) to the Registrant's Annual Report on Form 10-K for
the year ended January 2, 1993 [File No. 1-9786] and
incorporated herein by reference).
10.4 Form of Indemnification Agreement with Directors and
Officers (filed as Exhibit 10(g) to the Registrant's
Annual Report on Form 10-K for the year ended
December 29, 1990 [File No. 1-9786] and incorporated
herein by reference).
10.5 Asset and Stock Purchase Agreement dated January 14, 1993
among the Registrant, Spectra-Physics Analytical, Inc.
and Spectra-Physics, Inc. (filed as Exhibit 10(j) to the
Registrant's Annual Report on Form 10-K for the year
ended January 2, 1993 [File No. 1-9786] and incorporated
herein by reference).
10.6 Plan for sale of shares by the Registrant to Thermo
Electron (filed as Exhibit 10(dd) to the Registrant's
Form 10-Q for the quarter ended July 3, 1993 [File No.
1-9786] and incorporated herein by reference).
10.7 Master Repurchase Agreement dated January 1, 1994 between
the Registrant and Thermo Electron Corporation.
10.8-10.15 Reserved
10.16 Deferred Compensation Plan for Directors of the
Registrant (filed as Exhibit 10(f) to the Registrant's
Registration Statement on Form S-1 [Reg. No. 33-6762] and
incorporated herein by reference).
10.17 Directors Stock Option Plan of the Registrant (filed as
Exhibit 10(i) to the Registrant's Annual Report on Form
10-K for the year ended December 28, 1991 [File No.
1-9786] and incorporated herein by reference).
10.18 Incentive Stock Option Plan of the Registrant (filed as
Exhibit 10(c) to the Registrant's Registration Statement
on Form S-1 [Reg. No. 33-6762] and incorporated herein by
reference). (Maximum number of shares issuable is
1,500,000 shares, after adjustment to reflect share
increase approved in 1990 and 3-for-2 stock splits
effected in January 1988 and July 1993).
20PAGE
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Reference Page
- ------- --------- ----
10.19 Nonqualified Stock Option Plan of the Registrant (filed
as Exhibit 10(d) to the Registrant's Registration
Statement on Form S-1 [Reg. No. 33-6762] and incorporated
herein by reference). (Maximum number of shares issuable
is 1,500,000 shares, after adjustment to reflect share
increase approved in 1990 and 3-for-2 stock splits
effected in January 1988 and July 1993).
10.20 Equity Incentive Plan of the Registrant (filed as
Appendix A to the Proxy Statement dated April 27, 1993 of
the Registrant [File No. 1-9786] and incorporated herein
by reference). (Maximum number of shares issuable is
2,150,000 shares, after adjustment to reflect share
increase approved in December 1993 and 3-for-2 stock
split effected in July 1993).
10.21 Former Thermo Environmental Corporation Incentive Stock
Option Plan (filed as Exhibit 10(d) to Thermo
Environmental's Registration Statement on Form S-1 [Reg.
No. 33-329] and incorporated herein by reference).
(Maximum number of shares issuable is 618,750 shares,
after giving effect to share increase approved in 1987
and adjustment to reflect 3-for-2 stock split effected in
July 1993).
10.22 Former Thermo Environmental Corporation Nonqualified
Stock Option Plan (Filed as Exhibit 10(e) to Thermo
Environmental's Registration Statement on Form S-1 [Reg.
No. 33-329] and incorporated herein by reference).
(Maximum number of shares issuable is 618,750 shares,
after giving effect to share increase approved in 1987
and adjustment to reflect 3-for-2 stock split effected in
July 1993).
In addition to the stock-based compensation plans of the
Registrant, the executive officers of the Registrant may
be granted awards under stock-based compensation plans of
the Registrants' parent, Thermo Electron Corporation, and
its subsidiaries, for services rendered to the Registrant
or to such affiliated corporations. Such plans are listed
under Exhibits 10.23-10.65.
10.23 Thermo Electron Corporation Incentive Stock Option Plan
(filed as Exhibit 4(d) to Thermo Electron's Registration
Statement on Form S-8 [Reg. No. 33-8993] and incorporated
herein by reference). (Maximum number of shares issuable
is 6,023,437 shares, after adjustment to reflect share
increases approved in 1984 and 1986, and share decrease
approved in 1989, and 3-for-2 stock splits effected in
October 1986 and October 1993).
21PAGE
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Reference Page
- ------- --------- ----
10.24 Thermo Electron Corporation Nonqualified Stock Option
Plan (filed as Exhibit 4(e) to Thermo Electron's
Registration Statement on Form S-8 [Reg. No. 33-8993] and
incorporated herein by reference). (Plan amended in 1984
to extend expiration date to December 14, 1994; maximum
number of shares issuable is 6,023,437 shares, after
adjustment to reflect share increases approved in 1984
and 1986, and share decrease approved in 1989, and
3-for-2 stock splits effected in October 1986 and October
1993).
10.25 Thermo Electron Corporation Equity Incentive Plan (filed
as Exhibit A to Thermo Electron's Proxy Statement dated
April 12, 1989 [File No. 1-8002] and incorporated herein
by reference). (Plan amended in 1989 to restrict exercise
price for SEC reporting persons to not less than 50% of
fair market value or par value; maximum number of shares
issuable is 2,700,000 shares, after adjustment to reflect
3-for-2 stock split effected in October 1993).
10.26 Thermo Electron Corporation - Thermedics Inc.
Nonqualified Stock Option Plan (filed as Exhibit 4 to a
Registration Statement on Form S-8 of Thermedics Inc.
[Reg. No. 2-93747] and incorporated herein by reference).
(Maximum number of shares issuable is 450,000 shares,
after adjustment to reflect share increase approved in
1988, 5-for-4 stock split effected in January 1985,
4-for-3 stock split effected in September 1985, and
3-for-2 stock splits effected in October 1986 and
November 1993).
10.27 Thermo Electron Corporation - Thermo Instrument Systems
Inc. (formerly Thermo Environmental Corporation)
Nonqualified Stock Option Plan (filed as Exhibit 4(c) to
a Registration Statement on Form S-8 of Thermo Instrument
Systems Inc. [Reg. No. 33-8034] and incorporated herein
by reference). (Maximum number of shares issuable is
225,000 shares, after adjustment to reflect 3-for-2 stock
split effected in July 1993).
10.28 Thermo Electron Corporation - Thermo Instrument Systems
Inc. Nonqualified Stock Option Plan (filed as Exhibit
10.12 to Thermo Electron's Annual Report on Form 10-K for
the fiscal year ended January 3, 1987 [File No. 1-8002]
and incorporated herein by reference). (Maximum number of
shares issuable is 320,152 shares, after giving effect to
share increase approved in 1988 and adjustment for
3-for-2 stock splits effected in January 1988 and July
1993).
22PAGE
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Reference Page
- ------- --------- ----
10.29 Thermo Electron Corporation - Thermo Process Systems Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.13 to
Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended January 3, 1987 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of
shares issuable is 108,000 shares, after adjustment to
reflect 6-for-5 stock splits effected in July 1988 and
March 1989, and 3-for-2 stock split effected in September
1989).
10.30 Thermo Electron Corporation - Thermo Power Corporation
(formerly Tecogen Inc.) Nonqualified Stock Option Plan
(filed as Exhibit 10.14 to Thermo Electron's Annual
Report on Form 10-K for the fiscal year ended January 3,
1987 [File No. 1-8002] and incorporated herein by
reference).
10.31 Thermo Electron Corporation - Thermo Cardiosystems Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.11 to
Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of
shares issuable is 130,500 shares, after adjustment to
reflect share increases approved in 1990 and 1992,
3-for-2 stock split effected in January 1990, 5-for-4
stock split effected in May 1990 and 2-for-1 stock split
effected in November 1993).
10.32 Thermo Electron Corporation - Thermo Energy Systems
Corporation Nonqualified Stock Option Plan (filed as
Exhibit 10.12 to Thermo Electron's Annual Report on Form
10-K for the fiscal year ended December 29, 1990 [File
No. 1-8002] and incorporated herein by reference).
10.33 Thermo Electron Corporation - ThermoTrex Corporation
(formerly Thermo Electron Technologies Corporation)
Nonqualified Stock Option Plan (filed as Exhibit 10.13 to
Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of
shares issuable is 180,000 shares, after adjustment to
reflect 3-for-2 stock split effected in October 1993).
10.34 Thermo Electron Corporation - Thermo Fibertek Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.14 to
Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended December 28, 1991 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of
shares issuable is 400,000 shares, after adjustment to
reflect 2-for-1 stock split effected in September 1992).
23PAGE
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Reference Page
- ------- --------- ----
10.35 Thermo Electron Corporation - Thermo Voltek Corp.
(formerly Universal Voltronics Corp.) Nonqualified Stock
Option Plan (filed as Exhibit 10.17 to Thermo Electron's
Annual Report on Form 10-K for the fiscal year ended
January 2, 1993 [File No. 1-8002] and incorporated herein
by reference). (Maximum number of shares issuable is
37,500 shares, after adjustment to reflect 3-for-2 stock
split effected in November 1993).
10.36 Thermo Electron Corporation - Thermedics Detection Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.20 to
Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993 [File No. 1-8002] and
incorporated herein by reference).
10.37 Thermo Energy Systems Corporation Incentive Stock Option
Plan (filed as Exhibit 10.18 to Thermo Electron's Annual
Report on Form 10-K for the fiscal year ended January 2,
1993 [File No. 1-8002] and incorporated herein by
reference). (Maximum number of shares issuable is 900,000
shares, after adjustment to reflect share increase
approved in December 1993).
10.38 Thermo Energy Systems Corporation Nonqualified Stock
Option Plan (filed as Exhibit 10.19 to Thermo Electron's
Annual Report on Form 10-K for the fiscal year ended
January 2, 1993 [File No. 1-8002] and incorporated herein
by reference). (Maximum number of shares issuable is
900,000 shares, after giving effect to share increase
approved in December 1993).
10.39 Thermedics Inc. Incentive Stock Option Plan (filed as
Exhibit 10(d) to Thermedics' Registration Statement on
Form S-1 [Reg. No. 33-84380] and incorporated herein by
reference). (Maximum number of shares issuable is
1,931,923 shares, after adjustment to reflect share
increases approved in 1986 and 1992, 5-for-4 stock split
effected in January 1985, 4-for-3 stock split effected in
September 1985, and 3-for-2 stock split effected in
November 1993).
10.40 Thermedics Inc. Nonqualified Stock Option Plan (filed as
Exhibit 10(e) to Thermedics' Registration Statement on
Form S-1 [Reg. No. 33-84380] and incorporated herein by
reference). (Maximum number of shares issuable is
1,931,923 shares, after adjustment to reflect share
increases approved in 1986 and 1992, 5-for-4 stock split
effected in January 1985, 4-for-3 stock split effected in
September 1985, and 3-for-2 stock split effected in
November 1993).
10.41 Thermedics Inc. Equity Incentive Plan (filed as Appendix
A to the Proxy Statement dated May 10, 1993 of Thermedics
[File No. 1-9567] and incorporated herein by reference).
(Maximum number of shares issuable is 1,500,000 shares,
after adjustment to reflect 3-for-2 stock split effected
in November 1993).
24PAGE
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Reference Page
- ------- --------- ----
10.42 Thermo Cardiosystems Inc. Incentive Stock Option Plan
(filed as Exhibit 10(f) to Thermo Cardiosystems'
Registration Statement on Form S-1 [Reg. No. 33-25144]
and incorporated herein by reference). (Maximum number of
shares issuable is 1,143,750 shares, after adjustment to
reflect share increase approved in 1992, 3-for-2 stock
split effected in January 1990, 5-for-4 stock split
effected in May 1990 and 2-for-1 stock split effected in
November 1993).
10.43 Thermo Cardiosystems Inc. Nonqualified Stock Option Plan
(filed as Exhibit 10(g) to Thermo Cardiosystems'
Registration Statement on Form S-1 [Reg. No. 33-25144]
and incorporated herein by reference). (Maximum number of
shares issuable is 1,143,750 shares, after adjustment to
reflect share increase approved in 1992, 3-for-2 stock
split effected in January 1990, 5-for-4 stock split
effected in May 1990 and 2-for-1 stock split effected in
November 1993).
10.44 Thermo Voltek Corp. (formerly Universal Voltronics Corp.)
1985 Stock Option Plan (filed as Exhibit 10.14 to Thermo
Voltek's Annual Report on Form 10-K for the fiscal year
ended June 30, 1985 [File No. 0-8245] and incorporated
herein by reference). (Maximum number of shares issuable
is 200,000 shares, after adjustment to reflect 1-for-3
reverse stock split effected in November 1992 and 3-for-2
stock split effected in November 1993).
10.45 Thermo Voltek Corp. (formerly Universal Voltronics Corp.)
1990 Stock Option Plan (filed as Exhibit 10.2 to Thermo
Voltek's Annual Report on Form 10-K for the fiscal year
ended June 30, 1990 [File No. 1-10574] and incorporated
herein by reference). (Maximum number of shares issuable
is 400,000 shares, after adjustment to reflect share
increase in 1993, 1-for-3 reverse stock split effected in
November 1992 and 3-for-2 stock split effected in
November 1993).
10.46-10.50 Reserved
10.51 ThermoTrex Corporation (formerly Thermo Electron
Technologies Corporation) Incentive Stock Option Plan
(filed as Exhibit 10(h) to ThermoTrex's Registration
Statement on Form S-1 [Reg. No. 33-40972] and
incorporated herein by reference). (Maximum number of
shares issuable is 1,945,000 shares, after giving effect
to share increases approved in 1992 and 1993, and 3-for-2
stock split effected in October 1993).
25PAGE
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Reference Page
- ------- --------- ----
10.52 ThermoTrex Corporation (formerly Thermo Electron
Technologies Corporation) Nonqualified Stock Option Plan
(filed as Exhibit 10(i) to ThermoTrex's Registration
Statement on Form S-1 [Reg. No. 33-40972] and
incorporated herein by reference). (Maximum number of
shares issuable is 1,945,000 shares, after giving effect
to share increases approved in 1992 and 1993, and 3-for-2
stock split effected in October 1993).
10.53 ThermoTrex Corporation - ThermoLase Inc. Nonqualified
Stock Option Plan (filed as Exhibit 10.53 to ThermoTrex's
Annual Report on Form 10-K for the year ended January 1,
1994 [File No. 1-10791] and incorporated herein by
reference).
10.54 ThermoLase Inc. Nonqualified Stock Option Plan (filed as
Exhibit 10.54 to ThermoTrex's Annual Report on Form 10-K
for the year ended January 1, 1994 [File No. 1-10791] and
incorporated herein by reference).
10.55 ThermoLase Inc. Incentive Stock Option Plan (filed as
Exhibit 10.55 to ThermoTrex's Annual Report on Form 10-K
for the year ended January 1, 1994 [File No. 1-10791] and
incorporated herein by reference).
10.56 Thermo Fibertek Inc. Incentive Stock Option Plan (filed
as Exhibit 10(k) to Thermo Fibertek's Registration
Statement on Form S-1 [Reg. No. 33-51172] and
incorporated herein by reference).
10.57 Thermo Fibertek Inc. Nonqualified Stock Option Plan
(filed as Exhibit 10(l) to Thermo Fibertek's Registration
Statement on Form S-1 [Reg. No. 33-51172] and
incorporated herein by reference).
10.58 Thermo Power Corporation (formerly Tecogen Inc.)
Incentive Stock Option Plan (filed as Exhibit 10(h) to
Thermo Power's Registration Statement on Form S-1 [Reg.
No. 33-14017] and incorporated herein by reference).
(Maximum number of shares issuable is 950,000 shares,
after adjustment to reflect share increases approved in
1990, 1992 and 1993).
10.59 Thermo Power Corporation (formerly Tecogen Inc.)
Nonqualified Stock Option Plan (filed as Exhibit 10(i) to
Thermo Power's Registration Statement on Form S-1 [Reg.
No. 33-14017] and incorporated herein by reference).
(Maximum number of shares issuable is 950,000 shares,
after giving effect to share increases approved in 1990,
1992 and 1993).
10.60 Thermo Power Corporation Equity Incentive Plan (filed as
Appendix A to the Proxy Statement dated February 18, 1994
of Thermo Power Corporation [File No. 1-10573] and
incorporated herein by reference).
26PAGE
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Reference Page
- ------- --------- ----
10.61 Thermo Process Systems Inc. Incentive Stock Option Plan
(filed as Exhibit 10(h) to Thermo Process' Registration
Statement on Form S-1 [Reg. No. 33-6763] and incorporated
herein by reference). (Maximum number of shares issuable
is 1,850,000 shares, after adjustment to reflect share
increases approved in 1987, 1989 and 1992, 6-for-5 stock
splits effected in July 1988 and March 1989, and 3-for-2
stock split effected in September 1989).
10.62 Thermo Process Systems Inc. Nonqualified Stock Option
Plan (filed as Exhibit 10(i) to Thermo Process'
Registration Statement on Form S-1 [Reg. No. 33-6763] and
incorporated herein by reference). (Maximum number of
shares issuable is 1,850,000 shares, after adjustment to
reflect share increases approved in 1987, 1989 and 1992,
6-for-5 stock splits effected in July 1988 and March
1989, and 3-for-2 stock split effected in September
1989).
10.63 Thermo Process Systems Inc. Equity Incentive Plan [filed
as Exhibit 10.63 to Thermedics' Annual Report on Form
10-K for the year ended January 1, 1994 [File No. 1-9567]
and incorporated herein by reference.)
10.64 Thermo Process Systems Inc. - Thermo Remediation
Nonqualified Stock Option Plan (filed as Exhibit 10(l) to
Thermo Process Systems Inc.'s Quarterly Report on Form
10-Q for the fiscal quarter ended January 1, 1994 [File
No. 1-9549] and incorporated herein by reference).
10.65 Thermo Remediation Inc. Equity Incentive Plan (filed as
Exhibit 10.7 to Thermo Remediation's Registration
Statement on Form S-1 [Reg. No. 33-70544] and
incorporated herein by reference).
11 Statements re: Computation of Earnings per Share.
13 Annual Report to Shareholders for the year ended January
1, 1994 (portions incorporated herein by reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen & Co.
27<PAGE>
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
THERMO INSTRUMENT SYSTEMS INC.
Thermo Instrument Systems Inc., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows: The corporation
was originally incorporated under the name "Thermo Scientific Systems Inc." and
the date of filing of its original Certificate of Incorporation with the
Secretary of the State of Delaware was May 28, 1986. This Restated Certificate
of Incorporation restates and integrates all amendments to the Certificate of
Incorporation of this corporation, and has been duly adopted by the written
consent of the majority stockholder of this corporation in accordance with
Sections 228 and 245 of the General Corporation Law of the State of Delaware.
FIRST. The name of the corporation shall be:
THERMO INSTRUMENT SYSTEMS INC.
SECOND. Its registered office in the State of Delaware is 1013 Centre Road, in
the City of Wilmington, County of New Castle 19805, and its registered
agent at such address is CORPORATION SERVICE COMPANY.
THIRD The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
FOURTH. The total number of shares of stock which the corporation shall have
authority to issue is:
One Hundred Twenty-Five Million (125,000,000) shares, and the par
value of each such share is Ten Cents ($.10).
FIFTH. The Board of Directors shall have the power to adopt, amend or repeal
the by-laws.
SIXTH. No director shall be personally liable to the corporation or its
stockholders for monetary damages for any breach of fiduciary duty by
such director as a director. Notwithstanding the foregoing sentence,
a director shall be liable to the extent provided by applicable law
(i) for breach of the director's duty of loyalty to the corporation or
its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law,
(iii) pursuant to Section 174 of the Delaware General Corporation Law
or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article
SIXTH shall apply to or have any effect on the liability or alleged
liability of any director of the corporation for or with respect to
any acts or omissions of such director occurring prior to such
amendment.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been
executed on behalf of the undersigned corporation by its duly authorized officer
PAGE
<PAGE>
and attested to by its duly authorized Secretary this 28th day of February,
1994.
THERMO INSTRUMENT SYSTEMS INC.
By: Arvin H. Smith
--------------------------
Arvin H. Smith, President
ATTEST:
By: Sandra L. Lambert
----------------------------
Sandra L. Lambert, Secretary
<PAGE>
Exhibit 10.7
MASTER REPURCHASE AGREEMENT
AGREEMENT dated as of January 1, 1994 between Thermo Electron Corporation, a
Delaware corporation ("Seller"), and Thermo Instruments Systems Inc., a Delaware
corporation (the "Buyer").
1. Applicability
From time to time Buyer and Seller may enter into transactions in which
Seller agrees to transfer to Buyer certain securities and/or financial
instruments ("Securities") against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to transfer to Seller such Securities on demand,
against the transfer of funds by Seller. Each such transaction shall be
referred to herein as a "Transaction" and shall be governed by this Agreement,
unless otherwise agreed in writing.
2. Definitions
(a) "Act of Insolvency", with respect to either party (i) the
commencement by such party as debtor of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law,
or such party seeking the appointment of a receiver, trustee, custodian or
similar official for such party or any substantial part of its property; or (ii)
the commencement of any such case or proceeding against such party, or another
seeking such an appointment, which (A) is consented to or not timely contested
by such party, (B) results in the entry of an order for relief, such an
appointment or the entry of an order having a similar effect, or (C) is not
dismissed within 15 days; or (iii) the making by a party of a general assignment
for the benefit of creditors; or (iv) the admission in writing by a party of
such party's inability to pay such party's debts as they become due;
(b) "Additional Purchased Securities", Securities provided by Seller to
Buyer pursuant to Paragraph 4(a) hereof;
(c) "Income", with respect to any Security at any time, any principal
thereof then payable and all interest, dividends or other distributions thereon;
(d) "Market Value", with respect to any Securities as of any date, the
price for such Securities on such date obtained from a generally recognized
source agreed to by the parties or the most recent closing bid quotation from
such a source, plus accrued Income to the extent not included therein (other
than any Income transferred to Seller pursuant to Paragraph 6 hereof) as of such
date (unless contrary to market practice for such Securities);
(e) "Other Buyers", third parties that have entered into an agreement
with Seller that is substantially similar to this Agreement;
(f) "Pricing Rate", a rate equal to the Commercial Paper Composite rate
for 30-day maturities provided by Merrill Lynch, Pierce, Fenner & Smith
Incorporated (or, if such rate is not available, a substantially equivalent rate
agreed to by Buyer and Seller) plus 25 basis points, which rate shall be
adjusted on the first business day of each fiscal quarter and shall be in effect
for the entirety such fiscal quarter;
(g) "Purchase Price", the price at which Purchased Securities are
transferred by Seller to Buyer;
1PAGE
<PAGE>
(h) "Purchased Securities", the Securities transferred by Seller to Buyer
in a Transaction hereunder, and any Securities substituted therefor in
accordance with Paragraph 9 hereof. The term "Purchased Securities" with
respect to any Transaction at any time also shall include Additional Purchase
Securities transferred pursuant to Paragraph 4(a) and shall exclude Securities
returned pursuant to Paragraph 4(b);
(i) "Repurchase Collateral Account", a book account maintained by Seller
containing, among other Securities, the Purchased Securities.
(j) "Repurchase Price", for any Purchased Security, an amount equal to
the Purchase Price paid by Buyer to Seller for such Purchased Security;
3. Transactions
(a) A Transaction may be initiated by Buyer upon the transfer of the
Purchase Price to Seller's account. Upon such transfer, Seller shall transfer
to Buyer Purchased Securities having a Market Value equal to 103% of the
Purchase Price.
(b) Purchased Securities shall be held in custody for Buyer by Seller in
the Repurchase Collateral Account. Seller shall indicate on its books for such
account Buyer's ownership of the Purchased Securities. Upon reasonable request
from Buyer, Seller shall provide Buyer with a complete list of Purchased
Securities owned by Buyer.
(c) Upon demand by Buyer or Seller, Seller shall repurchase from Buyer,
and Buyer shall sell to Seller, for the Repurchase Price all or any part of the
Purchased Securities then owned by Buyer.
4. Margin Maintenance
(a) If at any time the aggregate Market Value of all Purchased Securities
then owned by Buyer is less than 103% of the aggregate Repurchase Price for such
Purchased Securities, then Seller shall transfer to Buyer additional Securities
("Additional Purchased Securities"), so that the aggregate Market Value of such
Purchased Securities, including any such Additional Purchased Securities, will
thereupon equal or exceed 103% of such aggregate Repurchase Price.
(b) If at any time the aggregate Market Value of all Purchased Securities
then owned by Buyer exceeds 103% of the aggregate Repurchase Price for such
Purchased Securities, then Seller may transfer Purchased Securities to Seller,
so that the aggregate Market Value of such Purchased Securities will thereupon
not exceed 103% of such aggregate Repurchase Price.
5. Interest Payments
If during any fiscal month Buyer owned Purchased Securities, then on the
first day of the next following fiscal month Seller shall pay to Buyer an amount
equal to the sum of the aggregate Repurchase Prices of the Purchased Securities
owned by Buyer at the close of each day during the preceding fiscal month
divided by the number of days in such month and the product multiplied by the
Pricing Rate times the number of days in such month divided by 360.
2PAGE
<PAGE>
6. Income Payments and Voting Rights
Where a particular Transaction's term extends over an Income payment date
on the Purchased Securities subject to that Transaction, Buyer shall, on the
date such Income is payable, transfer to Seller an amount equal to such Income
payment or payments with respect to any Purchased Securities subject to such
Transaction. Seller shall retain all voting rights with respect to Purchased
Securities sold to Buyer under this Agreement.
7. Security Interest
Although the parties intend that all Transactions hereunder be sales and
purchases and not loans, in the event any such Transactions are deemed to be
loans, Seller shall be deemed to have pledged to Buyer as security for the
performance by Seller of its obligations under each such Transaction and this
Agreement, and shall be deemed to have granted to Buyer a security interest in,
all of the Purchased Securities with respect to all Transactions hereunder and
all proceeds thereof.
8. Payment and Transfer
Unless otherwise mutually agreed, all transfers of funds hereunder shall be
in immediately available funds. As used herein with respect to Securities,
"transfer" is intended to have the same meaning as when used in Section 8-313 of
the Massachusetts Uniform Commercial Code or, where applicable, in any federal
regulation governing transfers of the Securities.
9. Substitution
Buyer hereby grants Seller the authority to manage, in Seller's sole
discretion, the Purchased Securities held in custody for Buyer by Seller in the
Repurchase Collateral Account. Buyer expressly agrees that Seller may (i)
substitute other Securities for any Purchased Securities and (ii) commingle
Purchased Securities with other Securities held in the Repurchase Collateral
Account. Substitutions shall be made by transfer to Buyer of such other
Securities and transfer to Seller of the Purchased Securities for which
substitution is being made. After substitution, the substituted Securities
shall be deemed to be Purchased Securities. Securities which are substituted
for Purchased Securities shall have a Market Value at the time of substitution
equal to or greater than the Market Value of the Purchase Securities for which
such Securities were substituted.
10. Representations
Each of Buyer and Seller represents and warrants to the other that (i) it
is duly authorized to execute and deliver this Agreement, to enter into the
Transactions contemplated hereunder and to perform its obligations hereunder and
has taken all necessary action to authorize such execution, delivery and
performance, (ii) the person signing this Agreement on its behalf is duly
authorized to do so on its behalf, (iii) it has obtained all authorizations of
any governmental body required in connection with this Agreement and the
Transactions hereunder and such authorizations are in full force and effect and
(iv) the execution, delivery and performance of this Agreement and the
Transactions hereunder will not violate any law, ordinance, charter, by-law or
rule applicable to it or any agreement by which it is bound or by which any of
its assets are affected. On the date for any Transaction Buyer and Seller shall
each be deemed to repeat all the foregoing representations made by it.
3PAGE
<PAGE>
11. Events of Default
In the event that (i) Seller fails to repurchase or Buyer fails to transfer
Purchased Securities upon demand for repurchase from either Buyer or Seller,
(ii) Seller or Buyer fails, after one business day's notice, to comply with
Paragraph 4 hereof, (iii) Buyer fails to make payment to Seller pursuant to
Paragraph 6 hereof, (iv) Seller fails to comply with Paragraph 5 hereof, (v) an
Act of Insolvency occurs with respect to Seller or Buyer, (vi) any
representation made by Seller or Buyer shall have been incorrect or untrue in
any material respect when made or repeated or deemed to have been made or
repeated, or (vii) Seller or Buyer shall admit to the other its inability to, or
its intention not to, perform any of its obligations hereunder (each an "Event
of Default"):
(a) At the option of the nondefaulting party, exercised by written notice
to the defaulting party (which option shall be deemed to have been exercised,
even if no notice is given, immediately upon the occurrence of any Act of
Insolvency), Seller shall become obligated to repurchase, and Buyer shall become
obligated to sell, all Purchased Securities then owned by Buyer for the
Repurchase Price of such Purchased Securities.
(b) If Seller is the defaulting party and Buyer exercises or is deemed to
have exercised the option referred to in subparagraph (a) of this Paragraph, (i)
the Seller's obligations hereunder to repurchase all Purchased Securities in
such Transactions shall thereupon become immediately due and payable, (ii) all
Income paid after such exercise or deemed exercise shall be retained by Buyer
and applied to the aggregate unpaid Repurchase Prices owed by Seller, and (iii)
Seller shall immediately deliver to Buyer any Purchased Securities subject to
such Transactions then in Seller's possession.
(c) In all Transactions in which Buyer is the defaulting party, upon
tender by Seller of payment of the aggregate Repurchase Prices for all such
Transactions, Buyer's right, title and interest in all Purchased Securities
subject to such Transactions shall be deemed transferred to Seller, and Buyer
shall deliver all such Purchased Securities to Seller.
(d) After one business day's notice to the defaulting party (which notice
need not be given if an Act of Insolvency shall have occurred, and which may be
the notice given under subparagraph (a) of this Paragraph or the notice referred
to in clause (ii) of the first sentence of this Paragraph), the nondefaulting
party may:
(i) as to Transactions in which Seller is the defaulting party, (A)
immediately sell, in a recognized market at such price or prices as Buyer may
reasonably deem satisfactory, any or all Purchased Securities subject to such
Transactions and apply the proceeds thereof to the aggregate unpaid Repurchase
Prices and any other amounts owing by Seller hereunder or (B) in its sole
discretion elect, in lieu of selling all or a portion of such Purchased
Securities, to give Seller credit for such Purchased Securities in an amount
equal to the price therefor on such date, obtained from a generally recognized
source or the most recent closing bid quotation from such a source, against the
aggregate unpaid Repurchase Prices and any other amounts owing by Seller
hereunder; and
(ii) as to Transactions in which Buyer is the defaulting party, (A)
purchase securities ("Replacement Securities") of the same class and amount as
any Purchased Securities that are not delivered by Buyer to Seller as required
4PAGE
<PAGE>
hereunder or (B) in its sole discretion elect, in lieu of purchasing Replacement
Securities, to be deemed to have purchased Replacement Securities at the price
therefor on such date, obtained from a generally recognized source or the most
recent closing bid quotation from such a source.
(e) As to Transactions in which Buyer is the defaulting party , Buyer
shall be liable to Seller (i) with respect to Purchased Securities (other than
Additional Purchased Securities), for any excess of the price paid (or deemed
paid) by Seller for Replacement Securities therefor over the Repurchase Price
for such Purchased Securities and (ii) with respect to Additional Purchased
Securities, for the price paid (or deemed paid) by Seller for the Replacement
Securities therefor.
(g) The defaulting party shall be liable to the nondefaulting party for
the amount of all reasonable legal or other expenses incurred by the
nondefaulting party in connection with or as a consequence of an Event of
Default.
(h) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other agreement or
applicable law.
12. Single Agreement
Buyer and Seller acknowledge that, and have entered hereinto and will enter
into each Transaction hereunder in consideration of and in reliance upon the
fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, (ii) that each of them shall be entitled to set
off claims and apply property held by them in respect of any Transaction against
obligations owing to them in respect of any other Transactions hereunder and
(iii) that payments, deliveries and other transfers made by either of them in
respect of any Transaction shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any other Transactions
hereunder, and the obligations to make any such payments, deliveries and other
transfers may be applied against each other and netted.
13. Entire Agreement; Severability
This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement and agreement herein shall be treated as separate and
independent from any other provision or agreement herein and shall be
enforceable notwithstanding the unenforceability of any such other provision or
agreement.
14. Non-assignability; Termination
The rights and obligations of the parties under this Agreement and under
any Transactions shall not be assigned by either party without the prior written
consent of the other party. Subject to the foregoing, this Agreement and any
Transactions shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns. This Agreement may be canceled by
either party upon giving written notice to the other, except that this Agreement
shall, notwithstanding such notice, remain applicable to any Transactions then
outstanding.
5PAGE
<PAGE>
15. Governing Law
This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts without giving effect to the conflict of law principles thereof.
16. No Waivers, Etc.
No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a wavier of its right to exercise any
other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto.
19. Intent
(a) The parties recognize that each Transaction is a "repurchase
agreement" as that term is defined in Section 101 of Title 11 of the United
States Code, as amended (except insofar as the type of Securities subject to
such Transaction or the term of such Transaction would render such definition
inapplicable), and a "securities contract" as that term is defined in Section
741 of Title 11 of the United States Code, as amended.
(b) It is understood that either party's right to liquidate Securities
delivered to it in connection with Transactions hereunder or to exercise any
other remedies pursuant to Paragraph 11 hereof, is a contractual right to
liquidate such Transaction as described in Sections 555 and 559 of Title 11 of
the United States Code, as amended.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
THERMO ELECTRON CORPORATION THERMO INSTRUMENT SYSTEMS INC.
By /s/ Theo Melas-Kyriazi By /s/ Arvin H. Smith
------------------------- -------------------------
(signature) (signature)
Theo Melas-Kyriazi Arvin H. Smith
------------------------- -------------------------
(Print Name) (Print Name)
Title Treasurer Title President
------------------------- -------------------------
6<PAGE>
EXHIBIT 11
THERMO INSTRUMENT SYSTEMS INC.
COMPUTATION OF EARNINGS PER SHARE
Year Ended
January 1, January 2, December 28,
1994 1993 1991
---------- ----------- ------------
Computation of Fully
Diluted Earnings per Share:
Income:
Net income $44,764,000 $33,130,000 $24,837,000
Add: Convertible obligation
interest, net of tax 4,016,000 3,905,000 1,148,000
----------- ----------- -----------
Income applicable to common stock
assuming full dilution (a) $48,780,000 $37,035,000 $25,985,000
----------- ----------- -----------
Shares:
Weighted average shares outstanding 44,909,660 43,261,257 40,629,612
Add: Shares issuable from assumed
conversion of convertible
obligations 6,589,803 6,279,297 3,404,898
Shares issuable from assumed
exercise of options
(as determined by the application
of the treasury stock method) 365,345 661,225 773,535
----------- ----------- -----------
Weighted average shares
outstanding, as adjusted (b) 51,864,808 50,201,779 44,808,045
----------- ----------- -----------
Fully diluted earnings per share
(a) / (b) $ 0.94 $ 0.74 $ 0.58
=========== =========== ===========
<PAGE>
Exhibit 13
Thermo Instrument Systems Inc.
1993 Financial Statements
PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Income
(In thousands except
per share amounts) 1993 1992 1991
- ------------------------------------------------------------------------------
Revenues:
Instruments $529,014 $368,289 $282,911
Services 55,162 54,910 55,836
-------- -------- --------
584,176 423,199 338,747
-------- -------- --------
Costs and Expenses:
Cost of instrument revenues 269,318 187,543 148,419
Cost of service revenues 42,714 44,136 47,101
Selling, general and
administrative expenses (Note 7) 148,150 106,147 79,539
Research and development expenses 34,510 26,138 16,318
-------- -------- --------
494,692 363,964 291,377
-------- -------- --------
Operating Income 89,484 59,235 47,370
Interest Income 3,644 6,994 4,918
Interest Expense (includes $4,327,
$1,415, and $807 related to notes
to parent company) (14,384) (11,389) (7,590)
Gain on Sale of Investments - 2,072 -
Other Income (Expense), Net 129 253 (1,125)
-------- -------- --------
Income Before Provision
for Income Taxes 78,873 57,165 43,573
Provision for Income Taxes (Note 5) 34,109 24,035 18,736
-------- -------- --------
Net Income $ 44,764 $ 33,130 $ 24,837
======== ======== ========
Earnings per Share:
Primary $ 1.00 $ 0.77 $ 0.61
======== ======== ========
Fully diluted $ 0.94 $ 0.74 $ 0.58
======== ======== ========
Weighted Average Shares:
Primary 44,910 43,261 40,630
======== ======== ========
Fully diluted 51,865 50,202 44,808
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
2PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Balance Sheet
(In thousands) 1993 1992
- ------------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $177,442 $ 25,939
Short-term investments, at cost (quoted market
value of $9,138 and $6,483) (Note 7) 6,145 6,085
Accounts receivable, less allowances
of $8,456 and $7,276 129,184 100,693
Unbilled contract costs and fees 6,907 4,774
Inventories 97,552 97,957
Prepaid expenses 5,131 4,436
Prepaid income taxes (Note 5) 24,212 34,574
-------- --------
446,573 274,458
-------- --------
Property, Plant and Equipment, at Cost, Net 121,287 119,113
-------- --------
Patents and Other Assets 27,820 31,593
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Note 2) 295,461 261,261
-------- --------
$891,141 $686,425
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
3PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Balance Sheet (continued)
(In thousands except share amounts) 1993 1992
- ------------------------------------------------------------------------------
Liabilities and Shareholders' Investment
Current Liabilities:
Notes payable $ 37,516 $ 14,037
Accounts payable 29,658 25,575
Accrued payroll and employee benefits 22,737 21,187
Accrued income taxes (Note 5) 18,653 4,091
Customer deposits 9,699 9,319
Accrued installation and warranty expenses 14,111 10,932
Other accrued expenses (Note 2) 70,079 86,913
Due to parent company (Note 7) 6,067 33,992
-------- --------
208,520 206,046
-------- --------
Deferred Income Taxes (Note 5) 19,542 22,566
-------- --------
Other Deferred Items 18,863 14,998
-------- --------
Long-term Obligations (Note 8):
Senior obligations, including
$140,000 due to parent company in 1993 210,000 -
Subordinated obligations, including $2,734
and $3,434 due to parent company 52,303 89,674
Other, including $48,000 due to
parent company in 1992 23,858 80,418
-------- --------
286,161 170,092
-------- --------
Commitments and Contingencies (Note 6)
Shareholders' Investment (Notes 3 and 9):
Common stock, $.10 par value, 125,000,000 shares
authorized; 47,078,660 and
29,743,721 shares issued 4,708 2,974
Capital in excess of par value 219,703 182,588
Retained earnings 152,364 106,357
-------- --------
376,775 291,919
Treasury stock at cost, 867,087
and 646,998 shares (15,850) (17,127)
Cumulative translation adjustment (2,870) (2,069)
-------- --------
358,055 272,723
-------- --------
$891,141 $686,425
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
4PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Cash Flows
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Operating Activities:
Net income $ 44,764 $ 33,130 $ 24,837
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 20,719 13,680 10,030
Gain on sale of investments - (2,072) -
Provision for losses on
accounts receivable 970 666 1,156
Increase (decrease) in
deferred income taxes (497) 7,485 387
Other noncash expenses 3,507 2,258 1,448
Changes in current accounts,
excluding the effects of
acquisitions:
Accounts receivable (27,716) 2,814 (7,071)
Inventories 6,916 (5,219) 3,865
Other current assets 7,482 2,343 2,303
Accounts payable (11,143) (9,429) 2,893
Other current liabilities 7,530 (7,304) (6,348)
Other 132 (397) 228
--------- --------- ---------
Net cash provided by
operating activities 52,664 37,955 33,728
Investing Activities: --------- --------- ---------
Acquisitions, net of cash
acquired (Note 2) (102,048) (205,488) -
Sale of Nicolet Biomedical
(Note 2) 67,900 - -
(Increase) decrease in
short-term investments (60) 64,289 (68,302)
Purchases of property, plant
and equipment (9,063) (6,538) (6,273)
Other 4,990 (2,513) 1,754
--------- --------- ---------
Net cash used in
investing activities (38,281) (150,250) (72,821)
Financing Activities: --------- --------- ---------
Proceeds from issuance of
long-term obligations 68,727 - 86,624
Proceeds from issuance of
obligations to parent
company (Notes 7 and 8) 229,000 94,913 15,000
Repayment and repurchase
of long-term obligations (4,482) (11,189) (2,798)
Repayment of obligations
to parent company (157,485) (18,786) -
Proceeds from issuance
of Company common stock 2,678 4,432 2,017
Purchases of Company common stock (836) (16,898) (191)
--------- --------- ---------
Net cash provided by
financing activities $ 137,602 $ 52,472 $ 100,652
--------- --------- ---------
5PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Cash Flows (continued)
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Exchange Rate Effect on Cash $ (482) $ (782) $ (1,423)
--------- --------- ---------
Increase (Decrease) in Cash
and Cash Equivalents 151,503 (60,605) 60,136
Cash and Cash Equivalents
at Beginning of Year 25,939 86,544 26,408
--------- --------- ---------
Cash and Cash Equivalents
at End of Year $ 177,442 $ 25,939 $ 86,544
========= ========= =========
Cash Paid For:
Interest $ 12,493 $ 13,074 $ 4,646
Income taxes $ 7,607 $ 17,413 $ 10,398
Noncash Financing Activities:
Conversions of convertible
obligations $ 37,371 $ 9,635 $ 41,638
The accompanying notes are an integral part of these consolidated financial
statements.
6PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Shareholders' Investment
Common Cumulative
Stock, Capital in Transla-
$.10 Par Excess of Retained Treasury tion
(In thousands) Value Par Value Earnings Stock Adjustment
- -----------------------------------------------------------------------------
Balance December 29, 1990 $ 2,617 $125,976 $ 52,120 $ (3) $ 3,430
Net income - - 24,837 - -
Purchases of Company
common stock - - - (1,029) -
Issuance of stock under
employees' and directors'
stock plans 21 1,838 - 996 -
Conversions of
convertible obligations 241 40,935 - - -
Cumulative translation
adjustment - - - - (1,025)
------- -------- -------- -------- --------
Balance December 28, 1991 2,879 168,749 76,957 (36) 2,405
Net income - - 33,130 - -
Purchases of Company
common stock - - - (16,898) -
Issuance of stock under
employees' and directors'
stock plans 36 2,958 - (193) -
Tax benefit related to
employees' and directors'
stock plans - 1,631 - - -
Conversions of
convertible obligations 59 9,250 - - -
Effect of purchase of
Nicolet shares from
parent company (Note 2) - - (3,730) - -
Cumulative translation
adjustment - - - - (4,474)
------- -------- -------- -------- --------
Balance January 2, 1993 2,974 182,588 106,357 (17,127) (2,069)
Net income - - 44,764 - -
Purchases of Company
common stock - - - (887) -
Issuance of stock under
employees' and directors'
stock plans 16 498 - 2,164 -
Tax benefit related to
employees' and directors'
stock plans - 1,815 - - -
Conversions of convertible
obligations 189 36,331 - - -
Effect of three-for-two
stock split $ 1,529 $ (1,529) $ - $ - $ -
7PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Shareholders' Investment (continued)
Common Cumulative
Stock, Capital in Transla-
$.10 Par Excess of Retained Treasury tion
(In thousands) Value Par Value Earnings Stock Adjustment
- -----------------------------------------------------------------------------
Effect of sale of Nicolet
Biomedical (Note 2) $ - $ - $ 1,243 $ - $ -
Cumulative translation
adjustment - - - - (801)
------- -------- -------- -------- -------
Balance January 1, 1994 $ 4,708 $219,703 $152,364 $(15,850) $(2,870)
======= ======== ======== ======== =======
The accompanying notes are an integral part of these consolidated financial
statements.
8PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Relationship with Thermo Electron Corporation
Thermo Instrument Systems Inc. (the Company) was incorporated on May 28, 1986 as
a wholly owned subsidiary of Thermo Electron Corporation (Thermo Electron). On
January 1, 1994, Thermo Electron owned 37,399,259 shares of the Company's common
stock, representing 81% of such stock outstanding.
Principles of Consolidation
The accompanying financial statements include the accounts of the Company and
its subsidiaries. All material intercompany accounts and transactions have been
eliminated. The Company accounts for investments in businesses in which it owns
between 20% and 50% under the equity method.
Fiscal Year
The Company has adopted a fiscal year ending the Saturday nearest December 31.
References to 1993, 1992, and 1991 are for the fiscal years ended January 1,
1994, January 2, 1993, and December 28, 1991, respectively. Fiscal years 1993
and 1991 each included 52 weeks; 1992 included 53 weeks.
Revenue Recognition
For the majority of its operations, the Company recognizes revenues upon
shipment of its products or upon completion of services it renders. The Company
provides a reserve for its estimate of warranty and installation costs at the
time of shipment. Revenues and profits on substantially all contracts are
recognized using the percentage-of-completion method. Revenues recorded under
the percentage-of-completion method were $23,218,000 in 1993, $27,448,000 in
1992, and $26,298,000 in 1991. The percentage of completion is determined by
relating either actual costs or actual labor incurred to date to management's
estimate of total costs or total labor, respectively, to be incurred on each
contract. If a loss is indicated on any contract in process, a provision is made
currently for the entire loss. The Company's contracts generally provide for
billing of customers upon the attainment of certain milestones specified in each
contract. Revenues earned on contracts in process in excess of billings are
classified as "Unbilled contract costs and fees" in the accompanying balance
sheet. There are no significant amounts included in the accompanying balance
sheet that are not expected to be recovered from existing contracts at current
contract values, or that are not expected to be collected within one year,
including amounts that are billed but not paid under retainage provisions.
Income Taxes
The Company and Thermo Electron have a tax allocation agreement under which the
Company is included in the consolidated federal and state income tax returns
filed by Thermo Electron. The agreement provides that in years in which the
Company has taxable income, it will pay to Thermo Electron amounts comparable to
the taxes the Company would have paid if it had filed separate tax returns. In
years in which the Company incurs a loss, Thermo Electron will reimburse the
Company the amount that the Company would have received if it had filed separate
tax returns. If Thermo Electron's equity ownership of the Company drops below
80%, the Company would be required to file its own tax returns. As of January 1,
1994, the Company owed an estimated $7,750,000 to Thermo Electron for federal
and state taxes. This amount is included in "Accrued income taxes" in the
accompanying 1993 balance sheet.
The Company adopted Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes," as of the beginning of 1992. Under SFAS No. 109,
deferred income taxes are recognized based on the expected future tax
9PAGE
<PAGE>
Thermo Instrument Systems Inc.
consequences of differences between the financial statement basis and the tax
basis of assets and liabilities calculated using enacted tax rates in effect for
the year in which the differences are expected to be reflected in the tax
return. Prior to 1992, the Company recorded income taxes on timing differences
between financial statement and tax treatment of income and expenses under
Accounting Principles Board Opinion No. 11. The implementation of SFAS No. 109
and the effect of adoption were not material to the Company's financial
statements.
Earnings per Share
Primary earnings per share have been computed based on the weighted average
number of shares outstanding during the year. Because the effect of the exercise
of the Company's stock options would be immaterial, they have been excluded from
the primary earnings per share calculation. Fully diluted earnings per share
assumes the effect of the conversion of the Company's dilutive convertible
obligations and elimination of the related interest expense, the exercise of
stock options and their related income tax effects.
Stock Split
All share and per share information has been restated to reflect a three-for-two
stock split, effected in the form of a 50% stock dividend, which was distributed
in July 1993.
Cash and Cash Equivalents
As of January 1, 1994, $148,975,000 of the Company's cash equivalents were
invested in a repurchase agreement with Thermo Electron. Under this agreement,
the Company in effect lends excess cash to Thermo Electron, which Thermo
Electron collateralizes with investments principally consisting of corporate
notes, government agency securities, money market funds, commercial paper, and
other marketable securities, in the amount of at least 103% of such obligation.
The Company's funds subject to the repurchase agreement are readily convertible
into cash by the Company and have an original maturity of three months or less.
The repurchase agreement earns a rate based on the Commercial Paper Composite
Rate plus 25 basis points, set at the beginning of each quarter. Cash
equivalents also include short-term certificates of deposit of the Company's
foreign subsidiaries, which have an original maturity of three months or less.
Cash and cash equivalents are carried at cost, which equals fair market value at
year-end 1993 and 1992.
Short-term Investments
Short-term investments represent investments in subordinated convertible
debentures issued by Thermedics Inc. (Note 7). Securities with original
maturities of greater than three months, which the Company intends to hold for
less than one year, are classified as short-term. These investments are carried
at the lower of cost or market value.
In May 1993, the Financial Accounting Standards Board issued SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115
requires that marketable equity and debt securities considered trading
securities be accounted for at market value, with the difference between cost
and market value recorded currently in the statement of income; that securities
considered available-for-sale be accounted for at market value, with the
difference between cost and market value, net of related tax effects, recorded
currently as a component of shareholders' investment; and that debt securities
considered held-to-maturity be recorded at amortized cost. The Company is
required to adopt SFAS No. 115 at the beginning of fiscal 1994. Management
believes that the marketable equity and debt securities in the accompanying
balance sheet will be considered available-for-sale and that the adoption of
SFAS No. 115 will result in a total increase to shareholders' investment of
10PAGE
<PAGE>
Thermo Instrument Systems Inc.
approximately $1,800,000, which results from unrealized gains on the
subordinated convertible debentures issued by Thermedics Inc.
Inventories
Inventories are stated at the lower of cost (on a first-in, first-out or
weighted average basis) or market value and include materials, labor, and
manufacturing overhead. The components of inventories are as follows:
(In thousands) 1993 1992
- -----------------------------------------------------------------
Raw materials and supplies $53,322 $64,237
Work in process and finished goods 44,230 33,720
------- -------
$97,552 $97,957
Property, Plant and Equipment ======= =======
The costs of additions and improvements are capitalized, while maintenance and
repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the estimated
useful lives of the property as follows: buildings, 20 to 40 years, machinery
and equipment, 3 to 10 years, and leasehold improvements, the shorter of the
term of the lease or the life of the asset. Property, plant and equipment
consist of the following:
(In thousands) 1993 1992
- -----------------------------------------------------------------
Land $ 22,015 $ 20,335
Buildings 69,302 57,549
Machinery, equipment and
leasehold improvements 69,155 71,848
-------- --------
160,472 149,732
Less: Accumulated depreciation
and amortization 39,185 30,619
-------- --------
$121,287 $119,113
======== ========
Patents and Other Assets
"Patents and other assets" in the accompanying balance sheet include the cost of
acquired trademarks, patents, and other specifically identifiable intangible
assets. These assets are amortized using the straight-line method over their
estimated useful lives, which range from 4 to 15 years. These assets were
$18,056,000 and $23,630,000, net of accumulated amortization of $7,937,000 and
$5,075,000, at year-end 1993 and 1992, respectively.
Cost in Excess of Net Assets of Acquired Companies
The excess of cost over the fair value of net assets of acquired businesses is
amortized using the straight-line method over 40 years. Accumulated amortization
was $19,780,000 and $12,026,000 at year-end 1993 and 1992, respectively. The
Company continually assesses whether a change in circumstances has occurred
subsequent to an acquisition that would indicate the future useful life of the
asset should be revised. The Company considers the future earnings potential of
the acquired business in assessing the recoverability of this asset.
Foreign Currency
All assets and liabilities of the Company's foreign subsidiaries are translated
at year-end exchange rates, and revenues and expenses are translated at average
exchange rates for the year in accordance with SFAS No. 52, "Foreign Currency
Translation." Resulting translation adjustments are reflected as a separate
11PAGE
<PAGE>
Thermo Instrument Systems Inc.
component of shareholders' investment titled "Cumulative translation
adjustment." Foreign currency transaction gains and losses are included in the
accompanying statement of income and are not material for the three years
presented.
Presentation
Certain amounts in 1992 and 1991 have been reclassified to conform to the 1993
financial statement presentation.
2. Acquisitions and Disposition
In February 1993, the Company acquired Spectra-Physics Analytical, a
manufacturer of liquid chromatography and capillary electrophoresis analytical
instruments, for $67.3 million in cash. The Company funded the acquisition of
Spectra-Physics Analytical through the issuance of a $69 million promissory note
to Thermo Electron, that was repaid in May 1993.
In 1993, the Company made several other acquisitions for an aggregate $35.6
million in cash. The Company funded these acquisitions through a $20.0 million
promissory note to Thermo Electron, that was repaid in 1993, and through
short-term borrowings.
In May 1992, the Company acquired Gas Tech Inc. (Gas Tech), a leading
manufacturer of worker safety instruments and systems for detecting and
monitoring toxic and combustible gases, for $22.5 million in cash. In addition,
the Company acquired the building Gas Tech occupies for $5.6 million in cash in
a post-acquisition transaction.
In August 1992, the Company acquired Nicolet Instrument Corporation (Nicolet).
The total purchase price to the Company was approximately $179 million. To help
finance the acquisition, the Company borrowed $48 million from Thermo Electron
pursuant to a promissory note that was repaid in September 1993 (Note 8).
Nicolet designs, manufactures, and markets instrumentation for a broad range of
analytical chemistry, neurodiagnostic, and electronic engineering
problem-solving applications in science and industry.
These acquisitions have been accounted for using the purchase method of
accounting and their results of operations have been included in the
accompanying financial statements from their respective dates of acquisition.
The aggregate cost of these acquisitions exceeded the estimated fair value of
the acquired net assets by approximately $198.0 million, which is being
amortized over 40 years. Allocation of the purchase price for these acquisitions
was based on an estimate of the fair value of the net assets acquired and, for
acquisitions completed in fiscal 1993, is subject to adjustment.
Effective April 5, 1993, the Company sold the biomedical instruments products
business of its Nicolet Instrument Corporation subsidiary (Nicolet Biomedical)
to Thermo Electron for approximately $67.9 million in cash. The results of
operations for Nicolet Biomedical have been excluded from the accompanying
financial statements as of April 5, 1993.
"Effect of purchase of Nicolet shares from parent company" in the accompanying
statement of shareholders' investment represents the difference between the
purchase price of Nicolet shares that were acquired by Thermo Electron in the
open market prior to the Company's tender offer and the cash tender offer price.
Due to the related party nature of this purchase from Thermo Electron, the
excess of the purchase price paid by the Company over the original purchase
price paid by Thermo Electron was reflected as a reduction in retained earnings.
"Effect of sale of Nicolet Biomedical" in the accompanying statement of
12PAGE
<PAGE>
Thermo Instrument Systems Inc.
shareholders' investment represents the portion that relates to Nicolet
Biomedical.
Based on unaudited data, the following table presents selected financial
information for the Company, Spectra-Physics Analytical, and Nicolet, excluding
Nicolet Biomedical, on a pro forma basis, assuming the companies had been
combined since the beginning of 1992. Net income and earnings per share are
shown before Nicolet's discontinued operations, which occurred in 1992. The
effect on the Company's financial statements of the acquisitions not included in
the pro forma data was not significant.
(In thousands except per share
amounts) 1993 1992
- ------------------------------------------------------------------
Revenues $579,414 $535,233
Net income 43,565 20,437
Earnings per share:
Primary 0.97 0.47
Fully diluted 0.94 0.47
The pro forma results for 1992 include a $7.2 million reorganization charge
recorded by Nicolet prior to its acquisition by the Company and a one-time $2.2
million charge for certain acquisition-related expenses incurred by Nicolet
prior to its acquisition by the Company. The pro forma results are not
necessarily indicative of future operations or the actual results that would
have occurred had the acquisitions been made at the beginning of 1992.
"Other accrued expenses" in the accompanying balance sheet includes
approximately $25 million and $43 million at year-end 1993 and 1992,
respectively, for estimated severance, relocation, and other restructuring
reserves associated with acquisitions.
3. Stock-based Compensation Plans
The Company has stock-based compensation plans for its key employees, directors,
and others. Two plans were adopted in 1986 and permit the grant of nonqualified
and incentive stock options. A third plan adopted in 1993 permits the grant of a
variety of stock and stock-based awards as determined by the human resources
committee of the Company's Board of Directors (the Board Committee), including
restricted stock, stock options, stock bonus shares, or performance-based
shares. To date, only nonqualified stock options have been awarded under these
plans. The option recipients and the terms of options granted under these plans
are determined by the Board Committee. Generally, options granted to date are
exercisable immediately, but are subject to certain transfer restrictions and
the right of the Company to repurchase shares issued upon exercise of the
options at the exercise price upon certain events. The restrictions and
repurchase rights generally lapse ratably over periods ranging from four to ten
years after the first anniversary of the grant date, depending on the term of
the option, which may range from five to twelve years. Nonqualified options may
be granted at any price determined by the Board Committee, although incentive
stock options must be granted at not less than fair market value on the date of
grant. Generally, stock options have been granted at fair market value. The
Company also has a directors' stock option plan, adopted in 1991, that provides
for the grant of stock options to nonemployee directors pursuant to a formula
approved by the Company's shareholders. Options awarded under this plan are
exercisable six months after the date of grant and expire seven years after
grant.
13PAGE
<PAGE>
Thermo Instrument Systems Inc.
In connection with the acquisition of Finnigan Corporation (Finnigan) in 1990,
the Company assumed certain outstanding options granted under Finnigan's 1979
and 1989 long-term incentive plans. The assumed options are exercisable ratably
over a four-year period commencing one year from the date of grant and expire
seven years from the date of grant. All such options constitute nonqualified
stock options.
In addition to the Company's stock-based compensation plans, certain officers
and key employees may also participate in stock-based compensation plans of
Thermo Electron and its other majority-owned subsidiaries.
No accounting recognition is given to options granted at fair market value until
they are exercised. Upon exercise, net proceeds, including tax benefits
realized, are credited to equity.
A summary of the Company's stock option information is as follows:
1993 1992 1991
Number Total Number Total Number Total
of Option of Option of Option
(In thousands) Shares Price Shares Price Shares Price
- ------------------------------------------------------------------------------
Options outstanding,
beginning of year 1,067 $11,188 1,498 $11,796 1,761 $12,125
Granted 1,185 36,397 216 3,897 218 2,830
Exercised (295) (1,758) (591) (3,842) (305) (1,606)
Lapsed or canceled (63) (1,029) (56) (663) (176) (1,553)
----- ------- ----- ------- ----- -------
Options outstanding,
end of year 1,894 $44,798 1,067 $11,188 1,498 $11,796
===== ======= ===== ======= ===== =======
Options exercisable 1,889 $44,636 1,020 $10,800 1,323 $10,239
===== ======= ===== ======= ===== =======
Options available for grant 1,155 135 318
===== ===== =====
4. Employee Benefit Plans
Employee Stock Purchase Plan
Substantially all of the Company's full-time U.S. employees are eligible to
participate in an employee stock purchase plan. Under this plan, shares of the
Company's and Thermo Electron's common stock may be purchased at the end of a
12-month plan year at 85% of the fair market value at the beginning of the plan
year, and the shares purchased are subject to a one-year resale restriction.
Prior to November 1993, the exercise price for the applicable shares was based
on 85% of the lower of the fair market value at the beginning or end of the plan
year. Shares are purchased through payroll deductions of up to 10% of each
participating employee's gross wages. During 1993, 1992, and 1991, the Company
issued 101,273 shares, 66,426 shares, and 80,733 shares of its common stock,
respectively, under this plan.
401(k) Savings Plan and Employee Stock Ownership Plan
The majority of the Company's U.S. employees are eligible to participate in
Thermo Electron's 401(k) savings plan and employee stock ownership plan.
Contributions to the 401(k) savings plan are made by both the employee and the
Company. Company contributions are based upon the level of employee
contributions. For these plans, the Company contributed and charged to expense
$2,239,000, $1,728,000, and $1,689,000 in 1993, 1992, and 1991, respectively.
14PAGE
<PAGE>
Thermo Instrument Systems Inc.
Post-retirement Benefits
The Company does not provide post-retirement benefits to current or former
employees.
Post-employment Benefits
The Company provides certain post-employment benefits to former or inactive
employees. The Company is required to adopt SFAS No. 112, "Employers' Accounting
for Post-employment Benefits," at the beginning of fiscal 1994. SFAS No. 112
requires the recognition of the cost of post-employment benefits at the time the
event prompting payment occurs and a reasonable estimate can be made. Management
believes that the adoption of this statement will not have a material impact on
the Company's financial statements.
5. Income Taxes
As discussed in Note 1, the Company adopted SFAS No. 109 in 1992.
The components of income before provision for income taxes are as follows:
(In thousands) 1993 1992 1991
- -----------------------------------------------------------------
Domestic $61,254 $49,225 $36,111
Foreign 17,619 7,940 7,462
------- ------- -------
$78,873 $57,165 $43,573
======= ======= =======
The components of the provision for income taxes are as follows:
(In thousands) 1993 1992 1991
- -----------------------------------------------------------------
Currently payable:
Federal $14,196 $10,625 $10,183
State 4,008 3,028 2,814
Foreign 6,909 3,791 1,171
------- ------- -------
25,113 17,444 14,168
------- ------- -------
Net deferred (prepaid):
Federal 6,691 5,694 3,019
State 1,147 (292) 387
Foreign 1,158 1,189 1,162
------- ------- -------
8,996 6,591 4,568
------- ------- -------
$34,109 $24,035 $18,736
======= ======= =======
The provision for income taxes that is currently payable does not reflect
$1,813,000 and $1,631,000 of tax benefits allocated to "Capital in excess of par
value" or $1,150,000 and $3,060,000 of tax benefits used to reduce "Cost in
excess of net assets of acquired companies" for 1993 and 1992, respectively.
15PAGE
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Thermo Instrument Systems Inc.
The provision for income taxes differs from the amounts calculated by applying
the statutory federal income tax rate of 35% in 1993 and 34% in 1992 and 1991 to
income before provision for income taxes due to the following:
(In thousands) 1993 1992 1991
- -----------------------------------------------------------------
Provision for income
taxes at statutory
rate $27,606 $19,436 $14,815
Increases (decreases)
resulting from:
State income taxes,
net of federal tax 3,351 1,806 2,113
Net foreign losses
not benefited and
tax rate
differential 1,330 2,223 326
Tax benefit of
foreign sales
corporation (1,134) (988) -
Amortization of cost
in excess of net
assets of acquired
companies 2,338 1,139 847
Nondeductible
expenses 585 159 588
Other, net 33 260 47
------- ------- -------
$34,109 $24,035 $18,736
======= ======= =======
Deferred income taxes and prepaid income taxes at year-end 1993 and 1992 consist
of the following:
(In thousands) 1993 1992
- -----------------------------------------------------------------
Deferred income taxes:
Depreciation $14,116 $14,157
Intangible assets 4,402 7,612
Other 1,024 797
------- -------
$19,542 $22,566
======= =======
Prepaid income taxes:
Reserves and other accruals $12,497 $21,872
Inventory basis difference 6,462 8,386
Allowance for doubtful accounts 2,660 2,174
Accrued compensation 3,956 3,466
Net operating loss and
tax credit carryforwards 2,262 552
Other, net 41 401
------- -------
27,878 36,851
Less: Valuation allowance 3,666 2,277
------- -------
$24,212 $34,574
======= =======
The year-end 1993 valuation allowance reserves for the uncertainty surrounding
the realization of $1,406,000 of certain state tax deferred assets and
16PAGE
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Thermo Instrument Systems Inc.
$2,260,000 for federal net operating loss and tax credit carryforwards, the
realization of which is limited to the future income of certain subsidiaries.
The net operating loss and tax credit carryforwards expire in the years 2002
through 2005, and the resulting benefit will be used to reduce "Cost in excess
of net assets of acquired companies." The increase in the valuation allowance is
primarily attributable to acquisitions.
A provision has not been made for U.S. or additional foreign taxes on $31
million of undistributed earnings of foreign subsidiaries that could be subject
to taxation if remitted to the U.S. The Company plans to keep these amounts
permanently reinvested overseas. The Company believes that any additional U.S.
tax liability due upon remittance of such earnings would not be material due to
available U.S. foreign tax credits.
6. Commitments and Contingencies
Operating Leases
The Company leases portions of its office and operating facilities under various
noncancelable operating lease arrangements. The accompanying statement of income
includes expenses from operating leases of $8,172,000, $5,893,000, and
$5,464,000 in 1993, 1992, and 1991, respectively. Future minimum payments due
under noncancelable operating leases at January 1, 1994 are $8,161,000 in 1994;
$6,742,000 in 1995; $4,811,000 in 1996; $3,855,000 in 1997; $2,574,000 in 1998;
and $5,414,000 in 1999 and thereafter. Total future minimum lease payments are
$31,557,000.
Litigation
The Company is contingently liable with respect to lawsuits and other matters
that arose in the ordinary course of business. In the opinion of management,
these contingencies will not have a material effect upon the financial position
of the Company or its results of operations.
7. Related Party Transactions
Corporate Services Agreement
The Company and Thermo Electron have a corporate services agreement under which
Thermo Electron's corporate staff provides certain administrative services,
including certain legal advice and services, risk management, certain employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management, and certain financial and other services, for which the Company
pays Thermo Electron annually an amount equal to 1.25% of the Company's
revenues. Prior to 1993, the Company paid an annual fee equal to 1% of the
Company's revenues. For these services, the Company was charged $7,302,000,
$4,232,000, and $3,387,000 in 1993, 1992, and 1991, respectively. Management
believes that the service fee charged by Thermo Electron is reasonable and that
such fees are representative of the expenses the Company would have incurred on
a stand-alone basis. The corporate services agreement is renewed annually, but
can be terminated upon 30 days' prior notice by the Company or upon the
Company's withdrawal from the Thermo Electron Corporate Charter (the Thermo
Electron Corporate Charter defines the relationships among Thermo Electron and
its majority-owned subsidiaries). For additional items such as employee benefit
plans, insurance coverage, and other identifiable costs, Thermo Electron charges
the Company based upon costs directly attributable to the Company.
Repurchase Agreement
The Company invests excess cash in a repurchase agreement with Thermo Electron
as discussed in Note 1.
17PAGE
<PAGE>
Thermo Instrument Systems Inc.
Short-term Investments
At January 1, 1994, the Company's short-term investments represented 6 1/2%
subordinated convertible debentures due 1998, which were purchased on the open
market for $5,805,000. The debentures have a par value of $6,323,000 and were
issued by Thermedics Inc., which is a majority-owned subsidiary of Thermo
Electron, and are guaranteed on a subordinated basis by Thermo Electron.
Long-term Obligations
See Note 8 for long-term obligations of the Company held by Thermo Electron.
Due to Parent Company
"Due to parent company" in the accompanying 1992 balance sheet includes
short-term borrowings from Thermo Electron of $28,127,000. These borrowings bore
interest at the Commercial Paper Composite Rate, plus 25 basis points, and were
repaid in 1993.
8. Long-term Obligations
Long-term obligations of the Company are as follows:
(In thousands) 1993 1992
- -----------------------------------------------------------------
3 3/4% Senior convertible note,
due 2000, convertible at $31.75
per share (a) $140,000 $ -
3 3/4% Senior convertible debentures,
due 2000, convertible at $31.75
per share (b) 70,000 -
7% Subordinated convertible note,
due 1996, convertible at $4.44
per share (a) 2,734 3,434
6 5/8% Subordinated convertible
debentures, due 2001, convertible
at $17.58 per share (c) 49,569 86,240
Promissory note, due 1995, bearing
interest at the Commercial Paper
Composite Rate, plus 25 basis
points (weighted average interest
rate of 3.53% and 3.65% in 1993
and 1992) (a) - 48,000
10.23% Mortgage loan secured by
property with a net book value of
$16,826, payable in monthly
installments with final payment
in 2004 11,536 12,150
8 5/8% Note, payable in semiannual
installments with final payment
in 1999 8,000 9,000
Other 11,176 14,140
-------- --------
293,015 172,964
Less: Current maturities of
long-term obligations 6,854 2,872
-------- --------
$286,161 $170,092
======== ========
(a) Represents an obligation to Thermo Electron.
(b) Guaranteed on a senior basis by Thermo Electron.
(c) Guaranteed on a subordinated basis by Thermo Electron.
18PAGE
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Thermo Instrument Systems Inc.
In lieu of issuing shares of Company's common stock upon conversion of the
3 3/4% senior convertible debentures due 2000, the Company has the option to pay
the holder of the debentures cash equal to the weighted average market price of
the Company's common stock on the trading date prior to conversion.
During 1993, 1992, and 1991, convertible obligations of $37,371,000, $9,635,000,
and $41,638,000, respectively, were converted into common stock of the Company.
In 1992 and 1991, the Company repurchased $650,000 and $1,000,000 of convertible
obligations for $673,000 and $930,000 in cash, respectively. These transactions
did not have a material effect on the Company's results of operations. The
annual requirements for long-term obligations are as follows:
(In thousands)
- -----------------------------------------------------------------
1994 $ 6,854
1995 2,339
1996 4,964
1997 2,366
1998 2,650
1999 and thereafter 273,842
--------
$293,015
========
Based upon quoted market prices and based upon borrowing rates currently
available to the Company for debt of the same remaining maturities, the fair
market value of the Company's long-term obligations at January 1, 1994 and
January 2, 1993 was approximately $389 million and $225 million, respectively.
9. Common Stock
At January 1, 1994, the Company had reserved 14,114,522 unissued shares of its
voting common stock for possible issuance under employees' and directors' stock
plans and possible conversion of the Company's convertible obligations.
10. Industry Segment and Geographical Data
The Company's principal businesses consist of developing, manufacturing, and
marketing analytical and environmental monitoring instruments; and providing
environmental services including laboratory-based testing, nuclear health
physics, and environmental science and engineering services. Financial
information pertaining to these segments is set forth in the following table:
(In thousands) 1993 1992 1991
- ----------------------------------------------------------------
Revenues:
Instruments $529,279 $368,533 $283,612
Services 55,162 54,910 55,836
Intersegment sales
elimination (a) (265) (244) (701)
-------- -------- --------
$584,176 $423,199 $338,747
Income before ======== ======== ========
provision for income
taxes:
Instruments $ 93,699 $ 61,591 $ 50,420
Services 4,321 3,284 1,047
Corporate (b) (19,147) (7,710) (7,894)
-------- -------- --------
$ 78,873 $ 57,165 $ 43,573
======== ======== ========
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Thermo Instrument Systems Inc.
(In thousands) 1993 1992 1991
- ----------------------------------------------------------------
Identifiable assets:
Instruments $679,151 $619,865 $301,140
Services 40,444 40,013 42,432
Corporate (c) 171,546 26,547 154,387
-------- -------- --------
$891,141 $686,425 $497,959
Depreciation and ======== ======== ========
amortization:
Instruments $ 18,741 $ 11,588 $ 8,153
Services 1,978 2,092 1,877
-------- -------- --------
$ 20,719 $ 13,680 $ 10,030
Capital expenditures: ======== ======== ========
Instruments $ 6,747 $ 4,901 $ 4,174
Services 2,316 1,637 2,099
-------- -------- --------
$ 9,063 $ 6,538 $ 6,273
Export revenues ======== ======== ========
included above (d):
Europe $ 72,161 $ 47,585 $ 44,389
Other 63,327 40,466 29,195
-------- -------- --------
$135,488 $ 88,051 $ 73,584
Foreign operations ======== ======== ========
included above:
Revenues:
Germany $ 54,600 $ 49,109 $ 39,843
Other Europe 62,017 41,891 30,759
Other 29,391 17,723 14,834
-------- -------- --------
$146,008 $108,723 $ 85,436
Income before ======== ======== ========
provision for
income taxes
Germany $ 2,841 $ 1,947 $ (375)
Other Europe 9,039 6,069 6,120
Other 5,739 (76) 1,717
-------- -------- --------
$ 17,619 $ 7,940 $ 7,462
Identifiable ======== ======== ========
assets:
Germany $ 87,979 $ 73,665 $ 64,814
Other Europe 92,002 58,772 51,168
Other 32,807 30,334 23,880
-------- -------- --------
$212,788 $162,771 $139,862
======== ======== ========
(a) Intersegment sales are accounted for at prices that are
representative of transactions with unaffiliated parties.
(b) Primarily interest income and expense, and corporate general
and administrative expenses.
(c) Primarily cash, cash equivalents, and short-term
investments.
(d) In general, export sales are denominated in U.S. dollars.
20PAGE
<PAGE>
Thermo Instrument Systems Inc.
11. Subsequent Event
On January 31, 1994, the Company announced its intention to acquire several
businesses of the EnviroTech Measurements & Controls group of Baker Hughes
Incorporated (Baker Hughes), for a cash purchase price of approximately $93
million. Thermo Electron intends to acquire the EnviroTech Controls, Noran
Instruments, TN Technologies, and Tremetrics businesses, which collectively
design, manufacture, and market a variety of process control, process
measurement, and laboratory analytical products for use in a wide range of
industrial, energy, environmental, and research applications.
Thermo Electron has entered into an acquisition agreement with Baker Hughes with
respect to this transaction, and Thermo Electron expects to assign its rights to
acquire these businesses to the Company. Consummation of the acquisition is
subject to regulatory approval and other closing conditions. The businesses to
be acquired by the Company have combined sales of approximately $129 million for
the fiscal year ended September 30, 1993.
21PAGE
<PAGE>
Report of Independent Public Accountants
To the Shareholders and Board of Directors
of Thermo Instrument Systems Inc.:
We have audited the accompanying consolidated balance sheet of Thermo Instrument
Systems Inc. (a Delaware corporation and 81%-owned subsidiary of Thermo Electron
Corporation) and subsidiaries as of January 1, 1994 and January 2, 1993, and the
related consolidated statements of income, shareholders' investment, and cash
flows for each of the three years in the period ended January 1, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Thermo Instrument Systems Inc.
and subsidiaries as of January 1, 1994 and January 2, 1993, and the results of
their operations and their cash flows for each of the three years in the period
ended January 1, 1994, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN & CO.
Boston, Massachusetts
February 17, 1994
22PAGE
<PAGE>
Thermo Instrument Systems Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
The Company's revenues grew 38% to $584.2 million in 1993, up from the 25%
increase reported in 1992. Net income increased 35% in 1993 to a record $44.8
million, following a 33% increase in 1992. Primary earnings per share grew 30%
to $1.00 in 1993, compared with a 26% increase in 1992.
Revenues from the Instruments segment increased 44% to $529.3 million in 1993,
up from the 30% increase reported in 1992. Revenues increased principally due to
acquisitions that added revenues of approximately $147 million in 1993 and $74
million in 1992. These acquisitions include GasTech Inc. in May 1992, Nicolet
Instrument Corporation in August 1992, Gamma-Metrics in January 1993,
Spectra-Physics Analytical in February 1993, and the radiation safety
measurement products and radiometry process control divisions of FAG
Kugelfischer Georg Shafer AG in October 1993. Instruments segment revenues for
1993 included $12.6 million of revenues from Nicolet Biomedical, which was sold
by the Company to Thermo Electron effective April 5, 1993. The remainder of the
increase was due to increased demand for products from existing businesses.
Revenues from the Services segment were relatively unchanged in 1993 compared
with 1992, which was 2% less than 1991.
The Company's gross profit margin increased to 47% in 1993 from 45% in 1992 and
42% in 1991. Gross profit margin for the Instruments segment was 49% in both
1993 and 1992 and 48% in 1991. The improvement in 1992 resulted principally from
a reduction in manufacturing costs and a more favorable product mix. Gross
profit margin for the Services segment improved 3 percentage points in 1993 to
23% and 4 percentage points in 1992 as a result of cost reductions in the
Company's engineering services business and greater revenues contributed by the
higher margin environmental laboratory and infrastructure businesses.
Selling, general and administrative expenses as a percentage of revenues was 25%
in 1993 and 1992 and 23% in 1991. The 1992 increase resulted from greater
selling and administrative expenses related to the expansion of the Company's
sales and service offices and higher selling, general and administrative
expenses as a percentage of revenues for acquired businesses.
Research and development expenses decreased to 6.5% of Instruments segment
revenues in 1993, compared with 7.1% in 1992 and 5.8% in 1991. Research and
development spending as a percentage of revenues declined in 1993 as the Company
completed development of its new Magna-IR (tm) and Quantum (tm) products which
were introduced by the Company's Nicolet and Finnigan subsidiaries,
respectively. The increase in 1992 resulted principally from higher spending as
a percentage of revenues by Nicolet.
Interest income was $3.6 million in 1993, $7.0 million in 1992, and $4.9 million
in 1991. The decrease in 1993 was primarily a result of lower average balances
of short-term investments due to the cash expended for the acquisition of
Nicolet, offset in part by interest income earned on the net proceeds from the
issuance of the 3 3/4% senior convertible obligations in September 1993. The
increase in interest income in 1992 was principally the result of higher average
balances of short-term investments following the issuance in August 1991 of the
6 5/8% subordinated convertible obligations. Interest expense increased to $14.4
million in 1993 from $11.4 million in 1992 and $7.6 million in 1991 due to debt
incurred in connection with acquisitions and the issuance of the senior
convertible obligations in September 1993. This increase in interest expense was
offset in part by a reduction in interest expense as a result of the
23PAGE
<PAGE>
Thermo Instrument Systems Inc.
conversion of approximately $37.4 million of the Company's convertible
debentures into common stock during 1993. "Gain on sale of investments" in 1992
resulted from partial liquidation of the Company's short-term investments. The
proceeds from the sale of the short-term investments were used to reduce
borrowings from Thermo Electron.
The effective tax rate was 43% in 1993, 42% in 1992, and 43% in 1991. These
rates exceeded the statutory federal income tax rate primarily due to
nondeductible amortization of costs in excess of net assets of acquired
companies, the inability to provide a tax benefit on losses incurred at certain
foreign subsidiaries and the impact of state income taxes.
Liquidity and Capital Resources
Consolidated working capital at January 1, 1994 was $238.1 million, compared
with $68.4 million at January 2, 1993, an increase of $166.7 million. Included
in working capital are cash, cash equivalents, and short-term investments of
$183.6 million at January 1, 1994 and $32.0 million at January 2, 1993. In 1993,
the Company expended $102.3 million, net of cash acquired, for acquisitions and
the Company sold Nicolet Biomedical to Thermo Electron for approximately $67.9
million (see Note 2 to Consolidated Financial Statements). In September 1993,
the Company issued and sold $210.0 million principal amount 3 3/4% senior
convertible obligations due 2000. The Company repaid $157.5 million of long- and
short-term obligations to Thermo Electron with the proceeds from the sale of
Nicolet Biomedical and the issuance of the senior convertible obligations.
In 1994, the Company plans to make expenditures for property, plant and
equipment of approximately $11 million. The Company plans to make these
expenditures from working capital.
The Company has historically complemented internal development with acquisitions
of businesses or technologies that extend the Company's presence in current
markets or provide opportunities to enter and compete effectively in new
markets. The Company will consider making acquisitions of such companies,
product lines, or technologies that are consistent with its plans for strategic
growth. The Company believes that its existing resources are sufficient to meet
the capital requirements of its operations for the foreseeable future.
In January 1994, the Company announced its intention to acquire several of the
businesses of the EnviroTech Measurements & Controls group of Baker Hughes
Incorporated for approximately $93 million in cash (see Note 11 to Consolidated
Financial Statements). The Company intends to fund this acquisition from its
existing cash balances.
Pending Accounting Changes
The Company is required to adopt Statement of Financial Accounting Standards
(SFAS) No. 112, "Employers' Accounting for Post-employment Benefits" and SFAS
No. 115, "Accounting for Certain Investments in Debt and Equity Securities" at
the beginning of fiscal 1994. Management does not expect the adoption of
SFAS No. 112 will have a material adverse effect on the Company's results of
operations. Management believes that the adoption of SFAS No. 115 will result in
a total increase to shareholders' investment of approximately $1.8 million,
which results from unrealized gains on subordinated convertible debentures
issued by Thermedics Inc., a majority-owned subsidiary of Thermo Electron.
24PAGE
<PAGE>
Thermo Instrument Systems Inc.
Selected Financial Information
(In thousands except
per share amounts) 1993(a) 1992(b) 1991(c) 1990(d) 1989
- ------------------------------------------------------------------------------
Statement of Income
Data:
Revenues $584,176 $423,199 $338,747 $285,384 $184,662
Income before
provision for
income taxes 78,873 57,165 43,573 32,515 15,719
Net income 44,764 33,130 24,837 18,915 8,272
Earnings per share:
Primary 1.00 0.77 0.61 0.49 0.26
Fully diluted 0.94 0.74 0.58 0.47 0.25
Balance Sheet Data:
Working capital $238,053 $ 68,412 $197,391 $ 63,372 $139,813
Total assets 891,141 686,425 497,959 376,148 248,490
Long-term obligations 286,161 170,092 123,476 64,171 79,098
Shareholders'
investment 358,055 272,723 250,954 184,140 117,171
Quarterly Information (Unaudited)
(In thousands except per share amounts)
1993 First(a) Second(a) Third(a) Fourth
- ------------------------------------------------------------------------------
Revenues $149,748 $140,415 $136,511 $157,502
Gross profit 69,106 65,309 63,153 74,576
Net income 9,849 10,506 11,223 13,186
Earnings per share:
Primary 0.22 0.24 0.25 0.29
Fully diluted 0.22 0.23 0.24 0.27
1992 First Second Third(b) Fourth
- ------------------------------------------------------------------------------
Revenues $ 84,832 $ 88,589 $112,261 $137,517
Gross profit 37,571 38,996 50,101 64,852
Net income 7,409 7,814 8,570 9,337
Earnings per share:
Primary 0.17 0.18 0.20 0.21
Fully diluted 0.17 0.18 0.19 0.21
(a) Reflects the February 1993 acquisition of Spectra-Physics Analytical, the
April 1993 sale of the Company's biomedical instruments products business
of its Nicolet Instrument Corporation subsidiary, and the September 1993
issuance of $210,000,000 aggregate principal amount of 3 3/4% senior
convertible obligations due 2000.
(b) Reflects the August 1992 acquisition of Nicolet Instrument Corporation.
(c) Reflects the issuance of $101,250,000 aggregate principal amount of 6 5/8%
subordinated convertible obligations due 2001.
(d) Reflects the May 1990 acquisition of Finnigan Corporation.
25PAGE
<PAGE>
Thermo Instrument Systems Inc.
Common Stock Market Information
The following table shows the market range for the Company's common stock based
on reported sales prices on the American Stock Exchange (symbol THI) for 1993
and 1992. Prices have been restated to reflect the July 1993 three-for-two stock
split.
1993 1992
--------------------- ---------------------
Quarter High Low High Low
- ---------------------------------------------------------------
First $28 2/3 $23 $16 1/8 $14
Second 27 3/8 24 1/3 17 1/8 14 7/8
Third 29 7/8 25 1/2 19 16 1/2
Fourth 34 7/8 28 1/4 23 3/8 18 1/8
As of February 25, 1994, the Company had 2,751 holders of record of its common
stock. This does not include holdings in street or nominee names. The closing
market price on the American Stock Exchange for the Company's common stock on
February 25, 1994 was $32 1/4 per share.
Dividend Policy
The Company has never paid cash dividends because its policy has been to use
earnings to finance expansion and growth. Payment of dividends will rest within
the discretion of the Board of Directors and will depend upon, among other
factors, the Company's earnings, capital requirements, and financial condition.
Shareholder Services
Shareholders who desire information about the Company are invited to contact
John N. Hatsopoulos, Chief Financial Officer, Thermo Instrument Systems Inc., 81
Wyman Street, P.O. Box 9046, Waltham, Massachusetts 02254-9046, by letter or
telephone, (617) 622-1111. A mailing list is maintained to enable shareholders
whose stock is held in street name, and other interested individuals, to receive
quarterly and annual reports as quickly as possible. If you would like your name
added to the mailing list, please notify this office.
Form 10-K
A copy of the Annual Report on Form 10-K for the fiscal year ended January 1,
1994, as filed with the Securities and Exchange Commission, may be obtained
without charge by writing to John N. Hatsopoulos, Chief Financial Officer,
Thermo Instrument Systems Inc., 81 Wyman Street, P.O. Box 9046, Waltham,
Massachusetts 02254-9046.
Corporate Office
Thermo Instrument Systems Inc.
504 Airport Road
Post Office Box 2108
Santa Fe, New Mexico 87504-2108
26PAGE
<PAGE>
Thermo Instrument Systems Inc.
Transfer Agent and Common Stock Registrar
American Stock Transfer & Trust Company is the stock transfer agent and
maintains shareholder accounting records. The agent will respond to questions on
issuances of stock certificates, changes of ownership, lost stock certificates,
and changes of address. For these and similar matters, please direct inquires
to:
American Stock Transfer & Trust Company
Shareholder Services Department
40 Wall Street, 46th Floor
New York, New York 10005
(718) 921-8200
Annual Meeting
The annual meeting of shareholders will be held on Monday, May 23, 1994, at 3:00
p.m. at the Hyatt Regency Hotel, Hilton Head, South Carolina.
27<PAGE>
Exhibit 21
Subsidiaries of the Registrant
At March 7, 1994, Thermo Instrument Systems Inc. owned the following companies:
STATE OR PERCENT
JURISDICTION OF
NAME OF OWNER-
INCORPORATION SHIP
Analytical Instrument Development, Inc. Pennsylvania 100
Eberline Instrument Company Limited United Kingdom 100
Eberline Instrument Corporation New Mexico 100
Finnigan Corporation Virginia 100
Finnigan Instruments, Inc. New York 100
Finnigan International Sales, Inc. California 100
Finnigan MAT China, Inc. California 100
Finnigan MAT (Delaware), Inc. Delaware 100
Finnigan MAT Instruments, Inc. Nevada 100
Finnigan MAT International Sales, Inc. California 100
Finnigan MAT (Nevada), Inc. Nevada 100
Finnigan MAT AG Switzerland 100
Finnigan MAT Canada, Ltd. Canada 100
Finnigan MAT GmbH Germany 100
Finnigan MAT Ltd. United Kingdom 100
Finnigan MAT AB Sweden 100
Finnigan MAT S.A.R.L. France 100
Finnigan MAT S.R.L. Italy 100
Thermo Separation Products S.R.L. Italy 100
Thermo Instruments Australia Pty. Limited Australia 100
Finnigan Properties, Inc. California 100
Gamma-Metrics California 100
Gamma-Metrics International F.S.C. Inc. Guam 100
Gas Tech Inc. California 100
Gas Tech Australia, Pty. Ltd. Australia 50
Gas Tech Partnership California 50*
Gastech Instruments Canada Ltd. Canada 100
Imaging Systems International, Incorporated Wisconsin 100
National Nuclear Corporation California 100
Nicolet Instrument Corporation Wisconsin 100
Nicolet Instrument Canada, Inc. Canada 100
Nicolet Instrument GmbH Germany 100
Nicolet Instrument Limited United Kingdom 100
Nicolet Instrument S.A.R.L. France 100
Nicolet Japan K.K. Japan 100
Project Phoenix of Madison, Inc. Wisconsin 100
Spectra-Tech, Europe Limited United Kingdom 100
Spectra-Tech, Inc. Wisconsin 100
Thermo Environmental Corporation Massachusetts 100
TEV Administrative Services Corporation Delaware 100
Thermo Analytical Inc. Massachusetts 100
Eberline Analytical Corporation New Mexico 100
Skinner & Sherman, Inc. Massachusetts 100
Skinner & Sherman Laboratories, Inc. Massachusetts 100
Skinner & Sherman Technology, Inc. Massachusetts 100
TMA/NORCAL Inc. California 100
Thermo Water Management Inc. Delaware 100
Page 1PAGE
<PAGE>
Exhibit 21
Subsidiaries of the Registrant
At March 7, 1994, Thermo Instrument Systems Inc. owned the following companies:
STATE OR PERCENT
JURISDICTION OF
NAME OF OWNER-
INCORPORATION SHIP
Bettigole Andrews & Clark, Inc. New York 100
N.H. Bettigole Co., Inc. Delaware 100
N.H. Bettigole, P.A. New Jersey 100
N.H. Bettigole, P.C. New York 100
Fellows, Read & Associates, Inc. New Jersey 100
Normandeau Associates, Inc. New Hampshire 100
Thermo Consulting Engineers Inc. Delaware 100
George A. Schock & Associates, Inc. New Jersey 100
Jennison Engineering, Inc. Vermont 100
Thermo Environmental Instruments Inc. California 100
MIE Acquisition, Inc. Massachusetts 100
Thermo Instrument Controls Inc. Delaware 100
Thermo Instrument Systems Japan Holdings, Inc. Delaware 100
Nippon Jarrell-Ash Company, Ltd. Japan 100
U.S. Virgin
Thermo Instruments F.S.C. Inc. Islands 100
Thermo Jarrell Ash Corporation Massachusetts 100
Scientific Measurement Systems Inc. Colorado 100
Thermo Instrument Systems (F.E.) Limited China 100
Thermo Instruments (Canada) Inc. Canada 100
Eberline Instruments (Canada) Ltd. Canada 100
Thermo Separation Products AG Switzerland 100
Thermo Separation Products Inc. Delaware 100
Thermo Instrument Systems (France) S.A. France 100
Thermo Separation Products S.A. France 100
Thermo Instrument Systems K.K. Japan 100
Van Hengel Holding B.V. Netherlands 100
Thermo Electron Limited United Kingdom 100
Planweld Limited United Kingdom 100
Hilger Analytical Limited United Kingdom 100
Thermo Instrument Systems B.V. Netherlands 100
Thermo Automation Services (ThAS) B.V. Netherlands 100
Thermo Instrument Systems GmbH Germany 100
Thermo Separation Products GmbH Germany 100
Thermo Jarrell Ash (Europe) B.V. Netherlands 100
Thermo Jarrell Ash, S.A. Spain 100
Thermo Separation Products B.V. Netherlands 100
Thermo Separation Products B.V. B.A. Belgium 100
* Joint Venture/Partnership
Page 2<PAGE>
EXHIBIT 23
Consent of Independent Public Accountants
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference of our reports dated February 17, 1994 included in or incorporated by
reference into Thermo Instrument Systems Inc.'s Annual Report on Form 10-K for
the year ended January 1, 1994, and into the Company's previously filed
Registration Statement No. 33-14980 on Form S-8, Registration Statement No.
33-16461 on Form S-8, Registration Statement No. 33-14974 on Form S-8, Post
Effective Amendment to Registration Statement on Form S-4 No. 33-32579-02 on
Form S-8, Registration Statement No. 33-33577 on Form S-8, Registration
Statement No. 33-36221 on Form S-8, Registration Statement No. 33-37866 on
Form S-8, Registration Statement No. 33-42270 on Form S-3, and Registration
Statement No. 33-69526 on Form S-3.
Arthur Andersen & Co.
Boston, Massachusetts
March 8, 1994
<PAGE>
