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 December 30, 1995
[ ] 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 26, 1996, was approximately $345,740,000.
As of January 26, 1996, the Registrant had 91,682,067 shares of Common
Stock outstanding.
Documents Incorporated by Reference
Portions of the Registrant's Annual Report to Shareholders for the year
ended December 30, 1995, 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 19, 1996, are incorporated by
reference into Part III.
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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, monitoring, process control, and imaging, inspection, and
measurement instruments used to identify and analyze air pollution,
radioactivity, complex chemical compounds, toxic metals, and other elements
in a broad range of liquids and solids, as well as to control, monitor,
image, inspect, and measure various industrial processes and life sciences
phenomena. Through its 72%-owned ThermoSpectra Corporation (ThermoSpectra)
subsidiary, the Company develops, manufactures, and markets precision
imaging, inspection, and measurement instrumentation that employ a variety
of energy sources or signals as well as high-speed data acquisition and
digital processing technologies. Through its 80%-owned Thermo BioAnalysis
Corporation (Thermo BioAnalysis) subsidiary, the Company develops,
manufactures, and sells instrumentation for the analytical biochemistry,
biopharmaceutical, and health physics instrumentation markets. Through its
wholly owned Thermo Optek Corporation (Thermo Optek) subsidiary, the
Company develops, manufactures, and markets optical and energy-based
analytical instruments. These instruments are used in the quantitative and
qualitative chemical analysis of elements and molecular compounds in a wide
variety of solids, liquids, and gases. The Company's wholly owned
ThermoQuest Corporation (ThermoQuest) subsidiary develops, manufactures,
and sells mass spectrometers, liquid chromatographs, and gas chromatographs
for the environmental, pharmaceutical, and industrial marketplaces. These
analytical instruments are used in the quantitative and qualitative
chemical analysis of organic and inorganic compounds at ultra-trace levels
of detection.
The Company has adopted a strategy of spinning out certain of its
businesses into separate subsidiaries and having these subsidiaries sell a
minority interest to outside investors. The Company believes that this
strategy provides additional motivation and incentives for the management
of the subsidiary through the establishment of subsidiary-level stock
option incentive programs, as well as capital to support the subsidiaries'
growth. In March and April 1995, Thermo BioAnalysis sold 1,601,500 shares
of its common stock in private placements at $10.00 per share for net
proceeds of $14.9 million. In August 1995, ThermoSpectra sold 1,725,000
shares of its common stock in an initial public offering at $14.00 per
share for net proceeds of $21.9 million. In October 1995, ThermoSpectra
sold 202,000 shares of its common stock in a private placement at $15.72
per share for net proceeds of $3.0 million.
In August 1995, ThermoQuest sold $96.3 million principal amount of 5%
subordinated convertible debentures due 2000 for net proceeds of $93.9
million. In October 1995, Thermo Optek sold $96.3 million principal amount
of 5% subordinated convertible debentures due 2000 for net proceeds of
$93.9 million. The debentures issued by ThermoQuest and Thermo Optek are
not convertible into common stock until after the issuing company completes
an initial public offering of common stock. In February 1996, ThermoQuest
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filed a registration statement with the Securities and Exchange Commission
(SEC) covering shares of common stock to be offered in its initial public
offering.
Effective April 2, 1995, the Company and Thermo TerraTech Inc. (Thermo
TerraTech) (formerly Thermo Process Systems Inc.) dissolved their Thermo
Terra Tech joint venture. Thermo TerraTech then purchased the services
businesses formerly operated by the joint venture from the Company for
$34.3 million in cash. The Company owned 49% of the joint venture and
accounted for its interest in the joint venture using the equity method.
Prior to the joint venture's formation on April 2, 1994, the Company's
services businesses comprised the Company's Services segment and were
consolidated in the Company's financial statements. The sale of the
businesses to Thermo TerraTech represents the Company's disposal of the
operations that comprised its Services segment.
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 a number of complementary acquisitions that have provided
additional technologies, specialized manufacturing or product development
expertise, and broader capabilities in marketing and distribution. In
19951, the Company's acquisitions included the assets of the Analytical
Instruments Division of Baird Corporation, a wholly owned subsidiary of Imo
Industries Inc., for $12.9 million in cash; Bakker Electronics Dongen B.V.
for $2.3 million in cash; Gould Instrument Systems, Inc. for $25.8 million
in cash, which includes the repayment of $6.0 million of bank debt;
Euroglas B.V. for $0.9 million in cash; the assets of the Flow Automation
Division of Galveston-Houston Company for $7.8 million in cash and the
assumption of certain liabilities; and the Analytical Instrument Division
of Analytical Technology, Inc. (ATI) for $43.3 million in cash, which
includes the repayment of $7.0 million of bank debt, subject to
post-closing adjustments. In February 1996, the Company acquired Dynatech
Laboratories Worldwide (DLW) from Dynatech Corporation for approximately
$43 million in cash, subject to post-closing adjustments. On March 1, 1995,
the Company entered into an agreement with Fisons plc (Fisons) to acquire
the Scientific Instruments Division of Fisons for approximately 202 million
British pounds sterling. On April 13, 1995, the Company announced that it
had received a "second request" for information regarding the transaction
from the U.S. Federal Trade Commission (FTC). After extensive discussions
with Fisons and the FTC, in January 1996 the Company withdrew its original
pre-merger notification filing under the Hart-Scott-Rodino Antitrust
Improvements Act (the HSR Act), and submitted a new filing with respect to
a modified form of the acquisition. On February 15, 1996, the Company
announced that the FTC had granted early termination of the waiting period
under the HSR Act with respect to the modified acquisition and on March 1,
1996, the Company announced that it had received clearance from U.K.
antitrust regulatory authorities. The form of the acquisition cleared by
the FTC and the U.K. authorities excludes from the businesses to be
acquired by the Company substantially all of the mass spectrometer
businesses of Fisons and a high-resolution mass spectrometer/inductively-
coupled plasma (ICP) product. These businesses accounted for slightly less
than 20% of the 1995 revenues of Fisons' Scientific Instruments Division.
The new purchase price is expected to be slightly less than 150 million
British pounds sterling, and will be subject to a post-closing adjustment
1 References to 1995, 1994, and 1993 herein are for the fiscal years ended
December 30, 1995, December 31, 1994, and January 1, 1994, respectively.
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based on the net asset value of the acquired businesses as of the closing
date. The modified acquisition is still subject to the consent of certain
third parties and the satisfaction of other closing conditions. The
Scientific Instruments Division of Fisons is principally composed of
operations that are involved in the research, development, manufacture, and
sale of analytical instruments to industrial and research laboratories
worldwide. The Company intends to fund the purchase price of this
acquisition from available cash and through borrowings from Thermo Electron
Corporation (Thermo Electron).
The Company was incorporated in Delaware in May 1986 as a wholly owned
subsidiary of Thermo Electron to succeed the instruments businesses that
were previously conducted by several Thermo Electron subsidiaries. As of
December 30, 1995, Thermo Electron owned 78,459,585 shares, or 86%, of the
Company's outstanding common stock. Thermo Electron is a manufacturer of
biomedical products including heart-assist systems and mammography systems,
paper-recycling and papermaking equipment, alternative-energy systems,
industrial process equipment, and other specialized products. Thermo
Electron also provides environmental and metallurgical services and
conducts advanced technology research and development.
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 and state income tax returns with the Company.
This may require the purchase by Thermo Electron of additional shares of
common stock and/or convertible debentures of the Company from time to time
as the number of outstanding shares of the Company increases. These and any
other purchases may be made either on the open market or directly from the
Company or pursuant to conversions of the Company's 3 3/4% senior
convertible note due 2000 held by Thermo Electron. See Notes 5 and 11 to
Consolidated Financial Statements in the Registrant's 1995 Annual Report to
Shareholders for a description of the Company's outstanding stock options
and convertible obligations. During 1995, Thermo Electron purchased
2,864,000 shares of the Company's common stock on the open market at a
total cost of $65.9 million. All share amounts have been restated to
reflect a three-for-two stock split, effected in the form of a 50% stock
dividend, which was distributed in April 1995, and a five-for-four stock
split, effected in the form of a 25% stock dividend, which was distributed
in December 1995.
(b) Financial Information About Industry Segments.
The Company operates in one business segment: the manufacturing and
marketing of analytical, monitoring, process control, and imaging,
inspection, and measurement instruments used to identify and analyze air
pollution, radioactivity, complex chemical compounds, toxic metals, and
other elements in a broad range of liquids and solids, as well as to
control, monitor, image, inspect, and measure various industrial processes
and life sciences phenomena. Prior to April 4, 1994, the Company also
provided environmental science and engineering services, laboratory-based
testing, and nuclear physics services.
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(c) Description of Business.
(i) Principal Products and Services
The Company manufactures and markets instruments that employ a variety
of advanced analytical techniques to determine the composition, structure,
and physical properties of natural and synthetic substances. The Company's
instruments are used for environmental and nuclear monitoring, process
control, as well as imaging, inspection, and measurement.
The Company has adopted Thermo Electron's spinout strategy in an
effort to more clearly focus its many analytical technologies on their more
specific niche markets. To date, the Company has completed an initial
public offering of ThermoSpectra, has privately offered equity in Thermo
BioAnalysis, and has privately sold convertible debentures in Thermo Optek
and ThermoQuest. The debentures issued by ThermoQuest and Thermo Optek are
not convertible into common stock until after the issuing company completes
an initial public offering of common stock. ThermoQuest filed a
registration statement with the SEC in February 1996 relating to its
initial public offering of common stock.
ThermoSpectra manufactures and markets precision imaging, inspection,
and measurement instruments based on high-speed data acquisition and
digital processing technologies to provide industrial and research
customers with integrated systems that address their specific needs.
ThermoSpectra's products include digital oscillographic recorders and data
acquisition systems that continuously measure and monitor signals from
various sensors; digital storage oscilloscopes (DSOs) that are capable of
taking hundreds of millions of measurements per second of transient signals
or short bursts of data; X-ray microanalyzers used as accessories to
electron microscopes to provide elemental materials analysis as a
supplement to the microscope's imaging capabilities; non-destructive X-ray
inspection systems for process monitoring and quality control applications;
and confocal laser scanning microscopes that use laser light to generate
precise optical images primarily for life science applications.
Thermo BioAnalysis develops, manufactures, and sells capillary
electrophoresis systems, matrix-assisted laser desorption/ionization
time-of-flight (MALDI-TOF) mass spectrometers, and health physics
instrumentation. Capillary electrophoresis is a separation technique based
on a combination of chromatographic and electroanalytical technologies and
is particularly useful in biochemical, pharmaceutical, and environmental
research. MALDI-TOF mass spectrometers measure the weight of the components
of a sample and identify inorganic chemical components and/or inorganic
elements contained within the sample. Thermo BioAnalysis' health physics
division manufactures and sells radiation detection and counting
instrumentation and sophisticated radiation monitoring systems to the
nuclear industry throughout the world. Through the February 1996
acquisition of DLW, Thermo BioAnalysis develops, manufactures, and sells
immunoassay products. Immunoassay is an analytical method used for the
qualitative and quantitative analysis of biological molecules. Immunoassay
products are widely used in pharmaceutical and biopharmaceutical research,
as well as for clinical testing of patient samples.
Thermo Optek is a leader in the development, manufacture, and
marketing of products used for both elemental and molecular analysis. These
products are based on several optical spectroscopy techniques, including
atomic emission (AE), atomic absorption (AA), and Fourier transform
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infrared (FT-IR) and FT-Raman technologies. Thermo Optek's AE and 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.
Thermo Optek sells its products to a range of customers in manufacturing
industries such as producers of aircraft, automobiles and trucks,
computers, chemicals, food, pharmaceuticals, and primary metals; in service
industries such as waste management companies and commercial testing
laboratories; and to government and university laboratories. Thermo Optek
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 the same time. The principal type of AE
spectrometer used for elemental analysis of liquids is the ICP mass
spectrometer (ICP/MS), which allows for simultaneous multi-element testing.
Thermo Optek is a market and technology leader in ICP spectrometry and has
developed the first ultratrace ICP spectrometer, the first ICP spectrometer
to incorporate a solid state detector, and the first combined optical
emission/mass spectrometer. Thermo Optek produces AA spectrometers in
single-, double- and four-channel models. Thermo Optek 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.
Thermo Optek is a leading manufacturer of molecular analysis systems
that use FT-IR and FT-Raman spectroscopic techniques. 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. Thermo Optek offers a variety of models ranging from newly
introduced models designed for routine applications to highly advanced
research-grade FT-IR spectrometers.
ThermoQuest is a leading manufacturer of commercial mass spectrometers
and has pioneered many of the significant developments and applications of
mass spectrometry. ThermoQuest's mass spectrometry products identify and
measure the components of a sample for organic chemical compounds or for
inorganic compounds. These instruments are used primarily by pharmaceutical
companies for drug research, testing, and quality control; by environmental
laboratories for testing water, air, and soil samples for compliance with
environmental regulations; by chemical companies for research and quality
control; by manufacturers for testing in certain industrial applications,
such as the manufacture of semiconductor components, and for quality
control; by food and beverage companies for quality control and to test
product contamination; and in forensic applications. ThermoQuest provides
both stand-alone mass spectrometers and combined systems that use its own
chromatographs or those purchased from other companies. These products span
a range of sensitivity, specificity, separation technologies, data-handling
capabilities, sizes, and prices.
ThermoQuest also manufactures high performance liquid chromatographs,
gas chromatographs, and related instruments and equipment used principally
in the research and development and production monitoring of
pharmaceuticals and chemicals, and for environmental monitoring. These
instruments separate the chemical components of substances for purposes of
identification and measurement. Gas chromatographs and liquid
chromatographs are widely used in environmental and industrial laboratories
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as stand-alone instruments or in conjunction with mass spectrometers, where
the gas or liquid chromatograph separates a sample into individual chemical
components for the mass spectrometer to identify. Applications include the
identification of organic compounds, from pesticide residues on vegetables
to chlorinated organics in drinking water. In 1995, ThermoQuest introduced
its GCQ(TM) and LCQ(TM) benchtop gas chromatography/mass spectrometry and
liquid chromatography/ mass spectrometry products. These systems are based
on the Company's proprietary ion trap technology and are capable of
multi-stage mass spectrometry.
In other wholly owned businesses, the Company 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. In addition, the
Company is a major supplier of instruments and systems that are
manufactured to European standards for personnel protection and
environmental monitoring. The Company also 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 the
Company's 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.
The 1995 acquisition of the Analytical Instrument Division of ATI
added to the Company's product offerings in several analytical areas,
notably in ultraviolet visual spectrometry and thermogravimetric analysis
(TGA). Ultraviolet visual spectrometry instruments are based upon the
selective absorbence of ultraviolet radiation by various substances. An
important use of ultraviolet instruments is the identification and
determination of biologically active substances. These instruments are
often used by life science researchers, pharmaceutical companies, and
environmental testing laboratories. TGA systems are employed in the
chemicals, plastics-polymers, and pharmaceutical industries for measuring
changes in mass as a function of temperature. Specific fields which have
widely used TGA include studies involving the thermal stability of
minerals, pyrolysis of coals and petroleums, and thermochemical reactions
of ceramics and cements.
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In addition, the Company manufactures 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 Company also participates in the process monitoring, analysis,
gauging, and control instruments markets, primarily for the oil, gas, and
petrochemical industries. The Company manufactures and markets a number of
process monitoring, analysis, and control systems including: analog and
digital recorders for continuous process industries; process and laboratory
analytical instruments and monitors to detect lethal gases for the oil,
gas, and petrochemical industries; supervisory control and data acquisition
software for process monitoring and operator interface in a variety of
industrial processes; and turnkey, integrated systems to control networks
of distant oil and gas wells.
The Company also manufactures and markets process gauges and
noncontacting and nonintrusive process control instrumentation to measure
liquid levels, density, weight, and flows for a variety of industries.
Application examples include measuring levels in a pharmaceutical reactor,
determining the percentage by weight of solids contained in a mining
slurry, or monitoring the flow of fluid into a wastewater treatment
facility. The Company's X-ray fluorescence instruments allow for the
nondestructive analysis of inorganic elements. Applications include alloy
identification, on-line process monitoring and quality control,
characterization of toxic metals in soil, and thickness and/or composition
of semiconductor thin films.
Customers and Marketing
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 are also used in biomedical
applications such as analysis of drugs and drug metabolites; 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's process control instrumentation is used primarily in the oil,
gas, and petrochemical industries.
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 are 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.
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(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 the Company's 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 $54,314,000,
$42,924,000, and $34,510,000 in 1995, 1994, and 1993, 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 sales of
its products.
(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
No single customer accounted for more than 10% of the Company's total
revenues in any of the past three years.
(viii) Backlog
The Company's backlog of firm orders as of December 30, 1995 and
December 31, 1994 was $188,680,000 and $139,596,000, respectively. The
Company anticipates that substantially all of the backlog at December 30,
1995, will be shipped or completed within the current fiscal year.
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(ix) Government Contracts
Not applicable.
(x) Competition
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.
In many markets, the Company competes with large analytical instrument
companies such as Hewlett-Packard Co. (Hewlett-Packard), Perkin Elmer
Corporation (Perkin Elmer), Varian Associates (Varian), and Hitachi Ltd.
(Hitachi). Certain products manufactured by the Company also compete with
products sold by numerous smaller, specialized firms.
ThermoSpectra competes in each of its markets primarily on the basis
of technical advances that result in new products and improved
price/performance ratios and reputation among customers as a quality leader
for products and services. To a lesser extent, ThermoSpectra competes on
the basis of price. The DSO market is dominated by Tektronix, Inc. and
Hewlett-Packard. In the X-ray microanalysis market, ThermoSpectra competes
primarily with Link Analytical Limited, a wholly owned subsidiary of Oxford
Instruments plc. In the X-ray inspection market, ThermoSpectra competes
with smaller companies in the manual segment of the market, and primarily
with Four Pi Systems, a subsidiary of Hewlett-Packard, in the automated
segment. In the digital video segment of the confocal microscopy market,
ThermoSpectra competes primarily with Nikon Inc. as well as Bio-Rad
Laboratories, Inc. (Bio-Rad), Carl Zeiss, Inc., and Leica plc.
Thermo BioAnalysis competes in each of its markets primarily on the
basis of technical performance and reliability. Thermo BioAnalysis'
principal competitors in the capillary electrophoresis market include
Beckman Instruments Inc. (Beckman Instruments), Bio-Rad, and
Hewlett-Packard. In the MALDI-TOF mass spectrometry market, principal
competitors include PerSeptive Biosystems Inc. and Shimadzu Corporation
(Shimadzu). Significant competitors in the health physics instrumentation
market include the Nuclear Instruments Group of EG&G, Inc., the Nuclear
Products Division of Morgan Crucible Co., plc, the Bicron/NE Technology
divisions of Saint-Gobain/Norton Industrial Ceramics Corporation, and the
Rados Companies.
Thermo Optek competes in each of its markets primarily on performance,
reliability, customer service, and price. In the market for AE and AA
spectrometers and ICP/MS instruments, Thermo Optek competes primarily with
Perkin Elmer and, to a lesser extent, Varian. In the FT-IR and FT-Raman
markets, Thermo Optek competes primarily with Perkin Elmer, the Digilab
division of Bio-Rad, Bruker Instruments Inc., and Bomen Inc.
ThermoQuest competes in each of its markets primarily on performance,
customer service and support and, to a lesser extent, price. ThermoQuest's
principal competitors in the mass spectrometry market include
Hewlett-Packard, Japan Electro Optical Laboratories, Hitachi, Fisons,
Shimadzu, and the Sciex Division of Perkin Elmer. ThermoQuest competes in
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the liquid chromatography market with Waters Corporation, Hewlett-Packard,
Shimadzu, Beckman Instruments, Hitachi, Perkin Elmer, Varian, Dionex
Corporation, and others. In the gas chromatography market, ThermoQuest
competes with numerous companies, including Hewlett-Packard, Perkin Elmer,
Varian, Hitachi, and Shimadzu.
The Company is a leading manufacturer of ambient air monitoring
instruments and a major manufacturer of source monitoring and worker-safety
monitoring instruments. The Company competes in these markets on the basis
of technical performance and reliability, as well as customer service.
The Company has a relatively small presence within the large and
varied process control marketplace, which is extremely fragmented and
comprises several large companies and numerous smaller companies. The
Company competes in this market primarily on the basis of technical
performance, customer service, and reliability.
(xii) Environmental Protection Regulations
The Company believes that compliance by the Company 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 December 30, 1995, the Company employed 4,752 people.
(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 14 to Consolidated Financial
Statements in the Registrant's 1995 Annual Report to Shareholders and is
incorporated herein by reference.
(e) Executive Officers of the Registrant.
Present Title (Year First Became
Name Age Executive Officer)
-------------------- --- ---------------------------------
Arvin H. Smith 66 President and Chief Executive Officer (1986)
Earl R. Lewis 52 Executive Vice President and
Chief Operating Officer (1990)
Denis A. Helm 56 Senior Vice President (1986)
Richard W.K. Chapman 51 Vice President (1994)
Barry S. Howe 40 Vice President (1994)
John N. Hatsopoulos * 61 Vice President and Chief Financial
Officer (1988)
Paul F. Kelleher 53 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 by the Board of Directors 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
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Company or with its parent company, Thermo Electron. Mr. Chapman has been
President and Chief Executive Officer of ThermoQuest since its inception in
June 1995, and served as President of the Company's Finnigan Corporation
(Finnigan) subsidiary from 1992 to 1995 and as Marketing Manager of
Finnigan from 1989 to 1992. Messrs. Helm, Lewis, Chapman, and Howe are
full-time employees of the Company. Messrs. Smith, Hatsopoulos, and
Kelleher are full-time employees of Thermo Electron and certain of its
subsidiaries, but devote such time to the affairs of the Company as the
Company's needs reasonably require.
Item 2. Properties
The Company owns approximately 1,446,000 square feet of office,
engineering, laboratory, and production space, principally in California,
Colorado, Florida, New Mexico, Texas, Wisconsin, Germany, and England, and
leases approximately 1,596,000 square feet of office, engineering,
laboratory, and production space under leases expiring from 1996 through
2017, principally in California, Massachusetts, Connecticut, Ohio, Texas,
Wisconsin, England, France, The Netherlands, Germany, and Japan. As of
December 30, 1995, the Company had a $10,101,000 mortgage loan that is
secured by 200,000 square feet of property in California with a net book
value of $16,303,000. The Company believes that its facilities are in good
condition and are suitable and adequate for its present operations and that
suitable space is readily available if any of such leases are not extended.
Item 3. Legal Proceedings
In August 1995, ThermoQuest's Finnigan subsidiary settled certain
patent litigation involving a claim by Analytica of Branford, Inc.
(Analytica) that Finnigan was infringing a U.S. patent entitled "Method of
Producing Multiply Charged Ions and For Determining Molecular Weights of
Molecules By Use of the Multiply Charged Ions of Molecules." Under the
settlement, ThermoQuest is required to make certain payments to Analytica
that are not expected to have a material effect of the Company's financial
position or results of operations.
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 one site to which chemical or other wastes generated by the
manufacturing operations of a subsidiary of the Company were sent. The
notification alleges that the subsidiary may be a potentially responsible
party with respect to the remedial actions needed to control or clean up
any such release. 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. 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 is also involved in situations under state environmental
laws with respect to certain other sites where remediation may be required.
The Company is conducting investigative or remediation activities at these
12PAGE
<PAGE>
sites pursuant to arrangements with state environmental agencies.
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.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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 labeled "Common Stock Market Information" and "Dividend
Policy" in the Registrant's 1995 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 labeled "Selected Financial Information" and "Dividend Policy" in
the Registrant's 1995 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 1995 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 December 30,
1995, are included in the Registrant's 1995 Annual Report to Shareholders
and are incorporated herein by reference.
13PAGE
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
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.
14PAGE
<PAGE>
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 schedule set forth in
the list below is 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 II: Valuation and Qualifying Accounts
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 in the notes thereto.
(b) Reports on Form 8-K.
During the quarter ended December 30, 1995, 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.
15PAGE
<PAGE>
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 11, 1996 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 11, 1996.
Signature Title
--------- -----
By: Arvin H. Smith President, Chief Executive Officer
----------------------- and Director
Arvin H. Smith
By: John N. Hatsopoulos Vice President, Chief Financial Officer
----------------------- and Director
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: Polyvios C. Vintiadis Director
-----------------------
Polyvios C. Vintiadis
16PAGE
<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 12, 1996 (except with respect to the matter discussed in Note 15
as to which the date is March 1, 1996). Our audits were made for the
purpose of forming an opinion on those statements taken as a whole. The
schedule listed in Item 14 on page 15 is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in the audits of the basic consolidated
financial statements and, in our opinion, fairly states, in all material
respects, the financial data required to be set forth therein in relation
to the basic consolidated financial statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
February 12, 1996
17PAGE
<PAGE>
SCHEDULE II
THERMO INSTRUMENT SYSTEMS INC.
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Bad
Charged Debts Ac-
Balance at to Costs Re- counts Balance
Beginning and cover- Written Disposi- at End
Description of Year Expenses ed Off tions(b) Other(a) of Year
- ------------------------------------------------------------------------------
Year Ended
December 30,
1995
Allowance for
Doubtful
Accounts $8,779 $2,543 $ 191 $(2,942) $ - $3,998 $12,569
Year Ended
December 31,
1994
Allowance for
Doubtful
Accounts $8,456 $ 733 $ 126 $(2,736) $(2,696) $4,896 $ 8,779
Year Ended
January 1,
1994
Allowance for
Doubtful
Accounts $7,276 $ 970 $1,241 $(1,733) $ (586) $1,288 $ 8,456
(a) Includes allowance of businesses acquired during the year as described in
Note 4 to Consolidated Financial Statements in the Company's 1995 Annual
Report to Shareholders and the effect of foreign currency translation.
(b) As described in Note 3 to Consolidated Financial Statements in the
Registrant's 1995 Annual Report to Shareholders.
18PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
---------- ------------------------------------------------------- ----
2.1 Asset and Stock Purchase Agreement among the Registrant,
Thermo Electron Corporation and Fisons plc dated March
1, 1995, as amended (filed as Exhibit 2.3 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 and as Exhibit 2 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995 [File No. 1-9786] and
incorporated herein by reference). Pursuant to Item
601(b)(2) of Regulation S-K, schedules to this Agreement
have been omitted. The Company hereby undertakes to
furnish supplementally a copy of such schedules to the
Commission upon request.
3.1 Restated Certificate of Incorporation of the Registrant,
as amended (filed as Exhibit 3.1 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 1, 1994 [File No. 1-9786] and incorporated
herein by reference).
3.2 By-Laws of the Registrant (filed as Exhibit 3(b) to the
Registrant's Annual Report on Form 10-K for the fiscal
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 of 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 fiscal
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 $70,000,000
principal amount of 3 3/4% senior convertible debentures
due 2000 (filed as Exhibit 4 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
October 2, 1993 [File No. 1-9786] and incorporated by
reference).
4.3 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
Registrant's Quarterly Report on Form 10-Q for the
quarter ended October 2, 1993 [File No. 1-9786] and
incorporated by reference).
19PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
---------- ------------------------------------------------------- ----
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
fiscal year ended January 2, 1993 [File No. 1-9786] and
incorporated herein by reference).
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 fiscal 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 fiscal year ended
December 29, 1990 [File No. 1-9786] and incorporated
herein by reference).
10.5 Plan for sale of shares by the Registrant to Thermo
Electron Corporation (filed as Exhibit 10(dd) to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 3, 1993 [File No. 1-9786] and
incorporated herein by reference).
10.6 Master Repurchase Agreement dated January 1, 1994
between the Registrant and Thermo Electron Corporation
(filed as Exhibit 10.7 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended January 1, 1994
[File No. 1-9786] and incorporated herein by reference).
10.7 Master Guarantee Reimbursement Agreement dated January
1, 1994 by and among the Registrant and Thermo Electron
Corporation (filed as Exhibit 4.4 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 [File No. 1-9786] and incorporated
herein by reference).
10.8-10.15 Reserved.
20PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
---------- ------------------------------------------------------- ----
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 10.17 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 [File
No. 1-9786] and incorporated herein by reference).
10.18 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 in the
aggregate under this plan and the Registrant's
Nonqualified Stock Option Plan is 2,812,500 shares,
after adjustment to reflect share increase approved in
1990, 3-for-2 stock splits effected in January 1988,
July 1993 and April 1995 and 5-for-4 stock split
effected in December 1995).
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 in the aggregate under this plan and the
Registrant's Incentive Stock Option Plan is 2,812,500
shares, after adjustment to reflect share increase
approved in 1990, 3-for-2 stock splits effected in
January 1988, July 1993 and April 1995 and 5-for-4 stock
split effected in December 1995).
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 4,031,250 shares, after adjustment to reflect share
increase approved in December 1993, 3-for-2 stock splits
effected in July 1993 and April 1995 and 5-for-4 stock
split effected in December 1995).
10.21 Finnigan Corporation 1979 Long-term Incentive Stock
Option Plan (filed as Exhibit 10.21 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 [File No. 1-9786] and incorporated
herein by reference).
21PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
---------- ------------------------------------------------------- ----
10.22 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 in the aggregate
under this plan and the Former Thermo Environmental
Corporation Nonqualified Stock Option Plan is 1,160,156
shares, after adjustment to reflect share increase
approved in 1987, 3-for-2 stock splits effected in July
1993 and April 1995 and 5-for-4 stock split effected in
December 1995).
10.23 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 in the aggregate
under this plan and the Former Thermo Environmental
Corporation Incentive Stock Option Plan is 1,160,156
shares, after adjustment to reflect share increase
approved in 1987, 3-for-2 stock splits effected in July
1993 and April 1995 and 5-for-4 stock split effected in
December 1995).
10.24 Thermo Instrument Systems Inc. - ThermoSpectra
Corporation Nonqualified Stock Option Plan (filed as
Exhibit 10.51 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 [File
No. 1-9786] and incorporated herein by reference).
10.25 Thermo Instrument Systems Inc. - ThermoQuest Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.65
to Thermo Cardiosystems' Annual Report on Form 10-K for
the fiscal year ended December 30, 1995 [File No.
1-10114] and incorporated herein by reference).
10.26 Thermo Instrument Systems Inc. - Thermo BioAnalysis
Corporation Nonqualified Stock Option Plan (filed as
Exhibit 10.64 to Thermo Cardiosystems' Annual Report on
Form 10-K for the fiscal year ended December 30, 1995
[File No. 1-10114] and incorporated herein by
reference).
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 10.27-10.89.
22PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
---------- ------------------------------------------------------- ----
10.27 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 in the aggregate under this plan and the
Thermo Electron Nonqualified Stock Option Plan is
9,035,156 shares, after adjustment to reflect share
increases approved in 1984 and 1986, share decrease
approved in 1989, and 3-for-2 stock splits effected in
October 1986, October 1993 and May 1995).
10.28 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 in the aggregate under
this plan and the Thermo Electron Incentive Stock Option
Plan is 9,035,156 shares, after adjustment to reflect
share increases approved in 1984 and 1986, share
decrease approved in 1989, and 3-for-2 stock splits
effected in October 1986, October 1993 and May 1995).
10.29 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 7,050,000 shares, after
adjustment to reflect 3-for-2 stock splits effected in
October 1993 and May 1995 and share increase approved in
1994).
10.30 Thermo Electron Corporation - Thermedics Inc.
Nonqualified Stock Option Plan (filed as Exhibit 4 to a
Registration Statement on Form S-8 of Thermedics [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).
10.31 Thermo Electron Corporation - Thermo Instrument Systems
Inc. (formerly Thermo Environmental Corporation)
Nonqualified Stock Option Plan (filed as Exhibit 4(c) to
the Registrant's Registration Statement on Form S-8
[Reg. No. 33-8034] and incorporated herein by
reference). (Maximum number of shares issuable is
421,875 shares, after adjustment to reflect 3-for-2
stock splits effected in July 1993 and April 1995 and
5-for-4 stock split effected in December 1995).
23PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
---------- ------------------------------------------------------- ----
10.32 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 600,285 shares, after
adjustment to reflect share increase approved in 1988,
3-for-2 stock splits effected in January 1988, July 1993
and April 1995 and 5-for-4 stock split effected in
December 1995).
10.33 Thermo Electron Corporation - Thermo TerraTech Inc.
(formerly 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).
10.34 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). (Amended in September 1995 to extend the
plan expiration date to December 31, 2005).
10.35 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).
10.36 Thermo Electron Corporation - Thermo Ecotek Corporation
(formerly 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).
24PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
---------- ------------------------------------------------------- ----
10.37 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).
10.38 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 600,000 shares, after adjustment
to reflect 2-for-1 stock split effected in September
1992 and 3-for-2 stock split effected in September
1995).
10.39 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 57,500 shares, after adjustment to reflect 3-for-2
stock split effected in November 1993 and share increase
approved in September 1995).
10.40 Thermo Electron Corporation - Thermo BioAnalysis
Corporation Nonqualified Stock Option Plan (filed as
Exhibit 10.31 to Thermo Power's Annual Report on Form
10-K for the fiscal year ended September 30, 1995 [File
No. 1-10573] and incorporated herein by reference).
10.41 Thermo Electron Corporation - ThermoLyte Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.32
to Thermo Power's Annual Report on Form 10-K for the
fiscal year ended September 30, 1995 [File No. 1-10573]
and incorporated herein by reference).
10.42 Thermo Electron Corporation - Thermo Remediation Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.33
to Thermo Power's Annual Report on Form 10-K for the
fiscal year ended September 30, 1995 [File No. 1-10573]
and incorporated herein by reference).
10.43 Thermo Electron Corporation - ThermoSpectra Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.34
to Thermo Power's Annual Report on Form 10-K for the
fiscal year ended September 30, 1995 [File No. 1-10573]
and incorporated herein by reference).
25PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
---------- ------------------------------------------------------- ----
10.44 Thermo Electron Corporation - ThermoLase Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.35
to Thermo Power's Annual Report on Form 10-K for the
fiscal year ended September 30, 1995 [File No. 1-10573]
and incorporated herein by reference).
10.45 Thermo Electron Corporation - ThermoQuest Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.41
to Thermo Cardiosystems' Annual Report on Form 10-K for
the fiscal year ended December 30, 1995 [File No.
1-10114] and incorporated herein by reference).
10.46 Thermo Electron Corporation - Thermo Optek Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.42
to Thermo Cardiosystems' Annual Report on Form 10-K for
the fiscal year ended December 30, 1995 [File No.
1-10114] and incorporated herein by reference).
10.47 Thermo Electron Corporation - Thermo Sentron Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.43
to Thermo Cardiosystems' Annual Report on Form 10-K for
the fiscal year ended December 30, 1995 [File No.
1-10114] and incorporated herein by reference).
10.48 Thermo Electron Corporation - Trex Medical Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.44
to Thermo Cardiosystems' Annual Report on Form 10-K for
the fiscal year ended December 30, 1995 [File No.
1-10114] and incorporated herein by reference).
10.49 Thermo Ecotek Corporation (formerly 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 in the aggregate
under this plan and the Thermo Ecotek Nonqualified Stock
Option Plan is 900,000 shares, after adjustment to
reflect share increase approved in December 1993).
10.50 Thermo Ecotek Corporation (formerly 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 in the
aggregate under this plan and the Thermo Ecotek
Incentive Stock Option Plan is 900,000 shares, after
adjustment to reflect share increase approved in
December 1993).
26PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
---------- ------------------------------------------------------- ----
10.51 Thermo Ecotek Corporation (formerly Thermo Energy
Systems Corporation) Equity Incentive Plan (filed as
Exhibit 10.39 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 [File
No. 1-9786] and incorporated herein by reference).
10.52 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 in the
aggregate under this plan and the Thermedics
Nonqualified Stock Option Plan 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 splits effected in October 1986 and
November 1993).
10.53 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 in the
aggregate under this plan and the Thermedics Incentive
Stock Option Plan 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
splits effected in October 1986 and November 1993).
10.54 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).
10.55 Thermedics Inc. - 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).
10.56 Thermedics Inc. - Thermo Sentron Inc. Nonqualified Stock
Option Plan (filed as Exhibit 10.51 to Thermo
Cardiosystems' Annual Report on Form 10-K for the fiscal
year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference).
10.57 Thermedics Detection Inc. Equity Incentive Plan (filed
as Exhibit 10.69 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994
[File No. 1-9786] and incorporated herein by reference).
27PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
---------- ------------------------------------------------------- ----
10.58 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 in the aggregate under this plan and
the Thermo Cardiosystems Nonqualified Stock Option Plan
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).
10.59 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 in the aggregate under this plan and
the Thermo Cardiosystems Incentive Stock Option Plan 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).
10.60 Thermo Cardiosystems Inc. Equity Incentive Plan (filed
as Exhibit 10.46 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994
[File No. 1-9786] and incorporated herein by reference).
10.61 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).
10.62 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 increases in 1993 and 1994, 1-for-3
reverse stock split effected in November 1992, and
3-for-2 stock split effected in November 1993).
10.63 Thermo Voltek Corp. Equity Incentive Plan (filed as
Exhibit 10.49 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 [File
No. 1-9786] and incorporated herein by reference).
10.64 Thermo Sentron Equity Incentive Plan (filed as Exhibit
10.57 to Thermo Cardiosystems' Annual Report on Form
10-K for the fiscal year ended December 30, 1995 [File
No. 1-10114] and incorporated herein by reference).
28PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
---------- ------------------------------------------------------- ----
10.65 ThermoSpectra Corporation Equity Incentive Plan (filed
as Exhibit 10.52 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994
[File No. 1-9786] and incorporated herein by reference).
10.66 ThermoQuest Corporation Equity Incentive Plan (filed as
Exhibit 10.69 to Thermo Cardiosystems' Annual Report on
Form 10-K for the fiscal year ended December 30, 1995
[File No. 1-10114] and incorporated herein by
reference).
10.67 Thermo Optek Corporation Equity Incentive Plan (filed as
Exhibit 10.70 to Thermo Cardiosystems' Annual Report on
Form 10-K for the fiscal year ended December 30, 1995
[File No. 1-10114] and incorporated herein by
reference).
10.68 Thermo BioAnalysis Corporation Equity Incentive Plan
(filed as Exhibit 10.67 to Thermo Cardiosystems' Annual
Report on Form 10-K for the fiscal year ended December
30, 1995 [File No. 1-10114] and incorporated herein by
reference).
10.69 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 in the aggregate under this plan and the
ThermoTrex Nonqualified Stock Option Plan is 1,945,000
shares, after adjustment to reflect share increases
approved in 1992 and 1993 and 3-for-2 stock split
effected in October 1993).
10.70 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 in the aggregate under this plan and the
ThermoTrex Incentive Stock Option Plan is 1,945,000
shares, after adjustment to reflect share increases
approved in 1992 and 1993 and 3-for-2 stock split
effected in October 1993).
10.71 ThermoTrex Corporation - ThermoLase Corporation
(formerly ThermoLase Inc.) Nonqualified Stock Option
Plan (filed as Exhibit 10.53 to ThermoTrex's Annual
Report on Form 10-K for the fiscal year ended January 1,
1994 [File No. 1-10791] and incorporated herein by
reference).
29PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
---------- ------------------------------------------------------- ----
10.72 ThermoTrex Corporation - Trex Medical Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.73
to Thermo Cardiosystems' Annual Report on Form 10-K for
the fiscal year ended December 30, 1995 [File No.
1-10114] and incorporated herein by reference).
10.73 ThermoLase Corporation (formerly ThermoLase Inc.)
Incentive Stock Option Plan (filed as Exhibit 10.55 to
ThermoTrex's Annual Report on Form 10-K for the fiscal
year ended January 1, 1994 [File No. 1-10791] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
ThermoLase Nonqualified Stock Option Plan is 2,800,000
shares, after adjustment to reflect share increase
approved in 1993 and 2-for-1 stock splits effected in
March 1994 and June 1995).
10.74 ThermoLase Corporation (formerly ThermoLase Inc.)
Nonqualified Stock Option Plan (filed as Exhibit 10.54
to ThermoTrex's Annual Report on Form 10-K for the
fiscal year ended January 1, 1994 [File No. 1-10791] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
ThermoLase Incentive Stock Option Plan is 2,800,000
shares, after adjustment to reflect share increase
approved in 1993 and 2-for-1 stock splits effected in
March 1994 and June 1995).
10.75 ThermoLase Corporation Equity Incentive Plan (filed as
Exhibit 10.81 to Thermo TerraTech's (formerly Thermo
Process') Annual Report on Form 10-K for the fiscal year
ended April 1, 1995 [File No. 1-9549] and incorporated
herein by reference).
10.76 Trex Medical Corporation Equity Incentive Plan (filed as
Exhibit 10.77 to Thermo Cardiosystems' Annual Report on
Form 10-K for the fiscal year ended December 30, 1995
[File No. 1-10114] and incorporated herein by
reference).
10.77 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).
10.78 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).
10.79 Thermo Fibertek Inc. Equity Incentive Plan (filed as
Exhibit 10.60 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 [File
No. 1-9786] and incorporated herein by reference).
30PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
---------- ------------------------------------------------------- ----
10.80 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 in the aggregate
under this plan and the Thermo Power Nonqualified Stock
Option Plan is 950,000 shares, after adjustment to
reflect share increases approved in 1990, 1992 and
1993).
10.81 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 in the
aggregate under this plan and the Thermo Power Incentive
Stock Option Plan is 950,000 shares, after adjustment to
reflect share increases approved in 1990, 1992 and
1993).
10.82 Thermo Power Corporation Equity Incentive Plan (filed as
Exhibit 10.63 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 [File
No. 1-9786] and incorporated herein by reference).
10.83 Thermo Power Corporation - ThermoLyte Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.84
to Thermo Cardiosystems' Annual Report on Form 10-K for
the fiscal year ended December 30, 1995 [File No.
1-10114] and incorporated herein by reference).
10.84 ThermoLyte Corporation Equity Incentive Plan (filed as
Exhibit 10.71 to Thermo Power's Annual Report on Form
10-K for the fiscal year ended September 30, 1995 [File
No. 1-10573] and incorporated herein by reference).
10.85 Thermo TerraTech Inc. (formerly Thermo Process Systems
Inc.) Incentive Stock Option Plan (filed as Exhibit
10(h) to Thermo TerraTech's Registration Statement on
Form S-1 [Reg. No. 33-6763] and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Thermo TerraTech
Nonqualified Stock Option Plan 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).
31PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
---------- ------------------------------------------------------- ----
10.86 Thermo TerraTech Inc. (formerly Thermo Process Systems
Inc.) Nonqualified Stock Option Plan (filed as Exhibit
10(i) to Thermo TerraTech's Registration Statement on
Form S-1 [Reg. No. 33-6763] and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Thermo TerraTech
Incentive Stock Option Plan 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).
10.87 Thermo TerraTech Inc. (formerly Thermo Process Systems
Inc.) Equity Incentive Plan [filed as Exhibit 10.63 to
Thermedics' Annual Report on Form 10-K for the fiscal
year ended January 1, 1994 [File No. 1-9567] and
incorporated herein by reference.) (Maximum number of
shares issuable is 1,750,000 shares, after adjustment to
reflect share increase approved in 1994).
10.88 Thermo TerraTech Inc. (formerly Thermo Process Systems
Inc.) - Thermo Remediation Inc. Nonqualified Stock
Option Plan (filed as Exhibit 10(l) to Thermo
TerraTech's Quarterly Report on Form 10-Q for the fiscal
quarter ended January 1, 1994 [File No. 1-9549] and
incorporated herein by reference).
10.89 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 Statement re: Computation of earnings per share.
13 Annual Report to Shareholders for the year ended
December 30, 1995 (only those portions incorporated
herein by reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.
Exhibit 11
THERMO INSTRUMENT SYSTEMS INC.
COMPUTATION OF EARNINGS PER SHARE
1995 1994 1993
----------- ----------- -----------
Computation of Fully
Diluted Earnings per Share
from Continuing Operations:
Income:
Income from continuing operations $79,304,000 $58,261,000 $42,793,000
Add: Convertible obligation
interest, net of tax 5,729,000 6,315,000 4,016,000
----------- ----------- -----------
Income from continuing operations
applicable to common stock
assuming full dilution (a) $85,033,000 $64,576,000 $46,809,000
----------- ----------- -----------
Shares:
Weighted average shares
outstanding 90,577,966 88,173,053 84,205,613
Add: Shares issuable from
assumed conversion of
convertible obligations 15,503,734 17,539,251 12,355,881
Shares issuable from
assumed exercise of
options (as determined
by the application of
the treasury stock method) 870,643 410,542 685,021
----------- ----------- -----------
Weighted average shares
outstanding, as adjusted (b) 106,952,343 106,122,846 97,246,515
----------- ----------- -----------
Fully Diluted Earnings per Share
from Continuing Operations
(a) / (b) $ .80 $ .61 $ .48
=========== =========== ===========
PAGE
<PAGE>
Exhibit 11
THERMO INSTRUMENT SYSTEMS INC.
COMPUTATION OF EARNINGS PER SHARE (continued)
1995 1994 1993
----------- ----------- -----------
Computation of Fully
Diluted Earnings per Share:
Income:
Net income $79,306,000 $60,220,000 $44,764,000
Add: Convertible obligation
interest, net of tax 5,729,000 6,315,000 4,016,000
----------- ----------- -----------
Income applicable to common stock
assuming full dilution (a) $85,035,000 $66,535,000 $48,780,000
----------- ----------- -----------
Shares:
Weighted average shares
outstanding 90,577,966 88,173,053 84,205,613
Add: Shares issuable from
assumed conversion of
convertible obligations 15,503,734 17,539,251 12,355,881
Shares issuable from
assumed exercise of
options (as determined
by the application of
the treasury stock method) 870,643 410,542 685,021
----------- ----------- -----------
Weighted average shares
outstanding, as adjusted (b) 106,952,343 106,122,846 97,246,515
----------- ----------- -----------
Fully Diluted Earnings per Share
(a) / (b) $ .80 $ .63 $ .50
=========== =========== ===========
Exhibit 13
Thermo Instrument Systems Inc.
Consolidated Financial Statements as of December 30, 1995
PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Income
(In thousands except per share amounts) 1995 1994 1993
-------------------------------------------------------------------------
Revenues (Note 14) $782,662 $649,992 $529,278
-------- -------- --------
Costs and Expenses:
Cost of revenues 403,443 335,341 269,582
Selling, general and administrative
expenses (Note 10) 220,436 174,490 139,206
Research and development expenses 54,314 42,924 34,510
-------- -------- --------
678,193 552,755 443,298
-------- -------- --------
Operating Income 104,469 97,237 85,980
Interest Income 14,646 5,935 3,644
Interest Expense (includes $5,512,
$5,384 and $4,327 to parent company) (18,129) (15,761) (14,384)
Gain on Issuance of Stock by
Subsidiaries (Note 12) 20,128 6,469 -
Gain on Sale of Related Party
Investments (Note 10) 2,227 2,000 -
-------- -------- --------
Income from Continuing Operations Before
Provision for Income Taxes and Minority
Interest Expense 123,341 95,880 75,240
Provision for Income Taxes (Note 8) 42,713 37,507 32,447
Minority Interest Expense 1,324 112 -
-------- -------- --------
Income from Continuing Operations 79,304 58,261 42,793
Income from Discontinued Operations
(less applicable income taxes of $1,655
in 1994 and $1,662 in 1993) (Note 3) 2 1,959 1,971
-------- -------- --------
Net Income $ 79,306 $ 60,220 $ 44,764
======== ======== ========
Earnings per Share from
Continuing Operations:
Primary $ .88 $ .66 $ .51
======== ======== ========
Fully diluted $ .80 $ .61 $ .48
======== ======== ========
Earnings per Share:
Primary $ .88 $ .68 $ .53
======== ======== ========
Fully diluted $ .80 $ .63 $ .50
======== ======== ========
Weighted Average Shares:
Primary 90,578 88,173 84,206
======== ======== ========
Fully diluted 106,952 106,123 97,247
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
2PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Balance Sheet
(In thousands) 1995 1994
---------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $ 395,233 $ 152,933
Available-for-sale investments, at quoted
market value (amortized cost of $15,385)
(includes $2,904 of related party investments)
(Notes 2 and 10) - 15,931
Accounts receivable, less allowances of $12,569
and $8,779 211,906 159,615
Unbilled contract costs and fees 3,800 5,903
Inventories 154,914 121,353
Prepaid expenses 9,450 5,388
Prepaid income taxes (Note 8) 31,233 28,533
---------- ----------
806,536 489,656
---------- ----------
Property, Plant and Equipment, at Cost, Net 133,677 126,924
---------- ----------
Net Assets of Discontinued Operations (Note 3) - 34,265
---------- ----------
Patents and Other Assets 29,611 22,224
---------- ----------
Cost in Excess of Net Assets of Acquired
Companies (Notes 4 and 8) 402,989 338,848
---------- ----------
$1,372,813 $1,011,917
========== ==========
3PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Balance Sheet (continued)
(In thousands except share amounts) 1995 1994
--------------------------------------------------------------------------
Liabilities and Shareholders' Investment
Current Liabilities:
Notes payable (Note 11) $ 55,822 $ 45,953
Accounts payable 55,626 38,594
Accrued payroll and employee benefits 33,025 33,085
Accrued income taxes 25,875 29,175
Accrued installation and warranty expenses 17,962 14,780
Deferred revenue 20,759 14,455
Other accrued expenses (Note 4) 94,653 69,309
Due to parent company 12,919 13,999
---------- ----------
316,641 259,350
---------- ----------
Deferred Income Taxes (Note 8) 20,168 21,347
---------- ----------
Other Deferred Items 23,718 19,261
---------- ----------
Long-term Obligations (Note 11):
Senior obligations, including $140,000 due to
parent company 207,600 210,000
Subordinated obligations, including $1,334 due
to parent company in 1994 214,775 38,196
Other 18,659 15,363
---------- ----------
441,034 263,559
---------- ----------
Minority Interest 28,547 7,637
---------- ----------
Commitments and Contingencies (Note 9)
Shareholders' Investment (Notes 5 and 6):
Common stock, $.10 par value, 125,000,000
shares authorized; 92,566,341 and 48,156,101
shares issued 9,257 4,816
Capital in excess of par value 248,468 233,765
Retained earnings 291,890 212,584
Treasury stock at cost, 917,985 and
683,742 shares (9,724) (12,736)
Cumulative translation adjustment 2,814 1,991
Net unrealized gain on available-for-sale
investments (Note 2) - 343
---------- ----------
542,705 440,763
---------- ---------
$1,372,813 $1,011,917
========== ==========
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) 1995 1994 1993
-------------------------------------------------------------------------
Operating Activities:
Net income $ 79,306 $ 60,220 $ 44,764
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 25,257 22,810 20,719
Provision for losses on accounts
receivable 2,543 733 970
Gain on issuance of stock by
subsidiaries (Note 12) (20,128) (6,469) -
Gain on sale of related
party investments (Note 10) (2,227) (2,000) -
Increase (decrease) in deferred
income taxes 2,196 1,816 (497)
Minority interest expense 1,324 112 -
Other noncash expenses 2,964 363 3,507
Changes in current accounts,
excluding the effects of
acquisitions:
Accounts receivable (22,661) (2,586) (27,716)
Inventories (7,433) 6,422 6,916
Other current assets 3,058 (12) 7,482
Accounts payable 1,202 7,745 (11,143)
Other current liabilities (4,968) (8,315) 7,530
Other (315) (84) 132
--------- --------- ---------
Net cash provided by operating
activities 60,118 80,755 52,664
--------- --------- ---------
Investing Activities:
Acquisitions, net of cash acquired
(Note 4) (89,469) (101,336) (102,048)
Proceeds from sale of services
businesses (Note 3) 34,267 - -
Proceeds from sale of Nicolet
Biomedical - - 67,900
Purchases of available-for-sale
investments - (23,105) -
Proceeds from sale and maturities of
available-for-sale investments 17,825 16,250 -
Purchases of property, plant and
equipment (10,313) (8,190) (9,063)
Other 561 1,214 4,930
--------- --------- ---------
Net cash used in investing
activities $ (47,129) $(115,167) $(38,281)
--------- --------- --------
5PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Cash Flows (continued)
(In thousands) 1995 1994 1993
--------------------------------------------------------------------------
Financing Activities:
Proceeds from issuance of Company and
subsidiaries' common stock (Note 12) $ 41,788 $ 17,446 $ 2,678
Net proceeds from issuance of long-term
obligations 187,846 - 68,727
Repayment and repurchase of long-term
obligations (1,373) (7,948) (4,482)
Proceeds from issuance of obligations
to parent company (Notes 10 and 11) 15,000 - 229,000
Repayment of obligations to parent
company(Note 10) (15,000) - (157,485)
Purchases of Company common stock - - (836)
--------- --------- ---------
Net cash provided by financing
activities 228,261 9,498 137,602
--------- --------- ---------
Exchange Rate Effect on Cash 1,050 405 (482)
--------- --------- ---------
Increase (Decrease) in Cash and Cash
Equivalents 242,300 (24,509) 151,503
Cash and Cash Equivalents at Beginning
of Year 152,933 177,442 25,939
--------- --------- ---------
Cash and Cash Equivalents at End of Year $ 395,233 $ 152,933 $ 177,442
========= ========= =========
Cash Paid For:
Interest $ 16,035 $ 14,782 $ 12,493
Income taxes $ 31,529 $ 24,913 $ 7,607
Noncash Activities:
Conversions of convertible obligations $ 18,321 $ 14,107 $ 37,371
Transfer of services businesses to
Thermo Terra Tech joint venture $ - $ 31,301 $ -
Fair value of assets of
acquired companies $ 161,985 $ 147,696 $ 151,886
Cash paid for acquired companies (93,004) (100,855) (102,861)
--------- --------- ---------
Liabilities assumed of acquired
companies $ 68,981 $ 46,841 $ 49,025
========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
6PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Shareholders' Investment
Net Un-
realized
Gain on
Common Avail-
Stock, Capital in Cumulative able-for-
(In thou- $.10 Par Excess of Retained Treasury Translation sale In-
sands) Value Par Value Earnings Stock Adjustment vestments
--------------------------------------------------------------------------
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) - - - -
Effect of sale
of Nicolet
Biomedical - - 1,243 - - -
Translation
adjustment - - - - (801) -
-------- -------- -------- -------- -------- --------
Balance
January 1,
1994 $ 4,708 $219,703 $152,364 $(15,850) $ (2,870) $ -
7PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Shareholders' Investment (continued)
Net Un-
realized
Gain on
Common Avail-
Stock, Capital in Cumulative able-for-
(In thou- $.10 Par Excess of Retained Treasury Translation sale In-
sands) Value Par Value Earnings Stock Adjustment vestments
---------------------------------------------------------------------------
Net income $ - $ - $ 60,220 $ - $ - $ -
Issuance of
stock under
employees'
and directors'
stock plans 4 (785) - 3,114 - -
Tax benefit
related to
employees'
and directors'
stock plans - 1,120 - - - -
Conversions of
convertible
obligations 104 13,727 - - - -
Effect of change
in accounting
principle
(Note 2) - - - - - 1,885
Change in net
unrealized gain
on available-
for-sale
investments
(Note 2) - - - - - (1,542)
Translation
adjustment - - - - 4,861 -
-------- -------- -------- -------- -------- --------
Balance
December 31,
1994 $ 4,816 $233,765 $212,584 $(12,736) $ 1,991 $ 343
8PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Shareholders' Investment (continued)
Net Un-
realized
Gain on
Common Avail-
Stock, Capital in Cumulative able-for-
(In thou- $.10 Par Excess of Retained Treasury Translation sale In-
sands) Value Par Value Earnings Stock Adjustment vestments
---------------------------------------------------------------------------
Net income $ - $ - $ 79,306 $ - $ - $ -
Issuance of
stock under
employees'
and directors'
stock plans 1 (1,023) - 3,012 - -
Tax benefit
related to
employees'
and directors'
stock plans - 1,950 - - - -
Conversions of
convertible
obligations 160 17,814 - - - -
Effect of
three-for-
two stock
split 2,429 (2,429) - - - -
Effect of
five-for-
four stock
split 1,851 (1,851) - - - -
Effect of
majority-
owned
subsidiaries'
equity trans-
actions - 242 - - - -
Change in net
unrealized gain
on available-
for-sale
investments
(Note 2) - - - - - (343)
Translation
adjustment - - - - 823 -
-------- -------- -------- -------- -------- --------
Balance
December 30,
1995 $ 9,257 $248,468 $291,890 $ (9,724) $ 2,814 $ -
======== ======== ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
9PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Thermo Instrument Systems Inc. (the Company) develops, manufactures, and
markets analytical, monitoring, process control, and imaging, inspection,
and measurement instruments used to identify and analyze radioactivity,
complex chemical compounds, toxic metals, and other elements in a broad
range of liquids and solids, as well as to control, monitor, image,
inspect, and measure various industrial processes and life sciences
phenomena.
Relationship with Thermo Electron Corporation
The Company was incorporated on May 28, 1986, as a wholly owned subsidiary
of Thermo Electron Corporation (Thermo Electron). As of December 30, 1995,
Thermo Electron owned 78,459,585 shares of the Company's common stock,
representing 86% of such stock outstanding.
Principles of Consolidation
The accompanying financial statements include the accounts of the Company,
its wholly owned subsidiaries, its publicly held ThermoSpectra Corporation
(ThermoSpectra) subsidiary, and its privately held Thermo BioAnalysis
Corporation (Thermo BioAnalysis) subsidiary. All material intercompany
accounts and transactions have been eliminated. The Company accounts for
investments in businesses in which it owns between 20% and 50% using the
equity method. The Company's ownership percentages of its majority-owned
subsidiaries at year-end were as follows:
1995 1994 1993
-------------------------------------------------------------------------
ThermoSpectra 72% 86% 100%
Thermo BioAnalysis 80% 100% 100%
Fiscal Year
The Company has adopted a fiscal year ending the Saturday nearest December
31. References to 1995, 1994, and 1993 are for the fiscal years ended
December 30, 1995, December 31, 1994, and January 1, 1994, respectively.
Revenue Recognition
For substantially all of its operations, the Company recognizes revenues
upon shipment of its products. The Company provides a reserve for its
estimate of warranty and installation costs at the time of shipment.
Revenues and profits on substantially all contracts are recognized using
the percentage-of-completion method. Revenues recorded under the
percentage-of-completion method were $16,966,000 in 1995, $15,421,000 in
1994, and $23,218,000 in 1993. 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. Deferred revenue in the
accompanying balance sheet consists primarily of unearned revenue on
service contracts at certain of the Company's subsidiaries. Substantially
all of the deferred revenue in the accompanying 1995 balance sheet will be
recognized within one year.
10PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Gain on Issuance of Stock by Subsidiaries
At the time a subsidiary sells its stock to unrelated parties at a price in
excess of its book value, the Company's net investment in that subsidiary
increases. If at that time the subsidiary is an operating entity and not
engaged principally in research and development, the Company records the
increase as a gain.
If gains have been recognized on issuances of a subsidiary's stock and
shares of the subsidiary are subsequently repurchased either by the
subsidiary, the Company, or Thermo Electron, gain recognition does not
occur on issuances subsequent to the date of a repurchase until such time
as shares have been issued in an amount equivalent to the number of
repurchased shares.
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 the Company would have
received if it had filed separate tax returns. If Thermo Electron's equity
ownership of the Company were to drop below 80%, the Company would be
required to file its own income tax returns. The Company owed $8,096,000
and $11,275,000 to Thermo Electron for estimated federal and state income
tax payments at year-end 1995 and 1994, respectively. These amounts are
included in accrued income taxes in the accompanying balance sheet.
In accordance with Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," the Company recognizes deferred
income taxes based on the expected future tax consequences of differences
between the financial statement basis and the tax basis of assets and
liabilities, calculated using enacted tax rates in effect for the year in
which the differences are expected to be reflected in the tax return.
Earnings per Share
Primary earnings per share have been computed based on the weighted average
number of shares outstanding during the year. Because the effect of the
assumed exercise of stock options would be immaterial, they have been
excluded from the primary earnings per share calculation. Fully diluted
earnings per share assumes the exercise of stock options and conversion of
the Company's dilutive convertible obligations and elimination of the
related interest expense.
Stock Splits
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 April 1995, and a five-for-four stock split,
effected in the form of a 25% stock dividend, which was distributed in
December 1995.
11PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Cash and Cash Equivalents
As of December 30, 1995, $336,573,000 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 U.S. government agency securities, corporate notes,
commercial paper, money market funds, 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. As of
December 30, 1995, the Company's cash equivalents also include investments
in 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 1995 and 1994.
Available-for-sale Investments
Pursuant to SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," effective January 2, 1994, the Company's debt and
marketable equity securities are accounted for at market value (Note 2).
Prior to 1994, these investments were carried at the lower of cost or
market value.
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) 1995 1994
--------------------------------------------------------------------------
Raw materials and supplies $ 80,959 $ 65,441
Work in process 40,851 27,879
Finished goods 33,104 28,033
-------- --------
$154,914 $121,353
======== ========
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 and
improvements, 5 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.
12PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Property, plant and equipment consist of the following:
(In thousands) 1995 1994
--------------------------------------------------------------------------
Land $ 23,578 $ 23,374
Buildings 78,075 76,789
Machinery, equipment and leasehold improvements 87,432 70,744
-------- --------
189,085 170,907
Less: Accumulated depreciation and amortization 55,408 43,983
-------- --------
$133,677 $126,924
======== ========
Patents and Other Assets
Patents and other assets in the accompanying balance sheet include the
costs 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 3 to 20 years.
These assets were $17,005,000 and $17,032,000, net of accumulated
amortization of $13,119,000 and $10,501,000, at year-end 1995 and 1994,
respectively.
Cost in Excess of Net Assets of Acquired Companies
The excess of cost over the fair value of net assets of acquired companies
is amortized using the straight-line method over 40 years. Accumulated
amortization was $37,976,000 and $28,245,000 at year-end 1995 and 1994,
respectively. The Company assesses the future useful life of this asset
whenever events or changes in circumstances indicate that the current
useful life has diminished. The Company considers the future undiscounted
cash flows of the acquired companies in assessing the recoverability of
this asset.
Environmental Liabilities
The Company accrues for costs associated with the remediation of
environmental pollution when it is probable that a liability has been
incurred and the Company's proportionate share of the amount can be
reasonably estimated. Any recorded liabilities have not been discounted.
Foreign Currency
All assets and liabilities of the Company's foreign subsidiaries are
translated at year-end exchange rates, and revenues and expenses are
translated at average exchange rates for the year in accordance with SFAS
No. 52, "Foreign Currency Translation." Resulting translation adjustments
are reflected as a separate component of 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.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
13PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Presentation
Certain amounts in 1994 and 1993 have been reclassified to conform to the
presentation in the 1995 financial statements.
2. Available-for-sale Investments
Effective January 2, 1994, the Company adopted SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." In accordance with
SFAS No. 115, the Company's debt and marketable equity securities are
considered available-for-sale investments in the accompanying balance sheet
and are carried at market value, with the difference between cost and
market value, net of related tax effects, recorded currently as a component
of shareholders' investment titled "Net unrealized gain on available-for-
sale investments." Effect of change in accounting principle in the
accompanying 1994 statement of shareholders' investment represents the
unrealized gain, net of related tax effects, pertaining to available-
for-sale investments held by the Company on January 2, 1994.
Available-for-sale investments in the accompanying 1994 balance sheet
represent investments in corporate bonds. The difference between the market
value and the cost basis of available-for-sale investments at December 31,
1994, was $546,000, which represents gross unrealized gains of $607,000 and
gross unrealized losses of $61,000 on those investments.
The cost of available-for-sale investments that were sold was based on
specific identification in determining realized gains recorded in the
accompanying statement of income. Gain on sale of related party investments
in the accompanying statement of income resulted from gross realized gains
relating to the sale of available-for-sale investments.
3. Discontinued Operations
Effective April 4, 1994, the Company formed an environmental services joint
venture with Thermo TerraTech Inc. (Thermo TerraTech) (formerly Thermo
Process Systems Inc.), another public subsidiary of Thermo Electron. The
joint venture operated under the name Thermo Terra Tech. The Company
contributed its analytical laboratories and its nuclear health physics and
environmental science and engineering services businesses. Thermo TerraTech
contributed its environmental laboratory business, which specializes in
fast-response testing of petroleum-contaminated soils and groundwater, and
approximately $31 million in cash and short-term investments.
Effective April 2, 1995, the Company and Thermo TerraTech dissolved
their joint venture. Thermo TerraTech then purchased the services
businesses formerly operated by the joint venture from the Company for
$34.3 million in cash, which was the net book value of the services
businesses. The Company owned 49% of the joint venture and accounted for
its interest in the joint venture using the equity method. Prior to the
joint venture's formation on April 2, 1994, the Company's services
businesses comprised its Services segment and were consolidated in the
14PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
3. Discontinued Operations (continued)
Company's financial statements. The sale of the services businesses to
Thermo TerraTech represents the Company's disposal of its Services segment.
Accordingly, the operating results of the Company's Services segment for
the three-month period ended April 2, 1994 and for 1993 and the equity in
the income of the joint venture recorded by the Company are classified as
"Income from discontinued operations" in the accompanying statement of
income. Revenues from the Company's Services segment for the three-month
period ended April 2, 1994 and for 1993 were $12.2 million and $55.2
million, respectively.
4. Acquisitions
During 1995, the Company made several acquisitions for an aggregate $93.0
million in cash.
In March 1994, the Company acquired several businesses within the
EnviroTech Measurements & Controls group of Baker Hughes Incorporated
(Baker Hughes) for a purchase price of $89.7 million in cash. The Company
acquired the EnviroTech Controls, NORAN Instruments (NORAN), 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. The Company contributed
the assets acquired and liabilities assumed from NORAN to ThermoSpectra in
connection with the formation of that company. During 1994, the Company
made several other acquisitions for an aggregate $11.2 million in cash.
These acquisitions have been accounted for using the purchase method of
accounting, and their results of operations have been included in the
accompanying financial statements from their respective dates of
acquisition. The aggregate cost of the acquisitions in 1995 and 1994
exceeded the estimated fair value of the acquired net assets by
approximately $143 million, which is being amortized over 40 years.
Allocation of the purchase price for these acquisitions was based on
estimates of the fair value of the net assets acquired and, for
acquisitions completed in fiscal 1995, is subject to adjustment upon
finalization of the purchase price allocation.
Based on unaudited data, the following table presents selected
financial information for the Company and the acquired businesses within
the EnviroTech Measurements & Controls group of Baker Hughes on a pro forma
basis, assuming the companies had been combined since the beginning of
1993. The effect of the acquisitions not included in the pro forma data was
not material to the Company's results of operations and financial position.
(In thousands except per share amounts) 1994 1993
--------------------------------------------------------------------------
Revenues $671,676 $657,930
Income from continuing operations 56,454 32,299
Earnings per share from continuing operations:
Primary .64 .38
Fully diluted .59 .37
The pro forma results are not necessarily indicative of future
operations or the actual results that would have occurred had the
acquisition of the acquired businesses within the EnviroTech Measurements
15PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
4. Acquisitions (continued)
& Controls group of Baker Hughes been made at the beginning of 1993.
Other accrued expenses in the accompanying balance sheet include
approximately $21 million and $17 million at year-end 1995 and 1994,
respectively, for estimated severance, relocation, and other reserves
associated with acquisitions.
5. Stock-based Compensation Plans
The Company has stock-based compensation plans for its key employees,
directors, and others. Two of these plans, adopted in 1986, 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 five to ten years
after the first anniversary of the grant date, depending on the term of the
option, which may range from seven to twelve years. Nonqualified stock
options may be granted at any price determined by the Board Committee,
although incentive stock options must be granted at not less than the fair
market value of the Company's stock on the date of grant. Generally, all
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 in the Company and its majority-owned subsidiaries to
outside directors pursuant to a formula approved by the Company's
shareholders. Options in the Company awarded under this plan are
exercisable six months after the date of grant and expire three or seven
years after the date of grant. In addition to the Company's stock-based
compensation plans, certain officers and key employees may also participate
in the stock-based compensation plans of Thermo Electron or its
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.
16PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
5. Stock-based Compensation Plans (continued)
A summary of the Company's stock option information is as follows:
1995 1994 1993
------------------- ------------------- -----------------
Range of Range of Range of
(In thousands Number Option Number Option Number Option
except per of Prices of Prices of Prices
share amounts) Shares per Share Shares per Share Shares per Share
--------------------------------------------------------------------------
Options out-
standing,
beginning
of year 3,798 $ 3.29-$18.02 3,552 $ 2.85-$18.02 2,005 $ 1.78-$12.43
Granted 6 18.84 744 15.08- 16.58 2,221 12.64- 18.02
Exercised (375) 3.29- 16.68 (353) 2.85- 12.64 (554) 1.78- 9.06
Lapsed or
cancelled (208) 3.29- 16.68 (145) 2.85- 16.68 (120) 2.85- 12.64
----- ----- -----
Options out-
standing, end
of year 3,221 $ 3.35-$18.84 3,798 $ 3.29-$18.02 3,552 $ 2.85-$18.02
===== ===== =====
Options
exercisable 3,221 $ 3.35-$18.84 3,791 $ 3.29-$18.02 3,542 $ 2.85-$16.68
===== ===== =====
Options
available
for grant 1,764 1,564 2,166
===== ===== =====
6. Common Stock
At December 30, 1995, the Company had reserved 20,404,319 unissued shares
of its common stock for possible issuance under stock-based compensation
plans and for issuance upon possible conversion of the Company's
convertible obligations.
7. Employee Benefit Plans
Employee Stock Purchase Plan
Substantially all of the Company's full-time U.S. employees are eligible to
participate in an employee stock purchase plan sponsored by the Company.
Prior to the November 1995 plan year, shares of the Company's and Thermo
Electron's common stock could 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 were subject to a one-year resale restriction.
Effective November 1, 1995, the applicable shares of common stock may be
purchased at 95% of the fair market value at the beginning of the plan
year, and the shares purchased are subject to a six-month resale
restriction. Shares are purchased through payroll deductions of up to 10%
of each participating employee's gross wages. During 1995, 1994, and 1993,
the Company issued 74,826 shares, 97,125 shares, and 189,886 shares,
respectively, of its common stock under this plan.
17PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
7. Employee Benefit Plans (continued)
401(k) Savings Plan and Employee Stock Ownership Plan
The majority of the Company's full-time U.S. employees are eligible to
participate in Thermo Electron's 401(k) savings plan and, prior to 1995, in
Thermo Electron's employee stock ownership plan (ESOP). 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 $2,769,000,
$2,774,000, and $2,239,000 in 1995, 1994, and 1993, respectively. Effective
December 31, 1994, the ESOP was split into two plans: ESOP I, covering
employees of Thermo Electron's corporate office and its wholly owned
subsidiaries and ESOP II, covering employees of certain of Thermo
Electron's majority-owned subsidiaries, including the Company. Also,
effective December 31, 1994, the ESOP II plan was terminated and as a
result, the Company's employees are no longer eligible to participate in an
ESOP.
8. Income Taxes
The components of income from continuing operations before provision for
income taxes and minority interest expense are as follows:
(In thousands) 1995 1994 1993
-------------------------------------------------------------------------
Domestic $ 95,999 $ 77,840 $ 57,621
Foreign 27,342 18,040 17,619
-------- -------- --------
$123,341 $ 95,880 $ 75,240
======== ======== ========
The components of the provision for income taxes are as follows:
(In thousands) 1995 1994 1993
-------------------------------------------------------------------------
Currently payable:
Federal $ 29,336 $ 17,682 $ 13,116
State 5,766 5,499 3,784
Foreign 11,490 7,977 6,909
-------- -------- --------
46,592 31,158 23,809
-------- -------- --------
Net deferred (prepaid):
Federal (3,628) 5,480 6,413
State (769) 1,207 1,067
Foreign 518 (338) 1,158
-------- -------- --------
(3,879) 6,349 8,638
-------- -------- --------
$ 42,713 $ 37,507 $ 32,447
======== ======== ========
The provision for income taxes that is currently payable does not
reflect $2,108,000, $1,120,000, and $1,815,000 of tax benefits of the
Company and its majority-owned subsidiaries allocated to capital in excess
18PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
8. Income Taxes (continued)
of par value, directly or through the effect of majority-owned
subsidiaries' equity transactions, in 1995, 1994, and 1993, respectively,
or $3,000,000 and $1,150,000 of tax benefits used to reduce cost in excess
of net assets of acquired companies in 1995 and 1993, respectively. The
deferred provision for income taxes does not reflect $3,375,000 of tax
benefits used to reduce cost in excess of net assets of acquired companies
in 1995.
The provision for income taxes in the accompanying statement of income
differs from the provision calculated by applying the statutory federal
income tax rate of 35% to income from continuing operations before
provision for income taxes and minority interest expense due to the
following:
(In thousands) 1995 1994 1993
-------------------------------------------------------------------------
Provision for income taxes at statutory rate $ 43,169 $ 33,558 $ 26,334
Increases (decreases) resulting from:
State income taxes, net of federal tax 3,248 4,359 3,153
Net foreign losses not benefited and tax
rate differential 2,438 817 1,330
Tax benefit of foreign sales corporation (1,987) (1,602) (1,134)
Amortization of cost in excess of net
assets of acquired companies 2,432 2,089 2,154
Gain on issuance of stock by subsidiaries (7,045) (2,264) -
Other, net 458 550 610
-------- -------- --------
$ 42,713 $ 37,507 $ 32,447
======== ======== ========
19PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
8. Income Taxes (continued)
Prepaid income taxes and deferred income taxes in the accompanying
balance sheet consist of the following:
(In thousands) 1995 1994
---------------------------------------------------------------
Prepaid income taxes:
Net operating loss and tax
credit carryforwards $ 22,549 $ 13,217
Reserves and accruals 12,165 10,588
Inventory basis difference 9,553 10,412
Accrued compensation 4,439 4,460
Allowance for doubtful accounts 1,454 3,399
Other, net 3,622 1,078
-------- --------
53,782 43,154
Less: Valuation allowance 22,549 14,621
-------- --------
$ 31,233 $ 28,533
======== ========
Deferred income taxes:
Depreciation $ 14,039 $ 13,321
Intangible assets 5,130 5,490
Other 999 2,536
-------- --------
$ 20,168 $ 21,347
======== ========
The year-end 1995 valuation allowance relates to uncertainty
surrounding the realization of $50,299,000 of foreign tax loss
carryforwards, $1,406,000 of certain state tax-deferred assets, and
$5,688,000 of federal net operating loss carryforwards, the realization of
which is limited to the future income of certain subsidiaries. The federal
net operating loss carryforwards expire in the years 2002 through 2011, and
any resulting benefit will be used to reduce cost in excess of net assets
of acquired companies. The increase in the valuation allowance results
primarily from valuation allowances established for net operating loss
carryforwards of businesses acquired in 1995.
The Company has not recognized a deferred tax liability for the
differences between the book basis and tax basis of the common stock of its
domestic subsidiaries (such differences relate primarily to unremitted
earnings and gains on issuance of stock by subsidiaries) because the
Company does not expect this basis difference to become subject to tax at
the parent level. The Company believes it can implement certain tax
strategies to recover its investment in its domestic subsidiaries tax-free.
A provision has not been made for U.S. or additional foreign taxes on
$44 million of undistributed earnings of foreign subsidiaries that could be
subject to taxation if remitted to the U.S. because the Company currently
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 be immaterial due to available U.S. foreign tax credits.
20PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
9. Commitments and Contingencies
Operating Leases
The Company leases portions of its office and operating facilities under
various operating lease arrangements. The accompanying statement of income
includes expenses from operating leases of $11,112,000, $9,028,000, and
$8,172,000 in 1995, 1994, and 1993, respectively. Future minimum payments
due under noncancellable operating leases at December 30, 1995, are
$11,430,000 in 1996; $9,005,000 in 1997; $6,785,000 in 1998; $5,389,000 in
1999; $4,559,000 in 2000; and $22,541,000 in 2001 and thereafter. Total
future minimum lease payments are $59,709,000.
Litigation
The Company is contingently liable with respect to lawsuits and other
matters. 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.
10. 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 paid Thermo Electron annually an amount
equal to 1.20% of the Company's revenues in fiscal 1995 and 1.25% of the
Company's revenues in fiscal 1994 and 1993. Beginning in fiscal 1996, the
Company will pay an annual fee equal to 1.0% of the Company's revenues. The
annual fee is reviewed and adjusted annually by mutual agreement of the
parties. For these services, the Company was charged $9,392,000,
$8,277,000, and $7,302,000 in 1995, 1994, and 1993, 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 relationship 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 attributable to the Company.
Repurchase Agreement
The Company invests excess cash in a repurchase agreement with Thermo
Electron as discussed in Note 1.
Available-for-sale Investments
During 1995, the Company sold its remaining investment in 6 1/2%
subordinated convertible debentures due 1998, which were issued by
Thermedics Inc. (Thermedics), a majority-owned subsidiary of Thermo
Electron. The Company sold $2,323,000 principal amount of the Thermedics
debentures in 1995 for net proceeds of $4,514,000, which resulted in a gain
of $2,227,000. During 1994, the Company sold $4,000,000 principal amount of
21PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
10. Related Party Transactions (continued)
the Thermedics debentures for net proceeds of $5,890,000, which resulted in
a gain of $2,000,000.
Short- and Long-term Obligations
To partially finance the acquisition of Gould Instrument Systems, Inc. in
May 1995, ThermoSpectra borrowed $15,000,000 from Thermo Electron pursuant
to a promissory note due May 1996 and bearing interest at the Commercial
Paper Composite Rate plus 25 basis points, set at the beginning of each
quarter. This note was repaid in August 1995 with proceeds from
ThermoSpectra's initial public offering of common stock (Note 12).
See Note 11 for long-term obligations of the Company held by Thermo
Electron.
11. Short- and Long-term Obligations
Short-term Obligations
Notes payable in the accompanying balance sheet represent bank borrowings
at several of the Company's foreign subsidiaries. The weighted average
interest rate for these borrowings was 4.27% and 5.83% at year-end 1995 and
1994, respectively.
Long-term Obligations
Long-term obligations of the Company are as follows:
(In thousands except per share amounts) 1995 1994
--------------------------------------------------------------------------
3 3/4% Senior convertible note, due 2000,
convertible at $16.93 per share (a) $140,000 $140,000
3 3/4% Senior convertible debentures, due 2000,
convertible at $16.93 per share (b) 67,600 70,000
6 5/8% Subordinated convertible debentures, due 2001,
convertible at $9.38 per share (c) 22,275 36,862
7% Subordinated convertible note, due 1996,
convertible at $2.37 per share (a) - 1,334
5% Subordinated convertible debentures, due 2000,
convertible into shares of ThermoQuest (c) 96,250 -
5% Subordinated convertible debentures, due 2000,
convertible into shares of Thermo Optek (c) 96,250 -
10.23% Mortgage loan secured by property with a net
book value of $16,303, payable in monthly
installments with final payment in 2004 10,101 10,855
Other 10,885 6,276
-------- --------
443,361 265,327
Less: Current maturities of long-term obligations 2,327 1,768
-------- --------
$441,034 $263,559
======== ========
(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.
22PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
11. Short- and Long-term Obligations (continued)
In lieu of issuing shares of the Company's common stock upon conversion
of the 3 3/4% senior convertible debentures due 2000, the Company has the
option to pay holders of the debentures cash equal to the weighted average
market price of the Company's common stock on the trading date prior to
conversion.
In August and October 1995, the Company's wholly owned ThermoQuest and
Thermo Optek subsidiaries, respectively, each issued and sold $96.3 million
principal amount of 5% subordinated convertible debentures due 2000. The
debentures will be convertible into shares of the respective subsidiary's
common stock at any time after the later of (1) 180 days after the date of
the close of the subsidiary's initial public offering of common stock or
(2) the date of the effectiveness under the Securities Act of 1933 of a
registration statement covering the resale of shares of the subsidiary's
common stock issuable upon conversion of the debentures, and prior to
redemption and maturity. The conversion price of the debentures will be set
on the date of the closing of the subsidiary's initial public offering of
common stock and will be equal to 110% of the initial public offering price
of the subsidiary's common stock. If ThermoQuest's and Thermo Optek's
initial public offerings have not occurred by August 3, 1996 and October
12, 1996, respectively, this percentage will decrease by 2.5% on such dates
and on each anniversary of such dates prior to the subsidiary's initial
public offering. If ThermoQuest's and Thermo Optek's initial public
offerings have not occurred by August 1, 1996 and October 1, 1996,
respectively, the rate of interest borne by the debentures will increase by
0.5% on such dates and on each anniversary of such dates prior to the
subsidiary's initial public offering. The debentures are guaranteed on a
subordinated basis by Thermo Electron. The Company has agreed to reimburse
Thermo Electron in the event Thermo Electron is required to make a payment
under the guarantees.
During 1995, 1994, and 1993, convertible obligations of $18,321,000,
$14,107,000, and $37,371,000, respectively, were converted into common
stock of the Company.
The annual requirements for long-term obligations are as follows:
(In thousands)
--------------------------------------------------------------------------
1996 $ 2,327
1997 2,225
1998 1,698
1999 1,635
2000 401,723
2001 and thereafter 33,753
--------
$443,361
========
See Note 13 for the fair value information pertaining to the Company's
long-term obligations.
12. Transactions in Stock of Subsidiaries
In March 1995, Thermo BioAnalysis sold 700,000 shares of its common stock
in a private placement at $10.00 per share for net proceeds of $6,530,000,
resulting in a gain of $4,714,000. In April 1995, Thermo BioAnalysis sold
23PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
12. Transactions in Stock of Subsidiaries (continued)
901,500 shares of its common stock in a private placement at $10.00 per
share for net proceeds of $8,388,000, resulting in a gain of $4,831,000.
In August 1995, ThermoSpectra sold 1,725,000 shares of its common stock
in an initial public offering at $14.00 per share for net proceeds of
$21,858,000, resulting in a gain of $9,333,000. In October 1995,
ThermoSpectra sold 202,000 shares of its common stock in a private
placement at $15.72 per share for net proceeds of $3,022,000, resulting in
a gain of $1,250,000.
In 1994, ThermoSpectra sold 1,505,000 shares of its common stock in
private placements at $10.00 per share for net proceeds of $13,993,000,
resulting in a gain of $6,469,000.
13. Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash and cash
equivalents, accounts receivable, notes payable, accounts payable, due to
parent company, long-term obligations, and forward exchange contracts. The
carrying amounts of these financial instruments, with the exception of
long-term obligations and forward exchange contracts, approximate fair
value due to their short-term nature.
Available-for-sale investments are carried at fair value in the
accompanying 1994 balance sheet. The fair values were determined based on
quoted market prices. See Note 2 for fair value information pertaining to
these financial instruments.
The Company enters into forward exchange contracts to hedge certain
firm purchase and sale commitments denominated in currencies other than its
subsidiaries' local currencies, principally U.S. dollars, British pounds
sterling, French francs, and Japanese yen. The purpose of the Company's
foreign currency hedging activities is to protect the Company's local
currency cash flows related to these commitments from fluctuations in
foreign exchange rates. The amounts of such forward exchange contracts at
year-end 1995 and 1994 were $12,200,000 and $11,067,000, respectively.
The carrying amount and fair value of the Company's long-term
obligations and off-balance-sheet financial instruments are as follows:
1995 1994
------------------ ------------------
Carrying Fair Carrying Fair
(In thousands) Amount Value Amount Value
----------------------------------------------------------------------
Long-term obligations:
Convertible obligations $422,375 $595,482 $248,196 $302,528
Other long-term obligations 18,659 19,122 15,363 15,747
-------- -------- -------- --------
$441,034 $614,604 $263,559 $318,275
======== ======== ======== ========
Off-balance-sheet
financial instruments:
Forward exchange
contracts receivable $ 462 $ 57
24PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
13. Fair Value of Financial Instruments (continued)
The fair value of long-term obligations was determined based on quoted
market prices and on borrowing rates available to the Company at the
respective year-ends. The fair value of convertible obligations exceeds the
carrying amount primarily due to the market price of the Company's common
stock at the respective year-ends exceeding the conversion price of the
convertible obligations.
The fair value of forward exchange contracts is the estimated amount
that the Company would receive if it were to terminate the contracts,
taking into account the change in foreign exchange rates.
14. Geographical Data
The Company is engaged in one business segment: developing, manufacturing,
and marketing analytical, environmental monitoring, and process control
instruments. The following table shows data for the Company by geographical
area:
(In thousands) 1995 1994 1993
--------------------------------------------------------------------------
Revenues:
United States $ 520,485 $ 457,121 $ 390,707
Germany 124,035 96,338 77,533
United Kingdom 78,768 57,752 44,888
Other Europe 107,755 72,633 60,437
Other 79,368 59,663 49,150
Transfers among geographical
areas (a) (127,749) (93,515) (93,437)
---------- ---------- ----------
$ 782,662 $ 649,992 $ 529,278
========== ========== ==========
Income from continuing operations before
provision for income taxes and
minority interest expense:
United States $ 81,144 $ 86,189 $ 75,410
Germany 8,703 3,168 4,116
United Kingdom 5,128 3,569 3,700
Other Europe 12,505 6,823 3,797
Other 8,203 7,490 6,317
Corporate and eliminations (b) (11,214) (10,002) (7,360)
---------- ---------- ----------
Total operating income 104,469 97,237 85,980
Interest and other income
(expense), net 18,872 (1,357) (10,740)
---------- ---------- ----------
$ 123,341 $ 95,880 $ 75,240
========== ========== ==========
25PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
14. Geographical Data (continued)
(In thousands) 1995 1994 1993
--------------------------------------------------------------------------
Identifiable assets:
United States $ 888,620 $ 595,329 $ 512,679
Germany 125,686 114,536 100,042
United Kingdom 85,615 46,959 38,905
Other Europe 94,135 53,664 42,245
Other 62,090 37,947 32,807
Corporate and eliminations (c) 116,667 163,482 164,463
---------- ---------- ----------
$1,372,813 $1,011,917 $ 891,141
========== ========== ==========
Export revenues included in United
States revenues above (d):
Europe $ 88,418 $ 70,903 $ 74,073
Asia 80,839 57,249 41,395
Other 40,303 25,412 20,020
---------- ---------- ----------
$ 209,560 $ 153,564 $ 135,488
========== ========== ==========
(a) Transfers among geographical areas are accounted for at prices that are
representative of transactions with unaffiliated parties.
(b) Primarily 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.
15. Subsequent Event
On March 1, 1995, the Company entered into an agreement with Fisons plc
(Fisons) to acquire the Scientific Instruments Division of Fisons for
approximately 202 million British pounds sterling. On April 13, 1995, the
Company announced that it had received a "second request" for information
regarding the transaction from the U.S. Federal Trade Commission (FTC).
After extensive discussions with Fisons and the FTC, in January 1996 the
Company withdrew its original pre-merger notification filing under the
Hart-Scott-Rodino Antitrust Improvements Act (the HSR Act), and submitted a
new filing with respect to a modified form of the acquisition. On February
15, 1996, the Company announced that the FTC had granted early termination
of the waiting period under the HSR Act with respect to the modified
acquisition and on March 1, 1996, the Company announced that it had
received clearance from U.K. antitrust regulatory authorities. The form of
the acquisition cleared by the FTC and the U.K. authorities excludes from
the businesses to be acquired by the Company substantially all of the mass
spectrometer businesses of Fisons and a high-resolution mass
spectrometer/inductively-coupled plasma product. These businesses accounted
for slightly less than 20% of the 1995 revenues of Fisons' Scientific
Instruments Division. The new purchase price is expected to be slightly
less than 150 million British pounds sterling and will be subject to a
post-closing adjustment based on the net asset value of the acquired
businesses as of the closing date. The modified acquisition is still
subject to the consent of certain third parties and the satisfaction of
other closing conditions.
26PAGE
<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 sheets of Thermo
Instrument Systems Inc. (a Delaware corporation and 86%-owned subsidiary of
Thermo Electron Corporation) and subsidiaries as of December 30, 1995 and
December 31, 1994, and the related consolidated statements of income,
shareholders' investment, and cash flows for each of the three years in the
period ended December 30, 1995. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Thermo
Instrument Systems Inc. and subsidiaries as of December 30, 1995 and
December 31, 1994, and the results of their operations and their cash flows
for each of the three years in the period ended December 30, 1995, in
conformity with generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements,
effective January 2, 1994, the Company changed its method of accounting for
investments in debt and marketable equity securities.
Arthur Andersen LLP
Boston, Massachusetts
February 12, 1996 (except with respect
to the matter discussed in Note 15 as
to which the date is March 1, 1996)
27PAGE
<PAGE>
Thermo Instrument Systems Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
The Company's revenues were $782.7 million in 1995, compared with $650.0
million in 1994 and $529.3 million in 1993. The increases were primarily
due to acquisitions, which included the Analytical Instruments Division of
Baird Corporation in January 1995, Gould Instrument Systems, Inc. (GIS) in
May 1995, the Analytical Instrument Division of Analytical Technology, Inc.
in December 1995, several businesses within the EnviroTech Measurements &
Controls group of Baker Hughes Incorporated (Baker Hughes) in March 1994,
and the radiation safety measurement products and radiometry process
control divisions of FAG Kugelfischer Georg Shafer AG in October 1993.
Acquisitions added revenues of $104 million in 1995 and $125 million in
1994. The 1993 results included $12.6 million of revenues from the
biomedical instruments products business of the Company's Nicolet
Instrument Corporation subsidiary (Nicolet Biomedical), which was sold to
Thermo Electron Corporation (Thermo Electron) effective April 5, 1993. The
remainder of the increase in revenues in 1995 was substantially a result of
the favorable effects of currency translation due to the decline in the
value of the U.S. dollar relative to foreign currencies in countries where
the Company operates. Approximately 50% of the Company's revenues originate
outside of the United States. Although the Company seeks to charge its
customers in the same currency as its operating costs, the Company's
financial performance and competitive position can be affected by currency
exchange rate fluctuations affecting the relationship between the U.S.
dollar and foreign currencies. Where appropriate, the Company uses forward
exchange contracts to reduce its exposure to currency fluctuations. An
increase in revenues in 1995 from certain existing businesses was offset in
part by a decline in revenues from the Company's air monitoring instruments
subsidiary as most orders in response to Phases I and II of the Clean Air
Act of 1990 have been completed.
The gross profit margin remained relatively unchanged at 48% in 1995
and 1994 and 49% in 1993. If the Company completes the modified acquisition
of the Scientific Instruments Division of Fisons plc (Fisons) (Note 15),
the Company expects that the gross profit margin will decline due to lower
margins at the businesses to be acquired from Fisons.
Selling, general and administrative expenses as a percentage of
revenues increased to 28% in 1995 from 27% in 1994 and 26% in 1993
primarily due to higher costs as a percentage of revenues at acquired
businesses and reduced revenues from the Company's air monitoring
instruments subsidiary as discussed above. The Company's goal is to
continue to reduce selling, general and administrative expenses as a
percentage of revenues at its newly acquired businesses. If the Company
completes the modified acquisition of the Scientific Instruments Division
of Fisons, the Company expects that selling, general and administrative
expenses will increase as a percentage of revenues. The Company intends to
take steps to reduce costs at the businesses acquired from Fisons. These
reductions are expected to take at least several quarters to implement, and
no assurance can be given that these reductions will be sufficient to bring
selling, general and administrative expenses as a percentage of revenues at
the businesses acquired from Fisons to a level comparable to that of the
Company's existing businesses.
Research and development expenses as a percentage of revenues were 6.9%
in 1995, compared with 6.6% in 1994 and 6.5% in 1993. The increase is
consistent with the Company's objective to develop and market new products.
28PAGE
<PAGE>
Thermo Instrument Systems Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations (continued)
Interest income was $14.6 million in 1995, $5.9 million in 1994, and
$3.6 million in 1993. The increase in 1995 was primarily the result of
interest income earned on the net proceeds from the issuance of $192.5
million aggregate principal amount of 5% subordinated convertible
debentures by the Company's ThermoQuest Corporation (ThermoQuest) and
Thermo Optek Corporation (Thermo Optek) subsidiaries in August 1995 and
October 1995, respectively, and higher prevailing interest rates in 1995
compared with 1994. Interest income also increased in 1995, to a lesser
extent, as a result of interest income earned on the net proceeds from the
issuance of common stock by the Company's Thermo BioAnalysis Corporation
(Thermo BioAnalysis) subsidiary in the first and second quarters of 1995
and by the Company's ThermoSpectra Corporation (ThermoSpectra) subsidiary
in the third quarter of 1995 and the third and fourth quarters of 1994. The
increase was offset in part by a reduction in cash as a result of the
acquisitions of the Analytical Instruments Division of Baird Corporation in
January 1995 and GIS in May 1995. The increase in interest income in 1994
was primarily a result of interest income earned on the net proceeds from
the issuance of 3 3/4% senior convertible obligations in September 1993,
offset in part by the cash used to purchase several businesses within the
EnviroTech Measurements & Controls group of Baker Hughes in the first
quarter of 1994. Interest expense increased to $18.1 million in 1995 from
$15.8 million in 1994 and $14.4 million in 1993. The increase in 1995 was
primarily due to the issuance of the 5% subordinated convertible debentures
by ThermoQuest and Thermo Optek, offset in part by the conversion of a
portion of the Company's 6 5/8% subordinated convertible debentures and
3 3/4% senior convertible obligations into common stock of the Company. The
increase in interest expense in 1994 was primarily due to the issuance of
the 3 3/4% senior convertible obligations in September 1993, offset in part
by a reduction in interest expense as a result of the repayment in the
third quarter of 1993 of debt incurred in connection with acquisitions.
The Company has adopted a strategy of spinning out certain of its
businesses into separate subsidiaries and having these subsidiaries sell a
minority interest to outside investors. The Company believes that this
strategy provides additional motivation and incentives for the management
of the subsidiary through the establishment of subsidiary-level stock
option incentive programs, as well as capital to support the subsidiaries'
growth. As a result of the sale of stock by subsidiaries, the Company
recorded gains of $20.1 million in 1995 and $6.5 million in 1994 (Note 12).
The size and timing of these transactions are dependent on market and other
conditions that are beyond the Company's control. Accordingly, there can be
no assurance that the Company will be able to realize gains from such
transactions in the future.
In October 1995, the Financial Accounting Standards Board (FASB)
issued an exposure draft of a Proposed Statement of Financial Accounting
Standards, "Consolidated Financial Statements: Policy and Procedures"
(Proposed Statement). The Proposed Statement would establish new rules for
how consolidated financial statements should be prepared. If the Proposed
Statement is adopted, there could be significant changes in the way the
Company records certain transactions of its controlled subsidiaries,
including the following: (i) any sale of the stock of a subsidiary that
does not result in a loss of control would be accounted for as a
transaction in equity of the consolidated entity with no gain or loss being
recorded and (ii) under certain circumstances, acquisitions could be
29PAGE
<PAGE>
Thermo Instrument Systems Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations (continued)
structured to significantly reduce the goodwill that is recorded and
consequently reduce the Company's future goodwill amortization associated
with the acquisition. The Company typically acquires technology companies
which are often characterized by significant amounts of goodwill. In
addition, under the Proposed Statement a company that has made certain
equity investments of generally less than 20% ownership would record a gain
(or loss) upon increasing its investment level to the point of exerting
"significant influence," generally 20% or higher.
The FASB conducted a hearing concerning the Proposed Statement in
February 1996, at which Thermo Electron, along with other major companies
and many of the major accounting firms and accounting associations,
expressed their disagreement with various parts of the Proposed Statement.
The FASB expects to issue a final statement by June 30, 1996, which could
become effective for fiscal years beginning after December 15, 1996.
The Company recorded gains of $2.2 million and $2.0 million in 1995 and
1994, respectively, from the sale of the Company's investment in Thermedics
Inc. convertible debentures. Thermedics Inc. is a majority-owned subsidiary
of Thermo Electron.
The effective tax rate was 35% in 1995, 39% in 1994, and 43% in 1993.
The effective tax rate decreased in 1995 and 1994 primarily due to the
nontaxable gains on the issuance of stock by subsidiaries. Excluding the
impact of the gains on the issuance of stock by subsidiaries, the effective
tax rates exceeded the statutory federal income tax rate primarily due to
the impact of state income taxes, nondeductible amortization of cost in
excess of net assets of acquired companies, and the inability to provide a
tax benefit on losses incurred at certain foreign subsidiaries.
Effective April 2, 1995, the Company and Thermo TerraTech Inc. (Thermo
TerraTech) (formerly Thermo Process Systems Inc.) dissolved their Thermo
Terra Tech joint venture. Thermo TerraTech then purchased the services
businesses formerly operated by the joint venture from the Company. Prior
to the joint venture's formation on April 2, 1994, the Company's services
businesses comprised its Services segment and were consolidated in the
Company's financial statements. The sale of the businesses to Thermo
TerraTech represents the Company's disposal of its Services segment
(Note 3).
Liquidity and Capital Resources
Consolidated working capital was $489.9 million at December 30, 1995,
compared with $230.3 million at December 31, 1994, an increase of $259.6
million. Included in working capital are cash, cash equivalents, and
available-for-sale investments of $395.2 million at December 30, 1995 and
$168.9 million at December 31, 1994. Of the $395.2 million balance at
December 30, 1995, $20.3 million was held by ThermoSpectra, $19.8 million
by Thermo BioAnalysis, $120.4 million by ThermoQuest, $115.1 million by
Thermo Optek, and $119.6 million by the Company and its wholly owned
subsidiaries. Cash provided by operations in 1995 was $60.1 million.
The Company's investing activities used $47.1 million of cash in 1995.
During 1995, the Company expended $89.5 million for acquisitions and $10.3
30PAGE
<PAGE>
Thermo Instrument Systems Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources (continued)
million for the purchase of property, plant and equipment. Additionally,
during 1995, the Company and Thermo TerraTech dissolved their Thermo Terra
Tech joint venture and the Company sold its services businesses formerly
operated by the joint venture to Thermo TerraTech for $34.3 million in
cash.
The Company's financing activities provided $228.3 million of cash in
1995. In March and April 1995, Thermo BioAnalysis completed private
placements of its common stock for net proceeds of $14.9 million. In August
and October 1995, ThermoSpectra sold shares of its common stock in an
initial public offering and a private placement for aggregate net proceeds
of $24.9 million. (Note 12) In August and October 1995, ThermoQuest and
Thermo Optek, respectively, each issued and sold $96.3 million principal
amount of 5% subordinated convertible debentures due 2000 for net proceeds
of $93.9 million.
In February 1996, Thermo BioAnalysis acquired Dynatech Laboratories
Worldwide (DLW) from Dynatech Corporation for $43 million in cash, subject
to post-closing adjustments. To partially finance the acquisition of DLW,
Thermo BioAnalysis borrowed $30 million from Thermo Electron pursuant to a
promissory note due February 1997 and bearing interest at the Commercial
Paper Composite Rate plus 25 basis points.
In February 1996, ThermoQuest filed a registration statement under the
Securities Act of 1933 with the Securities and Exchange Commission covering
shares of common stock to be offered in its initial public offering.
In 1996, the Company plans to make expenditures of approximately $11.5
million for property, plant and equipment. The Company believes that its
existing resources are sufficient to meet the capital requirements of its
existing operations for the foreseeable future.
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 businesses or technologies that are consistent with its plans for
strategic growth. On February 15, 1996, the Company announced that the
Federal Trade Commission had granted early termination of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act with respect
to the previously announced modified acquisition of the Scientific
Instruments Division of Fisons plc (Fisons) and on March 1, 1996, the
Company announced that it had received clearance of the transaction from
U.K. antitrust regulatory authorities (Note 15). It is the Company's intent
in the future to sell a portion of the businesses to be acquired from
Fisons to the Company's majority- and wholly owned subsidiaries, although
the size and timing of these transactions will be subject to negotiation
between the Company and its subsidiaries. The Company intends to fund the
purchase price of this acquisition, which is expected to be slightly less
than 150 million British pounds sterling, from available cash and through
borrowings from Thermo Electron. Borrowings from Thermo Electron will be at
prevailing market rates at the time funds are advanced.
31PAGE
<PAGE>
Thermo Instrument Systems Inc.
Selected Financial Information
(In thousands except
per share amounts) 1995(a)(b) 1994(c)(d) 1993(e) 1992(f) 1991
---------------------------------------------------------------------------
Statement of
Income Data:
Revenues $ 782,662 $ 649,992 $ 529,278 $ 368,532 $ 283,613
Income from
continuing
operations 79,304 58,261 42,793 31,666 24,752
Net income 79,306 60,220 44,764 33,130 24,837
Earnings per
share from
continuing
operations:
Primary .88 .66 .51 .39 .32
Fully diluted .80 .61 .48 .38 .31
Earnings per
share:
Primary .88 .68 .53 .41 .33
Fully diluted .80 .63 .50 .39 .31
Balance Sheet
Data:
Working capital $ 489,895 $ 230,306 $ 238,053 $ 68,412 $ 197,391
Total assets 1,372,813 1,011,917 891,141 686,425 497,959
Long-term
obligations 441,034 263,559 286,161 170,092 123,476
Shareholders'
investment 542,705 440,763 358,055 272,723 250,954
See notes located below "Quarterly Information" on the following page.
32PAGE
<PAGE>
Thermo Instrument Systems Inc.
Quarterly Information (Unaudited)
(In thousands except per share amounts)
1995(b) First Second Third Fourth
---------------------------------------------------------------------------
Revenues $172,944 $185,744 $193,899 $230,075
Gross profit 84,914 90,916 93,535 109,854
Income from continuing operations 16,914 18,673 21,881 21,836
Net income 16,916 18,673 21,881 21,836
Earnings per share from
continuing operations:
Primary .19 .21 .24 .24
Fully diluted .17 .19 .22 .22
Earnings per share:
Primary .19 .21 .24 .24
Fully diluted .17 .19 .22 .22
1994(d) First Second(c) Third Fourth
---------------------------------------------------------------------------
Revenues $147,587 $162,615 $161,580 $178,210
Gross profit 72,670 78,787 77,565 85,629
Income from continuing operations 12,476 13,564 14,532 17,689
Net income 12,852 14,084 15,104 18,180
Earnings per share from
continuing operations:
Primary .14 .15 .16 .20
Fully diluted .13 .14 .15 .18
Earnings per share:
Primary .15 .16 .17 .20
Fully diluted .14 .15 .16 .19
(a) Reflects the August and October 1995 issuance of $192,500,000 aggregate
principal amount of 5% subordinated convertible debentures due 2000 by
ThermoQuest Corporation and Thermo Optek Corporation, respectively.
(b) Results include nontaxable gains of $4,714,000, $4,831,000, $9,333,000,
and $1,250,000 in the first, second, third, and fourth quarters,
respectively, from the issuance of stock by subsidiaries.
(c) Reflects the March 1994 acquisition of several businesses within the
EnviroTech Measurements & Controls group of Baker Hughes Incorporated.
(d) Results include nontaxable gains of $3,284,000 and $3,185,000 in the
third and fourth quarters, respectively, from the issuance of stock by
subsidiary.
(e) Reflects the February 1993 acquisition of Spectra-Physics Analytical,
Inc., the April 1993 sale of the biomedical instruments products
business of the Company's 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.
(f) Reflects the August 1992 acquisition of Nicolet Instrument Corporation.
33PAGE
<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 1995 and 1994. Prices were restated in 1995 to reflect a three-for-two
stock split distributed in April 1995 and a five-for-four stock split
distributed in December 1995.
1995 1994
---------------------- -----------------------
Quarter High Low High Low
--------------------------------------------------------------------
First $18 13/15 $15 13/15 $18 8/15 $15 1/15
Second 20 1/5 17 1/5 17 14 7/15
Third 22 2/5 19 4/5 17 1/5 14 2/3
Fourth 27 1/10 21 1/2 17 15 4/15
As of January 26, 1996, the Company had 2,900 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 January 26, 1996, was $27 1/8 per share.
Stock Transfer Agent
American Stock Transfer & Trust Company is the stock transfer agent and
maintains shareholder activity 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 inquiries to:
American Stock Transfer & Trust Company
Shareholder Services Department
40 Wall Street, 46th Floor
New York, New York 10005
(718) 921-8200
Shareholder Services
Shareholders of Thermo Instrument Systems Inc. who desire information about
the Company are invited to contact John N. Hatsopoulos, Chief Financial
Officer, Thermo Instrument Systems Inc., 81 Wyman Street, Post Office Box
9046, Waltham, Massachusetts 02254-9046, (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 reports, annual reports,
and press releases as quickly as possible. Quarterly reports and press
releases are also available through the Internet at Thermo Electron's home
page on the World Wide Web (http://www.thermo.com).
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.
34PAGE
<PAGE>
Thermo Instrument Systems Inc.
Form 10-K Report
A copy of the Annual Report on Form 10-K for the fiscal year ended December
30, 1995, as filed with the Securities and Exchange Commission, may be
obtained at no charge by writing to John N. Hatsopoulos, Chief Financial
Officer, Thermo Instrument Systems Inc., 81 Wyman Street, Post Office Box
9046, Waltham, Massachusetts 02254-9046.
Annual Meeting
The annual meeting of shareholders will be held on Sunday, May 19, 1996, at
6:30 p.m. at the Turnberry Isle Resort & Club, Aventura, Florida.
35<PAGE>
Exhibit 21
Thermo Instrument Systems Inc. - Subsidiaries of the Registrant
At March 6, 1996, Thermo Instrument Systems Inc. owned the following companies:
STATE OR
JURISDICTION
OF PERCENT OF
NAME INCORPORATION OWNERSHIP
- ------------------------------------------------------------------------------
Thermo Instrument Systems Inc. Delaware 85.61**
Analytical Instrument Development, Inc. Pennsylvania 100
ATI Acquisition Corp. Wisconsin 100
Mattson Instruments Limited United Kingdom 100
Unicam Analytical Inc. Canada 100
Unicam Analytical Technology Netherlands Netherlands 100
B.V.
Unicam Analytische System GmbH Germany 100
Unicam France S.A. France 100
Unicam Italia SpA Italy 100
Unicam S.A. Belgium 100
Unicam Technology Limited United Kingdom 100
Unicam Limited United Kingdom 100
Unicam Export Limited United Kingdom 100
Eberline Instrument Company Limited United Kingdom 100
Eberline Instrument Corporation New Mexico 100
Epsilon Industrial Inc. Texas 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
Houston Atlas Inc. Texas 100
National Nuclear Corporation California 100
Optek-Nicolet Holdings Inc. Wisconsin 100
Thermo Optek Corporation Delaware 100
Nicolet Instrument Corporation Wisconsin 100
Nicolet Japan K.K. Japan 100
Spectra-Tech, Europe Limited United Kingdom 100
Spectra-Tech, Inc. Wisconsin 100
Nicolet Instrument GmbH Germany 100
Nicolet Instrument S.A.R.L. France 100
Thermo Instrument Systems Japan Holdings, Delaware 100
Inc.
Nippon Jarrell-Ash Company, Ltd. Japan 100
Thermo Jarrell Ash Corporation Massachusetts 100
Baird Do Brazil Representacoes Ltda. Brazil 100
Beijing Baird Analytical Instrument China 100
Technology Co. Limited
Thermo Instrument Systems (F.E.) China 100
Limited
Thermo Instruments (Canada) Inc. Canada 100
Eberline Instruments (Canada) Ltd. Canada 100
Thermo Optek Ltd. United Kingdom 100
Nicolet Instrument Limited United Kingdom 100
Planweld Limited United Kingdom 100
Hilger Analytical Limited United Kingdom 100
Page 1PAGE
<PAGE>
Thermo Instrument Systems Inc. - Subsidiaries of the Registrant
At March 6, 1996, Thermo Instrument Systems Inc. owned the following companies:
STATE OR
JURISDICTION
NAME OF PERCENT OF
INCORPORATION OWNERSHIP
- ------------------------------------------------------------------------------
Thermo Electron Limited United Kingdom 100
Thermo Vision Corporation Delaware 100
CID Technologies Inc. New York 100
Oriel Corporation Delaware 100
Andor Technology Limited United Kingdom 51.25
Oriel Foreign Sales Corp. U. S. Virgin 100
Islands
Scientific Measurement Systems Inc. Colorado 100
ThermoSpectra Corporation Delaware 72.39**
Beleggingsmaatschappij Zeis B.V. Netherlands 100
Bakker Electronics Dongen B.V. Netherlands 100
Bakker Electronics Limited United Kingdom 100
Diametrix Detectors, Inc. Delaware 50
Gould Instrument Systems, Inc. Ohio 100
Gould Instrument Systems GmbH Germany 100
NORAN Instruments GmbH Germany 100
Gould Instrument Systems Limited United Kingdom 100
Nicolet Technologies Ltd. United Kingdom 100
Gould Instruments S.A. France 100
Nicolet Instrument Technologies Inc. Wisconsin 100
Nicolet Technologies S.A.R.L. France 100
NORAN Instruments Inc. Wisconsin 100
Quest-Finnigan Holdings Inc. Virginia 100
Quest-TSP Holdings Inc. Delaware 100
ThermoQuest Corporation Delaware 100
(50% of which shares are owned
directly by Quest-Finnigan Holdings Inc.)
Extrel FTMS, Inc. Delaware 100
Finnigan Corporation Delaware 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 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. Australia 100
Limited
ThermoQuest Ltd. United Kingdom 100
Finnigan MAT Ltd. United Kingdom 100
Finnigan MAT AB Sweden 100
Thermo Separation Products Ltd. United Kingdom 100
Finnigan Properties, Inc. California 100
Page 2PAGE
<PAGE>
Thermo Instrument Systems Inc. - Subsidiaries of the Registrant
At March 6, 1996, Thermo Instrument Systems Inc. owned the following companies:
STATE OR
JURISDICTION
NAME OF PERCENT OF
INCORPORATION OWNERSHIP
- -----------------------------------------------------------------------------
Thermo Instrument Systems (France) S.A. France 100
Thermo Separation Products S.A. France 100
Thermo Separation Products AG Switzerland 100
Thermo Separation Products Inc. Delaware 100
ThermoQuest GmbH Germany 100
Finnigan MAT GmbH Germany 100
Thermo Separation Products GmbH Germany 100
ThermoQuest K.K. Japan 100
SID Instruments Inc. Delaware 100
ARL Inc. Delaware 100
FI Instruments Inc. Delaware 100
FI Ltd. United Kingdom 100
HB Instruments Inc. Delaware 100
Masslab Limited United Kingdom 100
NK Instruments Inc. Delaware 100
Thermo Elemental Limited United Kingdom 100
Thermo FAST UK Limited United Kingdom 100
Thermo Haake Ltd. United Kingdom 100
Thermo Labsystems Limited United Kingdom 100
Thermo SID (Australia) Pty. Ltd. Australia 100
Spectrace Instruments Inc. California 100
Thermo BioAnalysis Corporation Delaware 80.23**
(7% of which shares are owned directly by
Quest-TSP Holdings Inc. and 3% of which
shares are owned directly by Quest-Finnigan
Holdings Inc.)
BioAnalysis International Sales Inc. Delaware 100
DLW Inc. Virginia 100
Dynatech Deutschland GmbH Germany 100
Dynatech Laboratories spol. s.r.o. Czech Republic 100
Thermo BioAnalysis (Guernsey) Limited Channel 100
Islands
Thermo BioAnalysis Ltd. United Kingdom 100
Thermo BioAnalysis S.A. France 100
Thermo Environmental Instruments Inc. California 100
Thermo Instrument Controls Inc. Delaware 100
Thermo Instrument Controls de Mexico, S.A. Mexico 100
de C.V. (1% of which shares are owned
directly by Thermo Instrument Systems
Inc.)
Thermo Instruments do Brasil Ltda. Brazil 100
(1% of which shares are owned directly
by Thermo Jarrell Ash Corporation)
Thermo Instruments F.S.C. Inc. U.S. Virgin 100
Islands
TN Technologies Inc. Texas 100
TN Technologies Canada Inc. Canada 100
Van Hengel Holding B.V. Netherlands 100
Page 3PAGE
<PAGE>
Thermo Instrument Systems Inc. - Subsidiaries of the Registrant
At March 6, 1996, Thermo Instrument Systems Inc. owned the following companies:
STATE OR
JURISDICTION
NAME OF PERCENT OF
INCORPORATION OWNERSHIP
- ------------------------------------------------------------------------------
Baird Europe B.V. Netherlands 100
Baird France S.A.R.L. France 100
Thermo Instrument Systems B.V. Netherlands 100
Euroglas B.V. Netherlands 100
Hilkomij B.V. Netherlands 100
NORAN Instruments B.V. Netherlands 100
Thermo Automation Services (ThAS) B.V. Netherlands 100
Van Oortmerssen B.V. Netherlands 100
Thermo Instrument Systems GmbH Germany 100
(24% of which shares are owned directly
by Thermo Instrument Systems Inc.)
Eberline Instruments GmbH Germany 100
Thermo Instruments 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
TN Spectrace Europe B.V. Netherlands 100
Westronics Inc. Texas 100
* Joint Venture/Partnership ** As of 12/30/95
Exhibit 23
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
incorporation by reference of our reports dated February 12, 1996 (except
with respect with the matter discussed in Note 15 as to which the date is
March 1, 1996), included in or incorporated by reference into Thermo
Instrument Systems Inc.'s Annual Report on Form 10-K for the year ended
December 30, 1995, into the Company's previously filed Registration
Statements as follows: 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 LLP
Boston, Massachusetts
March 11, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
INSTRUMENT SYSTEMS INC.'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> DEC-30-1995
<CASH> 395,233
<SECURITIES> 0
<RECEIVABLES> 224,475
<ALLOWANCES> 12,569
<INVENTORY> 154,914
<CURRENT-ASSETS> 806,536
<PP&E> 189,085
<DEPRECIATION> 55,408
<TOTAL-ASSETS> 1,372,813
<CURRENT-LIABILITIES> 316,641
<BONDS> 301,034
<COMMON> 9,257
0
0
<OTHER-SE> 533,448
<TOTAL-LIABILITY-AND-EQUITY> 1,372,813
<SALES> 782,662
<TOTAL-REVENUES> 782,662
<CGS> 403,443
<TOTAL-COSTS> 403,443
<OTHER-EXPENSES> 54,314
<LOSS-PROVISION> 2,543
<INTEREST-EXPENSE> 18,129
<INCOME-PRETAX> 123,341
<INCOME-TAX> 42,713
<INCOME-CONTINUING> 79,304
<DISCONTINUED> 2
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 79,306
<EPS-PRIMARY> .88
<EPS-DILUTED> .80
</TABLE>
