SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________________________
AMENDMENT NO. 1 ON FORM 10-K/A
TO FORM 10-K
(mark one)
X Annual Report Pursuant to Section 13 or 15(d) of the Securities
---
Exchange Act of 1934 for the fiscal year ended April 1, 1995
___ Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 1-9549
THERMO PROCESS SYSTEMS INC.
(Exact name of Registrant as specified in its charter)
Delaware 04-2925807
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1268 Market Street
Livonia, Michigan 48150
(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
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 May 26, 1995, was approximately $37,269,000.
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As of May 26, 1995, the Registrant had 17,351,555 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Fiscal 1995 Annual Report to Shareholders for
the year ended April 1, 1995, are incorporated by reference into Parts I
and II.
Thermo Process Systems Inc.
Amendment No. 1 on Form 10K/A to Annual Report on Form 10-K
for the fiscal year ended April 1, 1995
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Part III, Item 10. Directors and Executive Officers of the
Registrant.
Part III, Item 11. Executive Compensation.
Part III, Item 12. Security Ownership of Certain Beneficial
Owners and Management.
Part III, Item 13. Certain Relationships and Transactions.
The information required under these items, originally to be
incorporated by reference from the Registrant's definitive proxy statement
to be filed with the Commission pursuant to Regulation 14A, not later than
120 days after the close of the fiscal year, is contained in the following
Attachment A, which is included herein and made a part of this Annual
Report on Form 10-K.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1
on Form 10-K/A to be signed by the undersigned, duly authorized.
THERMO PROCESS SYSTEMS INC.
By: /s/ Sandra L. Lambert
Sandra L. Lambert
Secretary
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ATTACHMENT A
DIRECTORS AND DIRECTOR COMPENSATION
Set forth below are the names of the Directors of Thermo Process
Systems Inc. (the "Corporation"), their ages, their offices in the
Corporation, if any, their principal occupation or employment for the past
five years, the length of their tenure as Directors and the names of other
public companies in which such persons hold directorships. Information
regarding their beneficial ownership of the Corporation's common stock (the
"Common Stock") and of the common stock of its parent corporation, Thermo
Electron Corporation ("Thermo Electron"), and of its subsidiary, Thermo
Remediation Inc. ("Thermo Remediation") is reported under the caption
"Stock Ownership."
John P. Appleton John P. Appleton, 60, has been President,
Chief Executive Officer and a Director of
the Corporation since September 1993. Dr.
Appleton has been Chairman, Chief
Executive Officer and a Director of Thermo
Remediation since September 1993 and has
served as a Vice President of Thermo
Electron since 1975 in various managerial
capacities.
George N. Dr. Hatsopoulos, 68, has been a Director
Hatsopoulos of the Corporation since 1986. Dr.
Hatsopoulos has been the Chairman of the
Board, President and Chief Executive
Officer of Thermo Electron since 1956. Dr.
Hatsopoulos is also a director of Bolt,
Beranek & Newman, Inc., Thermedics Inc.,
Thermo Ecotek Corporation, Thermo
Electron, Thermo Fibertek Inc., Thermo
Instrument Systems Inc., Thermo Power
Corporation and ThermoTrex Corporation.
Dr. Hatsopoulos is the brother of John N.
Hatsopoulos, a Director, a Vice President
and the Chief Financial Officer of the
Corporation.
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John N. Hatsopoulos Mr. Hatsopoulos, 61, has been a Director
of the Corporation since 1986 and its Vice
President and Chief Financial Officer
since 1988. He has been the Chief
Financial Officer of Thermo Electron since
1988 and an Executive Vice President of
Thermo Electron since 1986. Mr.
Hatsopoulos is also a director of Lehman
Brothers Funds, Inc., Thermedics Inc.,
Thermo Ecotek Corporation, Thermo Fibertek
Inc., Thermo Instrument Systems Inc.,
Thermo Power Corporation and ThermoTrex
Corporation. Mr. Hatsopoulos is the
brother of Dr. George N. Hatsopoulos, a
Director of the Corporation.
Donald E. Noble Mr. Noble, 80, has been a Director of the
Corporation since 1986 and Chairman of the
Board from 1992 to November 1994. From
1959 to 1980, Mr. Noble served as the
chief executive officer of Rubbermaid
Incorporated, first with the title of
President and then as the Chairman of the
Board. Mr. Noble is also a director of
Thermo Electron, Thermo Fibertek Inc. and
Thermo Power Corporation.
William A. Mr. Rainville, 53, has been a Director of
Rainville the Corporation since February 1993 and
Chairman of the Board since November 1994.
Mr. Rainville has been President and Chief
Executive Officer of Thermo Fibertek Inc.
since its inception in 1991 and a director
of that company since January 1992. From
1984 until January 1993, Mr. Rainville was
the President and Chief Executive Officer
of Thermo Electron Web Systems Inc., a
subsidiary of Thermo Electron and the
predecessor of Thermo Fibertek Inc. He
has been a Senior Vice President of Thermo
Electron since March 1993 and a Vice
President since 1986. Mr. Rainville is
also a director of Thermo Fibertek Inc.
and Thermo Remediation.
Warren M. Rohsenow Dr. Rohsenow, 74, has been a Director of
the Corporation since 1986. Dr. Rohsenow
is the Chairman of the Board of Dynatech
Corporation, a diversified high technology
company he founded. Dr. Rohsenow is also
Professor Emeritus of Mechanical
Engineering, Massachusetts Institute of
Technology.
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Polyvios C. Mr. Vintiadis, 58, has been a Director of
Vintiadis the Corporation since September 1992. Mr.
Vintiadis has been the Chairman and Chief
Executive Officer of Towermarc
Corporation, a real estate development
company, since 1984. Prior to joining
Towermarc Corporation, Mr. Vintiadis was a
principal of Morgens, Waterfall &
Vintiadis, Inc., a financial services
firm, with whom he remains associated.
For more than 20 years prior to that time,
Mr. Vintiadis was employed by Arthur D.
Little & Company, Inc. Mr. Vintiadis is
also a director of Thermo Instrument
Systems Inc.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The Board of Directors has established an Audit Committee and a Human
Resources Committee, each consisting solely of outside Directors. The
present members of the Audit Committee are Mr. Vintiadis (Chairman) and Mr.
Noble. The Audit Committee reviews the scope of the audit with the
Corporation's independent public accountants and meets with them for the
purpose of reviewing the results of the audit subsequent to its completion.
The present members of the Human Resources Committee are Mr. Noble
(Chairman), Dr. Rohsenow and Mr. Vintiadis. The Human Resources Committee
reviews the performance of senior members of management, recommends
executive compensation and administers the Corporation's stock option and
other stock plans. The Corporation does not have a nominating committee of
the Board of Directors. The Board of Directors met six times, the Audit
Committee met twice and the Human Resources Committee met three times
during fiscal 1995. Each Director attended at least 75% of all meetings of
the Board of Directors and Committees on which he served held during his
tenure.
COMPENSATION of DIRECTORS
Directors who are not employees of the Corporation, of Thermo Electron
or of any other companies affiliated with Thermo Electron (also referred to
as "outside directors"), receive an annual retainer of $4,000 and a fee of
$1,000 per day for attending regular meetings of the Board of Directors and
$500 per day for participating in meetings of the Board of Directors held
by means of conference telephone and for participating in certain meetings
of committees of the Board of Directors. Directors are also reimbursed for
out-of-pocket expenses incurred in attending such meetings. Payment of
Directors' fees is made quarterly. Dr. Appleton, Dr. G. Hatsopoulos, Mr.
J. Hatsopoulos and Mr. Rainville are all employees of Thermo Electron and
do not receive any cash compensation from the Corporation for their
services as Directors.
Under the Deferred Compensation Plan for Directors (the "Deferred
Compensation Plan"), a Director has the right to defer receipt of his cash
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fees until he ceases to serve as a Director, dies or retires from his
principal occupation. In the event of a change in control or proposed
change in control of the Corporation that is not approved by the Board of
Directors, deferred amounts become payable immediately. Either of the
following is deemed to be a change of control: (a) the occurrence, without
the prior approval of the Board of Directors, of the acquisition, directly
or indirectly, by any person of 50% or more of the outstanding Common Stock
or the outstanding common stock of Thermo Electron; or (b) the failure of
the persons serving on the Board of Directors immediately prior to any
contested election of Directors or any exchange offer or tender offer for
the Common Stock or the common stock of Thermo Electron to constitute a
majority of the Board of Directors at any time within two years following
any such event. Amounts deferred pursuant to the Deferred Compensation
Plan are valued on the date of deferral as units of the Corporation's
Common Stock. When payable, amounts deferred may be disbursed solely in
shares of Common Stock accumulated under the Deferred Compensation Plan. A
total of 54,000 shares of Common Stock have been reserved for issuance
under the Deferred Compensation Plan. As of July 1, 1995, deferred units
equal to 31,838 full shares of Common Stock were accumulated under the
Deferred Compensation Plan.
The Corporation's directors stock option plan (the "Directors Plan")
provides for the grant of stock options to purchase shares of Common Stock
to outside Directors as additional compensation for their service as
Directors. In February 1995, the Board of Directors approved amendments to
the Directors Plan that are subject to stockholder approval at the Annual
Meeting of Stockholders. Prior to the amendment of the Directors Plan, new
Directors were automatically granted options to purchase 1,000 shares of
Common Stock annually immediately following the Corporation's Annual
Meeting of Stockholders. As amended, the Directors Plan would also provide
for the automatic grant every five years of options to purchase 1,500
shares of the common stock of any majority-owned subsidiary of the
Corporation that is "spunout" to outside investors.
The exercise price for options that have been granted to date under
the Directors Plan is determined by the average of the closing prices of
the Common Stock as reported on the American Stock Exchange for the five
trading days preceding and including the date of grant. Outstanding options
are exercisable six months after the date of grant and, if granted prior to
1995, generally expire seven years from the date of grant. An aggregate of
75,000 shares of Common Stock has been reserved for issuance under the
Directors Plan. As of July 1, 1995, options to purchase 16,700 shares of
Common Stock were outstanding under the Directors Plan at an average
exercise price of $8.44 per share, no shares of Common Stock had been
issued pursuant to the exercise of options and no options to purchase
shares of Common Stock had lapsed. Options to purchase 58,300 shares of
Common Stock were reserved and available for grant under the Directors Plan
as of July 1, 1995.
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STOCK OWNERSHIP
The following table sets forth the beneficial ownership of Common
Stock, as well as the common stock of Thermo Electron and Thermo
Remediation, as of July 1, 1995, with respect to (i) each person who was
known by the Corporation to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each Director, (iii) each
executive officer named in the summary compensation table under the heading
"Executive Compensation" and (iv) all Directors and executive officers as a
group.
Thermo Thermo Thermo
Name (1) Process Electron Remediation
Systems Corporation Inc. (4)
Inc. (3)
(2)
Thermo Electron 14,428,751 N/A 8,775,187
Corporation (5) (6)
John P. Appleton 216,895 107,421 63,000
George N. Hatsopoulos 55,326 2,333,620 7,500
John N. Hatsopoulos 62,212 387,646 40,182
Donald E. Noble 45,984 32,970 9,000
Jeffrey L. Powell 82,921 27,505 111,000
William A. Rainville 60,000 201,101 24,000
Warren M. Rohsenow 45,034 0
681
Bruce J. Taunt 43,762 2,494 18,000
Polyvios C. Vintiadis 6,809 0
0
All Directors and 631,995 3,208,538 287,682
executive officers as a
group (10 persons)
_____________
(1) Shares of Common Stock of the Corporation and of the common stock of
Thermo Electron and Thermo Remediation beneficially owned include shares
owned by the indicated person, by that person's spouse, by that person and
his spouse, and by that person and his spouse (or either of them) for the
benefit of minor children. Except as reflected in the footnotes to this
table, all share ownership includes sole voting and investment power.
(2) Shares of Common Stock beneficially owned by Dr. Appleton, Dr. G.
Hatsopoulos, Mr. J. Hatsopoulos, Mr. Noble, Mr. Powell, Mr. Rainville, Dr.
Rohsenow, Mr. Taunt, Mr. Vintiadis and all Directors and executive officers
as a group include 215,000, 40,000, 40,000 6,200, 63,000 60,000, 6,200,
42,000, 4,300 and 481,700 shares, respectively, that such person or group
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has the right to acquire within 60 days of July 1, 1995 through the
exercise of stock options. Shares beneficially owned by Mr. J. Hatsopoulos
and all Directors and executive officers as a group include 12,500 shares
that Mr. J. Hatsopoulos has the right to acquire within 60 days after July
1, 1995 through the exercise of a stock purchase warrant acquired in
connection with a private placement of securities by the Corporation and
one of the Corporation's subsidiaries on terms identical to terms granted
to unaffiliated investors. Shares beneficially owned by Dr. Appleton, Dr.
G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Powell, Mr. Taunt and all Directors
and executive officers as a group include 161, 167, 170, 86, 20 and 762
full shares, respectively, allocated through June 30, 1995 to accounts
maintained pursuant to Thermo Electron's Employee Stock Ownership Plan
("ESOP"). Shares beneficially owned by Mr. Noble, Dr. Rohsenow and Mr.
Vintiadis and all Directors and executive officers as a group include
16,744, 12,584, 2,509 and 31,837 full shares, respectively, allocated
through July 1, 1995 to their respective accounts maintained under the
Corporation's Deferred Compensation Plan for Directors. Except for Dr.
Appleton, who beneficially owned approximately 1.25% of the Common Stock
outstanding as of July 1, 1995, no Director or executive officer
beneficially owned more than 1% of the Common Stock outstanding as of July
1, 1995; all Directors and executive officers as a group beneficially owned
3.64% of the Common Stock outstanding as of such date.
(3) The shares of common stock of Thermo Electron shown in the table
reflect a three-for-two split of such stock effected on May 24, 1995.
Shares of the common stock of Thermo Electron beneficially owned by Dr.
Appleton, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Noble, Mr. Powell,
Mr. Rainville, Mr. Taunt and all Directors and executive officers as a
group include 61,573, 1,102,200, 297,880, 3,750, 25,850, 136,175, 1,875,
and 1,694,428 shares, respectively, that such person or members of the
group has the right to acquire within 60 days of July 1, 1995 through the
exercise of stock options. Shares beneficially owned by Dr. Appleton, Dr.
G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Powell, Mr. Taunt and all Directors
and executive officers as a group include 850, 1,386, 1,130, 236, 42 and
4,368 full shares, respectively, allocated through June 30, 1995 to
accounts maintained pursuant to the ESOP. Shares beneficially owned by Mr.
Noble and all Directors and executive officers as a group each include
26,943 shares allocated through July 1, 1995, to Mr. Noble's account
maintained pursuant to Thermo Electron's Deferred Compensation Plan for
Directors. Except for Dr. G. Hatsopoulos, who beneficially owned 2.81% of
the Thermo Electron common stock outstanding as of July 1, 1995, no
Director or executive officer beneficially owned more than 1% of such
common stock outstanding as of such date; all Directors and executive
officers as a group beneficially owned approximately 3.86% of the Thermo
Electron common stock outstanding as of July 1, 1995.
(4) The shares of common stock of Thermo Remediation shown in the table
reflect a three-for-two split of such stock effected on March 31, 1995.
Shares beneficially owned by Dr. Appleton, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Noble, Mr. Powell, Mr. Rainville, Mr. Taunt and all
Directors and executive officers as a group include 63,000, 7,500, 22,500,
4,500, 111,000, 22,500, 18,000 and 264,000 shares, respectively, that such
person or group has the right to acquire within 60 days after July 1, 1995
through the exercise of stock options. No Director or executive officer
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beneficially owned more than 1% of the common stock of Thermo Remediation
outstanding as of July 1, 1995; all Directors and executive officers as a
group beneficially owned 2.34% of such common stock outstanding as of such
date.
(5) Includes 495,160 shares of Common Stock that Thermo Electron or its
majority-owned subsidiaries have the right to acquire within 60 days of
July 1, 1995 through the conversion of the Corporation's 6-1/2% convertible
subordinated debentures due 1997. Thermo Electron owned 80.85% of the
Common Stock outstanding as of July 1, 1995. Thermo Electron's address is
81 Wyman Street, Waltham, Massachusetts 02254-9046. As of July 1, 1995,
Thermo Electron had the power to elect all of the members of the
Corporation's Board of Directors.
(6) Includes 167,411 shares of the common stock of Thermo Remediation
which Thermo Electron has the right to acquire within 60 days of July 1,
1995 through the conversion of Thermo Remediation's 4.875% convertible
subordinated debentures due 2000, and 8,581,376 of such shares which the
Corporaiton owns or has the right to acquire within 60 days through the
conversion of Thermo Remediation's 3.875% subordinated convertible notes
due 2000.
Disclosure of Certain Late Filings
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's Directors and executive officers, and beneficial owners of
more than 10% of the Common Stock, such as Thermo Electron, to file with
the Securities and Exchange Commission initial reports of ownership and
periodic reports of changes in ownership of the Corporation's securities.
Based upon a review of such filings, all Section 16(a) filing requirements
applicable to such persons were complied with during fiscal 1995, except in
the following instances. The initial report of ownership for one of the
Corporation's executive officers, Mr. Bruce J. Taunt, failed to include
20.2 shares of Common Stock allocated to his account under the Thermo
Electron ESOP, and failed to include 160 shares of Common Stock
beneficially held by trust. These deficiencies were corrected in an
amendment to his Form 3 on January 25, 1995, except for the trust holdings
which were reported on his Form 5 filed in May 1995. In addition, the 1994
Form 5 filed on behalf of Mr. John N. Hatsopoulos, a Director and the Chief
Financial Officer of the Corporation, failed to report three gifts of
shares of Common Stock aggregating 4,000 shares. The gifts were reported
in an amendment to Mr. Hatsopoulos' Form 5 filed on October 12, 1994.
Thermo Electron reported purchases of the Corporation's 6-1/2% Convertible
Subordinated Debentures late on two occasions. It reported the purchase in
March 1994 of $1,150,000 principal amount of such debentures in May 1994 on
its Form 5 and another purchase in March 1995 of $365,000 principal amount
of such debentures in an amendment filed seven days late. In addition, in
converting Form 4 records of the Corporation from a manual system to a
computer database, it was discovered that Thermo Electron failed to report
the sale in August 1992 of $250,000 principal amount of the Corporation's
6-1/2% Convertible Subordinated Debentures. The sale was reported on the
Form 5 filed by Thermo Electron in May 1995.
EXECUTIVE COMPENSATION
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The following table summarizes compensation for services to the
Corporation in all capacities awarded to, earned by or paid to the
Corporation's chief executive officer and its two other most highly
compensated executive officers for the last three fiscal years. No other
executive officers of the Corporation who held office during fiscal 1995
met the definition of "highly compensated" within the meaning of the
Securities and Exchange Commission's executive compensation disclosure
rules for such period.
The Corporation is required to appoint certain executive officers and
full-time employees of Thermo Electron as executive officers of the
Corporation, in accordance with the Thermo Electron Corporate Charter. The
compensation for these executive officers is determined and paid entirely
by Thermo Electron. The time and effort devoted by these individuals to the
Corporation's affairs is provided to the Corporation under the Corporate
Services Agreement between the Corporation and Thermo Electron.
Accordingly, the compensation for these individuals is not reported in the
following table.
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SUMMARY COMPENSATION TABLE
Annual Long Term
Compensation Compensation
Securities
Underlying All
Awards of Other
Options (No. Compensation
Name and Fiscal of Shares and (2)
Principal Position Year Salary Bonus Company)(1)
John P. Appleton(3) 1995 $146,250 $100,000(3) 30,000(TPI) $11,171
President 1994 $ 75,533 $80,000(3) 185,000(TPI)
and Chief Executive 63,000(THN) $11,115
Officer
Jeffrey L. Powell 1995 $108,000 $63,500 10,000(TPI) $6,828
Vice President 15,000(THN)
15,150(TMO)
1994 $101,600 $46,675(4) 13,000(TPI) $4,484
96,000(THN)
3,750(TMO)
1993 $97,963 $26,000 15,000(TPI)
3,375(TMO) $5,746
Bruce J. Taunt (5) 1995 $91,000 $28,000 4,000(TPI) $5,203
Vice President, 3,000(THN)
Finance and
Administration
(1) Options to purchase Common Stock of the Corporation awarded to
executive officers are followed by the designation "TPI". In addition,
executive officers of the Corporation have been granted options to purchase
common stock of Thermo Electron and certain of its other subsidiaries as
part of Thermo Electron's stock option program. Options have been granted
during the last three fiscal years to the named executive officers in the
following Thermo Electron companies: Thermo Electron (designated in the
table as TMO) and Thermo Remediation (designated in the table as THN). The
shares of common stock of Thermo Electron and Thermo Remediation shown in
the table reflect a three-for-two split of each such stock effected on May
24, 1995 and March 31, 1995, respectively. Dr. Appleton has served as an
officer of Thermo Electron since 1975 and has been granted options to
purchase shares of the common stock of Thermo Electron and certain of its
subsidiaries other than the Corporation from time to time by Thermo
Electron or such other subsidiaries. These options are not reported in
this table as they were granted as compensation for service to other Thermo
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Electron companies in capacities other than in his capacity as the
president and chief executive officer of the Corporation.
(2) Represents the amount of matching contributions made on behalf of the
executive officers participating in Thermo Electron's 401(k) plan.
(3) Dr. Appleton was appointed President and Chief Executive Officer of
the Corporation effective September 1, 1993. Dr. Appleton is also a vice
president of Thermo Electron. Reported in the table under "Annual
Compensation" are the total amounts paid to Dr. Appleton for his service in
all capacities to Thermo Electron companies since September 1, 1993. The
Human Resources Committee of the Board of Directors of the Corporation
reviews total annual cash compensation to be paid to Dr. Appleton from all
sources within the Thermo Electron organization and approves the allocation
of a percentage of annual cash compensation (salary and bonus) for the time
he devotes to the affairs of the Corporation. For 1995 and 1994, 85% and
23%, respectively, of Dr. Appleton's annual compensation was allocated to
the Corporation. Bonuses paid to Dr. Appleton reflect compensation
decisions based on calendar year performance, in accordance with Thermo
Electron's compensation practices for its officers.
(4) In fiscal 1994, the Corporation changed its compensation practices to
make compensation decisions based on fiscal year performance rather than
calendar year performance. As a consequence, the bonus paid to Mr. Powell
in fiscal 1994 related to a 15-month period from January 3, 1993 through
April 2, 1994.
(5) Mr. Taunt was appointed an executive officer of the Corporation on
November 1, 1994.
STOCK OPTIONS GRANTED DURING FISCAL 1995
The following table sets forth information concerning individual
grants of stock options made during fiscal 1995 to the Corporation's chief
executive officer and the other named executive officers. It has not been
the Corporation's policy in the past to grant stock appreciation rights,
and no such rights were granted during fiscal 1995.
Dr. Appleton has served as a vice president of Thermo Electron since
1975 and from time to time has been granted options to purchase common
stock of Thermo Electron and certain of its subsidiaries other than the
Corporation and Thermo Remediation. These options are not reported in this
table as they were granted as compensation for service to other Thermo
Electron companies in capacities other than in his capacity as the chief
executive officer of the Corporation.
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Option Grants in Fiscal 1995
Percent Potential
of Realizable
Total Value at
Number of Options Exer- Assumed Annual
Securities Granted cise Expira Rates of Stock
Name Underlying to Emp- Price - Price
Options loyees Per tion Appreciation
Granted in Share Date for Option
(1) Fiscal Term
Year
5% 10%
John 30,000(TPI) 4.6% $8.10 2/16/07 $193,393 $519,638
P. Appleton
Jeffrey L. 10,000(TPI) 1.5% $ 8.10 2/16/07 $ 64,464 $173,213
Powell 15,000(THN) 16.5% $11.43 2/16/07 $136,450 $366,634
150(TMO) 0.01%(2) $26.83 7/19/01 $ 1,638 $ 3,818
Bruce J. 4,000(TPI) 0.6% $ 8.10 2/16/07 $ 25,786 $69,285
Taunt 3,000(THN) 3.3% $11.43 2/16/07 $ 27,290 $73,327
(1) In addition to the grant of options to purchase Common Stock of the
Corporation (designated in the table as TPI), options have been granted
during fiscal 1995 to the named executive officers to purchase the common
stock of Thermo Electron (designated in the table as TMO) and Thermo
Remediation (designated in the table as THN). All of the options granted
during the fiscal year are immediately exercisable at the date of grant.
However, the shares acquired upon exercise are subject to repurchase by the
granting corporation at the exercise price if the optionee ceases to be
employed by the granting corporation or another Thermo Electron company.
The granting corporation may exercise its repurchase rights within six
months after the termination of the optionee's employment. The repurchase
rights lapse ratably over a five- to ten-year period, depending on the
option term, which may vary from seven to twelve years, provided that the
optionee continues to be employed by the Corporation or another Thermo
Electron company. The granting corporation may permit the holders of such
options to exercise options and to satisfy tax withholding obligations by
surrendering shares equal in fair market value to the exercise price or
withholding obligation. The shares of common stock of Thermo Electron and
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Thermo Remediation shown in the table reflect a three-for-two split of each
such stock effected on May 24, 1995 and March 31, 1995, respectively.
(2) These options were granted under stock option plans maintained by
Thermo Electron and accordingly are reported as a percentage of total
options granted to employees of Thermo Electron and its subsidiaries.
(3) Options to purchase 15,000 shares of the common stock of Thermo
Electron granted to Mr. Powell are subject to the same terms as described
in footnote (1), except that the repurchase rights of the granting
corporation generally do not lapse until the tenth anniversary of the grant
date. In the event of the employee's death or involuntary termination
prior to the tenth anniversary of the grant date, the repurchase rights of
the granting corporation shall be deemed to have lapsed ratably over a
five-year period commencing with the fifth anniversary of the grant date.
STOCK OPTIONS EXERCISED DURING FISCAL 1995
The following table reports certain information regarding stock option
exercises during fiscal 1995 and outstanding stock options held at the end
of fiscal 1995 by the Corporation's chief executive officer and the other
named executive officers. No stock appreciation rights were exercised or
were outstanding during fiscal 1995.
AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND FISCAL 1995 YEAR-END OPTION
VALUES
Number of Value of
Unexercised Unexercised
Options at In-the-
Shares Fiscal Money
Acquire Value Year-end Options
Name Company d on Realize(Exer- (Exercisabl
Exer- d cisable/ e/
cise Unexercisab Unexercisab
le) (1) le)
John P. Thermo Process -- -- 215,000/0(3) $ 19,500/0
Appleton (2) Thermo Remediation -- -- 63,000/0 $387,450/0
Jeffrey L. Thermo Process 2,160 $13,651 73,800/0(4) $126,328/0
Powell Thermo Remediation -- -- 111,000/0(4) $615,150/0
Thermo Electron 3,375 $63,686 25,650/0(5) $197,808/0
Thermo Fibertek -- -- 2,000/0 $ 21,000/0
Bruce J. Thermo Process -- -- 42,000/0(4) $ 49,960/0
Taunt Thermo Remediation -- -- 18,000/0 $ 97,200/0
Remediation -- -- 1,875/0 $ 21,747/0
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(1) All of the options reported outstanding at the end of the fiscal year
were immediately exercisable at the date of grant. However, the shares
acquired upon exercise of the options reported in the table are subject to
repurchase by the granting corporation at the exercise price if the
optionee ceases to be employed by such corporation or any other Thermo
Electron company. The granting corporation may exercise its repurchase
rights within six months after the termination of the optionee's
employment. The repurchase rights generally lapse ratably over a five- to
ten-year period, depending on the option term, which may vary from seven to
twelve years, provided that the optionee continues to be employed by the
Corporation or another Thermo Electron company.
(2) Dr. Appleton has served as a vice president of Thermo Electron since
1975 and holds unexercised options to purchase common stock of Thermo
Electron and certain of its subsidiaries other than the Corporation and
Thermo Remediation. These options are not reported here as they were
granted as compensation for service to other Thermo Electron companies in
capacities other than in his capacity as the chief executive officer of the
Corporation.
(3) In addition to the terms described in footnote (1) above, shares
acquired upon exercise of these options are restricted from resale until
Dr. Appleton's retirement.
(4) Of these options awarded to Mr. Powell and Mr. Taunt, options to
purchase 15,000 shares each are subject to the following terms in addition
to those described in footnote (1): In the event of the optionee's
voluntary resignation or discharge for cause prior to February 8, 1998, all
of the shares acquired upon exercise of these options are subject to
repurchase by the Corporation at the exercise price. In addition, all
shares acquired upon the exercise of these options are subject to
restrictions on resale until February 8, 1998.
(5) Options to purchase 15,000 shares of the common stock of Thermo
Electron granted to Mr. Powell are subject to the same terms as described
in footnote (1), except that the repurchase rights of the granting
corporation generally do not lapse until the tenth anniversary of the grant
date. In the event of the employee's death or involuntary termination
prior to the tenth anniversary of the grant date, the repurchase rights of
the granting corporation shall be deemed to have lapsed ratably over a
five-year period commencing with the fifth anniversary of the grant date.
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SEVERANCE AND OTHER AGREEMENTS
Thermo Electron has entered into severance agreements with several key
employees, including Dr. Appleton. These agreements provide severance
benefits if there is a change of control of Thermo Electron that is not
approved by the Board of Directors of Thermo Electron and the employee's
employment with Thermo Electron or the majority-owned subsidiary is
terminated, for whatever reason, within one year thereafter. For purposes
of the agreements, a change of control exists upon (i) the acquisition of
50% or more of the outstanding common stock of Thermo Electron by any
person without the prior approval of the board of directors of Thermo
Electron, (ii) the failure of the board of directors of Thermo Electron,
within two years after any contested election of directors or tender or
exchange offer not approved by the board of directors, to be constituted of
a majority of directors holding office prior to such event or (iii) any
other event that the board of directors of Thermo Electron determines
constitutes an effective change of control of Thermo Electron. The benefit
under these agreements is stated as an initial percentage which was
established by the Board of Directors of Thermo Electron and was generally
based upon the employee's age and length of service with Thermo Electron at
the time of severence. Benefits are to be paid over a five-year period.
The benefit to be paid in the first year is determined by applying this
percentage to the employee's highest annual total remuneration in any
12-month period during the preceding three years. This benefit is reduced
by 10% in each of the succeeding four years in which benefits are paid.
The initial percentage to be so applied to Dr. Appleton is 40.1%. Assuming
severance benefits would have been payable under such agreements as of July
1, 1995, Dr. Appleton would have received approximately $100,000 in the
first year thereof from Thermo Electron.
RELATIONSHIP WITH AFFILIATES
Thermo Electron has adopted a strategy of selling a minority interest
in subsidiary companies to outside investors as an important tool in its
future development. As part of this strategy, the Corporation has created
Thermo Remediation as a majority-owned publicly held subsidiary. From time
to time, Thermo Electron and its subsidiaries will create other
majority-owned subsidiaries as part of its spinout strategy. (The
Corporation and the other Thermo Electron subsidiaries are hereinafter
referred to as the "Thermo Subsidiaries".)
Thermo Electron and each of the Thermo Subsidiaries recognize that the
benefits and support that derive from their affiliation are essential
elements of their individual performance. Accordingly, Thermo Electron and
each of the Thermo Subsidiaries have adopted the Thermo Electron Corporate
Charter (the "Charter") to define the relationships and delineate the
nature of such cooperation among themselves. The purpose of the Charter is
to ensure that (1) all of the companies and their stockholders are treated
consistently and fairly, (2) the scope and nature of the cooperation among
the companies, and each company's responsibilities, are adequately defined,
(3) each company has access to the combined resources and financial,
managerial and technological strengths of the others, and (4) Thermo
Electron and the Thermo Subsidiaries, in the aggregate, are able to obtain
the most favorable terms from outside parties.
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To achieve these ends, the Charter identifies the general principles
to be followed by the companies, addresses the role and responsibilities of
the management of each company, provides for the sharing of group resources
by the companies and provides for centralized administrative, banking and
credit services to be performed by Thermo Electron. The services provided
by Thermo Electron include collecting and managing cash generated by
members, coordinating the access of Thermo Electron and the Thermo
Subsidiaries (the "Thermo Group") to external financing sources, ensuring
compliance with external financial covenants and internal financial
policies, assisting in the formulation of long-range financial planning and
providing other banking and credit services. Pursuant to the Charter,
Thermo Electron may also provide guarantees of debt or other obligations of
the Thermo Subsidiaries or may obtain external financing at the parent
level for the benefit of the Thermo Subsidiaries. In certain instances, the
Thermo Subsidiaries may provide credit support to, or on behalf of, the
consolidated entity or may obtain financing directly from external
financing sources. Under the Charter, Thermo Electron is responsible for
determining that the Thermo Group remains in compliance with all covenants
imposed by external financing sources, including covenants related to
borrowings of Thermo Electron or other members of the Thermo Group, and for
apportioning such constraints within the Thermo Group. In addition, Thermo
Electron is also responsible for establishing internal policies and
procedures. The cost of the services provided by Thermo Electron to the
Thermo Subsidiaries is covered under existing corporate services agreements
between Thermo Electron and each of the Thermo Subsidiaries.
The Charter presently provides that it shall continue in effect so
long as Thermo Electron and at least one Thermo Subsidiary participate. The
Charter may be amended at any time by agreement of the participants. Any
Thermo Subsidiary, including the Corporation, can withdraw from
participation in the Charter upon 30 days' prior notice. A subsidiary's
participation in the Charter will terminate in the event the subsidiary
ceases to be controlled by Thermo Electron or ceases to comply with the
Charter or the policies and procedures applicable to the Thermo Group. A
withdrawal from the Charter automatically terminates the corporate services
agreement and tax allocation agreement (if any) in effect between the
withdrawing company and Thermo Electron. The withdrawal from participation
does not terminate outstanding commitments to third parties made by the
withdrawing company, or by Thermo Electron or other members of the Thermo
Group, prior to the withdrawal. However, a withdrawing company is required
to continue to comply with all policies and procedures applicable to the
Thermo Group and to provide certain administrative functions mandated by
Thermo Electron so long as the withdrawing company is controlled by or
affiliated with Thermo Electron.
As provided in the Charter, the Corporation and Thermo Electron have
entered into a Corporate Services Agreement (the "Services Agreement")
under which Thermo Electron's corporate staff provides certain
administrative services, including certain legal advice and services, risk
management, certain employee benefit administration, tax advice and
preparation of tax returns, centralized cash management and certain
financial and other services to the Corporation. Prior to January 1, 1995,
the Corporation was assessed an annual fee equal to 1.25% of the
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Corporation's revenues for these services. Effective January 1, 1995, the
fee has been reduced to 1.2% of the Corporation's revenues. The fee is
reviewed annually and may be changed by mutual agreement of the Corporation
and Thermo Electron. During fiscal 1995, Thermo Electron assessed the
Corporation $1,653,000 in fees under the Services Agreement. Management
believes that the charges under the Services Agreement are reasonable and
that the terms of the Services Agreement are representative of the expenses
the Corporation would have incurred on a stand-alone basis. For items such
as employee benefit plans, insurance coverage and other identifiable costs,
Thermo Electron charges the Corporation based on charges attributable to
the Corporation. The Services Agreement automatically renews for successive
one-year terms, unless canceled by the Corporation upon 30 days' prior
notice. In addition, the Services Agreement terminates automatically in
the event the Corporation ceases to be a member of the Thermo Group or
ceases to be a participant in the Charter. In the event of a termination of
the Services Agreement, the Corporation will be required to pay a
termination fee equal to the fee that was paid by the Corporation for
services under the Services Agreement for the nine-month period prior to
termination. Following termination, Thermo Electron may provide certain
administrative services on an as-requested basis by the Corporation or as
required in order to meet the Corporation's obligations under Thermo
Electron's policies and procedures. Thermo Electron will charge the
Corporation a fee equal to the market rate for comparable services if such
services are provided to the Corporation following termination.
From time to time, the Corporation may transact business in the
ordinary course with other companies in the Thermo Group. All such
transactions are on terms comparable to those the Corporation would receive
from unaffiliated parties.
As of April 1, 1995, $30,802,000 of the Corporation's cash equivalents
were invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Corporation in effect lends excess cash to Thermo Electron,
which Thermo Electron collateralizes with investments principally
consisting of corporate notes, U.S. government agency securities, money
market funds, commercial paper and other marketable securities, in the
amount of at least 103% of such obligation. The Corporation's funds subject
to the repurchase agreement are readily convertible into cash by the
Corporation and have a maturity of three months or less. The repurchase
agreement earns a rate based on the Commercial Paper Composite Rate plus 25
basis points, set at the beginning of each quarter.
The Corporation leases or subleases two office and manufacturing
facilities from Thermo Electron. The total rental payments made to Thermo
Electron during fiscal year 1995 under these agreements was $537,000.
The Corporation and Thermo Electron entered into a development
agreement under which Thermo Electron agreed to fund up to $4,000,000 of
the direct and indirect costs of the Corporation's development of
soil-remediation centers. In exchange for this funding, the Corporation
granted Thermo Electron a royalty equal to approximately 3% of net revenues
from soil-remediation services performed at the centers developed under
this agreement. The royalty payments may cease if the amounts paid by the
Corporation yield a certain internal rate of return to Thermo Electron on
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the funds advanced to the Corporation under this agreement. The
Corporation paid Thermo Electron royalties of $432,000 in fiscal 1995.
In February 1995, the Corporation acquired all of the outstanding
capital stock of Engineering, Technology and Knowledge Corporation and its
subsidiary, Elson T. Killam Associate Inc. ("Killam") from Nord Est S.A., a
French industrial company, for $12,566,000 in cash and a zero coupon
promissory note with a then-present value of $22,300,000. In a related
transaction, certain members of Killam's senior management exchanged
options to purchase Killam's common stock for options to purchase the
Corporation's Common Stock and canceled other options in exchange for cash
payments in the aggregate amount of $1,922,000. The Corporation borrowed
the cash portion of the purchase price, including cash used to
collateralize the promissory note delivered to Nord Est S.A., from Thermo
Electron through the issuance of a $38,000,000 promissory note that bears
interest at the Commercial Paper Composite Rate as announced from time to
time by Merrill Lynch Capital Markets plus 25 basis points and is due June
1, 1997. As of April 1, 1995, the Corporation owed Thermo Electron an
aggregate of $56,116,000.
Effective April 2, 1995, the Corporation agreed to dissolve the Thermo
Terra Tech joint venture with Thermo Instrument Systems Inc. ("THI"),
another subsidiary of Thermo Electron, and to purchase the businesses
originally contributed to the joint venture by THI and formerly operated by
the joint venture from THI for $34,267,000 in cash. The purchase price was
based on the Corporation's determination (as approved by its Board of
Directors) of the fair market value of the businesses, and the terms of the
agreement for the purchase were determined by arms' length negotiation
among the parties. As a result of this transaction, the Corporation
increased its ownership in the businesses operated by the joint venture
from 51% to 100%. The Corporation borrowed the purchase price from Thermo
Electron through the issuance of a $35,000,000 promissory note that bears
interest at the Commercial Paper Composite Rate as announced from time to
time by Merrill Lynch Capital Markets plus 25 basis points and is due May
13, 1997.
Thermo Electron owned approximately 80.85% of the Corporation's
outstanding Common Stock on July 1, 1995.
