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
September 30, 1995
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 1-10573
THERMO POWER CORPORATION
(Exact name of Registrant as specified in its charter)
Massachusetts 04-2891371
(State or other jurisdiction of (I.R.S. Employer
Identification No.)
incorporation or organization)
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02254-9046
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (617)
622-1000
Securities registred pursuant to Section 12(b) of the Act:
Name of each exchange on which Title of each class
registered
American Stock Exchange Common Stock, $.10 par value
Securities registred 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,
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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 November 24, 1995, was
approximately $63,355,000.
As of November 24, 1995, the Registrant had 12,432,545 shares of
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for
the year ended September 30, 1995, are incorporated by reference
into Parts I and II.
Thermo Power Corporation
Amendment No. 1 on Form 10K/A to Annual Report on Form 10-K for
the fiscal year ended September 30, 1995
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.
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Amendment No. 1 on Form 10-K/A to be signed by the
undersigned, duly authorized.
THERMO POWER CORPORATION
By:/s/ Sandra L. Lambert
ATTACHMENT A
DIRECTORS AND DIRECTOR COMPENSATION
`
Set forth below are the names of the persons presently serving
as Directors, their ages, their offices in the Corporation, if any,
their principal occupation or employment for the past five years, the
length of their tenure as Directors and the names of other public
companies in which such persons hold directorships. Information
regarding their beneficial ownership of the Corporation's Common
Stock and of the common stock of its parent corporation, Thermo
Electron Corporation ("Thermo Electron"), is reported under the
caption "Stock Ownership."
MARSHALL J. Mr. Armstrong, 60, has been a Director and
ARMSTRONG Chairman of the Board of the Corporation
since December 1990. Mr. Armstrong was
appointed Chief Executive Officer in April
1991 and President in November 1992. He
has been a Vice President of Thermo
Electron since 1986. He is also a Director
of SatCon Technology Corporation and
Thermo Instrument Systems Inc., a
majority-owned subsidiary of Thermo
Electron.
PETER O. CRISP Mr. Crisp, 63, has been a Director of the
Corporation since 1985. Mr. Crisp has
been a General Partner of Venrock
Associates, a venture capital investment
firm, for more than five years. Mr. Crisp
is also a Director of American
Superconductor Corporation, Apple
Computer, Inc., Evans & Sutherland
Computer Corporation, Long Island Lighting
Company, Thermedics Inc., Thermo Electron,
ThermoTrex Corporation and United States
Trust Corporation.
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George N. Dr. Hatsopoulos, 69 has been a Director of
Hatsopoulos the Corporation since its inception. 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 TerraTech
Inc. and ThermoTrex Corporation. Dr.
Hatsopoulos is the brother of Mr. John N.
Hatsopoulos, a Director and Vice President
and Chief Financial Officer of the
Corporation.
JOHN N. HATSOPOULOS Mr. Hatsopoulos, 61, has been a Director
of the Corporation since 1990 and its Vice
President and Chief Financial Officer
since 1988. Mr. Hatsopoulos has been the
Chief Financial Officer of Thermo Electron
Corporation since 1988 and an Executive
Vice President of Thermo Electron
Corporation 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 TerraTech
Inc. and ThermoTrex Corporation. Mr. John
N. Hatsopoulos is the brother of Dr.
George N. Hatsopoulos, a Director of the
Corporation.
ROBERT C. HOWARD Mr. Howard, 65, has been a Director of the
Corporation since its inception. Mr.
Howard has been an Executive Vice
President of Thermo Electron since 1986.
He is also a Director of Thermedics Inc.,
Thermo Cardiosystems Inc., Thermo Ecotek
Corporation, Thermo Instruments Systems
Inc., ThermoLase Corporation and
ThermoTrex Corporation.
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DONALD E. NOBLE Mr. Noble, 81, has been a Director of the
Corporation since 1990. For more than 20
years, from 1959 to 1980, Mr. Noble served
as the chief executive officer of
Rubbermaid Incorporated, first with the
title of president and then as Chairman of
the Board. Mr. Noble is also a Director
of Thermo Electron, Thermo Fibertek Inc.
and Thermo TerraTech Inc.
PAUL E. TSONGAS Mr. Tsongas, 54, has been a Director of
the Corporation since 1987. Mr. Tsongas is
a partner in the law firm of Foley, Hoag &
Eliot, Boston, Massachusetts. From 1988 to
1991, Mr. Tsongas was Chairman of the
Massachusetts Board of Regents of Higher
Education. From 1979 to 1985, he was a
U.S. Senator from Massachusetts. He is
also a Director of Boston Edison
Corporation, Wang Laboratories Inc.,
Thermo Fibertek Inc. and Thermo TerraTech
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. Noble
(Chairman) and Mr. Crisp. The Audit Committee reviews the scope of
the audit with the Corporation's independent public accountants and
meets with them for the purpose of reviewing the results of the audit
subsequent to its completion. The present members of the Human
Resources Committee are Mr. Crisp (Chairman), Mr. Noble and Mr.
Tsongas. 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 five times, the Audit Committee
met twice and the Human Resources Committee met four 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
the fiscal year.
COMPENSATION of DIRECTORS
Effective January 1, 1995, Directors who are not employees of
the Corporation, of Thermo Electron or 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
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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. Prior to January 1, 1995, the
annual retainer paid to outside Directors was $2,000. Payment of
outside Directors' fees is made quarterly. Mr. Armstrong, Mr. J.
Hatsopoulos and Mr. Howard are all employees of Thermo Electron and
do not receive any cash compensation from the Corporation for their
services as Directors. Directors are also reimbursed for
out-of-pocket expenses incurred in attending such meetings.
Under the Deferred Compensation Plan for Directors (the
"Deferred Compensation Plan"), a Director has the right to defer
receipt of his cash fees until he ceases to serve as a Director, dies
or retires from his principal occupation. In the event of a change in
control or proposed change in control of the Corporation that is not
approved by the Board of Directors, deferred amounts become payable
immediately. Amounts so deferred 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 25,000
shares of Common Stock have been reserved for issuance under the
Deferred Compensation Plan. As of January 1, 1996, deferred units
equal to 21,175.73 shares of Common Stock were accumulated under the
Deferred Compensation Plan.
In 1991, the Corporation adopted a directors stock option plan
(the "Directors Plan"), which was amended in 1995. 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. Under the Directors Plan, outside
Directors are automatically granted options to purchase 1,000 shares
of the Common Stock annually. In addition, the Directors Plan
provides for the automatic grant every five years of options to
purchase 1,500 shares of the common stock of a majority-owned
subsidiary of the Corporation that is "spunout" to outside investors.
Outside Directors receive an annual grant of options to purchase
1,000 shares of Common Stock at the close of business on the date of
each Annual Meeting of Stockholders of the Corporation. Options
evidencing annual grants may be exercised at any time from and after
the six-month anniversary of the grant date of the option and prior
to the expiration of the option on the third anniversary of the grant
date. Shares acquired upon exercise of the options would be subject
to repurchase by the Corporation at the exercise price if the
recipient ceased to serve as a Director of the Corporation or any
other Thermo Electron company prior to the first anniversary of the
grant date.
In addition, outside Directors are automatically granted options
to purchase 1,500 shares of common stock of each majority-owned
subsidiary of the Corporation that is "spunout" to outside investors.
The grant occurs on the close of business on the date of the first
Annual Meeting of Stockholders next following the subsidiary's
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spinout, which is the first to occur of either an initial public
offering of the subsidiary's common stock or a sale of such stock to
third parties in an arms-length transaction. The options granted
vest and become exercisable on the fourth anniversary of the date of
grant, unless prior to such date the subsidiary's common stock is
registered under Section 12 of the Securities Exchange Act 1934, as
amended (''Section 12 Registration"). In the event that the
effective date of Section 12 Registration occurs before the fourth
anniversary of the grant date, the option will become immediately
exercisable and the shares acquired upon exercise will be subject to
restrictions on transfer and the right of the Corporation to
repurchase such shares at the exercise price in the event the
Director ceases to serve as a Director of the Corporation or another
Thermo Electron company. In the event of Section 12 Registration,
the restrictions and repurchase rights shall lapse or be deemed to
lapse at the rate of 25% per year, starting with the first
anniversary of the grant date. These options expire after five
years. Under this provision of the Directors Plan, outside Directors
were granted options to purchase 1,500 shares of common stock of
ThermoLyte Corporation at an exercise price of $10.00 per share on
March 14, 1995, the date of last year's Annual Meeting of
Stockholders.
The exercise price for options granted under the Directors Plan
is the average of the closing prices of the common stock as reported
on the American Stock Exchange (or other principal market on which
the common stock is then traded) for the five trading days preceding
and including the date of grant, or, if the shares are not then
traded, at the last price per share paid by third parties in an
arms-length transaction prior to the option grant. An aggregate of
25,000 shares of Common Stock has been reserved for issuance under
the Directors Plan.
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of
Common Stock, as well as the common stock of Thermo Electron and
ThermoLyte Corporation, a majority-owned subsidiary of the
Corporation, as of January 1, 1996, with respect to (i) each person
who was known by the Corporation to own beneficially more than 5% of
the
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utstanding 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 current
executive officers as a group.
Thermo Power Thermo ThermoLyte
Name (1) Corporation Electron Corporation
(2) Corporation (4)
(3)
Thermo Electron 7,853,606 N/A N/A
Corporation (5)
Marshall J. Armstrong 169,540 118,147 2,500
J. Timothy Corcoran 138,564 47,148 0
Peter O. Crisp 32,151 64,434 0
George N. Hatsopoulos 54,282 2,328,408 0
John N. Hatsopoulos 45,953 366,725 0
Robert C. Howard 68,281 134,593 2,500
Chester G. Janssens 89,324 47,831 0
Donald E. Noble 18,485 12,387 1,000
Ravinder K. Sakhuja 66,531 113,829 0
Paul E. Tsongas 22,216 0 1,000
All Directors and
current executive 722,697 3,348,697 7,000
officers as a group
(11 persons)
(1) Except as reflected in the footnotes to this table, shares of
Common Stock of the Corporation and of the common stock of Thermo
Electron and ThermoLyte Corporation beneficially owned consist of
shares owned by the indicated person, and all share ownership
includes sole voting and investment power.
(2) Shares beneficially owned by Mr. Armstrong, Mr. Corcoran, Mr.
Crisp, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Howard, Mr.
Janssens, Mr. Noble, Dr. Sakhuja, Mr. Tsongas and all Directors and
executive officers as a group include 165,000, 135,500, 5,600,
40,000, 40,000, 40,000, 81,650, 6,200, 20,000, 4,800 and 547,750
shares, respectively, that such person or group has the right to
acquire within 60 days of January 1, 1996 through the exercise of
stock options. Shares beneficially owned by Mr. Crisp, Mr. Noble, Mr.
Tsongas and all Directors and executive officers as a group include
8,458, 4,860, 7,856 and 21,174 full shares, respectively, that had
been allocated through January 1, 1996, to their respective accounts
maintained under the Corporation's Deferred Compensation Plan for
Directors. Shares beneficially owned by Mr.. Armstrong include 1,120
shares held by Mr. Armstrong's spouse and 1,000 shares held by Mr.
Armstrong's son. Shares beneficially owned by Dr. G. Hatsopoulos
include 114 shares held by Dr. G. Hatsopoulos' spouse. Shares
beneficially owned by Mr. J. Hatsopoulos include 2,600 shares each
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held by Mr. J. Hatsopoulos as custodian for the benefit of two of his
children. Shares beneficially owned by Mr. Tsongas include 2,078
shares each held by Mr. Tsongas as custodian for two of his minor
daughters. No Director or executive officer beneficially owned more
than 1% of the Common Stock outstanding as of January 1, 1996, other
than Mr. Armstrong, who beneficially owned 1.3%, and Mr. Corcoran,
who beneficially owned 1.1%, of the Common Stock outstanding as of
such date; all Directors and executive officers as a group
beneficially owned 5.5% 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 in May 1995.
Shares beneficially owned by Mr. Armstrong, Mr. Corcoran, Mr. Crisp,
Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Howard, Mr. Janssens, Mr.
Noble, Dr. Sakhuja and all Directors and executive officers as a
group include 71,350, 45,548, 5,250, 1,102,200, 297,880, 40,185,
17,099, 5,250, 48,150 and 1,698,037 shares, respectively, that such
person or group has the right to acquire within 60 days of January 1,
1996 through the exercise of stock options. Shares of the common
stock of Thermo Electron beneficially owned by Mr. Armstrong, Dr. G.
Hatsopoulos, Mr. J. Hatsopoulos, Mr. Howard, Mr. Janssens, Dr.
Sakhuja and all Directors and executive officers as a group include
1,600, 1,481, 1,225, 1,963, 890, 889 and 8,867 full shares,
respectively, allocated to their respective accounts maintained
pursuant to Thermo Electron's Employee Stock Ownership Plan. Shares
of the common stock of Thermo Electron beneficially owned by Mr.
Crisp, Mr. Noble and all Directors and executive officers as a group
include 29,421, 4,860 and 34,281 full shares, respectively, allocated
through January 1, 1996 to their respective accounts maintained
pursuant to Thermo Electron's deferred compensation plan for
directors. Shares beneficially owned by Dr. G. Hatsopoulos include
59,734 shares held by Dr. G. Hatsopoulos' spouse, 112,500 shares held
by a QTIP trust for the benefit of Dr. G. Hatsopoulos' spouse and
26,625 shares held by a family trust of which Dr. G. Hatsopoulos'
spouse is trustee. Shares beneficially owned by Mr. J. Hatsopoulos
include 435 shares each held by a family trust for two of Mr. J.
Hatsopoulos' children. As of January 1, 1996, no director or
executive officer beneficially owned more than 1% of Thermo Electron
common stock outstanding as of such date other than Dr. G.
Hatsopoulos, who beneficially owned 2.6% of such stock; all directors
and executive officers as a group beneficially owned approximately
3.6% of the Thermo Electron common stock outstanding as of January 1,
1996.
(4) Shares beneficially owned by Mr. Crisp do not include 100,000
shares owned in the aggregate by entities affiliated with Venrock
Associates, of which Mr. Crisp is both a general and limited partner
and for which Mr. Crisp disclaims beneficial ownership. Shares
beneficially owned by Mr. Tsongas include 1,000 shares owned by Mr.
Tsongas' minor daughter. No Director or executive officer
beneficially owned more than 1% of the Common Stock outstanding of
ThermoLyte as of January 1, 1996; all Directors and executive
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officers as a group beneficially owned less than 1% of the
outstanding common stock as of such date.
(5) Thermo Electron owned 63.1% of the Common Stock outstanding as
of January 1, 1996. Thermo Electron's address is 81 Wyman Street,
Waltham, Massachusetts 02254-9046. As of January 1, 1996, Thermo
Electron had the power to elect all of the members of the
Corporation's Board of Directors.
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 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.
A Form 4 for January 1995 filed on behalf of Thermo Electron was
amended five days after the original filing to include the
acquisition of 50,200 shares on the last day of the month, which were
omitted from the original filing. In addition, the Form 5 filings
for fiscal 1995 of Mr. Donald E. Noble and Mr. Peter O. Crisp,
Directors of the Corporation, were amended four days after the
original filing to include the quarterly acquisition of phantom stock
units on July 1, 1995 pursuant to the Corporation's deferred
compensation plan for Directors, which had been erroneously omitted
from the original filing.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes compensation for services to the
Corporation in all capacities awarded to, earned by or paid to the
Corporation's chief executive officer and three other most highly
compensated executive officers for the last three fiscal years (the
"named executive officers"). No other executive officer of the
Corporation met the definition of "highly compensated" within the
meaning of the Securities and Exchange Commission's executive
compensation disclosure rules.
The Corporation is required to appoint certain executive
officers and full-time employees of Thermo Electron as executive
officers of the Corporation, in accordance with the Thermo Electron
Corporate Charter. The compensation for these executive officers is
determined and paid entirely by Thermo Electron. The time and effort
devoted by these individuals to the Corporation's affairs is provided
to the Corporation under the Corporate Services Agreement between the
Corporation and Thermo Electron. Accordingly, the compensation for
these individuals is not reported in the following table.
SUMMARY COMPENSATION TABLE
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Annual Compensation Long Term
(1) Compensation
Securities All
Underlying other
Name and Fiscal Options (No. Compens-
Principal Salary Bonus of Shares and ation(3)
Marshall J. 1995 -- $100,000 -- $7,931
Armstrong (4) 1994 $154,500 $126,000 125,000 (THP) $10,557
ExecChief Officer
1993 $145,750 $105,000 -- $8,267
J. Timothy 1995 $145,507 $83,000 15,000 (THP) $6,750
Corcoran (5)
President 30,400(TMO)
1994 $129,000 $75,000 80,500 (THP) $6,643
3,900 (TMO)
1993 $102,263 $65,000 40,000 (THP) $6,894
11,248 (TMO)
Chester G. 1995 $145,125 $15,000 12,000 (THP) $7,365
Janssens 2,400 (TMO)
Vice 1994 $140,000 $35,000 29,650 (THP) $6,722
President;
President, 4,125 (TMO)
1993 $113,438 $20,000 2,700 (TMO) $6,831
Ravinder K. 1995 $145,125 $40,000 4,200 (TMO) $7,260
Sakhuja (6) 1994 $140,250 $45,000 20,000 (THP) $6,431
Vice
President; 5,700 (TMO) --
President, 1993 $138,000 $30,000 5,625 (TMO) $6,096
(1) Annual compensation for executive officers generally is reviewed
and determined on a calendar-year basis, even though the
Corporation's fiscal year ends in September. The salary data
presented here has been adjusted to reflect salary paid during the
Corporation's fiscal year, while the bonus represents the bonus paid
for performance during the calendar year in which the Corporation's
fiscal year-end occurred. Bonuses have not yet been determined for
calendar 1995; therefore, the bonus amounts shown for fiscal 1995 are
estimates.
(2) Mr. Armstrong has served as a vice president of Thermo Electron
since 1986 and has been granted options to purchase common stock of
Thermo Electron and its subsidiaries other than the Corporation from
time to time by Thermo Electron or its other subsidiaries. These
options are not reported here as they were granted as compensation
for service to other Thermo Electron companies in capacities other
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than his capacity as the chief executive officer of the Corporation.
Options granted by the Corporation are designated in the table as
"THP." During the past three fiscal years, Mr. Corcoran, Mr. Janssens
and Dr. Sakhuja have been granted options to purchase common stock of
Thermo Electron Corporation (designated in the table as "TMO") as
part of Thermo Electron's stock option program.
(3) Represents the amount of matching contributions made by the
individual's employer on behalf of executive officers participating
in the Thermo Electron 401(k) plan.
(4) Mr. Armstrong is a vice president and full-time employee of
Thermo Electron, but he devotes such time to the affairs of the
Corporation as the Corporation's needs reasonably require. The annual
cash compensation and other total compensation reported in the table
for Mr. Armstrong has been determined and paid by Thermo Electron.
The Corporation is allocated a percentage of Mr. Armstrong's annual
cash compensation (salary and bonus) for the time he devotes to the
affairs of the Corporation, which is reviewed and approved by the
Human Resources Committee of the Board of Directors of the
Corporation. For fiscal 1995, 1994 and 1993, the Corporation was
allocated approximately 60%, 60% and 40%, respectively, of Mr.
Armstrong's annual cash compensation.
(5) Mr. Corcoran was appointed president of the Corporation
effective April 1, 1995. Prior to that date, he served as a vice
president of the Corporation.
(6) Dr. Sakhuja resigned his responsibilities as a vice president of
the Corporation effective as of December 8, 1995.
STOCK OPTIONS GRANTED DURING FISCAL 1995
The following table sets forth information concerning individual
grants of stock options made by the Corporation and the other Thermo
Electron companies during fiscal 1995 to the 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.
Mr. Armstrong has been granted options to purchase common stock
of Thermo Electron and certain of its subsidiaries from time to time
as compensation for service to other Thermo Electron companies in
capacities other than in his capacity as chief executive officer of
the Corporation. Accordingly, options granted by Thermo Electron
companies other than the Corporation and its subsidiaries have not
been reported in the table.
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OPTION GRANTS In FISCAL 1995
Percent of
Total Potential
Options Realizable Value
Number of Granted to at Assumed Annual
Securities Employees Exercis Rates of Stock
Underlying in e Price Expir- Price
Name Options Fiscal Per ation Appreciation for
Granted (1) Year Share Date Option Term
5% 10%
J. 15,000 (THP) 6.4% $8.9512/15/06 $106,800 $287,100
Timothy
Corcoran
30,000 (TMO) 2.0%(2) $30.0711/28/06 $717,900 $1,929,000
400 (TMO) 0.03%(2) $37.2705/23/98 $2,348 $4,936
Chester 12,000 (THP) 5.2% $8.9512/15/01 $43,680 $101,880
G.
Janssens
2,400 (TMO) 0.2%(2) $37.2705/23/98 $14,088 $29,616
Ravinder 4,200 (TMO) 0.3%(2) $37.2705/23/98 $24,654 $51,828
K.
Sakhuja
(1) 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 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 very from seven to
twelve years, provided that the optionee continues to be employed by
the Corporation or another Thermo Electron company. Certain options
granted as a part of Thermo Electron's stock option program have
three-year terms, and the repurchase rights lapse in their entirety
on the second anniversary of the grant date. The granting
corporation may permit the holders of 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.
(2) These options were granted under stock option plans maintained
by Thermo Electron and accordingly are reported as a percentage of
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total options granted to employees of Thermo Electron and its public
subsidiaries.
STOCK OPTIONS EXERCISED DURING FISCAL 1995 and Fiscal Year-End Values
The following table reports certain information regarding stock
option exercises during fiscal 1995 and outstanding stock options of
the Thermo Electron companies held at the end of fiscal 1995 by the
named executive officers. No stock appreciation rights were exercised
or were outstanding during fiscal 1995.
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AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND FISCAL 1995
YEAR-END OPTION VALUES
No. of
Unexercised
Options at Value of
Shares Fiscal Unexercised
Acquire Value Year-end In-the-
Name Company d on Realized (Exercisabl Money
Exercis e/ Options
e Unexercisab
le) (1)
Marshall J. Thermo -- -- 165,000 /0 $1,098,6 /--
Armstrong (2) Power 75
J. Timothy Thermo -- -- 135,500/0 $964,263 /--
Corcoran Power
Thermo -- -- 45,548/0(3) $806,541 /--
Electron
Chester G. Thermo -- -- 81,650/0 $535,779 /--
Janssens Power
Thermo -- -- 3,000/0 $29,625 /--
Ecotek
Thermo 7,649 $158,077 17,099/0 $409,725 /--
Electron
Thermo -- -- 3,000/0 $35,625 /--
Fibertek
ThermoTrex -- -- 900/0 $26,708 /--
Ravinder K. Thermo -- -- 20,000/0 $135,500 /--
Sakhuja Power
Thermo -- -- 3,500/0 $34,563 /--
Ecotek
Thermo 6,975 $144,619 48,150/0 $1,245,0 /--
Electron 96
Thermo -- -- 3,000/0 $35,625 /--
Fibertek
ThermoTrex -- -- 2,700/0 $80,123 /--
(1) The shares of common stock shown in the table have been adjusted
to reflect the following stock splits: (i) a three-for-two split
effected by Thermo Electron in May 1995 and (ii) a three-for-two
split effected by Thermo Fibertek Inc. in September 1995. All of the
options reported outstanding at the end of the fiscal year were
immediately exercisable as of fiscal year-end. 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
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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) As an executive officer of Thermo Electron, Mr. Armstrong also
holds unexercised options to purchase common stock of Thermo Electron
and its subsidiaries other than the Corporation and ThermoLyte. These
options are not reported here as they were granted as compensation
for service to other Thermo Electron companies in capacities other
than his capacity as the chief executive officer of the Corporation.
(3) Options to purchase 30,000 shares of the common stock of Thermo
Electron granted to Mr. Corcoran are subject the same terms described
in footnote (1), except that the repurchase rights of Thermo Electron
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
Thermo Electron shall be deemed to have lapsed ratably over a
five-year period commencing with the fifth anniversary of the grant
date.
SEVERANCE AGREEMENTS
In 1988, Thermo Electron entered into severance agreements with
several of its key employees, including key employees of the
Corporation and other majority-owned subsidiaries. These agreements
provide severance benefits if there is a change of control of Thermo
Electron that is not approved by the Board of Directors of Thermo
Electron and the employee's employment with Thermo Electron or the
majority-owned subsidiary is terminated, for whatever reason, within
one year thereafter. For purposes of the agreement, a change of
control exists upon (i) the acquisition of 50% or more of the
outstanding common stock of Thermo Electron by any person without the
prior approval of the Board of Directors of Thermo Electron, (ii) the
failure of the Board of Directors of Thermo Electron, within two
years after any contested election of directors or tender or exchange
offer not approved by the Board of Directors, to be constituted of a
majority of directors holding office prior to such event or (iii) any
other event that the Board of Directors of Thermo Electron determines
constitutes an effective change of control of Thermo Electron. Each
of the recipients of these agreements would receive a lump-sum
benefit at the time of a qualifying severance (as defined below)
equal to the highest total cash compensation paid to the employee by
Thermo Electron or the majority-owned subsidiary in any 12-month
period during the three years preceding the qualifying severance. A
qualifying severance exists (i) if the employment of the executive
officer is terminated for any reason within one year after a change
in control of Thermo Electron or (ii) a group of directors of Thermo
Electron consisting of directors of Thermo Electron on the date of
the severance agreement or, if an election contest or tender or
exchange offer for Thermo Electron's common stock has occurred, the
directors of Thermo Electron immediately prior to such election
contest or tender or exchange offer, and any future directors who are
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nominated or elected by such directors, determines that any other
termination of the executive officer's employment should be treated
as a qualifying severance. The benefits to be provided are limited so
that the payments would not constitute so-called "excess parachute
payments" under applicable provisions of the Internal Revenue Code of
1986. Assuming that severance benefits would have been payable under
these agreements as of September 30, 1995, Mr. Armstrong and Dr.
Sakhuja would have received approximately $300,000 and $190,000,
respectively.
RELATIONSHIP WITH AFFILIATES
Thermo Electron has adopted a strategy of selling a minority
interest in subsidiary companies to outside investors as an important
tool in its future development. As part of this strategy, Thermo
Electron and certain of its subsidiaries have created several
privately and publicly held subsidiaries. The Corporation has created
ThermoLyte Corporation ("ThermoLyte") as a majority-owned 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 has adopted the
Thermo Electron Corporate Charter (the "Charter") to define the
relationships and delineate the nature of such cooperation among
themselves. The purpose of the Charter is to ensure that (1) all of
the companies and their stockholders are treated consistently and
fairly, (2) the scope and nature of the cooperation among the
companies, and each company's responsibilities, are adequately
defined, (3) each company has access to the combined resources and
financial, managerial and technological strengths of the others, and
(4) Thermo Electron and the Thermo Subsidiaries, in the aggregate,
are able to obtain the most favorable terms from outside parties.
To achieve these ends, the Charter identifies the general
principles to be followed by the companies, addresses the role and
responsibilities of the management of each company, provides for the
sharing of group resources by the companies and provides for
centralized administrative, banking and credit services to be
performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members,
coordinating the access of Thermo Electron and the Thermo
Subsidiaries (the "Thermo Group") to external financing sources,
ensuring compliance with external financial covenants and internal
financial policies, assisting in the formulation of long-range
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
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Subsidiaries. In certain instances, the Thermo Subsidiaries may
provide credit support to, or on behalf of, the consolidated entity
or may obtain financing directly from external financing sources.
Under the Charter, Thermo Electron is responsible for determining
that the Thermo Group remains in compliance with all covenants
imposed by external financing sources, including covenants related to
borrowings of Thermo Electron or other members of the Thermo Group,
and for apportioning such constraints within the Thermo Group. In
addition, Thermo Electron establishes certain internal policies and
procedures applicable to members of the Thermo Group. The cost of the
services provided by Thermo Electron to the Thermo Subsidiaries is
covered under existing corporate services agreements between Thermo
Electron and each of the Thermo Subsidiaries.
The Charter presently provides that it shall continue in effect
so long as Thermo Electron and at least one Thermo Subsidiary
participate. The Charter may be amended at any time by agreement of
the participants. Any Thermo Subsidiary, including the Corporation,
can withdraw from participation in the Charter upon 30 days' prior
notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be
controlled by Thermo Electron or ceases to comply with the Charter or
the policies and procedures applicable to the Thermo Group. A
withdrawal from the Charter automatically terminates the corporate
services agreement and tax allocation agreement (if any) in effect
between the withdrawing company and Thermo Electron. The withdrawal
from participation does not terminate outstanding commitments to
third parties made by the withdrawing company, or by Thermo Electron
or other members of the Thermo Group, prior to the withdrawal.
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, employee benefit administration, tax
advice and preparation of tax returns, centralized cash management
and financial and other services to the Corporation. The Corporation
was assessed an annual fee equal to 1.2% and 1.25% of the
Corporation's revenues for these services in calendar 1995 and for
the two-year period beginning calendar 1993, respectively. Beginning
January 1, 1996, the fee has been reduced to 1% 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 $1,250,000 in fees
under the Services Agreement. Management believes that the charges
under the Services Agreement are reasonable and that the terms of the
Services Agreement are fair to the Corporation. For items such as
employee benefit plans, insurance coverage and other identifiable
costs, Thermo Electron charges the Corporation based on charges
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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.
The Corporation provides contract administration and other
services and data processing services, respectively, to one
wholly-owned and four majority-owned subsidiaries of Thermo Electron,
which are charged based on actual usage. For these services, the
Corporation charged $209,000 in fiscal 1995 to such subsidiaries.
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 September 30, 1995, $22,381,000 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,
government and agency securities, money market funds, certificates of
deposit 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.
Thermo Electron owned approximately 60.9% of the Corporation's
outstanding Common Stock on January 17, 1996. Thermo Electron intends
for the foreseeable future to maintain at least 50% ownership of the
Corporation. This may require the purchase by Thermo Electron of
additional shares of the Corporation's Common Stock from time to time
as the number of outstanding shares issued by the Corporation
increases. These purchases may be made either on the open market or
directly from the Corporation.
The Corporation leases an office and laboratory facility from
Thermo Electron under an agreement expiring in September 1997. The
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rental payments made to Thermo Electron, net of sublease income,
during fiscal 1995 were $170,000.
In March 1995, the Corporation's ThermoLyte subsidiary sold
1,845,000 units, each unit consisting one share of ThermoLyte common
stock, $0.01 par value, and one redemption right at $10.00 per unit.
Venrock Associates, of which Mr. Peter O. Crisp, a Director of the
Corporation, is a general partner, purchased 100,000 units in the
offering. Holders of the common stock purchased in the offering will
have the option to require ThermoLyte to redeem in December 1998 or
1999 any or all of their shares at $10.00 per share. The redemption
rights are guaranteed on a subordinated basis by Thermo Electron.
The Corporation has agreed to reimburse Thermo Electron in the event
Thermo Electron is required to make a payment under the guarantee.
AA960290024
