<PAGE>
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
Transition Report Pursuant to Section 13 or 15(d)
----- of the Securities Exchange Act of 1934
Commission file number 0-18095
THE RANDERS GROUP INCORPORATED
(Exact name of Registrant as specified in its charter)
Delaware 38-2788025
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
570 Seminole Road
Norton Shores, Michigan 49444
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(781) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock, $.0001 par value American Stock Exchange
Emerging Company Marketplace
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 29, 1998, was approximately $3,158,000.
As of May 29, 1998, the Registrant had 14,115,682 actual shares and 127,146,733
pro forma shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended April 4, 1998, are incorporated by reference into Parts I and II.
<TABLE>
<CAPTION>
<S> <C>
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.
</TABLE>
<PAGE>
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.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 on
Form 10-K/A to be signed by the undersigned, duly authorized.
THE RANDERS GROUP INCORPORATED
By: /s/ Sandra L. Lambert
------------------------------------
Sandra L. Lambert
Secretary
ATTACHMENT A
ELECTION OF DIRECTORS
Five directors are to be elected at the Meeting, each to hold office until
his successor is chosen and qualified or until his earlier resignation, death or
removal.
Nominees for Directors
Set forth below are the names of the persons nominated 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 corporations, Thermo TerraTech Inc.
("Thermo TerraTech"), a provider of industrial- and infrastructure-support
services including environmental-liability management, infrastructure
engineering, laboratory testing and metallurgical services, and Thermo Electron
Corporation ("Thermo Electron"), a provider of diversified products and services
for biomedical, instrument and environmental markets, is reported under the
caption "Stock Ownership." All of the nominees are currently directors of the
Corporation.
- --------------------------------------------------------------------------------
John P. Appleton Dr. Appleton, 63, has been the chairman of the
board and a director of the Corporation since
November 1997. Dr. Appleton has been president,
chief executive officer and a director of Thermo
TerraTech since September 1993, and has served as
a vice president of Thermo Electron since 1975 in
various managerial capacities. He was the chief
executive officer of Thermo Remediation Inc. from
September 1993 to May 1997 and also serves as a
director of Thermo Remediation Inc.
- --------------------------------------------------------------------------------
Thomas R. Eurich Mr. Eurich, 52, has been a director of the
Corporation since its inception in 1976. He has
also been a vice president of the Corporation
since November 1997. Prior to the acquisition of
a majority interest in the Corporation by Thermo
TerraTech, Mr. Eurich served as its president and
chief executive officer from its inception in 1976
until November 1997 and May 1997, respectively.
- --------------------------------------------------------------------------------
Emil C. Herkert Mr. Herkert, 60, has been a director of the
Corporation since November 1997. He has also
served as president and chief executive officer of
the Corporation since November 1997 and May 1997,
respectively. In addition, he has served as a
vice president of Thermo TerraTech since May 1996,
as president of The Killam Group of Companies from
its acquisition by Thermo TerraTech in February
1995 until its merger into the Corporation in May
1997, and as president of Killam Associates from
1997 through May 1998.
- --------------------------------------------------------------------------------
Susan F. Tierney Dr. Tierney, 47, has been a director of the
Corporation since November 1997. Dr. Tierney is a
partner with the Economics Resource Group. From
March 1993 to May 1993, Dr. Tierney was a
consultant for the U.S. Department of Energy, and
from May 1993 to July 1995, she served as
Assistant Secretary for Policy for the U.S.
Department of Energy. Prior to that appointment,
Dr. Tierney served as Secretary of Environmental
Affairs for the Commonwealth of Massachusetts from
January 1991 to March 1993 and as Commissioner of
the Department of Public Utilities for the
Commonwealth of Massachusetts from 1988 to January
1991. Dr. Tierney is also a director of Thermo
Ecotek Corporation.
- --------------------------------------------------------------------------------
Polyvios C. Vintiadis Mr. Vintiadis, 62, has been a director of the
Corporation since November 1997. Mr. Vintiadis
has been the chairman and chief executive officer
of Towermarc Corporation, a real estate
development company, since 1984. Prior to joining
Towermarc, 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. and Thermo
TerraTech Inc.
- --------------------------------------------------------------------------------
1
<PAGE>
Committees of the Board of Directors and Meetings
The board of directors has established an audit committee and a human
resources committee, each consisting solely of outside directors. The present
members of the audit committee are Dr. Tierney (Chairman) and Mr. Vintiadis.
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 Dr. Tierney and Mr. Vintiadis (Chairman). 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-based compensation plans. The Corporation does not
have a nominating committee of the board of directors. The board of directors
met nine times, the audit committee met once and the human resources committee
met twice during fiscal 1997. Each director attended at least 75% of all
meetings of the board of directors and committees on which he served held during
fiscal 1997.
Compensation of Directors
Cash Compensation
Directors who are not employees of the Corporation, of Thermo Electron or
of any other company affiliated with Thermo Electron (also referred to as
"outside directors") receive an annual retainer of $2,000 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. Payment of directors' fees is made quarterly. Dr.
Appleton, Mr. Eurich and Mr. Herkert are all employees of Thermo Electron or its
subsidiaries and do not receive any cash compensation from the Corporation for
their services as directors. Directors are also reimbursed for out-of-pocket
expenses incurred in attending such meetings.
Deferred Compensation Plan for Directors
Under the Corporation's deferred compensation plan for directors (the
"Deferred Compensation Plan"), a director has the right to defer receipt of his
cash fees until he ceases to serve as a director, dies or retires from his
principal occupation. In the event of a change 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 acquisition, without the prior approval of
the board of directors, directly or indirectly, by any person of 50% or more of
the outstanding Common Stock or the outstanding common stock of Thermo TerraTech
or 25% or more of 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 TerraTech or 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 at the end of each quarter 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 125,000 shares of Common Stock have been reserved for issuance
under the Deferred Compensation Plan. As of April 4, 1998, deferred units equal
to 13,357.14 shares of Common Stock were accumulated under the Deferred
Compensation Plan.
Stock-based Compensation
Directors of the Corporation are also eligible for the grant of stock
options under the Corporation's equity incentive plan. The equity incentive
plan is administered by the human resources committee of the board of directors,
which determines the form and terms of stock-based awards to be granted. To
date, only nonqualified stock options have been granted under this plan. In
fiscal 1998, options to purchase 240,000 shares of the Common Stock were granted
to each of the outside directors of the Corporation at an exercise price of $.65
per share. These options may be exercised at any time prior to the expiration
of the option on the seventh anniversary of the grant date. Shares acquired
upon exercise of the options are subject to restrictions on transfer and right
of the Corporation to repurchase such shares at the exercise price if the
director ceases to serve as a director of the Corporation or any other Thermo
Electron company. The restrictions and repurchase rights lapse or are deemed to
have lapsed 20% per
2
<PAGE>
year, starting with the first anniversary of the grant date, provided the
director has continuously served as a director of the Corporation or any other
Thermo Electron company since the grant date.
Stock Ownership Policies for Directors
During fiscal 1998, the human resources committee of the board of directors
(the "Committee") established a stock holding policy for directors. The stock
holding policy requires each director to hold a minimum of 1,000 shares of
Common Stock. Directors are requested to achieve this ownership level by the
Annual Meeting of Stockholders in 2000. Directors who are also executive
officers of the Corporation are required to comply with a separate stock holding
policy established by the Committee in fiscal 1998, which is described in
"Committee Report on Executive Compensation - Stock Ownership Policies."
In addition, the Committee adopted a policy requiring directors to hold
shares of the Corporation's Common Stock equal to one-half of their net option
exercises over a period of five years. The net option exercise is determined by
calculating the number of shares acquired upon exercise of a stock option, after
deducting the number of shares that could have been traded to exercise the
option and the number of shares that could have been surrendered to satisfy tax
withholding obligations attributable to the exercise of the option. This policy
is also applicable to executive officers and is described in "Committee Report
on Executive Compensation - Stock Ownership Policies."
STOCK OWNERSHIP
NOTE: Share amounts of the Corporation's Common Stock reported below do not
reflect the proposed five-for-one reverse stock split of the Common Stock
previously announced on January 8, 1998, and subject to Stockholder approval at
a Special Meeting of Stockholders to be called for that purpose.
The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermo TerraTech and Thermo Electron, as of May 30,
1998, 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. All figures in the table reflect ownership prior to the
proposed five-for-one reverse stock split of the Common Stock that will be voted
on by the Stockholders at the Meeting.
While certain directors or executive officers of the Corporation are also
directors or executive officers of Thermo Electron or Thermo TerraTech, all such
persons disclaim beneficial ownership of the shares of Common Stock owned by
Thermo TerraTech or Thermo Electron.
<TABLE>
<CAPTION>
The Randers Group Thermo Electron Thermo TerraTech
Name (1) Inc. (2) Corporation (3) Inc. (4)
-------- ------- --------------- --------
No. of % of No. of % of No. of % of
Shares Class Shares Class Shares Class
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Thermo Electron Corporation (5) 8,775,000 62.2 N/A N/A
John P. Appleton 600,000 4.1 145,309 * 297,039 1.5
Nicholas M. DeNichilo 300,000 2.1 10,175 * 33,000 *
Thomas R. Eurich 1,017,506 7.1 0 * 0 *
Emil C. Herkert 1,200,000 7.8 39,600 * 187,500 *
Susan F. Tierney 246,678 1.7 0 * 0 *
Polyvios C. Vintiadis 246,678 1.7 2,500 * 13,454 *
All directors and current executive
officers as a group (8 persons) 3,890,862 26.5 1,041,189 * 602,547 3.1
</TABLE>
*Reflects ownership of less than 1.0% of the Common Stock outstanding as of May
30, 1998.
3
<PAGE>
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for
the benefit of minor children and all share ownership includes sole voting
and investment power.
(2) Shares of Common Stock beneficially owned by Dr. Appleton, Mr. DeNichilo,
Mr. Eurich, Mr. Herkert, Dr. Tierney, Mr. Vintiadis and all directors and
executive officers as a group include 600,000, 300,000, 270,000, 1,200,000,
240,000, 240,000 and 3,130,000 shares, respectively, that such person or
group has the right to acquire within 60 days of May 30, 1998, through the
exercise of stock options. Shares beneficially owned by Dr. Tierney, Mr.
Vintiadis and all directors and executive officers as a group include
6,678, 6,678 and 13,356 full shares, respectively, that had been allocated
through May 30, 1998, to their respective accounts maintained under the
Corporation's Deferred Compensation Plan for Directors.
(3) Shares of the common stock of Thermo Electron beneficially owned by Dr.
Appleton, Mr. DeNichilo, Mr. Herkert and all directors and executive
officers as a group include 113,532, 9,750, 38,100 and 909,054 shares,
respectively, that such person or group has the right to acquire within 60
days of May 30, 1998, through the exercise of stock options. Shares
beneficially owned by Dr. Appleton and all directors and executive officers
as a group include 1,615 and 5,077 full shares allocated through May 30,
1998, to their respective accounts maintained pursuant to Thermo Electron's
employee stock ownership plan, of which the trustees, who have investment
power over its assets, were as of May 30, 1998, executive officers of
Thermo Electron ("ESOP").
(4) Shares of the common stock of Thermo TerraTech beneficially owned by Dr.
Appleton, Mr. DeNichilo, Mr. Vintiadis and all directors and executive
officers as a group include 275,000, 33,000, 7,300 and 360,300 shares,
respectively, that such person or group has the right to acquire within 60
days of May 30, 1998, through the exercise of stock options. Shares
beneficially owned by all directors and executive officers as a group
include 12,500 shares that such group has the right to acquire within 60
days of May 30, 1998, through the exercise of stock purchase warrants
acquired in connection with private placements of the securities of Thermo
TerraTech on terms identical to terms granted to unaffiliated investors.
Shares beneficially owned by Dr. Appleton and all directors and executive
officers as a group include 305 and 923 full shares, respectively,
allocated through May 30, 1998, to accounts maintained pursuant to the
ESOP. Shares beneficially owned by Mr. Vintiadis and all directors and
executive officers as a group include 6,154 full shares allocated through
May 30, 1998, to Mr. Vintiadis's account maintained pursuant to Thermo
TerraTech's deferred compensation plan for directors.
(5) As of May 30, 1998, Thermo Electron Corporation beneficially owned
approximately 62.2% of the outstanding Common Stock, of which approximately
53.3% is owned through its majority-owned subsidiary Thermo TerraTech Inc.
Thermo Electron's address is 81 Wyman Street, Waltham, Massachusetts. As of
May 30, 1998, Thermo Electron had the power to elect all of the members of
the Corporation's board of directors.
4
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
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 and Thermo TerraTech, 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 1997, except in the
following instances. Mr. Emil C. Herkert, a director and executive officer of
the Corporation, filed his Form 3 late. Thermo Electron filed two Forms 4 late,
reporting a total of four transactions associated with the grant of options to
purchase Common Stock granted to employees under its stock option program.
EXECUTIVE COMPENSATION
NOTE: Share amounts of the Corporation's Common Stock reported below do not
reflect the proposed five-for-one reverse stock split of the Common Stock
previously announced on January 8, 1998, and subject to Stockholder approval at
a Special Meeting of Stockholders to be called for that purpose.
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 its two other most highly compensated executive
officers (i) for the last full fiscal year from March 30, 1997 through April 4,
1998 ("fiscal 1998"), (ii) for the three-month period from January 1, 1997
through March 29, 1997 ("fiscal 1997"), reflecting a change in the Corporation's
fiscal year-end to the 52- or 53-week period ending on the Saturday nearest
March 30, and (iii) for the preceding two full fiscal years from January 1, 1996
to December 31, 1996 ("fiscal 1996"), and from January 1, 1995 to December 31,
1995 ("fiscal 1995"). 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.
5
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
- ---------------------------------------------------------------------------------------------------------------
Long Term
Compensation
------------
Securities Underlying All Other
Name and Fiscal Annual Compensation Options (No. of Shares Compensation
-------------------
Principal Position Year Salary Bonus and Company) (2) (3)
------------------ ---- ------ ----- ---------------- ---
<S> <C> <C> <C> <C> <C>
Emil C. Herkert (4) 1998 $244,186 $0 (1) 1,200,000 (RGI) $19,522
President & CEO 300 (TMO)
2,000 (MKA)
2,000 (ONX)
2,000 (TDX)
1,000 (TISI)
2,000 (TRIL)
1,500 (VIZ)
2,000 (TRCC)
- ---------------------------------------------------------------------------------------------------------------
Thomas R. Eurich (5) 1998 $145,000 $0 (1) 270,000 (RGI) $500
Vice President 1997 $33,250 -- (6) -- --
1996 $132,000 -- -- --
1995 $129,500 -- -- --
- ---------------------------------------------------------------------------------------------------------------
Nicholas M. DeNichilo (7) 1998 $142,000 $45,000 300,000 (RGI) $11,161
Vice President
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Herkert and Mr. Eurich have elected to forego their bonuses for fiscal
1998 in light of the Corporation's operating and stock price performance in
fiscal 1998.
(2) In addition to grants of options to purchase shares of Common Stock of the
Corporation (designated in the table as RGI), the named 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
fiscal year to the named executive officers in the following Thermo
Electron companies: Thermo Electron (designated in the table as TMO),
Metrika Systems Corporation (designated in the table as MKA), ONIX Systems
Inc. (designated in the table as ONX), Thermedics Detection Inc.
(designated in the table as TDX), Thermo Information Solutions Inc.
(designated in the Table as TISI), Thermo Trilogy Corporation (designated
in the table as TRIL), Thermo Vision Corporation (designated in the table
as VIZ) and Trex Communications Corporation (designated in the table as
TRCC).
(3) Represents the amount of matching contributions and contributions in lieu
of contributions to the Killam Associates Defined Benefit Retirement Plan
(see "Executive Compensation - Defined Benefit Retirement Plan") made by
the individual's employer on behalf of named executive officers
participating in the Elson T. Killam Savings and Investment Plan, in the
case of Messrs. Herkert and DeNichilo, and the amount of matching
contributions to The Randers Group Incorporated 401(k) Profit Sharing Plan,
in the case of Mr. Eurich.
(4) The Corporation became a majority-owned subsidiary of Thermo TerraTech on
May 12, 1997. Mr. Herkert was appointed chief executive officer of the
Corporation on May 12, 1997 and was appointed to the additional position of
president of the Corporation on November 19, 1997. The annual cash
compensation (salary and bonus) reported in the table for Mr. Herkert
represents the amount paid by the Corporation and all other Thermo Electron
entities for his services to such entities during fiscal 1998. Mr. Herkert
has been employed by Thermo TerraTech since February 1995 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
6
<PAGE>
to time by Thermo Electron or such other subsidiaries. These options are
not reported here as they were granted as compensation for service to
Thermo Electron companies in capacities other than in his capacity as the
president and chief executive officer of the Corporation.
(5) Mr. Eurich was appointed vice president of the Corporation on November 19,
1997. Prior to that time, Mr. Eurich served as chief executive officer of
the Corporation until May 12, 1997, and as president of the Corporation
until November 19, 1997.
(6) The Corporation changed its fiscal year-end to March from December in 1997,
and as a consequence, the salary data for fiscal 1997 reflects salary paid
during the three-month period from January 1, 1997 to March 29, 1997.
Salary data for the subsequent fiscal year reflects salary paid during the
Corporation's full fiscal year.
(7) Mr. DeNichilo was appointed vice president of the Corporation on November
19, 1997. The annual compensation (salary and bonus) reported in the table
for Mr. DeNichilo represents the amount paid by the Corporation and other
Thermo TerraTech for his services to such entities during fiscal 1998.
Stock Options Granted During Fiscal 1998
The following table sets forth information concerning individual grants of
stock options made during fiscal 1998 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 1998.
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.
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. During
fiscal 1998, no options to purchase Common Stock were granted to Dr. Appleton.
<TABLE>
<CAPTION>
Option Grants in Fiscal 1998
- ------------------------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Total Options Price Appreciation for
Number of Securities Granted to Exercise Option Term (2)
Underlying Options Employees in Price Per Expiration ---------------
Name Granted (1) Fiscal Year Share Date 5% 10%
---- ----------- ------------ ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Emil C. Herkert 1,200,000 (RGI) 22.03% $0.65 12/12/04 $312,000 $744,000
300 (TMO) 0.02%(3) $34.20 6/3/00 $1,617 $3,396
2,000 (MKA) 0.47%(3) $14.23 1/21/05 $11,580 $27,000
2,000 (ONX) 0.30%(3) $14.25 1/21/05 $11,600 $27,040
2,000 (TDX) 0.32%(3) $9.56 1/21/05 $7,780 $18,140
1,000 (TISI) 0.27%(3) $10.00 1/21/05 $4,070 $9,490
2,000 (TRIL) 0.99%(3) $8.25 1/21/05 $6,720 $15,660
1,500 (VIZ) 0.35%(3) $7.25 1/21/05 $4,425 $10,320
2,000 (TRCC) 0.37%(3) $4.00 1/21/05 $3,260 $7,580
- ------------------------------------------------------------------------------------------------------------------------------
Thomas R. Eurich 270,000 (RGI) 4.96% $0.65 12/12/04 $70,200 $167,400
- ------------------------------------------------------------------------------------------------------------------------------
Nicholas M. DeNichilo 300,000 (RGI) 5.51% $0.65 12/12/04 $78,000 $186,000
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In addition to the grant of options to purchase Common Stock of the
Corporation (designated in the table as RGI), options have been granted
during fiscal 1998 to the named executive officers as part of Thermo
Electron's stock option program to purchase the common stock of Thermo
Electron (designated in the table
7
<PAGE>
as TMO), Metrika Systems Corporation (designated in the table as MKA), ONIX
Systems Inc. (designated in the table as ONX), Thermedics Detection Inc.
(designated in the table as TDX), Thermo Information Solutions Inc.
(designated in the table as TISI), Thermo Trilogy Corporation (designated
in the table as TRIL), Thermo Vision Corporation (designated in the table
as VIZ) and Trex Communications Corporation (designated in the table as
TRCC). All of the options granted during the fiscal year are immediately
exercisable at the date of grant, except options to purchase the common
stock of Thermo Information Solutions Inc., Thermo Trilogy Corporation and
Trex Communications Corporation, which are not exercisable until the
earlier of (i) 90 days after the effective date of the registration of the
company's common stock under Section 12 of the Securities and Exchange Act
of 1934 and (ii) six years from the date of grant. In all cases, 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
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. For publicly traded companies,
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. For companies whose shares
are not publicly traded, the repurchase rights lapse in their entirety on
the sixth anniversary of the date of grant. The granting corporation may
permit the holders of options to exercise options and to satisfy tax
withholding obligations by surrendering shares equal in fair market value
to the exercise price or withholding obligation.
(2) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5%
and 10% compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on the future performance of the common stock of the
applicable corporation, the optionee's continued employment through the
option period and the date on which the options are exercised.
(3) These options were granted under stock option plans maintained by Thermo
Electron or its subsidiaries other than the Corporation as part of Thermo
Electron's compensation program and accordingly are reported as a
percentage of total options granted to employees of Thermo Electron and its
subsidiaries.
Stock Options Exercised During Fiscal 1998 and Fiscal Year-End Option Values
The following table reports certain information regarding stock option
exercises during fiscal 1998 and outstanding stock options held at the end of
fiscal 1998 by the Corporation's chief executive officer and the other named
executive officers. No stock appreciation rights were exercised or were
outstanding during fiscal 1998.
8
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises In Fiscal 1998 And Fiscal 1998 Year-End Option Values
- ------------------------------------------------------------------------------------------------------------------------------------
Number of
Unexercised
Options at Fiscal Value of
Shares Year-End Unexercised
Acquired on Value (Exercisable/ In-the-Money
Name Company Exercise Realized (1) Unexercisable) (2) Options
---- ------- --------- ------------ ------------------ -------
<S> <C> <C> <C> <C> <C>
Emil C. Herkert (3) Randers Group Inc. -- -- 1,200,000 /-- $120,000 /--
Thermo Electron -- -- 38,100 /-- (4) $607,591 /--
Metrika Systems -- -- 2,000 /-- $2,666 /--
Onix Systems -- -- 2,000 /-- $0 /--
Thermedics Detection -- -- 2,000 /-- $3,880 /--
Thermo Information Solutions -- -- -- /1,000 -- /$0(5)
Thermo TerraTech 187,500 $1,613,550 -- /-- -- /--
Thermo Trilogy -- -- -- /2,000 -- /$0(5)
Thermo Vision -- -- 1,500 /-- $188 /--
Trex Communications -- -- -- /2,000 -- /$0(5)
- -----------------------------------------------------------------------------------------------------------------------------------
Thomas R. Eurich Randers Group Inc. -- -- 270,000 /-- $27,000 /--
- ------------------------------------------------------------------------------------------------------------------------------------
Nicholas M. DeNichilo Randers Group Inc. -- -- 300,000 /-- $30,000 /--
Thermo Electron 1,500 $28,295 9,750 /-- $191,832 /--
Thermo TerraTech 6,000 $23,028 33,000 /-- $0 /--
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the option
because in many cases the shares are not sold on exercise but continue to
be held by the executive officer exercising the option. The amounts shown
represent the difference between the option exercise price and the market
price on the date of exercise, which is the amount that would have been
realized if the shares had been sold immediately upon exercise.
(2) All of the options reported outstanding at the end of the fiscal year are
immediately exercisable as of fiscal year-end, except options to purchase
the common stock of Thermo Information Solutions Inc., Thermo Trilogy
Corporation and Trex Communications Corporation, which are not exercisable
until the earlier of (i) 90 days after the effective date of the
registration of that company's common stock under Section 12 of the
Securities Exchange Act of 1934 and (ii) six years from the grant date. In
all cases, 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 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. For publicly traded
companies, 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. For companies whose shares
are not publicly traded, the repurchase rights lapse in their entirety on
the sixth anniversary of the grant date.
(3) Mr. Herkert has served as a vice president of Thermo TerraTech since 1996
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 here as they were granted as compensation for
service to Thermo Electron companies in capacities other than in his
capacity as the chief executive officer of the Corporation.
(4) Options to purchase 22,500 shares of the common stock of Thermo Electron
granted to Mr. Herkert 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
9
<PAGE>
rights of the granting corporation shall be deemed to lapse ratably over a
five-year period commencing with the fifth anniversary of the grant date.
(5) No public market existed for the shares underlying these options as of
April 4, 1998. Accordingly, no value in excess of exercise price has been
attributed to these options.
Defined Benefit Retirement Plan
The Corporation's Killam Associates subsidiary maintains a Defined Benefit
Retirement Plan (the "Plan") for eligible U.S. employees. Accrued benefits
under the Plan were frozen as of March 31, 1995. Mr. Herkert and Mr. DeNichilo
are both participants in the Plan. The following table sets forth the estimated
annual benefits payable under the Plan upon retirement in specified compensation
and years-of-service classifications. The estimated benefits reflect the
statutory limits on compensation that can be recognized for Plan purposes. The
limit at March 31, 1995 was $150,000 per year.
Annual Years of Service
Compensation 15 20 25 30 35
------------ -- -- -- -- --
$100,000 $20,064 $26,752 $33,440 $40,128 $46,817
125,000 25,427 33,902 42,378 50,853 59,329
150,000 20,789 41,052 51,315 61,578 71,842
Each eligible employee receives a monthly retirement benefit, beginning at
normal retirement age (65), although benefits are not reduced if the employee
retires after reaching 62. Before the benefit was frozen, it provided 1.05% of
an employee's Average Final Compensation (as defined below) in excess of the
average of the Social Security wage bases, multiplied by his years of service
(up to a maximum of 35 years). Benefits are reduced for retirement before age
62. Average Final Compensation is the average total compensation for the 5
consecutive years out of the last 15 years prior to 1995 which produce the
highest average. The frozen annual accrued benefit for Mr. Herkert is $93,332
(based on the compensation limit of $235,840 that was in effect in 1993) and for
Mr. DeNichilo is $32,638. The Plan benefits shown are payable during the
employee's lifetime unless the employee elects another form of benefit that
provides death protection.
In order to replace the benefit from the Plan, which was frozen March 31,
1995, Killam Associates provides a pension contribution as part of its Elson T.
Killam Savings and Investment Plan (the "Killam Plan"). The pension
contribution is based on age according to the following schedule and is fully
vested at the time of the contribution.
Age Percentage of Compensation
--- --------------------------
Less than 30 1.0%
30-34 1.5%
35-39 2.0%
40-44 3.0%
45-49 4.0%
50-54 7.0%
55-59 10.0%
60 or older 15.0%
Compensation that can be recognized for purposes of the Killam Plan is
limited to $160,000 in accordance with the statutory limitations. The
allocation in 1997 for Mr. Herkert was $16,000, and for Mr. DeNichilo was
$6,400.
10
<PAGE>
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 TerraTech has created the
Corporation as a publicly held subsidiary, and Thermo Electron and certain of
its subsidiaries have created several other privately and publicly held
subsidiaries. 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 majority-owned 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 mutual 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.
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 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 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. In
addition, 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. The Corporation was assessed an annual fee equal to 1.0% of the
Corporation's revenues for these services for calendar 1997 beginning on May 14,
1997. The annual fee has been reduced to 0.8%
11
<PAGE>
of the Corporation's total revenues for calendar 1998. The fee is reviewed
annually and may be changed by mutual agreement of the Corporation and Thermo
Electron. During fiscal 1998, Thermo Electron assessed the Corporation $679,000
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 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.
As of April 4, 1998, $8,713,000 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 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. The repurchase agreement earns a rate based on
the 90-day Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter.
From time to time, the Corporation may transact business with other
companies in the Thermo Group.
At April 4, 1998, the Corporation owed Thermo Electron and its other
subsidiaries an aggregate of $319,000 for amounts due under the Corporate
Services Agreement and related administrative charges, for other products and
services, and for miscellaneous items, net of amounts owed to the Corporation by
Thermo Electron and its other subsidiaries for miscellaneous items. The largest
amount of net indebtedness owed by Thermo Electron and its other subsidiaries to
the Corporation since March 29, 1997 was $1,426,000. These amounts do not bear
interest and are expected to be paid in the normal course of business.
Stock Holding Assistance Plan
In fiscal 1998, the Corporation adopted a stock holding policy which
requires its chief executive officer to acquire and hold a minimum number of
shares of Common Stock. In order to assist the chief executive officer in
complying with the policy, the Corporation also adopted a stock holding
assistance plan under which it may make interest-free loans to the chief
executive officer to enable such officer to purchase the Common Stock in the
open market. Loans will be repaid upon the earlier of demand or the fifth
anniversary of the date of the loan, unless otherwise authorized by the Human
Resources Committee of the board of directors. No such loans were outstanding
in fiscal 1998.
12
<PAGE>
[LINE GRAPH APPEARS HERE]
DATE RGI AMEX PEER GROUP
- ---- --- ---- ----------
5/12/97 100 100 100
4/3/98 105 129 108
