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 28, 1996
___ Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 1-13572
THERMO ECOTEK CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 04-3072335
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
245 Winter Street
Waltham, Massachusetts 02254-9046
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 622-1500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of Exchange on which registered
----------------------------------------------------------------
Common Stock, $.10 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to the filing requirements for at least
the past 90 days. Yes X No
----- ----
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference into Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by
nonaffiliates of the Registrant as of November 22, 1996 , was
approximately $59,897,000.
PAGE
<PAGE>
As of November 22, 1996 , the Registrant had 24,424,499 shares of
Common Stock outstanding.
PAGE
<PAGE>
Thermo Ecotek Corporation Amendment No. 1
on Form 10K/A to Annual Report on Form 10-K
for the fiscal year ended September 28, 1996
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Fiscal 1996 Annual Report to
Shareholders for the year ended September 28, 1996 , are
incorporated by reference into Parts I and II.
Part III, Item 10. Directors and Executive
Officers of the Registrant.
--------------------------
Part III, Item 11. Executive Compensation.
----------------------
Part III, Item 12. Security Ownership of Certain
Beneficial Owners and Management.
--------------------------------
Part III, Item 13. Certain Relationships and
-----------------------------------
Transactions.
------------
The information required under these items, originally to be
incorporated by reference from the Registrant's definitive proxy
statement to be filed with the Commission pursuant to Regulation
14A, not later than 120 days after the close of the fiscal year,
is contained in the following Attachment A, which is included
herein and made a part of this Annual Report on Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Amendment No. 1 on Form 10-K/A to be signed by the
undersigned, duly authorized.
THERMO ECOTEK CORPORATION
By: /s/ Sandra L. Lambert
-----------------------
Sandra L. Lambert
Secretary
PAGE
<PAGE>
ATTACHMENT A
DIRECTORS AND DIRECTOR COMPENSATION
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
corporation, Thermo Electron Corporation ("Thermo Electron"), is
reported under the caption "Stock Ownership." All of the nominees
are currently Directors of the Corporation.
Jerry P. Davis Mr. Davis, 63, has been a Director of the
Corporation since its inception in 1989.
He also served as the Chairman of the Board
of the Corporation from February 1994 to
January 1997, and as the Corporation's
President and Chief Executive Officer from
1989 until February 1994. Mr. Davis has
been a Vice President of Thermo Electron
since January 1986.
George N. Dr. Hatsopoulos, 70, has been a Director of
Hatsopoulos the Corporation since its inception in
1989. Dr. Hatsopoulos has been the
Chairman of the Board and Chief Executive
Officer of Thermo Electron since 1956. He
also served as the President of Thermo
Electron from 1956 until January 1997. Dr.
Hatsopoulos is also a director of
Thermedics Inc., Thermo Electron, Thermo
Fibertek Inc., Thermo Instrument Systems
Inc., Thermo Optek Corporation, ThermoQuest
Corporation and ThermoTrex Corporation.
Dr. Hatsopoulos is the brother of Mr. John
N. Hatsopoulos, a Director, Vice President
and Chief Financial Officer of the
Corporation.
PAGE
<PAGE>
John N. Hatsopoulos Mr. Hatsopoulos, 62, has been a Director of
the Corporation since 1990 and its Vice
President and Chief Financial Officer since
its inception in 1989. Mr. Hatsopoulos has
been the President of Thermo Electron since
January 1, 1997, and its Chief Financial
Officer since 1988. Prior to his
appointment as President of Thermo
Electron, he served as an Executive Vice
President since 1986. Mr. Hatsopoulos is
also a director of Thermedics Inc., Thermo
Fibergen Inc., Thermo Fibertek Inc., Thermo
Instrument Systems Inc., Thermo TerraTech
Inc. and ThermoTrex Corporation. Mr.
Hatsopoulos is the brother of Dr. George N.
Hatsopoulos, a Director of the Corporation.
Brian D. Holt Mr. Holt, 48, has been a Director of the
Corporation since January 1995, and
President and Chief Executive Officer of
the Corporation since February 1994. For
more than five years prior to his
appointment as an officer of the
Corporation, he was President and Chief
Executive Officer of Pacific Generation
Company, a financier, builder, owner and
operator of independent power facilities.
Mr. Holt is also a director of KFX Inc.
Frank Jungers Mr. Jungers, 70, has been a Director the
Corporation since its inception in 1989 and
its Chairman of the Board effective as of
January 1, 1997. Mr. Jungers has been a
consultant on business and energy matters
since 1977. Mr. Jungers was employed by
the Arabian American Oil Company from 1974
through 1977 as Chairman and Chief
Executive Officer. Mr. Jungers is also a
director of The AES Corporation, Donaldson,
Lufkin & Jenrette, Georgia-Pacific
Corporation, Thermo Electron and
ThermoQuest Corporation.
PAGE
<PAGE>
William A. Mr. Rainville, 54, has been a Director of
Rainville the Corporation since November 1995. He
has been President and Chief Executive
Officer of Thermo Fibertek Inc. since its
inception in 1991, and a Senior Vice
President of Thermo Electron since March
1993 and a Vice President of Thermo
Electron from 1986 to 1993. From 1984
until January 1993, Mr. Rainville was the
President and Chief Executive Officer of
Thermo Electron Web Systems Inc., a
subsidiary of Thermo Fibertek Inc. Mr.
Rainville is also a director of Thermo
Fibergen Inc., Thermo Fibertek Inc., Thermo
Remediation Inc. and Thermo TerraTech Inc.
Susan F. Tierney Ms. Tierney, 45, has been a Director of
the Corporation since March 1996. Ms.
Tierney is a Managing Consultant with the
Economics Research Group. From March 1993
to May 1993, Ms. 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, Ms. Tierney served as
Secretary of Environmental Affairs for the
Commonwealth of Massachusetts from 1988 to
January 1991.
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
Ms. Tierney (Chairman) and Mr. Jungers. 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.
Jungers (Chairman) and Ms. Tierney. The Human Resources Committee
reviews the performance of senior members of management,
recommends executive compensation and administers the
Corporation's stock option and other stock plans. The Corporation
does not have a nominating committee of the Board of Directors.
The Board of Directors met six times, the Audit Committee met
three times and the Human Resources Committee met four times,
during fiscal 1996. Each Director attended at least 75% of all
meetings of the Board of Directors and Committees on which he or
she served held during fiscal 1996.
PAGE
<PAGE>
Compensation of Directors
Cash Compensation
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
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
outside Directors' fees is made quarterly. Mr. Davis, Dr. G.
Hatsopoulos, Mr. J. Hatsopoulos, Mr. Holt, and Mr. Rainville 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.
Deferred Compensation Plan for Directors
Under the Deferred Compensation Plan for Directors (the
"Deferred Compensation Plan"), a Director has the right to defer
receipt of his or her cash fees until he or she ceases to serve
as a Director, dies or retires from his or her 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 September 28, 1996,[ ] deferred units
were accumulated under the Deferred Compensation Plan.
Directors Stock Option Plan
The Corporation has adopted a directors stock option plan
(the "Directors Plan") providing for the grant of stock options
to purchase shares of Common Stock to outside Directors as
additional compensation for their services as directors, which
was amended in 1994. The Directors Plan provides for the grant
of stock options upon an outside Director's initial appointment
and awards options to purchase 1,000 shares annually to outside
Directors.
Under the Directors Plan, an outside Director who was
appointed prior to December 31, 1994 automatically was granted an
option to purchase 36,000 shares of Common Stock upon his or her
initial appointment as a Director. These options are presently
exercisable and expire on the seventh anniversary of the date of
grant. However, the shares acquired upon exercise are subject to
repurchase by the Corporation at the exercise price if the
PAGE
<PAGE>
recipient ceases to serve as a Director of the Corporation or any
other Thermo Electron company, which repurchase right lapses
ratably over a five-year period. Pursuant to the amendments
adopted in 1994, the size of this initial grant was reduced and
eventually discontinued effective as of January 1, 1997. Under
the provisions of the amended plan, Ms. Tierney was granted an
option to repurchase 7,200 shares of Common Stock upon her
election as a Director in March 1996. These options are presently
exercisable and expire on the third anniversary of the date of
grant. Shares acquired upon exercise of these 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, which repurchase right lapses
in its entirety on the first anniversary of the grant date.
In addition, under the Directors Plan, outside Directors
receive an annual grant of options to purchase 1,000 shares of
Common Stock commencing with the 1996 Annual Meeting of
Stockholders. The annual grant is made at the close of business
on the date of the Annual Meeting of Stockholders to each outside
Director then holding office. 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 are 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.
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 for the five trading days
preceding and including the date of grant. An aggregate of
225,000 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, as
of December 28, 1996, 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 and all
nominees for 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.
While certain Directors and executive officers of the
Corporation are also directors and executive officers of Thermo
Electron or its subsidiaries other than the Corporation, all such
persons disclaim beneficial ownership of the shares of Common
Stock owned by Thermo Electron.
PAGE
<PAGE>
<TABLE>
<CAPTION>
Thermo Ecotek Thermo
Name (1) Corporation (2) Electron
Corporation
(3)
<S> <C> <C>
Thermo Electron Corporation (4) 20,459,515 N/A
Brian D. Chatlosh 41,250 20,594
Jerry P. Davis 212,970 86,621
Robert R. Fini 59,700 13,163
Floyd M. Gent 63,079 30,522
George N. Hatsopoulos 25,575 3,527,279
John N. Hatsopoulos 35,569 566,768
Brian D. Holt 150,000 164,591
Frank Jungers 41,850 245,854
Parimal S. Patel 155,815 45,676
William A. Rainville 6,000 253,006
Susan F. Tierney 8,992 0
All Directors and current
executive officers as
a group (14 persons) 944,885 5,128,769
</TABLE>
(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 beneficially owned consist of shares owned by the
indicated person, and all share ownership includes sole voting
and investment power.
(2) The shares of Common Stock shown in the table reflect a
three-for-two stock split effected in October 1996. Shares of
the Common Stock beneficially owned by each Director and
executive officer and by all Directors and executive officers as
a group exclude 20,459,515 shares beneficially owned by Thermo
Electron, as to which shares each Director and executive officer
and all members of such group disclaim beneficial ownership.
Shares beneficially owned by Mr. Chatlosh, Mr. Davis, Mr. Fini,
Mr. Gent, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Holt, Mr.
Jungers, Mr. Patel, Mr. Rainville, Ms. Tierney and all Directors
and executive officers as a group include 41,250, 180,000,
59,700, 60,000, 15,000, 13,257, 150,000, 37,500, 135,000, 6,000,
8,700 and 839,907 shares, respectively, that such person or
group has the right to acquire within 60 days of December 28,
1996 through the exercise of stock options. Shares of the common
stock of Thermo Electron beneficially owned by Ms. Tierney and
all Directors and executive officers as a group include 292 full
shares, respectively, allocated through September 28, 1996, to
their accounts maintained pursuant to Thermo Electron's deferred
compensation plan for directors. Shares beneficially owned by
Mr. Jungers include 300 shares held by Mr. Jungers' spouse. No
Director or executive officer beneficially owned more than 1% of
the Common Stock outstanding as of December 28, 1996; all
Directors and executive officers as a group beneficially owned
3.6% 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
1996. Shares beneficially owned by Mr. Chatlosh, Mr. Davis, Mr.
Fini, Mr. Gent, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Holt,
Mr. Jungers, Mr. Patel, Mr. Rainville and all Directors and
executive officers as a group include 19,650, 31,724, 8,550,
30,000, 1,499,500, 429,685, 163,900, 9,375, 27,224, 205,648 and
2,557,105 shares, respectively, that such person or group has the
right to acquire within 60 days of December 28, 1996 through the
exercise of stock options. Shares of the common stock of Thermo
Electron beneficially owned by Mr. Davis, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos and all Directors and executive officers as a
group include 1,614, 2,317, 1,934 and 7,189 full shares,
respectively, allocated to accounts maintained pursuant to Thermo
Electron's Employee Stock Ownership Plan. Shares of the common
PAGE
<PAGE>
stock of Thermo Electron beneficially owned by Mr. Jungers and
all Directors and executive officers as a group include 80,427
full shares, respectively, allocated through September 28, 1996,
to their accounts maintained pursuant to Thermo Electron's
deferred compensation plan for directors. Shares beneficially
owned by Dr. G. Hatsopoulos include 89,601 shares held by Dr. G.
Hatsopoulos' spouse, 168,750 shares held by a QTIP Trust for the
benefit of Dr. G. Hatsopoulos' spouse and 39,937 shares held by a
family trust of which Dr. G. Hatsopoulos' spouse is the trustee.
Shares beneficially owned by Mr. Jungers include 91,827 shares
held by a trust for Mr. Jungers and 4,500 shares held by Mr.
Jungers' spouse. As of December 28, 1996, no director or
executive officer beneficially owned more than 1% of the Thermo
Electron common stock outstanding as of December 28, 1996, other
then Dr. G. Hatsopoulos, who beneficially owned 2.3% of
such common stock; all directors and executive officers as a
group beneficially owned approximately 3.4% of the Thermo
Electron common stock outstanding as of December 28, 1996.
(4) Thermo Electron owned 82% of the Common Stock outstanding as
of December 28, 1996. Thermo Electron's address is 81 Wyman
Street, Waltham, Massachusetts 02254-9046. As of December 28,
1996, Thermo Electron had the power to elect all of the members
of the Corporation's Board of Directors.
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, 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 person were complied with during fiscal 1996,
except in the following instances. As reported in last year's
proxy statement, the Form 3 for Mr. William A. Rainville, a
Director of the Corporation, was filed 22 days late. In
addition, Forms 4 of Thermo Electron, the Corporation's majority
stockholder, for the periods from April 1996 to September 1996
were filed late by periods ranging from 2 days to 74 days.
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 four other most
highly compensated executive officers (the "named executive
officers") for the last full fiscal year from October 1, 1995 to
September 28, 1996 ("fiscal 1996") and for the nine-month period
from January 1, 1995 to September 30, 1995 ("fiscal 1995"),
PAGE
<PAGE>
reflecting a change in the Corporation's fiscal year-end to the
52 or 53 week period ending on the Saturday nearest September 30,
and for the preceding full fiscal year from January 2, 1994 to
December 31, 1994 ("fiscal 1994").
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.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Securities
Underlying
Options
(No. of
Name and Principal Fiscal Annual Compensation Shares and All Other
Position Year Salary Bonus Company) (3) Compensation
(4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Brian D. Holt (5) 1996 $191,750 $133,000 (2) 150 (TMO) $360
Chief Executive
Officer and 2,000 (TBA)
President 2,000 (TFG)
5,000 (TLZ)
2,000 (TLT)
6,000 (TOC)
6,000 (TMQ)
2,000 (TSR)
4,000 (TXM)
1995 $136,500(1) $90,000 15,000 (TMO) --
1994 $160,417 $80,000 150,000 (TCK) --
123,750 (TMO)
Parimal S. Patel 1996 $167,000 $61,400 (2) 17,850 (TMO) $6,750
Executive Vice
President, 1995 $125,250(1) $85,000 2,850 (TMO) $6,750
Project Finance 1994 $161,000 $67,000 3,150 (TMO) $6,750
PAGE
<PAGE>
Floyd M. Gent (6) 1996 $130,000 $47,000 (2) 7,500 (TMO) $7,886
Vice
President, Asset 1995 $97,500(1) $44,000 -- --
Management
Brian Chatlosh (7) 1996 $107,625 $37,000 (2) 15,000 (TCK) $5,526
Vice President,
Business 15,150 (TMO)
Development
Robert R. Fini 1996 $99,250 $30,500 (2) 15,000 (TCK) $5,638
Vice President,
Technical 8,550 (TMO)
Services 1995 $72,750(1) $25,500 -- $5,133
1994 $93,000 $18,000 -- $4,770
</TABLE>
(1) Annual compensation for executive officers is reviewed and
determined on a calendar year basis, even though the
Corporation's fiscal year ends in September. The Corporation
changed its fiscal year-end to September from December in 1995,
and as a consequence, the salary data for fiscal 1995 reflects
salary paid during the nine-month period from January 1, 1995 to
September 30, 1995. Salary data for subsequent fiscal years has
been adjusted to reflect salary paid during the Corporation's
full fiscal year.
(2) The bonus amount 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 1996; therefore, the bonus amounts shown for fiscal 1996
are estimates.
(3) The shares of Common Stock of the Corporation and common
stock of Thermo Electron shown in the table reflect three-for-two
stock splits effected in October 1996 and May 1996, respectively.
Mr. Holt was appointed a Vice President of Thermo Electron in
March 1996 and has been granted options to purchase common stock
of Thermo Electron since that date. These options are not
reported in the table as they were granted for service in a
capacity other than in his capacity as the chief executive
officer of the Corporation. In addition to receiving options to
purchase Common Stock of the Corporation (designated in the table
as TCK), the named executive officers, including Mr. Holt, have
been granted options to purchase common stock of Thermo Electron
Corporation and certain of its other subsidiaries as part of
Thermo Electron's stock option program in their capacities as
officers of the Corporation. Options have been granted during
the period covered by the table to the named executive officers
in the following Thermo Electron companies: Thermo Electron
PAGE
<PAGE>
(designated in the table as TMO), Thermo BioAnalysis Corporation
(designated in the table as TBA), Thermo Fibergen Inc.
(designated in the table as TFG), ThermoLase Corporation
(designated in the table as TLZ), ThermoLyte Corporation
(designated in the table as TLT), Thermo Optek Corporation
(designated in the table as TOC), ThermoQuest Corporation
(designated in the table as TMQ), Thermo Sentron Inc. (designated
in the table as TSR) and Trex Medical Corporation (designated in
the table as TXM).
(4) 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.
(5) Mr. Holt was appointed Chief Executive Officer in February
1994. Mr. Holt was also appointed Vice President of Thermo
Electron in March 1996. Prior to 1996, the Corporation's parent,
Thermo Electron, was allocated a percentage of Mr. Holt's annual
cash compensation (salary and bonus) for the time he devoted to
the affairs of Thermo Electron. For fiscal 1995 and 1994,
Thermo Electron was allocated 20% and 20%, respectively, of Mr.
Holt's annual cash compensation. For fiscal 1996, Thermo
Electron was allocated 10% of Mr. Holt's salary and paid a bonus
to Mr. Holt for service in his capacity as a Vice President of
Thermo Electron, which is not reported in the Summary
Compensation Table. The bonus of Mr. Holt reported in the
Summary Compensation Table for fiscal 1996 represents the bonus
paid by the Corporation for service by Mr. Holt in his capacity
as the Corporation's chief executive officer. The total salary
of Mr. Holt earned in all capacities for fiscal 1996, 1995, and
1994 is reported in the Summary Compensation Table. For periods
after fiscal 1996, Mr. Holt's annual cash compensation will be
determined and paid by Thermo Electron and the Corporation will
be allocated a percentage of Mr. Holt's annual cash compensation
for the time he devotes to the affairs of the Corporation, which
will be reviewed and approved by the Human Resources Committee of
the Board of Directors of the Corporation.
(6) Mr. Gent did not meet the definition of "highly compensated"
within the meaning of the Securities and Exchange Commission's
executive compensation disclosure rules in fiscal 1994. The
bonus reported in the table for fiscal 1996 represents the bonus
paid by the Corporation for service by Mr. Gent in his capacity
as an officer of the Corporation.
(7) Mr. Chatlosh was appointed Vice President, Business
Development effective as of January 1, 1996. The bonus reported
in the table for fiscal 1996 represents the bonus paid by the
Corporation for service by Mr. Chatlosh in his capacity as an
officer of the Corporation.
Stock Option Granted During Fiscal 1996
PAGE
<PAGE>
The following table sets forth information concerning
individual grants of stock options by the Corporation and other
Thermo Electron companies made during fiscal 1996 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 1996.
Mr. Holt has been granted options to purchase common stock
of Thermo Electron since March 1996 as compensation for service
to other Thermo Electron companies in capacities other than in
his capacity as chief executive officer of the Corporation.
Accordingly, such options have not been reported in the table.
Option Grants in Fiscal 1996
<TABLE>
<CAPTION>
Option Grants in Fiscal 1996
Percent
of Potential
Total Realizable
Option Value at Assumed
Number of Granted
Securities to Annual Rates of
Underlying Employees Exercise Stock
Options in Price Price Appreciation
Granted Fiscal Per Expiration for
Name (1) Year Share Date Option Term
5% 10%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Brian D. 150(TMO) 0.01% (2) $42.79 5/22/99 $1,011 $2,124
Holt 2,000(TBA) 0.2% (2) $10.00 3/11/08 $15,920 $42,760
2,000(TFG) 0.4% (2) $10.00 9/12/08 $15,920 $42,760
5,000(TLZ) 1.1% (2) $22.75 11/28/07 $90,550 $243,250
2,000(TLT) 0.6% (2) $10.00 3/11/08 $15,920 $42,760
6,000(TOC) 0.2% (2) $12.00 4/9/08 $57,300 $153,960
6,000(TMQ) 0.2% (2) $13.00 3/11/08 $62,100 $166,800
2,000(TSR) 0.4% (2) $14.00 3/11/08 $22,280 $59,880
4,000(TXM) 0.2% (2) $11.00 3/11/08 $35,000 $94,080
Parimal S. 15,000(TMO) 0.9% (2) $32.60 11/28/07 $389,100 $1,045,650
Patel 2,850(TMO) 0.2% (2) $42.79 5/22/99 19,209 $40,356
Floyd M. 7,500(TMO) 0.5% (2) $32.60 11/28/02 $99,525 $231,975
Gent
PAGE
<PAGE>
Brian 15,000(TCK) 5.0% $10.18 11/28/07 $121,500 $326,550
Chatlosh 15,000(TMO) 0.9% (2) $32.60 11/28/02 $389,100 $1,045,650
150(TMO) 0.01% (2) $42.79 5/22/99 $1,011 $2,124
Robert R. 15,000(TCK) 5.0% $10.18 11/28/02 $62,100 $144,900
Fini 7,500(TMO) 0.5% (2) $32.60 11/28/02 $99,525 $231,975
1,050(TMO) 0.1% (2) $42.79 5/22/99 $7,077 $14,868
</TABLE>
(1) All of the options granted during the fiscal year are
immediately exercisable at the date of grant, except options to
purchase shares of ThermoLyte Corporation (designated in the
table as TLT), 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 the "Exchange Act" and (ii) nine years after
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 the
Corporation or another Thermo Electron company. The granting
corporation may exercise its repurchase rights within six months
after the termination of the optionee's employment. 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 the optionee
continues to be employed by the Corporation or another Thermo
Electron company. For companies that are not publicly traded,
the repurchase rights lapse in their entirety on the ninth
anniversary of the grant date. Certain options granted as 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) 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
PAGE
<PAGE>
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 granting 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 and accordingly are reported as a
percentage of total options granted to employees of Thermo
Electron and its public subsidiaries.
Stock Options Exercised During Fiscal 1996 and Fiscal Year-End
Values
The following table reports certain information regarding
stock option exercises during fiscal 1996 and outstanding stock
options to purchase shares of Thermo Electron companies held at
the end of fiscal 1996 by the named executive officers. No stock
appreciation rights were exercised or were outstanding during
fiscal 1996.
Aggregated Option Exercises In Fiscal 1996 And Fiscal 1996
Year-End Option Values
<TABLE>
<CAPTION>
Aggregated Option Exercises In Fiscal 1996 And Fiscal 1996 Year-End Option Values
No. of
Unexercised
Options at
Shares Fiscal Value of
Acquired Year-end Unexercised
on Value (Exercisable/ In-the-Money
Name Company Exercise Realized Unexercisable) Options
(1)
<S> <C> <C> <C> <C> <C> <C> <C>
Brian D. Thermo -- -- 150,000 /0 $1,400,550 /--
Holt (2) Ecotek
Thermo -- -- 138,900 /0 (3) $2,718,545 /--
Electron
Thermo -- -- 2,000 /0 $7,750 /--
BioAnalysis
Thermo -- -- 2,000 /0 $5,250 /--
Fibergen
ThermoLase -- -- 5,000 /0 $3,125 /--
ThermoLyte -- -- 0/ 2,000 --/0 (4)
Thermo Optek -- -- 6,000 /0 $18,000 /--
ThermoQuest -- -- 6,000 /0 $3,000 /--
Thermo -- -- 2,000 /0 $0 /--
Sentron
Trex Medical -- -- 4,000 /0 $37,000 /--
Parimal S. Thermo -- -- 135,000 /0 (3) $1,451,296 /--
Patel Ecotek
PAGE
<PAGE>
Thermo -- -- 27,224/0 $318,294 /--
Electron
Thermo -- -- 2,700/0 $ 27,338 /--
Fibertek
-- -- $34,209 /--
Thermo 1,080 /0
Trex
Floyd M. Thermo -- -- 60,000 /0 $550,020 /--
Gent Ecotek
Thermo -- -- 30,000 /0 $515,626 /--
Electron
Brian Thermo -- -- 41,250 /0 $321,064 /--
Chatlosh Ecotek
Thermo -- -- 19,650 /0 $208,088 /--
Electron
Robert R. Thermo -- -- 59,700 /0 $551,470 /--
Fini Ecotek
Thermo -- -- 8,550 /0 $58,313 /--
Electron
Thermo -- -- 2,250 /0 $22,781 /--
Fibertek
</TABLE>
(1) The shares of common stock shown in the table have been
adjusted to reflect three-for-two stock splits effected by the
Corporation in October 1996, by Thermo Electron in May 1996, and
by Thermo Fibertek Inc. in June 1996. 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 shares of ThermoLyte Corporation (designated in the
table as TLT), 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 Exchange Act and
(ii) nine years after the grant date. In all cases, 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 another 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 that are not publicly traded,
the repurchase rights lapse in their entirety on the ninth
anniversary of the grant date. Certain options granted as part
of Thermo Electron's stock option program have three-year terms,
PAGE
<PAGE>
and the repurchase rights lapse in their entirety on the second
anniversary of the grant date.
(2) As a Vice President of Thermo Electron, Mr. Holt also holds
unexercised options to purchase common stock of Thermo Electron
and its subsidiaries other than the Corporation. These options
are not reported in the table 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 67,500 and 15,000 shares of the common
stock of Thermo Electron granted to Mr. Holt and Mr. Patel,
respectively, are subject to the same terms described in footnote
(1), except that the repurchase rights of the granting
corporation generally do not lapse until the tenth anniversary of
the grant date. In the event of the employee's death or
involuntary termination prior to the tenth anniversary of the
grant date, the repurchase rights of the granting corporation
shall be deemed to have lapsed ratably over a five-year period
commencing with the fifth anniversary of the grant date.
(4) No public market existed for the shares as of December 28,
1996. Accordingly, no value in excess of the exercise price has
been attributed to those options.
RELATIONSHIP WITH AFFILIATES
The Thermo Electron Corporate Charter
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,
including the Corporation. 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,
PAGE
<PAGE>
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 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
PAGE
<PAGE>
and to provide certain administrative functions mandated by
Thermo Electron so long as the withdrawing company is controlled
by or affiliated with Thermo Electron.
Corporate Services Agreement
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 fiscal 1995 and in periods prior to fiscal 1995,
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 1996, Thermo Electron assessed
the Corporation $1,570,000 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.
Miscellaneous
The Corporation leased its office facilities from Thermo
Electron under an agreement which terminated December 1, 1996.
The Corporation paid annual rent under that agreement equal to
(i) Thermo Electron's cost per square foot of operating the
building, multiplied by (ii) the number of square feet occupied
by the Corporation. Under the lease, the Company made a payment
to Thermo Electron of $177,000 in fiscal 1996.
PAGE
<PAGE>
Thermo Electron currently owns approximately 83% of the
outstanding shares of Common Stock. Thermo Electron intends for
the foreseeable future to maintain at least 80% ownership of the
Corporation. This may require the purchase by Thermo Electron of
additional shares of Common Stock from time to time as the number
of outstanding shares issued by the Corporation increases. These
and other purchases may be made either on the open market,
through conversion of convertible debentures held by Thermo
Electron or directly from the Corporation.
As of September 28, 1996, $53,250,000 of the Corporation's
cash equivalents were invested in a repurchase agreement with
Thermo Electron. Under this agreement, the Corporation in effect
lends excess cash to Thermo Electron, which Thermo Electron
collateralizes with investments principally consisting of
corporate notes, U.S. government agency securities, money market
funds, commercial paper and other marketable securities, in the
amount of at least 103% of such obligations. The Corporation's
funds subject to the repurchase agreement are readily convertible
into cash by the Corporation and have an original maturity of
three months or less. The repurchase agreement earns a rate
based on the Commercial Paper Composite Rate plus 25 basis
points, reset quarterly.
As of December 28, 1996, the Corporation had outstanding
indebtedness to Thermo Electron of $68.5 million, pursuant to 4%
subordinated convertible debentures due 2001, which are
convertible into the Corporation's Common Stock at $6.33 per
share.
Stock Holding Assistance Plan
In 1996, the Corporation adopted a stock holding policy
which requires its executive officers to acquire and hold a
minimum number of shares of Common Stock. In order to assist the
executive officers in complying with the policy, the Corporation
also adopted a Stock Holding Assistance Plan under which it may
make interest-free loans to certain key employees, including its
executive officers, to enable such employees to purchase the
Common Stock in the open market. No such loans are currently
outstanding under the plan.
