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 1-13876
THERMOSPECTRA CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 04-3242970
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
81 Wyman Street
Waltham, Massachusetts 02254-9046
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------------
Common Stock, $.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to the filing requirements for at least
the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference into Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by
nonaffiliates of the Registrant as of January 24, 1997, was
approximately $46,430,000.
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As of January 24, 1997, the Registrant had 12,448,000 shares of
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for
the fiscal year ended December 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.
THERMOSPECTRA CORPORATION
By: /s/ Sandra L. Lambert
-------------------------------
Sandra L. Lambert
Secretary
ATTACHMENT A
DIRECTORS
Set forth below are the names of the persons serving as
directors, their ages, their offices in the Corporation, if any,
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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
company, Thermo Instrument Systems Inc. ("Thermo Instrument"),
a manufacturer of analytical, environmental monitoring and process
control instrumentation, and Thermo Instrument's parent company,
Thermo Electron Corporation ("Thermo Electron"),
a diversified high technology company, is reported under the
caption "Stock Ownership."
Elias P. Dr. Gyftopoulos, 69, has been a director of the
Gyftopoulos Corporation since its inception in August 1994.
He is Professor Emeritus of the Massachusetts
Institute of Technology, where he was the Ford
Professor of Mechanical Engineering and of
Nuclear Engineering for more than 20 years prior
to his retirement in 1996. Dr. Gyftopoulos is
also a director of Thermo Electron, Thermo
BioAnalysis Corporation, Thermo Cardiosystems
Inc., ThermoLase Corporation, Thermo Remediation
Inc., Thermo Voltek Corp. and Trex Medical
Corporation.
Earl R. Lewis Mr. Lewis, 53, has been a director of the
Corporation since its inception in August 1994.
He has also been chairman of the board since June
1995 and was vice chairman of the board from
August 1994 to June 1995. Mr. Lewis has been
president and chief operating officer of Thermo
Instrument since March 1997 and January 1996,
respectively, was executive vice president of
Thermo Instrument from January 1996 to March
1997, was a senior vice president of Thermo
Instrument from January 1994 to January 1996, and
was a vice president of Thermo Instrument from
March 1992 to January 1994. He has also been the
chief executive officer of Thermo Optek Corporation,
a majority owned subsidiary of Thermo Instrument,
since its inception in August 1995, and was
president of Thermo Optek Corporation from August
1995 to March 1997. Mr. Lewis is also a director
of Thermo BioAnalysis Corporation, Thermo Optek
Corporation, ThermoQuest Corporation and Trex
Medical Corporation.
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Theo Mr. Melas-Kyriazi, 37, has been president, chief
Melas-Kyriazi executive officer and a director of the
Corporation since its inception in August 1994.
Mr. Melas-Kyriazi was treasurer of Thermo
Instrument and Thermo Electron from 1988 to
August 1994. Mr. Melas-Kyriazi is also a
director of Thermo Remediation Inc. and Thermo
Voltek Corp.
Arvin H. Mr. Smith, 67, has been a director of the
Smith Corporation since its inception in August 1994
and was chairman of the board from August 1994 to
June 1995. Mr. Smith has been the chairman and
chief executive officer of Thermo Instrument
since March 1997 and 1986, respectively, and was
also president of Thermo Instrument from 1986
until March 1997. Mr. Smith has been an
executive vice president of Thermo Electron since
1991 and was a senior vice president of Thermo
Electron from 1986 to 1991. Mr. Smith is also a
director of Thermo BioAnalysis Corporation,
Thermo Instrument, Thermo Optek Corporation,
Thermo Power Corporation and ThermoQuest
Corporation.
Michael P. Mr. Stansky, 38, has been a director of the
Stansky Corporation since October 1994. Mr. Stansky has
been the director of equity research at Tudor
Investment Corp. since February 1994. Prior to
joining Tudor Investment Corp., he was a
portfolio manager at Wellington Management
Company for more than five years.
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. Gyftopoulos and Mr. Stansky (Chairman). 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.
Gyftopoulos (Chairman) and Mr. Stansky. 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 seven times,
the Audit Committee met twice and the Human Resources Committee
met five times during fiscal 1996. Each director attended at
least 75% of all meetings of the Board of Directors and
committees on which he served held during fiscal 1996.
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Compensation of Directors
Cash Compensation
Directors who are not employees of the Corporation, of
Thermo Electron or of any other companies affiliated with Thermo
Electron (also referred to as "outside directors") receive an
annual retainer of $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. Messrs. Smith, Lewis and
Melas-Kyriazi are all employees of Thermo Electron companies 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
Under the Deferred Compensation Plan for Directors (the
"Deferred Compensation Plan"), a director has the right to defer
receipt of his cash fees until he ceases to serve as a director,
dies or retires from his principal occupation. In the event of a
change in control or proposed change in control of the
Corporation that is not approved by the Board of Directors,
deferred amounts become payable immediately. Either of the
following is deemed to be a change of control: (a) the
occurrence, without the prior approval of the Board of Directors,
of the acquisition, directly or indirectly, by any person of 50%
or more of the outstanding Common Stock or the outstanding common
stock of Thermo Instrument 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
Instrument 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 25,000 shares of
Common Stock have been reserved for issuance under the Deferred
Compensation Plan. As of March 1, 1997, no deferred units equal
to shares of Common Stock were accumulated under the Deferred
Compensation Plan.
Directors Stock Option Plan
The Corporation's directors stock option plan (the
"Directors Plan") provides for the grant of stock options to
purchase shares of common stock of the Corporation to outside
directors as additional compensation for their service as
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directors. The Directors Plan provides for the grant of stock
options upon a director's initial appointment and, beginning in
1999, awards options to purchase 1,000 shares annually to outside
directors. A total of 100,000 shares of Common Stock have been
reserved for issuance under the Directors Plan.
Under the Directors Plan, each new outside director who
joined the Board of Directors during 1995 was granted an option
to purchase 20,000 shares of Common Stock. The size of awards to
new directors appointed to the Board of Directors after 1995 is
reduced by 5,000 shares in each subsequent year. Outside
directors who join the Board of Directors after 1998 would not
receive an option grant upon their appointment or election to the
Board of Directors, but would be eligible to participate in the
annual option awards described below. Options evidencing initial
grants to directors are exercisable six months after the date of
grant. The shares acquired upon exercise are subject to
restrictions on transfer and the right of the Corporation to
repurchase such shares at the exercise price in the event the
director ceases to serve as a director of the Corporation or any
other Thermo Electron company. The restrictions and repurchase
rights lapse or are deemed to have lapsed in equal annual
installments of 5,000 shares per 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. These options
expire on the fifth anniversary of the grant date, unless the
director dies or otherwise ceases to serve as a director of the
Corporation or any other Thermo Electron company prior to that
date.
Outside directors will also receive an annual grant of
options to purchase 1,000 shares of Common Stock, commencing with
the Annual Meeting of the Stockholders to be held in 1999. The
annual grant will be made at the close of business on the date of
each Annual Meeting of the Stockholders of the Corporation 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 would
be subject to repurchase by the Corporation at the exercise price
if the recipient ceased to serve as a director of the Corporation
or any other Thermo Electron company prior to the first
anniversary of the grant date.
The exercise price for options granted under the Directors
Plan is the average of the closing prices of the common stock as
reported on the American Stock Exchange (or other principal
market on which the common stock is then traded) for the five
trading days preceding and including the date of grant, or, if
the shares are not then traded, at the last price per share paid
by third parties in an arms-length transaction prior to the
option grant. As of March 1, 1997, options to purchase 60,000
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shares of Common Stock were available for future grant under the
Directors Plan.
Stock Ownership Policies for Directors
During 1996, 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 1998 Annual
Meeting of Stockholders. Directors who are also executive
officers of the Corporation are required to comply with a
separate stock holding policy established by the Committee in
1996.
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.
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of
Common Stock, as well as the common stock of Thermo Instrument,
the Corporation's parent company, and of Thermo Electron, Thermo
Instrument's parent company, as of March 1, 1997, 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 current 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.
<TABLE>
<CAPTION>
Thermo Thermo
ThermoSpectra Instrument Electron
Name (1) Corporation Systems Inc. Corporation
(2) (3) (4)
<S> <C> <C> <C>
Thermo Instrument 8,998,936 N/A N/A
Systems Inc. (5)
Christopher J. Barron 25,000 15,038 148
Elias P. Gyftopoulos 20,000 47,018 71,070
Earl R. Lewis 55,000 128,233 124,184
Ronald W. Lindell 30,100 0 0
Theo Melas-Kyriazi 68,100 30,679 159,073
Arvin H. Smith 20,000 431,667 513,038
Michael P. Stansky 20,000 0 0
All directors and
current executive
officers as a group (9 263,200 752,531 1,539,279
</TABLE>
(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.
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(2) Shares of the Common Stock beneficially owned by Mr. Barron,
Dr. Gyftopoulos, Mr. Lewis, Mr. Lindell, Mr. Melas-Kyriazi, Mr.
Smith, Mr. Stansky and all directors and executive officers as a
group include 25,000, 20,000, 50,000, 30,000, 55,000 20,000,
20,000 and 245,000 shares, respectively, that such person or
group has the right to acquire within 60 days of March 1, 1997,
through the exercise of stock options. No director or executive
officer beneficially owned more than 1% of the Common Stock
outstanding as of March 1, 1997; all directors and executive
officers as a group beneficially owned 2.1% of the Common Stock
outstanding as of such date.
(3) Shares of the common stock of Thermo Instrument beneficially
owned by Mr. Barron, Dr. Gyftopoulos, Mr. Lewis, Mr.
Melas-Kyriazi, Mr. Smith and all directors and executive officers
as a group include 14,671, 14,465, 112,500, 29,062, 234,375 and
485,698 shares, respectively, that such person or group had the
right to acquire within 60 days after March 1, 1997, through the
exercise of stock options. Shares of the common stock of Thermo
Instrument beneficially owned by Mr. Melas-Kyriazi, Mr. Smith and
all directors and executive officers as a group include 374, 530
and 1,829 shares, respectively, allocated through March 1, 1997,
to their respective accounts maintained pursuant to Thermo
Electron's employee stock ownership plan (the "ESOP"), of which
the trustees, who have investment power over its assets, are
executive officers of Thermo Electron. Shares beneficially owned
by Mr. Lewis include 2,390 shares held by Mr. Lewis' spouse. The
directors and executive officers of the Corporation did not
individually or as a group beneficially own more than 1% of the
common stock of Thermo Instrument outstanding as of March 1,
1997.
(4) The shares of the common stock of Thermo Electron shown in
the table reflect a three-for-two split of such stock distributed
in June 1996 in the form of a 50% stock dividend. Shares of the
common stock of Thermo Electron beneficially owned by Dr.
Gyftopoulos, Mr. Lewis, Mr. Melas-Kyriazi, Mr. Smith and all
directors and executive officers as a group include 9,375,
121,536, 116,772, 222,411 and 997,353 shares, respectively, that
such person or group has the right to acquire within 60 days of
March 1, 1997, through the exercise of stock options. Shares of
the common stock of Thermo Electron beneficially owned by Mr.
Melas-Kyriazi, Mr. Smith and all directors and executive officers
as a group include 969, 1,717 and 5,944 full shares,
respectively, allocated to accounts maintained pursuant to the
ESOP. No director or executive officer beneficially owned more
than 1% of the common stock of Thermo Electron outstanding as of
March 1, 1997; all directors and executive officers as a group
beneficially owned approximately 1.02% of the Thermo Electron
common stock outstanding as of such date.
(5) As of March 1, 1997, Thermo Instrument beneficially owned
approximately 72% of the outstanding Common Stock. Thermo
Instrument's address is 1275 Hammerwood Avenue, Sunnyvale,
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California 94089. As of March 1, 1997, Thermo Instrument had the
power to elect all of the members of the Corporation's Board of
Directors. Thermo Instrument is a majority owned subsidiary of
Thermo Electron and therefore, Thermo Electron may be deemed a
beneficial owner of the shares of Common Stock beneficially owned
by Thermo Instrument. Thermo Electron disclaims beneficial
ownership of these shares.
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 Instrument, 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 1996, except
in the following instances. Thermo Instrument filed six Forms 4
late, reporting a total of 14 transactions, consisting of 11
exercises of options granted to employees to purchase shares of
the Common Stock and the lapse and cancellation of three such
options without exercise. Thermo Electron filed six Forms 4
late, reporting a total of 31 transactions, including the 14
transactions described above for Thermo Instrument, an additional
15 open market purchases and an additional two exercises of
employee stock options.
EXECUTIVE COMPENSATION
NOTE: All share amounts reported below, in all cases, have been
adjusted as applicable to reflect a three-for-two stock split
with respect to the common stock of Thermo Electron distributed
in June 1996 in the form of a 50% stock dividend.
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 (the "named executive
officers") for the last three fiscal years. 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
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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
Annual Options
Name and Fiscal Compensation (No. of Shares All Other
Principal Year Salary Bonus Other and Company) Compensation
Position (1) (2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Theo 1996 $147,000 $85,000 -- 3,900(TMO) $8,281(4)
Melas-Kyriazi
President and 4,000(TBA)
Chief Executive 2,000(TFG)
Officer (3)
2,000(TLT)
15,000(TOC)
10,000(TMQ)
2,000(TSR)
4,000(TXM)
1995 $142,000 $81,400 -- 3,750(TMO) $6,750
1994 $142,000 -- -- 55,000(THS) $6,750
27,000(TMO)
Christopher J. 1996 $116,883 $25,100 6,000(TOC) --
Barron
Vice President 4,000(TMQ) --
1995 $114,975 $23,000 -- -- --
1994 $112,500 $20,000 -- 25,000(THS) --
Ronald W. Lindell 1996 $108,000 $28,400 $17,105 6,000(TOC) --
Vice President 4,000(TMQ) --
1995 $103,000 $30,000 $42,927 -- --
1994 $ 96,000 $30,000 $ -- 30,000(THS) --
</TABLE>
(1) Options granted by the Corporation are designated in the
table as "THS." In addition, the named executive officers also
have been granted options to purchase common stock of the
following Thermo Electron companies from time to time as part of
Thermo Electron's stock option program: Thermo Electron
(designated in the table as TMO), Thermo BioAnalysis Corporation
(designated in the table as TBA), Thermo Fibergen Inc.
(designated in the table as TFG), 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).
(2) Represents the amount of matching contributions made by the
individual's employer on behalf of named executive officers
participating in the Thermo Electron 401(k) plan.
(3) Mr. Melas-Kyriazi was appointed president and chief
executive officer of the Corporation on August 10, 1994. Prior
to that date, he served as treasurer of Thermo Electron and its
subsidiaries. Reported in the table under "Salary" is the total
salary paid in 1994 to Mr. Melas-Kyriazi for his service as both
president and chief executive officer of the Corporation and as
treasurer of Thermo Electron. In 1994, the portion of Mr.
Melas-Kyriazi's salary paid by the Corporation was $35,500. None
of the bonus paid to Mr. Melas-Kyriazi with respect to 1994
performance was attributable to his service as president and
chief executive officer of the Corporation. In addition, Mr.
Melas-Kyriazi 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
and certain of its subsidiaries. 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 president and chief executive officer of the
Corporation.
(4) In addition to the matching contribution referred to in
footnote (2), such amount includes $1,531 of compensation
attributable to an interest-free loan provided to Mr.
Melas-Kyriazi pursuant to the Corporation's stock holding
assistance plan. See "Relationship with Affiliates - Stock
Holding Assistance Plan."
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(5) The amount shown for Mr. Lindell represents relocation
expenses for which Mr. Lindell was reimbursed by the Corporation.
Stock Options Granted During Fiscal 1996
The following table sets forth information concerning
individual grants of stock options made during fiscal 1996 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 1996.
<TABLE>
<CAPTION>
Option Grants in Fiscal 1996
Potential
Realizable
Percent of Value at Assumed
Total Annual Rates of
Options Stock
Number of Granted to Price
Securities Exercise Appreciation for
Underlying Employees Price Expira- Option Term (2)
Options in Per tion
Name Granted (1) Fiscal Year Share Date 5% 10%
<C> <C> <C> <C> <C> <C> <C> <C>
Theo 3,900 (TMO) 0.3%(3) $42.79 05/22/99 $26,286 $55,224
Melas-Kyriazi
4,000 (TBA) 0.5%(3) $10.00 03/13/08 $31,840 $85,520
2,000 (TFG) 0.4%(3) $10.00 09/12/08 $15,920 $42,760
2,000 (TLT) 0.6%(3) $10.00 03/11/08 $15,920 $42,760
15,000 (TOC) 0.5%(3) $12.00 04/11/08 $143,250 $384,900
10,000 (TMQ) 0.4%(3) $13.00 02/08/08 $103,500 $278,000
2,000 (TSR) 0.4%(3) $14.00 03/11/08 $22,280 $59,880
4,000 (TXM) 0.2%(3) $11.00 03/11/08 $35,000 $94,080
Christopher J. 6,000 (TOC) 0.2%(3) $12.00 04/11/08 $57,300 $153,960
Barron
4,000 (TMQ) 0.1%(3) $13.00 02/08/08 $41,400 $111,200
Ronald W. 6,000 (TOC) 0.2%(3) $12.00 04/11/08 $57,300 $153,960
Lindell
4,000 (TMQ) 0.1%(3) $13.00 02/08/08 $41,400 $111,200
</TABLE>
(1) The options granted during the fiscal year were immediately
exercisable as of fiscal year-end, except options to purchase the
common stock of ThermoLyte 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 (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 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
that are not publicly traded, the repurchase rights lapse in
their entirety on the ninth anniversary of the grant date.
Certain options granted as a part of Thermo Electron's stock
option program have three-year terms, and the repurchase rights
lapse in their entirety on the second anniversary of the grant
date. The granting corporation may permit the holder 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
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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 companies other than the
Corporation and accordingly are reported as a percentage of total
options granted to employees of that company.
Stock Options Exercised During Fiscal 1996
The following table reports certain information regarding
stock option exercises during fiscal 1996 and outstanding stock
options held at the end of fiscal 1996 by the Corporation's chief
executive officer and the other named executive officers. No
stock appreciation rights were exercised or were outstanding
during fiscal 1996.
<TABLE>
<CAPTION>
Aggregated Option Exercises In Fiscal 1996 And
Fiscal 1996 Year-End Option Values
Number of
Unexercised
Options at
Shares Fiscal
Acquired Year-End Value of
on Value (Exercisable/ Unexercised
Name Company Exercise Realized Unexercisable) In-the-Money
(1) Options
<S> <C> <C> <C> <C> <C> <C>
Theo ThermoSpectra -- -- 55,000/0 $103,125/-
Melas-Kyriazi
(2)
Thermo -- -- 30,150/0(3) $990,938/-
Electron
Thermo -- -- 4,000/0 $12,500/-
BioAnalysis
Thermo -- -- 2,000/0 $1,500/-
Fibergen
ThermoLyte -- -- 0/2,000 --/$0(4)
Thermo Optek -- -- 15,000/0 $0/-
ThermoQuest -- -- 10,000/0 $0/-
Thermo Sentron -- -- 2,000/0 $0/-
Trex Medical -- -- 4,000/0 $6,500/-
Christopher J. ThermoSpectra -- -- 25,000/0 $46,875/-
Barron
Thermo -- -- 14,671/0 $292,241/-
Instrument
Thermo Optek -- -- 6,000/0 $0/-
ThermoQuest -- -- 4,000/0 $0/-
Ronald W. ThermoSpectra -- -- 30,000/0 $56,250/-
Lindell
Thermo Optek -- -- 6,000/0 $0/-
ThermoQuest -- -- 4,000/0 $0/-
</TABLE>
(1) All of the options reported outstanding at the end of the
fiscal year were immediately exercisable as of the fiscal
year-end, except options to purchase the common stock of
ThermoLyte 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 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 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
that are not publicly traded, the repurchase rights lapse in
their entirety on the ninth anniversary of the grant date.
Certain options granted as a part of Thermo Electron's stock
option program have three-year terms, and the repurchase rights
lapse in their entirety on the second anniversary of the grant
date. The granting corporation may permit the holder 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) Mr. Melas-Kyriazi also holds other unexercised options to
purchase common stock of Thermo Electron and its subsidiaries
other than the Corporation. These options are not reported here
as they were granted as compensation for service to other Thermo
Electron companies in capacities other than in his capacity as
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chief executive officer of the Corporation.
(3) Options to purchase 22,500 shares of the common stock of
Thermo Electron granted to Mr. Melas-Kyriazi are subject to the
same terms as described in footnote (1), except that the
repurchase rights of the granting corporation generally do not
lapse until the tenth anniversary of the grant date. In the event
of the employee's death or involuntary termination prior to the
tenth anniversary of the grant date, the repurchase rights of the
granting corporation shall be deemed to have lapsed ratably over
a five-year period, commencing with the fifth anniversary of the
grant date.
(4) No public market existed for the shares underlying these
options as of December 28, 1996. Accordingly, no value in excess
of the exercise price has been attributed to these options.
RELATIONSHIP WITH AFFILIATES
Thermo Electron has adopted a strategy of selling a minority
interest in subsidiary companies to outside investors as an
important tool in its future development. As part of this
strategy, Thermo Electron and certain of its subsidiaries have
created several privately and publicly held subsidiaries,
including the Corporation, which was created by Thermo
Instrument. From time to time, Thermo Electron and its
subsidiaries will create other majority-owned subsidiaries as
part of its spinout strategy. (The Corporation and such 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
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
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<PAGE>
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
in effect between the withdrawing company and Thermo Electron.
The withdrawal from participation does not terminate outstanding
commitments to third parties made by the withdrawing company, or
by Thermo Electron or other members of the Thermo Group, prior to
the withdrawal. However, a withdrawing company is required to
continue to comply with all policies and procedures applicable to
the Thermo Group and to provide certain administrative functions
mandated by Thermo Electron so long as the withdrawing company is
controlled by or affiliated with Thermo Electron.
As provided in the Charter, the Corporation and Thermo
Electron have entered into a Corporate Services Agreement (the
"Services Agreement") under which Thermo Electron's corporate
staff provides certain administrative services, including certain
legal advice and services, risk management, employee benefit
administration, tax advice and preparation of tax returns,
centralized cash management and financial and other services to
the Corporation. The Corporation was assessed an annual fee equal
to 1.0% of the Corporation's revenues for these services in
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<PAGE>
calendar 1996. 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
$1,232,000 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 additional items such as employee
benefit plans, insurance coverage and other identifiable costs,
Thermo Electron charges the Corporation based on charges
attributable to the Corporation. The Services Agreement
automatically renews for successive one-year terms, unless
canceled by the Corporation upon 30 days' prior notice. In
addition, the Services Agreement terminates automatically in the
event the Corporation ceases to be a member of the Thermo Group
or ceases to be a participant in the Charter. In the event of a
termination of the Services Agreement, the Corporation will be
required to pay a termination fee equal to the fee that was paid
by the Corporation for services under the Services Agreement for
the nine-month period prior to termination. Following
termination, Thermo Electron may provide certain administrative
services on an as-requested basis by the Corporation or as
required in order to meet the Corporation's obligations under
Thermo Electron's policies and procedures. Thermo Electron will
charge the Corporation a fee equal to the market rate for
comparable services if such services are provided to the
Corporation following termination.
From time to time, the Corporation may transact business
with other companies in the Thermo Group. In fiscal 1996, such
transactions included the following.
The Corporation leases certain office and manufacturing
space from Nicolet Instrument Corporation ("Nicolet"), a
wholly-owned subsidiary of Thermo Instrument. Effective January
1, 1996, the annual rent expense is $208,000. This lease is
effective until December 31, 1998, but may be terminated by the
Corporation upon 90 days' prior written notice to Nicolet.
The Corporation's Nicolet Imaging Systems division has an
arrangement with ThermoTrex Corporation ("ThermoTrex"), a
publicly traded, majority-owned subsidiary of Thermo Electron,
whereby ThermoTrex provides certain research and development
services to the Corporation, and the Corporation purchase flat
screen x-ray sensitive detectors pursuant to purchase orders. In
1996, the Corporation paid ThermoTrex $97,689 for such products
and services. Thermo Electron's Tecomet division manufactures
the Corporation's precision X-Y translation table pursuant to
purchase orders. In 1996, the Corporation paid Tecomet $169,000
for such services. In addition, the Corporation purchases and
sells products and services in the ordinary course of business
with other companies affiliated with Thermo Instrument. In 1996,
purchases from these companies totaled $820,481 and sales to
these companies totaled $240,000.
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<PAGE>
To finance the acquisition of IRT Corporation in September
1994, the Corporation borrowed $7,300,000 from Thermo Instrument
pursuant to a promissory note due September 2001. In connection
with the 1996 acquisition of Kevex Instruments and Kevex X-ray,
the Corporation borrowed $15,000,000 from Thermo Electron
pursuant to a promissory note due August 1998. In connection
with the acquisition of Park Scientific Instruments Corporation
in March 1997, the Corporation borrowed $10,000,000 from Thermo
Electron pursuant to a promissory note due March 1999. These
notes bear interest at the 90-day Commercial Paper Composite Rate
plus 25 basis points, set at the beginning of each quarter. The
interest rate for the notes outstanding in 1996 was 5.77%.
As of December 28, 1996, $11,858,000 of the Corporation's
cash equivalents were invested pursuant to a repurchase agreement
with Thermo Electron. Under this agreement, the Corporation in
effect lends excess cash to Thermo Electron, which Thermo
Electron collateralizes with investments principally consisting
of corporate notes, U.S. government agency securities, money
market funds, commercial paper and other marketable securities,
in the amount of at least 103% of such obligation. The
Corporation's funds subject to the repurchase agreement are
readily convertible into cash by the Corporation and have a
maturity of three months or less. The repurchase agreement earns
a rate based on the 90-day Commercial Paper Composite Rate plus
25 basis points, set at the beginning of each quarter.
Stock Holding Assistance Plan
During 1996, the Human Resources Committee of the Corporation's
Board of Directors (the "Committee") established a stock holding
policy for executive officers of the Corporation. The stock
holding policy specifies an appropriate level of ownership of the
Corporation's Common Stock as a multiple of the officer's
compensation. For the chief executive officer, the multiple is
one times his base salary and reference bonus for the calendar
year. For all other officers, the multiple is one times the
officer's base salary. The Committee deemed it appropriate to
permit officers to achieve these ownership levels over a
three-year period.
In order to assist officers in complying with the policy,
the Committee also adopted a stock holding assistance plan under
which the Corporation is authorized to make interest-free loans
to officers to enable them to purchase shares of the Common Stock
in the open market. The loans are required to be repaid upon the
earlier of demand or the fifth anniversary of the date of the
loan, unless otherwise authorized by the Committee. During 1996,
Mr. Melas-Kyriazi received loans in the aggregate principal
amount of $164,830.47 under this plan to purchase 12,525 shares.
14