SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------------------------
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 January 3, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 1-8002
THERMO ELECTRON CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 04-2209186
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02254-9046
(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:
Title of each class Name of each exchange on which registered
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Common Stock, $1.00 par value New York Stock Exchange
Preferred Stock Purchase Rights
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. [ X ]
The aggregate market value of the voting stock held by nonaffiliates of
the Registrant as of January 30, 1998, was approximately $6,089,611,000.
As of January 30, 1998, the Registrant had 159,173,807 shares of Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year
ended January 3, 1998, are incorporated by reference into Parts I and II.
Portions of the Registrant's definitive Proxy Statement for the Annual
Meeting of Shareholders to be held on June 2, 1998, are incorporated by
reference into Part III.
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PART I
Item 1. Business
(a) General Development of Business
Thermo Electron Corporation and its subsidiaries (the Company or the
Registrant) develop, manufacture, and market analytical and monitoring
instruments; biomedical products including heart-assist devices,
respiratory-care equipment, and mammography systems; paper recycling and
papermaking equipment; alternative-energy systems; industrial process
equipment; and other specialized products. The Company also provides a
range of services that include industrial outsourcing, particularly in
environmental-liability management, laboratory analysis, and
metallurgical processing; and conducts advanced-technology research and
development. The Company performs its business through divisions and
wholly owned subsidiaries, as well as majority-owned subsidiaries that
are partially owned by the public or by private investors.
A key element in the Company's growth has been its ability to
commercialize innovative products and services emanating from research
and development activities conducted by the Company's various
subsidiaries. The Company's strategy has been to identify business
opportunities arising from social, economic, and regulatory issues, and
to seek a leading market share through the application of proprietary
technology. As part of this strategy, the Company continues to focus on
the acquisition of complementary businesses that can be integrated into
its existing core businesses to leverage access to new markets.
The Company believes that maintaining an entrepreneurial atmosphere
is essential to its continued growth and development. To preserve this
atmosphere, the Company has adopted a strategy of spinning out certain of
its businesses into separate subsidiaries and having these subsidiaries
sell a minority interest to outside investors. The Company believes that
this strategy provides additional motivation and incentives for the
management of the subsidiaries through the establishment of subsidiary-
level stock option incentive programs, as well as capital to support the
subsidiaries' growth. The Company's wholly and majority-owned
subsidiaries are provided with centralized corporate development,
administrative, financial, and other services that would not be available
to many independent companies of similar size. As of March 11, 1998, the
Company had 28 subsidiaries that have sold minority equity interests, 22
of which are publicly traded and 6 of which are privately held.
The Company is a Delaware corporation and was incorporated in 1956.
The Company completed its initial public offering in 1967 and was listed
on the New York Stock Exchange in 1980.
Forward-looking Statements
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Annual Report
on Form 10-K. For this purpose, any statements contained herein that are
not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes,"
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"anticipates," "plans," "expects," "seeks," "estimates," and similar
expressions are intended to identify forward-looking statements. There
are a number of important factors that could cause the results of the
Company to differ materially from those indicated by such forward-looking
statements, including those detailed under the heading "Forward-looking
Statements" in the Registrant's 1997 Annual Report to Shareholders, which
statements are incorporated herein by reference.
(b) Financial Information About Industry Segments
The Company's products and services are divided into six segments:
Instruments, Alternative-energy Systems, Paper Recycling, Biomedical
Products, Industrial Outsourcing, and Advanced Technologies. Products or
services within a particular segment are provided by more than one
subsidiary, and certain subsidiaries' products or services are included
in more than one segment. The principal products and services offered by
the Company in the six industry segments are described below. Financial
information concerning the Company's industry segments is summarized in
Note 14 to Consolidated Financial Statements in the Registrant's 1997*
Annual Report to Shareholders, which information is incorporated herein
by reference.
(c) Description of Business
(i) Principal Products and Services
Instruments
The Company, through its Thermo Instrument Systems Inc. subsidiary,
is a worldwide leader in the development, manufacture, and marketing of
instruments used to identify complex chemical compounds, toxic metals,
and other elements in a broad range of liquids, solids, and gases, as
well as to analyze air pollution and radioactivity. Thermo Instrument
also provides instruments that control, monitor, image, inspect, and
measure various industrial processes and life sciences phenomena.
Thermo Instrument historically has expanded both through the
acquisition of companies and product lines and through the internal
development of new products and technologies. During the past several
years, Thermo Instrument has completed a number of complementary
acquisitions that have provided additional technologies, specialized
manufacturing or product-development expertise, and broader capabilities
in marketing and distribution.
For example, in March 1997, Thermo Instrument acquired 95% of Life
Sciences International PLC, a London Stock Exchange-listed company.
Subsequently, Thermo Instrument acquired the remaining shares of Life
Sciences' capital stock. Life Sciences manufactures laboratory science
equipment, appliances, instruments, consumables, and reagents for the
research, clinical, and industrial markets.
* References to 1997, 1996, and 1995 herein are for the fiscal years
ended January 3, 1998, December 28, 1996, and December 30, 1995,
respectively.
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In March 1996, Thermo Instrument completed the acquisition of a
substantial portion of the businesses constituting the Scientific
Instruments Division of Fisons plc, a wholly owned subsidiary of
Rhone-Poulenc Rorer Inc. These businesses substantially added to Thermo
Instrument's research, development, manufacture, and sale of analytical
instruments to industrial and research laboratories worldwide. Certain of
the Fisons businesses were since sold by Thermo Instrument to a number of
its public subsidiaries that have complementary technologies and markets.
Thermo Instrument adopted the Company's spinout strategy in an effort
to more clearly focus its many instrumentation technologies on specific
niche markets. To date, Thermo Instrument has completed initial public
offerings of ThermoSpectra Corporation, ThermoQuest Corporation, Thermo
Optek Corporation, Thermo BioAnalysis Corporation, Metrika Systems
Corporation, and Thermo Vision Corporation. Thermo Instrument has
completed a private placement of common stock of its ONIX Systems Inc.
subsidiary and has filed a registration statement with the Securities and
Exchange Commission for a public offering of ONIX Systems common stock.
Thermo Instrument's subsidiaries are outlined below:
ThermoSpectra develops, manufactures, and markets precision imaging
and inspection, temperature-control, and test and measurement
instruments. These instruments are generally combined with proprietary
operations and analysis software to provide industrial and research
customers with integrated systems that address their specific needs.
ThermoQuest is a leading provider of mass spectrometers, liquid
chromatographs, and gas chromatographs for the pharmaceutical,
environmental, and industrial marketplaces. These analytical instruments
are used in the quantitative and qualitative chemical analysis of organic
and inorganic compounds at ultratrace levels of detection. ThermoQuest
also supplies scientific equipment for the preparation and preservation
of chemical samples, and consumables for the chromatography industry.
Thermo Optek is a worldwide leader in the development, manufacture,
and marketing of analytical instruments that use a range of light- and
energy-based techniques. Thermo Optek's instruments are used in the
quantitative and qualitative chemical analysis of elements and molecular
compounds in a variety of solids, liquids, and gases.
Thermo BioAnalysis develops, manufactures, and markets instruments,
consumables, and information-management systems used in biochemical
research and production, as well as in clinical diagnostics. Thermo
BioAnalysis focuses on three principal product areas: life sciences
instrumentation and consumables, information-management systems, and
health physics instrumentation.
Metrika Systems manufactures process optimization systems that
provide on-line, real-time analysis of the elemental composition of bulk
raw materials in basic-materials production processes, including coal,
cement, and minerals. In addition, Metrika Systems manufactures
industrial gauging and process-control instruments and systems used
principally by manufacturers of finished web materials, such as sheet
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metal, rubber, and plastic foils, to measure and control parameters such
as thickness and coating weight of such materials.
Thermo Vision, which became a public subsidiary of Thermo Instrument
in December 1997, designs, manufactures, and markets a diverse array of
photonics (light-based) products, including optical components, imaging
sensors and systems, lasers, optically based instruments, opto-
electronics, and fiber optics. These products are used in applications
including medical diagnostics, semiconductor production, X-ray imaging,
physics research, and telecommunications.
ONIX Systems, a privately held subsidiary of Thermo Instrument,
designs, develops, markets, and services sophisticated field measurement
instruments and on-line sensors for process-control industries,
particularly oil and gas. Systems provide real-time data collection,
analysis, and local control functions regarding the flow, level, density,
or composition of a particular material.
Thermo Instrument also has wholly owned businesses, including the
Life Sciences Clinical Instrument Division, which provides an array of
clinical laboratory equipment and consumables, and Thermo Monitoring
Instruments, which produces instruments and complete systems for
detecting and monitoring environmental pollutants from industrial and
mobile sources, and for detecting radioactive contamination.
Alternative-energy Systems
The Company's Alternative-energy Systems segment includes the
operation of independent (non-utility) power plants that operate using
environmentally sound fuels and technologies, the development of
engineered clean fuels, and the manufacture and sale of biopesticides.
This segment also includes the manufacture, sale, and servicing of
intelligent traffic-control systems, industrial refrigeration equipment;
natural gas engines; packaged cooling and cogeneration systems; and steam
turbines and compressors.
Through its Thermo Ecotek Corporation subsidiary, the Company
designs, develops, owns, and operates independent (non-utility) electric
power-generation facilities that use environmentally responsible fuels,
including agricultural and wood wastes, referred to as "biomass." Thermo
Ecotek currently operates seven biomass facilities. Its facilities are
developed and operated through joint ventures or limited partnerships in
which it has a majority interest, or through wholly owned subsidiaries.
Thermo Ecotek intends to pursue development of biomass and other
power-generation projects both in the U.S. and overseas. In 1996, Thermo
Ecotek formed a joint venture in Italy to develop, own, and operate
biomass-fueled electric power facilities, and in January 1997, announced
a joint agreement to expand two district energy centers in the Czech
Republic. In the U.S., where the Company believes that utility
deregulation may present opportunities for updating aging plants, Thermo
Ecotek signed a $9.5 million agreement in November 1997 to purchase two
deregulated plants in southern California for possible refurbishing and
repowering.
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Thermo Ecotek is expanding beyond power generation into other
products and processes that protect the environment. In August 1995,
Thermo Ecotek, through two wholly owned subsidiaries, entered into a
Limited Partnership Agreement with KFx Wyoming, Inc., a subsidiary of KFx
Inc., to develop, construct, and operate a coal-beneficiation plant in
Gillette, Wyoming. The facility employs patented "clean coal" technology
to remove excess moisture and increase energy from subbituminous coal
extracted from Wyoming's Powder River Basin.
In May 1996, Thermo Ecotek entered the biopesticide business by
acquiring the assets, subject to certain liabilities, of the biopesticide
division of W.R. Grace & Co. (renamed Thermo Trilogy), which develops,
manufactures, and markets environmentally friendly products for
agricultural pest control. In January 1997, Thermo Trilogy acquired the
assets of biosys, inc., a producer of pheromone, neem/azadiractin,
nematodes, and virus-based biopesticide products, as well as
disease-resistant sugar cane, and in November 1997, purchased the Bt
biopesticide product line of Novartis AG.
The Company, through its Thermo Power Corporation subsidiary,
manufactures, markets, and services intelligent traffic-control systems,
industrial refrigeration equipment, engines for vehicular and stationary
applications, natural gas-fueled commercial cooling and cogeneration
systems, and, through its privately held ThermoLyte Corporation
subsidiary, is developing a line of gas-powered lighting products for
commercialization.
In November 1997, Thermo Power completed a cash tender offer for Peek
plc, based in the U.K. Through Peek, the Company offers a range of
intelligent traffic-control systems for urban traffic control, motorway
management, and public transportation management in cities worldwide.
Systems include traffic-signal synchronization systems to minimize
congestion, variable message systems to advise drivers of accidents or
construction, video systems to provide real-time analysis of traffic
flows at intersections and on highways, as well as automatic
toll-collection systems. Peek also has developed high-resolution video
equipment to aid police officers in monitoring traffic violations.
Through its industrial refrigeration business, Thermo Power supplies
standard and custom-designed industrial refrigeration systems used
primarily by the food-processing, petrochemical, and pharmaceutical
industries. Thermo Power is also a supplier of both remanufactured and
new commercial cooling equipment for sale or rental. The commercial
cooling equipment is used primarily in institutions and commercial
buildings, as well as by service contractors.
Thermo Power also develops, manufactures, markets, and services
gasoline engines for recreational boats, propane and gasoline engines for
lift trucks, and natural gas engines for vehicles and stationary
industrial applications; and designs, develops, markets, and services
packaged cooling and cogeneration systems fueled principally by natural
gas.
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The Company's Alternative-energy Systems segment also includes a
U.K.-based manufacturer of steam turbines and compressors.
Paper Recycling
The Company designs, manufactures, and sells paper recycling and
papermaking equipment and accessory products, and electroplating and
aqueous cleaning systems.
Through its Thermo Fibertek Inc. subsidiary, the Company is a leading
designer and manufacturer of processing machinery, accessories, and
water-management systems for the paper and paper recycling industries.
Thermo Fibertek's custom-engineered systems remove debris, impurities,
and ink from wastepaper, and process it into a fiber mix used to produce
recycled paper. Thermo Fibertek's principal products include
custom-engineered systems and equipment for the preparation of wastepaper
for conversion into recycled paper, accessory equipment and related
consumables important to the efficient operation of papermaking machines,
and water-management systems essential for draining, purifying, and
recycling process water.
In May 1997, Thermo Fibertek acquired the majority of the assets,
subject to certain liabilities, of the stock-preparation business of
Black Clawson Company and certain of its affiliates. In August 1997, the
Company acquired the remaining assets of the stock-preparation business
of Black Clawson Company and such affiliates. This business, renamed
Thermo Black Clawson, is a leading supplier of recycling equipment used
in processing fiber for the manufacture of "brown paper," such as that
used for corrugated boxes.
In September 1996, Thermo Fibergen Inc. became a majority-owned,
public subsidiary of Thermo Fibertek. Thermo Fibergen is developing and
commercializing equipment and systems to recover materials from
papermaking sludge generated by plants that produce virgin and recycled
pulp and paper. Thermo Fibergen's GranTek Inc. subsidiary uses a patented
process to convert papermaking sludge into granules that are used for
applications including carriers for agricultural chemicals, oil and
grease absorption, and catbox filler.
Through a wholly owned subsidiary, the Company also manufactures
electroplating systems and related waste-treatment equipment and
accessories, as well as aqueous systems for cleaning metal parts without
using ozone-damaging solvents.
Biomedical Products
The Company's Biomedical Products segment comprises a number of
diverse medical products businesses, both wholly and publicly owned, that
supply a wide range of medical systems and devices for diagnostic
imaging, cardiovascular support, respiratory care, neurodiagnostics,
sleep analysis, wireless patient monitoring, and blood management. The
Company's biomedical products are provided to hospitals, clinics,
universities, private-practice medical offices, and medical research
facilities.
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Its wholly owned Thermo Biomedical group includes Bear Medical
Systems, the business of which was acquired from Allied Healthcare
Products, Inc. in October 1997. Bear Medical designs, manufactures, and
markets respiratory products, primarily ventilators.
Also part of the Company's Thermo Biomedical group are SensorMedics
Corporation, a leading provider of systems for pulmonary function
diagnosis and a producer of respiratory gas analyzers, physiological
testing equipment, and automated sleep-analysis systems; and Medical Data
Electronics, a manufacturer of patient-monitoring systems. Both companies
were acquired in 1996.
Nicolet Biomedical Inc., another wholly owned subsidiary of the
Company, is a leading manufacturer of biomedical instruments for
assessing muscle, nerve, sleep, hearing, and brain blood-flow disorders,
various neurologic disorders, and for related work in clinical
neurophysiology. In September 1997, Nicolet acquired IMEX Medical
Systems, Inc., a leading manufacturer of products used to evaluate
peripheral vascular disease, as well as products to detect fetal
heartbeat. This subsidiary is now called Nicolet Vascular Inc.
Another wholly owned subsidiary, Bird Medical Technologies, Inc.,
develops, manufactures, and sells respiratory-care equipment and
accessories and infection-control products to hospitals, subacute-care
facilities, outpatient surgical centers, doctors, dentists, the military,
and to other manufacturers.
Thermo Cardiosystems Inc., a public subsidiary of Thermedics Inc.,
has developed an implantable left ventricular-assist system (LVAS) called
HeartMate(TM) that, when implanted alongside the natural heart, is
designed to take over the pumping function of the left ventricle for
patients whose hearts are too damaged or diseased to produce adequate
blood flow. Thermo Cardiosystems has two versions of the LVAS: a
pneumatic (or air-driven) system that can be controlled by either a
bedside console or portable unit, and an electric system that features an
internal electric motor powered by an external battery-pack worn by the
patient.
The air-driven HeartMate system has received both the European
Conformity Mark and U.S. Food and Drug Administration (FDA) approval for
commercial sale. The electric version of the LVAS, which also holds the
CE Mark, is currently awaiting commercial approval by the FDA for use as
a bridge to transplant. In Europe, the device is used both as a bridge to
transplant and as an alternative to medical therapy.
In December 1996, Thermo Cardiosystems acquired the business of
Nimbus Medical, Inc., a research and development organization involved
for more than 20 years in technology for ventricular-assist devices and
total artificial hearts, including high-speed rotary blood pumps, which
are relatively small and could potentially provide cardiac support in
small adults and children.
Also part of Thermo Cardiosystems is International Technidyne
Corporation, a leading manufacturer of hemostasis-management products,
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including blood coagulation-monitoring instruments, and a supplier of
skin-incision devices used to draw small blood samples precisely and with
minimal discomfort.
Trex Medical Corporation, a public subsidiary of ThermoTrex
Corporation, designs, manufactures, and markets a range of medical
imaging systems. It is the world's leading manufacturer of mammography
equipment and minimally invasive digital breast-biopsy systems. Trex
Medical also provides general-purpose and specialty radiographic systems,
such as those used in the diagnosis and treatment of coronary artery
disease and other vascular conditions.
In early December, Trex Medical submitted a 510(k) application to the
FDA seeking clearance to market its digital imaging system for
mammography. The Company believes that an advantage of digital imaging is
that radiologists can manipulate and enhance image quality to scrutinize
subtle differences that may otherwise go undetected on film-based X-rays.
If the FDA approves the digital imaging system for mammography
applications, Trex Medical plans to develop its digital technology for
use in certain of its other products.
ThermoLase Corporation, also a public subsidiary of ThermoTrex,
operates a network of spas that offer its patented SoftLight(R)
hair-removal system, for which it received FDA clearance in April 1995.
The SoftLight system uses a low-energy dermatology laser in combination
with a lotion to remove hair. ThermoLase submitted a 510(k) application
for its laser-based skin-retexturing system, based on data from clinical
trials.
ThermoLase currently has 14 Spa Thira locations in the U.S., with 3
spas outside the U.S.: in Paris, France; Lugano, Switzerland; and Dubai,
U.A.E. To complement its Spa Thira salons, ThermoLase has commenced a
program to license the SoftLight hair-removal process to physicians for
use in their practices. ThermoLase has established a number of joint
ventures and other physician-licensing arrangements to market its
SoftLight processes internationally.
ThermoLase also manufactures and markets personal care products sold
through department stores, salons, and spas, including the lotion that is
used in the SoftLight hair-removal process.
Trex Communications Corporation, a majority-owned, privately held
subsidiary of ThermoTrex, is developing laser communications technology
designed to transmit very large amounts of data quickly, and also designs
and markets interactive information and voice-response systems, as well
as automated calling equipment.
Industrial Outsourcing
Through its Thermo TerraTech Inc. subsidiary, the Company provides
outsourcing services, primarily in environmental-liability management and
infrastructure planning and design, with specialization in the areas of
municipal and industrial water quality management, bridge and highway
construction and reconstruction, and natural resource management. Thermo
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TerraTech also offers comprehensive environmental testing and analysis
through a national network of laboratories serving the pharmaceutical,
food, and environmental industries.
Thermo Remediation Inc., a public subsidiary of Thermo TerraTech, is
a national provider of outsourcing services for environmental management,
including industrial, nuclear, and soil remediation, as well as
waste-fluids recycling, primarily helping clients manage problems
associated with environmental compliance, waste management, and the
cleanup of sites contaminated with organic or toxic wastes.
The Randers Group Incorporated, also a public subsidiary of Thermo
TerraTech, provides comprehensive engineering and outsourcing services in
such areas as water and wastewater treatment, highway and bridge
projects, process engineering, construction management, and operational
services.
A privately held subsidiary of Thermo TerraTech, Thermo EuroTech
N.V., provides remediation and recycling services in Europe. The Company
treats oil-based contaminated soils and recycles waste oil and oily waste
streams. In February 1998, Thermo EuroTech acquired a controlling
interest in an Irish environmental services company that provides
comprehensive in-plant waste management and recycling services to
high-tech manufacturing firms in that country.
In addition, metallurgical heat-treating services are provided by a
wholly owned subsidiary of the Company for customers in the automotive,
aerospace, defense, and other industries. The Company also provides,
through another wholly owned business, metallurgical fabrication
services, principally on high-temperature materials, for customers in the
aerospace, medical, electronics, and nuclear industries.
Advanced Technologies
The Company's Advanced Technologies segment includes basic and
applied research and development, often sponsored by the U.S. government,
that is conducted with a goal of identifying viable commercial
opportunities for new ventures. A number of its subsidiaries also provide
various instrument systems, developed primarily for product
quality-assurance applications in industrial, food and beverage,
pharmaceutical, and electronics markets.
The Company's ThermoTrex subsidiary conducts sponsored research and
development with the goal of commercializing new products based on
advanced technologies developed in its laboratories. Sponsored research
and development, conducted principally for the U.S. government, includes
basic and applied research in communications, avionics, X-ray detection,
signal processing, advanced-materials technology, and lasers.
ThermoTrex is currently developing a number of additional
technologies that it believes may have future commercial potential. These
include a passive microwave camera intended to "see" through clouds and
fog to enhance safety in aerial navigation, a space surveillance system
designed to produce high-resolution images of low-earth-orbit satellites,
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a rapid optical beam steering laser radar system, and direct digital
imaging systems for medical equipment to improve image quality for
earlier and more accurate clinical diagnoses.
The Company's wholly owned Thermo Coleman Corporation subsidiary
provides systems engineering, technology support and information-
technology services and products. Thermo Coleman also provides defense-
and environmental-systems engineering, integration and analysis services,
and advanced technology research and development, primarily to the U.S.
government. Using expertise gained from its government contract work,
Thermo Coleman designs, develops, and commercializes services and
products in areas such as information technology and sensor and
measurement systems for customers in industries including healthcare,
education, aircraft production, government, utilities, and entertainment.
Thermo Sentron Inc., a public subsidiary of Thermedics, designs and
manufactures high-speed precision-weighing and inspection equipment for
packaging lines and industrial production. Thermo Sentron serves two
principal markets, packaged goods and bulk materials, both of which use
its products to meet quality and productivity objectives. Customers for
Thermo Sentron's checkweighers are in the food-processing,
pharmaceutical, mail-order, and other packaged-goods businesses. Thermo
Sentron also sells metal detectors with a patented self-test feature that
are used to inspect packaged products for metal contamination to
food-processing and pharmaceutical companies. Its bulk-materials product
line includes conveyor-belt scales, solid level-measurement and
conveyor-monitoring systems, and sampling systems, all sold to customers
in the mining and material-processing industries, as well as to electric
utilities, chemical, and other manufacturing companies.
Thermedics Detection Inc., another public subsidiary of Thermedics,
develops and manufactures high-speed on-line analysis systems used for
product quality assurance in a variety of industrial processes, as well
as for security. Thermedics Detection provides X-ray imaging systems that
monitor a wide range of containers for fill volume, net volume, and
package integrity, as well as systems that detect trace amounts of
contaminants in refillable bottles, specifically for the beverage
industry. For the beverage, food, cosmetic, and other industries,
Thermedics Detection also makes instruments that use near-infrared
spectroscopy to measure moisture and other product components, including
fat, protein, solvents, and other substances in numerous consumer and
industrial products. Thermedics Detection recently introduced an
ultrahigh-speed gas chromatograph that permits manufacturers to conduct
laboratory-quality analysis for near-on-line process-control
applications.
Thermo Voltek Corp., also a public subsidiary of Thermedics, designs,
manufactures, and markets test instruments and a range of products
related to power amplification, conversion, and quality. Thermo Voltek's
power products are used in communications, broadcast, research, and
medical imaging applications. It's test instruments allow manufacturers
of electronic systems and integrated circuits to test for electromagnetic
compatibility.
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Through a wholly owned subsidiary, Thermedics manufactures
electrode-based chemical-measurement products used in the agricultural,
biomedical research, food processing, pharmaceutical, sewage treatment,
and many other industries. In laboratories, manufacturing plants, and in
the field, Thermedics' products permit these industries to determine the
presence and amount of relevant chemicals. Thermedics also manufactures
on-line process monitors used by power plants and semiconductor
manufacturers to detect contaminants in high-purity water.
(ii) New Products
The Company's business includes the development and introduction of
new products and may include entry into new business segments. The
Company has made no commitments to new products that require the
investment of a material amount of the Company's assets, nor does it have
any definitive plans to enter new business segments that would require
such an investment (see Section (xi) "Research and Development").
(iii) Raw Materials
Certain raw materials used in the manufacture of Thermo
Cardiosystem's LVAS are available from only one or two suppliers. Thermo
Cardiosystems is making efforts to minimize the risks associated with
sole sources and ensure long-term availability, including qualifying
alternative materials or developing alternative sources for materials and
components supplied by a single source. Although the Company believes
that it has adequate supplies of materials and components to meet demand
for the LVAS for the foreseeable future, no assurance can be given that
the Company will not experience shortages of certain materials or
components in the future that could cause delays in Thermo Cardiosystems'
LVAS development program or adversely affect Thermo Cardiosystems'
ability to manufacture and ship LVAS units to meet demand.
Except as described above, in the opinion of management, the Company
has a readily available supply of raw materials for all of its
significant products from various sources and does not anticipate any
difficulties in obtaining the raw materials essential to its business.
(iv) Patents, Licenses, and Trademarks
The Company considers patents to be important in the present
operation of its business; however, the Company does not consider any
patent, or related group of patents, to be of such importance that its
expiration or termination would materially affect the Company's business
taken as a whole. The Company seeks patent protection for inventions and
developments made by its personnel and incorporated into its products or
otherwise falling within its fields of interest. Patent rights resulting
from work sponsored by outside parties do not always accrue exclusively
to the Company and may be limited by agreements or contracts.
The Company protects some of its technology as trade secrets and,
where appropriate, uses trademarks or registers its products. It also
enters into license agreements with others to grant and/or receive rights
to patents and know-how.
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(v) Seasonal Influences
Thermo Ecotek earns a disproportionately high share of its income
from May through October due to the rate structures under the power sales
agreements relating to its California power plants, which provide strong
incentives to operate during this period of high demand. Conversely,
Thermo Ecotek historically has operated at a loss or at a marginal profit
during the first quarter due to the rate structure under these
agreements.
Funding patterns of government entities, as well as seasonality, are
expected to result in fluctuations in quarterly revenues and income at
Thermo Power's Peek subsidiary. Peek has historically experienced
relatively higher sales and net income in the second and fourth calendar
quarters and relatively lower sales and net income in the first and third
calendar quarters.
While Thermo TerraTech conducts significant operations year-round,
the majority of its businesses experience seasonal fluctuations due to
adverse weather during winter months.
There are no other material seasonal influences on the Company's
sales of products and services.
(vi) Working Capital Requirements
There are no special inventory requirements or credit terms extended
to customers that would have a material adverse effect on the Company's
working capital.
(vii) Dependency on a Single Customer
No single customer accounted for more than 10% of the Company's total
revenues in any of the past three years. The Advanced Technologies
segment derived approximately 34%, 38%, and 52% of its revenues in 1997,
1996, and 1995, respectively, from contracts with various agencies of the
U.S. government. In connection with the development of power plants,
Thermo Ecotek typically enters into long-term power supply contracts with
a single customer for the sale of power generated by each plant. The
Alternative-energy Systems segment derived 15%, 16%, and 16% of its
revenues in 1997, 1996, and 1995, respectively, from Pacific Gas &
Electric and 15%, 16%, and 15% of its revenues in 1997, 1996, and 1995,
respectively, from Southern California Edison.
13PAGE
<PAGE>
(viii) Backlog
The Company's backlog of firm orders at year-end 1997 and 1996 was as
follows:
(In thousands) 1997 1996
-------------------------------------------------------------------------
Instruments $298,900 $266,600
Alternative-energy Systems 186,800 118,500
Paper Recycling 62,300 52,300
Biomedical Products 109,800 107,700
Industrial Outsourcing 117,100 118,200
Advanced Technologies 120,600 148,600
-------- --------
$895,500 $811,900
======== ========
Backlog includes the uncompleted portion of research and development
contracts and the uncompleted portion of certain contracts that are
accounted for using the percentage-of-completion method. Certain of such
firm orders are cancellable by the customer upon the payment of a
cancellation charge. The Company believes substantially all of the
year-end 1997 backlog will be filled during 1998.
(ix) Government Contracts
Approximately 5% of the Company's total revenues in 1997 were derived
from contracts or subcontracts with the federal government, which are
subject to renegotiation of profits or termination. The Company does not
have any knowledge of threatened or pending renegotiation or termination
of any material contract or subcontract.
(x) Competition
The Company is engaged in many highly competitive industries. The
nature of the competition in each of the Company's segments is described
below:
Instruments
The Company is among the principal manufacturers of analytical
instrumentation. Within the markets for the Company's analytical
instrument products, the Company competes with several large corporations
that have broad product offerings, such as Hewlett-Packard Company;
Perkin-Elmer Corp.; Varian Associates, Inc.; and Hitachi, Ltd., as well
as numerous smaller companies that address particular segments of the
industry or specific geographic areas. The Company's instruments business
generally competes on the basis of technical advances that result in new
products and improved price/performance ratios, reputation among
customers as a quality leader for products and services, and active
research and application-development programs. To a lesser extent, the
Company competes on the basis of price.
14PAGE
<PAGE>
Alternative-energy Systems
The worldwide independent power market consists of numerous
companies, ranging from small startups to multinational industrial
companies. In addition, a number of regulated utilities have created
subsidiaries that compete as non-utility generators. Non-utility
generators often specialize in market "niches," such as a specific
technology or fuel (i.e., gas-fired cogeneration, refuse-to-energy,
hydropower, geothermal, wind, solar, wood, or coal) or a specific region
of the country where they believe they have a market advantage. However,
many non-utility generators, including the Company, seek to develop
projects on a best-available-fuel basis. The Company competes primarily
on the basis of project experience, technical expertise, capital
resources, and power pricing.
The market in which the Company's biopesticide business competes is
highly competitive and subject to rapid technological change. Many
competitors are large chemical and pharmaceutical companies with greater
financial, marketing, and technological resources than the Company. The
Company's biopesticide business competes primarily based on effective-
ness, and also on price, ease of use, and environmental impact of use.
The market for traffic products and services is extremely
competitive, and the Company expects that competition will continue to
increase, with the principal factors being price, functionality,
reliability, service and support, and vendor and product reputation,
along with industry and general economic trends. The Company believes
that it is a leading manufacturer and supplier of traffic products, and
considers its major competitor to be Siemens AG. However, the traffic
market is highly fragmented and competition varies significantly
depending on the individual product.
The Company's sale of industrial refrigeration systems is subject to
intense competition. The industrial refrigeration market is mature,
highly fragmented, and extremely dependent on close customer contacts.
Major industrial refrigeration companies, of which the Company is one,
account for approximately one-half of worldwide sales, with the balance
generated by many smaller companies. The Company competes principally on
the basis of its advanced control systems and overall quality,
reliability, service, and price. The Company believes it is a leader in
remanufactured refrigeration equipment. The Company competes in this
market primarily based on price, delivery time, and customized equipment.
Paper Recycling
The Company faces significant competition in the markets for paper
recycling and water-handling equipment and papermaking accessories, and
competes in these markets primarily on the basis of quality, service,
technical expertise, and product innovation. The Company is a leading
supplier of de-inking systems for paper recycling and accessory equipment
for papermaking machines, and competes in these markets primarily on the
basis of service, technical expertise, and performance.
15PAGE
<PAGE>
Biomedical Products
Competition in the markets for most of the Company's biomedical
products, including those manufactured by Thermo Cardiosystems,
ThermoTrex, Nicolet Biomedical, Bird Medical Technologies, SensorMedics,
Medical Data Electronics, Bear Medical Systems, and Nicolet Vascular, is
based to a large extent upon technical performance.
The Company is aware of one other company that has submitted a PMA
application with the FDA for an implantable LVAS that would compete with
Thermo Cardiosystems' LVAS. The Company is unaware whether this PMA
application has been accepted for filing by the FDA. Also, the Company is
aware of one other company that has received approval by the FDA Advisory
Panel on Circulatory System Devices and subsequent commercial approval
for its cardiac-assist device. This is an external device that is
positioned on the outside of the patient's chest and is intended for
short-term use in the hospital environment. The Company is also aware
that a total artificial heart is currently undergoing clinical trials.
The requirement of obtaining FDA approval for commercial sale of an LVAS
is a significant barrier to entry into the U.S. market for these devices.
There can be no assurance, however, that FDA regulations will not change
in the future, reducing the time and testing required for others to
obtain FDA approval. In addition, other research groups and companies are
developing cardiac-assist systems using alternative technologies or
concepts, one or more of which might prove functionally equivalent to, or
more suitable than, the Company's systems. Among products that have been
approved for commercial sale, the Company competes primarily on the basis
of performance, service capability, reimbursement status, and price.
The Company is one of a number of competitors in the markets for
mammography and general radiographic systems and is one of two
competitors in the market for stereotactic breast-biopsy systems. The
Company competes in these markets primarily on the basis of product
features, product performance, and reputation, as well as price and
service. The markets in which the Company competes with these products
are characterized by rapid technological change. The Company believes
that in order to be competitive in these markets it will be important to
continue to be technologically innovative.
The Company's SoftLight laser hair-removal system competes with other
laser-based systems, electrolysis, and other traditional hair-removal
methods, such as shaving and waxing. In 1997, five other laser
manufacturers received clearance from the FDA to market their laser-based
systems for the removal of unwanted facial and body hair. The laser-based
hair-removal market is characterized by rapid technological change, and
the Company believes that it must continue to be technologically
innovative in order to compete in this market. In addition, the SoftLight
system competes with electrolysis providers, many of whom are small
practitioners with well-established networks of client relationships. The
Company believes that competition for its hair-removal services is based
primarily on efficacy, price, comfort, and safety.
16PAGE
<PAGE>
Industrial Outsourcing
The Company seeks to compete in the market for soil-remediation
services based on its ability to offer customers superior protection from
environmental liabilities. However, with relaxed regulatory standards in
many states, the Company faces intense competition in local markets from
landfills, other treatment technologies, and from companies competing
with similar technologies, limiting the volume of soil to be treated and
the prices that can be charged by the Company. Pricing is therefore a
major competitive factor for the Company.
The Company's metallurgical services business competes in specialty
machining services. Competition is based principally on services
provided, turnaround time, and price.
Hundreds of independent analytical testing laboratories and
consulting firms compete for environmental services business nationwide.
Many of these firms use equipment and processes similar to those of the
Company. Competition is based not only on price, but also on reputation
for accuracy, quality, and the ability to respond rapidly to customer
requirements. In addition, many industrial companies have their own
in-house analytical testing capabilities. The Company believes that its
competitive strength lies in certain niche markets within which the
Company is recognized for its expertise.
Advanced Technologies
In its contract research and development business, the Company not
only competes with other companies and institutions that perform similar
services, but must also rely on the ability of government agencies and
other clients to obtain allocations of research and development monies to
fund contracts with the Company. The Company competes for research and
development programs principally on the basis of technical innovations.
As government funding becomes more scarce, particularly for defense
projects, the competition for such funding will become more intense. In
addition, as the Company's programs move from the development stage to
commercialization, competition is expected to intensify.
Thermo Sentron competes with several international and regional
companies in the market for its products. Thermo Sentron's competitors in
the packaged goods market differ from those in the bulk materials market.
The principal competitive factors in both markets are customer service
and support, quality, reliability, and price.
Thermedics Detection's product quality-assurance systems compete with
chemical-detection systems manufactured by several companies and with
other technologies and processes for product quality assurance.
Competition in the markets for all of the Company's detection products is
based primarily on performance, service, and price. There are a number of
competitors in the market for instruments that detect explosives,
including makers of other chemical-detection instruments as well as
enhanced X-ray detectors.
17PAGE
<PAGE>
Thermo Voltek is a leading supplier of electromagnetic compatibility
testing equipment. The Company competes in this market primarily on the
basis of performance, technical expertise, reputation, and price. In the
market for power amplifiers, Thermo Voltek competes with several
companies worldwide primarily on the basis of technical expertise,
reputation, and price.
Thermedics' electrode-based chemical-measurement products compete
with several international companies. In the markets for these products,
Thermedics competes on the basis of performance, service, technology, and
price.
(xi) Research and Development
During 1997, 1996, and 1995, the Company expended $335,372,000,
$299,271,000, and $269,329,000, respectively, on research and
development. Of these amounts, $143,743,000, $144,823,000, and
$167,120,000, respectively, were sponsored by customers and $191,629,000,
$154,448,000, and $102,209,000, respectively, were Company-sponsored.
(xii) Environmental Protection Regulations
The Company believes that compliance with federal, state, and local
environmental protection regulations will not have a material adverse
effect on its capital expenditures, earnings, or competitive position.
(xiii) Number of Employees
At January 3, 1998, the Company employed approximately 22,400
persons.
(d) Financial Information about Exports by Domestic Operations and About
Foreign Operations
Financial information about exports by domestic operations and about
foreign operations is summarized in Note 14 to Consolidated Financial
Statements in the Registrant's 1997 Annual Report to Shareholders, which
information is incorporated herein by reference.
(e) Executive Officers of the Registrant
Present Title (Year First Became
Name Age Executive Officer)
---------------------------------------------------------------
George N. Hatsopoulos* 71 Chairman of the Board and Chief
Executive Officer (1956)
John N. Hatsopoulos* 63 President and Chief Financial Officer
(1968)
Arvin H. Smith 68 Executive Vice President (1983)
William A. Rainville 56 Senior Vice President (1993)
John W. Wood Jr. 54 Senior Vice President (1995)
Peter G. Pantazelos 67 Executive Vice President (1968)
Paul F. Kelleher 55 Senior Vice President, Finance and
Administration (1982)
* George N. Hatsopoulos and John N. Hatsopoulos are brothers.
18PAGE
<PAGE>
Each executive officer serves until his successor is chosen or
appointed and qualified or until earlier resignation, death, or removal.
All executive officers, except Messrs. John Hatsopoulos, Rainville, and
Wood, have held comparable positions with the Company for at least the
last five years. Mr. John Hatsopoulos has been President of the Company
since January 1997 and Chief Financial Officer of the Company since 1988.
Mr. Rainville has been a Senior Vice President of the Company since 1993
and was a Vice President of the Company from 1986 to 1993. Mr. Wood was
President and Chief Executive Officer of Thermedics from 1984 until 1998,
when he assumed the position of Chairman of the Board, and was a Vice
President of the Company from 1994 to 1995, prior to becoming a Senior
Vice President of the Company in 1995.
Item 2. Properties
The location and general character of the Company's principal
properties by industry segment as of January 3, 1998, are as follows:
Instruments
The Company owns approximately 2,601,000 square feet of office,
engineering, laboratory, and production space, principally in California,
Florida, New Mexico, Texas, Wisconsin, Ohio, New Hampshire, New York,
Massachusetts, the United Kingdom, and Germany, and leases approximately
2,423,000 square feet of office, engineering, laboratory, and production
space principally in California, Massachusetts, Texas, Wisconsin, and the
United Kingdom, under leases expiring from 1998 to 2017.
Alternative-energy Systems
The Company owns approximately 510,000 square feet of office,
engineering, and production space, principally in Pennsylvania, the
United Kingdom, Texas, Florida, California, and Massachusetts, and leases
approximately 686,000 square feet of office, engineering, laboratory, and
production space principally in Illinois, Michigan, and the United
Kingdom, under leases expiring from 1998 to 2020.
The Company operates four independent power plants in California,
Maine, and New Hampshire, under leases expiring from 2000 to 2010. The
Company owns three independent power plants in New Hampshire and
California and a coal-beneficiation plant in Wyoming.
Paper Recycling
The Company owns approximately 1,281,000 square feet of office,
laboratory, and production space, principally in France, Connecticut,
Massachusetts, New York, and Ohio, and leases approximately 317,000
square feet of office, engineering, and production space principally in
Wisconsin, Louisianna, and Massachusetts, under leases expiring from 1998
to 2005.
19PAGE
<PAGE>
Biomedical Products
The Company owns approximately 458,000 square feet of office and
production space in Illinois, California, Wisconsin, Connecticut, and New
Jersey, and leases approximately 1,409,000 square feet of office,
engineering, laboratory, and production space in principally Texas,
Massachusetts, California, New York, Connecticut, and Illinois, under
leases expiring from 1998 to 2013.
Industrial Outsourcing
The Company owns approximately 715,000 square feet of office,
laboratory, and production space, principally in California,
Pennsylvania, Minnesota, New Jersey, and Massachusetts, and leases
approximately 563,000 square feet of office, engineering, laboratory, and
production space principally in California, Pennsylvania, Massachusetts,
New Hampshire, New York, New Jersey, and Florida, under leases expiring
from 1998 to 2008.
The Company owns approximately 71.5 acres of land from which it
provides soil-remediation services principally in Maryland, Oregon, and
California, and leases approximately 26 acres of land from which it
provides soil-remediation and fluid-recycling services principally in New
York, Arizona, and Washington, under leases expiring from 1999 to 2006.
The Company also leases approximately 15 acres in Delfzijl, Holland,
consisting of office, production, and oil storage facilities, under a
lease expiring in 2059.
Advanced Technologies and Corporate Headquarters
The Company owns approximately 162,000 square feet of office space
principally in Massachusetts, New York, and the United Kingdom, and
leases approximately 1,047,000 square feet of office, engineering, and
laboratory space principally in Florida, Massachusetts, California,
Minnesota, Virginia, the Netherlands, Australia, and Alabama, under
leases expiring from 1998 to 2011.
The Company believes that its facilities are in good condition and
are suitable and adequate to meet its current needs, and that suitable
replacements are available on commercially reasonable terms for any
leases that expire in 1998 in the event that the Company is unable to
renew such leases on reasonable terms.
Item 3. Legal Proceedings
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
20PAGE
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
Information concerning the market and market price for the
Registrant's common stock, $1.00 par value, and related matters, is
included under the sections labeled "Common Stock Market Information" and
"Dividend Policy" in the Registrant's 1997 Annual Report to Shareholders
and is incorporated herein by reference.
Item 6. Selected Financial Data
The information required under this item is included under the
sections "Ten Year Financial Summary" and "Dividend Policy" in the
Registrant's 1997 Annual Report to Shareholders and is incorporated
herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required under this item is included under the
heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Registrant's 1997 Annual Report to
Shareholders and is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The Registrant's Consolidated Financial Statements as of December 28,
1996, are included in the Registrant's 1997 Annual Report to Shareholders
and are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
Not Applicable.
21PAGE
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
The information concerning directors required under this item is
incorporated herein by reference from the material contained under the
caption "Election of Directors" in the Registrant's definitive proxy
statement to be filed with the Securities and Exchange Commission
pursuant to Regulation 14A, not later than 120 days after the close of
the fiscal year.
Item 11. Executive Compensation
The information required under this item is incorporated herein by
reference from the material contained under the caption "Executive
Compensation" in the Registrant's definitive proxy statement to be filed
with the Securities and Exchange Commission pursuant to Regulation 14A,
not later than 120 days after the close of the fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required under this item is incorporated herein by
reference from the material contained under the caption "Stock Ownership"
in the Registrant's definitive proxy statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, not later
than 120 days after the close of the fiscal year.
Item 13. Certain Relationships and Related Transactions
The information required under this item is incorporated herein by
reference from the material contained under the caption "Relationship
with Affiliates" in the Registrant's definitive proxy statement to be
filed with the Securities and Exchange Commission pursuant to Regulation
14A, not later than 120 days after the close of the fiscal year.
22PAGE
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a, d) Financial Statements and Schedules
(1) The financial statements set forth in the list below are
filed as part of this Report.
(2) The financial statement schedule set forth in the list
below is filed as part of this Report.
(3) Exhibits filed herewith or incorporated herein by reference
are set forth in Item 14(c) below.
List of Financial Statements and Schedules Referenced in this
Item 14
Information incorporated by reference from Exhibit 13 filed
herewith:
Consolidated Statement of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Shareholders' Investment
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
Financial Schedule included herewith:
Schedule II: Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable
or not required, or because the required information is shown
either in the financial statements or in the notes thereto.
(b) Reports on Form 8-K
None.
(c) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
23PAGE
<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 Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 11, 1998
THERMO ELECTRON CORPORATION
By: George N. Hatsopoulos
-------------------------
George N. Hatsopoulos
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated, as of March 11, 1998.
Signature Title
--------- -----
By:George N. Hatsopoulos Chief Executive Officer, Chairman
-------------------------- of the Board, and Director
George N. Hatsopoulos
By:John N. Hatsopoulos President, Chief Financial Officer,
-------------------------- and Director
John N. Hatsopoulos
By:Paul F. Kelleher Senior Vice President, Finance and
-------------------------- Administration (Chief Accounting
Paul F. Kelleher Officer)
By:John M. Albertine Director
--------------------------
John M. Albertine
By:Peter O. Crisp Director
--------------------------
Peter O. Crisp
By:Elias P. Gyftopoulos Director
--------------------------
Elias P. Gyftopoulos
By:Frank Jungers Director
--------------------------
Frank Jungers
By:Robert A. McCabe Director
--------------------------
Robert A. McCabe
By:Frank E. Morris Director
--------------------------
Frank E. Morris
By:Donald E. Noble Director
--------------------------
Donald E. Noble
By:Hutham S. Olayan Director
--------------------------
Hutham S. Olayan
By:Richard F. Syron Director
--------------------------
Richard F. Syron
By:Roger D. Wellington Director
--------------------------
Roger D. Wellington
24PAGE
<PAGE>
Report of Independent Public Accountants
----------------------------------------
To the Shareholders and Board of Directors of
Thermo Electron Corporation:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in Thermo
Electron Corporation's Annual Report to Shareholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated
February 18, 1998. Our audits were made for the purpose of forming an
opinion on those statements taken as a whole. The schedule listed in Item
14 on page 23 is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures
applied in the audits of the basic consolidated financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic consolidated
financial statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
February 18, 1998
25PAGE
<PAGE>
SCHEDULE II
THERMO ELECTRON CORPORATION
Valuation and Qualifying Accounts
(In thousands)
Balance Provision
at Charged Accounts Balance
Beginning to Accounts Written at End
Description of Year Expense Recovered Off Other(a) of Year
-----------------------------------------------------------------------------
Allowance for
Doubtful Accounts
Year Ended
Jan. 3, 1998 $34,321 $ 9,078 $ 527 $(8,594) $20,366 $55,698
Year Ended
Dec. 28, 1996 $29,318 $ 6,002 $ 760 $(8,994) $ 7,235 $34,321
Year Ended
Dec. 30, 1995 $21,664 $ 5,534 $ 5 $(6,422) $ 8,537 $29,318
(a) Allowances of businesses acquired during the year as described in Note 3
to Consolidated Financial Statements in the Registrant's 1997 Annual
Report to Shareholders and the effect of foreign currency translation.
26PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
2.1 Amended and Restated Asset and Stock Purchase Agreement
dated March 29, 1996, among the Registrant, Thermo
Instrument, and Fisons plc (filed as Exhibit 2.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 30, 1996 [File No. 1-8002] and incorporated
herein by reference). Pursuant to Item 601(b)(2) of
Regulation S-K, schedules to this Agreement have been
omitted. The Registrant hereby undertakes to furnish
supplementally a copy of such schedules to the Commission
upon request.
3.1 Restated Certificate of Incorporation of the Registrant, as
amended (filed as Exhibit 3(i) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June
29, 1996 [File No. 1-8002] and incorporated herein by
reference).
3.2 By-laws of the Registrant, as amended (filed as Exhibit 3.2
to the Registrant's Annual Report on Form 10-K for the year
ended December 28, 1996 [File No. 1-8002] and incorporated
herein by reference).
4.1 Fiscal Agency Agreement dated as of January 3, 1996,
between the Registrant and Chemical Bank pertaining to the
Registrant's 4 1/4% Subordinated Convertible Debentures due
2003 (filed as Exhibit 4.1 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 30,
1995 [File No. 1-8002] and incorporated herein by
reference).
The Registrant agrees, pursuant to Item 601(b)(4)(iii)(A)
of Regulation S-K, to furnish to the Commission upon
request, a copy of each instrument with respect to other
long-term debt of the Registrant or its consolidated
subsidiaries.
4.2 Rights Agreement dated as of January 19, 1996, between the
Registrant and The First National Bank of Boston, which
includes as Exhibit A the Form of Certificate of
Designations, as Exhibit B the Form of Rights Certificate,
and as Exhibit C the Summary of Rights to Purchase
Preferred Stock (filed as Exhibit 1 to the Registrant's
Registration Statement on Form 8-A, declared effective by
the Commission on January 31, 1996 [File No. 1-8002] and
incorporated herein by reference).
27PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.1 Thermo Electron Corporate Charter as amended and restated
effective January 3, 1993 (filed as Exhibit 10.1 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1993 [File No. 1-8002] and incorporated
herein by reference).
10.2 Form of Severance Benefit Agreement with officers (filed as
Exhibit 10.15 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 29, 1990 [File No.
1-8002] and incorporated herein by reference).
10.3 Form of Indemnification Agreement with directors and
officers (filed as Exhibit 10.16 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 29,
1990 [File No. 1-8002] and incorporated herein by
reference).
10.4 Reserved.
10.5 Amended and Restated Reimbursement Agreement dated as of
December 31, 1993, among Chemical Trust Company of
California as Owner Trustee; Delano Energy Company Inc.;
ABN AMRO Bank N.V., Boston Branch, for itself and as Agent;
The First National Bank of Boston, as Co-agent; Barclays
Bank PLC, as Co-agent; Societe Generale, as Co-agent; and
BayBank, as Lead Manager (filed as Exhibit 10.5 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 1, 1994 [File No. 1-8002] and incorporated
herein by reference).
10.6 Amended and Restated Participation Agreement dated as of
December 31, 1991, among Delano Energy Company Inc.; Thermo
Ecotek Corporation (formerly Thermo Energy Systems
Corporation); Chemical Trust Company of California, as
Owner Trustee; ABN AMRO Bank N.V., Boston Branch, as
Co-agent; Bank of Montreal, as Co-agent; Barclays Bank PLC,
as Co-agent; Society Generale, as Co-agent; BayBank, as
Lead Manager; and ABN AMRO Bank N.V., Cayman Island Branch,
and joined in by the Registrant (filed as Exhibit 10.6 to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended January 1, 1994 [File No. 1-8002] and
incorporated herein by reference).
28PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.7 Turnkey Engineering, Procurement, Construction, and
Initial Operation Agreement for a de-inking pulp facility
dated as of November 1, 1994, between the Registrant, as
contractor, and Great Lakes Pulp Partners I, L.P., as
owner (filed as Exhibit 10.7 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December
31, 1994 [File No. 1-8002] and incorporated herein by
reference). Pursuant to Item 601(b)(2) of Regulation S-K,
schedules to this Agreement have been omitted. The
Company hereby undertakes to furnish supplementally a
copy of such schedules to the Commission upon request.
10.8 Revolving Credit Facility Letters from Barclays Bank PLC
in favor of the Registrant and its subsidiaries.
10.9 Stock Holdings Assistance Plan and Form of Promissory
Note.
10.10 - 10.20 Reserved.
10.21 Deferred Compensation for Directors of the Registrant
(filed as Exhibit 10.5 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended January 3, 1987
[File No. 1-8002] and incorporated herein by reference).
(Maximum number of shares issuable is 679,218 shares,
after adjustment to reflect share increases approved in
1986 and 1992 and 3-for-2 stock splits effected in
October 1986, October 1993, May 1995, and June 1996.)
10.22 Amended and Restated Directors' Stock Option Plan of the
Registrant (filed as Exhibit 10.25 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 [File No. 1-8002] and incorporated
herein by reference).
10.23 Incentive Stock Option Plan of the Registrant (filed as
Exhibit 4(d) to the Registrant's Registration Statement
on Form S-8 [Reg. No. 33-8993] and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Registrant's
Nonqualified Stock Option Plan is 13,552,734 shares,
after adjustment to reflect share increases approved in
1984 and 1986, share decrease approved in 1989, and
3-for-2 stock splits effected in October 1986, October
1993, May 1995, and June 1996.)
29PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.24 Nonqualified Stock Option Plan of the Registrant (filed as
Exhibit 4(e) to the Registrant's Registration Statement on
Form S-8 [Reg. No. 33-8993] and incorporated herein by
reference). (Plan amended in 1984 to extend expiration date
to December 14, 1994; maximum number of shares issuable in
the aggregate under this plan and the Registrant's
Incentive Stock Option Plan is 13,552,734 shares, after
adjustment to reflect share increases approved in 1984 and
1986, share decrease approved in 1989, and 3-for-2 stock
splits effected in October 1986, October 1993, May 1995,
and June 1996.)
10.25 Equity Incentive Plan of the Registrant (filed as Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended July 2, 1994 [File No. 1-8002] and
incorporated herein by reference). (Plan amended in 1989 to
restrict exercise price for SEC reporting persons to not
less than 50% of fair market value or par value; maximum
number of shares issuable is 15,575,000 shares, after
adjustment to reflect 3-for-2 stock splits effected in
October 1993, May 1995, and June 1996, and share increases
approved in 1994 and 1997.)
10.26 Thermo Electron Corporation - Thermedics Inc. Nonqualified
Stock Option Plan (filed as Exhibit 4 to a Registration
Statement on Form S-8 of Thermedics [Reg. No. 2-93747] and
incorporated herein by reference). (Maximum number of
shares issuable is 450,000 shares, after adjustment to
reflect share increase approved in 1988, 5-for-4 stock
split effected in January 1985, 4-for-3 stock split
effected in September 1985, and 3-for-2 stock splits
effected in October 1986 and November 1993.)
10.27 Thermo Electron Corporation - Thermo Instrument Systems
Inc. (formerly Thermo Environmental Corporation)
Nonqualified Stock Option Plan (filed as Exhibit 4(c) to a
Registration Statement on Form S-8 of Thermo Instrument
[Reg. No. 33-8034] and incorporated herein by reference).
(Maximum number of shares issuable is 527,343 shares, after
adjustment to reflect 3-for-2 stock splits effected in July
1993 and April 1995, 5-for-4 stock splits effected in
December 1995 and October 1997.)
30PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.28 Thermo Electron Corporation - Thermo Instrument Systems
Inc. Nonqualified Stock Option Plan (filed as Exhibit 10.12
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended January 3, 1987 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of
shares issuable is 750,356 shares, after adjustment to
reflect share increase approved in 1988, 3-for-2 stock
splits effected in January 1988, July 1993 and April 1995,
and 5-for-4 stock splits effected in December 1995 and
October 1997.)
10.29 Thermo Electron Corporation - Thermo TerraTech Inc.
(formerly Thermo Process Systems Inc.) Nonqualified Stock
Option Plan (filed as Exhibit 10.13 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 3, 1987 [File No. 1-8002] and incorporated herein
by reference). (Maximum number of shares issuable is
108,000 shares, after adjustment to reflect 6-for-5 stock
splits effected in July 1988 and March 1989, and 3-for-2
stock split effected in September 1989.)
10.30 Thermo Electron Corporation - Thermo Power Corporation
(formerly Tecogen Inc.) Nonqualified Stock Option Plan
(filed as Exhibit 10.14 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended January 3, 1987
[File No. 1-8002] and incorporated herein by reference).
(Amended in September 1995 to extend the plan expiration
date to December 31, 2005.)
10.31 Thermo Electron Corporation - Thermo Cardiosystems Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.11 to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 29, 1990 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of
shares issuable is 250,000 shares, after adjustment to
reflect share increases approved in 1990, 1992, and 1997,
3-for-2 stock split effected in January 1990, 5-for-4 stock
split effected in May 1990, 2-for-1 stock split effected in
November 1993, and 3-for-2 stock split effected in May
1996.)
10.32 Thermo Electron Corporation - Thermo Ecotek Corporation
(formerly Thermo Energy Systems Corporation) Nonqualified
Stock Option Plan (filed as Exhibit 10.12 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 29, 1990 [File No. 1-8002] and incorporated
herein by reference). (Maximum number of shares issuable is
487,500 shares, after adjustment to reflect 3-for-2 stock
split effected in October 1996.)
31PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.33 Thermo Electron Corporation - ThermoTrex Corporation
(formerly Thermo Electron Technologies Corporation)
Nonqualified Stock Option Plan (filed as Exhibit 10.13 to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 29, 1990 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of
shares issuable is 225,000 shares, after adjustment to
reflect 3-for-2 stock split effected in October 1993 and
share increase approved in March 1997.)
10.34 Thermo Electron Corporation - Thermo Fibertek Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.14 to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 28, 1991 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of
shares issuable is 900,000 shares, after adjustment to
reflect 2-for-1 stock split effected in September 1992 and
3-for-2 stock split effected in September 1995 and June
1996.)
10.35 Thermo Electron Corporation - Thermo Voltek Corp. (formerly
Universal Voltronics Corp.) Nonqualified Stock Option Plan
(filed as Exhibit 10.17 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended January 2, 1993
[File No. 1-8002] and incorporated herein by reference).
(Maximum number of shares issuable is 86,250 shares, after
adjustment to reflect 3-for-2 stock split effected in
November 1993, share increase approved in September 1995,
and 3-for-2 stock split effected in August 1996.)
10.36 Thermo Electron Corporation - Thermo BioAnalysis
Corporation Nonqualified Stock Option Plan (filed as
Exhibit 10.31 to Thermo Power's Annual Report on Form 10-K
for the fiscal year ended September 30, 1995 [File No.
1-10573] and incorporated herein by reference). (Maximum
number of shares issuable is 150,000 shares, after share
increase approved in March 1997.)
10.37 Thermo Electron Corporation - ThermoLyte Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.32 to
Thermo Power's Annual Report on Form 10-K for the fiscal
year ended September 30, 1995 [File No. 1-10573] and
incorporated herein by reference). (Maximum number of
shares issuable is 150,000 shares, after share increase
approved in March 1997.)
10.38 Thermo Electron Corporation - Thermo Remediation Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.33 to
Thermo Power's Annual Report on Form 10-K for the fiscal
year ended September 30, 1995 [File No. 1-10573] and
incorporated herein by reference).
32PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.39 Thermo Electron Corporation - ThermoSpectra Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.34 to
Thermo Power's Annual Report on Form 10-K for the fiscal
year ended September 30, 1995 [File No. 1-10573] and
incorporated herein by reference).
10.40 Thermo Electron Corporation - ThermoLase Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.35 to
Thermo Power's Annual Report on Form 10-K for the fiscal
year ended September 30, 1995 [File No. 1-10573] and
incorporated herein by reference).
10.41 Thermo Electron Corporation - ThermoQuest Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.41 to
Thermo Cardiosystems' Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference).
10.42 Thermo Electron Corporation - Thermo Optek Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.42 to
Thermo Cardiosystems' Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference).
10.43 Thermo Electron Corporation - Thermo Sentron Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.43 to
Thermo Cardiosystems' Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference).
10.44 Thermo Electron Corporation - Trex Medical Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.44 to
Thermo Cardiosystems' Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference).
10.45 Thermo Electron Corporation - Thermo Fibergen Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.19 to
Trex Medical's Annual Report on Form 10-K for the fiscal
year ended September 28, 1996 [File No. 1-11827] and
incorporated herein by reference).
10.46 Thermo Electron Corporation - Thermedics Detection Inc.
Nonqualified Stock Option Plan.
10.47 Thermo Electron Corporation - Metrika Systems Corporation
Nonqualified Stock Option Plan.
10.48 Thermo Electron Corporation - Thermo Vision Corporation
Nonqualified Stock Option Plan.
33PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.49 Thermo Electron Corporation - ONIX Systems Inc.
Nonqualified Stock Option Plan.
10.50 Thermo Electron Corporation - The Randers Group
Incorporated Nonqualified Stock Option Plan.
10.51 Thermo Electron Corporation - Trex Communications
Corporation Nonqualified Stock Option Plan.
10.52 Thermo Electron Corporation - Thermo Trilogy Corporation
Nonqualified Stock Option Plan.
13 Annual Report to Shareholders for the year ended January 3,
1998 (only those portions incorporated herein by
reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27.1 Financial Data Schedule for the year ended January 3, 1998.
27.2 Financial Data Schedule for the year ended December 30,
1995 (restated for the adoption of SFAS No. 128).
27.3 Financial Data Schedule for the quarter ended March 30,
1996 (restated for the adoption of SFAS No. 128).
27.4 Financial Data Schedule for the quarter ended June 29, 1996
(restated for the adoption of SFAS No. 128).
27.5 Financial Data Schedule for the quarter ended September 28,
1996 (restated for the adoption of SFAS No. 128).
27.6 Financial Data Schedule for the year ended December 28,
1996 (restated for the adoption of SFAS No. 128).
27.7 Financial Data Schedule for the quarter ended March 29,
1997 (restated for the adoption of SFAS No. 128).
27.8 Financial Data Schedule for the quarter ended June 28, 1997
(restated for the adoption of SFAS No. 128).
27.9 Financial Data Schedule for the quarter ended September 27,
1997 (restated for the adoption of SFAS No. 128).
Exhibit 10.8
The Directors
Thermo Electron
Corporation
81 Wyman Street
Waltham M.A. 02254
U.S.A.
July 1995
Dear Sirs
We are pleased to advise you that Barclays Bank PLC (the "Bank")
has agreed to provide in aggregate short term facilities of up to
US$100,000,000 (one hundred million United States ("US") Dollars)
or its currency equivalent (referred to as the "Facility") to
Thermo Electron Corporation (the "Parent") and certain
Subsidiaries as may be nominated from time to time in accordance
with clause 3 (such companies being individually referred to as a
"Borrower", collectively the "Borrowers") as detailed below.
This Facility Letter cancels and replaces the existing
US$55,000,000 facility provided by the Bank
to the Parent and its Subsidiaries.
The Schedules attached hereto form part of the terms and
conditions of this letter.
The Facility will be available for utilisation by the Borrowers,
subject to the following terms and
conditions:-
1. Options Available Within and Utilisation of the Facility
--------------------------------------------------------
The Facility may be utilised by way of the following options
and in accordance with the provisions of the Schedules
related thereto.-
Sterling Money Market Loan (see Schedule A) and/or
Sterling Overdraft (see Schedule B) and/or
Currency Money Market Loan (the "Currency MML") (see Schedule
C) and/or
Foreign Currency Overdraft (see Schedule D) and/or
Revolving Acceptance Credit (the "Credit") (see Schedule E)
and/or
Bonds Guarantees and Indemnities (see Schedule F) and/or
Letters of Credit (see Schedule G) and/or
Ancillary Facilities (see Schedule H).
PAGE
<PAGE>
Within the Facility the aggregate of the liabilities due,
owing or incurred thereunder shall not
at any time exceed US$100,000,000 (or its currency
equivalent).
The US dollar equivalent of the currency or currencies
utilised or available to be utilised under the Facility may
be calculated by the Bank at any time by reference to the
Bank's spot rate of exchange in the London Foreign Exchange
Market for the sale of the relevant currency or currencies
for US dollars.
Allocations under the Facility that are made available to
Borrowers or the Parent by branches or affiliates of the Bank
in countries outside of the United Kingdom will be governed
by the terms of the Facility as detailed herein, except where
specifically superceded by local arrangements.
2. Availability
------------
2.1 This offer is available to the Parent for acceptance until
one Month from the date of this letter after which date the
offer will lapse unless extended in writing by the Bank.
Acceptance is to be signified as stated in clause 18 below.
2.2 All monies owing under the Facility are repayable upon
written demand by the Bank and any undrawn portion may be
cancelled by the Bank at any time. Following demand and/or
cancellation, no further utilisation may be made under the
Facility. If demand for repayment is made the Bank shall
have in addition the right to call for full cash cover for
the amount of contingent liabilities outstanding to the Bank
hereunder.
The Parent shall indemnify the Bank on demand against any
loss or expense which the Bank
may reasonably sustain or incur as a direct consequence of
making such demand.
In the absence of demand or cancellation by the Bank, the
Facility is available for utilisation until 12 April 1996 and
no liability or liabilities incurred may extend more than
three months beyond the above mentioned expiry date.
However, the Bank will be pleased to discuss the Borrower's
requirements shortly before that date.
3. Subsidiaries as Borrowers
-------------------------
3.1 The Parent may designate any of its Subsidiaries as a
Borrower under this Facility Letter by giving not less than
10 days notice thereof to the Bank. No such designation
shall take effect until such Subsidiary and the Parent have
executed a deed of accession in the form set out in Schedule
PAGE
<PAGE>
1, and the Bank has received and found to he reasonably
satisfactory to it such other documents, (including
constitutional documents, board minutes, necessary licences
or consents, and legal opinions) and information as the Bank
may reasonably require. In addition, no Subsidiary which has
acceded as a Borrower pursuant to this clause may utilise the
Facility, or any option within the Facility until the Parent
has made a request pursuant to clause 3.2 below and the Bank
has agreed to such request.
3.2 Following a request from the Parent in the form contained in
Schedule 2, the Bank may from time to time by notice in
writing to the Parent allocate to any Subsidiary of the
Parent (which has acceded as a Borrower pursuant to Clause
3.1 above) a tranche of the Facility and/or one or more of
the options (detailed in clause 1) contained within the
Facility. If the Bank does so, that tranche will not then be
available to the Parent or other Borrowers, and the Facility
available to them will reduce accordingly.
3.3 Each Borrower, by its execution of the deed of accession,
irrevocably appoints the Parent as its agent for all purposes
of or connected with this Agreement. The Bank may rely upon
any document signed by or on behalf of the Parent as if it
had been signed by each and every other Borrower. The Parent
may give a good receipt for any sum payable to each and every
other Borrower hereunder.
4. Interest/Fees/Charges
---------------------
The interest and/or fees, and/or charges payable on each
option within the Facility will be calculated and be payable
in accordance with the relevant schedule to this Agreement.
5 . Interest on an Overdue Amount
-----------------------------
5.1If any moneys payable under this Facility are not paid when
due by the Borrowers or the
Parent:
(i) interest will be charged on the overdue amounts, on a
daily basis, from the due date to the date of actual
payment;
(ii) the amount of such interest shall be calculated by
reference to successive interest periods, (the duration
of such interest periods shall be selected by the Bank at
its discretion).
5.2Interest shall be charged at the rate per annum determined by
the Bank to be equal to 1% above the rate which would
otherwise have been applicable to such overdue amount under
the provisions of the relevant Schedule if such amount had
been non-overdue principal (except that in the case of any
PAGE
<PAGE>
amount that does not have an applicable interest rate
hereunder the rate charged shall be 2% per annum over the
Bank's Base Rate rate current from time to time). Interest
so accrued shall be due on demand or (in the absence of
demand) on the last day of the default interest period in
which it accrued and, if unpaid, shall be compounded on the
last day of that and each successive interest period.
Interest on overdue amounts shall be charged and compounded
on this basis after as well as before any judgement obtained
hereunder.
6. Guarantees
----------
The repayment of each Borrower's obligations hereunder will
be guaranteed by the Parent by the execution of a guarantee
acceptable to the Bank in the principal sum of US$100,000,000
plus interest and other liabilities as detailed therein.
7. Fees
----
The Parent shall pay to the Bank the following fees:
(i) an arrangement fee of #65,000 upon acceptance by the
Parent of the Facility; and
(ii) a facility fee of #35,000 per annum annually in
advance during the continuation of the Facility.
8. Cancellation
------------
Any undrawn part of the amount of the Facility may be
cancelled by the Parent in minimum amounts of US$1,000,000
and multiples of US$500,000 subject to the Parent giving the
Bank not less than seven days' notice in writing (such
notice, once given, shall be irrevocable).
Amounts which are cancelled will no longer be available for
drawing.
9. Change of Circumstances
-----------------------
In the event of any change in applicable law or regulation or
the existing requirements of, or any new requirements being
imposed by, the Bank of England or other regulatory authority
the result of which, in the sole opinion of the Bank, is to
increase the cost to it of funding, maintaining or making
available the Facility (or any undrawn amount thereof) or to
reduce the effective return to the Bank then the Borrowers
and/or, as appropriate, the Parent shall pay to the Bank,
upon receipt of documentation evidencing such increased cost
or reduction, as the case may be, such sum as may be
certified by the Bank to the Borrowers and/or the Parent as
shall compensate the Bank for such increased cost or such
reduction.
PAGE
<PAGE>
10. Set-off
-------
Any sum of money at any time standing to the credit of a
Borrower or the Parent with the Bank in any currency upon any
account or otherwise (whether or not any such account is held
in such Borrower's or the Parent's name) or provided to the
Bank as cash cover for any bills and/or any outstanding
liabilities under the Facility, may be applied by the Bank at
any time (upon 5 Business Days written notice to such
Borrower and the Parent) in or towards the discharge of any
money or liabilities now or hereafter due, owing or incurred
to the Bank by such Borrower or the Parent hereunder (whether
as principal or surety).
11. Indemnity
---------
11.1 The Parent shall indemnify the Bank on demand (without
prejudice to the Bank's other rights) for any expense, loss
or liability reasonably incurred by the Bank in consequence
of (i) any default or delay by the Borrowers or the Parent in
the payment of any amount when due under this letter, or (ii)
all or part of the Facility being prepaid or becoming
repayable otherwise than on the maturity of the then current
interest period including, without limitation any loss
(including loss of margin), expense or liability sustained or
incurred by the Bank in any such event in liquidating or
re-deploying funds acquired or committed to fund, make
available or maintain the Facility (or any part of it).
11.2 If, for any reason, any amount payable under this letter is
received or recovered in a currency (the "other currency")
other than that in which it is required to be paid hereunder
(the "contractual currency"), then to the extent that the
payment to the Bank (when converted to the contractual
currency at the then applicable rate of exchange) falls short
of the amount so payable under this letter, the Parent shall,
as a separate and independent obligation, fully indemnify the
Bank against the amount of the shortfall. For the purpose of
this sub-clause the expression "rate of exchange" means the
rate at which the Bank is able as soon as practicable after
receipt to purchase the contractual currency in London with
the other currency.
12. Illegality
----------
If, at any time, the Bank determines that it is, or will
become unlawful or contrary to any directives of any agency
or any country or state for it to make, fund or allow to
remain outstanding all or part of the Facility, and/or carry
out all or any of its other obligations towards the
Borrowers and the Parent under this letter, then upon the
Bank notifying the Parent of such event, within 30 days of
that notification or such earlier date (if any) as the Bank
PAGE
<PAGE>
shall certify to be necessary to comply with the relevant
law or directive, the Borrowers and/or the Parent (as
appropriate) shall prepay any principal amounts outstanding
together with any accrued interest thereon.
13. Representations and Warranties
------------------------------
13.1 By accepting this letter the Parent and each Borrower
represents and warrants that:
(a) Statutes: The Parent and each of its Material
---------
Subsidiaries are duly organised, existing and (where
relevant) in good standing under the laws of the
jurisdictions of their respective incorporation and have
the corporate power and authority to own their
respective property and assets and to transact the
businesses in which they respectively are engaged or
presently propose to engage and are duly qualified and
(where relevant) in good standing as foreign
corporations.
(b) Corporate Power and Authority: Borrowers: Each of the
-----------------------------------------
Borrowers has the corporate power, and has taken all
necessary corporate action (including, without
limitation, any consent of stockholders required by law
or by its constitutional documents) to authorise it to
execute, deliver and perform the terms and provisions of
and to incur its obligations under this Agreement and to
borrow hereunder or otherwise utilise the Facility. This
Agreement has been or, when executed, will be duly
authorised, executed and delivered by each Borrower and
constitutes the legal, valid and binding obligation of
that Borrower enforceable in accordance with its terms
(except as the enforceability thereof may be limited by
insolvency or similar laws of general application
affecting creditors' rights and by general principles of
equity).
(c) Corporate Power and Authority: Guarantor: The Parent as
-----------------------------------------
Guarantor has the corporate power and has taken all
necessary corporate action (including, without
limitation, any consent of stockholders required by law
or by its constitutional documents) to authorise it to
execute deliver and perform the terms and provisions of
and to incur its obligations under the Guarantee. The
Guarantee has been duly authorised executed and
delivered by the Parent thereto and will when executed
constitute the legal valid and binding obligation of the
Parent enforceable in accordance with its terms (except
as the enforceability thereof may be limited by
insolvency or similar laws of general application
affecting creditors' rights and by general principles of
equity).
PAGE
<PAGE>
(d) Compliance with other Instruments: Neither the Parent
----------------------------------
nor any Material Subsidiary is in default under any
material agreement to which it is a party, and the
execution, delivery and performance by each Borrower and
the Parent, as the case may be, of this Agreement and
the Guarantee (a) will not contravene any provision of
Applicable Law, (b) will not conflict with or be
inconsistent with or result in any breach of any of the
terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or
imposition of any Encumbrance on any of the property or
assets of the Parent or any Material Subsidiary pursuant
to the terms of any indenture, mortgage, deed to secure
debt, deed of trust, or other material agreement or
instrument to which the Parent or any Material
Subsidiary is a signatory or by which it is bound or to
which it may be subject, (c) will not violate any
provision of the constitutional documents of the Parent
or any corporate Material Subsidiary and (d) will not
require any Governmental Approval.
(e) Financial Statements of Group: The consolidated
-----------------------------------
financial statements of the Parent and its Subsidiaries
dated 1st January 1994 and the related consolidated
statements of income (including the notes thereto), are
all true and correct in all material respects and
present fairly the consolidated financial condition of
the Parent and its Subsidiaries at that date and the
results of their operations for the year then ending.
To the Parent's knowledge neither the Parent nor any
Material Subsidiary had as at such date any significant
liabilities, material to the Parent and its subsidiaries
on a consolidated basis, contingent or otherwise
(including liabilities for Taxes or any unusual forward
or long-term commitments) which were not disclosed by or
reserved against in the financial statements referred to
above or in the notes thereto, and there are no material
unrealised or anticipated losses from any unfavourable
commitments of the Parent. All such financial
statements were prepared in accordance with generally
accepted accounting principles applied on a consistent
basis throughout the periods involved. Since 1st
January 1994 there has been no material adverse change
in the operations, business, property or assets of, or
in the condition (financial or otherwise) or prospects
of, the Parent and its Material Subsidiaries, taken as a
whole.
(f) Governmental Approvals: No Governmental Approval is
------------------------
required to authorise, or is required in connection with
the execution, delivery and performance of this
Agreement or the Guarantee.
(g) Title to Properties: Each of the Parent and its Material
--------------------
PAGE
<PAGE>
Subsidiaries has good and marketable title to its owned
properties, including the properties and assets
reflected in the financial statements referred to in
paragraph (f) above. None of those properties is
subject to any Encumbrance except as referred to in
those financial statements and possible title defects
and Encumbrances which do not materially interfere with
the use or materially detract from the value of such
properties or the operations of the Parent or the
relevant Material Subsidiary.
(h) Taxes : Each of the Parent and its Material Subsidiaries
-----
has filed or caused to be filed all declarations,
reports and tax returns including, in the case of the
Parent and each Material Subsidiary located in the
United States, all federal and state income tax returns
which it is required by law to file, and has paid all
Taxes which are shown as being due and payable on such
returns or on any assessments made against it or any of
its properties. The accruals and reserves on the books
of the Parent and its Material Subsidiaries in respect
of Taxes are adequate for all periods. Neither the
Parent nor any Material Subsidiary has any knowledge of
any unpaid adjustment, assessment or any penalties or
interest of significance, or any basis therefor, by any
taxing authority for any period, except those being
contested in good faith and by appropriate proceedings
which effectively stay the enforcement of any
Encumbrance and the attachment of a penalty.
(i) Solvency: The Parent (i) acknowledges that it will have
---------
received, before the execution of its Guarantee, fair
consideration and reasonably equivalent value for the
obligations incurred or to be incurred by it thereunder,
(ii) represents and warrants that after giving effect to
such obligations (1) the present fair saleable value of
the assets of it exceeds its liabilities in that it
retains sufficient capital reasonably to anticipate the
needs and risks of its ongoing business, and (2) it has
not incurred (actually or contingently) debts beyond its
ability to pay such debts as they mature, and that the
present fair saleable value of its assets is greater
than that needed to pay its probable existing debts as
they become due.
(j) Disclosure: Neither this Agreement, nor any other
----------
document, certificate or statement furnished to the Bank
by or on behalf of either Borrower or the Parent in
connection herewith contains any untrue statement of a
material fact or omits to state a material fact
necessary in order to make the statements contained
herein and therein not misleading. There is no fact
peculiar to the Parent or any of its Material
Subsidiaries which materially adversely affects or may
PAGE
<PAGE>
(as far as the Parent can now foresee) materially
adversely affect the business, property or assets, or
financial condition of the Parent and its Material
Subsidiaries taken as a whole which has not been set out
in this Agreement, or in the other documents,
certificates and statements furnished to the Bank by or
on behalf of the Parent, prior to the date hereof in
connection with the transactions contemplated by this
letter.
13.2Each party providing the same shall be deemed to repeat the
representations and warranties contained in the preceding
sub-clause on each occasion on which there is any
utilisation of the Facility by reference to the
circumstances then existing.
14. Positive Covenants
------------------
14.1 Use of Proceeds
---------------
Each Borrower undertakes that the proceeds of the Facility
will be used for the general working capital purposes of the
Borrowers. None of such proceeds shall be used to purchase
or carry, or to reduce or retire or refinance any credit
incurred to purchase or carry, any margin stock (within the
meaning of Regulations U and X) or to extend credit to others
for the purpose of purchasing or carrying any such margin
stock. If requested by the Bank, the Parent will deliver
statements in conformity with the requirements of Federal
Reserve Form U-l referred to in Regulation U.
14.2 Financial Information for Group
-------------------------------
The Parent will deliver to the Bank:
(a) within 90 days after the end of each year of the Parent
and its Subsidiaries an audited consolidated balance
sheet of the Parent as at the end of such year, and
audited consolidated statements of income and cash flow
of the Parent and its Subsidiaries for such year, all in
reasonable detail and with the unqualified opinion of
Arthur Andersen (or other independent certified public
accountants of recognised standing selected by the
Parent and reasonably satisfactory to the Bank) together
with the management letter prepared in connection with
such audited financial statements, provided that the
Parent may make a change in its accounting principles in
any year, so long as (w) such change or changes are
clearly reflected in the annual audit report, and (x)
any principle has been concurred in by the Parent and
the Parent's independent certified public accountants
and is in accordance with generally accepted accounting
principles;
PAGE
<PAGE>
(b) copies of its quarterly results on Form 10-Q and its
audited Consolidated Profit and Loss Account and Balance
Sheet (in the form of an Annual Report and/or form 10-K,
as appropriate) not later than 45 days from the end of
each quarter and 90 days from the end of each accounting
reference period respectively; and
(c) with reasonable promptness, such further information
regarding the business affairs and financial condition
of the Parent or any Material Subsidiary as the Bank may
reasonably request.
14.3 Maintenance of Books: Inspection of Property and Records
--------------------------------------------------------
The Parent shall and shall procure that each of its Material
Subsidiaries shall prepare or cause to be prepared (a) its
annual statements and reports in accordance with generally
accepted accounting principles and permit any person
designated by the Bank to visit and inspect any of its
properties, corporate books and financial records, and to
discuss its accounts, affairs and finance with the principal
officers of the Parent and such Material Subsidiary during
reasonable business hours, and upon reasonable prior notice,
from time to time, as the Bank may reasonably request and
(b) its interim statements and reports in accordance with
methods historically used by such Material Subsidiary, as
the case may be, as such methods have yielded financial
information which has historically not required material
annual adjustments to bring such information into compliance
with generally accepted accounting principles.
14.4 Maintenance of Properties
-------------------------
The Parent shall and shall procure that each of its Material
Subsidiaries shall maintain, preserve, protect and keep, or
cause to be maintained, preserved, protected and kept, its
properties and every part thereof in good repair, working
order and condition, and from time to time will make or
cause to be made all needful and proper repairs, renewals,
replacements, extensions, additions, betterments, and
improvements thereto, so that the business carried on in
connection therewith may be properly and advantageously
conducted at all times Provided that the Parent and its
Material Subsidiaries shall not be obliged to repair or
replace any such properties which have become obsolete or
unsuitable or inadequate for the purpose for which they are
used.
14.5 Maintenance of Insurance
------------------------
The Parent shall and shall procure that each of its Material
Subsidiaries shall maintain liability and worker's
compensation insurance (or maintain a legally sufficient,
fully funded, programme of self-insurance against worker's
PAGE
<PAGE>
compensation liabilities), adequate insurance on its
properties against such hazards and in at least such amounts
as is customary in the business and, at the request of the
Bank, the Parent will forthwith deliver an officer's
certificate specifying the details of the insurance then in
effect.
14.6 Taxes
-----
The Parent shall and shall procure that each of its Material
Subsidiaries shall pay and discharge all Taxes prior to the
date on which penalties attach thereto, and will pay all
Taxes which, if unpaid, might become an Encumbrance upon any
of its property Provided that the Parent and its Material
Subsidiaries shall not be required to pay and discharge any
such Tax so long as the legality or amount thereof shall be
promptly contested in good faith and by appropriate
proceedings which effectively stay the enforcement of any
Encumbrance and the attachment of a penalty and the Parent
or such Material Subsidiary, as the case may be, shall have
set aside appropriate reserves therefor in accordance with
generally accepted accounting principles.
14.7 Existence and Status
--------------------
The Parent and each of its Material Subsidiaries which is a
corporation shall maintain its corporate existence and
(where relevant) good standing in its state of incorporation
and its qualification and (where relevant) good standing as
a foreign corporation in all jurisdictions where its
ownership of property or its business activities cause such
qualification to be required.
14.8 Litigation
----------
The Parent shall give prompt notice to the Bank of any
material pending legal proceedings. For the purposes of
this Clause 14.8, only pending legal proceedings which would
be required to be reported by the Parent for Securities and
Exchange Commission Filings need be reported to the Bank.
14.9 Stockholder Reports, etc
------------------------
Promptly after the same are available, the Parent will
provide to the Bank copies of all publicly available current
reports on Form 8-K, proxy statements and prospectuses filed
with the Securities and Exchange Commission under the
Securities Act 1933, as amended or the Securities Exchange
Act 1934 as amended, as the case may be, (excluding
prospectuses relating to employee stock option or benefit
plans).
15. Payments and Gross-Up
---------------------
PAGE
<PAGE>
15. I All payments by a Borrower, whether of principal,
interest or otherwise, shall be made to the Bank not later
than 12 noon (London time) on the due date in same day funds
(or as otherwise expressly agreed by the Bank), without
set-off or counterclaim and free of any deduction or
withholding whatsoever, including without prejudice to the
generality of the foregoing, for or on account of Taxes
unless that Borrower is required by law to make any such
payments subject to deduction or withholding on account of
Taxes, in which case the sum payable by that Borrower in
respect of which such deduction or withholding is required
to be made shall be increased to the extent necessary to
ensure that, after the making of such deduction or
withholding, the Bank receives and retains (free from any
liability in respect of any such deduction or withholding) a
net sum equal to the sum which it would have received and so
retained had no such deduction or withholding been made or
required to be made.
15.2 Without prejudice to the provisions of Clause I5.1, if the
Bank is required by law to make any payment on account of
Taxes (other than Taxes on its overall net income) or
otherwise on or in relation to any sum received or
receivable by the Bank hereunder, or any liability in
respect of any such payment is imposed, levied or assessed
against the Bank, the relevant Borrower shall, on demand by
the Bank, indemnify the Bank against such payment or
liability together with any interest penalties and expenses
payable or incurred in connection therewith (except to the
extent that such interest penalties and expenses results
from the late settlement of such payment or liability by the
Bank).
15.3 If the Bank intends to make a claim pursuant to clause 15.2,
it shall notify the relevant Borrower of the event by reason
of which it is entitled to do so and provide to that
Borrower in reasonable detail a calculation of the amount
claimed Provided that nothing herein shall require the Bank
to disclose any information relating to the organisation of
its affairs which the Bank shall, in its sole opinion,
consider to be confidential.
16. Interpretation
--------------
16.1 In this Facility Letter, unless the context otherwise
requires: -
"Agreement" means the agreement arising on the Borrowers'
acceptance of the offer contained in this Facility Letter;
" Applicable Law" means (i) all applicable common law and
principles of equity and (ii) all applicable provisions of
all (a) constitutions, statutes, rules, regulations and
orders of governmental bodies, (b) Governmental Approvals
PAGE
<PAGE>
and (c) orders, decisions, judgments and decrees of all
courts and arbitrators;
"Base Rate" means the Bank's base rate published from time
to time;
" Business Day" means a day on which the relevant London
financial markets are open for dealings in eurocurrency
deposits between banks and, if a payment falls due
hereunder, also, a day on which banks in the relevant
principal financial centre (as determined by the Bank) for
the relevant currency are open for dealings in such
currency. Should any requirement under this letter fall due
on a date which is not a Business Day then such date shall
be extended to the next Business Day;
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the
regulations promulgated and the rulings issued thereunder;
" Encumbrance" includes any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind or
description (and shall include, without limitation, any
agreement to give any of the foregoing, any conditional sale
or other title retention agreement, any lease in the nature
thereof including any lease or similar arrangement with a
public authority executed in connection with the issuance of
industrial development revenue bonds or pollution control
revenue bonds, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any
jurisdiction);
"Governmental Approval" means any order, permission,
authorization, consent, approval, licence, franchise, permit
or validation of, exemption by, registration or filing with,
or report or notice to, any governmental agency or unit, or
any public commission, boarder authority;
"Guarantor" means the Parent;
" Guarantee" means the guarantee executed and delivered to
the Bank pursuant to Clause 6;
" Material Subsidiary" means any Subsidiary of the Parent
designated as a Borrower pursuant to Clause 3 and any other
Subsidiary of the Parent which alone, or together with its
own subsidiaries, represents either or both of (a) not less
than 5 % of the net earnings before Taxes of the Parent and
its Subsidiaries taken as a whole in the fiscal year of the
Parent most recently ended or (b) not less than 5% of the
consolidated book value of the assets of the Parent and its
subsidiaries taken as a whole as of the last day of the
fiscal year of the Parent most recently ended, and "Material
Subsidiaries" shall be construed accordingly;
PAGE
<PAGE>
"Month" means a period starting on one day in a calendar
Month and ending on the corresponding day in the next
calendar Month or, if that is not a Business Day, on the
next Business Day unless that falls in another calendar
Month in which case it shall end on the preceding Business
Day, save that where a period starts on the last Business
Day in a Month or there is no corresponding day in the Month
in which the period ends, that period shall end on the last
Business Day in the later Month;
"Outstanding Amount" means, in relation to a Bank Guarantee
at any time, the maximum
actual and contingent liability of the Bank under that Bank
Guarantee at that time;
"Regulation U or X" shall mean Regulation U or X
respectively of the Board of Governors of the Federal
Reserve System, as in effect from time to time, and any
regulation successor thereto;
"Sterling" and "#" means lawful currency of the United
Kingdom;
"Subsidiary" shall mean a subsidiary undertaking within the
meaning of Section 736 of the
Companies Act 1985;
" Tax" shall mean, with respect to any person or entity, any
federal, state or foreign tax, assessment, customs duties,
or other governmental charge, levy or assessment (including
any withholding tax) upon such person or entity or upon such
person's or entity's assets, revenues, income or profits
(other than United Kingdom income taxes imposed upon the
Bank);
"U.S. Dollar", "Dollar" and "I" shall mean lawful money of
the United States of America.
16.2 Reference to any statutory provision includes any amended or
re-enacted version of such provision with effect from the
date on which it comes into force.
16.3 Save as otherwise expressly provided herein, references in
this Agreement to this Agreement or any other document
include reference to this Agreement or such other document
as varied, supplemented and/or replaced as agreed between
the parties hereto or as permitted hereby or to which the
Bank shall have consented from time to time.
16.4 References to Clauses, sub-clauses, paragraphs, Schedules
and annexures are to be construed as references to Clauses,
sub-clauses, paragraphs, Schedules and annexures of this
Agreement unless otherwise stated.
PAGE
<PAGE>
16.5 Clause headings are for convenience only and shall not
affect the construction hereof.
17. Governing Law and Jurisdiction
------------------------------
17.1 This Facility Letter shall be governed by and construed in
accordance with English law.
17.2 The Parent and its Material Subsidiaries agree that any
legal action or proceedings arising out of or in connection
with this Facility Letter may be brought in the High Court
of Justice in England and irrevocably submit to the
jurisdiction of that Court, provided that this submission to
jurisdiction shall not (and shall not be construed so as to)
limit the Bank's right to take proceedings in whatever
jurisdiction shall seem fit to the Bank,
18. Acceptance
----------
Prior to the Facility being utilised, the Parent shall
provide the Bank with the following:-
(a) the enclosed duplicate of this letter duly signed on each
Borrower's and the Parent's behalf as evidence of
acceptance of the terms and conditions stated herein;
(b) a certified true copy of a resolution of the Parent's
Board of Directors: -
(i) accepting the Facility on the terms and conditions
stated herein,
(ii) authorising a specified person, or persons, to
sign and return to the Bank the duplicate of this
letter, and
(iii) authorising the Bank to accept instructions and
confirmation in connection with the Facility signed
in accordance with the Bank's signing mandate current
from time to time, and to accept instructions in
connection with drawings under the Facility by
telephone from any person specifically authorised to
give such telephone instructions,
(c) confirmed specimens of the signatures of those officers
referred to in (b)(ii) above; and
(d) the Guarantee referred to in clause 6 duly executed by
the Parent and in the form required by the Bank; and
(e) an opinion of the legal counsel to the Parent addressed
to the Bank in a form reasonably satisfactory to the
Bank and which opinion includes confirmation that the
PAGE
<PAGE>
Parent is legally empowered to accept and enter into the
terms and conditions of this letter and the related
guarantee.
Yours faithfully
For and on behalf of
Barclays Bank PLC
/s/ Jonathan L Gray
Jonathan L Gray
Relationship Director - North America
Large Corporate Banking
Accepted on the terms and conditions stated herein.
For and on behalf of
THERMO ELECTRON CORPORATION
/s/ Jonathan W. Painter
by..............................................................
........
date.................10/2/95....................................
..............
PAGE
<PAGE>
SCHEDULE 1
----------
FORM OF DEED OF ACCESSION
-------------------------
THIS DEED is made on 19
BETWEEN
(1) [ ] ("the Borrower");
(2) THERMO ELECTRON CORPORATION ("the Parent") on behalf of
itself and each of the other Borrowers (as defined in the
Facilities Letter); and
(3) BARCLAYS BANK PLC ("the Bank").
WHEREAS this Deed is supplemental to the facilities letter dated
[ ], 1995 and made
between the Parent and the Bank ("the Facilities Letter").
NOW THIS DEED WITNESSETH:-
1. Accession of Borrower
---------------------
In consideration of the Bank agreeing to the Borrower
becoming an additional Borrower pursuant to Clause 3 of
the Facilities Letter and by the execution of this Deed
the Borrower agrees to observe and be bound by the terms
and provisions of the Facilities Letter insofar as they
apply to the Borrower as if it were an original party to
the Facilities Letter.
2. Interpretation
--------------
This Deed shall be read as one with the Facilities Letter
so that any reference therein to "this Agreement",
"hereunder" and similar expressions shall include and be
deemed to include this Deed.
3. Conditions precedent
--------------------
The obligations of the Bank hereunder are subject to the
condition that the Bank is satisfied that all appropriate
conditions precedent have been fulfilled by the Borrower
pursuant to Clause 3 of the Facilities Letter.
PAGE
<PAGE>
IN WITNESS whereof the parties hereto have caused this Deed to be
duly executed on the date first
written above.
EXECUTED AS A DEED by
[THE BORROWER]
in the presence of:-
EXECUTED AS A DEED by
THERMO ELECTRON CORPORATION
in the presence of:-
SCHEDULE 2
----------
Form of request for allocation of the Facility
----------------------------------------------
FROM: Thermo Electron Corporation
TO: Barclays Bank PLC
Dear Sirs,
Facility Letter dated [ ] made between Thermo Electron
----------------------- ------------------------------
Corporation (the "Parent") and
------------------------------
Barclays Bank PLC (the "Bank") (the "Facility")
-----------------------------------------------
We refer to the above Facility Letter. Terms and expressions
defined in the Facility Letter shall have
the same meaning when used in this request.
Pursuant to clause 3.2 of the Facility Letter, we hereby make the
following request(s) for an allocation
of [a] tranche(s) of the Facility: -
Name of Subsidiary Amount of Tranche
------------------ -----------------
Option(s)
---------
Requested Requested
--------- ---------
We confirm that:-
(1) each of the representations and warranties contained in
sub-clause 13.1 of the Facility Letter is true and
accurate if made on the date hereof with reference to the
facts and circumstances now existing;
(2) on the date on which the tranche(s) requested above will
be utilised there will exist no breach of the terms of the
PAGE
<PAGE>
Facility Letter;
(3) the above-named Subsidiary has executed and provided to
the Bank a deed of accession in the form stipulated by
clause 3.1 of the Facility Letter.
Yours faithfully
THERMO ELECTRON CORPORATION
SCHEDULE A
----------
Sterling Money Market Loan
--------------------------
The Sterling Money Market Loan may be drawn in one or more
amounts, each drawing to be a minimum amount of #500,000 and
multiples of #100,000 thereafter for periods of 30,60 or 90 days
at the Borrower's option or other mutually agreed period but no
drawing shall be made for an interest period with a maturity date
of more than three months beyond the expiry date detailed in
clause 2.2 of the letter.
When wishing to draw under the Sterling Money Market Loan, the
Borrower should telephone the account holding branch of the Bank
on or shortly before the day on which funds are required stating
the amount of the drawing, the period required and giving
instructions for payment of the funds. In the event these
instructions do not stipulate that the funds must be credited to
the Borrower's current account with the account holding Branch
such instructions must be confirmed by letter to the account
holding Branch at the earliest opportunity.
The rate of interest on each drawing will include the Bank's
margin of 0.45% per annum added to the cost of funds to the Bank
(such cost of funds to be conclusively determined by the Bank and
shall include any associated costs resulting from requirements of
the Bank of England or other governmental authorities or
agencies, whether having the force of law or otherwise, affecting
the conduct of the Bank's business) for the period of the
drawing. Interest will be payable without deduction at six
monthly intervals if appropriate and at the maturity of each
drawing, and calculated on the basis of actual days elapsed over
a 365 day year.
Each drawing, together with interest thereon, will be repaid on
PAGE
<PAGE>
its maturity date by debit to the Borrower's current account at
the account holding branch.
SCHEDULE B
----------
Sterling Overdraft
------------------
The Sterling Overdraft will be available on the Borrower's
current account at the Branch with interest charged at a rate of
1% per annum over the Bank's Base Rate current from time to time.
Interest, together with other charges will be debited to the
Borrower's current account at the Branch quarterly in arrears in
March, June, September and December each year or at such other
times as may be determined by the Bank, and such interest will be
calculated on the basis of actual days elapsed over a 365 day
year.
PAGE
<PAGE>
SCHEDULE C
----------
Currency Money Market Loan
--------------------------
This option relates to a short term loan in any currency (other
than sterling) which is freely transferable and convertible into
sterling and is available to the Bank in the relevant amount for
the relevant period in the normal course of business on the
London Inter-Bank market. The Bank shall be sole arbitor of the
availability of such currencies.
The short term currency loans may be drawn in one or more
amounts, each drawing to be a minimum amount of the currency
equivalent of US$500,000. Larger drawings shall be in amounts
which are mutually agreeable and drawings shall be for periods up
to a maximum of six months at the Borrower's option or other
mutually agreed periods but no drawing should be made for an
interest period with a maturity date of more than three months
beyond the expiry date detailed in clause 2.2 of the letter.
When drawings are to be made, the Borrower should telephone the
account holding branch of the Bank two business days before the
business day on which funds are required stating the amount of
the drawing, the period required and giving instructions for
payment of the funds. In the event these instructions do not
stipulate that the funds must be credited to the Borrower's
PAGE
<PAGE>
current account with the Branch, such instructions must be
confirmed by letter to the Branch at the earliest opportunity.
The interest rate on each drawing will include the Bank's margin
of 0.45% per annum added to the cost of funds to the Bank (such
cost of funds to be conclusively determined by the Bank) which
will be dependent upon the conditions prevailing in the relevant
London financial markets for the period of the drawing. Interest
will be payable without deduction at six monthly intervals, if
appropriate, and at the maturity of each drawing, and calculated
on the basis of actual days elapsed over a 360 day year.
Each drawing, together with interest thereon, will be repaid on
its maturity date in the currency in which such drawing is
outstanding in immediately available freely convertible and
transferable funds without any set-off or counterclaim and free
of any deduction or withholding on any ground, to such bank or
branch of the Bank as the Bank may specify. In the event of the
Borrower being compelled by law to make any such deduction or
withholding, the Borrower will pay to the Bank such additional
amount(s) as are required to ensure that the Bank receives and
retains a net amount equal to the full amount which it would have
received if no such deduction or withholding had been made.
For the purposes of this letter a "business day" shall mean a day
----
on which the relevant London financial markets are open for
dealings in eurocurrency deposits between banks and, in addition,
so far as concerns a day on which a payment falls to be made
hereunder, a day on which banks in the relevant principal
financial centre (as determined by the Bank) for the relevant
currency are open for dealings in such currency. Should any
requirements under this letter fall due on a date which is not a
business day, then such date shall be extended to the next
business day.
SCHEDULE D
----------
Foreign Currency Overdraft
--------------------------
The Foreign Currency overdraft will made available in any
currency (other than sterling) as previously agreed by and
arranged with the Bank, and which currency is freely transferable
and available to the Bank in the normal course of business.
The Foreign Currency Overdraft will be available on the
Borrower's foreign currency account at the account holding branch
with interest charged at 1% per annum over the bank's call loan
PAGE
<PAGE>
rate current from time to time. Interest together with other
charges will be debited to the Borrower's foreign currency
account at the account holding branch quarterly in arrears in
March, June, September and December each year or at such times as
may be determined by the Bank, and such interest will be
calculated on the basis of actual days elapsed over a 360 day
year.
SCHEDULE E
----------
Revolving Acceptance Credit
---------------------------
To enable drawings to be made under the Revolving Acceptance
Credit (the "Credit"), the Borrower should either:
PAGE
<PAGE>
(I) forward bills to the Branch to be in the Branch's hands at
least four business days before the funds are required.
Bills should be drawn by the Borrower on Barclays Bank PLC, Head
Office, 54 Lombard Street, London EC3P 3AH for fixed periods of
30,60 or 90 days except that no period may be selected which
would mature more than 90 days after the expiry date detailed in
clause 2 of this letter. If the selected maturity date is a
non-business day, bills should be drawn to mature on the
following business day. Individual bills should be drawn in
amounts of #50,000 and should be made to the Bank's order and
claused "Drawn against purchases of electronic security
systems" or
(ii) forward a supply of bills to the Branch drawn as in (i)
above, except that the dates will be left blank. The branch
will arrange for the supply of bills to be held by the
Bank's Global Treasury Services Office in London ("GTS"),
and for the dates to be completed in accordance with the
Borrower's oral instructions when drawings are required.
When wishing to draw under the Credit, the Borrower should
telephone the Bank's dealers at GTS on 071 696 2496 before 12.00
noon on the day on which funds are required, stating the amount
required and the period, and agreeing the discount rate quoted.
The Bank will accept the bills and will, at its option, either
(i) discount the bills itself in which case the rate of discount
will be the then current offer rate as quoted by the Bank for
such bills in the London Discount Market, or (ii) offer the bills
for discount as agent on the Borrower's behalf in the London
Discount Market at the discount rate prevailing in such market at
the time when discount is effected. The proceeds after discount
and acceptance commission will be credited to the Borrower's
current account at the Branch.
Acceptance commission payable at the time of acceptance will be
charged at the rate of 0.5% per annum on the face value of each
draft presented and will be deducted from the proceeds after
discount.
The Bank will debit the Borrower's current account with the face
value of each draft upon its maturity date. The Credit is
revolving, however, and it will be open to the Borrower within
the validity and terms of the Facility to present further bills
in accordance with this clause.
By its acceptance of the Facility, the Borrower undertakes that
during the validity of the Credit it will ensure that there are
sufficient purchases to cover the amounts drawn during the period
for which such bills are drawn and which are not the subject of
other financing arrangements. The Borrower will provide a
certificate to this effect, signed by an official authorised to
draw bills, if requested by the Bank in writing.
PAGE
<PAGE>
The acceptance of a bill shall give rise to a debt from the
Borrower to the Bank equal to the face value of such bill, which
debt shall be due for payment on the maturity of such bill.
SCHEDULE F
----------
Bonds, Guarantees and Indemnities
---------------------------------
The Bank is prepared to consider issuing guarantees, bonds and
indemnities on behalf of the Borrower in respect of normally
accepted and commercial transactions, subject to prior agreement
with the Bank and receipt of the necessary counter indemnities.
Pricing will be as follows:
expiry less than 1 year : 0.500% per annum
one to three years : 0.625% per annum
three to five years : 0.750% per annum
Other, including guarantees
with non-standard wording or
without a fixed expiry date : 1.000% per annum
PAGE
<PAGE>
SCHEDULE G
----------
Letters of Credit
-----------------
The Bank is prepared to open Documentary Letters of Credit on
instructions from the Borrower to provide for the purchase of
commodities as may be agreed by the bank from time to time. All
Documentary Letters of Credit are issued subject to the terms and
conditions set out in the Bank's standard form for opening
Documentary Letters of Credit and are also subject to the
"Uniform Customs and Practice for Documentary Credits (1983
Revision)", or any subsequent revision as issued by the
International Chamber of Commerce. Pricing will be decided on a
case by case basis.
PAGE
<PAGE>
SCHEDULE H
----------
ANCILLARY FACILITIES
--------------------
Negotiation of Sterling/Foreign Currency Cheques and Bills of
-------------------------------------------------------------
Exchange Payable Abroad
-----------------------
The Bank will purchase, with recourse, suitable foreign currency
and sterling cheques payable abroad and/or approved foreign
currency or sterling bills of exchange payable abroad. The
suitability of those cheques and bills of exchange which the Bank
is prepared to purchase is entirely at the discretion of the
Bank, and is subject to the Uniform Rules of the Collection of
Commercial Paper (1978 Revision). Pricing will be decided on a
case by case basis.
SFET
----
The Bank is prepared to consider marking a Spot and Forward
Exchange Transaction (SFET) Facility.
The SFET facility covers the maximum liability of the Borrower to
the Bank outstanding at any time under contracts of not more than
12 months duration for the forward purchase or sale of foreign
currency for delivery at a future date and spot purchase or
sale-of foreign currencies, but excludes purchases or sales where
the Bank is required irrevocably to pay away funds prior to
receiving firm confirmation of incoming cover.
When wishing to utilise the SFET facility the Borrower should
telephone the account holding branch. All payment and delivery
instructions are to be advised to and processed by the account
holding branch and confirmed by letter at the earliest
opportunity.
Bankers Automated Clearing Services Limited (BACS)
--------------------------------------------------
The Bank is prepared to make available a BACS facility to
accommodate
the Company's requirements for automated payments or receipts.
Daylight Exposure Limit (DEL)
-----------------------------
The Bank is prepared to make available a DEL to cover the
aggregate of the face value of the funds which the Bank is
required to pay away by CHAPS prior to receiving incoming funds
to cover these payments on the same day.
Branch Originated BACS Facility (BOBS)
--------------------------------------
The Bank is prepared to make available a BOBS facility to
accommodate the Company's requirements for automated payments or
receipts when originated by the account holding branch.
PAGE
<PAGE>
The Directors
Thermo Electron Corporation
81 Wyman Street
Waltham,
M.A. 02254-9046
U.S.A.
25th July 1997
Dear Sirs
We refer to the letter (the _Letter_) dated July 1995 and
subsequently varied by the letters dated 10th April 1996
and 1st July 1996 from Barclays Bank PLC (the _Bank_)
setting out the terms and conditions of a $100,000,000 (one
hundred million United States Dollars) or currency
equivalent aggregate short term facilities (the _Facility_)
provided to Thermo Electron Corporation (the _Borrower_).
We are pleased to vary the terms and conditions of the
Facility Letter as follows:-
1. Availability : In the absence of demand or cancellation
by the Bank the Facility is available for utilisation
until 24th July 1998 and no liability or liabilities
incurred may extend more than three months beyond the
above mentioned expiry date.
2. Amount : the amount of the Facility is hereby amended to
$150,000,000 (one hundred and fifty million United States
Dollars).
3. Fees : The Borrower shall pay to the Bank the following
fees :
i) an arrangement fee of #150,000 upon acceptance of this
letter ; and
ii) a fee calculated at the rate of 0.10 per cent per
annum payable quarterly in
arrears on the total amounts utilised under the
Facility, during the continuation of
the Facility.
4. Set-Off : we hereby amend clause 10, line 4, by deleting
the words _(upon 5 Business Days written notice to such
Borrower and the Parent)_.
5. Schedule A - Sterling Money Market Loan : The Bank's
margin is hereby amended to 0.40% per annum.
6. Schedule C - Currency Money Market Loan : The Bank's
margin is hereby amended to 0.40% per annum.
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7. Schedule F - Bonds, Guarantees and Indemnities :
Commission at a rate of 0.45% per annum will be charged
regardless of expiry, subject to a minimum of #100.
All other terms and conditions will remain unchanged.
Acceptance of the amended terms and conditions shall be
signified by the Borrower returning to the Bank :-
a) the enclosed duplicate of this letter duly signed on the
Borrower's behalf as evidence of acceptance of the
amended terms and conditions stated herein, and
b) a certified true copy of a resolution of the Borrower's
Board of Directors:-
i) accepting the amended terms and conditions stated
herein, and
ii) authorising a specified person, or persons, to
endorse and return to the
Bank the duplicate of this letter.
Yours faithfully,
for and on behalf of
BARCLAYS BANK PLC
/s/ Jonathan L Gray
Jonathan L Gray
Relationship Director - North America
Large Corporate Banking
Accepted as of the above date on the terms and conditions
stated herein, pursuant to a resolution of the Board of
Directors (a certified true copy of which is attached
hereto).
for and on behalf of
Thermo Electron Corporation
/s/ Kenneth J. Apicerno
Assistant Treasurer
EXHIBIT 10.9
THERMO ELECTRON CORPORATION
RESTATED STOCK HOLDING ASSISTANCE PLAN
SECTION 1. Purpose.
The purpose of this Plan is to benefit Thermo Electron
Corporation (the "Company") and its stockholders by encouraging
Key Employees to acquire and maintain share ownership in the
Company, by increasing such employees' proprietary interest in
promoting the growth and performance of the Company and its
subsidiaries and by providing for the implementation of the Stock
Holding Policy.
SECTION 2. Definitions.
The following terms, when used in the Plan, shall have the
meanings set forth below:
Committee: The Human Resources Committee of the Board of
Directors of the Company as appointed from time to time.
Common Stock: The common stock of the Company and any
successor thereto.
Company: Thermo Electron Corporation, a Delaware
corporation.
Stock Holding Policy: The Stock Holding Policy of the
Company, as adopted by the Committee and as in effect from time
to time.
Key Employee: Any employee of the Company or any of its
subsidiaries, including any officer or member of the Board of
Directors who is also an employee, as designated by the
Committee, and who, in the judgment of the Committee, will be in
a position to contribute significantly to the attainment of the
Company's strategic goals and long-term growth and prosperity.
Loans: Loans extended to Key Employees by the Company
pursuant to this Plan.
Plan: The Thermo Electron Corporation Stock Holding
Assistance Plan, as amended from time to time.
SECTION 3. Administration.
The Plan and the Stock Holding Policy shall be administered
by the Committee, which shall have authority to interpret the
Plan and the Stock Holding Policy and, subject to their
provisions, to prescribe, amend and rescind any rules and
regulations and to make all other determinations necessary or
desirable for the administration thereof. The Committee's
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interpretations and decisions with regard to the Plan and the
Stock Holding Policy and such rules and regulations as may be
established thereunder shall be final and conclusive. The
Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or the Stock Holding
Policy, or in any Loan in the manner and to the extent the
Committee deems desirable to carry it into effect. No member of
the Committee shall be liable for any action or omission in
connection with the Plan or the Stock Holding Policy that is made
in good faith.
SECTION 4. Loans and Loan Limits.
The Committee has determined that the provision of Loans
from time to time to Key Employees in such amounts as to cause
such Key Employees to comply with the Stock Holding Policy is, in
the judgment of the Committee, reasonably expected to benefit the
Company and authorizes the Company to extend Loans from time to
time to Key Employees in such amounts as may be requested by such
Key Employees in order to comply with the Stock Holding Policy.
Such Loans may be used solely for the purpose of acquiring Common
Stock (other than upon the exercise of stock options or under
employee stock purchase plans) in open market transactions or
from the Company.
Each Loan shall be full recourse and evidenced by a
non-interest bearing promissory note substantially in the form
attached hereto as Exhibit A (the "Note") and maturing in
accordance with the provisions of Section 6 hereof, and
containing such other terms and conditions, which are not
inconsistent with the provisions of the Plan and the Stock
Holding Policy, as the Committee shall determine in its sole and
absolute discretion.
SECTION 5. Federal Income Tax Treatment of Loans.
For federal income tax purposes, interest on Loans shall be
imputed on any interest free Loan extended under the Plan. A Key
Employee shall be deemed to have paid the imputed interest to the
Company and the Company shall be deemed to have paid said imputed
interest back to the Key Employee as additional compensation.
The deemed interest payment shall be taxable to the Company as
income, and may be deductible to the Key Employee to the extent
allowable under the rules relating to investment interest. The
deemed compensation payment to the Key Employee shall be taxable
to the employee and deductible to the Company, but shall also be
subject to employment taxes such as FICA and FUTA.
SECTION 6. Maturity of Loans.
Each Loan to a Key Employee hereunder shall be due and
payable on demand by the Company. If no such demand is made,
then each Loan shall mature and the principal thereof shall
become due and payable on the fifth anniversary of the date of
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the Loan, provided that the Committee may, in its sole and
absolute discretion, authorize such other maturity and repayment
schedule as the Committee may determine. Each Loan shall also
become immediately due and payable in full, without demand, upon
the occurrence of any of the events set forth in the Note;
provided that the Committee may, in its sole and absolute
discretion, authorize an extension of the time for repayment of a
Loan upon such terms and conditions as the Committee may
determine.
SECTION 7. Amendment and Termination of the Plan.
The Committee may from time to time alter or amend the Plan
or the Stock Holding Policy in any respect, or terminate the Plan
or the Stock Holding Policy at any time. No such amendment or
termination, however, shall alter or otherwise affect the terms
and conditions of any Loan then outstanding to Key Employee
without such Key Employee's written consent, except as otherwise
provided herein or in the promissory note evidencing such Loan.
SECTION 8. Miscellaneous Provisions.
(a) No employee or other person shall have any claim or
right to receive a Loan under the Plan, and no employee shall
have any right to be retained in the employ of the Company due to
his or her participation in the Plan.
(b) No Loan shall be made hereunder unless counsel for the
Company shall be satisfied that such Loan will be in compliance
with applicable federal, state and local laws.
(c) The expenses of the Plan shall be borne by the Company.
(d) The Plan shall be unfunded, and the Company shall not
be required to establish any special or separate fund or to make
any other segregation of assets to assure the making of any Loan
under the Plan.
(e) Except as otherwise provided in Section 7 hereof, by
accepting any Loan under the Plan, each Key Employee shall be
conclusively deemed to have indicated his acceptance and
ratification of, and consent to, any action taken under the Plan
or the Stock Holding Policy by the Company, the Board of
Directors of the Company or the Committee.
(f) The appropriate officers of the Company shall cause to
be filed any reports, returns or other information regarding
Loans hereunder, as may be required by any applicable statute,
rule or regulation.
SECTION 9. Effective Date.
The Plan and the Stock Holding Policy shall become effective
upon approval and adoption by the Committee.
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EXHIBIT A TO STOCK HOLDING ASSISTANCE PLAN
THERMO ELECTRON CORPORATION
Promissory Note
$_________
Dated:____________
For value received, ________________, an individual whose
residence is located at _______________________ (the "Employee"),
hereby promises to pay to Thermo Electron Corporation (the
"Company"), or assigns, ON DEMAND, but in any case on or before
[insert date which is the fifth anniversary of date of issuance]
(the "Maturity Date"), the principal sum of [loan amount in
words] ($_______), or such part thereof as then remains unpaid,
without interest. Principal shall be payable in lawful money of
the United States of America, in immediately available funds, at
the principal office of the Company or at such other place as the
Company may designate from time to time in writing to the
Employee.
Unless the Company has already made a demand for payment in
full of this Note, the Employee agrees to repay to the Company
from the Employee's annual cash incentive compensation (referred
to as bonus), beginning with the first such bonus payment to
occur after the date of this Note and on each of the next four
bonus payment dates occurring prior to the Maturity Date, such
amount as may be designated by the Company. Any amount remaining
unpaid under this Note shall be due and payable on the Maturity
Date.
This Note may be prepaid at any time or from time to time,
in whole or in part, without any premium or penalty. The
Employee acknowledges and agrees that the Company has advanced to
the Employee the principal amount of this Note pursuant to the
Company's Stock Holding Assistance Plan, and that all terms and
conditions of such Plan are incorporated herein by reference.
The unpaid principal amount of this Note shall be and become
immediately due and payable without notice or demand, at the
option of the Company, upon the occurrence of any of the
following events:
(a) the termination of the Employee's employment with
the Company, with or without cause, for any reason or for no
reason;
(b) the death or disability of the Employee;
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(c) the failure of the Employee to pay his or her
debts as they become due, the insolvency of the Employee,
the filing by or against the Employee of any petition under
the United States Bankruptcy Code (or the filing of any
similar petition under the insolvency law of any
jurisdiction), or the making by the Employee of an
assignment or trust mortgage for the benefit of creditors or
the appointment of a receiver, custodian or similar agent
with respect to, or the taking by any such person of
possession of, any property of the Employee; or
(d) the issuance of any writ of attachment, by trustee
process or otherwise, or any restraining order or injunction
not removed, repealed or dismissed within thirty (30) days
of issuance, against or affecting the person or property of
the Employee or any liability or obligation of the Employee
to the Company.
In case any payment herein provided for shall not be paid
when due, the Employee further promises to pay all costs of
collection, including all reasonable attorneys' fees.
No delay or omission on the part of the Company in
exercising any right hereunder shall operate as a waiver of such
right or of any other right of the Company, nor shall any delay,
omission or waiver on any one occasion be deemed a bar to or
waiver of the same or any other right on any future occasion.
The Employee hereby waives presentment, demand, notice of
prepayment, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or
enforcement of this Note. The undersigned hereby assents to any
indulgence and any extension of time for payment of any
indebtedness evidenced hereby granted or permitted by the
Company.
This Note has been made pursuant to the Company's Stock
Holding Assistance Plan and shall be governed by and construed in
accordance with, such Plan and the laws of the State of Delaware
and shall have the effect of a sealed instrument.
_______________________________
Employee Name: _________________
________________________
Witness
EXHIBIT 10.46
THERMO ELECTRON CORPORATION
THERMEDICS DETECTION INC. NONQUALIFIED STOCK OPTION PLAN
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended
to encourage ownership of Common Stock, $0.01 par value (the
"Common Stock"), of Thermedics Detection Inc. ("Subsidiary"), a
subsidiary of Thermo Electron Corporation (the "Company"), by
persons selected by the Board of Directors (or a committee
thereof) in its sole discretion, including directors, executive
officers, key employees and consultants of the Company and its
subsidiaries, and to provide additional incentive for them to
promote the success of the business of the Company and
Subsidiary. The Plan is intended to be a nonstatutory stock
option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of
Directors of the Company.
3. Stock Subject to Plan
At no time shall the number of shares of the Common Stock
then outstanding which are attributable to the exercise of
options granted under the Plan plus the number of shares then
issuable upon the exercise of outstanding options granted under
the Plan exceed 150,000 shares, subject however, to the
provisions of paragraph 11 of the Plan. Shares to be issued upon
the exercise of options granted under the Plan shall be shares of
Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall
again be available for options thereafter to be granted.
4. Administration
The Plan shall be administered by a committee (the
"Committee") composed of the members of the Board of Directors of
the Company, no member of which shall act upon any matter
exclusively affecting any option granted or to be granted to
himself or herself under the Plan. Subject to the provisions of
the Plan, the Committee shall have complete authority, in its
discretion, to make the following determinations with respect to
each option to be granted by the Company: (a) the person to
receive the option (the "Optionee"); (b) the time of granting the
option; (c) the number of shares subject thereto; (d) the option
price; (e) the option period; and (f) the terms of the option and
form of option agreement (which need not be identical, but which
shall conform to the applicable terms and conditions of the Plan
and contain such other provisions as the Board of Directors deems
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advisable and not inconsistent with the Plan). In making such
determinations, the Committee may take into account the nature of
the services rendered by the Optionees, their present and
potential contributions to the success of the Company and/or one
or more of its subsidiaries, and such other factors as the
Committee in its discretion shall deem relevant. Subject to the
provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to it, to determine the terms and
provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's
determinations on the matters referred to in this paragraph 4
shall be conclusive.
5. Eligibility
An option may be granted to any person selected by the
Committee in its sole discretion.
6. Time of Granting Options
The granting of an option shall take place at the time
specified by the Committee. Only if expressly so provided by the
Committee shall the granting of an option be regarded as taking
place at the time when a written option agreement shall have been
duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement
shall provide, among other things, that it does not confer upon
an Optionee any right to continue in the employ of the Company
and/or one or more of its subsidiaries or to continue as a
director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such
subsidiary to terminate the employment of the Optionee at any
time if the Optionee is an employee, to remove the Optionee as a
director of the Company if the Optionee is a director, or to
terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such
installments, cumulative or noncumulative, as the Committee may
determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by
written notice of intent to exercise the option, specifying the
number of shares of stock with respect to which the option is
then being exercised. The notice shall be accompanied by payment
in the form of cash or shares of Subsidiary Common Stock (the
"Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however,
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that such Tendered Shares shall have been acquired by the
Optionee more than six months prior to the date of exercise,
unless such requirement is waived in writing by the Company.
Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares
then being purchased, registered in the name of the Optionee or
other person exercising the option. If any law or applicable
regulation of the Securities and Exchange Commission or other
body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in
connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or
certificates for such shares shall be postponed until completion
of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Except as may be authorized by the Committee , in its sole
discretion, no Option may be transferred other than by will or
the laws of descent and distribution, and during a Optionee's
lifetime an option requiring exercise may be exercised only by
him or her (or in the event of incapacity, the person or persons
properly appointed to act on his or her behalf). The Committee
may, in its discretion, determine the extent to which options
granted to an Optionee shall be transferable, and such provisions
permitting or acknowledging transfer shall be set forth in the
written agreement evidencing the option executed and delivered by
or on behalf of the Company and the Optionee.
10. Vesting, Restrictions and Termination of Options
The Committee, in its sole discretion, may determine the
manner in which options shall vest, the rights of the Company to
repurchase the shares issued upon the exercise of any option and
the manner in which such rights shall lapse, and the terms upon
which any option granted shall terminate. The Board of Directors
shall have the right to accelerate the date of exercise of any
installment or to accelerate the lapse of the Company's
repurchase rights. All of such terms shall be specified in a
written option agreement executed and delivered by or on behalf
of the Company and the Optionee to whom such option shall be
granted.
11. Adjustment of Number of Shares
Each stock option agreement shall provide that in the event
of any stock dividend payable in the Common Stock or any split-up
or contraction in the number of shares of the Common Stock
occurring after the date of the agreement and prior to the
exercise in full of the option, the number of shares for which
the option may thereafter be exercised shall be proportionately
adjusted and the price to be paid for each share subject to the
option shall be proportionately adjusted. Each such agreement
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shall also provide that in case of any reclassification or change
of outstanding shares of the Common Stock or in case of any
consolidation or merger of Subsidiary with or into another
company or in case of any sale or conveyance to another company
or entity of the property of Subsidiary as a whole or
substantially as a whole, the Optionee shall, upon exercise of
the option, be entitled to receive shares of stock or other
securities in its place equivalent in kind and value to those
shares which he would have received if he had exercised the
option in full immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and had
continued to hold the shares subject to the option (together with
all other shares, stock and securities thereafter issued in
respect thereof) to the time of the exercise of the option;
provided , that if any recapitalization is to be effected through
an increase in the par value of the Common Stock without an
increase in the number of authorized shares and such new par
value will exceed the option price under such agreement, the
Company shall notify the Optionee of such proposed
recapitalization, and the Optionee shall then have the right,
exercisable at any time prior to such recapitalization becoming
effective, to purchase all of the shares subject to the option
which he has not theretofore purchased (anything in such
agreement to the contrary notwithstanding), but if the Optionee
fails to exercise such right before such recapitalization becomes
effective, the option price under such agreement shall be
appropriately adjusted. Each such agreement shall further
provide that upon dissolution or liquidation of Subsidiary, the
option shall terminate, but the Optionee (if at the time an
employee or director of the Company and/or any one or more of its
subsidiaries) shall have the right, immediately prior to such
dissolution or liquidation, to exercise the option to the full
extent not theretofore exercised; that no adjustment provided for
above shall apply to any share with respect to which the option
has been exercised prior to the effective date of such
adjustment; and that no fraction of a share or fractional shares
shall be purchasable or deliverable under such agreement, but in
the event any adjustment thereunder of the number of shares
covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares. In the event of changes
in the outstanding Common Stock by reason of any stock dividend,
split-up, contraction, reclassification, or change of outstanding
shares of the Common Stock of the nature contemplated by this
paragraph 11, the number of shares of Common Stock available for
the purpose of the Plan as stated in paragraph 3 hereof shall be
correspondingly adjusted by the Committee.
12. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in
respect of shares as to which their options shall not have been
exercised, certificates issued and delivered and payment as
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herein provided made in full, and shall have no rights with
respect to such shares not expressly conferred by this Plan.
13. Stock Reserved
The Company shall at all times during the term of the
options reserve and keep available such number of shares of the
Common Stock as will be sufficient to satisfy the requirements of
this Plan and shall pay all other fees and expenses necessarily
incurred by the Company in connection therewith.
14. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the
Company, will be required to give a representation in form
satisfactory to counsel for the Company that he will not
transfer, sell or otherwise dispose of the shares received upon
exercise of the option at any time purchased by him, upon
exercise of any portion of the option, in a manner which would
violate the Securities Act of 1933, as amended, and the
regulations of the Securities and Exchange Commission thereunder
and the Company may, if required or at its discretion, make a
notation on any certificates issued upon exercise of options to
the effect that such certificate may not be transferred except
after receipt by the Company of an opinion of counsel
satisfactory to it to the effect that such transfer will not
violate such Act and such regulations.
15. Tax Withholding
The Company shall have the right to deduct from payments of
any kind otherwise due to an Optionee any federal, state or local
taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of options under the Plan (the
"withholding requirements"). The Committee will have the right
to require that the Optionee or other appropriate person remit to
the Company an amount sufficient to satisfy the withholding
requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery
of any Common Stock pursuant to exercise of an option. If and to
the extent that such withholding is required, the Committee may
permit the Optionee or such other person to elect at such time
and in such manner as the Committee provides to have the Company
hold back from the shares to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the
withholding requirements.
16. Termination and Amendment of Plan
The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at
any time the approval of the Stockholders of the Company is
required as to such modification or amendment under Rule 16b-3,
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the Board of Directors may not effect such modification or
amendment without such approval.
The termination or any modification or amendment of the Plan
shall not, without the consent of an Optionee, affect his or her
rights under an option previously granted to him or her. With
the consent of the Optionees affected, the Board of Directors may
amend outstanding option agreements in a manner not inconsistent
with the Plan. The Board of Directors shall have the right to
amend or modify the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.
Notwithstanding any other provisions hereof, the Plan shall
terminate on December 31, 2008 and no options shall be granted
hereunder thereafter.
EXHIBIT 10.47
THERMO ELECTRON CORPORATION
METRIKA SYSTEMS CORPORATION NONQUALIFIED STOCK OPTION PLAN
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended
to encourage ownership of Common Stock, $0.01 par value (the
"Common Stock"), of Metrika Systems Corporation ("Subsidiary"),
a subsidiary of Thermo Electron Corporation (the "Company"), by
persons selected by the Board of Directors (or a committee
thereof) in its sole discretion, including directors, executive
officers, key employees and consultants of the Company and its
subsidiaries, and to provide additional incentive for them to
promote the success of the business of the Company and
Subsidiary. The Plan is intended to be a nonstatutory stock
option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of
Directors of the Company.
3. Stock Subject to Plan
At no time shall the number of shares of the Common Stock
then outstanding which are attributable to the exercise of
options granted under the Plan plus the number of shares then
issuable upon the exercise of outstanding options granted under
the Plan exceed 150,000 shares, subject however, to the
provisions of paragraph 11 of the Plan. Shares to be issued upon
the exercise of options granted under the Plan shall be shares of
Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall
again be available for options thereafter to be granted.
4. Administration
The Plan shall be administered by a committee (the
"Committee") composed of the members of the Board of Directors of
the Company, no member of which shall act upon any matter
exclusively affecting any option granted or to be granted to
himself or herself under the Plan. Subject to the provisions of
the Plan, the Committee shall have complete authority, in its
discretion, to make the following determinations with respect to
each option to be granted by the Company: (a) the person to
receive the option (the "Optionee"); (b) the time of granting the
option; (c) the number of shares subject thereto; (d) the option
price; (e) the option period; and (f) the terms of the option and
form of option agreement (which need not be identical, but which
shall conform to the applicable terms and conditions of the Plan
and contain such other provisions as the Board of Directors deems
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advisable and not inconsistent with the Plan). In making such
determinations, the Committee may take into account the nature of
the services rendered by the Optionees, their present and
potential contributions to the success of the Company and/or one
or more of its subsidiaries, and such other factors as the
Committee in its discretion shall deem relevant. Subject to the
provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to it, to determine the terms and
provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's
determinations on the matters referred to in this paragraph 4
shall be conclusive.
5. Eligibility
An option may be granted to any person selected by the
Committee in its sole discretion.
6. Time of Granting Options
The granting of an option shall take place at the time
specified by the Committee. Only if expressly so provided by the
Committee shall the granting of an option be regarded as taking
place at the time when a written option agreement shall have been
duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement
shall provide, among other things, that it does not confer upon
an Optionee any right to continue in the employ of the Company
and/or one or more of its subsidiaries or to continue as a
director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such
subsidiary to terminate the employment of the Optionee at any
time if the Optionee is an employee, to remove the Optionee as a
director of the Company if the Optionee is a director, or to
terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such
installments, cumulative or noncumulative, as the Committee may
determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by
written notice of intent to exercise the option, specifying the
number of shares of stock with respect to which the option is
then being exercised. The notice shall be accompanied by payment
in the form of cash or shares of Subsidiary Common Stock (the
"Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however,
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that such Tendered Shares shall have been acquired by the
Optionee more than six months prior to the date of exercise,
unless such requirement is waived in writing by the Company.
Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares
then being purchased, registered in the name of the Optionee or
other person exercising the option. If any law or applicable
regulation of the Securities and Exchange Commission or other
body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in
connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or
certificates for such shares shall be postponed until completion
of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Except as may be authorized by the Committee , in its sole
discretion, no Option may be transferred other than by will or
the laws of descent and distribution, and during a Optionee's
lifetime an option requiring exercise may be exercised only by
him or her (or in the event of incapacity, the person or persons
properly appointed to act on his or her behalf). The Committee
may, in its discretion, determine the extent to which options
granted to an Optionee shall be transferable, and such provisions
permitting or acknowledging transfer shall be set forth in the
written agreement evidencing the option executed and delivered by
or on behalf of the Company and the Optionee.
10. Vesting, Restrictions and Termination of Options
The Committee, in its sole discretion, may determine the
manner in which options shall vest, the rights of the Company to
repurchase the shares issued upon the exercise of any option and
the manner in which such rights shall lapse, and the terms upon
which any option granted shall terminate. The Board of Directors
shall have the right to accelerate the date of exercise of any
installment or to accelerate the lapse of the Company's
repurchase rights. All of such terms shall be specified in a
written option agreement executed and delivered by or on behalf
of the Company and the Optionee to whom such option shall be
granted.
11. Adjustment of Number of Shares
Each stock option agreement shall provide that in the event
of any stock dividend payable in the Common Stock or any split-up
or contraction in the number of shares of the Common Stock
occurring after the date of the agreement and prior to the
exercise in full of the option, the number of shares for which
the option may thereafter be exercised shall be proportionately
adjusted and the price to be paid for each share subject to the
option shall be proportionately adjusted. Each such agreement
PAGE
<PAGE>
shall also provide that in case of any reclassification or change
of outstanding shares of the Common Stock or in case of any
consolidation or merger of Subsidiary with or into another
company or in case of any sale or conveyance to another company
or entity of the property of Subsidiary as a whole or
substantially as a whole, the Optionee shall, upon exercise of
the option, be entitled to receive shares of stock or other
securities in its place equivalent in kind and value to those
shares which he would have received if he had exercised the
option in full immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and had
continued to hold the shares subject to the option (together with
all other shares, stock and securities thereafter issued in
respect thereof) to the time of the exercise of the option;
provided , that if any recapitalization is to be effected through
an increase in the par value of the Common Stock without an
increase in the number of authorized shares and such new par
value will exceed the option price under such agreement, the
Company shall notify the Optionee of such proposed
recapitalization, and the Optionee shall then have the right,
exercisable at any time prior to such recapitalization becoming
effective, to purchase all of the shares subject to the option
which he has not theretofore purchased (anything in such
agreement to the contrary notwithstanding), but if the Optionee
fails to exercise such right before such recapitalization becomes
effective, the option price under such agreement shall be
appropriately adjusted. Each such agreement shall further
provide that upon dissolution or liquidation of Subsidiary, the
option shall terminate, but the Optionee (if at the time an
employee or director of the Company and/or any one or more of its
subsidiaries) shall have the right, immediately prior to such
dissolution or liquidation, to exercise the option to the full
extent not theretofore exercised; that no adjustment provided for
above shall apply to any share with respect to which the option
has been exercised prior to the effective date of such
adjustment; and that no fraction of a share or fractional shares
shall be purchasable or deliverable under such agreement, but in
the event any adjustment thereunder of the number of shares
covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares. In the event of changes
in the outstanding Common Stock by reason of any stock dividend,
split-up, contraction, reclassification, or change of outstanding
shares of the Common Stock of the nature contemplated by this
paragraph 11, the number of shares of Common Stock available for
the purpose of the Plan as stated in paragraph 3 hereof shall be
correspondingly adjusted by the Committee.
12. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in
respect of shares as to which their options shall not have been
exercised, certificates issued and delivered and payment as
PAGE
<PAGE>
herein provided made in full, and shall have no rights with
respect to such shares not expressly conferred by this Plan.
13. Stock Reserved
The Company shall at all times during the term of the
options reserve and keep available such number of shares of the
Common Stock as will be sufficient to satisfy the requirements of
this Plan and shall pay all other fees and expenses necessarily
incurred by the Company in connection therewith.
14. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the
Company, will be required to give a representation in form
satisfactory to counsel for the Company that he will not
transfer, sell or otherwise dispose of the shares received upon
exercise of the option at any time purchased by him, upon
exercise of any portion of the option, in a manner which would
violate the Securities Act of 1933, as amended, and the
regulations of the Securities and Exchange Commission thereunder
and the Company may, if required or at its discretion, make a
notation on any certificates issued upon exercise of options to
the effect that such certificate may not be transferred except
after receipt by the Company of an opinion of counsel
satisfactory to it to the effect that such transfer will not
violate such Act and such regulations.
15. Tax Withholding
The Company shall have the right to deduct from payments of
any kind otherwise due to an Optionee any federal, state or local
taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of options under the Plan (the
"withholding requirements"). The Committee will have the right
to require that the Optionee or other appropriate person remit to
the Company an amount sufficient to satisfy the withholding
requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery
of any Common Stock pursuant to exercise of an option. If and to
the extent that such withholding is required, the Committee may
permit the Optionee or such other person to elect at such time
and in such manner as the Committee provides to have the Company
hold back from the shares to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the
withholding requirements.
16. Termination and Amendment of Plan
The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at
any time the approval of the Stockholders of the Company is
required as to such modification or amendment under Rule 16b-3,
PAGE
<PAGE>
the Board of Directors may not effect such modification or
amendment without such approval.
The termination or any modification or amendment of the Plan
shall not, without the consent of an Optionee, affect his or her
rights under an option previously granted to him or her. With
the consent of the Optionees affected, the Board of Directors may
amend outstanding option agreements in a manner not inconsistent
with the Plan. The Board of Directors shall have the right to
amend or modify the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.
Notwithstanding any other provisions hereof, the Plan shall
terminate on December 31, 2008 and no options shall be granted
hereunder thereafter.
EXHIBIT 10.48
THERMO ELECTRON CORPORATION
THERMO VISION CORPORATION NONQUALIFIED STOCK OPTION PLAN
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended
to encourage ownership of Common Stock, $0.01 par value (the
"Common Stock"), of Thermo Vision Corporation ("Subsidiary"), a
subsidiary of Thermo Electron Corporation (the "Company"), by
persons selected by the Board of Directors (or a committee
thereof) in its sole discretion, including directors, executive
officers, key employees and consultants of the Company and its
subsidiaries, and to provide additional incentive for them to
promote the success of the business of the Company and
Subsidiary. The Plan is intended to be a nonstatutory stock
option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of
Directors of the Company.
3. Stock Subject to Plan
At no time shall the number of shares of the Common Stock
then outstanding which are attributable to the exercise of
options granted under the Plan plus the number of shares then
issuable upon the exercise of outstanding options granted under
the Plan exceed 150,000 shares, subject however, to the
provisions of paragraph 11 of the Plan. Shares to be issued upon
the exercise of options granted under the Plan shall be shares of
Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall
again be available for options thereafter to be granted.
4. Administration
The Plan shall be administered by a committee (the
"Committee") composed of the members of the Board of Directors of
the Company, no member of which shall act upon any matter
exclusively affecting any option granted or to be granted to
himself or herself under the Plan. Subject to the provisions of
the Plan, the Committee shall have complete authority, in its
discretion, to make the following determinations with respect to
each option to be granted by the Company: (a) the person to
receive the option (the "Optionee"); (b) the time of granting the
option; (c) the number of shares subject thereto; (d) the option
price; (e) the option period; and (f) the terms of the option and
form of option agreement (which need not be identical, but which
shall conform to the applicable terms and conditions of the Plan
and contain such other provisions as the Board of Directors deems
PAGE
<PAGE>
advisable and not inconsistent with the Plan). In making such
determinations, the Committee may take into account the nature of
the services rendered by the Optionees, their present and
potential contributions to the success of the Company and/or one
or more of its subsidiaries, and such other factors as the
Committee in its discretion shall deem relevant. Subject to the
provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to it, to determine the terms and
provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's
determinations on the matters referred to in this paragraph 4
shall be conclusive.
5. Eligibility
An option may be granted to any person selected by the
Committee in its sole discretion.
6. Time of Granting Options
The granting of an option shall take place at the time
specified by the Committee. Only if expressly so provided by the
Committee shall the granting of an option be regarded as taking
place at the time when a written option agreement shall have been
duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement
shall provide, among other things, that it does not confer upon
an Optionee any right to continue in the employ of the Company
and/or one or more of its subsidiaries or to continue as a
director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such
subsidiary to terminate the employment of the Optionee at any
time if the Optionee is an employee, to remove the Optionee as a
director of the Company if the Optionee is a director, or to
terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such
installments, cumulative or noncumulative, as the Committee may
determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by
written notice of intent to exercise the option, specifying the
number of shares of stock with respect to which the option is
then being exercised. The notice shall be accompanied by payment
in the form of cash or shares of Subsidiary Common Stock (the
"Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however,
PAGE
<PAGE>
that such Tendered Shares shall have been acquired by the
Optionee more than six months prior to the date of exercise,
unless such requirement is waived in writing by the Company.
Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares
then being purchased, registered in the name of the Optionee or
other person exercising the option. If any law or applicable
regulation of the Securities and Exchange Commission or other
body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in
connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or
certificates for such shares shall be postponed until completion
of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Except as may be authorized by the Committee , in its sole
discretion, no Option may be transferred other than by will or
the laws of descent and distribution, and during a Optionee's
lifetime an option requiring exercise may be exercised only by
him or her (or in the event of incapacity, the person or persons
properly appointed to act on his or her behalf). The Committee
may, in its discretion, determine the extent to which options
granted to an Optionee shall be transferable, and such provisions
permitting or acknowledging transfer shall be set forth in the
written agreement evidencing the option executed and delivered by
or on behalf of the Company and the Optionee.
10. Vesting, Restrictions and Termination of Options
The Committee, in its sole discretion, may determine the
manner in which options shall vest, the rights of the Company to
repurchase the shares issued upon the exercise of any option and
the manner in which such rights shall lapse, and the terms upon
which any option granted shall terminate. The Board of Directors
shall have the right to accelerate the date of exercise of any
installment or to accelerate the lapse of the Company's
repurchase rights. All of such terms shall be specified in a
written option agreement executed and delivered by or on behalf
of the Company and the Optionee to whom such option shall be
granted.
11. Adjustment of Number of Shares
Each stock option agreement shall provide that in the event
of any stock dividend payable in the Common Stock or any split-up
or contraction in the number of shares of the Common Stock
occurring after the date of the agreement and prior to the
exercise in full of the option, the number of shares for which
the option may thereafter be exercised shall be proportionately
adjusted and the price to be paid for each share subject to the
option shall be proportionately adjusted. Each such agreement
PAGE
<PAGE>
shall also provide that in case of any reclassification or change
of outstanding shares of the Common Stock or in case of any
consolidation or merger of Subsidiary with or into another
company or in case of any sale or conveyance to another company
or entity of the property of Subsidiary as a whole or
substantially as a whole, the Optionee shall, upon exercise of
the option, be entitled to receive shares of stock or other
securities in its place equivalent in kind and value to those
shares which he would have received if he had exercised the
option in full immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and had
continued to hold the shares subject to the option (together with
all other shares, stock and securities thereafter issued in
respect thereof) to the time of the exercise of the option;
provided , that if any recapitalization is to be effected through
an increase in the par value of the Common Stock without an
increase in the number of authorized shares and such new par
value will exceed the option price under such agreement, the
Company shall notify the Optionee of such proposed
recapitalization, and the Optionee shall then have the right,
exercisable at any time prior to such recapitalization becoming
effective, to purchase all of the shares subject to the option
which he has not theretofore purchased (anything in such
agreement to the contrary notwithstanding), but if the Optionee
fails to exercise such right before such recapitalization becomes
effective, the option price under such agreement shall be
appropriately adjusted. Each such agreement shall further
provide that upon dissolution or liquidation of Subsidiary, the
option shall terminate, but the Optionee (if at the time an
employee or director of the Company and/or any one or more of its
subsidiaries) shall have the right, immediately prior to such
dissolution or liquidation, to exercise the option to the full
extent not theretofore exercised; that no adjustment provided for
above shall apply to any share with respect to which the option
has been exercised prior to the effective date of such
adjustment; and that no fraction of a share or fractional shares
shall be purchasable or deliverable under such agreement, but in
the event any adjustment thereunder of the number of shares
covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares. In the event of changes
in the outstanding Common Stock by reason of any stock dividend,
split-up, contraction, reclassification, or change of outstanding
shares of the Common Stock of the nature contemplated by this
paragraph 11, the number of shares of Common Stock available for
the purpose of the Plan as stated in paragraph 3 hereof shall be
correspondingly adjusted by the Committee.
12. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in
respect of shares as to which their options shall not have been
exercised, certificates issued and delivered and payment as
PAGE
<PAGE>
herein provided made in full, and shall have no rights with
respect to such shares not expressly conferred by this Plan.
13. Stock Reserved
The Company shall at all times during the term of the
options reserve and keep available such number of shares of the
Common Stock as will be sufficient to satisfy the requirements of
this Plan and shall pay all other fees and expenses necessarily
incurred by the Company in connection therewith.
14. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the
Company, will be required to give a representation in form
satisfactory to counsel for the Company that he will not
transfer, sell or otherwise dispose of the shares received upon
exercise of the option at any time purchased by him, upon
exercise of any portion of the option, in a manner which would
violate the Securities Act of 1933, as amended, and the
regulations of the Securities and Exchange Commission thereunder
and the Company may, if required or at its discretion, make a
notation on any certificates issued upon exercise of options to
the effect that such certificate may not be transferred except
after receipt by the Company of an opinion of counsel
satisfactory to it to the effect that such transfer will not
violate such Act and such regulations.
15. Tax Withholding
The Company shall have the right to deduct from payments of
any kind otherwise due to an Optionee any federal, state or local
taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of options under the Plan (the
"withholding requirements"). The Committee will have the right
to require that the Optionee or other appropriate person remit to
the Company an amount sufficient to satisfy the withholding
requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery
of any Common Stock pursuant to exercise of an option. If and to
the extent that such withholding is required, the Committee may
permit the Optionee or such other person to elect at such time
and in such manner as the Committee provides to have the Company
hold back from the shares to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the
withholding requirements.
16. Termination and Amendment of Plan
The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at
any time the approval of the Stockholders of the Company is
required as to such modification or amendment under Rule 16b-3,
PAGE
<PAGE>
the Board of Directors may not effect such modification or
amendment without such approval.
The termination or any modification or amendment of the Plan
shall not, without the consent of an Optionee, affect his or her
rights under an option previously granted to him or her. With
the consent of the Optionees affected, the Board of Directors may
amend outstanding option agreements in a manner not inconsistent
with the Plan. The Board of Directors shall have the right to
amend or modify the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.
Notwithstanding any other provisions hereof, the Plan shall
terminate on December 31, 2008 and no options shall be granted
hereunder thereafter.
EXHIBIT 10.49
THERMO ELECTRON CORPORATION
ONIX SYSTEMS INC. NONQUALIFIED STOCK OPTION PLAN
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended
to encourage ownership of Common Stock, $0.01 par value (the
"Common Stock"), of ONIX Systems Inc. ("Subsidiary"),
subsidiary of Thermo Electron Corporation (the "Company"), by
persons selected by the Board of Directors (or a committee
thereof) in its sole discretion, including directors, executive
officers, key employees and consultants of the Company and its
subsidiaries, and to provide additional incentive for them to
promote the success of the business of the Company and
Subsidiary. The Plan is intended to be a nonstatutory stock
option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of
Directors of the Company.
3. Stock Subject to Plan
At no time shall the number of shares of the Common Stock
then outstanding which are attributable to the exercise of
options granted under the Plan plus the number of shares then
issuable upon the exercise of outstanding options granted under
the Plan exceed 150,000 shares, subject however, to the
provisions of paragraph 11 of the Plan. Shares to be issued upon
the exercise of options granted under the Plan shall be shares of
Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall
again be available for options thereafter to be granted.
4. Administration
The Plan shall be administered by a committee (the
"Committee") composed of the members of the Board of Directors of
the Company, no member of which shall act upon any matter
exclusively affecting any option granted or to be granted to
himself or herself under the Plan. Subject to the provisions of
the Plan, the Committee shall have complete authority, in its
discretion, to make the following determinations with respect to
each option to be granted by the Company: (a) the person to
receive the option (the "Optionee"); (b) the time of granting the
option; (c) the number of shares subject thereto; (d) the option
price; (e) the option period; and (f) the terms of the option and
form of option agreement (which need not be identical, but which
shall conform to the applicable terms and conditions of the Plan
and contain such other provisions as the Board of Directors deems
PAGE
<PAGE>
advisable and not inconsistent with the Plan). In making such
determinations, the Committee may take into account the nature of
the services rendered by the Optionees, their present and
potential contributions to the success of the Company and/or one
or more of its subsidiaries, and such other factors as the
Committee in its discretion shall deem relevant. Subject to the
provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to it, to determine the terms and
provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's
determinations on the matters referred to in this paragraph 4
shall be conclusive.
5. Eligibility
An option may be granted to any person selected by the
Committee in its sole discretion.
6. Time of Granting Options
The granting of an option shall take place at the time
specified by the Committee. Only if expressly so provided by the
Committee shall the granting of an option be regarded as taking
place at the time when a written option agreement shall have been
duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement
shall provide, among other things, that it does not confer upon
an Optionee any right to continue in the employ of the Company
and/or one or more of its subsidiaries or to continue as a
director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such
subsidiary to terminate the employment of the Optionee at any
time if the Optionee is an employee, to remove the Optionee as a
director of the Company if the Optionee is a director, or to
terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such
installments, cumulative or noncumulative, as the Committee may
determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by
written notice of intent to exercise the option, specifying the
number of shares of stock with respect to which the option is
then being exercised. The notice shall be accompanied by payment
in the form of cash or shares of Subsidiary Common Stock (the
"Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however,
PAGE
<PAGE>
that such Tendered Shares shall have been acquired by the
Optionee more than six months prior to the date of exercise,
unless such requirement is waived in writing by the Company.
Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares
then being purchased, registered in the name of the Optionee or
other person exercising the option. If any law or applicable
regulation of the Securities and Exchange Commission or other
body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in
connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or
certificates for such shares shall be postponed until completion
of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Except as may be authorized by the Committee , in its sole
discretion, no Option may be transferred other than by will or
the laws of descent and distribution, and during a Optionee's
lifetime an option requiring exercise may be exercised only by
him or her (or in the event of incapacity, the person or persons
properly appointed to act on his or her behalf). The Committee
may, in its discretion, determine the extent to which options
granted to an Optionee shall be transferable, and such provisions
permitting or acknowledging transfer shall be set forth in the
written agreement evidencing the option executed and delivered by
or on behalf of the Company and the Optionee.
10. Vesting, Restrictions and Termination of Options
The Committee, in its sole discretion, may determine the
manner in which options shall vest, the rights of the Company to
repurchase the shares issued upon the exercise of any option and
the manner in which such rights shall lapse, and the terms upon
which any option granted shall terminate. The Board of Directors
shall have the right to accelerate the date of exercise of any
installment or to accelerate the lapse of the Company's
repurchase rights. All of such terms shall be specified in a
written option agreement executed and delivered by or on behalf
of the Company and the Optionee to whom such option shall be
granted.
11. Adjustment of Number of Shares
Each stock option agreement shall provide that in the event
of any stock dividend payable in the Common Stock or any split-up
or contraction in the number of shares of the Common Stock
occurring after the date of the agreement and prior to the
exercise in full of the option, the number of shares for which
the option may thereafter be exercised shall be proportionately
adjusted and the price to be paid for each share subject to the
option shall be proportionately adjusted. Each such agreement
PAGE
<PAGE>
shall also provide that in case of any reclassification or change
of outstanding shares of the Common Stock or in case of any
consolidation or merger of Subsidiary with or into another
company or in case of any sale or conveyance to another company
or entity of the property of Subsidiary as a whole or
substantially as a whole, the Optionee shall, upon exercise of
the option, be entitled to receive shares of stock or other
securities in its place equivalent in kind and value to those
shares which he would have received if he had exercised the
option in full immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and had
continued to hold the shares subject to the option (together with
all other shares, stock and securities thereafter issued in
respect thereof) to the time of the exercise of the option;
provided , that if any recapitalization is to be effected through
an increase in the par value of the Common Stock without an
increase in the number of authorized shares and such new par
value will exceed the option price under such agreement, the
Company shall notify the Optionee of such proposed
recapitalization, and the Optionee shall then have the right,
exercisable at any time prior to such recapitalization becoming
effective, to purchase all of the shares subject to the option
which he has not theretofore purchased (anything in such
agreement to the contrary notwithstanding), but if the Optionee
fails to exercise such right before such recapitalization becomes
effective, the option price under such agreement shall be
appropriately adjusted. Each such agreement shall further
provide that upon dissolution or liquidation of Subsidiary, the
option shall terminate, but the Optionee (if at the time an
employee or director of the Company and/or any one or more of its
subsidiaries) shall have the right, immediately prior to such
dissolution or liquidation, to exercise the option to the full
extent not theretofore exercised; that no adjustment provided for
above shall apply to any share with respect to which the option
has been exercised prior to the effective date of such
adjustment; and that no fraction of a share or fractional shares
shall be purchasable or deliverable under such agreement, but in
the event any adjustment thereunder of the number of shares
covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares. In the event of changes
in the outstanding Common Stock by reason of any stock dividend,
split-up, contraction, reclassification, or change of outstanding
shares of the Common Stock of the nature contemplated by this
paragraph 11, the number of shares of Common Stock available for
the purpose of the Plan as stated in paragraph 3 hereof shall be
correspondingly adjusted by the Committee.
12. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in
respect of shares as to which their options shall not have been
exercised, certificates issued and delivered and payment as
PAGE
<PAGE>
herein provided made in full, and shall have no rights with
respect to such shares not expressly conferred by this Plan.
13. Stock Reserved
The Company shall at all times during the term of the
options reserve and keep available such number of shares of the
Common Stock as will be sufficient to satisfy the requirements of
this Plan and shall pay all other fees and expenses necessarily
incurred by the Company in connection therewith.
14. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the
Company, will be required to give a representation in form
satisfactory to counsel for the Company that he will not
transfer, sell or otherwise dispose of the shares received upon
exercise of the option at any time purchased by him, upon
exercise of any portion of the option, in a manner which would
violate the Securities Act of 1933, as amended, and the
regulations of the Securities and Exchange Commission thereunder
and the Company may, if required or at its discretion, make a
notation on any certificates issued upon exercise of options to
the effect that such certificate may not be transferred except
after receipt by the Company of an opinion of counsel
satisfactory to it to the effect that such transfer will not
violate such Act and such regulations.
15. Tax Withholding
The Company shall have the right to deduct from payments of
any kind otherwise due to an Optionee any federal, state or local
taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of options under the Plan (the
"withholding requirements"). The Committee will have the right
to require that the Optionee or other appropriate person remit to
the Company an amount sufficient to satisfy the withholding
requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery
of any Common Stock pursuant to exercise of an option. If and to
the extent that such withholding is required, the Committee may
permit the Optionee or such other person to elect at such time
and in such manner as the Committee provides to have the Company
hold back from the shares to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the
withholding requirements.
16. Termination and Amendment of Plan
The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at
any time the approval of the Stockholders of the Company is
required as to such modification or amendment under Rule 16b-3,
PAGE
<PAGE>
the Board of Directors may not effect such modification or
amendment without such approval.
The termination or any modification or amendment of the Plan
shall not, without the consent of an Optionee, affect his or her
rights under an option previously granted to him or her. With
the consent of the Optionees affected, the Board of Directors may
amend outstanding option agreements in a manner not inconsistent
with the Plan. The Board of Directors shall have the right to
amend or modify the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.
Notwithstanding any other provisions hereof, the Plan shall
terminate on December 31, 2008 and no options shall be granted
hereunder thereafter.
EXHIBIT 10.50
THERMO ELECTRON CORPORATION
THE RANDERS GROUP INCORPORATED NONQUALIFIED STOCK OPTION PLAN
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended
to encourage ownership of Common Stock, $0.01 par value (the
"Common Stock"), of The Randers Group Incorporated
("Subsidiary"), a subsidiary of Thermo Electron Corporation (the
"Company"), by persons selected by the Board of Directors (or a
committee thereof) in its sole discretion, including directors,
executive officers, key employees and consultants of the Company
and its subsidiaries, and to provide additional incentive for
them to promote the success of the business of the Company and
Subsidiary. The Plan is intended to be a nonstatutory stock
option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of
Directors of the Company.
3. Stock Subject to Plan
At no time shall the number of shares of the Common Stock
then outstanding which are attributable to the exercise of
options granted under the Plan plus the number of shares then
issuable upon the exercise of outstanding options granted under
the Plan exceed 1,500,000 shares, subject however, to the
provisions of paragraph 11 of the Plan. Shares to be issued upon
the exercise of options granted under the Plan shall be shares of
Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall
again be available for options thereafter to be granted.
4. Administration
The Plan shall be administered by a committee (the
"Committee") composed of the members of the Board of Directors of
the Company, no member of which shall act upon any matter
exclusively affecting any option granted or to be granted to
himself or herself under the Plan. Subject to the provisions of
the Plan, the Committee shall have complete authority, in its
discretion, to make the following determinations with respect to
each option to be granted by the Company: (a) the person to
receive the option (the "Optionee"); (b) the time of granting the
option; (c) the number of shares subject thereto; (d) the option
price; (e) the option period; and (f) the terms of the option and
form of option agreement (which need not be identical, but which
shall conform to the applicable terms and conditions of the Plan
and contain such other provisions as the Board of Directors deems
PAGE
<PAGE>
advisable and not inconsistent with the Plan). In making such
determinations, the Committee may take into account the nature of
the services rendered by the Optionees, their present and
potential contributions to the success of the Company and/or one
or more of its subsidiaries, and such other factors as the
Committee in its discretion shall deem relevant. Subject to the
provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to it, to determine the terms and
provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's
determinations on the matters referred to in this paragraph 4
shall be conclusive.
5. Eligibility
An option may be granted to any person selected by the
Committee in its sole discretion.
6. Time of Granting Options
The granting of an option shall take place at the time
specified by the Committee. Only if expressly so provided by the
Committee shall the granting of an option be regarded as taking
place at the time when a written option agreement shall have been
duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement
shall provide, among other things, that it does not confer upon
an Optionee any right to continue in the employ of the Company
and/or one or more of its subsidiaries or to continue as a
director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such
subsidiary to terminate the employment of the Optionee at any
time if the Optionee is an employee, to remove the Optionee as a
director of the Company if the Optionee is a director, or to
terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such
installments, cumulative or noncumulative, as the Committee may
determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by
written notice of intent to exercise the option, specifying the
number of shares of stock with respect to which the option is
then being exercised. The notice shall be accompanied by payment
in the form of cash or shares of Subsidiary Common Stock (the
"Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however,
PAGE
<PAGE>
that such Tendered Shares shall have been acquired by the
Optionee more than six months prior to the date of exercise,
unless such requirement is waived in writing by the Company.
Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares
then being purchased, registered in the name of the Optionee or
other person exercising the option. If any law or applicable
regulation of the Securities and Exchange Commission or other
body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in
connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or
certificates for such shares shall be postponed until completion
of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Except as may be authorized by the Committee , in its sole
discretion, no Option may be transferred other than by will or
the laws of descent and distribution, and during a Optionee's
lifetime an option requiring exercise may be exercised only by
him or her (or in the event of incapacity, the person or persons
properly appointed to act on his or her behalf). The Committee
may, in its discretion, determine the extent to which options
granted to an Optionee shall be transferable, and such provisions
permitting or acknowledging transfer shall be set forth in the
written agreement evidencing the option executed and delivered by
or on behalf of the Company and the Optionee.
10. Vesting, Restrictions and Termination of Options
The Committee, in its sole discretion, may determine the
manner in which options shall vest, the rights of the Company to
repurchase the shares issued upon the exercise of any option and
the manner in which such rights shall lapse, and the terms upon
which any option granted shall terminate. The Board of Directors
shall have the right to accelerate the date of exercise of any
installment or to accelerate the lapse of the Company's
repurchase rights. All of such terms shall be specified in a
written option agreement executed and delivered by or on behalf
of the Company and the Optionee to whom such option shall be
granted.
11. Adjustment of Number of Shares
Each stock option agreement shall provide that in the event
of any stock dividend payable in the Common Stock or any split-up
or contraction in the number of shares of the Common Stock
occurring after the date of the agreement and prior to the
exercise in full of the option, the number of shares for which
the option may thereafter be exercised shall be proportionately
adjusted and the price to be paid for each share subject to the
option shall be proportionately adjusted. Each such agreement
PAGE
<PAGE>
shall also provide that in case of any reclassification or change
of outstanding shares of the Common Stock or in case of any
consolidation or merger of Subsidiary with or into another
company or in case of any sale or conveyance to another company
or entity of the property of Subsidiary as a whole or
substantially as a whole, the Optionee shall, upon exercise of
the option, be entitled to receive shares of stock or other
securities in its place equivalent in kind and value to those
shares which he would have received if he had exercised the
option in full immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and had
continued to hold the shares subject to the option (together with
all other shares, stock and securities thereafter issued in
respect thereof) to the time of the exercise of the option;
provided , that if any recapitalization is to be effected through
an increase in the par value of the Common Stock without an
increase in the number of authorized shares and such new par
value will exceed the option price under such agreement, the
Company shall notify the Optionee of such proposed
recapitalization, and the Optionee shall then have the right,
exercisable at any time prior to such recapitalization becoming
effective, to purchase all of the shares subject to the option
which he has not theretofore purchased (anything in such
agreement to the contrary notwithstanding), but if the Optionee
fails to exercise such right before such recapitalization becomes
effective, the option price under such agreement shall be
appropriately adjusted. Each such agreement shall further
provide that upon dissolution or liquidation of Subsidiary, the
option shall terminate, but the Optionee (if at the time an
employee or director of the Company and/or any one or more of its
subsidiaries) shall have the right, immediately prior to such
dissolution or liquidation, to exercise the option to the full
extent not theretofore exercised; that no adjustment provided for
above shall apply to any share with respect to which the option
has been exercised prior to the effective date of such
adjustment; and that no fraction of a share or fractional shares
shall be purchasable or deliverable under such agreement, but in
the event any adjustment thereunder of the number of shares
covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares. In the event of changes
in the outstanding Common Stock by reason of any stock dividend,
split-up, contraction, reclassification, or change of outstanding
shares of the Common Stock of the nature contemplated by this
paragraph 11, the number of shares of Common Stock available for
the purpose of the Plan as stated in paragraph 3 hereof shall be
correspondingly adjusted by the Committee.
12. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in
respect of shares as to which their options shall not have been
exercised, certificates issued and delivered and payment as
PAGE
<PAGE>
herein provided made in full, and shall have no rights with
respect to such shares not expressly conferred by this Plan.
13. Stock Reserved
The Company shall at all times during the term of the
options reserve and keep available such number of shares of the
Common Stock as will be sufficient to satisfy the requirements of
this Plan and shall pay all other fees and expenses necessarily
incurred by the Company in connection therewith.
14. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the
Company, will be required to give a representation in form
satisfactory to counsel for the Company that he will not
transfer, sell or otherwise dispose of the shares received upon
exercise of the option at any time purchased by him, upon
exercise of any portion of the option, in a manner which would
violate the Securities Act of 1933, as amended, and the
regulations of the Securities and Exchange Commission thereunder
and the Company may, if required or at its discretion, make a
notation on any certificates issued upon exercise of options to
the effect that such certificate may not be transferred except
after receipt by the Company of an opinion of counsel
satisfactory to it to the effect that such transfer will not
violate such Act and such regulations.
15. Tax Withholding
The Company shall have the right to deduct from payments of
any kind otherwise due to an Optionee any federal, state or local
taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of options under the Plan (the
"withholding requirements"). The Committee will have the right
to require that the Optionee or other appropriate person remit to
the Company an amount sufficient to satisfy the withholding
requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery
of any Common Stock pursuant to exercise of an option. If and to
the extent that such withholding is required, the Committee may
permit the Optionee or such other person to elect at such time
and in such manner as the Committee provides to have the Company
hold back from the shares to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the
withholding requirements.
16. Termination and Amendment of Plan
The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at
any time the approval of the Stockholders of the Company is
required as to such modification or amendment under Rule 16b-3,
PAGE
<PAGE>
the Board of Directors may not effect such modification or
amendment without such approval.
The termination or any modification or amendment of the Plan
shall not, without the consent of an Optionee, affect his or her
rights under an option previously granted to him or her. With
the consent of the Optionees affected, the Board of Directors may
amend outstanding option agreements in a manner not inconsistent
with the Plan. The Board of Directors shall have the right to
amend or modify the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.
Notwithstanding any other provisions hereof, the Plan shall
terminate on December 31, 2008 and no options shall be granted
hereunder thereafter.
EXHIBIT 10.51
THERMO ELECTRON CORPORATION
TREX COMMUNICATIONS CORPORATION NONQUALIFIED STOCK OPTION PLAN
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended
to encourage ownership of Common Stock, $0.01 par value (the
"Common Stock"), of Trex Communications Corporation
("Subsidiary"), a subsidiary of Thermo Electron Corporation (the
"Company"), by persons selected by the Board of Directors (or a
committee thereof) in its sole discretion, including directors,
executive officers, key employees and consultants of the Company
and its subsidiaries, and to provide additional incentive for
them to promote the success of the business of the Company and
Subsidiary. The Plan is intended to be a nonstatutory stock
option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of
Directors of the Company.
3. Stock Subject to Plan
At no time shall the number of shares of the Common Stock
then outstanding which are attributable to the exercise of
options granted under the Plan plus the number of shares then
issuable upon the exercise of outstanding options granted under
the Plan exceed 150,000 shares, subject however, to the
provisions of paragraph 11 of the Plan. Shares to be issued upon
the exercise of options granted under the Plan shall be shares of
Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall
again be available for options thereafter to be granted.
4. Administration
The Plan shall be administered by a committee (the
"Committee") composed of the members of the Board of Directors of
the Company, no member of which shall act upon any matter
exclusively affecting any option granted or to be granted to
himself or herself under the Plan. Subject to the provisions of
the Plan, the Committee shall have complete authority, in its
discretion, to make the following determinations with respect to
each option to be granted by the Company: (a) the person to
receive the option (the "Optionee"); (b) the time of granting the
option; (c) the number of shares subject thereto; (d) the option
price; (e) the option period; and (f) the terms of the option and
form of option agreement (which need not be identical, but which
shall conform to the applicable terms and conditions of the Plan
and contain such other provisions as the Board of Directors deems
PAGE
<PAGE>
advisable and not inconsistent with the Plan). In making such
determinations, the Committee may take into account the nature of
the services rendered by the Optionees, their present and
potential contributions to the success of the Company and/or one
or more of its subsidiaries, and such other factors as the
Committee in its discretion shall deem relevant. Subject to the
provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to it, to determine the terms and
provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's
determinations on the matters referred to in this paragraph 4
shall be conclusive.
5. Eligibility
An option may be granted to any person selected by the
Committee in its sole discretion.
6. Time of Granting Options
The granting of an option shall take place at the time
specified by the Committee. Only if expressly so provided by the
Committee shall the granting of an option be regarded as taking
place at the time when a written option agreement shall have been
duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement
shall provide, among other things, that it does not confer upon
an Optionee any right to continue in the employ of the Company
and/or one or more of its subsidiaries or to continue as a
director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such
subsidiary to terminate the employment of the Optionee at any
time if the Optionee is an employee, to remove the Optionee as a
director of the Company if the Optionee is a director, or to
terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such
installments, cumulative or noncumulative, as the Committee may
determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by
written notice of intent to exercise the option, specifying the
number of shares of stock with respect to which the option is
then being exercised. The notice shall be accompanied by payment
in the form of cash or shares of Subsidiary Common Stock (the
"Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however,
PAGE
<PAGE>
that such Tendered Shares shall have been acquired by the
Optionee more than six months prior to the date of exercise,
unless such requirement is waived in writing by the Company.
Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares
then being purchased, registered in the name of the Optionee or
other person exercising the option. If any law or applicable
regulation of the Securities and Exchange Commission or other
body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in
connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or
certificates for such shares shall be postponed until completion
of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Except as may be authorized by the Committee , in its sole
discretion, no Option may be transferred other than by will or
the laws of descent and distribution, and during a Optionee's
lifetime an option requiring exercise may be exercised only by
him or her (or in the event of incapacity, the person or persons
properly appointed to act on his or her behalf). The Committee
may, in its discretion, determine the extent to which options
granted to an Optionee shall be transferable, and such provisions
permitting or acknowledging transfer shall be set forth in the
written agreement evidencing the option executed and delivered by
or on behalf of the Company and the Optionee.
10. Vesting, Restrictions and Termination of Options
The Committee, in its sole discretion, may determine the
manner in which options shall vest, the rights of the Company to
repurchase the shares issued upon the exercise of any option and
the manner in which such rights shall lapse, and the terms upon
which any option granted shall terminate. The Board of Directors
shall have the right to accelerate the date of exercise of any
installment or to accelerate the lapse of the Company's
repurchase rights. All of such terms shall be specified in a
written option agreement executed and delivered by or on behalf
of the Company and the Optionee to whom such option shall be
granted.
11. Adjustment of Number of Shares
Each stock option agreement shall provide that in the event
of any stock dividend payable in the Common Stock or any split-up
or contraction in the number of shares of the Common Stock
occurring after the date of the agreement and prior to the
exercise in full of the option, the number of shares for which
the option may thereafter be exercised shall be proportionately
adjusted and the price to be paid for each share subject to the
option shall be proportionately adjusted. Each such agreement
PAGE
<PAGE>
shall also provide that in case of any reclassification or change
of outstanding shares of the Common Stock or in case of any
consolidation or merger of Subsidiary with or into another
company or in case of any sale or conveyance to another company
or entity of the property of Subsidiary as a whole or
substantially as a whole, the Optionee shall, upon exercise of
the option, be entitled to receive shares of stock or other
securities in its place equivalent in kind and value to those
shares which he would have received if he had exercised the
option in full immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and had
continued to hold the shares subject to the option (together with
all other shares, stock and securities thereafter issued in
respect thereof) to the time of the exercise of the option;
provided , that if any recapitalization is to be effected through
an increase in the par value of the Common Stock without an
increase in the number of authorized shares and such new par
value will exceed the option price under such agreement, the
Company shall notify the Optionee of such proposed
recapitalization, and the Optionee shall then have the right,
exercisable at any time prior to such recapitalization becoming
effective, to purchase all of the shares subject to the option
which he has not theretofore purchased (anything in such
agreement to the contrary notwithstanding), but if the Optionee
fails to exercise such right before such recapitalization becomes
effective, the option price under such agreement shall be
appropriately adjusted. Each such agreement shall further
provide that upon dissolution or liquidation of Subsidiary, the
option shall terminate, but the Optionee (if at the time an
employee or director of the Company and/or any one or more of its
subsidiaries) shall have the right, immediately prior to such
dissolution or liquidation, to exercise the option to the full
extent not theretofore exercised; that no adjustment provided for
above shall apply to any share with respect to which the option
has been exercised prior to the effective date of such
adjustment; and that no fraction of a share or fractional shares
shall be purchasable or deliverable under such agreement, but in
the event any adjustment thereunder of the number of shares
covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares. In the event of changes
in the outstanding Common Stock by reason of any stock dividend,
split-up, contraction, reclassification, or change of outstanding
shares of the Common Stock of the nature contemplated by this
paragraph 11, the number of shares of Common Stock available for
the purpose of the Plan as stated in paragraph 3 hereof shall be
correspondingly adjusted by the Committee.
12. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in
respect of shares as to which their options shall not have been
exercised, certificates issued and delivered and payment as
PAGE
<PAGE>
herein provided made in full, and shall have no rights with
respect to such shares not expressly conferred by this Plan.
13. Stock Reserved
The Company shall at all times during the term of the
options reserve and keep available such number of shares of the
Common Stock as will be sufficient to satisfy the requirements of
this Plan and shall pay all other fees and expenses necessarily
incurred by the Company in connection therewith.
14. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the
Company, will be required to give a representation in form
satisfactory to counsel for the Company that he will not
transfer, sell or otherwise dispose of the shares received upon
exercise of the option at any time purchased by him, upon
exercise of any portion of the option, in a manner which would
violate the Securities Act of 1933, as amended, and the
regulations of the Securities and Exchange Commission thereunder
and the Company may, if required or at its discretion, make a
notation on any certificates issued upon exercise of options to
the effect that such certificate may not be transferred except
after receipt by the Company of an opinion of counsel
satisfactory to it to the effect that such transfer will not
violate such Act and such regulations.
15. Tax Withholding
The Company shall have the right to deduct from payments of
any kind otherwise due to an Optionee any federal, state or local
taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of options under the Plan (the
"withholding requirements"). The Committee will have the right
to require that the Optionee or other appropriate person remit to
the Company an amount sufficient to satisfy the withholding
requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery
of any Common Stock pursuant to exercise of an option. If and to
the extent that such withholding is required, the Committee may
permit the Optionee or such other person to elect at such time
and in such manner as the Committee provides to have the Company
hold back from the shares to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the
withholding requirements.
16. Termination and Amendment of Plan
The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at
any time the approval of the Stockholders of the Company is
required as to such modification or amendment under Rule 16b-3,
PAGE
<PAGE>
the Board of Directors may not effect such modification or
amendment without such approval.
The termination or any modification or amendment of the Plan
shall not, without the consent of an Optionee, affect his or her
rights under an option previously granted to him or her. With
the consent of the Optionees affected, the Board of Directors may
amend outstanding option agreements in a manner not inconsistent
with the Plan. The Board of Directors shall have the right to
amend or modify the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.
Notwithstanding any other provisions hereof, the Plan shall
terminate on December 31, 2008 and no options shall be granted
hereunder thereafter.
EXHIBIT 10.52
THERMO ELECTRON CORPORATION
THERMO TRILOGY CORPORATION NONQUALIFIED STOCK OPTION PLAN
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended
to encourage ownership of Common Stock, $0.01 par value (the
"Common Stock"), of Thermo Trilogy Corporation ("Subsidiary"),
a subsidiary of Thermo Electron Corporation (the "Company"), by
persons selected by the Board of Directors (or a committee
thereof) in its sole discretion, including directors, executive
officers, key employees and consultants of the Company and its
subsidiaries, and to provide additional incentive for them to
promote the success of the business of the Company and
Subsidiary. The Plan is intended to be a nonstatutory stock
option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of
Directors of the Company.
3. Stock Subject to Plan
At no time shall the number of shares of the Common Stock
then outstanding which are attributable to the exercise of
options granted under the Plan plus the number of shares then
issuable upon the exercise of outstanding options granted under
the Plan exceed 150,000 shares, subject however, to the
provisions of paragraph 11 of the Plan. Shares to be issued upon
the exercise of options granted under the Plan shall be shares of
Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall
again be available for options thereafter to be granted.
4. Administration
The Plan shall be administered by a committee (the
"Committee") composed of the members of the Board of Directors of
the Company, no member of which shall act upon any matter
exclusively affecting any option granted or to be granted to
himself or herself under the Plan. Subject to the provisions of
the Plan, the Committee shall have complete authority, in its
discretion, to make the following determinations with respect to
each option to be granted by the Company: (a) the person to
receive the option (the "Optionee"); (b) the time of granting the
option; (c) the number of shares subject thereto; (d) the option
price; (e) the option period; and (f) the terms of the option and
form of option agreement (which need not be identical, but which
shall conform to the applicable terms and conditions of the Plan
and contain such other provisions as the Board of Directors deems
PAGE
<PAGE>
advisable and not inconsistent with the Plan). In making such
determinations, the Committee may take into account the nature of
the services rendered by the Optionees, their present and
potential contributions to the success of the Company and/or one
or more of its subsidiaries, and such other factors as the
Committee in its discretion shall deem relevant. Subject to the
provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to it, to determine the terms and
provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's
determinations on the matters referred to in this paragraph 4
shall be conclusive.
5. Eligibility
An option may be granted to any person selected by the
Committee in its sole discretion.
6. Time of Granting Options
The granting of an option shall take place at the time
specified by the Committee. Only if expressly so provided by the
Committee shall the granting of an option be regarded as taking
place at the time when a written option agreement shall have been
duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement
shall provide, among other things, that it does not confer upon
an Optionee any right to continue in the employ of the Company
and/or one or more of its subsidiaries or to continue as a
director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such
subsidiary to terminate the employment of the Optionee at any
time if the Optionee is an employee, to remove the Optionee as a
director of the Company if the Optionee is a director, or to
terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such
installments, cumulative or noncumulative, as the Committee may
determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by
written notice of intent to exercise the option, specifying the
number of shares of stock with respect to which the option is
then being exercised. The notice shall be accompanied by payment
in the form of cash or shares of Subsidiary Common Stock (the
"Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however,
PAGE
<PAGE>
that such Tendered Shares shall have been acquired by the
Optionee more than six months prior to the date of exercise,
unless such requirement is waived in writing by the Company.
Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares
then being purchased, registered in the name of the Optionee or
other person exercising the option. If any law or applicable
regulation of the Securities and Exchange Commission or other
body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in
connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or
certificates for such shares shall be postponed until completion
of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Except as may be authorized by the Committee , in its sole
discretion, no Option may be transferred other than by will or
the laws of descent and distribution, and during a Optionee's
lifetime an option requiring exercise may be exercised only by
him or her (or in the event of incapacity, the person or persons
properly appointed to act on his or her behalf). The Committee
may, in its discretion, determine the extent to which options
granted to an Optionee shall be transferable, and such provisions
permitting or acknowledging transfer shall be set forth in the
written agreement evidencing the option executed and delivered by
or on behalf of the Company and the Optionee.
10. Vesting, Restrictions and Termination of Options
The Committee, in its sole discretion, may determine the
manner in which options shall vest, the rights of the Company to
repurchase the shares issued upon the exercise of any option and
the manner in which such rights shall lapse, and the terms upon
which any option granted shall terminate. The Board of Directors
shall have the right to accelerate the date of exercise of any
installment or to accelerate the lapse of the Company's
repurchase rights. All of such terms shall be specified in a
written option agreement executed and delivered by or on behalf
of the Company and the Optionee to whom such option shall be
granted.
11. Adjustment of Number of Shares
Each stock option agreement shall provide that in the event
of any stock dividend payable in the Common Stock or any split-up
or contraction in the number of shares of the Common Stock
occurring after the date of the agreement and prior to the
exercise in full of the option, the number of shares for which
the option may thereafter be exercised shall be proportionately
adjusted and the price to be paid for each share subject to the
option shall be proportionately adjusted. Each such agreement
PAGE
<PAGE>
shall also provide that in case of any reclassification or change
of outstanding shares of the Common Stock or in case of any
consolidation or merger of Subsidiary with or into another
company or in case of any sale or conveyance to another company
or entity of the property of Subsidiary as a whole or
substantially as a whole, the Optionee shall, upon exercise of
the option, be entitled to receive shares of stock or other
securities in its place equivalent in kind and value to those
shares which he would have received if he had exercised the
option in full immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and had
continued to hold the shares subject to the option (together with
all other shares, stock and securities thereafter issued in
respect thereof) to the time of the exercise of the option;
provided , that if any recapitalization is to be effected through
an increase in the par value of the Common Stock without an
increase in the number of authorized shares and such new par
value will exceed the option price under such agreement, the
Company shall notify the Optionee of such proposed
recapitalization, and the Optionee shall then have the right,
exercisable at any time prior to such recapitalization becoming
effective, to purchase all of the shares subject to the option
which he has not theretofore purchased (anything in such
agreement to the contrary notwithstanding), but if the Optionee
fails to exercise such right before such recapitalization becomes
effective, the option price under such agreement shall be
appropriately adjusted. Each such agreement shall further
provide that upon dissolution or liquidation of Subsidiary, the
option shall terminate, but the Optionee (if at the time an
employee or director of the Company and/or any one or more of its
subsidiaries) shall have the right, immediately prior to such
dissolution or liquidation, to exercise the option to the full
extent not theretofore exercised; that no adjustment provided for
above shall apply to any share with respect to which the option
has been exercised prior to the effective date of such
adjustment; and that no fraction of a share or fractional shares
shall be purchasable or deliverable under such agreement, but in
the event any adjustment thereunder of the number of shares
covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares. In the event of changes
in the outstanding Common Stock by reason of any stock dividend,
split-up, contraction, reclassification, or change of outstanding
shares of the Common Stock of the nature contemplated by this
paragraph 11, the number of shares of Common Stock available for
the purpose of the Plan as stated in paragraph 3 hereof shall be
correspondingly adjusted by the Committee.
12. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in
respect of shares as to which their options shall not have been
exercised, certificates issued and delivered and payment as
PAGE
<PAGE>
herein provided made in full, and shall have no rights with
respect to such shares not expressly conferred by this Plan.
13. Stock Reserved
The Company shall at all times during the term of the
options reserve and keep available such number of shares of the
Common Stock as will be sufficient to satisfy the requirements of
this Plan and shall pay all other fees and expenses necessarily
incurred by the Company in connection therewith.
14. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the
Company, will be required to give a representation in form
satisfactory to counsel for the Company that he will not
transfer, sell or otherwise dispose of the shares received upon
exercise of the option at any time purchased by him, upon
exercise of any portion of the option, in a manner which would
violate the Securities Act of 1933, as amended, and the
regulations of the Securities and Exchange Commission thereunder
and the Company may, if required or at its discretion, make a
notation on any certificates issued upon exercise of options to
the effect that such certificate may not be transferred except
after receipt by the Company of an opinion of counsel
satisfactory to it to the effect that such transfer will not
violate such Act and such regulations.
15. Tax Withholding
The Company shall have the right to deduct from payments of
any kind otherwise due to an Optionee any federal, state or local
taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of options under the Plan (the
"withholding requirements"). The Committee will have the right
to require that the Optionee or other appropriate person remit to
the Company an amount sufficient to satisfy the withholding
requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery
of any Common Stock pursuant to exercise of an option. If and to
the extent that such withholding is required, the Committee may
permit the Optionee or such other person to elect at such time
and in such manner as the Committee provides to have the Company
hold back from the shares to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the
withholding requirements.
16. Termination and Amendment of Plan
The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at
any time the approval of the Stockholders of the Company is
required as to such modification or amendment under Rule 16b-3,
PAGE
<PAGE>
the Board of Directors may not effect such modification or
amendment without such approval.
The termination or any modification or amendment of the Plan
shall not, without the consent of an Optionee, affect his or her
rights under an option previously granted to him or her. With
the consent of the Optionees affected, the Board of Directors may
amend outstanding option agreements in a manner not inconsistent
with the Plan. The Board of Directors shall have the right to
amend or modify the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.
Notwithstanding any other provisions hereof, the Plan shall
terminate on December 31, 2008 and no options shall be granted
hereunder thereafter.
Exhibit 13
THERMO ELECTRON CORPORATION
Consolidated Financial Statements
1997
PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Consolidated Statement of Income
(In thousands except per share amounts) 1997 1996 1995
------------------------------------------------------------------------
Revenues:
Product and service revenues $3,392,575 $2,766,002 $2,075,748
Research and development
contract revenues 165,745 166,556 194,543
---------- ---------- ----------
3,558,320 2,932,558 2,270,291
---------- ---------- ----------
Costs and Operating Expenses:
Cost of product and service
revenues 1,973,265 1,657,746 1,239,762
Expenses for research and
development and new lines of
business (a) 337,305 301,457 272,809
Selling, general, and
administrative expenses 840,692 689,248 510,564
Restructuring and other
nonrecurring costs, net
(Note 11) 1,272 37,641 21,938
---------- ---------- ----------
3,152,534 2,686,092 2,045,073
---------- ---------- ----------
Operating Income 405,786 246,466 225,218
Gain on Issuance of Stock by
Subsidiaries (Note 9) 80,055 126,599 80,815
Other Income (Expense), Net
(Note 10) 2,626 1,486 (7,225)
---------- ---------- ----------
Income Before Income Taxes and
Minority Interest 488,467 374,551 298,808
Provision for Income Taxes
(Note 8) 174,713 110,845 98,711
Minority Interest Expense 74,426 72,890 60,515
---------- ---------- ----------
Net Income $ 239,328 $ 190,816 $ 139,582
========== ========== ==========
Earnings per Share (Note 15):
Basic $ 1.57 $ 1.35 $ 1.10
========== ========== ==========
Diluted $ 1.41 $ 1.17 $ .95
========== ========== ==========
Weighted Average Shares (Note 15):
Basic 152,489 141,525 126,626
========== ========== ==========
Diluted 176,082 175,605 158,562
========== ========== ==========
2PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Consolidated Statement of Income (continued)
(In thousands) 1997 1996 1995
------------------------------------------------------------------------
(a) Includes costs of:
Research and development
contracts $ 143,743 $ 144,823 $ 167,120
Internally funded research
and development 191,629 154,448 102,209
Other expenses for new lines
of business 1,933 2,186 3,480
---------- ---------- ----------
$ 337,305 $ 301,457 $ 272,809
========== ========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
3PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Consolidated Balance Sheet
(In thousands) 1997 1996
------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $ 593,580 $ 414,404
Short-term available-for-sale investments,
at quoted market value (amortized cost of
$925,855 and $1,428,564; Note 2) 929,118 1,431,881
Accounts receivable, less allowances of
$55,698 and $34,321 797,399 616,545
Unbilled contract costs and fees 69,375 77,155
Inventories 543,589 432,960
Prepaid income taxes (Note 8) 118,182 129,802
Prepaid expenses 42,955 29,082
---------- ----------
3,094,198 3,131,829
---------- ----------
Property, Plant, and Equipment, at Cost, Net 789,046 704,447
---------- ----------
Long-term Available-for-sale Investments, at
Quoted Market Value (amortized cost of
$49,581 and $84,094; Note 2) 63,306 94,401
---------- ----------
Other Assets 157,108 127,632
---------- ----------
Cost in Excess of Net Assets of Acquired
Companies (Notes 3, 8, and 11) 1,692,211 1,082,935
---------- ----------
$5,795,869 $5,141,244
========== ==========
4PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Consolidated Balance Sheet (continued)
(In thousands except share amounts) 1997 1996
-----------------------------------------------------------------------
Liabilities and Shareholders' Investment
Current Liabilities:
Notes payable and current maturities of
long-term obligations (Note 5) $ 176,912 $ 153,787
Accounts payable 251,677 203,643
Accrued payroll and employee benefits 140,698 122,079
Accrued income taxes 57,923 61,534
Accrued installation and warranty costs 72,710 69,006
Deferred revenue 54,999 45,715
Other accrued expenses (Notes 1 and 3) 337,316 257,448
---------- ----------
1,092,235 913,212
---------- ----------
Deferred Income Taxes (Note 8) 90,802 81,726
---------- ----------
Other Deferred Items 59,082 81,020
---------- ----------
Long-term Obligations (Note 5):
Senior convertible obligations 187,824 369,997
Subordinated convertible obligations 1,473,015 1,009,470
Nonrecourse tax-exempt obligations 37,600 77,900
Other 44,468 92,975
---------- ----------
1,742,907 1,550,342
---------- ----------
Minority Interest 719,622 684,050
---------- ----------
Commitments and Contingencies (Note 6)
Common Stock of Subsidiaries Subject to
Redemption ($95,262 and $81,179 redemption
value; Note 1) 93,312 76,525
---------- ----------
Shareholders' Investment (Notes 4 and 7):
Preferred stock, $100 par value, 50,000
shares authorized; none issued
Common stock, $1 par value, 350,000,000
shares authorized; 159,206,337 and
149,996,979 shares issued 159,206 149,997
Capital in excess of par value 843,709 801,793
Retained earnings 1,034,640 795,312
Treasury stock at cost, 95,684 and 15,520
shares (3,839) (570)
Cumulative translation adjustment (46,339) (504)
Deferred compensation (Note 4) - (58)
Net unrealized gain on available-for-sale
investments (Note 2) 10,532 8,399
---------- ----------
1,997,909 1,754,369
---------- ----------
$5,795,869 $5,141,244
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
5PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Consolidated Statement of Cash Flows
(In thousands) 1997 1996 1995
----------------------------------------------------------------------------
Operating Activities:
Net income $ 239,328 $ 190,816 $ 139,582
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 135,738 115,167 85,869
Restructuring and other
nonrecurring costs, net
(Note 11) 1,272 37,641 21,938
Provision for losses on accounts
receivable 9,078 6,002 5,534
Increase in deferred income
taxes 1,111 20,869 4,277
Minority interest expense 74,426 72,890 60,515
Gain on issuance of stock by
subsidiaries (Note 9) (80,055) (126,599) (80,815)
Gain on sale of investments, net (5,077) (9,840) (9,305)
Other noncash items, net 9,093 15,758 19,239
Changes in current accounts,
excluding the effects of
acquisitions:
Accounts receivable (86,511) (17,078) (52,649)
Inventories 9,159 (1,298) (32,267)
Other current assets 31,445 (35,657) (9,447)
Accounts payable (8,308) (14,307) 19,198
Other current liabilities (61,681) (29,859) 27,427
----------- ----------- -----------
Net cash provided by operating
activities 269,018 224,505 199,096
----------- ----------- -----------
Investing Activities:
Acquisitions, net of cash acquired
(Note 3) (849,118) (366,317) (330,698)
Refund of acquisition purchase
price (Note 3) 36,132 - -
Proceeds from sale of businesses 27,102 - -
Purchases of available-for-sale
investments (973,687) (1,644,094) (592,364)
Proceeds from sale and maturities of
available-for-sale investments 1,543,025 835,935 617,145
Purchases of property, plant, and
equipment (111,605) (124,541) (64,016)
Proceeds from sale of property,
plant, and equipment 15,633 10,500 5,702
Increase in other assets (13,425) (26,144) (19,750)
Other 6,115 3,385 (147)
----------- ----------- -----------
Net cash used in investing
activities $ (319,828) $(1,311,276) $ (384,128)
----------- ----------- -----------
6PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Consolidated Statement of Cash Flows (continued)
(In thousands) 1997 1996 1995
----------------------------------------------------------------------------
Financing Activities:
Net proceeds from issuance of
long-term obligations (Note 5) $ 490,821 $ 953,376 $ 203,387
Repayment of long-term obligations (78,287) (60,643) (14,702)
Net proceeds from issuance of
Company and subsidiary common
stock (Note 9) 164,855 303,954 173,326
Purchases of subsidiary common
stock and debentures (311,092) (144,053) (101,099)
Increase (decrease) in short-
term notes payable (24,256) (13,391) 1,438
Other (4,291) (1,279) (226)
----------- ----------- -----------
Net cash provided by financing
activities 237,750 1,037,964 262,124
----------- ----------- -----------
Exchange Rate Effect on Cash (7,764) 350 2,764
----------- ----------- -----------
Increase (Decrease) in Cash and
Cash Equivalents 179,176 (48,457) 79,856
Cash and Cash Equivalents at
Beginning of Year 414,404 462,861 383,005
----------- ----------- -----------
Cash and Cash Equivalents at End
of Year $ 593,580 $ 414,404 $ 462,861
=========== =========== ===========
See Note 12 for supplemental cash flow information.
The accompanying notes are an integral part of these consolidated financial
statements.
7PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Consolidated Statement of Shareholders' Investment
(In thousands) 1997 1996 1995
-----------------------------------------------------------------------
Common Stock, $1 Par Value
Balance at beginning of year $ 149,997 $ 89,006 $ 53,558
Issuance of stock under employees'
and directors' stock plans 866 892 571
Conversions of convertible
obligations 8,343 13,449 6,047
Effect of three-for-two stock
splits - 46,650 27,687
Acquisition through pooling-of-
interests (Note 3) - - 1,143
---------- ---------- ----------
Balance at end of year 159,206 149,997 89,006
---------- ---------- ----------
Capital in Excess of Par Value
Balance at beginning of year 801,793 614,363 493,058
Issuance of stock under employees'
and directors' stock plans 13,185 8,172 5,293
Tax benefit related to employees'
and directors' stock plans 5,456 12,821 9,666
Conversions of convertible
obligations 164,537 254,842 150,787
Effect of majority-owned
subsidiaries' equity
transactions (141,262) (41,755) (34,642)
Effect of three-for-two stock
splits - (46,650) (27,687)
Acquisition through pooling-of-
interests (Note 3) - - 17,888
---------- ---------- ----------
Balance at end of year 843,709 801,793 614,363
---------- ---------- ----------
Retained Earnings
Balance at beginning of year 795,312 604,496 472,396
Net income 239,328 190,816 139,582
Acquisition through pooling-of-
interests (Note 3) - - (7,482)
---------- ---------- ----------
Balance at end of year $1,034,640 $ 795,312 $ 604,496
---------- ---------- ----------
8PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Consolidated Statement of Shareholders' Investment (continued)
(In thousands) 1997 1996 1995
-----------------------------------------------------------------------
Treasury Stock
Balance at beginning of year $ (570) $ (536)$ (1,631)
Activity under employees' and
directors' stock plans (3,269) (34) 1,095
---------- ---------- ----------
Balance at end of year (3,839) (570) (536)
---------- ---------- ----------
Cumulative Translation Adjustment
Balance at beginning of year (504) 608 (3,557)
Translation adjustment (45,835) (1,112) 4,193
Acquisition through pooling-of-
interests (Note 3) - - (28)
---------- ---------- ----------
Balance at end of year (46,339) (504) 608
---------- ---------- ----------
Deferred Compensation
Balance at beginning of year (58) (2,271) (2,657)
Amortization of deferred
compensation 58 296 386
ESOP II loan repayment (Note 4) - 1,917 -
---------- ---------- ----------
Balance at end of year - (58) (2,271)
---------- ---------- ----------
Net Unrealized Gain on Available-
for-sale Investments
Balance at beginning of year 8,399 4,063 (3,681)
Change in net unrealized gain
on available-for-sale
investments (Note 2) 2,133 4,336 7,744
---------- ---------- ----------
Balance at end of year 10,532 8,399 4,063
---------- ---------- ----------
Total Shareholders' Investment $1,997,909 $1,754,369 $1,309,729
========== ========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
9PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Significant Accounting Policies
Nature of Operations
Thermo Electron Corporation and its subsidiaries (the Company)
develop, manufacture, and market analytical and monitoring instruments;
biomedical products including heart-assist devices, respiratory-care
equipment, and mammography systems; paper recycling and papermaking
equipment; alternative-energy systems; industrial process equipment; and
other specialized products. The Company also provides industrial
outsourcing, laboratory, and metallurgical services, and conducts
advanced-technology research and development.
Principles of Consolidation
The accompanying financial statements include the accounts of Thermo
Electron and its majority- and wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated.
Majority-owned public subsidiaries consist of Thermedics Inc., Thermo
Instrument Systems Inc., Thermo TerraTech Inc., Thermo Power Corporation,
ThermoTrex Corporation, Thermo Fibertek Inc., and Thermo Ecotek
Corporation. Thermo Cardiosystems Inc., Thermo Voltek Corp., Thermo
Sentron Inc., and Thermedics Detection Inc. are majority-owned, public
subsidiaries of Thermedics. ThermoSpectra Corporation, ThermoQuest
Corporation, Thermo Optek Corporation, Thermo BioAnalysis Corporation,
Metrika Systems Corporation, and Thermo Vision Corporation are
majority-owned, public subsidiaries of Thermo Instrument. Thermo
Remediation Inc. and The Randers Group Incorporated are majority-owned,
public subsidiaries of Thermo TerraTech. ThermoLase Corporation and Trex
Medical Corporation are majority-owned, public subsidiaries of
ThermoTrex. Thermo Fibergen Inc. is a majority-owned, public subsidiary
of Thermo Fibertek. Thermo Information Solutions Inc. is a
majority-owned, privately held subsidiary. ONIX Systems Inc. is a
majority-owned, privately held subsidiary of Thermo Instrument. Thermo
EuroTech N.V. is a majority-owned, privately held subsidiary of Thermo
TerraTech. ThermoLyte Corporation is a majority-owned, privately held
subsidiary of Thermo Power. Trex Communications Corporation is a
majority-owned, privately held subsidiary of ThermoTrex. Thermo Trilogy
Corporation is a majority-owned, privately held subsidiary of Thermo
Ecotek. The Company accounts for investments in businesses in which it
owns between 20% and 50% using the equity method.
Fiscal Year
The Company has adopted a fiscal year ending the Saturday nearest
December 31. References to 1997, 1996, and 1995 are for the fiscal years
ended January 3, 1998, December 28, 1996, and December 30, 1995,
respectively. Fiscal year 1997 included 53 weeks; 1996 and 1995 each
included 52 weeks.
Revenue Recognition
For the majority of its operations, the Company recognizes revenues
upon shipment of its products, or upon completion of services it renders.
The Company provides a reserve for its estimate of warranty and
installation costs at the time of shipment. Deferred revenue in the
10PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Significant Accounting Policies (continued)
accompanying balance sheet consists primarily of unearned revenue on
service contracts. Substantially all of the deferred revenue in the
accompanying 1997 balance sheet will be recognized within one year.
Revenues and profits on substantially all contracts are recognized using
the percentage-of-completion method. Revenues recorded under the
percentage-of-completion method were $440.4 million in 1997, $421.1
million in 1996, and $472.0 million in 1995. The percentage of completion
is determined by relating either the actual costs or actual labor
incurred to date to management's estimate of total costs or total labor,
respectively, to be incurred on each contract. If a loss is indicated on
any contract in process, a provision is made currently for the entire
loss. The Company's contracts generally provide for billing of customers
upon the attainment of certain milestones specified in each contract.
Revenues earned on contracts in process in excess of billings are
classified as unbilled contract costs and fees in the accompanying
balance sheet. There are no significant amounts included in the
accompanying balance sheet that are not expected to be recovered from
existing contracts at current contract values, or that are not expected
to be collected within one year, including amounts that are billed but
not paid under retainage provisions.
Gain on Issuance of Stock by Subsidiaries
At the time a subsidiary sells its stock to unrelated parties at a
price in excess of its book value, the Company's net investment in that
subsidiary increases. If at that time the subsidiary is an operating
entity and not engaged principally in research and development, the
Company records the increase as a gain.
If gains have been recognized on issuances of a subsidiary's stock
and shares of the subsidiary are subsequently repurchased by the
subsidiary, by the subsidiary's parent, or by the Company, gain
recognition does not occur on issuances subsequent to the date of a
repurchase until such time as shares have been issued in an amount
equivalent to the number of repurchased shares. Such transactions are
reflected as equity transactions, and the net effect of these
transactions is reflected in the accompanying statement of shareholders'
investment as the effect of majority-owned subsidiaries' equity
transactions.
Stock-based Compensation Plans
The Company applies Accounting Principles Board Opinion (APB) No. 25,
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its stock-based compensation plans (Note 4). Accordingly,
no accounting recognition is given to stock options granted at fair
market value until they are exercised. Upon exercise, net proceeds,
including tax benefits realized, are credited to equity.
Income Taxes
In accordance with Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," the Company recognizes deferred
income taxes based on the expected future tax consequences of differences
11PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Significant Accounting Policies (continued)
between the financial statement basis and the tax basis of assets and
liabilities, calculated using enacted tax rates in effect for the year in
which the differences are expected to be reflected in the tax return.
Earnings per Share
During the fourth quarter of 1997, the Company adopted SFAS No. 128,
"Earnings per Share" (Note 15). As a result, all previously reported
earnings per share have been restated; however, basic earnings per share
equals the Company's previously reported primary earnings per share for
1996 and 1995. Basic earnings per share have been computed by dividing
net income by the weighted average number of shares outstanding during
the year. Diluted earnings per share have been computed assuming the
conversion of convertible obligations and the elimination of the related
interest expense, and the exercise of stock options, as well as their
related income tax effects.
Stock Split
All share and per share information was restated in 1996 to reflect a
three-for-two stock split, effected in the form of a 50% stock dividend,
that was distributed in June 1996.
Cash and Cash Equivalents
Cash equivalents consists principally of corporate notes, commercial
paper, U.S. government-agency securities, money market funds, and other
marketable securities purchased with an original maturity of three months
or less. These investments are carried at cost, which approximates market
value.
Inventories
Inventories are stated at the lower of cost (on a first-in, first-out
or weighted average basis) or market value and include materials, labor,
and manufacturing overhead. The components of inventories are as follows:
(In thousands) 1997 1996
----------------------------------------------------------------------
Raw materials and supplies $260,458 $236,297
Work in process 108,327 80,614
Finished goods 174,804 116,049
-------- --------
$543,589 $432,960
======== ========
Property, Plant, and Equipment
The costs of additions and improvements are capitalized, while
maintenance and repairs are charged to expense as incurred. The Company
provides for depreciation and amortization using the straight-line method
over the estimated useful lives of the property as follows: buildings and
improvements, 5 to 40 years; alternative-energy facilities, 5 to 25
years; machinery and equipment, 2 to 20 years; and leasehold
improvements, the shorter of the term of the lease or the life of the
asset.
12PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Significant Accounting Policies (continued)
Property, plant, and equipment consists of the following:
(In thousands) 1997 1996
----------------------------------------------------------------------
Land $ 59,867 $ 55,430
Buildings 235,103 206,406
Alternative-energy facilities 247,361 247,361
Machinery, equipment, and leasehold
improvements 617,582 500,992
---------- ----------
1,159,913 1,010,189
Less: Accumulated depreciation and
amortization 370,867 305,742
---------- ----------
$ 789,046 $ 704,447
========== ==========
Other Assets
Other assets in the accompanying balance sheet includes intangible
assets, notes receivable, deferred debt expense, prepaid pension costs,
and other assets. Intangible assets include the costs of acquired
trademarks, patents, product technology, and other specifically
identifiable intangible assets and are being amortized using the
straight-line method over their estimated useful lives, which range from
3 to 20 years. Intangible assets were $50.5 million and $39.9 million,
net of accumulated amortization of $45.7 million and $38.0 million, at
year-end 1997 and 1996, respectively.
Cost in Excess of Net Assets of Acquired Companies
The excess of cost over the fair value of net assets of acquired
companies is amortized using the straight-line method principally over 40
years. Accumulated amortization was $134.7 million and $96.4 million at
year-end 1997 and 1996, respectively. The Company assesses the future
useful life of this asset whenever events or changes in circumstances
indicate that the current useful life has diminished. The Company
considers the future undiscounted cash flows of the acquired companies in
assessing the recoverability of this asset. If impairment has occurred,
any excess of carrying value over fair value is recorded as a loss.
Common Stock of Subsidiaries Subject to Redemption
In March 1995, ThermoLyte sold 1,845,000 units, each unit consisting
of one share of ThermoLyte common stock and one redemption right, at
$10.00 per unit, for net proceeds of $17.3 million. Holders of the common
stock issued in the offering will have the option to require ThermoLyte
to redeem any or all of their shares at $10.00 per share in December 1998
or 1999. ThermoLyte common stock subject to redemption of $18.1 million
is included in other accrued expenses in the accompanying 1997 balance
sheet since it is redeemable in December 1998. The redemption value is
$18.5 million.
13PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Significant Accounting Policies (continued)
In September 1996, Thermo Fibergen sold 4,715,000 units, each unit
consisting of one share of Thermo Fibergen common stock and one
redemption right, at $12.75 per unit, for net proceeds of $55.8 million.
The common stock and redemption rights began trading separately on
December 13, 1996. Holders of a redemption right have the option to
require Thermo Fibergen to redeem one share of Thermo Fibergen common
stock at $12.75 per share in September 2000 or 2001. The redemption
rights carry terms that generally provide for their expiration if the
closing price of Thermo Fibergen's common stock exceeds $19 1/8 for 20 of
any 30 consecutive trading days prior to September 2001.
In April 1997, ThermoLase completed an exchange offer whereby its
shareholders had the opportunity to exchange one share of existing
ThermoLase common stock and $3.00 (in cash or ThermoLase common stock)
for a new unit consisting of one share of ThermoLase common stock and one
redemption right. The redemption right entitles the holder to sell the
related share of common stock to ThermoLase for $20.25 during the period
from April 3, 2001, through April 30, 2001. The redemption right will
expire if the closing price of ThermoLase common stock is at least $26.00
for 20 of any 30 consecutive trading days. In connection with this offer,
ThermoLase issued in April 1997, 2,000,000 units in exchange for
2,261,706 shares of its common stock and $0.5 million in cash, net of
expenses. As a result of these transactions, $40.5 million was
reclassified from "Shareholders' investment" and "Minority interest" to
"Common stock of subsidiaries subject to redemption," based on the
issuance of the 2,000,000 redemption rights, each carrying a maximum
liability of $20.25.
The difference between the redemption value and the original carrying
amount of ThermoLyte and Thermo Fibergen common stock subject to
redemption is accreted over the period through the first redemption
period. Accretion is charged to minority interest expense in the
accompanying statement of income. All redemption rights are guaranteed on
a subordinated basis by the Company.
Foreign Currency
All assets and liabilities of the Company's foreign subsidiaries are
translated at year-end exchange rates, and revenues and expenses are
translated at average exchange rates for the year in accordance with SFAS
No. 52, "Foreign Currency Translation." Resulting translation adjustments
are reflected as a separate component of shareholders' investment titled
"Cumulative translation adjustment." Foreign currency transaction gains
and losses are included in the accompanying statement of income and are
not material for the three years presented.
Forward Contracts and Interest Rate Swap Agreements
The Company uses short-term forward foreign exchange contracts to
manage certain exposures to foreign currencies. The Company enters into
forward foreign exchange contracts to hedge firm purchase and sale
commitments denominated in currencies other than its subsidiaries' local
currencies. These contracts principally hedge transactions denominated in
14PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Significant Accounting Policies (continued)
U.S. dollars, British pounds sterling, French francs, and Japanese yen.
The purpose of the Company's foreign currency hedging activities is to
protect the Company's local currency cash flows related to these
commitments from fluctuations in foreign exchange rates. Gains and losses
arising from forward foreign exchange contracts are recognized as offsets
to gains and losses resulting from the transactions being hedged.
Thermo Ecotek has interest rate swap agreements that convert its
variable rate obligations to fixed rate obligations (Note 5). Interest
rate swap agreements are accounted for under the accrual method. Amounts
to be received from or paid to the counterparties of the agreements are
accrued during the period to which the amounts relate and are reflected
as interest expense. The related amounts payable to the counterparties
are included in other accrued expenses in the accompanying balance sheet.
The fair value of the swap agreements is not recognized in the
accompanying financial statements since the agreements are accounted for
as hedges.
The Company does not enter into speculative foreign currency or
interest swap agreements.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Presentation
Certain amounts in 1996 and 1995 have been reclassified to conform to
the presentation in the 1997 financial statements.
2. Available-for-sale Investments
In accordance with SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," the Company's debt and marketable equity
securities are considered available-for-sale investments in the
accompanying balance sheet and are carried at market value, with the
difference between cost and market value, net of related tax effects,
recorded currently as a component of shareholders' investment titled "Net
unrealized gain on available-for-sale investments."
15PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
2. Available-for-sale Investments (continued)
The aggregate market value, cost basis, and gross unrealized gains
and losses of short- and long-term available-for-sale investments by
major security type are as follows:
Gross Gross
Market Cost Unrealized Unrealized
(In thousands) Value Basis Gains Losses
------------------------------------------------------------------------
1997
Government-agency
securities $ 385,476 $ 385,049 $ 451 $ (24)
Corporate bonds 513,956 513,427 717 (188)
Other 92,992 76,960 16,628 (596)
---------- ---------- ---------- ----------
$ 992,424 $ 975,436 $ 17,796 $ (808)
========== ========== ========== ==========
1996
Government-agency
securities $ 830,446 $ 829,736 $ 761 $ (51)
Corporate bonds 581,804 581,424 482 (102)
Other 114,032 101,498 12,855 (321)
---------- ---------- ---------- ----------
$1,526,282 $1,512,658 $ 14,098 $ (474)
========== ========== ========== ==========
Short- and long-term available-for-sale investments in the
accompanying 1997 balance sheet include equity securities of $50.4
million and debt securities of $803.3 million with contractual maturities
of one year or less and $138.7 million with contractual maturities of
more than one year through five years. Actual maturities may differ from
contractual maturities as a result of the Company's intent to sell these
securities prior to maturity and as a result of put and call options that
enable either the Company, the issuer, or both to redeem these securities
at an earlier date.
The cost of available-for-sale investments that were sold was based
on specific identification in determining realized gains and losses
recorded in the accompanying statement of income. The net gain on sale of
investments resulted from gross realized gains of $5.2 million, $11.2
million, and $9.8 million and gross realized losses of $0.1 million, $1.4
million, and $0.5 million in 1997, 1996, and 1995, respectively, relating
to the sale of available-for-sale investments.
3. Acquisitions
In March 1997, Thermo Instrument acquired 95% of Life Sciences
International PLC, a London Stock Exchange-listed company. Subsequently,
Thermo Instrument acquired the remaining shares of Life Sciences'
16PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
3. Acquisitions (continued)
capital stock. The aggregate purchase price for Life Sciences was $442.8
million, net of $55.8 million of cash acquired. The purchase price
includes the repayment of $105.0 million of Life Sciences' bank debt.
Life Sciences manufactures laboratory science equipment, appliances,
instruments, consumables, and reagents for the research, clinical, and
industrial markets.
In 1997, in addition to the acquisition of Life Sciences, the Company
and its majority-owned subsidiaries made several other acquisitions for
an aggregate of $406.3 million in cash, net of cash acquired, the
issuance of subsidiary common stock and stock options valued at $4.5
million, and $5.1 million to be paid in the first quarter of 1998,
subject to certain post-closing adjustments. The Company does not expect
that aggregate post-closing adjustments, if any, will be material.
In June 1996, the Company acquired SensorMedics Corporation in
exchange for 1,243,518 shares of the Company's common stock, including
156,590 shares reserved for issuance upon exercise of assumed stock
options and warrants. SensorMedics manufactures systems for pulmonary
function diagnosis, respiratory-gas analyzers, physiological testing
equipment, and automated sleep-analysis systems. The acquisition has been
accounted for under the pooling-of-interests method.
Historical financial information presented for 1995 has been restated
to include the acquisition of SensorMedics. Revenues and net income
(loss) for 1995, as previously reported by the separate entities prior to
the acquisition and as restated for the combined Company, are as follows:
(In thousands) 1995
-----------------------------------------------------------------------
Revenues:
Previously reported $2,207,417
SensorMedics 62,874
----------
$2,270,291
==========
Net Income (Loss):
Previously reported $ 140,080
SensorMedics (498)
----------
$ 139,582
==========
In March 1996, Thermo Instrument completed the acquisition of a
substantial portion of the businesses constituting the Scientific
Instruments Division of Fisons plc (Fisons businesses), a wholly owned
subsidiary of Rhone-Poulenc Rorer Inc. (RPR), for approximately $181.2
million in cash, net of $7.7 million of cash acquired, and the assumption
of approximately $47.2 million of indebtedness. In December 1997, Thermo
Instrument and RPR negotiated a post-closing adjustment under the terms
of the purchase agreement for the Fisons acquisition pertaining to
determination of the net assets of the Fisons businesses at the date of
17PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
3. Acquisitions (continued)
acquisition. This negotiation resulted in a refund to Thermo Instrument
of $36.1 million, plus $3.8 million of interest from the date of
acquisition. Thermo Instrument has recorded $33.1 million of the refund
as a reduction in cost in excess of net assets of acquired companies. The
remaining $3.0 million represented payment for uncollected accounts
receivable acquired by the Company that were guaranteed by RPR.
In 1996, in addition to the acquisitions of SensorMedics and the
Fisons businesses, the Company and its majority-owned subsidiaries made
several other acquisitions for an aggregate of $185.1 million in cash,
net of cash acquired, the issuance of common stock of the Company and its
majority-owned subsidiaries valued at $2.4 million, and the issuance of
$26.6 million in debt.
In March 1995, the Company acquired Coleman Research Corporation in
exchange for 6,003,336 shares of the Company's common stock, including
304,292 shares reserved for issuance upon exercise of assumed stock
options. This business was renamed Thermo Coleman Corporation. Thermo
Coleman provides systems integration, systems engineering, analytical
services, technology support, information technology services and
products, and advanced-technology research and development to government
and commercial customers. The acquisition has been accounted for under
the pooling-of-interests method.
In 1995, in addition to the acquisition of Thermo Coleman, the
Company and its majority-owned subsidiaries made several other
acquisitions for an aggregate of $330.7 million in cash, net of cash
acquired, the issuance of common stock and stock options of the Company's
majority-owned subsidiaries valued at $19.0 million, and the issuance of
$22.3 million in debt.
These acquisitions, except for SensorMedics and Thermo Coleman, have
been accounted for using the purchase method of accounting, and the
acquired companies' results have been included in the accompanying
financial statements from their respective dates of acquisition. The
aggregate cost of these acquisitions exceeded the estimated fair value of
the acquired net assets by $1,239.8 million, which is being amortized
principally over 40 years. Allocation of the purchase price for these
acquisitions was based on estimates of the fair value of the net assets
acquired and, for acquisitions completed in 1997, is subject to
adjustment upon finalization of the purchase price allocation. The
Company has gathered no information that indicates the final purchase
price allocations will differ materially from the preliminary estimates.
Pro forma data is not presented since the acquisitions were not material
to the Company's results of operations.
In connection with the acquisition of the Fisons businesses, Thermo
Instrument had undertaken a restructuring of the acquired businesses
during 1996. In accordance with the requirements of Emerging Issues Task
Force Pronouncement (EITF) 95-3, Thermo Instrument finalized its
restructuring plans in the first quarter of 1997. The restructuring plans
include reductions in staffing levels, abandonment of excess facilities,
and other costs associated with exiting certain activities of the
acquired businesses. As part of the cost of the acquisition, Thermo
Instrument established reserves totaling $46.2 million for estimated
18PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
3. Acquisitions (continued)
severance, excess facilities, and other exit costs associated with the
acquisition, $14.3 million and $19.0 million of which was expended during
1997 and 1996, respectively, primarily for severance and
abandoned-facility payments. At January 3, 1998, the remaining reserve
for restructuring these businesses was $11.1 million, including the
impact of currency translation, and primarily represents ongoing
severance and abandoned-facility payments.
4. Employee Benefit Plans
Stock-based Compensation Plans
Stock Option Plans
------------------
The Company has stock-based compensation plans for its key employees,
directors, and others, which permit the award of stock-based incentives
in the stock of the Company and its majority-owned subsidiaries. The
Company has a nonqualified stock option plan, adopted in 1974, and an
incentive stock option plan, adopted in 1981, which permit the award of
stock options to key employees. The incentive stock option plan expired
in 1991, and no grants were made after that date. An equity incentive
plan, adopted in 1989, permits the grant of a variety of stock and
stock-based awards as determined by the human resources committee of the
Company's Board of Directors (the Board Committee), including restricted
stock, stock options, stock bonus shares, or performance-based shares.
The option recipients and the terms of options granted under these plans
are determined by the Board Committee. Generally, options outstanding
under these plans are exercisable immediately, but are subject to certain
transfer restrictions and the right of the Company to repurchase shares
issued upon exercise of the options at the exercise price, upon certain
events. The restrictions and repurchase rights may lapse over periods
ranging from one to ten years, depending on the term of the option, which
may range from three to twelve years. In addition, under certain options,
shares acquired upon exercise are restricted from resale until retirement
or other events. Nonqualified options are generally granted at fair
market value, although the Board Committee has discretion to grant
options at a price at or above 85% of the fair market value on the date
of grant. Incentive stock options must be granted at not less than the
fair market value of the Company's stock on the date of grant. Generally,
stock options have been granted at fair market value. The Company also
has a directors' stock option plan, adopted in 1993, that provides for
the annual grant of stock options of the Company and its majority-owned
subsidiaries to outside directors pursuant to a formula approved by the
Company's shareholders. Options awarded under this plan are exercisable
six months after the date of grant and expire three to seven years after
the date of grant. In addition to the Company's stock-based compensation
plans, certain officers and key employees may also participate in
stock-based compensation plans of the Company's majority-owned
subsidiaries.
19PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
4. Employee Benefit Plans (continued)
A summary of the Company's stock option activity is as follows:
1997 1996 1995
---------------- ---------------- ----------------
Weighted Weighted Weighted
Number Average Number Average Number Average
(Shares in of Exercise of Exercise of Exercise
thousands) Shares Price Shares Price Shares Price
------------------------------------------------------------------------
Options outstanding,
beginning of year 8,421 $21.24 8,302 $17.46 7,878 $14.92
Granted 1,401 37.06 1,183 39.03 1,330 27.85
Exercised (744) 13.37 (1,125) 10.71 (1,099) 8.69
Forfeited (247) 29.45 (89) 26.97 (111) 16.67
Assumed upon
acquisitions
through pooling-
of-interests
(Note 3) - - 150 14.97 304 5.65
------ ------ ------
Options outstanding,
end of year 8,831 $24.19 8,421 $21.24 8,302 $17.46
====== ====== ====== ====== ====== ======
Options exercisable 8,821 $24.18 8,406 $21.23 8,262 $17.51
====== ====== ====== ====== ====== ======
Options available
for grant 5,132 1,291 2,397
====== ====== ======
20PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
4. Employee Benefit Plans (continued)
A summary of the status of the Company's stock options at January 3,
1998, is as follows:
Options Outstanding
-------------------------------
Weighted
Average Weighted
Number Remaining Average
Range of of Contractual Exercise
Exercise Prices Shares Life Price
------------------------------------------------------------------------
(Shares in thousands)
$ 6.33 - $15.61 1,479 2.4 years $12.30
15.62 - 24.89 4,331 7.0 years 19.44
24.90 - 34.18 798 8.2 years 32.16
34.19 - 43.46 2,223 8.7 years 38.49
-----
$ 6.33 - $43.46 8,831 6.8 years $24.19
=====
The information disclosed above for options outstanding at January 3,
1998, does not differ materially for options exercisable.
Employee Stock Purchase Plan
----------------------------
Substantially all of the Company's full-time U.S. employees are
eligible to participate in an employee stock purchase plan sponsored by
the Company. Under this plan, shares of the Company's common stock can be
purchased at the end of a 12-month period at 95% of the fair market value
at the beginning of the period, and the shares purchased are subject to a
six-month resale restriction. Prior to November 1, 1995, shares of the
Company's common stock could be purchased at 85% of the fair market value
at the beginning of the period, and the shares purchased were subject to
a one-year resale restriction. Shares are purchased through payroll
deductions of up to 10% of each participating employee's gross wages.
Participants of employee stock purchase programs sponsored by the
Company's majority-owned public subsidiaries may also elect to purchase
shares of the common stock of the subsidiary by which they are employed
under the same general terms described above. During 1997, 1996, and
1995, the Company issued 243,444 shares, 285,448 shares, and 330,444
shares, respectively, of its common stock under this plan.
Employee Stock Ownership Plan
-----------------------------
The Company's Employees Stock Ownership Plan (ESOP) was split into
two plans effective December 31, 1994: ESOP I and ESOP II. The ESOP I
covers eligible full-time U.S. employees of the Company's corporate
office and its wholly owned subsidiaries. The ESOP II, terminated
effective December 31, 1994, covered employees of certain of the
Company's majority-owned subsidiaries. The Company loaned funds to the
ESOP to purchase shares of common stock of the Company and its
majority-owned subsidiaries. The shares purchased by the ESOP were
21PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
4. Employee Benefit Plans (continued)
recorded as deferred compensation in the accompanying balance sheet. The
loan to the ESOP II was repaid in full in 1996 and all expense related to
the plans had been recognized. The loan repayment was recorded as a
reduction in deferred compensation in the accompanying balance sheet.
Shares are allocated to the plan participants based on employee
compensation. For these plans, the Company charged to expense $0.2
million and $0.3 million in 1996 and 1995, respectively.
Pro Forma Stock-based Compensation Expense
In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock-based Compensation," which sets forth a
fair-value based method of recognizing stock-based compensation expense.
As permitted by SFAS No. 123, the Company has elected to continue to
apply APB No. 25 to account for its stock-based compensation plans. Had
compensation cost for awards in 1997, 1996, and 1995 under the Company's
stock-based compensation plans been determined based on the fair value at
the grant dates consistent with the method set forth under SFAS No. 123,
the effect on the Company's net income and earnings per share would have
been as follows:
(In thousands except per share amounts) 1997 1996 1995
-----------------------------------------------------------------------
Net income:
As reported $239,328 $190,816 $139,582
Pro forma 224,337 181,880 137,587
Basic earnings per share:
As reported 1.57 1.35 1.10
Pro forma 1.47 1.29 1.09
Diluted earnings per share:
As reported 1.41 1.17 .95
Pro forma 1.32 1.12 .93
Because the method prescribed by SFAS No. 123 has not been applied to
options granted prior to January 1, 1995, the resulting pro forma
compensation expense may not be representative of the amount to be
expected in future years. Pro forma compensation expense for options
granted is reflected over the vesting period; therefore, future pro forma
compensation expense may be greater as additional options are granted.
The weighted average fair value per share of options granted was
$15.14, $13.03, and $9.39 in 1997, 1996, and 1995, respectively. The fair
value of each option grant was estimated on the grant date using the
Black-Scholes option-pricing model with the following weighted-average
assumptions:
1997 1996 1995
-----------------------------------------------------------------------
Volatility 26% 24% 24%
Risk-free interest rate 6.2% 6.1% 6.0%
Expected life of options 6.5 years 5.2 years 5.0 years
22PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
4. Employee Benefit Plans (continued)
The Black-Scholes option-pricing model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option-pricing
models require the input of highly subjective assumptions including
expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of
the fair value of its employee stock options.
401(k) Savings Plan
The Company's 401(k) savings plan covers the majority of the
Company's eligible full-time U.S. employees. Contributions to the plan
are made by both the employee and the Company. Company contributions are
based on the level of employee contributions. For this plan, the Company
contributed and charged to expense $13.9 million, $10.1 million, and $7.6
million in 1997, 1996, and 1995, respectively.
Other Retirement Plans
Certain of the Company's subsidiaries offer retirement plans,
separate from the Company's 401(k) savings plan. These retirement plans
cover approximately 20% of the Company's U.S. employees. The majority of
these subsidiaries offer 401(k) savings plans; however, one subsidiary
offers a money purchase plan and two subsidiaries offer profit-sharing
plans. Company contributions to the 401(k) savings plans are based on the
level of employee contributions. Company contributions to the money
purchase plan and profit-sharing plans are based on formulas determined
by the Company. For these plans, the Company contributed and charged to
expense $9.3 million, $8.8 million, and $8.2 million in 1997, 1996, and
1995, respectively.
23PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
5. Long-term Obligations and Other Financing Arrangements
Long-term obligations of the Company are as follows:
(In thousands except per share amounts) 1997 1996
-----------------------------------------------------------------------
5% Senior convertible debentures,
due 2001, convertible at $21.00 per share $ - $ 175,216
4 1/4% Subordinated convertible debentures,
due 2003, convertible at $37.80 per share 585,000 585,000
4 1/2% Senior convertible debentures,
due 2003, convertible into shares
of Thermo Instrument at $34.46 per share 172,500 172,500
3 3/4% Senior convertible debentures,
due 2000, convertible into shares of
Thermo Instrument at $13.55 per share 15,324 22,281
5% Subordinated convertible debentures,
due 2000, convertible into shares of
ThermoQuest at $16.50 per share 80,591 86,250
5% Subordinated convertible debentures,
due 2000, convertible into shares of
Thermo Optek at $13.94 per share 79,956 86,250
4 7/8% Subordinated convertible debentures,
due 2000, convertible into shares of
Thermo Remediation at $17.92 per share 34,950 34,950
Noninterest-bearing subordinated convertible
debentures due 2003, convertible into
shares of Thermedics at $32.68 per share 62,300 65,000
4 3/4% Subordinated convertible debentures,
due 2004, convertible into shares of
Thermo Cardiosystems at $31.42 per share 70,000 -
Noninterest-bearing subordinated convertible
debentures, due 1997, convertible into shares
of Thermo Cardiosystems at $14.49 per share - 3,755
3 3/4% Subordinated convertible debentures,
due 2000, convertible into shares of Thermo
Voltek at $7.83 per share 7,750 9,345
4 5/8% Subordinated convertible debentures,
due 2003, convertible into shares of
Thermo TerraTech at $15.90 per share 111,850 111,850
6 1/2% Subordinated convertible debentures,
due 1997, convertible into shares of
Thermo TerraTech at $10.33 per share - 8,620
4 1/2% Subordinated convertible debentures,
due 2004, convertible into shares of
Thermo Fibertek at $12.10 per share 153,000 -
4 3/8% Subordinated convertible debentures,
due 2004, convertible into shares of
ThermoLase at $17.39 per share 115,000 -
3 1/4% Subordinated convertible debentures,
due 2007, convertible into shares of
ThermoTrex at $27.00 per share 114,500 -
24PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
5. Long-term Obligations and Other Financing Arrangements (continued)
(In thousands except per share amounts) 1997 1996
-----------------------------------------------------------------------
Noninterest-bearing subordinated convertible
debentures, due 2001, convertible into
shares of Thermo Ecotek at $13.56 per share $ 8,118 $ 22,205
4 7/8% Subordinated convertible debentures,
due 2004, convertible into shares of
Thermo Ecotek at $16.50 per share 50,000 -
8.1% Nonrecourse tax-exempt obligation,
payable in semiannual installments, with
final payment in 2000 35,600 51,200
6.0% Nonrecourse tax-exempt obligation,
payable in semiannual installments, with
final payment in 2000 23,900 43,500
Other 93,857 113,289
---------- ----------
1,814,196 1,591,211
Less: Current maturities 71,289 40,869
---------- ----------
$1,742,907 $1,550,342
========== ==========
The debentures that are convertible into subsidiary common stock have
been issued by the respective subsidiaries and are guaranteed by the
Company, on a subordinated basis in most cases.
In the event of a change in control of the Company (as defined in the
related fiscal agency agreement) that has not been approved by the
continuing members of the Company's Board of Directors, each holder of
the 4 1/4% convertible debentures issued by the Company will have the
right to require the Company to buy all or part of the holder's
debentures, at par value plus accrued interest, within 50 calendar days
after the date of expiration of a specified approval period. In addition,
certain of the obligations convertible into subsidiary common stock
become exchangeable for common stock of the Company at an exchange price
equal to 50% of the average price of the Company's common stock for the
30 trading days preceding the change in control.
Nonrecourse tax-exempt obligations represent obligations issued by
the California Pollution Control Financing Authority, the proceeds of
which were used to finance two alternative-energy facilities (Delano I
and Delano II) located in Delano, California. The obligations are
credit-enhanced by a letter of credit issued by a bank group. The
obligations are payable only by a subsidiary of Thermo Ecotek and are not
guaranteed by the Company, except under limited circumstances. As
required by the financing bank group, Thermo Ecotek entered into interest
rate swap agreements that effectively convert these obligations from
floating rates to the fixed rates described above. These swaps have terms
expiring in 2000, commensurate with the final maturity of the debt.
During 1997 and 1996, the average variable rate received under the
interest rate swap agreements was 3.7% and 3.5%, respectively. The
notional amount of the swap agreements was $61.3 million and $95.7
25PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
5. Long-term Obligations and Other Financing Arrangements (continued)
million at year-end 1997 and 1996, respectively. The interest rate swap
agreements are with a different counterparty than the holders of the
underlying debt. The Company believes, however, that the credit risks
associated with these swaps are minimal because the agreements are with a
large, reputable bank.
The annual requirements for long-term obligations are as follows:
(In thousands)
-----------------------------------------
1998 $ 71,289
1999 25,466
2000 224,244
2001 49,021
2002 2,940
2003 and thereafter 1,441,236
----------
$1,814,196
==========
See Note 13 for fair value information pertaining to the Company's
long-term obligations.
Notes payable and current maturities of long-term obligations in the
accompanying balance sheet includes $105.7 million and $112.9 million in
1997 and 1996, respectively, of short-term bank borrowings and borrowings
under lines of credit of certain of the Company's subsidiaries. The
weighted average interest rate for these borrowings was 5.7% and 5.4% at
year-end 1997 and 1996. Unused lines of credit were $205 million as of
year-end 1997.
6. Commitments and Contingencies
Operating Leases
The Company leases portions of its office and operating facilities
under various operating lease arrangements. The accompanying statement of
income includes expenses from operating leases of $73.6 million, $62.6
million, and $48.8 million in 1997, 1996, and 1995, respectively. Future
minimum payments due under noncancelable operating leases at January 3,
1998, are $71.0 million in 1998; $60.7 million in 1999; $52.2 million in
2000; $45.8 million in 2001; $42.6 million in 2002; and $165.5 million in
2003 and thereafter. Total future minimum lease payments are $437.8
million.
Litigation and Related Contingencies
ThermoTrex is a defendant in a lawsuit brought by Fischer Imaging
Corporation, which alleges that the prone breast-biopsy systems of the
Lorad division of ThermoTrex's Trex Medical subsidiary infringe a Fischer
patent on a precision mammographic needle-biopsy system. Lorad's
cumulative revenues from this product totaled approximately $118.6
million through January 3, 1998.
26PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
6. Commitments and Contingencies (continued)
Five former employees of Thermo Instrument's Epsilon Industrial, Inc.
(Epsilon) subsidiary have commenced an arbitration proceeding naming as
joint defendants Epsilon, Thermo Instrument, and certain affiliates of
Thermo Instrument, including the Company, alleging that these entities
breached the terms of certain agreements entered into with such employees
at the time that a predecessor of Epsilon acquired the assets and
business of a company formerly owned by such employees. The former
employees are claiming actual damages of between $27 million and $46
million, punitive damages of twice the actual damages, attorneys' fees
and expenses, and pre-judgment and post-judgment interest, resulting from
the alleged failure of Thermo Instrument and such affiliates, to, among
other things, use their best efforts to develop and promote certain
products acquired at that time. The arbitration proceeding, which is
binding and nonappealable, is expected to conclude in the second quarter
of 1998.
Thermo Coleman has been named as a defendant in a lawsuit initiated
by certain former employees. This suit was filed under the "qui tam"
provisions of the Federal False Claims Act (the Act), which permit an
individual to bring suit in the name of the United States and, if the
United States obtains a judgment against the defendant, to share in any
recovery. The suit alleges, among other things, that Thermo Coleman
violated the Act as a result of its performance of certain
support-service functions under a subcontract from a third party, which,
in turn, contracted directly with the U.S. government. The complaint
seeks an order requiring Thermo Coleman to cease and desist from such
allegedly improper practices, the award of treble damages in an
unspecified amount, plus other penalties. The amount of billings under
the contract activities in question were approximately $7.6 million.
Under the law, the U.S. government will investigate the allegations set
forth in the complaint, and then will determine whether it wishes to
intervene and take over the lawsuit. The Company has been advised that
the U.S. government has not completed its investigation and that no
decision has been made on whether the U.S. government will intervene in
the lawsuit.
ThermoQuest's Finnigan subsidiary has filed complaints against
Bruker-Franzen Analytik GmbH and its U.S. affiliate, and Hewlett-Packard
Company, for alleged violation of two U.S. patents owned by Finnigan
pertaining to methods used in ion-trap mass spectrometers. One of
Finnigan's complaints was filed in United States District Court and the
other was filed with the United States International Trade Commission
(ITC). In February 1998, an administrative law judge at the ITC issued an
initial determination to the effect that, although one of Finnigan's
patents was infringed, the patents were invalid for purposes of this
case. The ITC's jurisdiction on this matter is limited to the issue of
whether or not the defendants' products that use the patented methods can
be imported into the U.S. The judge's initial determination will be
considered by the full commission during the second quarter of 1998.
Bruker has presented counterclaims alleging that the Finnigan patents are
invalid and unenforceable and are not infringed by the mass spectrometers
co-marketed by Bruker. They also allege that Finnigan has violated
27PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
6. Commitments and Contingencies (continued)
antitrust laws by attempting to maintain a monopoly position and restrain
trade through enforcement of allegedly fraudulently obtained patents.
Bruker has asked for judgment consistent with its counterclaims, and for
three times the antitrust damages (including attorney's fees) it has
sustained.
The Company intends to vigorously defend these matters. In the
opinion of management, the ultimate liability for all such matters will
not be material to the Company's financial position, but an unfavorable
outcome in one or more of the matters described above could materially
affect the results of operations or cash flows for a particular quarter
or annual period.
7. Common Stock
At January 3, 1998, the Company had reserved 31,354,154 unissued
shares of its common stock for possible issuance under stock-based
compensation plans, for possible conversion of the Company's convertible
debentures, and for possible exchange of certain subsidiaries'
convertible obligations into common stock of the Company. Certain of the
subsidiaries' obligations are exchangeable into common stock of the
Company in the event of a change in control (as defined in the related
fiscal agency agreement) that has not been approved by the continuing
members of the Company's Board of Directors (Note 5). The exchange price
would be equal to 50% of the average price of the Company's common stock
for the 30 trading days preceding the change in control.
In January 1996, the Company redeemed the share purchase rights
outstanding under its previously existing shareholder rights plan for
$.02 per right, or $.006 per share of the Company's common stock
outstanding. Simultaneously with this redemption, the Company distributed
rights under a new shareholder rights plan adopted by the Company's Board
of Directors to holders of outstanding shares of the Company's common
stock. Each right entitles the holder to purchase one ten-thousandth of a
share of Series B Junior Participating Preferred Stock, $100 par value,
at a purchase price of $250 per share, subject to adjustment. The rights
will not be exercisable until the earlier of (i) 10 days following a
public announcement that a person or group of affiliated or associated
persons (an Acquiring Person) has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares of
common stock (the Stock Acquisition Date), or (ii) 10 business days
following the commencement of a tender offer or exchange offer for 15% or
more of the outstanding shares of common stock.
In the event that a person becomes the beneficial owner of 15% or
more of the outstanding shares of common stock, except pursuant to an
offer for all outstanding shares of common stock approved by the outside
Directors, each holder of a right (except for the Acquiring Person) will
thereafter have the right to receive, upon exercise, that number of
shares of common stock that equals the exercise price of the right
divided by one half of the current market price of the common stock. In
the event that, at any time after any person has become an Acquiring
Person, (i) the Company is acquired in a merger or other business
28PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
7. Common Stock (continued)
combination transaction in which the Company is not the surviving
corporation or its common stock is changed or exchanged (other than a
merger that follows an offer approved by the outside Directors), or
(ii) 50% or more of the Company's assets or earning power is sold or
transferred, each holder of a right (except for the Acquiring Person)
shall thereafter have the right to receive, upon exercise, the number of
shares of common stock of the acquiring company that equals the exercise
price of the right divided by one half of the current market price of
such common stock.
At any time until 10 days following the Stock Acquisition Date, the
Company may redeem the rights in whole, but not in part, at a price of
$.01 per right (payable in cash or stock). The rights expire on January
29, 2006, unless earlier redeemed or exchanged.
8. Income Taxes
The components of income before income taxes and minority interest
are as follows:
(In thousands) 1997 1996 1995
------------------------------------------------------------------------
Domestic $414,146 $313,069 $256,738
Foreign 74,321 61,482 42,070
-------- -------- --------
$488,467 $374,551 $298,808
======== ======== ========
The components of the provision for income taxes are as follows:
(In thousands) 1997 1996 1995
------------------------------------------------------------------------
Currently payable:
Federal $105,889 $ 85,024 $ 72,932
Foreign 30,928 31,851 17,751
State 18,380 18,445 19,892
-------- -------- --------
155,197 135,320 110,575
-------- -------- --------
Net deferred (prepaid):
Federal 12,018 (19,994) (9,717)
Foreign 3,966 (2,275) 232
State 3,532 (2,206) (2,379)
-------- -------- --------
19,516 (24,475) (11,864)
-------- -------- --------
$174,713 $110,845 $ 98,711
======== ======== ========
29PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
8. Income Taxes (continued)
The Company and its majority-owned subsidiaries receive a tax
deduction upon exercise of nonqualified stock options by employees for
the difference between the exercise price and the market price of the
underlying common stock on the date of exercise. The provision for income
taxes that is currently payable does not reflect $15.4 million, $24.5
million, and $20.5 million of such benefits of the Company and its
majority-owned subsidiaries that have been allocated to capital in excess
of par value, directly or through the effect of majority-owned
subsidiaries' equity transactions, in 1997, 1996, and 1995, respectively.
In addition, the provision for income taxes that is currently payable
does not reflect $1.9 million, $6.5 million, and $3.0 million of tax
benefits used to reduce cost in excess of net assets of acquired
companies in 1997, 1996, and 1995, respectively. The deferred provision
for income taxes does not reflect $5.9 million of tax benefits used to
reduce cost in excess of net assets of acquired companies in 1995.
The provision for income taxes in the accompanying statement of
income differs from the provision calculated by applying the statutory
federal income tax rate of 35% to income before income taxes and minority
interest due to the following:
(In thousands) 1997 1996 1995
-----------------------------------------------------------------------
Provision for income taxes at
statutory rate $170,963 $131,093 $104,583
Increases (decreases) resulting from:
Gain on issuance of stock by
subsidiaries (28,019) (44,310) (28,285)
State income taxes, net of federal
tax 14,243 10,555 11,314
Foreign tax rate and tax law
differential 8,937 8,528 3,785
Amortization and write-off of cost
in excess of net assets of acquired
companies 9,918 8,643 7,484
Other, net (1,329) (3,664) (170)
-------- -------- --------
$174,713 $110,845 $ 98,711
======== ======== ========
30PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
8. Income Taxes (continued)
Prepaid income taxes and deferred income taxes in the accompanying
balance sheet consist of the following:
(In thousands) 1997 1996
------------------------------------------------------------
Prepaid income taxes:
Reserves and accruals $ 65,086 $ 84,253
Net operating loss and credit
carryforwards 64,615 76,866
Inventory basis difference 29,829 22,906
Accrued compensation 17,775 14,435
Intangible assets 2,683 5,253
Other, net 5,504 1,192
-------- --------
185,492 204,905
Less: Valuation allowance 53,992 75,103
-------- --------
$131,500 $129,802
======== ========
Deferred income taxes:
Depreciation $ 92,672 $ 68,587
Intangible assets 7,906 8,254
Other 3,542 4,885
-------- --------
$104,120 $ 81,726
======== ========
The valuation allowance relates to the uncertainty surrounding the
realization of tax loss carryforwards and the realization of tax benefits
attributable to accrued acquisition expenses and certain other tax assets
of the Company and certain subsidiaries. Of the year-end 1997 valuation
allowance, $49 million will be used to reduce cost in excess of net
assets of acquired companies when any portion of the related deferred tax
asset is recognized. During 1997, the valuation allowance decreased
primarily due to the decrease in tax loss carryforwards.
At year-end 1997, the Company had foreign and federal net operating
loss carryforwards of $133 million and $37 million, respectively. Use of
the carryforwards is limited based on the future income of certain
subsidiaries. The federal net operating loss carryforwards expire in the
years 1998 through 2012. Of the foreign net operating loss carryforwards,
$10 million expire in the years 1998 through 2004, and the remainder do
not expire.
The Company has not recognized a deferred tax liability for the
difference between the book basis and tax basis of its investment in the
common stock of its domestic subsidiaries (such difference relates
primarily to unremitted earnings and gains on issuance of stock by
subsidiaries) because the Company does not expect this basis difference
to become subject to tax at the parent level. The Company believes it can
implement certain tax strategies to recover its investment in its
domestic subsidiaries tax-free.
31PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
8. Income Taxes (continued)
A provision has not been made for U.S. or additional foreign taxes on
$216 million of undistributed earnings of foreign subsidiaries that could
be subject to taxation if remitted to the U.S. because the Company
currently plans to keep these amounts permanently reinvested overseas.
9. Transactions in Stock of Subsidiaries
Gain on issuance of stock by subsidiaries in the accompanying
statement of income results primarily from the following transactions:
1997
Initial public offering of 2,671,292 shares of Thermedics Detection
common stock at $11.50 per share for net proceeds of $28.1 million
resulted in a gain of $17.1 million that was recorded by Thermedics.
Sale of 1,768,500 shares of ThermoQuest common stock at $15.00 per
share for net proceeds of $24.8 million and conversion of $15.7 million
of ThermoQuest 5% subordinated convertible debentures, convertible at
$16.50 per share into 949,027 shares of ThermoQuest common stock,
resulted in gains of $12.0 million and $7.8 million, respectively, that
were recorded by Thermo Instrument.
Private placements of 1,212,260 shares and 94,000 shares of Thermo
Information Solutions common stock at $9.00 and $10.00 per share,
respectively, for aggregate net proceeds of $11.0 million resulted in a
gain of $6.6 million.
Initial public offering of 2,300,000 shares of Metrika Systems common
stock at $15.50 per share for net proceeds of $32.5 million resulted in a
gain of $13.2 million that was recorded by Thermo Instrument.
Private placement of 2,832,500 shares of Trex Communications common
stock at $4.00 per share for net proceeds of $10.6 million resulted in a
gain of $5.9 million that was recorded by ThermoTrex.
Private placement of 1,639,670 shares of ONIX Systems common stock at
$14.25 per share for net proceeds of $22.0 million resulted in a gain of
$7.9 million that was recorded by Thermo Instrument.
Private placement of 1,160,900 shares of Thermo Trilogy common stock
at $8.25 per share for net proceeds of $8.9 million resulted in a gain of
$4.1 million that was recorded by Thermo Ecotek.
Initial public offering of 1,139,491 shares of Thermo Vision common
stock at $7.50 per share for net proceeds of $7.0 million resulted in a
gain of $2.3 million that was recorded by Thermo Instrument.
Conversion of $13.1 million and $3.2 million of Thermo Optek 5%
subordinated convertible debentures convertible at $14.85 per share and
$13.94 per share, respectively, into 1,111,316 shares of Thermo Optek
common stock resulted in a gain of $3.2 million that was recorded by
Thermo Instrument.
1996
Initial public offering of 3,450,000 shares of ThermoQuest common
stock at $15.00 per share for net proceeds of $47.8 million resulted in a
gain of $27.2 million that was recorded by Thermo Instrument.
32PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
9. Transactions in Stock of Subsidiaries (continued)
Private placements of 300,000 and 383,500 shares of Thermedics
Detection common stock at $10.00 and $10.75 per share, respectively, for
aggregate net proceeds of $7.0 million resulted in a gain of $5.7 million
that was recorded by Thermedics.
Initial public offering of 2,875,000 shares of Thermo Sentron common
stock at $16.00 per share for net proceeds of $42.3 million resulted in a
gain of $18.0 million that was recorded by Thermedics.
Initial public offering of 3,450,000 shares of Thermo Optek common
stock at $13.50 per share for net proceeds of $42.9 million resulted in a
gain of $25.1 million that was recorded by Thermo Instrument.
Initial public offering of 2,875,000 shares of Trex Medical common
stock and sale of 871,832 shares of Trex Medical common stock in a
concurrent rights offering at $14.00 per share and private placements of
100,000 and 300,000 shares of Trex Medical common stock at $10.75 and
$14.50 per share, respectively, for aggregate net proceeds of $54.3
million resulted in an aggregate gain of $28.3 million that was recorded
by ThermoTrex.
Initial public offering of 1,670,000 shares of Thermo BioAnalysis
common stock at $14.00 per share for net proceeds of $20.8 million
resulted in a gain of $9.8 million that was recorded by Thermo
Instrument.
Private placement of 967,828 shares of Metrika Systems common stock
at $15.00 per share for net proceeds of $13.5 million resulted in a gain
of $9.6 million that was recorded by Thermo Instrument.
1995
Initial public offering of 3,500,334 shares of Thermo Ecotek common
stock at $8.50 per share for net proceeds of $27.5 million resulted in a
gain of $7.9 million.
Private placement of 1,601,500 shares of Thermo BioAnalysis common
stock at $10.00 per share for net proceeds of $14.9 million resulted in a
gain of $9.5 million that was recorded by Thermo Instrument.
Private placement of 500,000 shares of Thermo Remediation common
stock at $13.25 per share for net proceeds of $6.6 million resulted in a
gain of $1.6 million that was recorded by Thermo TerraTech.
Private placements of 150,000 and 50,000 shares of ThermoLase common
stock at $13.75 and $12.825 per share, respectively, and a public
offering of 2,250,000 shares of ThermoLase common stock at $25.25 per
share, for aggregate net proceeds of $55.3 million resulted in an
aggregate gain of $34.7 million that was recorded by ThermoTrex.
Initial public offering of 1,725,000 shares of ThermoSpectra common
stock at $14.00 per share and a private placement of 202,000 shares of
ThermoSpectra common stock at $15.72 per share, for aggregate net
proceeds of $24.9 million resulted in an aggregate gain of $10.6 million
that was recorded by Thermo Instrument.
Conversion of $9.1 million of Thermo Voltek 3 3/4% subordinated
convertible debentures convertible at $7.83 per share into 1,163,098
shares of Thermo Voltek common stock resulted in a gain of $3.5 million
that was recorded by Thermedics.
33PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
9. Transactions in Stock of Subsidiaries (continued)
Private placement of 1,862,000 shares of Trex Medical common stock at
$10.25 per share for net proceeds of $17.6 million resulted in a gain of
$12.8 million that was recorded by ThermoTrex.
The Company's ownership percentage in these subsidiaries changed
primarily as a result of the transactions listed above, as well as the
Company's purchases of shares of its majority-owned subsidiaries' stock,
the subsidiaries' purchases of their own stock, the issuance of
subsidiaries' stock by the Company or by the subsidiaries under
stock-based compensation plans or in other transactions, and the
conversion of convertible obligations held by the Company, its
subsidiaries, or by third parties.
34PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
9. Transactions in Stock of Subsidiaries (continued)
The Company's ownership percentages at year end were as follows:
1997 1996 1995
---- ---- ----
Thermedics 58% 55% 51%
Thermo Cardiosystems (a) 59% 54% 55%
Thermo Voltek (a) 68% 51% 59%
Thermo Sentron (a) 78% 73% 100%
Thermedics Detection (b) 76% 94% 100%
Thermo Instrument 82% 82% 86%
ThermoSpectra (c) 83% 73% 72%
ThermoQuest (c) 88% 93% 100%
Thermo Optek (c) 92% 93% 100%
Thermo BioAnalysis (c) 78% 67% 80%
Metrika Systems (d) 60% 84% 100%
Thermo Vision (c) 80% 100% 100%
ONIX Systems (d) 87% 100% 100%
Thermo TerraTech 82% 81% 81%
Thermo Remediation (e) 70% 68% 69%
Thermo EuroTech (f) 56% 53% 62%
The Randers Group (e) 96% 100% 100%
Thermo Power 69% 64% 63%
ThermoLyte (g) 78% 78% 78%
ThermoTrex 55% 51% 51%
ThermoLase (h) 70% 64% 65%
Trex Medical (i) 79% 79% 91%
Trex Communications (i) 78% 100% 100%
Thermo Fibertek 90% 84% 81%
Thermo Fibergen (j) 71% 68% 100%
Thermo Ecotek 88% 82% 83%
Thermo Trilogy (k) 87% 100% 100%
Thermo Information Solutions 79% 100% 100%
____________________
(a) Reflects combined ownership by Thermedics and Thermo Electron.
(b) Reflects ownership by Thermedics.
(c) Reflects combined ownership by Thermo Instrument and Thermo Electron.
(d) Reflects ownership by Thermo Instrument.
(e) Reflects combined ownership by Thermo TerraTech and Thermo Electron.
(f) Reflects ownership by Thermo TerraTech.
(g) Reflects ownership by Thermo Power.
(h) Reflects combined ownership by ThermoTrex and Thermo Electron.
(i) Reflects ownership by ThermoTrex.
(j) Reflects ownership by Thermo Fibertek.
(k) Reflects ownership by Thermo Ecotek.
35PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
10. Other Income (Expense), Net
The components of other income (expense), net, in the accompanying
statement of income are as follows:
(In thousands) 1997 1996 1995
------------------------------------------------------------------------
Interest income $ 90,559 $ 94,109 $ 62,146
Interest expense (93,125) (96,695) (77,861)
Equity in losses of unconsolidated
subsidiaries (1,018) (28) (203)
Gain on sale of investments, net 5,077 9,840 9,305
Other income (expense), net 1,133 (5,740) (612)
-------- -------- --------
$ 2,626 $ 1,486 $ (7,225)
======== ======== ========
11. Restructuring and Other Nonrecurring Costs, Net
Restructuring and other nonrecurring costs, net, in 1997 includes
$7.8 million to write down certain capital equipment and intangible
assets, including cost in excess of net assets of acquired companies, in
response to a severe downturn in Thermo Remediation's soil-remediation
business that resulted in closure of two soil-remediation sites during
1997 and reduced cash flows at certain other sites, such that analysis
indicated that the investment in these assets would not be recovered.
During 1997, the Company settled two legal cases in which it was a
defendant concerning development of a proposed waste-to-energy facility
and development and construction of an alternative-energy facility. These
matters were settled for amounts less than the damages that had been
sought by the plaintiffs and less than the amounts that had been reserved
by the Company. As a result, the Company reversed $9.7 million of
reserves previously established for these matters, which is included as a
reduction of restructuring and other nonrecurring costs in 1997. In
addition, the 1997 amount includes $3.4 million of restructuring and
other nonrecurring costs, primarily severance, at two majority-owned
subsidiaries and at the Company's wholly owned businesses and $1.4
million at ThermoTrex for the write-off of acquired technology relating
to an acquisition. This amount represents the portion of the purchase
price allocated to technology in development at the acquired business.
The 1997 amount also includes a gain of $2.2 million from the sale of a
business by ThermoSpectra and $0.6 million of other nonrecurring costs.
The 1996 amount includes a write-off of $12.7 million of cost in
excess of net assets of acquired company and certain other intangible
assets at Thermedics' Corpak subsidiary, as a result of Thermedics no
longer intending to further invest in this business and reduced cash
flows, such that analysis indicated that the investment in these assets
would not be recovered. The 1996 amount also includes $11.4 million of
costs recorded by SensorMedics primarily as a result of its merger with
the Company, including employee compensation that became payable as a
result of the merger with the Company, certain investment banking fees
and other related transaction costs, the settlement of a pre-acquisition
legal dispute, and severance costs for terminated employees. In addition,
36PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
11. Restructuring and Other Nonrecurring Costs, Net (continued)
$4.4 million was recorded by the Company's wholly owned Peter Brotherhood
Ltd. subsidiary primarily for the write-off of a nontrade receivable and
severance costs, and $3.5 million and $4.9 million were recorded by Thermo
Instrument and Thermo Cardiosystems, respectively, for the write-off of
acquired technology relating to an acquisition at each subsidiary. These
amounts represent the portion of the purchase price allocated to technology
in development at the acquired businesses.
The 1995 amount includes $11.5 million to write off the Company's net
investment in a waste-recycling facility in San Diego County, California,
that was subsequently sold in 1996. The 1995 amount also includes $5.0
million to write off the cost in excess of net assets of acquired companies
at Thermo TerraTech's thermal-processing equipment business due to this
asset no longer being recoverable based on discontinuing investment in this
business and reduced cash flows, such that analysis indicated that the
investment in these assets would not be recovered. In addition, $2.5
million was recorded to write off the cost in excess of net assets of
acquired companies at the Company's wholly owned Napco Inc. subsidiary and
$2.9 million was recorded for other nonrecurring costs at other business
units.
37PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
12. Supplemental Cash Flow Information
Supplemental cash flow information is as follows:
(In thousands) 1997 1996 1995
--------------------------------------------------------------------------
Cash Paid For:
Interest $ 100,165 $ 86,449 $ 72,714
Income taxes $ 151,685 $ 91,536 $ 51,184
Noncash Activities:
Conversions of Company and
subsidiary convertible
obligations $ 246,088 $ 390,494 $ 212,979
Exchange of subsidiary common
stock for common stock of
subsidiary subject to
redemption $ 40,500 $ - $ -
Sale of waste-recycling
facility $ - $ 112,553 $ -
Assumption by buyer of waste-
recycling facility debt $ - $ 109,862 $ -
Acquisition of asset under
capital lease $ - $ - $ 47,101
Fair value of assets of
acquired companies $1,210,319 $ 673,662 $ 521,558
Cash paid for acquired
companies (924,336) (383,685) (339,075)
Issuance of Company and
subsidiary common stock
and stock options for
acquired companies (4,543) (2,351) (18,990)
Issuance of long-term
obligations for acquired
companies - (26,560) (22,300)
Amount payable for acquired
company (5,111) - -
---------- ----------- -----------
Liabilities assumed of
acquired companies $ 276,329 $ 261,066 $ 141,193
========== =========== ===========
38PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
13. Fair Value of Financial Instruments
The Company's financial instruments consist mainly of cash and cash
equivalents, available-for-sale investments, accounts receivable, notes
payable and current maturities of long-term obligations, accounts
payable, long-term obligations, forward foreign exchange contracts, and
interest rate swaps. The carrying amount of these financial instruments,
with the exception of available-for-sale investments, long-term
obligations, forward foreign exchange contracts, and interest rate swaps,
approximates fair value due to their short-term nature.
Available-for-sale investments are carried at fair value in the
accompanying balance sheet. The fair values were determined based on
quoted market prices. See Note 2 for fair value information pertaining to
these financial instruments.
The carrying amount and fair value of the Company's long-term
obligations and off-balance-sheet financial instruments are as follows:
1997 1996
---------------------- -----------------------
Carrying Fair Carrying Fair
(In thousands) Amount Value Amount Value
-----------------------------------------------------------------------
Long-term obligations:
Convertible
obligations $1,660,839 $1,856,570 $1,379,467 $1,616,239
Other 82,068 83,898 170,875 171,722
---------- ---------- ---------- ----------
$1,742,907 $1,940,468 $1,550,342 $1,787,961
========== ========== ========== ==========
Off-balance-sheet
financial instruments:
Forward foreign
exchange contracts
receivable $ (1,731) $ (1,370)
Interest rate
swaps payable $ 1,324 $ 1,643
The fair value of long-term obligations was determined based on
quoted market prices and on borrowing rates available to the Company at
the respective year ends. The fair value of convertible obligations
exceeds the carrying amount primarily due to the market price of the
Company's or subsidiaries' common stock exceeding the conversion price of
the convertible obligations.
The Company had forward foreign exchange contracts of $46.6 million
and $19.7 million outstanding at year-end 1997 and 1996, respectively.
Additionally, the notional amount of the Company's interest rate swap
agreements was $61.3 million and $95.7 million at year-end 1997 and 1996,
respectively (Note 5). The fair value of such contracts and swap
agreements is the estimated amount that the Company would pay or receive
upon termination of the contract, taking into account the change in
foreign exchange rates on forward foreign exchange contracts, and market
interest rates and the creditworthiness of the counterparties on interest
rate swap agreements.
39PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
14. Business Segment and Geographical Information
The Company's business segments include the following:
Instruments: analytical, monitoring, process control and
imaging, inspection, and measurement instruments
Alternative-energy Systems: clean power generation,
biopesticides, intelligent traffic-control systems,
industrial-refrigeration systems, natural gas engines,
cooling and cogeneration units, turbines and compressors
Paper Recycling: paper recycling and papermaking
equipment, electroplating equipment
Biomedical Products: mammography and minimally invasive
breast-biopsy systems, general-purpose X-ray systems,
respiratory-care equipment, skin-incision devices, blood
coagulation-monitoring equipment, left ventricular-assist
systems, neurophysiology monitoring instruments,
biomedical materials, laser-based skin-care systems,
personal-care products
Industrial Outsourcing: environmental-liability
management, environmental cleanup, laboratory analysis,
metallurgical heat treating and fabrication
Advanced Technologies: process-detection systems, security
instruments, precision weighing and inspection equipment,
power-conversion instruments, programmable power
amplifiers, electronic test equipment, development of
avionics products, medical imaging equipment, and advanced
materials
40PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
14. Business Segment and Geographical Information (continued)
(In thousands) 1997 1996 1995
---------------------------------------------------------------------------
Business Segment Information
Revenues:
Instruments $1,592,314 $1,209,362 $ 782,662
Alternative-energy Systems 384,923 339,813 325,912
Paper Recycling 278,911 286,312 317,951
Biomedical Products 590,234 455,890 316,622
Industrial Outsourcing 305,508 273,894 210,503
Advanced Technologies 415,016 375,459 323,567
Intersegment Sales Elimination (a) (8,586) (8,172) (6,926)
---------- ---------- ----------
$3,558,320 $2,932,558 $2,270,291
========== ========== ==========
Income Before Income Taxes and
Minority Interest:
Instruments $ 235,674 $ 138,869 $ 113,651
Alternative-energy Systems 68,501 38,112 32,952
Paper Recycling 31,101 36,115 29,071
Biomedical Products 52,634 16,444 27,167
Industrial Outsourcing 13,896 17,709 21,215
Advanced Technologies 35,197 28,040 23,842
---------- ---------- ----------
Total Segment Income (b) 437,003 275,289 247,898
Corporate (c) 51,464 99,262 50,910
---------- ---------- ----------
$ 488,467 $ 374,551 $ 298,808
========== ========== ==========
Identifiable Assets:
Instruments $2,351,153 $1,924,400 $1,372,813
Alternative-energy Systems 873,407 617,154 695,849
Paper Recycling 431,860 296,582 238,537
Biomedical Products 992,719 691,836 596,467
Industrial Outsourcing 389,980 396,901 335,726
Advanced Technologies 466,004 389,586 301,059
Corporate (d) 290,746 824,785 245,888
---------- ---------- ----------
$5,795,869 $5,141,244 $3,786,339
========== ========== ==========
41PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
14. Business Segment and Geographical Information (continued)
(In thousands) 1997 1996 1995
--------------------------------------------------------------------------
Depreciation and Amortization:
Instruments $ 54,993 $ 44,233 $ 25,257
Alternative-energy Systems 25,109 24,253 25,186
Paper Recycling 7,438 5,333 5,228
Biomedical Products 20,659 15,148 9,626
Industrial Outsourcing 14,336 12,918 11,197
Advanced Technologies 11,704 11,952 8,104
Corporate 1,499 1,330 1,271
---------- ---------- ----------
$ 135,738 $ 115,167 $ 85,869
========== ========== ==========
Capital Expenditures:
Instruments $ 29,198 $ 19,134 $ 10,313
Alternative-energy Systems (e) 26,588 42,537 14,024
Paper Recycling 4,097 4,265 3,686
Biomedical Products 24,898 29,731 9,768
Industrial Outsourcing 17,936 18,710 19,499
Advanced Technologies 7,550 9,412 6,266
Corporate 1,338 752 460
---------- ---------- ----------
$ 111,605 $ 124,541 $ 64,016
========== ========== ==========
Geographical Information
Revenues:
United States $2,723,254 $2,171,879 $1,790,058
United Kingdom 417,072 312,522 156,863
Other Europe 558,828 536,496 353,595
Other 154,390 146,998 117,354
Transfers among geographical
areas (a) (295,224) (235,337) (147,579)
---------- ---------- ----------
$3,558,320 $2,932,558 $2,270,291
========== ========== ==========
42PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
14. Business Segment and Geographical Information (continued)
(In thousands) 1997 1996 1995
--------------------------------------------------------------------------
Income Before Income Taxes and
Minority Interest:
United States $ 339,871 $ 212,341 $ 201,815
United Kingdom 35,265 11,359 5,609
Other Europe 47,281 32,813 26,835
Other 14,586 18,776 13,639
---------- ---------- ----------
Total Segment Income (b) 437,003 275,289 247,898
Corporate (c) 51,464 99,262 50,910
---------- ---------- ----------
$ 488,467 $ 374,551 $ 298,808
========== ========== ==========
Identifiable Assets:
United States $4,165,197 $3,372,448 $2,939,286
United Kingdom 704,314 340,005 171,438
Other Europe 551,500 516,558 340,289
Other 104,087 87,449 89,439
Corporate (d) 270,771 824,784 245,887
---------- ---------- ----------
$5,795,869 $5,141,244 $3,786,339
========== ========== ==========
Export Sales Included in United
States Revenues Above (f) $ 593,850 $ 436,972 $ 340,736
========== ========== ==========
(a) Intersegment sales and transfers among geographical areas are accounted
for at prices that are representative of transactions with unaffiliated
parties.
(b) Segment income is income before corporate general and administrative
expenses, other income and expense, minority interest expense, and
income taxes.
(c) Includes corporate general and administrative expenses, other income
and expense, and gain on issuance of stock by subsidiaries.
(d) Primarily cash and cash equivalents, short- and long-term investments,
and property and equipment at the Company's Waltham, Massachusetts,
headquarters.
(e) Includes $36.9 million in 1996 for the construction of a coal-
beneficiation plant in Gillette, Wyoming.
(f) In general, export revenues are denominated in U.S. dollars.
43PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
15. Earnings per Share
Basic and diluted earnings per share were calculated as follows:
(In thousands except per share amounts) 1997 1996 1995
------------------------------------------------------------------------
Basic
Net income $239,328 $190,816 $139,582
-------- -------- --------
Weighted average shares 152,489 141,525 126,626
-------- -------- --------
Basic earnings per share $ 1.57 $ 1.35 $ 1.10
======== ======== ========
Diluted
Net income $239,328 $190,816 $139,582
Effect of:
Convertible debentures 18,814 23,523 15,561
Majority-owned subsidiaries'
dilutive securities (9,925) (8,084) (5,177)
-------- -------- --------
Income available to common
shareholders, as adjusted $248,217 $206,255 $149,966
-------- -------- --------
Weighted average shares 152,489 141,525 126,626
Effect of:
Convertible debentures 21,596 31,735 30,023
Stock options 1,997 2,345 1,913
-------- -------- --------
Weighted average shares, as adjusted 176,082 175,605 158,562
-------- -------- --------
Diluted earnings per share $ 1.41 $ 1.17 $ .95
======== ======== ========
The computation of diluted earnings per share for each period
excludes the effect of assuming the exercise of certain outstanding stock
options because the effect would be antidilutive. As of January 3, 1998,
there were 1,058,100 of such options outstanding, with exercise prices
ranging from $39.43 to $43.46 per share.
44PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Notes to Consolidated Financial Statements
16. Unaudited Quarterly Information
(In thousands except per share amounts)
1997(a) First Second Third Fourth
------------------------------------------------------------------------
Revenues $ 763,505 $ 875,016 $ 909,850 $1,009,949
Gross profit 296,365 358,538 374,041 412,368
Net income 52,058 56,158 61,859 69,253
Earnings per share:
Basic .35 .37 .41 .44
Diluted .31 .34 .36 .40
1996(b) First Second Third Fourth
------------------------------------------------------------------------
Revenues $ 652,385 $ 745,759 $ 739,981 $ 794,433
Gross profit 244,381 281,697 296,627 307,284
Net income 41,023 44,919 51,242 53,632
Earnings per share:
Basic .31 .32 .36 .36
Diluted .26 .28 .31 .32
(a) Results include nontaxable gains of $33.7 million, $15.2 million,
$18.6 million, and $12.6 million in the first, second, third, and
fourth quarters, respectively, from the issuance of stock by
subsidiaries.
(b)Results include nontaxable gains of $28.9 million, $43.5 million,
$38.5 million, and $15.7 million in the first, second, third, and
fourth quarters, respectively, from the issuance of stock by
subsidiaries.
45PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Report of Independent Public Accountants
To the Shareholders and Board of Directors
of Thermo Electron Corporation:
We have audited the accompanying consolidated balance sheet of Thermo
Electron Corporation (a Delaware corporation) and subsidiaries as of
January 3, 1998, and December 28, 1996, and the related consolidated
statements of income, shareholders' investment, and cash flows for each
of the three years in the period ended January 3, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Thermo Electron Corporation and subsidiaries as of January 3, 1998, and
December 28, 1996, and the results of their operations and their cash
flows for each of the three years in the period ended January 3, 1998, in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
February 18, 1998
46PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations.
For this purpose, any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," "seeks," "estimates," and similar expressions are
intended to identify forward-looking statements. There are a number of
important factors that could cause the results of the Company to differ
materially from those indicated by such forward-looking statements,
including those detailed immediately after this Management's Discussion
and Analysis of Financial Condition and Results of Operations under the
heading "Forward-looking Statements."
Overview
The Company develops and manufactures a broad range of products that
are sold worldwide. The Company expands the product lines and services it
offers by developing and commercializing its own core technologies and by
making strategic acquisitions of complementary businesses. The majority
of the Company's businesses fall into six broad markets: instruments,
alternative-energy, paper recycling, biomedical, industrial outsourcing,
and advanced technologies.
An important component of the Company's strategy is to establish
leading positions in its markets through the application of proprietary
technology, whether developed internally or acquired. A key contribution
to the growth of the Company's segment income (as defined in the results
of operations below), particularly over the last several years, has been
the ability to identify attractive acquisition opportunities, complete
those acquisitions, and derive a growing income contribution from the
newly acquired businesses as they are integrated into the Company's
business segments and their profitability improves.
The Company seeks to minimize its dependence on any specific product
or market by expanding and diversifying its portfolio of businesses and
technologies. Similarly, the Company's goal is to maintain a balance in
its businesses between those affected by various regulatory cycles and
those more dependent on the general level of economic activity. Although
the Company is diversified in terms of technology, product offerings, and
geographic markets served, the future financial performance of the
Company as a whole will be largely affected by the strength of worldwide
economies and the continued adoption and diligent enforcement of health,
safety, and environmental regulations and standards, among other factors.
The Company believes that maintaining an entrepreneurial atmosphere
is essential to its continued growth and development. In order to
preserve this atmosphere, the Company has adopted a strategy of spinning
out certain of its businesses into separate subsidiaries and having these
subsidiaries sell a minority interest to outside investors. The Company
believes that this strategy provides additional motivation and incentives
for the management of the subsidiaries through the establishment of
subsidiary-level stock option programs, as well as capital to support the
subsidiaries' growth. As a result of the sale of stock by subsidiaries,
47PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Overview (continued)
the issuance of stock by subsidiaries upon conversion of convertible
debentures, and similar transactions, the Company records gains that
represent the increase in the Company's net investment in the
subsidiaries and are classified as "Gain on issuance of stock by
subsidiaries" in the accompanying statement of income. These gains have
represented a substantial portion of the net income reported by the
Company in certain periods. The size and timing of these transactions are
dependent on market and other conditions that are beyond the Company's
control. Accordingly, there can be no assurance that the Company will be
able to generate gains from such transactions in the future.
Further, in October 1995, the Financial Accounting Standards Board
(FASB) issued an exposure draft of a Proposed Statement of Financial
Accounting Standards, "Consolidated Financial Statements: Policy and
Procedures" (the Proposed Statement). The Proposed Statement would
establish new rules for how consolidated financial statements should be
prepared. If the Proposed Statement is adopted, there would be
significant changes in the way the Company records certain transactions
of its controlled subsidiaries. Among those changes, any sale of the
stock of a subsidiary that does not result in a loss of control would be
accounted for as a transaction in equity of the consolidated entity with
no gain or loss being recorded. The exposure draft addresses the
consolidation issues in two parts: consolidation procedures, which
includes proposed rule changes affecting the Company's ability to
recognize gains on issuances of subsidiary stock, and consolidation
policy, which does not address accounting for such gains. During 1997,
the FASB decided to focus its efforts on the consolidation policy part of
the exposure draft and to consider resuming discussion on consolidation
procedures after completion of the efforts on consolidation policy. The
timing and content of any final statement are uncertain.
Results of Operations
1997 Compared With 1996
Sales in 1997 were $3,558.3 million, an increase of $625.8 million,
or 21%, over 1996. Segment income, excluding restructuring and other
nonrecurring costs, net, of $1.3 million in 1997 and $37.6 million in
1996, described below, increased 40% to $438.3 million in 1997 from
$312.9 million in 1996. (Segment income is income before corporate
general and administrative expenses, other income and expense, minority
interest expense, and income taxes.) Operating income, which includes
restructuring and other nonrecurring costs, net, increased 65% to $405.8
million in 1997 from $246.5 million in 1996.
Instruments
-----------
Sales from the Instruments segment were $1,592.3 million in 1997, an
increase of $383.0 million, or 32%, over 1996. Sales increased primarily
due to acquisitions made by Thermo Instrument, which added $407 million
of sales in 1997. The unfavorable effects of currency translation due to
the strengthening of the U.S. dollar relative to foreign currencies in
48PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
1997 Compared With 1996 (continued)
countries in which Thermo Instrument operates decreased revenues by $46.8
million in 1997. In addition, revenues increased in 1997 due to higher
sales at ThermoQuest's existing mass spectrometry business, partly as a
result of the continued success of a new product introduced in the first
quarter of 1996, and due to increased sales from Metrika Systems,
primarily as a result of increased sales in international markets at its
on-line raw-materials analyzer business. Revenues also increased at ONIX
Systems, primarily due to increased sales of industry-specific
instruments to the production segment of the oil and gas industry.
Revenues from Thermo Optek's existing businesses decreased slightly due
to the inclusion in 1996 of several large nonrecurring sales to the
Chinese and Japanese governments, a decrease in demand for elemental
products in Japan, and the elimination of certain unprofitable acquired
product lines, offset substantially by greater demand at one of its
business units.
Segment income margin (segment income margin is segment income as a
percentage of sales), excluding nonrecurring items, net, of $1.3 million
of income in 1997 and $3.5 million of costs in 1996, improved to 14.7% in
1997 from 11.8% in 1996. The improvement was primarily due to operating
margin improvement at certain of the Fisons businesses acquired in 1996
and increased sales of ThermoQuest's higher-margin mass spectrometry
products. This increase was offset in part by the inclusion of
lower-margin revenues at certain acquired businesses, including Life
Sciences, which recorded an adjustment to expense of $3.6 million
relating to the sale of inventories revalued at the date of acquisition
and, to a lesser extent, a decrease in segment income margin at
ThermoSpectra, primarily as a result of a one-time inventory write-off
and a change in sales mix at one of its business units. The 1996 period
included a charge of $2.0 million relating to the sale of inventories
revalued at the date of the acquisition of the Fisons businesses.
Nonrecurring income of $1.3 million in 1997 represents a $2.2 million
gain on the sale of a business by ThermoSpectra, offset in part by $0.9
million of severance costs for employees terminated during 1997 at one of
ThermoSpectra's business units. During 1996, the Company recorded
nonrecurring costs of $3.5 million, which represented the write-off of
acquired technology relating to the acquisition of the Fisons businesses
(Note 11).
Alternative-energy Systems
--------------------------
Sales from the Alternative-energy Systems segment were $384.9 million
in 1997, compared with $339.8 million in 1996. Within this segment,
revenues from Thermo Ecotek increased to $189.5 million in 1997 from
$154.3 million in 1996. Revenues from Thermo Ecotek's Thermo Trilogy
biopesticide subsidiary increased by $18.7 million to $21.4 million,
primarily due to the inclusion of revenues from two acquired businesses.
Thermo Ecotek's revenues in 1997 include $8.2 million for a contractual
settlement with a utility, pursuant to which Thermo Ecotek surrendered
its rights to a power sales agreement relating to a cogeneration facility
it had planned to develop and construct on Staten Island, New York. The
settlement, reached in 1993, called for Thermo Ecotek to refund $8.2
49PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
1997 Compared With 1996 (continued)
million to the utility should Thermo Ecotek construct and commence
operations of a plant on Staten Island prior to 2000. Thermo Ecotek had
deferred recognition of the refundable portion of the settlement pending
a decision concerning development of the plant. During 1997, Thermo
Ecotek determined that, due to economic conditions in the domestic energy
market, it would not proceed with development of a facility on Staten
Island. In addition, higher contractual energy rates at all of Thermo
Ecotek's facilities, except the Hemphill plant in New Hampshire,
contributed to higher revenues in 1997. Pursuant to Thermo Ecotek's
utility contracts for its four plants in California, there will be no
further contractual energy rate increases beginning in 1998. Revenues in
1996 from the Company's wholly owned waste-recycling facility in southern
California, which was sold in July 1996, were $9.2 million. Sales at
Peter Brotherhood declined to $39.6 million in 1997 from $54.4 million in
1996, primarily due to the disposal of certain business units, which
resulted in a $14.2 million decrease in revenues. The business units were
sold for a nominal loss. Sales from Thermo Power increased to $155.8
million in 1997 from $122.1 million in 1996, primarily due to $38.8
million of sales from Peek plc, acquired in November 1997, as well as
higher engine sales due to a $3.6 million nonrecurring order from one
customer, offset in part by lower demand for Thermo Power's remaining
product lines.
Segment income, excluding nonrecurring items, net, of $8.3 million of
income in 1997 and $4.4 million of costs in 1996, was $60.2 million in
1997, compared with $42.5 million in 1996. Thermo Ecotek's segment income
was $50.4 million in 1997, compared with $39.3 million in 1996. The
increase primarily resulted from $8.2 million of segment income from the
contractual settlement with a utility concerning the cancellation of a
power sales agreement and, to a lesser extent, higher contractual energy
rates. These increases were offset in part by a decrease in Thermo
Ecotek's segment income of $4.6 million in 1997 as a result of the
funding of certain reserves required in connection with a nonrecourse
lease agreement for its Woodland, California plant. The Woodland plant's
results were approximately breakeven in 1997 and are expected to remain
so for the foreseeable future. Segment income in 1996 from the Company's
waste-recycling facility, which was sold in July 1996, was $4.6 million.
Results from this facility, net of related interest expense (not included
in segment income), were approximately breakeven in 1996. During 1997,
the Company settled two legal cases in which it was a defendant,
concerning development of a proposed waste-to-energy facility and
development and construction of an alternative-energy facility. These
matters were settled for amounts less than the damages that had been
sought by the plaintiffs and less than the amounts that had been reserved
by the Company. As a result, in 1997, the Company reversed $9.7 million
of reserves previously established for these matters, which is included
in restructuring and other nonrecurring costs, net (Note 11). Segment
income at Thermo Power improved to $7.5 million from $1.1 million in
1996, primarily due to contributions from Peek and, to a lesser extent,
improved segment income at its engines and industrial refrigeration
businesses, due to increased engine revenues, lower warranty costs in
50PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
1997 Compared With 1996 (continued)
both businesses, as well as lower overhead as a result of consolidating
two engine manufacturing facilities. Excluding restructuring and other
nonrecurring costs of $1.4 million in 1997 and $4.4 million in 1996,
Peter Brotherhood was profitable in 1997, compared with a segment loss of
$2.5 million in 1996. The restructuring and other nonrecurring costs in
1997 related primarily to severance for employees terminated in 1997 and
in 1996 related primarily to the write-off of a nontrade receivable and
severance costs.
Two of Thermo Ecotek's plants are located in New Hampshire and sell
power to Public Service Company of New Hampshire (PSNH). In January 1997,
PSNH's parent company, Northeast Utilities, disclosed in a filing with
the Securities and Exchange Commission that if a proposed deregulation
plan for the New Hampshire electric utility industry were adopted, PSNH
could default on certain financial obligations and seek bankruptcy
protection. In February 1997, the New Hampshire Public Utilities
Commission (NHPUC) voted to adopt a deregulation plan, and in March 1997,
PSNH filed suit to block the plan. In March 1997, the federal district
court issued a temporary restraining order that prohibits the NHPUC from
implementing the deregulation plan as it affects PSNH, pending a
determination by the court on whether PSNH's claim could be heard by the
court. In April 1997, the court ruled that it could now hear the case and
ordered that the restraining order would continue indefinitely pending
the outcome of the suit. In addition, in March 1997, Thermo Ecotek, along
with a group of other biomass power producers, filed a motion with the
NHPUC seeking clarification of the NHPUC's proposed deregulation plan
regarding several issues, including purchase requirements and payment of
current rate order prices with respect to Thermo Ecotek's energy output.
An unfavorable resolution of this matter, including the bankruptcy of
PSNH, could have a material adverse effect on Thermo Ecotek's results of
operations and financial position.
Thermo Ecotek has continued to address issues concerning operations
at its Gillette, Wyoming, coal-beneficiation facility. Thermo Ecotek has
conducted extensive testing and operated the facility, producing
commercially salable product. For tax purposes, the facility must be
"placed in service" by June 30, 1998, to qualify for certain tax credits
on its output. Although the facility has operated and produced
commercially salable product, Thermo Ecotek has encountered certain
difficulties in achieving optimal and sustained operation. Thermo Ecotek
has addressed and resolved certain problems previously encountered,
including a fire at the facility and certain construction problems
relating to the flow of materials within the facility and the design and
operation of certain pressure-release equipment. Currently, Thermo Ecotek
is experiencing certain operational problems relating to tar residue
build-up within the system during production. Thermo Ecotek is actively
exploring solutions to this problem. Because the technology being
developed at the facility is new and untested, no assurance can be given
that other difficulties will not arise or that Thermo Ecotek will be able
to correct these problems and achieve optimal and sustained performance.
51PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
1997 Compared With 1996 (continued)
Paper Recycling
---------------
Sales in the Paper Recycling segment were $278.9 million in 1997,
compared with $286.3 million in 1996. A wholly owned subsidiary of the
Company recorded $58.0 million of revenues from a contract to design and
construct an office wastepaper de-inking facility in 1996. This contract
was substantially completed in the second quarter of 1996. Sales from
Thermo Fibertek increased 25% to $239.6 million from $192.2 million in
1996, primarily due to revenues of $52.7 million from acquired
businesses, principally Thermo Black Clawson, which was acquired in May
1997. Increases in revenues from Thermo Fibertek's accessories,
water-management, and other businesses were substantially offset by a
$11.3 million decrease in revenues at its recycling business due to a
continuing decrease in demand resulting from a severe drop in de-inked
pulp prices in 1996. In addition, the unfavorable effects of currency
translation reduced Thermo Fibertek's revenues by $6.3 million in 1997.
Sales from Thermo TerraTech's thermal-processing equipment business were
$25.3 million in 1997, compared with $25.5 million in 1996. In October
1997, this business was sold for a nominal loss. Sales of automated
electroplating equipment by Napco increased $3.4 million to $14.0
million, primarily due to higher demand.
Segment income margin, excluding restructuring and other nonrecurring
costs of $1.1 million in 1997, was 11.5% in 1997, compared with 12.6% in
1996. This decline primarily resulted from lower sales at Thermo
Fibertek's recycling business and lower-margin revenues from Thermo Black
Clawson. In addition, the Company recorded a segment loss in 1997 on the
contract to design and construct the office wastepaper de-inking facility
due to a reserve established in 1997 for disputed contractual items
relating to this facility. Thermo Fibertek recorded restructuring and
other nonrecurring costs of $1.1 million in 1997 relating to the
consolidation of the operations of two of its subsidiaries into the
operations of Thermo Black Clawson (Note 11).
Biomedical Products
-------------------
Sales from the Biomedical Products segment were $590.2 million in
1997, an increase of $134.3 million, or 29%, over 1996. Sales increased
due to the inclusion of $62.7 million in sales from acquired businesses,
increased demand at Trex Medical and Bird Medical Technologies, Inc., and
growth at ThermoLase's hair-removal business due to the opening of new
spas and higher revenues from physician and international licensing
arrangements. Rather than continuing to open additional domestic spas,
ThermoLase intends to concentrate its resources on attempting both to
increase the capacity utilization of its existing U.S. spas and to expand
its physicians' licensing program and international licensing
arrangements. These increases in revenues were offset in part by a $4.7
million decline in sales of Thermo Cardiosystems' left ventricular-assist
systems (LVAS), which Thermo Cardiosystems believes resulted from delayed
orders as customers await approval from the U.S. Food and Drug
Administration of its advanced electric LVAS. Although Thermo
Cardiosystems believes that such approval may be received during the
52PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
1997 Compared With 1996 (continued)
first six months of 1998, there can be no assurance that approval will
occur within the expected time period, or at all.
Segment income, excluding restructuring and other nonrecurring costs
of $0.5 million in 1997 and $29.7 million in 1996, increased to $53.2
million in 1997 from $46.1 million in 1996. This increase resulted
substantially from improvements at existing businesses, primarily at Bird
Medical, SensorMedics Corporation, and Trex Medical's existing businesses
and, to a lesser extent, the inclusion of segment income from acquired
businesses. This increase in segment income was offset in part by an
increase in segment loss at ThermoLase to $18.4 million in 1997 from $7.6
million in 1996, due to the early operations of its Spa Thira
hair-removal business, which has been operating below maximum capacity as
it seeks to develop its client base and refine its process and operating
procedures, and by pre-opening costs incurred in connection with new spa
openings. ThermoLase believes that improvements in the efficacy and
duration of its SoftLight(SM) hair-removal process are critical elements
in its ability to improve the profitability of its spas. In 1998, the
effect of operating each spa below maximum capacity, as ThermoLase
develops its client base and expands its product lines, will continue to
have a negative effect on ThermoLase's segment income. Thermo
Cardiosystems' profitability declined by $4.7 million primarily due to a
decrease in LVAS revenues. Restructuring and other nonrecurring costs of
$0.5 million in 1997 represent costs to close certain foreign sales
offices at certain of the Company's wholly owned businesses.
Restructuring and other nonrecurring costs of $29.7 million in 1996
included a write-off of $12.7 million of cost in excess of net assets of
acquired company and certain other intangible assets at Thermedics'
Corpak subsidiary, $11.4 million of costs incurred by SensorMedics
primarily as a result of its merger with the Company, $4.9 million for
Thermo Cardiosystem's write-off of acquired technology relating to a 1996
acquisition, and $0.7 million of other costs (Note 11).
Industrial Outsourcing
----------------------
Sales in the Industrial Outsourcing segment were $305.5 million in
1997, an increase of $31.6 million, or 12%, over 1996. Revenues from
Thermo TerraTech's remediation and recycling services increased to $136.5
million in 1997 from $121.2 million in 1996, primarily due to the
inclusion of $22.9 million of sales from acquired businesses, offset in
part by a $6.4 million decrease in revenues at one of Thermo
Remediation's business units resulting from a decline in the number of
contracts in process. In addition, revenues from Thermo Remediation's
soil-remediation services decreased 18% to $18.5 million, resulting from
lower volumes of soil processed due to overcapacity in the industry and,
to a lesser extent, competitive pricing pressures early in the year.
Revenues from consulting and design services increased $3.6 million due
to the inclusion of $12.8 million from acquired businesses, offset in
part by a decrease in revenues due to the completion of two large
contracts. Sales of metallurgical services increased to $54.2 million in
1997 from $45.7 million in 1996, due to increased demand for existing
services and the inclusion of $3.3 million of sales from an acquired
business.
53PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
1997 Compared With 1996 (continued)
Segment income, excluding restructuring and other nonrecurring costs
of $7.9 million in 1997 and $0.1 million in 1996, was $21.7 million in
1997, compared with $17.8 million in 1996. Segment income improved in
1997 due to the effect in 1996 of costs incurred at Thermo TerraTech to
reduce redundancies at regional laboratories, and by costs incurred at
Thermo EuroTech in 1996 relating primarily to the settlement of several
contract disputes, as well as the impact of severe winter weather in
early 1996, which affected all phases of Thermo EuroTech's business. The
effect of these improvements was offset in part by a decline in segment
income from soil-remediation services due to lower sales as discussed
above and lower segment income from consulting and design services due to
the completion of two large contracts. Restructuring and other
nonrecurring costs in 1997 included $7.8 million to write down certain
capital equipment and intangible assets, including cost in excess of net
assets of acquired companies, in response to a severe downturn in Thermo
Remediation's soil-remediation business. This resulted in the closure of
two soil-remediation sites during 1997 and reduced cash flows at certain
other sites, such that analysis indicated that the investment in these
assets would not be recovered (Note 11).
Advanced Technologies
---------------------
Sales from the Advanced Technologies segment were $415.0 million in
1997, compared with $375.5 million in 1996. Sales at Thermo Coleman were
$156.2 million in 1997, compared with $144.2 million in 1996. This
increase resulted primarily from its Thermo Information Solutions
subsidiary's contract to supply kiosk units and, to a lesser extent,
higher integrated document management revenues and sales of $3.3 million
from acquired businesses. These increases in revenues were offset in part
by a decrease in revenues from government contracts. Sales of kiosk units
increased to $16.5 million in 1997 from $1.4 million in 1996. Thermo
Information Solutions intends to exit this business in 1998 due to
inherently low margins, lower than expected orders from its sole
customer, and the absence of other orders. Thermo Coleman experienced a
decline in backlog totaling $19.4 million in 1997. Thermo Coleman's
backlog at any certain date may not be indicative of future demand for
its products or services. Sales at Thermo Sentron increased to $78.7
million in 1997 from $70.0 million in 1996, primarily due to higher
demand and, to a lesser extent, sales of $4.2 million from acquired
businesses, offset in part by the unfavorable effects of currency
translation. Sales at Thermedics Detection increased 17% to $51.3 million
in 1997, primarily due to sales of its Alexus systems in connection with
the completion of a mandated product-line upgrade from The Coca-Cola
Company to its existing installed base, and $3.2 million of sales of
explosives-detection systems to the U.S. Federal Aviation Administration.
Thermedics Detection expects that sales of its Alexus systems will slow
in 1998 due to the completion of the mandated upgrade for The Coca-Cola
Company in 1997 and a decrease in demand for new installations. Sales at
Thermo Voltek declined to $44.6 million in 1997 from $48.5 million in
1996, primarily due to lower demand for electrostatic compatibility (EMC)
test products, resulting from the declining influence of IEC 801, the
54PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
1997 Compared With 1996 (continued)
European Union directive on electromagnetic compatibility that took
effect January 1, 1996, and, to a lesser extent, a decline in the
component-reliability market for electrostatic discharge test equipment
that resulted from a slowdown in capital expenditures by the
semiconductor industry. These decreases in revenues at Thermo Voltek were
offset in part by sales of $5.8 million from acquired businesses. Sales
from ThermoTrex's business units, including Trex Communications,
increased $12.7 million in 1997 as a result of $6.9 million of sales from
an acquired business at Trex Communications and, to a lesser extent,
increased revenues from government contracts.
Segment income margin, excluding restructuring and other nonrecurring
costs of $1.4 million in 1997, was 8.8% in 1997, compared with 7.5% in
1996. This improvement resulted from increased sales and the impact in
the 1996 period of charges for inventory obsolescence and other
adjustments at Thermedics Detection, as well as a loss in the 1996 period
at ThermoTrex's advanced-technology research center due to cost overruns
and higher expenses for new lines of business. The improvement was offset
in part by a decrease in profitability at Thermo Voltek and lower margins
at Thermo Coleman as a result of increased sales of low-margin kiosk
units and reduced revenues from government contracts. Restructuring and
other nonrecurring costs of $1.4 million in 1997 were recorded by
ThermoTrex for the write-off of acquired technology relating to an
acquisition (Note 11).
Gain on Issuance of Stock by Subsidiaries
-----------------------------------------
As a result of the sale of stock by subsidiaries and issuance of
stock by subsidiaries upon conversion of convertible debentures, the
Company recorded gains of $80.1 million in 1997 and $126.6 million in
1996. See Notes 1 and 9 for a more complete description of these
transactions. Minority interest expense increased to $74.4 million in
1997 from $72.9 million in 1996. Minority interest expense includes $19.0
million in 1997 and $38.2 million in 1996 related to gains recorded by
the Company's majority-owned subsidiaries as a result of the sale of
stock and the issuance of stock upon conversion of convertible
debentures, by their subsidiaries.
Contingent Liabilities and Other Matters
----------------------------------------
At year-end 1997, the Company was contingently liable with respect to
certain lawsuits (Note 6).
The Company is currently assessing the potential impact of the year
2000 on the processing of date-sensitive information by the Company's
computerized information systems and on products sold as well as products
purchased by the Company. The Company believes that its internal
information systems and current products are either year 2000 compliant
or will be so prior to the year 2000 without incurring material costs.
There can be no assurance, however, that the Company will not experience
unexpected costs and delays in achieving year 2000 compliance for its
internal information systems and current products, which could result in
a material adverse effect on the Company's future results of operations.
55PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
1997 Compared With 1996 (continued)
The Company is presently assessing the effect that the year 2000
problem may have on its previously sold products. The Company is also
assessing whether its key suppliers are adequately addressing this issue
and the effect this might have on the Company. The Company has not
completed its analysis and is unable to conclude at this time that the
year 2000 problem as it relates to its previously sold products and
products purchased from key suppliers is not reasonably likely to have a
material adverse effect on the Company's future results of operations.
1996 Compared With 1995
Sales in 1996 were $2,932.6 million, an increase of $662.3 million,
or 29%, over 1995. Segment income, excluding restructuring and other
nonrecurring costs of $37.6 million in 1996 and $21.9 million in 1995,
described below, increased 16% to $312.9 million in 1996 from $269.8
million in 1995. Operating income, which includes restructuring and other
nonrecurring costs, was $246.5 million in 1996, compared with $225.2
million in 1995.
Instruments
-----------
Sales from the Instruments segment were $1,209.4 million in 1996, an
increase of $426.7 million, or 55%, over 1995. Sales increased primarily
due to acquisitions made by Thermo Instrument, which added $404 million
of sales in 1996. The unfavorable effects of currency translation due to
the strengthening of the U.S. dollar relative to foreign currencies in
countries in which Thermo Instrument operates decreased revenues by $21.8
million in 1996. The remainder of the increase resulted primarily from
greater demand at Thermo Instrument's mass spectrometry business as a
result of recently introduced products and, to a lesser extent, greater
demand at its Fourier transform infrared spectrometry business.
Segment income margin, excluding restructuring and other nonrecurring
costs of $3.5 million in 1996, declined to 11.8% in 1996 from 14.5% in
1995, primarily due to lower margins at acquired businesses.
Restructuring and other nonrecurring costs of $3.5 million represents the
write-off of acquired technology relating to the acquisition of the
Fisons businesses (Note 11).
Alternative-energy Systems
--------------------------
Sales from the Alternative-energy Systems segment were $339.8 million
in 1996, compared with $325.9 million in 1995. Within this segment,
revenues from Thermo Ecotek were $154.3 million in 1996, compared with
$141.4 million in 1995. This increase resulted primarily from higher
contractual energy rates at all of Thermo Ecotek's facilities, except the
Hemphill plant in New Hampshire; increased revenues at the Delano plants
in California resulting from fewer days of scheduled and unscheduled
outages; and an acquisition that added $2.6 million in revenues. Revenues
from the Company's waste-recycling facility in southern California were
$9.2 million in 1996, compared with $20.8 million in 1995. This facility
was sold in July 1996. Sales at Peter Brotherhood declined 3% to $54.4
million as a result of lower demand for steam turbines. Sales from Thermo
Power were $122.1 million in 1996, compared with $108.4 million in 1995.
56PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
1996 Compared With 1995 (continued)
This increase resulted primarily from increased demand for
custom-designed industrial refrigeration packages, remanufactured
commercial cooling equipment, and the inclusion of revenues from
lift-truck engines, offset in part by declines in revenues from
marine-engine products and rental equipment.
Segment income, excluding restructuring and other nonrecurring costs
of $4.4 million in 1996 and $11.5 million in 1995, was $42.5 million in
1996, compared with $44.5 million in 1995. Thermo Ecotek had segment
income of $39.3 million in 1996, compared with $34.6 million in 1995.
This improvement results from increased revenues and, to a lesser extent,
lower fuel costs. Segment income from the Company's waste-recycling
facility, which was sold in July 1996, excluding restructuring and other
nonrecurring costs of $11.5 million in 1995, was $4.6 million in 1996 and
$5.9 million in 1995. Results from this facility, net of related interest
expense (not included in segment income), were approximately at the
breakeven level for both periods. Segment income at Thermo Power declined
by $3.9 million to $1.1 million in 1996 due to a change in sales mix, a
cost increase in one of the major components of its industrial
refrigeration packages, higher depreciation expense at NuTemp, and higher
warranty expenses for marine-engine products and at NuTemp. Peter
Brotherhood incurred a segment loss of $2.5 million in 1996, excluding
restructuring and other nonrecurring costs of $4.4 million, compared with
a loss of $1.1 million in 1995. The decline resulted from increased costs
to complete jobs in process as well as competitive pricing pressures.
Peter Brotherhood recorded restructuring and other nonrecurring costs of
$4.4 million in 1996 primarily for the write-off of a nontrade receivable
and severance costs.
Restructuring and other nonrecurring costs of $11.5 million in 1995
represents the Company's net investment in a waste-recycling facility in
southern California that contracted to process waste for San Diego County
(the County) under a long-term service agreement. During the third
quarter of 1995, the County paid the Company less than the amount due
under the long-term service agreement, and in October 1995, the Company
notified the County that the County was in default of the service
agreement. The County was a party to the financing arrangements for the
facility and was also in default of certain terms of such arrangements.
As a result of the County's default under the service agreement and
financing arrangements, the Company concluded that it would be unable to
recover its investment in the facility. In 1996, in settlement of these
matters, the facility was sold to the County for a nominal amount plus
the County's assumption of the facility debt.
Paper Recycling
---------------
Sales in the Paper Recycling segment were $286.3 million in 1996,
compared with $318.0 million in 1995. A wholly owned subsidiary of the
Company recorded revenues from a contract to design and construct an
office wastepaper de-inking facility of $58.0 million in 1996 and $77.0
million in 1995. This contract was substantially completed in the second
quarter of 1996. Sales from Thermo Fibertek declined 7%, to $192.2
million in 1996. Thermo Fibertek's revenues under a subcontract from
57PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
1996 Compared With 1995 (continued)
Thermo Electron to supply equipment and services for the office
wastepaper de-inking facility described above decreased $12.9 million.
Revenues from Thermo Fibertek's recycling business declined an additional
$7.5 million due to lower demand resulting from a severe drop in de-inked
pulp prices, offset in part by $2.2 million of revenues from a business
acquired during 1996. Revenues from Thermo Fibertek's accessories
business increased $8.8 million primarily due to increased demand. The
unfavorable effects of currency translation reduced Thermo Fibertek's
revenues by $1.7 million in 1996. Sales of Thermo TerraTech's
thermal-processing equipment increased $8.3 million in 1996 due to
increased demand, while sales of automated electroplating equipment by
the Company's wholly owned Napco subsidiary declined $6.4 million in
1996.
Segment income margin, excluding restructuring and other nonrecurring
costs of $7.5 million in 1995, was 12.6% in 1996, compared with 11.5% in
1995. This improvement resulted primarily from a nonrecurring payment
received under the office wastepaper de-inking facility contract in 1996,
which represented certain cost savings on the contract, and increased
revenues from Thermo TerraTech's thermal-processing equipment business
from depressed levels in 1995. Restructuring and other nonrecurring costs
of $7.5 million in 1995 represent the write-off of cost in excess of net
assets of acquired companies, of which $5.0 million was recorded by
Thermo TerraTech, and $2.5 million was recorded by Napco (Note 11).
Biomedical Products
-------------------
Sales in the Biomedical Products segment were $455.9 million in 1996,
an increase of $139.3 million, or 44%, over 1995. Sales increased due to
the inclusion of $111.7 million in sales from acquired businesses, as
well as increased demand for certain products at Trex Medical, Thermo
Cardiosystems' LVAS, and ThermoLase's hair-removal business.
Segment income, excluding restructuring and other nonrecurring costs
of $29.7 million in 1996, increased to $46.1 million in 1996 from $27.2
million in 1995. This improvement resulted primarily from the inclusion
of segment income from acquired businesses and increased sales at
existing businesses. Restructuring and other nonrecurring costs of $29.7
million in 1996 included a write-off of $12.7 million of cost in excess
of net assets of acquired company and certain other intangible assets at
Thermedics' Corpak subsidiary, $11.4 million of costs incurred by
SensorMedics primarily as a result of its merger with the Company, $4.9
million for Thermo Cardiosystem's write-off of acquired technology
relating to a 1996 acquisition, and $0.7 million of other costs (Note
11).
Industrial Outsourcing
----------------------
Sales in the Industrial Outsourcing segment were $273.9 million in
1996, an increase of $63.4 million, or 30%, over 1995. Revenues from
Thermo TerraTech's remediation and recycling services increased to $121.2
million in 1996 from $67.5 million in 1995, primarily due to the
inclusion of $53.9 million in revenues from acquired businesses. This
increase was offset in part by a decline in revenues from soil-
58PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
1996 Compared With 1995 (continued)
remediation services of $4.9 million in 1996 due to declines in the
volume of soil processed as a result of more relaxed regulatory standards
in several states and competitive pricing pressures; and by a decline in
revenues at Thermo TerraTech's radiochemistry laboratory businesses
reflecting a reduction in spending at the U.S. Department of Energy and
reduced federal government budget appropriations. Sales of metallurgical
services were $45.7 million in 1996, compared with $42.8 million in 1995.
Sales increased due to increased demand for existing services, offset in
part by a decline of $2.9 million resulting from the closing of a small
metallurgical services division in 1995.
Segment income, excluding restructuring and other nonrecurring costs
of $0.1 million in 1996 and $2.0 million in 1995, was $17.8 million in
1996, compared with $23.2 million in 1995. Additional segment income from
acquisitions was more than offset by costs incurred at Thermo TerraTech
to reduce redundancies at regional laboratories and by costs incurred at
Thermo EuroTech relating primarily to the settlement of several contract
disputes, as well as the impact of severe winter weather in early 1996,
which affected all phases of Thermo EuroTech's business, and by the
effect of lower sales and income from the traditionally higher-margin
soil-remediation services. Restructuring and other nonrecurring costs of
$2.0 million in 1995 were recorded in connection with closing a
metallurgical services division.
Advanced Technologies
---------------------
Sales from the Advanced Technologies segment were $375.5 million in
1996, compared with $323.6 million in 1995. Sales increased $73.5 million
due to the inclusion of sales from acquired businesses. These increases
were offset in part by declines in revenues due to lower U.S. government
contract funding at Thermo Coleman and ThermoTrex due to increased
competition for government research and development funding.
Segment income, excluding restructuring and other nonrecurring costs
of $1.0 million in 1995, was $28.0 million in 1996, compared with $24.8
million in 1995. Segment income provided by acquired companies and
additional income from certain businesses were offset in part by lower
segment income at Thermo Coleman, as a result of lower revenues, and by a
loss incurred at ThermoTrex's advanced-technology research center due to
cost overruns and higher expenses for new lines of business.
Restructuring and other nonrecurring costs in 1995 primarily represent
the write-off of intangible assets at ThermoTrex's East Coast division
which was closed.
Gain on Issuance of Stock by Subsidiaries
-----------------------------------------
As a result of the sale of stock by subsidiaries, the issuance of
stock by subsidiaries upon conversion of convertible debentures, and
similar transactions, the Company recorded gains of $126.6 million in
1996 and $80.8 million in 1995. See Notes 1 and 9 for a more complete
description of these transactions. Minority interest expense increased to
$72.9 million in 1996 from $60.5 million in 1995. Minority interest
expense includes $38.2 million in 1996 and $28.6 million in 1995 related
to gains recorded by the Company's majority-owned subsidiaries as a
result of the sale of stock and the issuance of stock upon conversion of
convertible debentures, by their subsidiaries.
59PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
Consolidated working capital was $2,002.0 million at January 3, 1998,
compared with $2,218.6 million at December 28, 1996. Included in working
capital were cash, cash equivalents, and short-term available-for-sale
investments of $1,522.7 million at January 3, 1998, compared with
$1,846.3 million at December 28, 1996. In addition, the Company had
long-term available-for-sale investments of $63.3 million at January 3,
1998, compared with $94.4 million at December 28, 1996. Of the total
$1,586.0 million of cash, cash equivalents, and short- and long-term
available-for-sale investments at January 3, 1998, $1,333.1 million was
held by the Company's majority-owned subsidiaries and the balance was
held by the Company and its wholly owned subsidiaries.
During 1997, $269.0 million of cash was provided by operating
activities. Cash of $86.5 million was used to fund an increase in
accounts receivable, principally at Trex Medical, Thermo Instrument, and
Thermo TerraTech. The increase in receivables at Trex Medical resulted
primarily from increased sales and, to a lesser extent, longer customer
payment patterns due to higher international sales and a shift to direct
sales at a subsidiary. The increase in receivables at Thermo Instrument
resulted from increased shipments in the fourth quarter at ThermoQuest
and a competitive trend to commercial terms of 30 days from ThermoQuest's
past practice of obtaining deposits on certain systems. The increase in
receivables at Thermo TerraTech resulted from higher revenues at one
business unit and a delay in the pursuit of collections at a second,
which Thermo TerraTech expects to address in 1998 by expanding collection
efforts. In addition, cash of $61.7 million was used to reduce other
current liabilities, primarily for taxes and certain exit costs relating
to acquisitions (Note 3).
The Company's primary investing activities, excluding
available-for-sale investments activity, included acquisitions, capital
expenditures, and the sale of certain businesses and property, plant, and
equipment. During 1997, the Company expended $849.1 million, net of cash
acquired, for acquisitions and received a $36.1 million refund relating
to a 1996 acquisition (Note 3). In addition, the Company sold certain
businesses for net proceeds of $27.1 million. The Company expended $111.6
million for purchases of property, plant, and equipment and received
proceeds of $15.6 million from the sale of property, plant, and
equipment.
The Company's financing activities provided $237.8 million of cash in
1997. Net proceeds from the issuance of Company and subsidiary common
stock totaled $164.9 million, and net proceeds from the issuance of
long-term obligations totaled $490.8 million. In addition, the Company
repaid long-term obligations of $78.3 million.
During 1997, an aggregate principal amount of $246.1 million of
Company and subsidiary convertible obligations were converted into shares
of Company and subsidiary common stock.
In January 1998, Thermo Instrument issued and sold $250.0 million
principal amount of 4% subordinated convertible debentures due 2005 for
net proceeds of $243.8 million.
60PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources (continued)
The Company intends, for the foreseeable future, to maintain at least
80% ownership of its Thermo Instrument and Thermo Ecotek subsidiaries,
which is required in order to continue to file a consolidated federal
income tax return with these subsidiaries. In addition, the Company
intends to maintain greater than 50% ownership of its other
majority-owned subsidiaries so that it may continue to consolidate these
subsidiaries for financial reporting purposes. This may require the
purchase by the Company of additional shares or convertible debentures of
these companies from time to time as the number of outstanding shares
issued by these companies increases, either in the open market or
directly from the subsidiaries. See Note 5 for a description of
outstanding convertible debentures issued by Thermo Instrument and Thermo
Ecotek. In addition, at January 3, 1998, Thermo Instrument and Thermo
Ecotek had outstanding stock options for 4,365,000 shares and 1,267,000
shares, respectively, exercisable at various prices and subject to
certain vesting schedules. The Company's other majority-owned
subsidiaries also have outstanding stock options, convertible debentures,
or both.
During 1997, the Company and its majority-owned subsidiaries expended
$311.1 million to purchase common stock and debentures of certain of the
Company's majority-owned subsidiaries. These purchases were made pursuant
to authorizations by the Company's and certain majority-owned
subsidiaries' Boards of Directors. As of January 3, 1998, $13.1 million
and $35.0 million remained under the Company's and its majority-owned
subsidiaries' authorizations, respectively. Subsequent to January 3,
1998, the Company and a majority-owned subsidiary received additional
authorizations of $50.0 million and $10.0 million, respectively. The
amount of purchases in a given reporting period may vary significantly.
The Company has no material commitments for purchases of property,
plant, and equipment and expects that, for 1998, expenditures on such
items will approximate the 1997 level. Since January 3, 1998, a
majority-owned subsidiary expended $4.5 million on the acquisition of a
business and as of March 10, 1998, the Company's majority-owned
subsidiaries had agreements or nonbinding letters of intent to acquire
businesses for a total cost of approximately $67.5 million. Proposed
acquisitions of new businesses are subject to various conditions to
closing, and there can be no assurance that all proposed transactions
will be consummated.
As discussed above, a substantial percentage of the Company's
consolidated cash and investments is held by subsidiaries that are not
wholly owned by the Company. This percentage may vary significantly over
time. Pursuant to the Thermo Electron Corporate Charter (the Charter), to
which each of the majority-owned subsidiaries of the Company is a party,
the combined financial resources of Thermo Electron and its subsidiaries
allow the Company to provide banking, credit, and other financial
services to its subsidiaries so that each member of the Thermo Electron
group of companies may benefit from the financial strength of the entire
organization. Toward that end, the Charter states that each member of the
group may be required to provide certain credit support to the
61PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources (continued)
consolidated entity. This credit may rank junior, pari passu with, or
senior in priority to payment of the other indebtedness of these members.
Nonetheless, the Company's ability to access assets held by its
majority-owned subsidiaries through dividends, loans, or other
transactions is subject in each instance to a fiduciary duty owed to the
minority shareholders of the relevant subsidiary. In addition, dividends
received by Thermo Electron from a subsidiary that does not consolidate
with Thermo Electron for tax purposes are subject to tax. Therefore,
under certain circumstances, a portion of the Company's consolidated cash
and short-term investments may not be readily available to Thermo
Electron or certain of its subsidiaries.
Market Risk
The Company is exposed to market risk from changes in foreign
currency exchange rates, interest rates, and equity prices, which could
affect its future results of operations and financial condition. The
Company manages its exposure to these risks through its regular operating
and financing activities. Additionally, the Company uses short-term
forward contracts to manage certain exposures to foreign currencies. The
Company enters into forward foreign exchange contracts to hedge firm
purchase and sale commitments denominated in currencies other than its
subsidiaries' local currencies. The Company does not engage in extensive
foreign currency hedging activities; however, the purpose of the
Company's foreign currency hedging activities is to protect the Company's
local currency cash flows related to these commitments from fluctuations
in foreign exchange rates. The Company's forward foreign exchange
contracts principally hedge transactions denominated in U.S. dollars,
British pounds sterling, French francs, and Japanese yen. Gains and
losses arising from forward contracts are recognized as offsets to gains
and losses resulting from the transactions being hedged. The Company does
not enter into speculative foreign currency agreements.
Foreign Currency Exchange Rates
The fair value of forward foreign exchange contracts is sensitive to
changes in foreign currency exchange rates. The fair value of forward
foreign exchange contracts is the estimated amount that the Company would
pay or receive upon termination of the contract, taking into account the
change in foreign exchange rates. A 10% depreciation in year-end 1997
foreign currency exchange rates related to the Company's contracts would
result in a decrease in the unrealized gain on forward foreign exchange
contracts of $3 million. Since the Company uses forward foreign exchange
contracts as hedges of firm purchase and sale commitments, the unrealized
gain or loss on forward foreign currency exchange contracts resulting
from changes in foreign currency exchange rates would be offset by a
corresponding change in the fair value of the hedged item.
The Company generally views its investment in foreign subsidiaries
with a functional currency other than the Company's reporting currency as
long-term. The Company's investment in foreign subsidiaries is sensitive
to fluctuations in foreign currency exchange rates. The functional
62PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Market Risk (continued)
currencies of the Company's foreign subsidiaries are principally
denominated in British pounds sterling, French francs, and German
deutsche marks. The effect of a change in foreign exchange rates on the
Company's net investment in foreign subsidiaries is recorded as a
separate component of shareholders' investment. A 10% depreciation in
year-end 1997 functional currencies, relative to the U.S. dollar, would
result in a $27 million reduction of shareholders' investment.
Interest Rates
Certain of the Company's short- and long-term available-for-sale
investments, long-term obligations, and interest rate swap agreements are
sensitive to changes in interest rates. Interest rate changes would
result in a change in the fair value of these financial instruments due
to the difference between the market interest rate and the rate at the
date of purchase or issuance of the financial instrument. A 10% decrease
in year-end 1997 market interest rates would result in a negative impact
of $18 million on the net fair value of the Company's interest-sensitive
financial instruments.
Equity Prices
The Company's available-for-sale investment portfolio includes equity
securities that are sensitive to fluctuations in price. In addition, the
Company's and its subsidiaries' convertible obligations are sensitive to
fluctuations in the price of Company or subsidiary common stock into
which the obligations are convertible. Changes in equity prices would
result in changes in the fair value of the Company's available-for-sale
investments and convertible obligations due to the difference between the
current market price and the market price at the date of purchase or
issuance of the financial instrument. A 10% increase in the year-end 1997
market equity prices would result in a negative impact of $96 million on
the net fair value of the Company's price-sensitive equity financial
instruments.
63PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Forward-looking Statements
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company wishes to caution
readers that the following important factors, among others, in some cases
have affected, and in the future could affect, the Company's actual
results and could cause its actual results in 1998 and beyond to differ
materially from those expressed in any forward-looking statements made
by, or on behalf of, the Company.
Risks Associated with Acquisition Strategy. One of the Company's
principal growth strategies is to supplement its internal growth with the
acquisition of businesses and technologies that complement or augment the
Company's existing product lines. Certain businesses recently acquired by
the Company have had low levels of profitability. In addition, businesses
that the Company may seek to acquire in the future may also be marginally
profitable or unprofitable. In order for any acquired businesses to
achieve the level of profitability desired by the Company, the Company
must successfully change operations and improve market penetration. No
assurance can be given that the Company will be successful in this
regard. In addition, promising acquisitions are difficult to identify and
complete for a number of reasons, including competition among prospective
buyers, the need for regulatory approvals, including antitrust approvals,
and the high valuations of businesses resulting from historically high
stock prices in many countries. Acquisitions completed by the Company may
be made at substantial premiums over the fair value of the net assets of
the acquired companies. There can be no assurance that the Company will
be able to complete pending or future acquisitions or that the Company
will be able to successfully integrate any acquired businesses into its
existing business or make such businesses profitable. In order to finance
any such acquisitions, it may be necessary for the Company to raise
additional funds either through public or private financings. Any equity
or debt financing, if available at all, may be on terms which are not
favorable to the Company and may result in dilution to the Company's
shareholders.
Risks Associated with Spinout of Subsidiaries. The Company has
adopted a strategy of spinning out certain of its businesses into
separate subsidiaries and having these subsidiaries sell a minority
interest to outside investors. As a result of the sale of stock by
subsidiaries, the issuance of stock by subsidiaries upon conversion of
convertible debentures, and similar transactions, the Company records
gains that represent the increase in the Company's net investment in the
subsidiaries. These gains have represented a substantial portion of the
net income reported by the Company in certain periods. The size and
timing of these transactions are dependent on market and other conditions
that are beyond the Company's control. Accordingly, there can be no
assurance that the Company will be able to generate gains from such
transactions in the future.
Further, in October 1995, the Financial Accounting Standards Board
(FASB) issued an exposure draft of a Proposed Statement of Financial
Accounting Standards, "Consolidated Financial Statements: Policy and
Procedures" (the Proposed Statement). The Proposed Statement would
establish new rules for how consolidated financial statements should be
64PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Forward-looking Statements
prepared. If the Proposed Statement is adopted, there would be
significant changes in the way the Company records certain transactions
of its controlled subsidiaries. Among those changes, any sale of the
stock of a subsidiary that does not result in a loss of control would be
accounted for as a transaction in the equity of the consolidated entity
with no gain or loss being recorded. The exposure draft addresses the
consolidation issues in two parts: consolidation procedures, which
includes proposed rule changes affecting the Company's ability to
recognize gains on issuances of subsidiary stock, and consolidation
policy, which does not address accounting for such gains. During 1997,
the FASB decided to focus its efforts on the consolidation policy part of
the exposure draft and to consider resuming discussion on consolidation
procedures after completion of the efforts on consolidation policy. The
timing and content of any final statement are uncertain.
Competition. The Company encounters and expects to continue to
encounter significant competition in the sale of its products and
services. The Company's competitors include a number of large
multinational corporations, some of which may be able to adapt more
quickly to new or emerging technologies and changes in customer
requirements, or to devote greater resources to the promotion and sale of
their products than the Company. Competition could increase if new
companies enter the market or if existing competitors expand their
product lines or intensify efforts within existing product lines. There
can be no assurance that the Company's current products, products under
development, or ability to develop new technologies will be sufficient to
enable it to compete effectively.
Risks Associated with International Operations. International
revenues account for a substantial portion of the Company's revenues, and
the Company intends to continue to expand its presence in international
markets. International revenues are subject to a number of risks,
including the following: fluctuations in exchange rates may affect
product demand and adversely affect the profitability in U.S. dollars of
products and services provided by the Company in foreign markets where
payment for the Company's products and services is made in the local
currency; agreements may be difficult to enforce and receivables
difficult to collect through a foreign country's legal system; foreign
customers may have longer payment cycles; foreign countries may impose
additional withholding taxes or otherwise tax the Company's foreign
income, impose tariffs, or adopt other restrictions on foreign trade;
U.S. export licenses may be difficult to obtain; and the protection of
intellectual property in foreign countries may be more difficult to
enforce. There can be no assurance that any of these factors will not
have a material adverse impact on the Company's business and results of
operations.
Rapid and Significant Technological Change and New Products. The
markets for the Company's products are characterized by rapid and
significant technological change, evolving industry standards and
frequent new product introductions and enhancements. Many of the
Company's products and products under development are technologically
65PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Forward-looking Statements
innovative and require significant planning, design, development, and
testing at the technological, product, and manufacturing-process levels.
These activities require significant capital commitments and investment
by the Company. In addition, products that are competitive in the
Company's markets are characterized by rapid and significant
technological change due to industry standards that may change on short
notice and by the introduction of new products and technologies that
render existing products and technologies uncompetitive or obsolete.
There can be no assurance that any of the products currently being
developed by the Company, or those to be developed in the future, will be
technologically feasible or accepted by the marketplace, that any such
development will be completed in any particular time frame, or that the
Company's products or proprietary technologies will not become
uncompetitive or obsolete.
Possible Adverse Effect from Changes in Governmental Regulations. The
Company competes in several markets which involve compliance by its
customers with federal, state, local, and foreign regulations, such as
environmental, health and safety, and food and drug regulations. The
Company develops, configures, and markets its products to meet customer
needs created by such regulations. These regulations may be amended or
eliminated in response to new scientific evidence or political or
economic considerations. Any significant change in regulations could
adversely affect demand for the Company's products in regulated markets.
Government Regulation; No Assurance of Regulatory Approvals. Certain
of the Company's products are subject to pre-marketing clearance or
approval by the U.S. Food and Drug Administration (FDA) and similar
agencies in foreign countries. The use or sale of certain of the
Company's products under development may require approvals by other
government agencies. The process of obtaining clearance and approval from
the FDA and other government agencies is time-consuming and expensive.
Furthermore, there can be no assurance that the necessary clearances or
approvals for the Company's products, services, and products and services
under development will be obtained on a timely basis, if at all.
FDA regulations also require continuing compliance with specific
standards in conjunction with the maintenance and marketing of products
and services that have been approved or cleared. Failure to comply with
applicable regulatory requirements can result in, among other things,
civil and criminal penalties, suspension of approvals, recalls, or
seizures of products, injunctions, and criminal prosecutions.
Risks Associated with Dependence on Capital Spending Policies and
Government Funding. The Company's customers include pharmaceutical and
chemical companies, laboratories, universities, healthcare providers,
paper manufacturers, consumer product companies, government agencies, and
public and private research institutions. The capital spending of these
entities can have a significant effect on the demand for the Company's
products. Such spending is based on a wide variety of factors, including
the resources available to make purchases, the spending priorities among
various types of equipment, public policy, and the effects of different
economic cycles. Any decrease in capital spending by any of the customer
groups that account for a significant portion of the Company's sales
could have a material adverse effect on the Company's business and
results of operations.
66PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Forward-looking Statements
Dependence on Patents and Proprietary Rights. The Company places
considerable importance on obtaining patent and trade secret protection
for significant new technologies, products, and processes because of the
length of time and expense associated with bringing new products through
the development process and to the marketplace. The Company's success
depends in part on its ability to develop patentable products and obtain
and enforce patent protection for its products both in the United States
and in other countries. The Company owns numerous United States and
foreign patents, and intends to file additional applications for patents
as appropriate to cover its products. No assurance can be given that
patents will issue from any pending or future patent applications owned
by or licensed to the Company or that the claims allowed under any issued
patents will be sufficiently broad to protect the Company's technology.
In addition, no assurance can be given that any issued patents owned by
or licensed to the Company will not be challenged, invalidated, or
circumvented, or that the rights granted thereunder will provide
competitive advantages to the Company. There can be no assurance that
third parties will not assert claims against the Company that the Company
infringes the intellectual property rights of such parties. The Company
could incur substantial costs and diversion of management resources with
respect to the defense of any such claims, which could have a material
adverse effect on the Company's business, financial condition, and
results of operations. Furthermore, parties making such claims could
secure a judgment awarding substantial damages, as well as injunctive or
other equitable relief, which could effectively block the Company's
ability to make, use, sell, distribute, or market its products and
services in the United States or abroad. In the event that a claim
relating to intellectual property is asserted against the Company, the
Company may seek licenses to such intellectual property. There can be no
assurance, however, that such licenses could be obtained on commercially
reasonable terms, if at all. The failure to obtain the necessary licenses
or other rights could preclude the sale, manufacture, or distribution of
the Company's products and, therefore, could have a material adverse
effect on the Company's business, financial condition, and results of
operations.
The Company relies on trade secrets and proprietary know-how, which
it seeks to protect, in part, by confidentiality agreements with its
collaborators, employees, and consultants. There can be no assurance that
these agreements will not be breached, that the Company would have
adequate remedies for any breach, or that the Company's trade secrets
will not otherwise become known or be independently developed by
competitors.
ThermoQuest's Finnigan subsidiary has filed complaints against
Bruker-Franzen Analytik GmbH and its U.S. affiliate, and Hewlett-Packard
Company, for alleged violation of two U.S. patents owned by Finnigan
pertaining to methods used in ion-trap mass spectrometers. One of
Finnigan's complaints was filed in United States District Court and the
other was filed with the United States International Trade Commission
(ITC). In February 1998, an administrative law judge at the ITC issued an
initial determination to the effect that, although one of Finnigan's
patents was infringed, the patents were invalid for purposes of this
case. The ITC's jurisdiction on this matter is limited to the issue of
67PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Forward-looking Statements
whether or not the defendants' products that use the patented methods can
be imported into the U.S. The judge's initial determination will be
considered by the full commission during the second quarter of 1998.
Bruker has presented counterclaims alleging that the Finnigan patents are
invalid and unenforceable and are not infringed by the mass spectrometers
co-marketed by Bruker. They also allege that Finnigan has violated
antitrust laws by attempting to maintain a monopoly position and restrain
trade through enforcement of allegedly fraudulently obtained patents.
Bruker has asked for judgment consistent with its counterclaims, and for
three times the antitrust damages (including attorney's fees) it has
sustained.
There can be no assurance as to the outcome of this matter. While the
Company believes that any resolution of this matter will not materially
affect its financial position, an unfavorable resolution could have a
material adverse effect on the Company's future results of operations.
Potential Impact of Year 2000 on Processing of Date-sensitive
Information. The Company is currently assessing the potential impact of
the year 2000 on the processing of date-sensitive information by the
Company's computerized information systems and on products sold as well
as products purchased by the Company. The Company believes that its
internal information systems and current products are either year 2000
compliant or will be so prior to the year 2000 without incurring material
costs. There can be no assurance, however, that the Company will not
experience unexpected costs and delays in achieving year 2000 compliance
for its internal information systems and current products, which could
result in a material adverse effect on the Company's future results of
operations.
The Company is presently assessing the effect that the year 2000
problem may have on its previously sold products. The Company is also
assessing whether its key suppliers are adequately addressing this issue
and the effect this might have on the Company. The Company has not
completed its analysis and is unable to conclude at this time that the
year 2000 problem as it relates to its previously sold products and
products purchased from key suppliers is not reasonably likely to have a
material adverse effect on the Company's future results of operations.
68PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Common Stock Market Information
The Company's common stock is traded on the New York Stock Exchange
under the symbol TMO. The following table sets forth the high and low
sale prices of the Company's common stock for 1997 and 1996, as reported
in the consolidated transaction reporting system. Prices have been
restated to reflect a three-for-two stock split, effected in the form of
a 50% stock dividend, that was distributed in June 1996.
1997 1996
------------------- -------------------
Quarter High Low High Low
---------------------------------------------------------------------
First $40 1/2 $30 7/8 $42 1/12 $30 2/5
Second 38 3/4 28 3/8 44 3/8 38 4/5
Third 41 1/2 32 1/8 41 7/8 31 3/4
Fourth 44 1/2 33 1/2 41 1/8 29 3/4
As of January 30, 1998, the Company had 9,288 holders of record of
its common stock. This does not include holdings in street or nominee
names. The closing market price on the New York Stock Exchange for the
Company's common stock on January 30, 1998, was $39 per share.
Common stock of the Company's majority-owned public subsidiaries is
traded on the American Stock Exchange: Thermedics Inc. (TMD), Thermo
Cardiosystems Inc. (TCA), Thermo Voltek Corp. (TVL), Thermo Sentron Inc.
(TSR), Thermedics Detection Inc. (TDX), Thermo Instrument Systems Inc.
(THI), ThermoSpectra Corporation (THS), ThermoQuest Corporation (TMQ),
Thermo Optek Corporation (TOC), Thermo BioAnalysis Corporation (TBA),
Metrika Systems Corporation (MKA), Thermo Vision Corporation (VIZ),
Thermo TerraTech Inc. (TTT), Thermo Remediation Inc. (THN), The Randers
Group Incorporated (RGI.EC), ThermoTrex Corporation (TKN), ThermoLase
Corporation (TLZ), Trex Medical Corporation (TXM), Thermo Power
Corporation (THP), Thermo Fibertek Inc. (TFT), Thermo Fibergen Inc.
(TFG), and Thermo Ecotek Corporation (TCK).
Shareholder Services
Shareholders of Thermo Electron Corporation who desire information
about the Company are invited to contact John N. Hatsopoulos, President
and Chief Financial Officer, Thermo Electron Corporation, 81 Wyman
Street, P.O. Box 9046, Waltham, Massachusetts 02254-9046, (781) 622-1111.
A mailing list is maintained to enable shareholders whose stock is held
in street name, and other interested individuals, to receive quarterly
reports, annual reports, and press releases as quickly as possible.
Distribution of printed quarterly reports is limited to the second
quarter only. All material will be available from Thermo Electron's
Internet site (http://www.thermo.com).
69PAGE
<PAGE>
Thermo Electron Corporation 1997 Financial Statements
Stock Transfer Agent
BankBoston N.A. is the stock transfer agent and maintains shareholder
activity records. The agent will respond to questions on issuance of
stock certificates, change of ownership, lost stock certificates, and
change of address. For these and similar matters, please direct inquiries
to:
BankBoston N.A.
c/o Boston EquiServe Limited Partnership
P.O. Box 8040
Boston, Massachusetts 02266-8040
(617) 575-3120
Dividend Policy
The Company has never paid cash dividends and does not expect to pay
cash dividends in the foreseeable future because its policy has been to
use earnings to finance expansion and growth. Payment of dividends will
rest within the discretion of the Board of Directors and will depend
upon, among other factors, the Company's earnings, capital requirements,
and financial condition.
Form 10-K Report
A copy of the Annual Report on Form 10-K for the fiscal year ended
January 3, 1998, as filed with the Securities and Exchange Commission,
may be obtained at no charge by writing to John N. Hatsopoulos, President
and Chief Financial Officer, Thermo Electron Corporation, 81 Wyman
Street, P.O. Box 9046, Waltham, Massachusetts 02254-9046.
Annual Meeting
The annual meeting of shareholders will be held on Tuesday, June 2,
1998, at 4:15 p.m. at the Hyatt Regency Hotel, Scottsdale, Arizona.
70PAGE
<PAGE>
<TABLE>
Thermo Electron Corporation 1997 Financial Statements
<CAPTION>
Ten Year Financial Summary
(In millions except per share amounts)
1997 1996(a) 1995 1994(b) 1993(c) 1992(d) 1991(e) 1990 1989 1988
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of
Income Data:
Revenues $3,558.3 $2,932.6 $2,270.3 $1,729.2 $1,354.5 $999.2 $ 842.5 $744.5 $640.3 $553.7
Gross Profit 1,441.3 1,130.0 863.4 650.9 482.3 326.7 256.5 233.8 176.0 157.4
Operating
Income 405.8 246.5 225.2 182.1 119.2 70.5 43.6 40.9 23.6 25.8
Net Income 239.3 190.8 139.6 104.7 76.9 59.5 48.5 35.5 27.3 23.3
Earnings per
Share:
Basic 1.57 1.35 1.10 .90 .74 .62 .56 .46 .37 .33
Diluted 1.41 1.17 .95 .78 .65 .58 .53 .43 .35 .31
Balance Sheet
Data:
Working
Capital $2,002.0 $2,218.6 $1,317.1 $1,150.7 $ 833.8 $ 508.7 $ 468.4 $244.1 $277.6 $220.1
Total Assets 5,795.9 5,141.2 3,786.3 3,061.9 2,507.6 1,838.0 1,212.5 912.0 669.9 528.5
Long-term
Obligations 1,742.9 1,550.3 1,118.1 1,049.9 647.6 494.2 255.1 210.5 177.0 152.9
Minority
Interest 719.6 684.1 471.6 327.7 277.7 164.3 122.5 83.9 51.8 22.6
Common Stock of
Subsidiaries
Subject to
Redemption 93.3 76.5 17.5 - 14.5 5.5 5.5 8.7 13.1 -
Shareholders'
Investment 1,997.9 1,754.4 1,309.7 1,007.5 873.7 563.8 489.5 314.1 229.2 196.4
(a)Reflects the issuance of $585.0 million principal amount of convertible debentures.
(b)Reflects the issuance of $345.0 million principal amount of convertible debentures.
(c)Reflects the Company's 1993 public offering of common stock for net proceeds of$246.0 million.
(d)Reflects the issuance of $260.0 million principal amount of convertible debentures.
(e)Reflects the issuance of $164.0 million principal amount of convertible debentures.
71<PAGE>
</TABLE>
Exhibit 21
THERMO ELECTRON CORPORATION SUBSIDIARIES
As of February 20, 1998, the Registrant owned the following subsidiaries:
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
Coleman Research Corporation Florida 100
Coleman Services Incorporated Delaware 100
Thermo Information Solutions Inc. Delaware 79**
Thermo Info France S.A. France 100
Thermo Info UK Limited United Kingdom 100
Traveller Information Services, Inc. Alabama 75
Nicolet Biomedical Inc. California 100
Eden Medical Electronics, Inc. Delaware 100
Neuroscience Limited United Kingdom 100
Nicolet Biomedical Japan Inc. Japan 100
Nicolet Biomedical Ltd. United Kingdom 100
Nicolet Biomedical S.A.R.L. France 100
Nicolet - EME GmbH Germany 100
Nicolet Vascular Inc. Delaware 100
ILS, Inc. Delaware 100
IMEX International, Inc. Colorado 100
Peter Brotherhood Holdings Ltd. United Kingdom 100
Aircogen Ltd. United Kingdom 80
Peter Brotherhood Limited United Kingdom 100
D.S.T. Pattern & Engineering Co. Ltd. United Kingdom 100
Link Control Technology Ltd. United Kingdom 100
Machtech Ltd. United Kingdom 100
Peter Brotherhood Pension Fund Trustees Ltd. United Kingdom 100
S. Gregsons & Sons Ltd. United Kingdom 100
Thermo Electron Realty Limited United Kingdom 100
Thermo Holdings Limited United Kingdom 100
SensorMedics Corporation Delaware 100
SensorMedics B.V. Netherlands 100
SensorMedics (Deutschland) GmbH Germany 100
SensorMedics FSC Corporation Virgin Islands 100
Termo Electron, S.A. de C.V. Mexico 100
The Thermo Electron Companies Inc. Wisconsin 100
Bear Medical Systems Inc. Delaware 100
Bird Medical Technologies, Inc. California 100
Bird International, Inc. U.S. Virgin 100
Islands
Bird Products Corporation California 100
Bird Life Design Corporation California 100
Stackhouse, Inc. California 100
Gulf Precision, Inc. Arizona 100
Seeley Enterprises, Inc. New Mexico 100
ITC Holdings Inc. Delaware 100
Loftus Furnace Company Pennsylvania 100
Medical Data Electronics, Inc. Delaware 100
Page 1PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
Met-Therm, Inc. Ohio 100
NAPCO, Inc. Connecticut 100
Nicolet Biomedical of California Inc. California 100
North East Surgical Tool Corp. Massachusetts 100
North Carbondale Minerals, Inc. California 100
Overly, Inc. Wisconsin 100
Perfection Heat Treating Company Michigan 100
San Marcos Resource Recovery, Inc. California 100
Southern Ocean County Resource Recovery, Inc. New Jersey 100
Staten Island Cogeneration Corporation New York 100
TE Great Lakes Inc. Michigan 100
TEC Cogeneration Inc. Florida 100
South Florida Cogeneration Associates Florida 50*
TEC Energy Corporation California 100
North County Resource Recovery Associates California 100*
(50% of which is owned directly by
San Marcos Resource Recovery, Inc.)
Tecomet Inc. Massachusetts 100
Thermedics Inc. Massachusetts 58**
Corpak Inc. Massachusetts 100
Walpak Company Illinois 100
Orion Research, Inc. Massachusetts 100
Advanced Sensor Technology Massachusetts 100
Orion Research Limited United Kingdom 100
Orion Research Puerto Rico, Inc. Delaware 100
Russell pH Limited Scotland 100
Thermedics Detection Inc. Massachusetts 76**
Detection Securities Corporation Massachusetts 100
Moisture Systems Corporation Ltd. United Kingdom 100
Rutter & Co. Netherlands 100
Rutter Instrumentation S.A.R.L. France 90
Systech B.V. Netherlands 50
ThermedeTec Corporation Delaware 100
Thermedics Detection de Argentina S.A. Argentina 100
(1% of which shares are owned
directly by Thermedics Detection Inc.)
Thermedics Detection de Mexico, S.A. Mexico 100
de C.V.
Thermedics Detection GmbH Germany 100
Thermedics Detection Limited United Kingdom 100
Thermedics Detection Scandinavia AS Norway 100
Thermo Sentron Inc. Delaware 71**
(additionally, 6.86% of the shares are owned
directly by The Thermo Electron Companies
Inc.)
Ramsey France S.A.R.L. France 100
Page 2PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
Ramsey Ingenieros S.A. Spain 100
Ramsey Italia S.R.L. Italy 100
Tecno Europa Elettromeccanica S.R.L. Italy 100
Ramsey Technology Inc. Massachusetts 100
Xuzhou Ramsey Technology Co., Limited China 50*
Thermo Sentron Australia Pty. Ltd.. Australia 100
Thermo Sentron B.V. Netherlands 100
Thermo Sentron Canada Inc. Canada 100
Thermo Sentron GmbH Germany 100
Thermo Sentron Limited United Kingdom 100
Hitech Electrocontrols Limited United Kingdom 100
Hitech Licenses Ltd. United Kingdom 100
Hitech Metal Detectors Ltd. United Kingdom 100
Westerland Engineering Ltd. United Kingdom 100
Thermo Sentron SEC Corporation Massachusetts l00
Thermo Sentron (South Africa) Pty. Ltd. South Africa 100
TMD Securities Corporation Massachusetts 100
Thermo Cardiosystems Inc. Massachusetts 51**
(additionally, 8.84% of the shares are
owned directly by The Thermo Electron
Companies Inc.)
International Technidyne Corporation Delaware 100
International Technidyne Corporation United Kingdom 100
Limited
Nimbus Inc. Massachusetts 100
TCA Securities Corporation Massachusetts 100
Thermo Voltek Corp. Delaware 65**
(additionally, 2.69% of the shares are
owned directly by The Thermo Electron
Companies Inc.)
Thermo Voltek Europe B.V. Netherlands 100
Comtest Instrumentation, B.V. Netherlands 100
Comtest Italia S.R.L. Italy 100
Comtest Limited United Kingdom 100
Milmega Limited United Kingdom 100
TVL Securities Corporation Delaware 100
UVC Realty Corp. New York 100
Thermo Administrative Services Corporation Delaware 100
Thermo Amex Management Company Inc. Delaware 100
Thermo Amex Finance, L.P. Delaware 99*
Thermo Amex Convertible Growth Delaware 99*
Fund I., L.P.
Thermo Ecotek Corporation Delaware 88**
Delano Energy Company Inc. Delaware 100
Eco Fuels Inc. Wyoming 100
EuroEnergy Group, B.V. Italy 50*
Page 3PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
Gage Canal Power Company Delaware 100
Independent Power Services Corporation Nevada 100
KFP Operating Company, Inc. Delaware 100
Riverside Canal Power Company California 100
SFS Corporation New Hampshire 100
TCK Fuels Inc. Delaware 100
KFx Fuel Partners, L.P. Delaware 95*
(2% of which is owned
directly by Eco Fuels Inc.)
TES Securities Corporation Delaware 100
Thermendota, Inc. California 100
Mendota Biomass Power, Ltd. California 100
MBPL Agriwaste Corporation California 100
Thermo Ecotek International Holdings Inc. Cayman Islands 100
Thermo Ecotek Europe Holdings B.V. Netherlands 100
ECS Sro Czech Republic 50*
EMD Ventures B.V. Netherlands 65*
ECS sro Czech Republic 50*
EMD Pribram sro Czech Republic 50*
EuroEnergy Group B.V. Netherlands 50*
Thermo EuroVentures sro Czech Republic 100
Thermo Ecotek International Inc. Cayman Islands 100
TCK Cogeneration Dominicana Inc. Cayman Islands 100
(1% of which shares are owned directly by
Thermo Ecotek International Holdings
Inc.)
TCK Dominicana Holdings Inc. Cayman Islands 100
(1% of which shares are owned directly by
Thermo Ecotek International Holdings
Inc.)
Thermo Electron of Maine, Inc. Maine 100
Gorbell/Thermo Electron Power Company Maine 80*
Thermo Electron of New Hampshire, Inc. New Hampshire 100
Hemphill Power and Light Company New Hampshire 66*
Thermo Electron of Whitefield, Inc. New Hampshire 100
Whitefield Power and Light Company New Hampshire 100*
(39% of which is owned
directly by SFS Corporation)
Thermo Fuels Company, Inc. California 100
Thermo Natural Gas Company Delaware 100
Thermo Trilogy Corporation Delaware 87**
Thermo Trilogy International Cayman Islands 100
Holdings, Inc.
AgriSense-BCS, Ltd. United Kingdom 100
P J Margo Pvt. Ltd. India 50*
Ulna Incorporated California 100
Woodland Biomass Power, Inc. California 100
Page 4PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
Woodland Biomass Power, Ltd. California 100*
(.1% of which is owned directly
by Thermo Ecotek Corporation)
Thermo Electron Foundation, Inc. Massachusetts 100
Thermo Electron Metallurgical Services, Inc. Texas 100
Thermo Fibertek Inc. Delaware 90**
AES Equipos y Sistemas S.A. de C.V. Mexico 100
Enviroprint Inc. Delaware 100
Fibertek Construction Company, Inc. Maine 100
Thermo AES Canada Inc. Canada 100
Thermo Black Clawson Inc. Delaware 100
Thermo Black Clawson (China) China 100
Thermo Black Clawson S.A. France 100
Thermo Fibertek Holdings Limited United Kingdom 100
Thermo Black Clawson Limited United Kingdom 100
Thermo Fibertek U.K. Limited United Kingdom 100
Vickerys Holdings Limited United Kingdom 100
Vickerys Limited United Kingdom 100
Paperlines Limited New Zealand 100
Winterburn Limited United Kingdom 100
Thermo Web Systems, Inc. Massachusetts 100
Fiberprep Inc. Delaware 95
(31.05% of which shares are owned
directly by E. & M. Lamort, S.A.)
Fiberprep Securities Corporation Delaware 100
Thermo Wisconsin, Inc. Wisconsin 100
Thermo Fibergen Inc. Delaware 71**
Fibergen Securities Corporation Massachusetts 100
GranTek Inc. Wisconsin 100
TMO Lamort Holdings Inc. Delaware 100
E. & M. Lamort, S.A. France 100
Lamort Equipementos Industrials Ltda. Brazil 60*
Lamort GmbH Germany 100
Lamort Iberia S.A. Spain 100
Lamort Italia S.R.L. Italy 100
Lamort Paper Services Ltd. United Kingdom 100
Nordiska Lamort Lodding A.B. Sweden 100
Thermo Instrument Systems Inc. Delaware 82**
Analytical Instrument Development, Inc. Pennsylvania 100
Eberline Instrument Company Limited United Kingdom 100
Eberline Instrument Corporation New Mexico 100
Epsilon Industrial Inc. Texas 100
ESM Eberline Instruments Strahlen Germany 100
- und Umweltmesstechnik GmbH
Fisons Instruments Vertriebs GmbH Germany 100
Gebruder Haake GmbH Germany 100
Page 5PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
Gas Tech Inc. California 100
Gas Tech Australia, Pty. Ltd. Australia 50*
Gas Tech Partnership California 50*
Gastech Instruments Canada Ltd. Canada 100
Life Sciences International Limited United Kingdom 100
Comdate Services Limited England 100
Lipshaw Limited England 100
Luckham Limited England 100
Phicom Limited England 100
Shandon Scientific Limited England 100
Southions Investments Limited England 100
Sungel Puntar Rubber Estate Limited England 100
Westions Limited England 100
Whale Scientific Limited England 100
Helmet Securities Limited England 100
Life Sciences International GmbH Germany 100
Life Sciences International Kft Hungary 100
Life Sciences International SNC France 100
Life Sciences International France 100
(France) SA
Shandon SA France 100
Life Sciences International, Inc. Pennsylvania 100
LSI North America Service Inc. Delaware 100
Shandon, Inc. Pennsylvania 100
Alko Diagnostic Corporation Massachusetts 100
E-C Apparatus Corporation Florida 100
Whale Scientific, Inc. Colorado 100
Life Sciences International Holdings BV Netherlands 100
Biosystems Oy Finland 100
Life Sciences International Poland 100
(Poland) SP z O.O
Angela Scientific Instruments Limited England 100
Britlowes Limited England 100
Commendstar Limited England 100
Consumer & Video Holdings Limited England 100
Video Communications Limited England 100
Greensecure Projects Limited England 100
Labsystems Europe GA Spain 100
Labsystems Ges mbH Austria 100
LSI (US) Inc. Delaware 100
Omnigene Limited England 59
Shandon Southern Instruments Limited England 100
Shenbridge Limited England 100
Southern Instruments Holdings Limited England 100
Metrika Systems Corporation Delaware 60**
Eberline Radiometrie GmbH Germany 100
Page 6PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
Eberline Radiometrie S.A. France 100
Gamma-Metrics California 100
Gamma-Metrics International F.S.C. Inc. Guam 100
Radiometrie U.S.A., Inc. California 100
Thermo Instrument Systems Limited United Kingdom 100
National Nuclear Corporation California 100
ONIX Systems Inc. Delaware 87**
Brandt Instruments, Inc. Delaware 100
CAC Inc. Delaware 100
Flow Automation Inc. Texas 100
Thermo Instrument Controls de Mexico, Mexico 100
S.A. de C.V.
(1% of which shares are owned directly
by ONIX Systems Inc.)
VG Gas Analysis Systems Inc. Massachusetts 100
Houston Atlas Inc. Texas 100
OnIX Holdings Limited England 100
CAC Limited United Kingdom 100
Flow Automation (UK) Limited United Kingdom 100
VG Gas Analysis Limited United Kingdom 100
Peek Measurement, Inc. Texas 100
Peek Measurement Limited England 100
Peek Environmental Limited England 100
Sarasota Data Products Limited England 100
Sarasota Instrumentation Limited England 100
TN Spectrace Europe B.V. Netherlands 100
TN Technologies Inc. Texas 100
Kay-Ray/Sensall, Inc. Delaware 100
TN Technologies Canada Inc. Canada 100
Westronics Inc. Texas 100
Optek-Nicolet Holdings Inc. Wisconsin 100
Thermo Optek Corporation Delaware 91**
(additionally, 1.47% of the shares are
owned directly by The Thermo Electron
Companies Inc.)
Spectronic Instruments, Inc. Delaware 100
SLM International Inc. Illinois 100
Thermo Jarrell Ash Corporation Massachusetts 100
ARL Applied Research Laboratories Switzerland 100
S.A.
Fisons Instruments (Proprietary) South Africa 100
Limited
Thermo Optek Wissenschaftliche Austria 100
Gerate GesmbH
Baird Do Brazil Representacoes Ltda. Brazil 100
Beijing Baird Analytical Instrument China 100
Technology Co. Limited
Page 7PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
Cahn Instrument Corporation Wisconsin 100
Mattson Instruments Limited United Kingdom 100
Thermo Elemental Limited United Kingdom 100
Thermo Optek Limited United Kingdom 100
Unicam Limited United Kingdom 100
Unicam Export Limited United Kingdom 100
Unicam Analytical Technology Netherlands 100
Netherlands B.V.
Unicam Italia SpA Italy 100
Unicam S.A. Belgium 100
Fisons Instruments Nordic AB Sweden 100
Nicolet Instrument Corporation Wisconsin 100
Nicolet Japan K.K. Japan 100
Spectra-Tech, Inc. Wisconsin 100
Spectra-Tech, Europe Limited United Kingdom 100
Nicolet Instrument GmbH Germany 100
Optek Securities Corporation Massachusetts 100
Planweld Holding Limited United Kingdom 100
Nicolet Instrument Limited United Kingdom 100
Planweld Limited United Kingdom 100
Hilger Analytical Limited United Kingdom 100
Thermo Electron Limited United Kingdom 100
Thermo Instrument Systems Japan Delaware 100
Holdings, Inc.
Nippon Jarrell-Ash Company, Ltd. Japan 100
Thermo Instruments (Canada) Inc. Canada 100
Eberline Instruments (Canada) Ltd. Canada 100
Fisons Instruments Inc. Canada 100
Unicam Analytical Inc. Canada 100
Thermo Optek France S.A. France 100
Thermo Optek Holding B.V. Netherlands 100
Baird Europe B.V. Netherlands 100
Baird France S.A.R.L. France 100
Thermo Group B.V. Netherlands 100
Thermo Optek Materials Analysis (S.E.A.) Singapore 100
Pte Limited
VG Systems Limited United Kingdom 100
ThermoSpectra Corporation Delaware 77**
(additionally, 6.23% of the shares are
owned directly by The Thermo Electron
Companies Inc.)
Diametrix Detectors, Inc. Delaware 50
Gould Instrument Systems, Inc. Ohio 100
Kevex Instruments Inc. Delaware 100
Kevex X-Ray Inc. Delaware 100
Neslab Instruments Europa BV Netherlands 100
Page 8PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
Neslab Instruments, Inc. New Hampshire 100
Neslab Instruments Limited England 100
Nicolet Instrument Technologies Inc. Wisconsin 100
NORAN Instruments Inc. Wisconsin 100
Park Scientific Instruments Corporation California 100
Park Scientific S.A. Switzerland 100
PSI Virgin Islands Incorporated U.S. Virgin 100
Islands
Sierra Research and Technology, Inc. Delaware 100
ThermoSpectra B.V. Netherlands 100
Nicolet Technologies B.V. Netherlands 100
Bakker Electronics Limited United Kingdom 100
NORAN Instruments B.V. Netherlands 100
ThermoSpectra GmbH Germany 100
Gould Nicolet Messtechnik GmbH Germany 100
NORAN Instruments GmbH Germany 100
ThermoSpectra Limited United Kingdom 100
Nicolet Technologies Ltd. United Kingdom 100
Thermo Spectra S.A. France 100
Nicolet Technologies S.A.R.L. France 100
Quest-Finnigan Holdings Inc. Virginia 100
Quest-TSP Holdings Inc. Delaware 100
ThermoQuest Corporation Delaware 88**
(43.9% of which shares are owned
directly by Quest-Finnigan Holdings
Inc.)
(additionally, .12% of the shares are
owned directly by The Thermo Electron
Companies Inc.)
Denley Instruments Limited England 100
E-C Apparatus Limited England 100
Finnigan FT/MS Inc. Delaware 100
Finnigan Corporation Delaware 100
Finnigan Instruments, Inc. New York 100
Finnigan International Sales, Inc. California 100
Finnigan MAT China, Inc. California 100
Finnigan MAT (Delaware), Inc. Delaware 100
Finnigan MAT Instruments, Inc. Nevada 100
Finnigan MAT International Sales, California 100
Inc.
Finnigan MAT (Nevada), Inc. Nevada 100
Finnigan MAT Canada, Ltd. Canada 100
Finnigan MAT GmbH Germany 100
Finnigan MAT S.R.L. Italy 100
Thermo Separation Products Italy 100
S.R.L.
Masslab Limited United Kingdom 100
Page 9PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
Thermo Instruments Australia Pty. Australia 100
Limited
ThermoQuest Ltd. United Kingdom 100
Finnigan MAT Ltd. United Kingdom 100
Finnigan MAT AB Sweden 100
Thermo Separation Products Ltd. United Kingdom 100
Finnigan Properties, Inc. California 100
Forma Scientific, Inc. Delaware 100
Forma Ohio Inc. Ohio 100
International Equipment Company Delaware 100
International Equipment Company England 100
Limited
Savant Instruments, Inc. New York 100
Forma Scientific Limited England 100
Hypersil Inc. Delaware 100
Hypersil Limited England 100
Life Sciences International Hong Kong 100
(Hong Kong) Limited
Life Sciences International, Inc. Pennsylvania 100
Life Sciences International England 100
(Europe) Limited
Life Sciences International England 100
(UK) Limited
Kenbury Limited England 100
Savant Instruments Limited England 100
ThermoQuest B.V. Netherlands 100
Thermo Separation Products B.V. Netherlands 100
Thermo Separation Products Belgium 100
B.V. B.A.
ThermoQuest France S.A. France 100
Finnigan Automass S.A. France 100
Finnigan MAT S.A.R.L. France 100
Thermo Separation Products S.A. France 100
ThermoQuest Italia S.p.A. Italy 100
ThermoQuest Spain S.A. Spain 100
ThermoQuest Wissenschaftliche Austria 100
Gerate GmbH
Thermo Separation Products AG Switzerland 100
Thermo Separation Products Inc. Delaware 100
ThermoQuest GmbH Germany 100
Thermo Separation Products GmbH Germany 100
ThermoQuest K.K. Japan 100
RealFlex Systems Inc. Texas 100
SID Instruments Inc. Delaware 100
FI Instruments Inc. Delaware 100
FI S.A. France 100
Page 10PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
Fisons Instruments BV Netherlands 100
Fisons Instruments NV Belgium 100
Fisons Instruments K.K. Japan 100
HB Instruments Inc. Delaware 100
NK Instruments Inc. Delaware 100
Thermo Capillary Electrophoresis Inc. Delaware 100
Thermo Haake Ltd. United Kingdom 100
Thermo Haake (U.K.) Limited United Kingdom 100
Thermo Instrumentos Cientificos S.A. Spain 100
Spectrace Instruments Inc. California 100
Thermo BioAnalysis Corporation Delaware 70**
(4.1% of which shares are owned directly by
Quest-TSP Holdings Inc. and 1.8% of
which shares are owned directly by
Quest-Finnigan Holdings Inc.
(Additionally, 7.12% of the shares are
owned directly by The Thermo
Electron Companies Inc.)
Denley Instruments Inc. North Carolina 100
Fastighets AB Skrubba Sweden 100
Dynatech Laboratories spol. s.r.o. Czech Republic 100
DYNEX Technologies (Asia) Inc. Delaware 100
DYNEX Technologies Inc. Virginia 100
Hybaid BV Netherlands 100
Hybaid Limited England 100
Labsystems Espana SA Spain 100
Labsystems Inc. Delaware 100
Labysystems Japan K.K. Japan 100
Labsystems OY Finland 100
Labsystems (Hong Kong) Limited Hong Kong 99
Labsystems BTD China 33
Labsystems LHD China 33
Labsystems Lenpipette Russia 95
Labsystems Pakistan (Private) Ltd Pakistan 34
Labsystems Sweden AB Sweden 100
Labsystems (UK) Limited England 100
Life Sciences International(Benelux) B.V. Netherlands 100
Thermo BioAnalysis GmbH Germany 100
DYNEX Technologies GmbH Germany 100
Thermo LabSystems Vertriebs GmbH Germany 100
Thermo BioAnalysis (Guernsey) Ltd. Channel 100
Islands
Thermo BioAnalysis Holding, Limited United Kingdom 100
Affinity Sensors Limited United Kingdom 100
Dynex Technologies Limited United Kingdom 100
Thermo BioAnalysis Limited United Kingdom 100
Page 11PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
Thermo LabSystems Limited United Kingdom 100
Thermo BioAnalysis S.A. France 100
Thermo LabSystems S.A.R.L. France 100
Thermo LabSystem (Australia) Pty Limited Australia 100
Thermo LabSystems Inc. Massachusetts 100
Thermo Environmental Instruments Inc. California 100
Thermo Instruments do Brasil Ltda. Brazil 100
(1% of which shares are owned directly
by Thermo Jarrell Ash Corporation)
Van Hengel Holding B.V. Netherlands 100
ESM Eberline Instruments Strahlen Germany 100
- und Umweltmesstechnik GmbH
Fisons Instruments Vertriebs GmbH Germany 100
Gebruder Haake GmbH Germany 100
Thermo Instrument Systems B.V. Netherlands 100
Euroglas B.V. Netherlands 100
Thermo Automation Services (ThAS) B.V. Netherlands 100
This Analytical B.V. Netherlands 100
This Gas Analysis B.V. Netherlands
This Lab Systems B.V. Netherlands 100
This Scientific B.V. Netherlands 100
Thermo Instruments GmbH Germany 100
Thermo Jarrell Ash, S.A. Spain 100
Thermo Vision Corporation Delaware 78**
(additionally, 1.27 % of the shares are
owned directly by The Thermo Electron
Companies Inc.)
CID Technologies Inc. New York 100
Centro Vision Inc. Delaware 100
Hilger Crystals Limited United Kingdom 100
Laser Science, Inc. Delaware 100
Oriel Instruments Corporation Delaware 100
Oriel Foreign Sales Corp. U.S. Virgin 100
Islands
Thermo Leasing Corporation Delaware 100
Thermo Capital Company LLC Delaware 50*
Thermo Power Corporation Massachusetts 69**
NuTemp, Inc. Illinois 100
Peek plc Scotland 92
Peek Data Limited England 100
Peek Group Services Limited England 100
Dubilier Warminster Limited England 100
International Resistance Co Limited England 100
Minicircuits Limited England 100
Peek International Limited England 100
Peek Corporation Delaware 100
Page 12PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
Peek Traffic, Inc. Delaware 100
Polysonics International, Inc. U.S. Virgin 100
Islands
Saratec Measurement Inc. Florida 100
Signal Control Company Delaware 100
Signal Maintenance, Inc. Delaware 100
Streeter Amet Inc. Delaware 100
Transyt Corporation Florida 100
Peek Traffic USA, Inc. Florida 100
Peek Traffic GmbH Germany 100
Peek International B.V. Netherlands 100
Peek Traffic A.B. Sweden 100
Peek Traffic A/S Denmark 100
Peek Traffic A/S Norway 100
Peek Traffic B.V. Netherlands 100
Peek Fleetlogic B.V. Netherlands 100
Peek Traffic Projects B.V. Netherlands 100
Peek Limited Hong Kong 85
Peek Trafikk Sendirian Bermad Malaysia 100
Peek Traffic (Thailand) Limited Thailand 100
Sichuan Modern Control System China 41*
Engineering Company Limited
Peek Traffic OY Finland 100
Peek Investments, Limited England 100
Dubilier America, Inc. Delaware 100
ACI Holdings, Inc. New York 100
Peek Systems Limited England 100
Softwell Limited England 100
Peek Technology Limited England 100
Peek Traffic Limited England 100
GK Instruments Limited England 100
Sarasota Traffic Limited England 100
Streeteramet Limited England 100
Weighwrite Limited England 100
Radley Services Limited England 100
Atest Electronics Limited England 100
Bartsign Limited England 100
Greenpar Holdings Limited England 100
Helvetia Automatic Products Limited England 100
Peek Field Services Limited England 100
Peek Traffic Systems B.V. Netherlands 100
Radley (1) Limited England 100
Smartways Limited England 100
Tollstar Limited England 100
Takepine Limited United Kingdom 100
Tecogen Securities Corporation Massachusetts 100
Page 13PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
ThermoLyte Corporation Delaware 78**
Thermo TerraTech Inc. Delaware 82**
Holcroft (Canada) Limited Canada 100
Holcroft Corporation Delaware 100
Holcroft GmbH Germany 100
Metallurgical, Inc. Minnesota 100
Cal-Doran Metallurgical Services, Inc. California 100
Metal Treating Inc. Wisconsin 100
Normandeau Associates, Inc. New Hampshire 100
TMA/Hanford, Inc. Washington 100
The Randers Group Incorporated Delaware 95**
(additionally, 1.03% of the shares are owned
directly by Thermo Electron Corporation)
Clark-Trombley Consulting Engineers, Inc. Michigan 100
Randers Engineering, Inc. Michigan 100
Randers Engineering of Massachusetts,Inc. Michigan 100
Randers Group Property Corporation Michigan 100
Redeco Incorporated Michigan 100
Viridian Technology Incorporated Michigan 100
The Killam Group, Inc. Delaware 100
CarlanKillam Consulting Group, Inc. Florida 100
Carlan Consulting Group of Alabama 100
Alabama, Inc.
Thermo Consulting & Design Inc. Delaware 100
Engineering Technology and Delaware 100
Knowledge Corporation
Elson T. Killam Associates, Inc. New Jersey 100
BAC Killam Inc. New York 100
N.H. Bettigole Co., Inc. Delaware 100
N.H. Bettigole P.A. New Jersey 100
N.H. Bettigole P.C. New York 100
CarlanKillam Construction Florida 100
Services, Inc.
Duncan, Lagnese and Associates, Pennsylvania 100
Incorporated
E3-Killam, Inc. New York 100
Killam Associates, Inc. Ohio 100
Killam Management and New Jersey 100
Operational Services, Inc.
Fellows, Read & Associates, Inc. New Jersey 100
Killam Associates, New England Inc. Delaware 100
George A. Schock & Associates, New Jersey 100
Inc.
Jennison Engineering, Inc. Vermont 100
Thermo Analytical Inc. Delaware 100
Skinner & Sherman, Inc. Massachusetts 100
Page 14PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
Thermo EuroTech N.V. Netherlands 56**
Thermo EuroTech Ireland Ltd. Ireland 100
Green Sunrise Holdings Ltd. Ireland 70
AutoRod Ltd. Ireland 100
Green Sunrise Industries Ltd. Ireland 100
GreenStar Recycling Ltd. Ireland 100
Pipe & Drain Services Ltd. Ireland 100
GreenStar Products Ltd. Ireland 70
Grond- & Watersaneringstechniek Netherlands 100
Nederland B.V.
Refining & Trading Holland B.V. Netherlands 100
Thermo Remediation Inc. Delaware 69**
(additionally, 1.52% of the shares are owned
directly by The Thermo Electron Companies
Inc.)
Benchmark Environmental Corporation New Mexico 100
Eberline Holdings Inc. Delaware 100
Eberline Analytical Corporation New Mexico 100
Thermo Hanford Inc. Delaware 100
TMA/NORCAL Inc. California 100
IEM Sealand Corporation Virginia 100
RPM Systems, Inc. Connecticut 100
Remediation Technologies, Inc. Delaware 100
GeoWest Golden Inc. Colorado 100
GeoWest TriTechnics of Ohio, LLC Colorado 100
RETEC Thermal, Inc. Delaware 100
ReTec/Tetra L.C. Texas 50*
Thermo Fluids Inc. Delaware 100
TPS Technologies Inc. Florida 100
TPST Soil Recyclers of California Inc. California 100
California Hydrocarbon, Inc. Nevada 100
TPST Soil Recyclers of Maryland Inc. Maryland 100
Todds Lane Limited Partnership Maryland 100*
(1% of which is owned directly
by TPS Technologies Inc.)
TPST Soil Recyclers of New York Inc. New York 100
TPST Soil Recyclers of Oregon Inc. Oregon 100
TPST Soil Recyclers of South Delaware 100
Carolina Inc.
TPST Soil Recyclers of Virginia Inc. Delaware 100
TPST Soil Recyclers of Washington Inc. Washington 100
TRUtech L.L.C. Delaware 48*
Thermo Securities Corporation Delaware 100
Thermo Soil Recyclers Inc. Massachusetts 100
Thermo Technology Ventures Inc. Idaho 100
Plasma Quench Investment Limited Partnership Delaware 60*
Page 15PAGE
<PAGE>
THERMO ELECTRON CORPORATION SUBSIDIARIES
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
ThermoTrex Corporation Delaware 55**
ThermoLase Corporation Delaware 68**
(additionally, 2.13% of the shares are owned
directly by The Thermo Electron Companies
Inc.)
CBI Laboratories, Inc. Texas 100
ThermoLase England L.L.C. Delaware 50*
ThermoLase UK Limited United Kingdom 100
ThermoLase France L.L.C. Delaware 50*
ThermoDess S.A.S. France 50*
ThermoLase International L.L.C. Delaware 35*
ThermoLase Japan L.L.C. Wyoming 50*
Thira Japan, Inc. Japan 100
ThermoTrex East Inc. Massachusetts 100
Trex Medical Corporation Delaware 79**
Bennett X-Ray Corporation New York 100
Bennett International Corporation U.S. Virgin 100
Islands
Eagle X-Ray, Inc. New York 100
Island X-Ray Incorporated New York 100
Continental X-Ray Corporation Delaware 100
Thermo Lorad F.S.C. Inc. U.S. Virgin 100
Islands
XRE Corporation Delaware 100
Trex Communications Corporation Delaware 78**
Computer Communications Specialists, Inc. Georgia 100
Computer Communication Specialists United Kingdom 100
UK Ltd
TMO, Inc. Massachusetts 100
TMOI Inc. Delaware 100
Thermo Biomedical Inc. Delaware 100
Thermo Digital Technologies L.L.C. Delaware 51*
Thermo Electron Export Inc. Barbados 100
(equally owned among TMO, TMD, TCA, TCK, TFT,
THI, THP, TTT, TVL, TLZ, THS, TBA, TOC, TMQ
and TXM )
Thermo Electron (London) Ltd. United Kingdom 50*
Thermo Finance (UK) Limited United Kingdom 100
Thermo Foundation, Inc. Massachusetts 100
TMO TCA Holdings, Inc. Delaware 100
* Joint Venture/Partnership ** As of 1/3/98
Exhibit 23
Consent of Independent Public Accountants
-----------------------------------------
As independent public accountants, we hereby consent to the
incorporation by reference of our reports dated February 18, 1998,
included in or incorporated by reference into Thermo Electron
Corporation's Annual Report on Form 10-K for the year ended January 3,
1998, into the Company's previously filed Registration Statement No.
33-00182 on Form S-8, Registration Statement No. 33-8993 on Form S-8,
Registration Statement No. 33-8973 on Form S-8, Registration Statement
No. 33-16460 on Form S-8, Registration Statement No. 33-16466 on Form
S-8, Registration Statement No. 33-25052 on Form S-8, Registration
Statement No. 33-37865 on Form S-8, Registration Statement No. 33-37867
on Form S-8, Registration Statement No. 33-36223 on Form S-8,
Registration Statement No. 33-52826 on Form S-8, Registration Statement
No. 33-52804 on Form S-8, Registration Statement No. 33-52806 on Form
S-8, Registration Statement No. 33-52800 on Form S-8, Registration
Statement No. 33-37868 on Form S-3, Registration Statement No. 33-35657
on Form S-3, Registration Statement No. 33-34752 on Form S-3,
Registration Statement No. 33-39434 on Form S-3, Registration Statement
No. 33-12748 on Form S-3, Registration Statement No. 33-39773 on Form
S-3, Registration Statement No. 33-40669 on Form S-3, Registration
Statement No. 33-41256 on Form S-3, Registration Statement No. 33-42694
on Form S-3, Registration Statement No. 33-43706 on Form S-3,
Registration Statement No. 33-45401 on Form S-3, Registration Statement
No. 33-45603 on Form S-3, Registration Statement No. 33-50924 on Form
S-3, Registration Statement No. 33-51187 on Form S-8, Registration
Statement No. 33-51189 on Form S-8, Registration Statement No. 33-54185
on Form S-3, Registration Statement No. 33-54347 on Form S-8,
Registration Statement No. 33-54453 on Form S-8, Registration Statement
No. 33-59544 on Form S-3, Registration Statement No. 333-00197 on Form
S-3, Registration Statement No. 033-65237 on Form S-8, Registration
Statement No. 033-61561 on Form S-8, Registration Statement No. 033-58487
on Form S-8, Registration Statement No. 333-01277 on Form S-3,
Registration Statement No. 333-01809 on Form S-3, Registration Statement
No. 333-01893 on Form S-3, Registration Statement No. 333-19549 on Form
S-3, Registration Statement No. 333-19535 on Form S-8, Registration
Statement No. 333-19633-01 on Form S-3, Registration Statement No.
333-32035-01 on Form S-3, Registration Statement No. 333-34909-01 on Form
S-3, Registration Statement No. 333-32111 on Form S-3, and Registration
Statement No. 333-14265 on Form S-8.
Arthur Andersen LLP
Boston, Massachusetts
March 10, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ELECTRON CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JANUARY 3,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> JAN-03-1998
<CASH> 593,580
<SECURITIES> 929,118
<RECEIVABLES> 853,097
<ALLOWANCES> 55,698
<INVENTORY> 543,589
<CURRENT-ASSETS> 3,094,198
<PP&E> 1,159,913
<DEPRECIATION> 370,867
<TOTAL-ASSETS> 5,795,869
<CURRENT-LIABILITIES> 1,092,235
<BONDS> 1,742,907
0
0
<COMMON> 159,206
<OTHER-SE> 1,838,703
<TOTAL-LIABILITY-AND-EQUITY> 5,795,869
<SALES> 3,392,575
<TOTAL-REVENUES> 3,558,320
<CGS> 1,973,265
<TOTAL-COSTS> 2,117,008<F1>
<OTHER-EXPENSES> 193,562<F2>
<LOSS-PROVISION> 9,078
<INTEREST-EXPENSE> 93,125
<INCOME-PRETAX> 488,467
<INCOME-TAX> 174,713
<INCOME-CONTINUING> 239,328
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<FN>
<F1>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COST OF
PRODUCT AND SERVICE REVENUES" AND "RESEARCH AND DEVELOPMENT CONTRACTS".
<F2>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "RESTRUCTURING
AND OTHER NONRECURRING COSTS", "INTERNALLY FUNDED RESEARCH AND DEVELOPMENT" AND
"OTHER EXPENSES FOR NEW LINES OF BUSINESS".
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAIN SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ELECTRON CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> DEC-30-1995
<CASH> 462,861
<SECURITIES> 593,802
<RECEIVABLES> 522,631
<ALLOWANCES> 29,318
<INVENTORY> 332,786
<CURRENT-ASSETS> 2,056,592
<PP&E> 977,816
<DEPRECIATION> 262,228
<TOTAL-ASSETS> 3,786,339
<CURRENT-LIABILITIES> 739,446
<BONDS> 1,118,077
0
0
<COMMON> 89,006
<OTHER-SE> 1,220,723
<TOTAL-LIABILITY-AND-EQUITY> 3,786,339
<SALES> 2,075,748
<TOTAL-REVENUES> 2,270,291
<CGS> 1,239,762
<TOTAL-COSTS> 1,406,882<F1>
<OTHER-EXPENSES> 156,634<F2>
<LOSS-PROVISION> 5,534
<INTEREST-EXPENSE> 77,861
<INCOME-PRETAX> 298,808
<INCOME-TAX> 98,711
<INCOME-CONTINUING> 190,816
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 190,816
<EPS-PRIMARY> 1.10
<EPS-DILUTED> .95
<FN>
<F1>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COST OF
PRODUCT AND SERVICE REVENUES" AND "RESEARCH AND DEVELOPMENT CONTRACTS".
<F2>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "RESTRUCTURING
AND OTHER NONRECURRING COSTS", "INTERNALLY FUNDED RESEARCH AND DEVELOPMENT" AND
"OTHER EXPENSES FOR NEW LINES OF BUSINESS".
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAIN SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ELECTRON CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE QUARTER ENDED MARCH 30,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> MAR-30-1996
<CASH> 774,805
<SECURITIES> 675,752
<RECEIVABLES> 632,477
<ALLOWANCES> 29,769
<INVENTORY> 437,369
<CURRENT-ASSETS> 2,697,893
<PP&E> 1,062,938
<DEPRECIATION> 276,666
<TOTAL-ASSETS> 4,675,047
<CURRENT-LIABILITIES> 977,965
<BONDS> 1,617,647
0
0
<COMMON> 91,859
<OTHER-SE> 1,323,966
<TOTAL-LIABILITY-AND-EQUITY> 4,675,047
<SALES> 550,678
<TOTAL-REVENUES> 652,385
<CGS> 329,340
<TOTAL-COSTS> 408,003<F1>
<OTHER-EXPENSES> 32,464<F2>
<LOSS-PROVISION> 318
<INTEREST-EXPENSE> 27,636
<INCOME-PRETAX> 76,260
<INCOME-TAX> 22,676
<INCOME-CONTINUING> 41,023
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,023
<EPS-PRIMARY> .31
<EPS-DILUTED> .26
<FN>
<F1>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COST OF
PRODUCT AND SERVICE REVENUES" AND "RESEARCH AND DEVELOPMENT CONTRACTS".
<F2>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "RESTRUCTURING
AND OTHER NONRECURRING COSTS", "INTERNALLY FUNDED RESEARCH AND DEVELOPMENT" AND
"OTHER EXPENSES FOR NEW LINES OF BUSINESS".
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ELECTRON CORP.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 29,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> JUN-29-1996
<CASH> 541,195
<SECURITIES> 1,127,877
<RECEIVABLES> 604,792
<ALLOWANCES> 37,649
<INVENTORY> 449,124
<CURRENT-ASSETS> 2,878,454
<PP&E> 1,077,605
<DEPRECIATION> 283,117
<TOTAL-ASSETS> 4,900,554
<CURRENT-LIABILITIES> 925,997
<BONDS> 1,657,235
0
0
<COMMON> 141,410
<OTHER-SE> 1,409,268
<TOTAL-LIABILITY-AND-EQUITY> 4,900,554
<SALES> 1,269,793
<TOTAL-REVENUES> 1,398,144
<CGS> 702,491
<TOTAL-COSTS> 872,066<F1>
<OTHER-EXPENSES> 98,650<F2>
<LOSS-PROVISION> 2,150
<INTEREST-EXPENSE> 53,236
<INCOME-PRETAX> 157,847
<INCOME-TAX> 42,650
<INCOME-CONTINUING> 85,942
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 85,942
<EPS-PRIMARY> .63
<EPS-DILUTED> .54
<FN>
<F1>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COST OF
PRODUCTS", "COST OF SERVICES", AND "RESEARCH AND DEVELOPMENT CONTRACTS".
<F2>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COSTS
ASSOCIATED WITH DIVISIONAL AND PRODUCT RESTRUCTURING", "INTERNALLY FUNDED
RESEARCH AND DEVELOPMENT" AND "OTHER EXPENSES FOR NEW LINES OF BUSINESS".
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ELECTRON CORP.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER
28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> SEP-28-1996
<CASH> 506,528
<SECURITIES> 1,204,981
<RECEIVABLES> 630,772
<ALLOWANCES> 35,345
<INVENTORY> 441,161
<CURRENT-ASSETS> 2,950,374
<PP&E> 985,866
<DEPRECIATION> 291,108
<TOTAL-ASSETS> 4,949,500
<CURRENT-LIABILITIES> 929,127
<BONDS> 1,408,386
0
0
<COMMON> 149,110
<OTHER-SE> 1,548,370
<TOTAL-LIABILITY-AND-EQUITY> 4,949,500
<SALES> 2,013,840
<TOTAL-REVENUES> 2,138,125
<CGS> 1,209,280
<TOTAL-COSTS> 1,315,419<F1>
<OTHER-EXPENSES> 147,800<F2>
<LOSS-PROVISION> 4,343
<INTEREST-EXPENSE> 75,056
<INCOME-PRETAX> 269,186
<INCOME-TAX> 74,589
<INCOME-CONTINUING> 137,184
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 137,184
<EPS-PRIMARY> .99
<EPS-DILUTED> .85
<FN>
<F1>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COST OF
PRODUCT AND SERVICE REVENUES" AND "RESEARCH AND DEVELOPMENT CONTRACTS".
<F2>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS:
"RESTRUCTURING AND OTHER NONRECURRING COSTS", "INTERNALLY FUNDED
RESEARCH AND DEVELOPMENT" AND "OTHER EXPENSES FOR NEW LINES OF BUSINESS".
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ELECTRON CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> DEC-28-1996
<CASH> 414,404
<SECURITIES> 1,431,881
<RECEIVABLES> 650,866
<ALLOWANCES> 34,321
<INVENTORY> 432,960
<CURRENT-ASSETS> 3,131,829
<PP&E> 1,010,189
<DEPRECIATION> 305,742
<TOTAL-ASSETS> 5,141,244
<CURRENT-LIABILITIES> 913,212
<BONDS> 1,550,342
0
0
<COMMON> 149,997
<OTHER-SE> 1,604,372
<TOTAL-LIABILITY-AND-EQUITY> 5,141,244
<SALES> 2,766,002
<TOTAL-REVENUES> 2,932,558
<CGS> 1,657,746
<TOTAL-COSTS> 1,802,569<F1>
<OTHER-EXPENSES> 194,275<F2>
<LOSS-PROVISION> 6,002
<INTEREST-EXPENSE> 96,695
<INCOME-PRETAX> 301,661
<INCOME-TAX> 110,845
<INCOME-CONTINUING> 190,816
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 190,816
<EPS-PRIMARY> 1.35
<EPS-DILUTED> 1.17
<FN>
<F1>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COST OF
PRODUCT AND SERVICE REVENUES" AND "RESEARCH AND DEVELOPMENT CONTRACTS".
<F2>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS:
"RESTRUCTURING AND OTHER NONRECURRING COSTS", "INTERNALLY FUNDED RESEARCH
AND DEVELOPMENT" AND "OTHER EXPENSES FOR NEW LINES OF BUSINESS".
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ELECTRON CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH
29, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> MAR-27-1997
<CASH> 341,753
<SECURITIES> 1,174,930
<RECEIVABLES> 707,512
<ALLOWANCES> 38,784
<INVENTORY> 511,100
<CURRENT-ASSETS> 2,967,872
<PP&E> 1,073,921
<DEPRECIATION> 319,935
<TOTAL-ASSETS> 5,343,588
<CURRENT-LIABILITIES> 1,130,257
<BONDS> 1,501,830
0
0
<COMMON> 150,167
<OTHER-SE> 1,607,281
<TOTAL-LIABILITY-AND-EQUITY> 5,343,588
<SALES> 722,625
<TOTAL-REVENUES> 763,505
<CGS> 430,802
<TOTAL-COSTS> 467,140<F1>
<OTHER-EXPENSES> 50,003<F2>
<LOSS-PROVISION> 2,558
<INTEREST-EXPENSE> 21,412
<INCOME-PRETAX> 97,595
<INCOME-TAX> 28,397
<INCOME-CONTINUING> 52,058
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,058
<EPS-PRIMARY> .35
<EPS-DILUTED> .31
<FN>
<F1>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COST OF
PRODUCT AND SERVICE REVENUES" AND "RESEARCH AND DEVELOPMENT CONTRACTS".
<F2>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS:
"RESTRUCTURING AND OTHER NONRECURRING COSTS", "INTERNALLY FUNDED RESEARCH AND
DEVELOPMENT" AND "OTHER EXPENSES FOR NEW LINES OF BUSINESS".
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ELECTRON CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE
28, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> JUN-28-1997
<CASH> 288,738
<SECURITIES> 1,004,232
<RECEIVABLES> 756,341
<ALLOWANCES> 43,647
<INVENTORY> 535,307
<CURRENT-ASSETS> 2,808,149
<PP&E> 1,105,121
<DEPRECIATION> 340,654
<TOTAL-ASSETS> 5,304,637
<CURRENT-LIABILITIES> 1,012,214
<BONDS> 1,601,299
0
0
<COMMON> 150,235
<OTHER-SE> 1,591,655
<TOTAL-LIABILITY-AND-EQUITY> 5,304,637
<SALES> 1,557,373
<TOTAL-REVENUES> 1,638,521
<CGS> 912,661
<TOTAL-COSTS> 983,618<F1>
<OTHER-EXPENSES> 94,015<F2>
<LOSS-PROVISION> 5,221
<INTEREST-EXPENSE> 42,898
<INCOME-PRETAX> 210,545
<INCOME-TAX> 70,423
<INCOME-CONTINUING> 108,216
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,216
<EPS-PRIMARY> .72
<EPS-DILUTED> .65
<FN>
<F1>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COST OF
PRODUCT AND SERVICE REVENUES" AND "RESEARCH AND DEVELOPMENT CONTRACTS".
<F2>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "RESTRUCTURING
AND OTHER NONRECURRING COSTS", "INTERNALLY FUNDED RESEARCH AND DEVELOPMENT" AND
"OTHER EXPENSES FOR NEW LINES OF BUSINESS".
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ELECTRON CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
SEPTEMBER 27, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> SEP-27-1997
<CASH> 493,287
<SECURITIES> 1,036,917
<RECEIVABLES> 790,075
<ALLOWANCES> 43,235
<INVENTORY> 521,605
<CURRENT-ASSETS> 3,070,179
<PP&E> 1,119,306
<DEPRECIATION> 359,902
<TOTAL-ASSETS> 5,588,131
<CURRENT-LIABILITIES> 1,008,822
<BONDS> 1,819,445
0
0
<COMMON> 151,359
<OTHER-SE> 1,637,377
<TOTAL-LIABILITY-AND-EQUITY> 5,588,131
<SALES> 2,426,797
<TOTAL-REVENUES> 2,426,797
<CGS> 1,413,400
<TOTAL-COSTS> 1,519,427<F1>
<OTHER-EXPENSES> 145,559<F2>
<LOSS-PROVISION> 6,974
<INTEREST-EXPENSE> 67,794
<INCOME-PRETAX> 341,105
<INCOME-TAX> 118,373
<INCOME-CONTINUING> 170,075
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 170,075
<EPS-PRIMARY> 1.13
<EPS-DILUTED> 1.01
<FN>
<F1>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COST OF
PRODUCT AND SERVICE REVENUES" AND "RESEARCH AND DEVELOPMENT CONTRACTS".
<F2>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS:
"RESTRUCTURING AND OTHER NONRECURRING COSTS", "INTERNALLY FUNDED RESEARCH AND
DEVELOPMENT" AND "OTHER EXPENSES FOR NEW LINES OF BUSINESS".
</FN>
</TABLE>
