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 2, 19991, 2000
[ ] 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
incorporation or organization) (I.R.S. Employer Identification No.)
incorporation or organization)
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02454-9046
(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
------------------------------- -----------------------------------------
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. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of January 29, 1999,28, 2000, was approximately $2,569,399,000.$2,493,791,000.
As of January 29, 1999,28, 2000, the Registrant had 158,133,782156,800,687 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year ended
January 2, 1999,1, 2000, 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 May 27, 1999,18, 2000, are incorporated by reference into
Part III.
PART I
Item 1. Business
(a) General Development of Business
Thermo Electron Corporation and its subsidiaries (the(also referred to in this document as the
Company or the Registrant) develop and manufacture a broad range of products that are sold
worldwide. The Company is a worldglobal leader in monitoring, analytical,the development, manufacture,
and biomedical instrumentation; biomedical products including heart-assist devices,
respiratory-care equipment,sale of measurement and mammography systems;detection instruments used in virtually every
industry to monitor, collect, and paper recycling and
papermaking equipment. The Company also develops alternative-energy systems and
clean fuels,analyze data that provides a range of services including industrial outsourcing and
environmental-liability management, and conducts research and development in
advanced imaging, laser, and electronic information-management technologies. The
Company performs its business through wholly owned subsidiaries and divisions,
as well as majority-owned subsidiaries that are partially owned byknowledge for the
public or
private investors.
A key element inuser. For example, the Company's growth has been its abilitypowerful analysis technologies help researchers
sift through data to commercialize
innovative productsmake the discoveries that will fight disease or prolong
life; allow manufacturers to fabricate ever-smaller components required to
increase the speed and services emanating from researchquality of communications; or monitor and development
activities conducted by its various subsidiaries. The Company's strategy has
beencontrol
industrial processes on-line to identify business opportunities arising from social, economic,ensure that critical quality standards are met
efficiently and regulatory issues, and to seek a leading market share throughsafely.
In the application of
proprietary technology. As part of this strategy, the Company has acquired
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 Companylate eighties, Thermo Electron had adopted a strategy of spinning
out certain of its businesses into separate public subsidiaries in which it held
the majority ownership. By offering employees a stake in their own ventures,
Thermo Electron's objective was to maintain the entrepreneurial culture it
believed was essential to its continued growth and having these subsidiaries sell a minority interest to
outside investors. The Company believes that this strategy provides additional
motivation 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 19, 1999,development. By 1997, the
Company had 29spun out 22 public entities serving many diverse markets.
In 1998, the Company began to reorganize and simplify its structure to
increase business focus. During 1999, three of its subsidiaries that have
sold minority equity interests, 23 that are publicly tradedwere taken
private, and 6 that are
privately held. In addition,a fourth in Februaryearly 2000. Also in 1999, the Company's Thermo
Instrument Systems Inc. subsidiary completed the acquisition of Spectra-Physics
AB, which
has an 80%-owneda Stockholm Stock Exchange-listed company. As part of the acquisition of
Spectra-Physics, Thermo Instrument acquired Spectra-Physics' majority-owned
public subsidiary, Spectra-Physics Lasers, Inc. During 1998,(SPLI).
In January 2000, Thermo Electron announced a major reorganization that
would allow it to focus solely on its measurement and detection instrument
business. The Company will offer as a dividend to its shareholders two
businesses that will be spun off completely: one serving the healthcare industry
with a range of medical products for diagnosis and monitoring, and the other
supplying systems to the paper making and recycling industry as well as
fiber-based consumer products. In addition, the Company announced a proposed reorganization involvingplans to sell other
non-core businesses with aggregate revenues of more than $1 billion. The
businesses to be spun off and sold have been accounted for as discontinued
operations (see "Description of Business - Principal Products and Services"). As
part of this plan, the Company and certainintends to take private all of its subsidiaries. The goals ofremaining
public subsidiaries, except for SPLI. Except where indicated, the proposed
reorganization include consolidating and strategically realigning certain
businessesinformation
presented in this Form 10-K pertains to enhance their competitive market positions and improve management
coordination and increasing liquidity in the public markets by providing larger
market floats for the Company's publicly traded subsidiaries. If completed as
proposed, the reorganization would reduce the number of the Company's
majority-owned public subsidiaries from 23 to 16, excluding Spectra-Physics
Lasers, Inc.continuing operations.
Each component of the reorganization is subject to numerous conditions, as
outlined in Note 17 to Consolidated Financial Statements in the Registrant's
1998*1999* Annual Report to Shareholders, which information is incorporated hereininto this document by
reference.
The Company believes that this reorganization will offer a number of
long-term benefits. It will vastly simplify Thermo Electron's corporate
structure and allow it to channel all resources toward a single business -
instrumentation. It will create added value for shareholders by offering a stake
in the two spinoff companies. In addition, it will generate substantial cash
from the sale of businesses that can be reinvested in the future growth of the
Company. The Company's strategy going forward is to emphasize internal growth by
continuing to actively fund research and development, particularly in its
high-growth segments serving the life sciences and telecommunications
industries, and to augment that growth with complementary acquisitions.
Thermo Electron 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.
- --------------------
* References to 1999, 1998, and 1997 herein are for the fiscal years ended
January 1, 2000, January 2, 1999, and January 3, 1998, respectively.
2
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," "anticipates," "plans," "expects,"
"seeks," "estimates," and similar expressions are intended to - --------------------
* References to 1998, 1997, and 1996 herein are for the fiscal years ended
January 2, 1999, January 3, 1998, and December 28, 1996, respectively.
2
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 19981999 Annual Report to
Shareholders, which statements are incorporated herein by reference.
(b) Financial Information About Segments
Financial information concerning the Company's segments is summarized in
Note 14 to Consolidated Financial Statements in the Registrant's 19981999 Annual
Report to Shareholders, which information is incorporated herein by reference.
(c) Description of Business
(i) Principal Products and Services
The Company's productsThermo Electron has elected to focus on its instruments business, and, services are divided intoas
stated previously, has initiated a significant reorganization plan to accomplish
that objective. Although no longer considered a core business under the plan,
its Thermo Ecotek Corporation subsidiary will remain with the Company after it
is taken private as Thermo Electron continues to evaluate how to best exit that
business while creating maximum value for shareholders. As a result, Thermo
Electron currently reports its business in four segments: Life Sciences, Optical
Technologies, Measurement and Detection, BiomedicalControl, and Emerging Technologies, Energy and
Environment, and Recycling and Resource Recovery. Products or services withinPower Generation. This represents a
particular segment are provided by more than one subsidiary,change in the composition of its segments from prior periods, and the businessesCompany
has restated the information contained herein regarding segments for earlier
periods.
Life Sciences
The Company addresses the biotechnology and pharmaceutical markets, as
well as the clinical laboratory and healthcare industries, through its Life
Sciences segment. The segment is organized into five groups: biosciences
instruments and consumables, advanced instrumentation and consumables,
scientific equipment, clinical equipment and supplies, and information
management systems.
Biosciences instruments and consumables encompass a broad range of
one subsidiary (Thermedics Inc.)instruments, such as microplate-based handling and reading equipment, optical
biosensors, polymerase chain reaction (PCR) thermal cyclers for deoxyribonucleic
acid (DNA) amplification, and capillary electrophoresis (CE). Consumables -
disposable, one-time use, or limited life span products - include reagents,
microtiter plates, liquid-handling pipettes, and pipette tips. Biosciences
instruments are includedused primarily by pharmaceutical companies for drug discovery
and development, testing, and quality control, and by biotechnology companies
for research leading to knowledge about diseases and possible treatments. These
products are typically used on the "front end" of multi-instrument systems, as
the instruments prepare and handle samples prior to being loaded into other,
advanced instruments.
Advanced instrumentation and consumables includes the Company's offerings
of mass spectrometers, liquid chromatographs, gas chromatographs, and
multi-instrument combinations of these products, along with the vials, syringes,
and columns necessary for chromatography. As with biomolecular instruments,
these products are used by the pharmaceutical industry for drug development,
testing, and quality control; and by the biotechnology industry for research
leading to knowledge about disease and possible treatments. A significant, and
growing, application for these instruments is proteomics, which is the study of
proteins. Most drugs - about 90 percent - interact with proteins, so
3
multi-instrument systems that rapidly identify and quantify proteins are of
increasing value to pharmaceutical and biotechnology customers. In 2000, the
Company introduced an integrated, high-throughput system for the quantitative
analysis of proteins, employing the Company's new Surveyor high performance
liquid chromatograph, LCQ Deca mass spectrometer, and new TurboSEQUEST software.
Scientific equipment is used for the preparation and preservation of
chemical samples, principally in two segments.research settings for pharmaceutical, academic,
and government customers. Products in this group include ultralow-temperature
freezers, high-speed centrifuges, centrifugal vacuum concentrators, and
laboratory freeze dryers. The principalCompany also designs, manufactures, and markets
electrochemistry and other technologies for quality assurance and regulatory
compliance, primarily in the environmental, food, beverage, chemical,
pharmaceutical, and biomedical research industries. These products determine the
quality of various substances, from food and services offeredpharmaceuticals to water and
wastewater, by measuring their pH, specific ion concentration, dissolved oxygen,
and conductivity.
Clinical equipment and supplies are used by such healthcare facilities as
reference laboratories, physician-office laboratories, and hospital laboratories
to detect and diagnose disease. Products in this group include sample
preparation instruments and materials to highlight abnormal cells, blood gas and
ion-selective electrolyte (ISE) consumables, chemistry reagents, clinical
biochemistry instruments and automation equipment, and rapid diagnostic tests
for use in physicians' offices. The Company received U.S. Food and Drug
Administration (FDA) clearance in December 1998 for its FLU OIA 15-minute
diagnostic test, which detects influenza A and B in patient samples. The Company
also received FDA clearance in 1999 to market a rapid diagnostic test for
Clostridium difficile, an intestinal disease.
Information management systems provided by the Company facilitate the
monitoring and analysis of samples, as well as storage and organization of
information in the four industry segments are
described below.
Measurementlaboratories, industrial settings, and Detection
This segment includes the following businesses:
Thermo Instrument Systems Inc. and all of its subsidiaries:
Metrika Systems Corporation
ONIX Systems Inc.
Thermo BioAnalysis Corporation
Thermo Optek Corporation
ThermoQuest Corporation
ThermoSpectra Corporation
Thermo Vision Corporation
and certain public subsidiaries of Thermedics Inc.:
Thermedics Detection Inc.
Thermo Sentron Inc.
Thermo Voltek Corp.
Thermo Instrument Systems Inc.
Thermo Instrument, a majority-owned public subsidiary of theclinical testing sites.
The Company is a worldwideleading supplier of laboratory information management systems
(LIMS) and provides chromatography data systems (CDS) to analyze chromatographic
data obtained via gas or liquid chromatography and CE.
Optical Technologies
The Company is a leader in optical and energy-based systems and
technologies that control and apply light throughout the electromagnetic
spectrum for many different uses. Products within the Optical Technologies
segment are used in multiple markets, particularly the scientific instrument,
semiconductor, and telecommunications industries, to fabricate, analyze, and
implement advanced materials. These products are grouped into four categories:
spectroscopy, semiconductor, physical properties, and photonics. In addition,
the Company's majority-owned SPLI subsidiary, a leader in the design,
development, manufacture, and marketingdistribution of measurement
instruments used to monitor, collect,lasers and analyze information. Theselaser systems are
used for multiple applications in a
broad range of industries, including industrial
processing, food and beverage production, life sciences research, and medical
diagnostics.
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 key acquisitions that have provided complementary
technologies, specialized manufacturing or product-development expertise, and
broader capabilities in marketing and distribution.
3
In February 1999, Thermo Instrument completed the acquisition of
Spectra-Physics AB, a Swedish company that manufactures a wide range of
laser-based instrumentation systems, primarily for the process-control,
industrial measurement, construction, research, commercial, and government
markets. Spectra-Physics reported revenues of $442 million in 1998 and has
operations throughout North America and Europe, and a presence in the Pacific
Rim. Spectra-Physics had approximately 17.6 million shares outstanding. The
aggregate cost for Spectra-Physics will total approximately $355 million.
Thermo Instrument adopted the Company's spinout strategy in an effort to
more clearly focus its many measurement and detection technologies on specific
market niches. Excluding Spectra-Physics Lasers, Inc., a public subsidiary of
Spectra-Physics, Thermo Instrument has seven majority-owned public subsidiaries,
described below.
Metrika Systems manufactures on-line process-optimization systems that
provide real-time nondestructive analysismarkets, is also part of the composition of raw materials in
basic-materials production processes including coal, cement, and minerals. In
addition, Metrika Systems manufactures advanced systemsOptical Technologies segment.
Spectroscopy instrumentation is used principally by
manufacturers of finished flat metals, such as sheet metal, and web materials,
such as rubber, plastic foils, and glass to measure and control parameters such
as thickness and coating weight.
ONIX Systems designs, develops, markets, and services sophisticated
field-measurement instruments and on-line sensors for process-control
industries, particularly the oil and gas industry. These systems provide
real-time data collection, analysis, and local control functions to enhance
production efficiency, improve process and quality control, ensure regulatory
compliance, and increase employee safety.
Thermo BioAnalysis develops, manufactures, and markets instruments,
consumables, and information-management systems used in pharmaceutical research
and production, and in clinical diagnostics, including point-of-care test kits
for rapid diagnosis of certain illnesses.
Thermo Optek is a worldwide leader in spectroscopy instrumentation for molecular and elemental analysis
based upon energy and light measurements, as
well as systems for materials sciences including surface analysis,
characterization, preparation,measurements. These precision instruments use optics
to determine, in a nondestructive manner, the composition of a wide range of
complex liquids and physical-properties analysis.
ThermoQuest issolids. Customers include pharmaceutical, specialty
chemical, and basic material producers, who use these instruments either in a
leading manufacturer of mass spectrometers, liquid
chromatographs, and gas chromatographs forlaboratory or integrated into the pharmaceutical, environmental,
and industrial marketplaces. These analytical instrumentsproduction line.
Semiconductor products are used in the quantitativemanufacture of capital equipment
that produces and qualitative chemical analysistests semiconductors. In particular, the Company is the
leading supplier of organic and inorganic
compounds at ultratrace levels of detection. ThermoQuest also supplies
scientific equipmentmolecular beam epitaxy (MBE) reactors for the preparationmanufacture of
gallium arsenide and preservationother compound semiconductor devices. The largest
application is for microwave devices used in cellular telephones and other
high-speed wireless communications devices. In 1999, the Company introduced the
V150 MBE, a successor to its market-leading V100 MBE system. The V150 MBE helps
customers keep up with the rapidly growing demand for high-speed
telecommunications devices by significantly increasing semiconductor production
capacity.
4
Physical properties products analyze materials for viscosity, surface
tension, and thermal properties. Significant customers include the food and
beverage industries, which use high-precision viscometers to maintain quality
and consistency of chemical samples,their products. In addition, the Company manufactures
products for precision temperature control necessary for analytical, laboratory,
industrial, research and consumablesdevelopment, laser, and semiconductor applications.
Photonics businesses manufacture optical components that are used in a
variety of industries, including scientific and medical instruments,
telecommunications, and semiconductor applications.
Also a part of this segment, SPLI offers technologies of high-power
semiconductor-based laser and semiconductor laser pumped solid state laser
technologies, as well as conventional lasers and laser-related products.
Conventional lasers have unique performance characteristics that make them the
only current solution for certain demanding technical applications. SPLI also
manufactures high-power semiconductor-based lasers, which are generally more
efficient, reliable, cost-effective, and compact than conventional lasers.
SPLI's customers are in the materials processing, life sciences, research and
development, printing, and telecommunications markets. Research and development
emphasis will be on creating components for the chromatography industry.
ThermoSpectra develops, manufactures,next generation of high-speed
fiber-optic telecommunications. In 1999, SPLI introduced a new line of thin-film
filters, which are used to separate data (light) within fiber-optic cable,
allowing more wavelengths of light to travel down the cable to increase what is
known as the "bandwidth" or capacity of the fiber.
Measurement and markets precision imagingControl
The Company provides a range of real-time, on-line sensors, monitors, and
inspection, temperature-control,control systems through its Measurement and testControl segment that not only help
manufacturers ensure their processes and measurement instruments. These
instruments are generally combined with proprietary operationsindustrial practices meet their own and
analysis
software to provide industrialgovernment standards for quality, reliability, and research customers with integrated systems to
address specific needs.
Thermo Vision designs, manufactures,safety, but also reduce
costs, save materials, and markets a diverse array of
photonics products (light-based technologies) including optical components,
imaging sensors and systems, lasers, optically based instruments,
opto-electronics, and fiber optics.increase productivity. These products are used in applications
including medical diagnosticsorganized
into five groups: environmental, weighing and analytical instrumentation; semiconductor
manufacturing; X-ray imaging; physics, chemistry, and biology research; and
telecommunications.
Thermo Instrument also includes wholly owned businesses, which produceinspection, quality control, field
instruments and sensors, and oil and gas.
Environmental products include a complete line of instruments and systems
for detecting and monitoring environmental pollutants fromgenerated by industrial and mobile
sources,sources. These include continuous gaseous and aerosol monitors, and water
quality instruments for assessing ambient air quality and emissions from
stationary sources. Specific compounds measured include oxides of nitrogen,
sulfur dioxide, ozone, carbon monoxide, carbon dioxide, volatile organic
compounds, fine particulates, total organic carbon, and total organic halogens.
The Company also provides a comprehensive line of radiation and gas
detectors for controlling and detecting the presence of harmful radiation and
combustible and toxic gases for worker safety, and for
detecting radioactive contamination.
4
Thermedics Inc.
Three majority-owned public subsidiariesplant safety. These products range
from the simplest handheld general-purpose portable equipment to more
sophisticated stationary installed systems.
Weighing and inspection systems include a comprehensive family of Thermedics, a majority-owned
public subsidiary of the Company, manufactureon-line
weighing, force measurement, and detection
instruments.
Thermedics Detection develops, manufactures, and markets high-speed on-line
analysis systems used for product quality assurance, laboratory analysis, and
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,
for the beverage, food, and other industries. Thermedics Detection also makes
instruments that measure moisture and other product components, including fat,
protein, and solvents, in numerous consumer and industrial products, along with
electrode-based chemical-measurement systems used in the agricultural,
biomedical research, food processing, pharmaceutical, water-treatment, and other
industries. The company also offers an ultrahigh-speed gas chromatograph that
permits manufacturers to conduct laboratory-quality analysis for near-on-line
process-control applications. In addition, Thermedics Detection makes security
instruments that use trace particle- and vapor-detection techniques for
forensics, search, and screening applications.
Thermo Sentron designs and manufactures high-speed precision-weighing and inspection equipment for two principal markets,consumer products,
packaged goods, and bulk materials, that use its products to meetmaterials. Products for the packaged and consumer goods
sector provide customers with a quality and productivity objectives.
The company's checkweigherssolution by ensuring
that each package contains the proper quantity or a specific item, whether it be
a food product or a book ordered over the Internet. In addition, the Company
employs in its systems various technologies including X-ray imaging and
metal detectorsultratrace chemical detection to inspect food, beverage, and pharmaceutical
packages to see that they are free of physical contaminants and contain no
missing or broken parts. In bulk materials, the Company's product line includes
solids flow monitoring, level measurement, and force and tension measurements
for a wide variety of process industries including food, chemicals, plastics,
and pharmaceuticals.
5
Quality control systems are manufactured by the Company for on-line
process optimization, taking ultrahigh-speed noninvasive measurements and
analyzing the physical and chemical properties of streams of raw materials in
real time. These systems are used primarily to analyze the composition of raw
materials for certain basic industries, such as coal, cement, and minerals
production. This technology allows the entire stream of material to be analyzed
and eliminates the need for off-line sampling, which adds production time and
cost.
Process optimization systems are also provided by the food-processing, pharmaceutical,Company for the
continuous production of certain web-type finished materials, such as metal
strip, plastics, foil, rubber, glass, and mail-order industries. Its bulk-materials
product linepaper. The Company's instruments
measure the total thickness, basis weight, and coating thickness of such
materials, and are also capable of detecting defects the size of a pinhole in
these webs. They can measure a single point on the material, several points, or
generate a web profile. Measurements are gathered without contacting the
material or interfering with the production process, and are highly accurate and
extremely reliable - even in hostile environments such as steel mills. These
systems provide tangible economic benefits for customers, while reducing
materials waste and energy consumption.
Field instruments and sensors are provided by the Company for use in the
process control industry. These instruments measure level, density, flow, and
composition, acquiring data for use in controlling industrial and chemical
processes. Level and density instruments include point-level, continuous-level,
and density sensors that use a variety of technologies, including commercial
radiation, radar, ultrasonic, and vibrational measurement principles. Flow
instrumentation includes conveyor-belt scales, solid level-measurementultrasonic flowmeters, in-line turbine meters,
pitostatic air flow monitors, and conveyor-monitoringelectronic flow metering instruments used for
natural gas custody transfer. The Company's on-line composition analysis
instruments are used to measure chemical compounds in a variety of liquids,
gases, and solids using gas chromatographic, mass spectrographic, and X-ray
fluorescent technologies. The Company also offers strip chart and video graphic
recorders along with instrumentation for measuring and recording AC power in
industrial facilities.
Oil and gas products cover specifically designed and installed sensor
systems that are used to provide real-time measurement, data communication, and
local control of process functions, primarily for customers in the production
segment of the oil and gas industry. These special-purpose instruments and
sensors include rod pump controllers, remote terminal units, gas-injection
systems, and samplingboth topside and subsea wellhead safety and control systems. These
systems sold toand the miningaftermarket services provided are required by oil and material-processing industries, as well as to electric utilitiesgas
companies throughout the world, particularly those operating offshore platforms.
The Company's electrical generators, switchgear, and chemical
and other manufacturers. With its June 1998 acquisition of the
product-monitoring group of Graseby Limited, a subsidiary of Smiths Industries
plc, Thermo Sentron broadened its core product lines and also added the
production of thermal printers that apply information such as bar codes, lot
numbers, and "sell by" dates to labels on food and pharmaceutical products.
Thermo Voltek designs, manufactures, and markets test instruments and a
range of products related to power amplification, conversion, and quality.
Thermo Voltek's power productsmotor control units are
used in communications, broadcast, research,
and medical imaging applications. Its test instruments allow manufacturers of
electronic systems and integrated circuits to test for electromagnetic
compatibility.
Biomedical and Emerging Technologies
This segment primarily includes the following businesses:
Thermo Biomedical
Certain subsidiaries of Thermedics Inc., including its public
subsidiary
Thermo Cardiosystems Inc.
ThermoTrex Corporation
Trex Medical Corporation
ThermoLase Corporation
Thermo Coleman Corporation
This segment comprises a number of diverse businesses, both wholly and
publicly owned, that supply a wide rangevariety of medical products such as medical
systemsindustrial and devices for diagnostic imaging, cardiovascular support, respiratory
care, neurodiagnostics, sleep analysis, wireless patient monitoring, and
hemostasis management. The Company's biomedical products are provided to
hospitals, clinics, universities, private-practice medical offices, and medical
research facilities.
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Thermo Biomedical
Thermo Biomedical consists of a group of wholly owned companies that
serve a range of healthcare markets. Bear Medical Systems Inc. designs,
manufactures, and markets respiratory products, primarily ventilators, for
pediatric and adult care. Bird Medical Technologies, Inc. develops,
manufactures, and sells respiratory-care equipment and accessories and
infection-control products. Medical Data Electronics, Inc. is a
manufacturer of wireless, portable patient-monitoring systems. Nicolet
Biomedical Inc. is a leading manufacturer of instruments for assessing
muscle, nerve, sleep, hearing, and brain blood-flow disorders, various
neurologic disorders, and for related work in clinical neurophysiology.
Nicolet Biomedical is also a leading manufacturer of products used to
evaluate peripheral vascular disease, as well as products to detect fetal
heartbeat. SensorMedics Corporation is a leading provider of systems for
pulmonary function diagnosis, and a producer of respiratory gas analyzers,
physiological testing equipment, and automated sleep-analysis systems.
The Company's wholly owned Tecomet Inc. subsidiary provides specialty-metals
fabrication services required for biocompatible orthopedic devices used in human
joint reconstruction and trauma surgeries, surgical tools, and for high-quality
aerospace and other commercial applications.
Thermedics Inc.
Thermo Cardiosystems, a majority-owned public subsidiary of Thermedics, and
the wholly owned businesses of Thermedics also manufacture biomedical products.
Thermo Cardiosystems has developed an implantable left ventricular-assist
system (LVAS) called HeartMate(R) 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
(CE) 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, was
granted FDA approval in September 1998 for use as a bridge to transplant. In
Europe, the electric device is used both as a bridge to transplant and as an
alternative to medical therapy.
Thermo Cardiosystems is also pursuing the development of next-generation
devices, including high-speed rotary blood pumps that are relatively small and
could potentially provide cardiac support in small adults and children.
Thermo Cardiosystems is also a leading manufacturer of hemostasis-management
products, including blood coagulation-monitoring instruments, and also supplies
skin-incision devices used to draw small blood samples precisely and with
minimal discomfort.
Thermedics' wholly owned businesses provide proprietary thermoplastic
polyurethanes used in medical disposables and industrial products, and
enteral-feeding systems for patients who are unable to feed themselves but do
not require intravenous support.
ThermoTrex Corporation
ThermoTrex, a majority-owned public subsidiary of the Company, including two
majority-owned public subsidiaries, are included in the Biomedical and Emerging
Technologies segment.
6
Trex Medical, a public subsidiary of ThermoTrex, designs, manufactures, and
markets mammography equipment and minimally invasive digital breast-biopsy
systems; general-purpose and specialized medical X-ray equipment, including
imaging systems used during interventional cardiac procedures such as balloon
angioplasty; and dental X-ray systems. Trex Medical sells its systems worldwide
principally through a network of independent dealers and, to a lesser extent, on
a direct basis. In addition, Trex Medical manufactures breast-biopsy and X-ray
systems as an original equipment manufacturer for other medical equipment
companies such as the General Electric Company.
In early December 1997, Trex Medical submitted a 510(k) application to the
FDA seeking clearance to market its digital imaging system for mammography,
believing that this advanced technology could help radiologists manipulate and
enhance image quality to scrutinize subtle differences that may otherwise go
undetected on film-based X-rays. In December 1998, the FDA withdrew Trex
Medical's application on the basis that it was unable to determine substantial
equivalence between full-field digital mammography and conventional film-based
systems from the data provided. In January 1999, the FDA deemed the application
active again; however, Trex Medical will be required to submit additional
information.
ThermoLase, also a public subsidiary of ThermoTrex, developed a patented
hair-removal system called SoftLight(R), 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. In May 1998, ThermoLase received
510(k) clearance from the FDA to use the SoftLight laser for cosmetic skin
resurfacing.
ThermoLase had initially implemented a strategy of offering its laser-based
hair-removal services through a network of spas and through physician licensees.
However, because results in the marketplace would not support the company's
premium pricing structure and its substantial infrastructure costs, ThermoLase
has reassessed its strategy and repositioned its offerings.
ThermoLase added its new skin-resurfacing service, and in June 1998,
acquired The Greenhouse Spa, Inc. in an effort to bring traditional destination
spa services to its day spa network. Of its 15 original spas, ThermoLase
announced the closure of three in the U.S. and one overseas, with the remaining
domestic spas now operating under the Greenhouse name. ThermoLase is evaluating
the performance of individual spas to determine which are most viable under the
Greenhouse format and, if appropriate, will close or sell additional spas.Power Generation
Through its wholly owned Creative Beauty Innovations (CBI) subsidiary,
ThermoLase also offers personal-care products such as lotions, cleansers, and
energy drinks that are sold through the Greenhouse Spas and other high-end
salons, department stores, and discount chains under both CBI brand names and
private labels.
Trex Communications Corporation, a majority-owned privately held subsidiary
of ThermoTrex, manufactures and markets ground-based satellite communication
systems and related components and has developed and is in early-stage testing
of its laser communications technology designed to move very large amounts of
data quickly, via lasers without the need for wires or licensing from the
Federal Communications Commission.
ThermoTrex, through a wholly owned business 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, digital imaging, 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
millimeter-wave camera intended to see through clouds and fog and certain opaque
objects to enhance safety in aerial navigation, a space surveillance system
designed to produce high-resolution images of low-earth-orbit satellites, a
rapid optical beam steering laser radar system, and direct-detection digital
imaging technology for certain medical imaging fields.
7
Thermo Coleman Corporation
Thermo Coleman, a majority-owned privately held subsidiary of the Company,
provides systems engineering, technology support, and information-technology
services and products to government and commercial markets. 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 Information Solutions Inc., a majority-owned privately held
subsidiary of Thermo Coleman, develops commercial applications for information
technology, including integrated document management software, Internet products
and services, and virtual reality products for education and entertainment.
Other
A wholly owned subsidiary of the Company, Thermo Digital Technologies,
L.L.C., has a major contract to supply advanced digital passport printer
technology to the U.S. Department of State for its 15 passport issuing centers
throughout the country. This equipment prints photographic images and other
personal data in a single step to enhance speed and security in passport
production.
Energy and Environment
This segment includes the following businesses:
Thermo Ecotek Corporation
Thermo TerraTech Inc.
ThermoRetec Corporation
The Randers Killam Group Inc.
Thermo Power Corporation
Thermo Ecotek Corporation
Thermo Ecotek, a majority-owned subsidiary ofbusiness, the Company develops, owns, and
operates independent (non-utility)(nonutility) electric power-generation facilities that
use environmentally responsible technologies, developsin this
country and markets clean
alternative fuels,overseas, as well as a natural gas gathering, storage, and produces and sells biopesticides.marketing
business in the U.S.
Thermo Ecotek currently operates sevensix power plants fueled by agricultural
and wood wastes, known as biomass. Its facilities are typically 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 the development of additional biomass projects overseas and other
power-generation projects both in the U.S. and overseas. In the U.S., where the
Company believes
that utility deregulation may present opportunities for updating, agingor repowering,
existing plants and is pursuing the development of additional power projects
both in the U.S. and overseas. In November 1997, Thermo Ecotek purchased two
deregulated plants in southern California in November 1997 for refurbishing and repowering, and
recently acquired the
rights to develop a similar site in Florida.Florida in January 1999. Overseas, Thermo Ecotek formed a joint venture in Italy and is in the
process of
developing biomass-fueled electric power facilities that it will operate. In
early 1998, Thermo Ecotek, through a wholly owned subsidiary's participation in
a joint venture,Company indirectly acquired a majority interest in two energy centers in the
Czech Republic.Republic in early 1998, and in September 1999 acquired an electricity
generating facility in Germany.
Thermo Ecotek is also expanding beyondestablished a Texas-based natural gas gathering,
storage, and marketing business in 1998. Called Star Natural Gas, this business
provides midstream services to the natural gas industry by offering natural gas
gathering capabilities from the wellhead to the transmission pipeline; gas
processing, which involves the extraction of natural gas liquids; gas treatment
for removal of impurities; and underground storage facilities. These services
provide a means by which gas producers move and market their products.
6
The Company believes that global energy deregulation presents future
opportunities for independent power generation into other products
and processes that protect the environment.generation. However, since Thermo Ecotek has
been deemed a non-core business according to Thermo Electron's reorganization
plan, any future investment will be funded solely by Thermo Ecotek.
In August 1995, through two wholly
owned subsidiaries, Thermo Ecotek entered into a Limited Partnership Agreement
with KFx Wyoming, Inc., a subsidiary of KFx, Inc., to develop, construct, and
operate a coal- beneficiationcoal-beneficiation plant in Gillette, Wyoming. The facility employsemployed
patented "clean coal" technology to remove excess moisture and increase energy
from subbituminous coal extracted from Wyoming's Powder River Basin.low-grade regional coal. Although Thermo Ecotek has also recently establishedbelieves the technology
employed at the plant was viable, and a natural gas gathering, storage, and
marketing business.high-quality coal product was produced,
various operational problems were encountered that would require a significant
investment to yield production volumes that would meet the Company's objectives.
As a result, in May 1999, Thermo Ecotek also develops, manufactures, and markets environmentally
friendly products for agricultural pest control through its majority-owned
privately held Thermo Trilogy Corporation subsidiary.
8
Thermo TerraTech Inc.
Thermo TerraTech, a majority-owned public subsidiarydecided to cease operation of the Company,
provides industrial outsourcing servicesplant
and manufacturing support encompassinghold for sale its investment in the facility.
Discontinued Operations
As a broad rangeresult of specializations, includingits reorganization plan announced January 31, 2000, in
which Thermo Electron will take private, spin off, and sell a number of
companies to focus on the instrumentation marketplace, a number of businesses
have been accounted for as discontinued operations. The major businesses
included in this category are as follows:
Businesses to be spun off:
Thermo Fibertek companies
Thermo Fibertek: papermaking and recycling equipment and water-management
systems
Thermo Fibergen: fiber-based composite products and water-clarification
and fiber recovery systems
New Medical Products company
Thermo Biomedical: neurodiagnostic monitoring, vascular, and audiology
systems; respiratory-care products; and portable
patient-monitors
Thermedics Medical: biocompatible polymers; cardiac and respiratory
diagnostic and monitoring equipment; and enteral
feeding systems
Businesses to be sold include the following:
Thermo Cardiosystems: heart-assist devices
Trex Medical: medical imaging systems
Thermo TerraTech: environmental management and infrastructure engineering
design
and construction, environmental compliance, laboratory testing, and metal
treating.
ThermoRetec, a majority-owned public subsidiary ofservices
Thermo TerraTech, is a
national provider of environmental management services in the areas of
industrial, nuclear, and soil remediation, as well as waste-fluids recycling.
ThermoRetec helps clients manage problems associated with environmental
compliance, waste management, and the cleanup of sites contaminated with organic
or toxic wastes.
The Randers Killam Group, another majority-owned public subsidiary of Thermo
TerraTech, provides comprehensiveColeman: systems engineering and outsourcinganalytical services
in such
areas as water and wastewater treatment, highway and bridge projects, process
engineering, construction management, and operational services.
Thermo EuroTech N.V., a majority-owned privately held subsidiary of Thermo
TerraTech, provides remediation and recycling services in Europe, specializing
in converting "off-spec" and contaminated petroleum fluids into usable oil
products, and providing comprehensive in-plant waste management and recycling
services to high-tech manufacturers.
In addition, two wholly owned subsidiaries of Thermo TerraTech provide
metallurgical processing services using thermal-treatment equipment for
customers in the automotive, aerospace, defense, and other industries, and
analytical laboratory services, primarily for pharmaceutical, environmental, and
food testing.
Thermo Power Corporation
Thermo Power, a majority-owned public subsidiary of the Company, develops
and commercializes advanced traffic-control systems and related products,
industrial refrigeration equipment, and commercial cooling and cogeneration
systems. The Company also conducts research and development on advanced power
and pollution-control technologies, and offers propane-powered lighting
products, as well as lighting products for the automotive, sporting goods, and
marine markets.
During 1998, Thermo Power completed its divestiture of the industrial and
marine engine product lines of its Crusader Engines division. This divestiture
was the result of changing market conditions that resulted in declining
profitability at Crusader, and the desire to improve its focus on promoting its
core traffic-control operations.
Thermo Power's Peek plc subsidiary, acquired in November 1997, is a
U.K.-based company that offers a range of traffic-control systems for urbanPeek: intelligent traffic control motorway management, and public transportation management in
cities worldwide. Products 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-designedNuTemp: industrial refrigeration systems
used for cooling,
freezing, and cold-storage applications 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, through its privately held subsidiary, ThermoLyte Corporation,
is also developing and commercializing propane-powered lightingTrilogy: biopesticide products
for
home or recreational use, and, through a recent acquisition, provides specialty
lights for the automotive, sporting goods, and marine markets.
In addition, Thermo Power designs, develops, markets, and services packaged
cooling and cogeneration systems fueled principally by natural gas, and conducts
sponsored research involving various instrumentation, control, and heat-recovery
technologies.
9
Recycling and Resource Recovery
This segment primarily includes the following businesses:
Thermo Fibertek Inc.
Thermo Fibergen Inc.
Thermo Fibertek, a majority-owned public subsidiary of the Company, designs
and manufactures stock-preparation equipment, accessories, and water-management
systems for the paper and paper recycling industries. 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. Thermo Fibertek is a leading equipment
manufacturer for the worldwide paper and paper recycling industries.
Thermo Fibergen, a majority-owned public subsidiary of Thermo Fibertek,
designs, builds, owns, and operates plants to help pulp and paper mill customers
"close the loop" in their water and solids systems on a long-term contract
basis. The plants clean and recycle water and long fiber for reuse in the
papermaking process. In July 1998, the Company completed construction, and began
operating, its first plant.
Thermo Fibergen also uses a patented process to convert papermaking
byproducts into granules that are used for various applications, including
carriers for agricultural chemicals, oil and grease absorption, and cat box
filler, with additional uses under development.
This segment also includes two wholly owned subsidiaries of the Company that
manufacture electroplating systems and related wastewater-treatment equipment
and accessories, and produce steamPeter Brotherhood: industrial turbines and compressors.compressors
(ii) and (xi) New Products; Research and Development
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.
During 1999, 1998, 1997, and 1996,1997, the Company expended $367.3$171.1 million, $335.4$128.0
million, and $299.3$123.9 million, respectively, on research and development.
Of these
amounts, $154.2 million, $143.7 million, and $144.8 million, respectively, were
sponsored by customers and $213.2 million, $191.6 million, and $154.4 million,
respectively, were Company-sponsored.7
(iii) Raw Materials
Certain raw materials used in the manufacture of Thermo Cardiosystems' 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 delay shipments of Thermo Cardiosystems'
LVAS.
Except as described above, inContinuing Operations
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.
10
Discontinued Operations
Certain raw materials used in the manufacture of Thermo Cardiosystems'
left ventricular-assist systems (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 and components or developing alternative
sources for materials and components supplied by a single source. Although
Thermo Cardiosystems 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 Thermo Cardiosystems will not experience shortages of certain
materials or components in the future that could delay shipments of the LVAS.
The cost to Thermo Cardiosystems to evaluate and test alternative
materials and components and the time necessary to obtain FDA approval for these
materials and components are inherently difficult to determine because both time
and cost are dependent on at least two factors: the similarity of alternative
materials or components to the original materials or components, and the amount
of third-party testing that may have already been completed on alternative
materials or components. There can be no assurance that the substitution of
alternative materials or components will not cause delays in Thermo
Cardiosystems' LVAS development program or adversely affect Thermo
Cardiosystems' ability to manufacture and ship LVAS to meet demand.
(iv) Patents, Licenses, and Trademarks
Continuing Operations
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.
Discontinued Operations
Thermo Cardiosystems has received correspondence from a third party
alleging that the textured surface of the LVAS housing infringes certain patent
rights of such third party. In general, an owner of intellectual property can
prevent others from using such property without a license and is entitled to
damages for unauthorized usage. Thermo Cardiosystems has investigated the bases
of the allegation and, based on the opinion of its counsel and the Company's
assessment of the proceedings in the United States Patent and Trademark Office
to date, it believes that if it were sued on these bases, it would have
meritorious defenses. Given the inherent uncertainties in dispute resolution,
however, if Thermo Cardiosystems were sued and the outcome were unfavorable,
Thermo Cardiosystems' results of operations or financial condition could be
materially adversely affected in amounts Thermo Cardiosystems cannot reasonably
estimate.
8
(v) Seasonal Influences
Certain businesses within the Energy and Environment segment are impacted by
seasonal influences:
Thermo Ecotek, earnswhich represents the Power Generation segment, historically
has earned 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 provideprovided strong incentives to operate during
this period of high demand. Conversely, Thermo Ecotek historically has operated
at a marginal profit during the first calendar quarter due to the rate structure
under these agreements. Funding patternsDue to the expiration of government entities, as well as seasonality, impact
quarterly revenues and incomethe fixed price contracts at
Thermo Power's Peek subsidiary. Peek has
historically experienced relatively higher sales and net incomeEcotek's California plants, the seasonality of this business is expected
to be reduced 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.future.
There are no other material seasonal influences on the Company's sales of
products and services.products.
(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 Power Generation segment derived 10% or more of its revenues during
the past three years from its three most significant electric utility customers.
Revenues from Southern California Edison as a percentage of the Power Generation
segment's revenues were approximately 34%, 35%, and 34% in 1999, 1998, and 1997,
respectively. Revenues from Pacific Gas & Electric as a percentage of the Power
Generation segment's revenues were approximately 26%, 34%, and 35% in 1999,
1998, and 1997, respectively. Revenues from Public Service of New Hampshire as a
percentage of the Power Generation segment's revenues were approximately 19%,
19%, and 20% in 1999, 1998, and 1997, respectively.
(viii) Backlog
The Company's backlog of firm orders at year-end 1999 and 1998 was as
follows:
(In thousands) 1999 1998
- ------------------------------------------------------------------------------------- -------- --------
Life Sciences $110,224 $ 91,250
Optical Technologies 200,421 122,361
Measurement and Control 114,138 96,036
Power Generation 47,245 98,733
-------- --------
$472,028 $408,380
======== ========
The Company believes substantially all of the year-end 1999 backlog will
be filled during 2000. The decrease in backlog at the Power Generation segment
primarily results from the expiration of fixed price contracts at Thermo Ecotek.
(ix) Government Contracts
Not applicable.
9
(x) Competition
The markets for the Company's products are highly competitive. The Company
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. In many markets, the Company competes with large analytical
instrument companies such as Agilent Technologies; PerkinElmer, Inc.; Varian
Associates, Inc.; Waters Corporation; and Hitachi, Ltd. Certain products
manufactured by the Company also compete with products sold by numerous smaller,
specialized firms.
Life Sciences
Biosciences instruments and consumables. The Company competes with
PerkinElmer; Molecular Devices Corporation; Beckman Coulter, Inc.; Bio-Rad
Laboratories, Inc.; Agilent; MJ Research Technology; Qiagen Corporation; Biacore
International, Inc.; Nalge Nunc Inc.; Corning-Costar Corporation; Rainin
Instruments; Greiner GmbH; and Eppendorf GmbH. The Company competes primarily on
the basis of technical performance, user convenience, and, to a lesser extent,
price.
Advanced instrumentation and consumables. The Company's backlogprincipal
competitors include Agilent, Waters, Shimadzu Corporation, and PerkinElmer. The
Company competes primarily on the basis of firm orders at year-end 1998technical performance, customer
service and 1997 was:
(In thousands) 1998 1997
- -------------------------------------------------------------------------------------- ---------- ----------support, and price.
Scientific equipment. The Company's principal competitors in this market
are Jouan S.A., NuAire Inc., Sanyo Electric Co. Ltd., Labconco Corporation,
Corning, Fisher Scientific International Inc., Mettler-Toledo International
Inc., Beckman Coulter, Metrohm Ltd., Radiometer, Kyoto, ManTech,
and Denver Instruments. In this market, the Company competes primarily on the
basis of technical performance, customer service and support, and price.
Clinical equipment and supplies. The Company competes with Leica
Microsystems; Sakura Finetek U.S.A., Inc.; Ventana Corporation; Cytyc
Corporation; Wescor Inc.; Jewett Inc.; and Mopec Inc. The Company competes
primarily on the basis of quality, price, and service.
In the clinical chemistry reagent market, the Company's competitors
include Abbott Laboratories; BioChem Pharma; Chiron Corporation; and Sigma
Diagnostics, a division of Sigma-Aldrich Co. The Company competes in this market
primarily on the basis of product quality and price.
Competitors in the market for rapid diagnostic test kits are Abbott
Laboratories; Becton, Dickinson and Company; Roche-Boeringher Manheim; and
Quidel Corporation. The Company competes primarily on the basis of its
innovative technology as well as price.
Information management systems. The Company's competitors include
PerkinElmer, PE Biosystems, Beckman Coulter, Agilent, LabVantage Solutions, LIMS
U.S., Scientific Software Inc., and Waters. The Company competes primarily on
the basis of product performance and price.
Optical Technologies
Spectroscopy. In the spectroscopy market, the Company competes primarily
with the Analytical Instrument division of PerkinElmer, Varian, Agilent, and
Bio-Rad. The Company competes primarily on the basis of quality, performance,
technology, and price.
10
Semiconductor. The Company competes primarily with Riber Instruments S.A.
and Oxford Instruments plc. In this market, the Company competes primarily on
the basis of quality, performance, technology, and price.
Physical properties. The Company competes with TA Instruments, Inc., a
subsidiary of Waters; and Rheometrics Scientific Inc. The Company offers
mid-level products in this market, with instruments that operate on a
personal-computer platform. The Company competes in this market primarily on the
basis of quality, performance, and price.
Photonics. The Company competes primarily on the basis of technical
suitability, product performance, reliability, and price. Principal competitors
include Optical Coating Laboratory, Inc. and Newport Corporation.
Measurement and Detection $309,600 $331,600
BiomedicalControl
Environmental. The Company's principal competitors include Monitor Labs
Incorporated; Advanced Pollution Instruments; Rupprecht & Pataschnick Co., Inc.;
and Emerging Technologies 281,300 214,000
EnergyMine Safety Appliances Co. The Company competes in this market primarily
on the basis of technical performance, price, reliability, and Environment 288,100 274,700
Recyclingcustomer service.
Weighing and Resource Recovery 77,300 75,200
-------- --------
$956,300 $895,500
======== ========
Backlog at the Measurement and Detection segment decreased due to a $15.4
million decline at Thermo Instrument primarily due to lower backlog at Thermo
Optek and ThermoSpectra, principally as a result of a decrease in demand in Asia
and the slowdown in the semiconductor and related industries. To a lesser
extent, the decrease in the Measurement and Detection segment backlog was due to
Thermedics Detection's completion of its contract with the U.S. Federal Aviation
Association and a decrease in demand at Thermo Voltek.
11
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 1998 backlog will be filled
during 1999.
(ix) Government Contracts
Not applicable.
(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:
Measurement and Detection
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.
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
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, ease of
use, 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. Thermedics Detection's
electrode-based chemical-measurement products compete with several international
companies. In the markets for these products, the company competes on the basis
of performance, service, technology, and price.
Thermo Voltek competes in this market for electromagnetic compatibility
testing equipment 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.
Biomedical and Emerging Technologies
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,
and Bear Medical Systems, is based to a large extent upon technical performance.
The Company is aware of one other company, Baxter Healthcare Corporation,
that has received premarket approval (PMA) from the FDA for an implantable LVAS
similar to Thermo Cardiosystems' LVAS. Also, the Company is aware of one other
company, Thoratec Laboratories Corporation, that has received the same approval
from the FDA for its cardiac-assist device. This is an external device,
positioned on the outside of the patient's chest, and is intended for short-term
use in the hospital environment. In November, this company announced that it had
12
received approval from the FDA for an investigational device exemption (IDE) for
a portable power source. The Company is aware that other cardiac-assist devices
are in various stages of development by other companies, including a total
artificial heart that is currently undergoing clinical trials. The requirement
of obtaining FDA approval for commercial sale of an LVAS in the United States is
a significant barrier to entry into the United States 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
for commercial sale. In addition, other research groups and companies, some that
have significantly greater resources than those of the Company, are developing
cardiac 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, and price.
Competition in the market for medical devices is also significantly affected by
the reimbursement policies of government and private insurers. Any product for
which reimbursement is not available from such third-party payors will be at a
significant competitive disadvantage.
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. A number of other companies have received clearance
from the FDA to market their laser-based systems for the removal of unwanted
facial and body hair. 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.
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 the nature of the services offered, the quality of products and
services, past performance, customer relationships, marketing competence,
infrastructure, and price. Federal procurement policies increasingly emphasize
past performance. As government funding becomes more scarce, particularly for
defense projects, the competition for such funding will become more intense.
Energy and Environment
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 performance, quality, and price.
13
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 competitors to be Siemens AG and
Econolite Control Products, Inc. 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 to a lesser extent,
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.
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.
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.
Recycling and Resource Recovery
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, price, service, technical expertise,
and product innovation. A significant portion of the Company's business is
generated from its existing customer base. To maintain this base, the Company
has emphasized a problem-solving relationship with its customers.
(xii) Environmental Protection Regulations
The Company believes that compliance by the Company 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 2,inspection. Major competitors in the packaged-goods and
bulk-materials markets are Ishida Scales Mfg. Co., Ltd.; Mettler-Toledo AG; Carl
Schenck AG; and Milltronics Corporation. Competitive pressures affecting the
market for precision-weighing and inspection equipment include customer service
and support, quality and reliability, price, accuracy, ease of use, distribution
channels, technical features, compatibility with customers' manufacturing
processes, and regulatory approvals.
Quality control. The Company's principal competitors include Scantech
Limited, Integrated Measurement Systems, Inc., Toshiba Corporation, Yokogawa
Electric Corporation, and Infrared Engineering Limited. The Company competes
primarily on the basis of technical performance, customer service, and, to a
lesser extent, price.
Field instruments and sensors. In the field measurement instruments and
sensors market the Company competes primarily on quality and reliability,
technical features, accuracy, ease of use, price, and reputation for aftermarket
service. The Company competes with a few large competitors in each product area
and with many companies within specific industries. Major competitors include
Fisher-Rosemount, a division of Emerson Electric Co., Inc.; Asea Brown Boveri
(Holding) Ltd.; and Yokogawa.
Oil and gas. The Company has a relatively small presence within the large
and varied process-control marketplace, which is extremely fragmented and
consists of several large companies, including Fisher-Rosemount, Elsag Bailey,
and Honeywell Process Control, as well as numerous smaller companies. The
Company competes in this market primarily on the basis of technical performance,
customer service, price, and reliability.
Power Generation
The worldwide independent power market consists of numerous companies,
ranging from small startups to multinational firms. In addition, a number of
regulated utilities have created subsidiaries that compete as nonutility
generators. Nonutility generators often specialize in market niches, such as a
specific technology or fuel (for example, 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 nonutility generators seek to develop projects powered by the best
fuel available. Many companies in this market have substantially greater
financial, technical, and operational resources than the Company. The Company
competes primarily on the basis of project experience, technical expertise,
capital resources, and power pricing.
11
(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 1, 2000, the Company employed approximately 25,400 persons, of
which 14,160 were employed by the Company's continuing operations and 11,240 by
the Company's discontinued operations.
(d) Financial Information About Geographic Areas
Financial information about geographic areas is summarized in Note 14 to
Consolidated Financial Statements in the Registrant's 1999 the Company employed approximately 23,600 persons.
(d) Financial Information About Geographic Areas
Financial information about geographic areas is summarized in Note 14 to
Consolidated Financial Statements in the Registrant's 1998 Annual Report to
Shareholders, which information is incorporated herein by reference.
14
(e) Executive Officers of the Registrant
Name Age Present Title (Fiscal Year First Became
Executive Officer)
------------------------------------------------------------------------
George N. Hatsopoulos 72 Chairman of the Board and Chief Executive
Officer (1956)
Arvin H. Smith 69 President (1983)
Brian D. Holt 49 Chief Operating Officer, Energy and
Environment (1998)
John T. Keiser 63 Chief Operating Officer, Biomedical and
Emerging Technologies (1998)
Earl R. Lewis 55 Chief Operating Officer, Measurement and
Detection (1998)
William A. Rainville 57 Chief Operating Officer, Recycling and
Resource Recovery (1993)
Theo Melas-Kyriazi 39 Chief Financial Officer and Vice President
(1998)
Paul F. Kelleher 56 Senior Vice President, Finance and
Administration (1982)
Each executive officer serves until his successor is chosen or appointed and
qualified or until earlier resignation, death, or removal. Messrs. Hatsopoulos
and Kelleher have held comparable positions with the Company for at least the
last five years. Mr. Smith was named President of the Company in September 1998.
From 1984 until 1985, he served as a Vice President of the Company. In 1986, he
was named Senior Vice President and, in 1991, Executive Vice President. Mr. Holt
was appointed Chief Operating Officer, Energy and Environment, in September
1998. From March 1996 to September 1998 he was a Vice President of the Company.
Mr. Holt has been President and Chief Executive Officer of Thermo Ecotek since
February 1994. For more than five years prior to that time, he was President and
Chief Executive Officer of Pacific Generation Company (financier, builder,
owner, and operator of independent power facilities). Mr. Keiser was appointed
Chief Operating Officer, Biomedical and Advanced Technology, in September 1998,
and his title changed to Chief Operating Officer, Biomedical and Emerging
Technologies, in March 1999. From 1985 until 1994, Mr. Keiser was President of
Eberline Instrument division of Thermo Instrument. In 1994 he was appointed
Senior Vice President of Thermedics and President of Thermo Biomedical. In March
1998, he was named President of Thermedics. Mr. Lewis was appointed Chief
Operating Officer, Instrumentation, in September 1998, and his title was changed
to Chief Operating Officer, Measurement and Detection, in March 1999. Mr. Lewis
was a Vice President of the Company from March 1996 to June 1998 and a Senior
Vice President of the Company from June 1998 to September 1998. Since 1990 Mr.
Lewis has held various positions with Thermo Instrument, and effective March
1997, was named President and in January 1998 was named Chief Executive Officer
of Thermo Instrument. Mr. Rainville was appointed Chief Operating Officer,
Recycling and Resource Recovery, in September 1998. He was a Senior Vice
President of the Company from 1993 until 1998 and was a Vice President of the
Company from 1986 to 1993. Mr. Melas-Kyriazi was appointed Chief Financial
Officer on January 1, 1999. He joined the Company in 1986 as Assistant
Treasurer, and became Treasurer in 1998. He was named President and Chief
Executive Officer of ThermoSpectra in 1994, a position he held until becoming
Vice President of Corporate Strategy of the Company in 1998. The Company
recently announced the appointment of Mr. Richard F. Syron as President and
Chief Executive Officer, effective June 1, 1999. Dr. George Hatsopoulos will
become non-executive Chairman of the Board and Mr. Smith will remain with the
Company in an advisory role.
Item 2. Properties
The location and general character of the Company's principal properties by
segment as of January 2, 1999, are:
Measurement and Detection
The Company owns approximately 2,176,000 square feet of office, engineering,
laboratory, and production space, principally in Wisconsin, Ohio, Germany, the
United Kingdom, California, New York, Massachusetts, and Italy, and leases
approximately 3,867,000 square feet of office, engineering, laboratory, and
production space, principally in Massachusetts, Texas, California, Wisconsin,
New Hampshire, the United Kingdom, Germany, and Finland, under leases expiring
from 1999 to 2017.
15
Biomedical and Emerging Technologies
The Company owns approximately 538,000 square feet of office engineering,
laboratory, and production space, principally in Illinois, California,
Connecticut, and Texas, and leases approximately 2,300,000 square feet of
office, engineering, laboratory, and production space, principally in
California, Massachusetts, Texas, Florida, and France, under leases expiring
from 1999 to 2013.
Energy and Environment
The Company owns approximately 1,137,000 square feet of office, engineering,
laboratory, and production space, principally in California, Pennsylvania,
Minnesota, and the United Kingdom, and leases approximately 1,124,000 square
feet of office, engineering, laboratory, and production space, principally in
Illinois, California, Massachusetts, Pennsylvania, Florida, the United Kingdom,
and the Netherlands, under leases expiring from 1999 to 2023.
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.
The Company owns approximately 72 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 Holland, consisting of office, production, and oil storage
facilities, under a lease expiring in 2059.
Recycling and Resource Recovery
The Company owns approximately 1,474,000 square feet of office, engineering,
laboratory, and production space, principally in France, Connecticut, Ohio,
Massachusetts, and the United Kingdom, and leases approximately 282,000 square
feet of office, engineering, laboratory, and production space, principally in
Wisconsin and Sweden, under leases expiring from 1999 to 2006.
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 the
near term 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.
16
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 dividend policy, is included under the
sections labeled "Common Stock Market Information" and "Dividend Policy" in the
Registrant's 1998 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
labeled "Ten Year Financial Summary" and "Dividend Policy" in the Registrant's
1998 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 1998 Annual Report to Shareholders and
is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
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 1998 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 January 2, 1999,
and Supplementary Data are included in the Registrant's 1998 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.
17
Name Age Present Title (Fiscal Year First Became Executive Officer)
-------------------- --- ----------------------------------------------------------
Richard F. Syron 56 Chief Executive Officer and President (1999)
Brian D. Holt 50 Chief Operating Officer, Energy and Environment (1998)
John T. Keiser 64 Chief Operating Officer, Biomedical (1998)
Earl R. Lewis 56 Chief Operating Officer, Measurement and Detection (1998)
William A. Rainville 58 Chief Operating Officer, Recycling and Resource Recovery (1993)
Theo Melas-Kyriazi 40 Chief Financial Officer and Vice President (1998)
Paul F. Kelleher 57 Senior Vice President, Finance and Administration (1982)
Each executive officer serves until his successor is chosen or appointed and qualified or until
earlier resignation, death, or removal. Mr. Syron was appointed President and Chief Executive Officer
in June 1999 and Chairman of the Board in January 2000. From April 1994 until May 1999, Mr. Syron was
the Chairman and Chief Executive officer of the American Stock Exchange Inc. Mr. Holt was appointed
Chief Operating Officer, Energy and Environment, in September 1998. From March 1996 to September 1998
he was a Vice President of the Company. Mr. Holt has been President and Chief Executive Officer of
Thermo Ecotek since February 1994. Mr. Keiser was appointed Chief Operating Officer, Biomedical, in
September 1998. From 1985 until 1994, Mr. Keiser was President of the Eberline Instrument division of
Thermo Instrument. In 1994 he was appointed Senior Vice President of Thermedics and President of Thermo
Biomedical. In March 1998, he was named President of Thermedics. Mr. Lewis was appointed Chief
Operating Officer, Instrumentation, in September 1998, and his title was changed to Chief Operating
Officer, Measurement and Detection, in March 1999. Mr. Lewis was a Vice President of the Company from
March 1996 to June 1998 and a Senior Vice President of the Company from June 1998 to September 1998.
Since 1990 Mr. Lewis has held various positions with Thermo Instrument, and effective March 1997, was
named President and in January 1998 was named Chief Executive Officer of Thermo Instrument. Mr.
Rainville was appointed Chief Operating Officer, Recycling and Resource Recovery, in September 1998. He
was a Senior Vice President of the Company from 1993 until 1998 and was a Vice President of the Company
from 1986 to 1993. Mr. Melas-Kyriazi was appointed Chief Financial Officer on January 1, 1999. He
joined the Company in 1986 as Assistant Treasurer, and became Treasurer in 1998. He was named President
and Chief Executive Officer of ThermoSpectra in 1994, a position he held until becoming Vice President
of Corporate Strategy of the Company in 1998. Mr. Kelleher has held comparable positions with the
Company for at least the last five years.
12
Item 2. Properties
The location and general character of the Company's principal properties
by segment as of January 1, 2000, are as follows:
Life Sciences
The Company owns approximately 1,080,000 square feet of office,
engineering, laboratory, and production space, principally in Ohio, California,
Pennsylvania, Massachusetts, Italy, Germany, and England, and leases
approximately 1,130,000 square feet of office, engineering, laboratory, and
production space, principally in Massachusetts, Virginia, Texas, Colorado, New
York, Finland, England, and France, under leases expiring from 2000 to 2016.
Optical Technologies
The Company owns approximately 860,000 square feet of office, engineering,
laboratory, and production space, principally in Wisconsin, California, New
York, Arizona, Germany, Switzerland, and England, and leases approximately
1,330,000 square feet of office, engineering, laboratory, and production space,
principally in Massachusetts, California, Connecticut, New Hampshire, and
England, under leases expiring from 2000 to 2017.
Measurement and Control
The Company owns approximately 400,000 square feet of office, engineering,
laboratory, and production space, principally in New Mexico, California, Texas,
Indiana, Arkansas, Louisiana, Germany, and England, and leases approximately
2,110,000 square feet of office, engineering, laboratory, and production space,
principally in Ohio, Texas, Massachusetts, California, Minnesota, Maryland,
Georgia, Sweden, Germany, England, Australia, and the Netherlands, under leases
expiring from 2000 to 2068.
Power Generation
The Company leases approximately 50,000 square feet of office space,
principally in Massachusetts and Texas, under leases expiring from 2000 to 2004.
The Company operates three independent power plants in California 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.
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 the
near term 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.
13
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 dividend policy, is included under the
sections labeled "Common Stock Market Information" and "Dividend Policy" in the
Registrant's 1999 Annual Report to Shareholders and is incorporated herein by
reference.
During 1998 and 1999, in a series of transactions with an institutional
counterparty, the Registrant sold put options on an aggregate of 5,701,000
shares of its common stock and purchased call options on an aggregate of
2,850,500 shares of its common stock. No cash was exchanged as a result of these
transactions. The Registrant has a remaining maximum potential obligation under
the put options to buy back 2,367,000 shares at a weighted average exercise
price of $14.06 for an aggregate of $33.3 million. These put and call options
are exercisable only at maturity and expire between April and May 2000. The
Registrant has the right to settle the put options by physical settlement of the
options or by net share settlement using shares of the Registrant's common
stock. Under the remaining call options, the Registrant has the right, but not
the obligation, to purchase from the counterparty 1,183,500 shares of its common
stock at an average price per share of $14.76 in 2000. The Registrant may, from
time to time, enter into additional put and call option arrangements. During
1999, the Registrant purchased 1,536,000 shares of its common stock under the
put options for $24.6 million. During 1999 and January 2000, put options for
1,798,000 shares expired. Each of these transactions was exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended.
Item 6. Selected Financial Data
The information required under this item is included under the sections
labeled "Selected Financial Information" and "Dividend Policy" in the
Registrant's 1999 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 1999 Annual Report to Shareholders and is
incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
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 1999 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 January 1, 2000,
and Supplementary Data are included in the Registrant's 1999 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.
14
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. The information
concerning delinquent filers pursuant to Item 405 of Regulation S-K is
incorporated herein by reference from the material contained under the heading
"Section 16(a) Beneficial Ownership Reporting Compliance" 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 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.
15
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 Operations
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Comprehensive Income and 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
On December 23, 1999, the Company filed a Current Report on Form 8-K for
events occurring December 21, 1999, with respect to the election of
Richard F. Syron, the Registrant's president and chief executive officer,
to the position of chairman of the board of directors.
(c) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
16
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 22, 2000 THERMO ELECTRON CORPORATION
By: /s/ Richard F. Syron
Richard F. Syron
Chief Executive Officer and President
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 22, 2000.
Signature Title
By: /s/ Richard F. Syron Chairman of the Board, Chief Executive
Richard F. Syron Officer, President, and Director
By: /s/ Theo Melas-Kyriazi Chief Financial Officer and Vice
Theo Melas-Kyriazi President
By: /s/ Paul F. Kelleher Senior Vice President, Finance and Administration
Paul F. Kelleher (Chief Accounting Officer)
By: /s/ Samuel W. Bodman Director
Samuel W. Bodman
By: /s/ Peter O. Crisp Director
Peter O. Crisp
By: /s/ Elias P. Gyftopoulos Director
Elias P. Gyftopoulos
By: /s/ George N. Hatsopoulos Director
George N. Hatsopoulos
By: /s/ Frank Jungers Director
Frank Jungers
By: /s/ Robert A. McCabe Director
Robert A. McCabe
By: /s/ Hutham S. Olayan Director
Hutham S. Olayan
By: /s/ Robert W. O'Leary Director
Robert W. O'Leary
By: /s/ Roger D. Wellington Director
Roger D. Wellington
17
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 17, 2000 (except with respect to
the matters discussed in Note 17, as to which the date is March 7, 2000). 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 16 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 17, 2000
18
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 Comprehensive Income and 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
On December 10, 1998, the Company filed a Current Report on Form 8-K dated
December 10, 1998, with respect to a proposed corporate reorganization.
(c) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
19
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 22, 1999 THERMO ELECTRON CORPORATION
By: /s/ 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 22, 1999.
Signature Title
By: /s/ George N. Hatsopoulos Chief Executive Officer, Chairman of the
George N. Hatsopoulos Board, and Director
By: /s/ Theo Melas-Kyriazi Chief Financial Officer and Vice President
Theo Melas-Kyriazi
By: /s/ Paul F. Kelleher Senior Vice President, Finance and
Paul F. Kelleher Administration(Chief Accounting Officer)
By: /s/ John M. Albertine Director
John M. Albertine
By: /s/ Peter O. Crisp Director
Peter O. Crisp
By: /s/ Elias P. Gyftopoulos Director
Elias P. Gyftopoulos
By: /s/ John N. Hatsopoulos Vice Chairman of the Board and Director
John N. Hatsopoulos
By: /s/ Frank Jungers Director
Frank Jungers
By: /s/ Robert A. McCabe Director
Robert A. McCabe
By: /s/ Donald E. Noble Director
Donald E. Noble
By: /s/ Hutham S. Olayan Director
Hutham S. Olayan
By: /s/ Robert W. O'Leary Director
Robert W. O'Leary
By: /s/ Richard F. Syron Director
Richard F. Syron
By: /s/ Roger D. Wellington Director
Roger D. Wellington
20
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 16, 1999 (except with respect to
the matter discussed in Note 19, as to which the date is March 1, 1999). 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 19 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 16, 1999
21
SCHEDULE II
THERMO ELECTRON CORPORATION
Valuation and Qualifying Accounts
(In thousands)
Description Provision Accounts Accounts Other (a) Balance
Balance at Charged to Recovered Written Balance
Beginning Expense Accounts Off at End
Beginning Expense OffDescription of Year Recovered Other (a) of Year
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- ------------------------------------------ ---------- ---------- --------- -------- --------- --------
Allowance for Doubtful Accounts
Year Ended January 1, 2000 $ 26,938 $ 8,626 $ 253 $ (8,908) $ 6,790 $ 33,699
Year Ended January 2, 1999 $ 55,69825,796 $ 10,0385,002 $ 480 $(15,371)492 $ 1,762(8,754) $ 52,6074,402 $ 26,938
Year Ended January 3, 1998 $ 34,32120,835 $ 9,0784,981 $ 527304 $ (8,594)(5,674) $ 20,3665,350 $ 55,698
Year Ended December 28, 1996 $ 29,318 $ 6,002 $ 760 $ (8,994) $ 7,235 $ 34,32125,796
Description Balance at Established Activity Other (c) Balance
Beginning as Cost of Charged at End
Description of Year Acquisitions to Reserve Other (c) of Year
Year Reserve
- ----------------------------------------------------------------------------------- ---------- ------------ ------------- ------------ ----------- ---------------------- --------- -------
Accrued Acquisition Expenses (b)
Year Ended January 1, 2000 $ 16,284 $ 18,144 $(11,539) $ (2,552) $ 20,337
Year Ended January 2, 1999 $ 32,50520,683 $ 12,112 $(17,496) $(3,929)8,387 $(10,036) $ 23,192(2,750) $ 16,284
Year Ended January 3, 1998 $ 23,47320,412 $ 35,456 $(20,775) $(5,649)24,579 $(19,367) $ 32,505
Year Ended December 28, 1996(4,941) $ 17,961 $ 41,683 $(28,998) $(7,173) $ 23,473
Description20,683
Balance at Provision Activity Balance
Beginning Charged to Charged Other (f) at End
Description of Year Expense (e) to Reserve of Year
Year
- ----------------------------------------- ------------------------------------------- ---------- ------------- ----------- ------------ ---------------------- --------- -------
Accrued Restructuring Costs (d)
Year Ended January 1, 2000 $ 11,320 $ 13,404 $(12,491) $ (649) $11,584
Year Ended January 2, 1999 $ 826244 $ 28,773 $(11,117)18,776 $(7,962) $ 258 $ 18,740262 $11,320
Year Ended January 3, 1998 $ 1,228- $ 4,340 $(4,748)953 $ 6 $ 826
Year Ended December 28, 1996(709) $ - $ 2,828 (1,653) $ 53 $ 1,228244
(a) Includes allowance of businesses acquired during the year as described in
Note 3 to Consolidated Financial Statements in the Registrant's 19981999 Annual
Report to Shareholders and the effect of foreign currency translation.
(b) The nature of activity in this account is described in Note 3 to
Consolidated Financial Statements in the Registrant's 19981999 Annual Report to
Shareholders.
(c) Represents reversal of accrued acquisition expenses and corresponding
reduction of cost in excess of net assets of acquired companies resulting
from finalization of restructuring plans and the effect of foreign currency
translation.
(d) The nature of activity in this account is described in Note 11 to
Consolidated Financial Statements in the Registrant's 19981999 Annual Report to
Shareholders.
(e) ExcludesIn 1999, includes the reversal of $2.3 million of previously recorded
restructuring costs, and excludes provision of $15.7$136.2 million in 1999 and
$4.8 million in 1998, $7.2 million in 1997, and $15.7
million in 1996, primarily for asset write-downs.
(f) Represents the effect of foreign currency translation.
22primarily for asset write-downs.
(f) Represents the effect of foreign currency translation.
19
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
3.1 Amended and Restated Certificate of Incorporation of the Registrant, as amended
(filed as Exhibit 3(i)1
to the Registrant's Quarterly ReportAmendment No. 3 to Registration Statement on Form 10-Q for the quarter ended June 29, 19968-A/A [File No.
1-8002] and incorporated herein by reference).
3.2 By-laws of the Registrant, as amended (filed as Exhibit 3 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended OctoberJuly 3, 19981999 [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] as amended by
Amendment No. 1 to the Registrant's Registration Statement on
Form 8-A/A filed with the Commission on May 30, 1997, and
incorporated herein by reference).
4.3 Amendment No. 1 to Rights Agreement dated as of June 11, 1999,
between the Registrant and BankBoston, N.A. (formerly, The First
National Bank of Boston), which includes as Exhibit B the amended
and restated form of Rights Certificate and as Exhibit C the
amended and restated Summary of Rights to Purchase Preferred
Stock (filed as Amendment No. 2 to the Registrant's Registration
Statement on Form 8-A/A [File No. 1-8002] filed with the
Commission on June 21, 1999, and incorporated herein by
reference).
4.4 Indenture dated as of October 29, 1998, by and between the
Registrant and Bankers Trust Company, as Trustee, relating to the
issuance of senior debt securities by the Registrant (filed as
Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated
October 29, 1998, filed with the Securities and Exchange
Commission on October 30, 1998, and incorporated herein by
reference).
4.44.5 First Supplemental Indenture dated as of October 29, 1998, by and
between the Registrant and Bankers Trust Company, as Trustee,
relating to the issuance by the Registrant of $150,000,000
aggregate principal amount of its 7.625% Notes due 2008 (filed as
Exhibit 4.2 to the Registrant's Current Report on Form 8-K dated
October 29, 1998, filed with the Securities and Exchange
Commission on October 30, 1998, incorporated herein by
reference).
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).
20
Exhibit
Number Description of Exhibit
10.2 Thermo Electron Corporation 1998 Executive Retention Plan/Form of
Executive Retention Agreement (filed as Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
October 3, 1998 [File No. 1-8002] and incorporated herein by
reference). (Each executive officer has a two- year agreement
except Mr. Richard F. Syron, who has a three-year agreement.)
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).
23
Exhibit
Number Description of Exhibit- 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).
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 (filed as Exhibit 10.8 to
the Registrant's Annual Report on Form 10-K for the year ended
January 3, 1998 [File No. 1-8002] and incorporated herein by
reference).
10.910.8 Stock Holdings Assistance Plan and Form of Promissory Note (filed
as Exhibit 10.9 to the Registrant's Annual Report on Form 10-K
for the year ended January 3, 1998 [File No.
1-8002] and incorporated herein by reference).
10.1010.9 - 10.20 Reserved.
10.21 Amended and Restated Deferred Compensation Plan for Directors of
the Registrant (filed as Exhibit 10.510.1 to the Registrant's
AnnualQuarterly Report on Form 10-K10-Q for the fiscal yearquarter ended JanuaryJuly 3, 19871999
[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
10.2510.2 to the Registrant's AnnualQuarterly Report on Form 10-K10-Q for the fiscal yearquarter ended December 31, 1994July 3, 1999
[File No. 1-8002] and incorporated herein by reference).
24
Exhibit
Number Description of Exhibit
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.)
21
Exhibit
Number Description of Exhibit
10.24 Amended and Restated Nonqualified Stock Option Plan of the
Registrant (filed as Exhibit 4(e)10.3 to the Registrant's Registration StatementQuarterly
Report on Form S-8 [Reg.10-Q for the quarter ended July 3, 1999 [File No.
33-8993]1-8002] 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 Amended and Restated Equity Incentive Plan (filed as Exhibit 10.110.4 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended July 4, 19983, 1999 [File No. 1-8002] and
incorporated herein by reference).
10.26 Amended and Restated Thermo Electron Corporation - Thermedics
Inc. Nonqualified Stock Option Plan (filed as Exhibit 410.5 to a Registration Statementthe
Registrant's Quarterly Report on Form S-8 of Thermedics [Reg.10-Q for the quarter ended
July 3, 1999 [File No. 2-93747]1-8002] 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 Amended and Restated Thermo Electron Corporation - Thermo Instrument Systems Inc.
(formerly Thermo Environmental Corporation) Nonqualified Stock Option Plan (filed as
Exhibit 4(c)10.6 to a Registration Statementthe Registrant's Quarterly Report on Form S-8 of Thermo Instrument [Reg.10-Q for the quarter ended July
3, 1999 [File No. 33-8034]1-8002] 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.)
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 Amended and Restated Thermo Electron Corporation - Thermo
TerraTech Inc. (formerly Thermo
Process Systems Inc.) Nonqualified Stock Option Plan (filed as Exhibit
10.1310.7 to the Registrant's AnnualQuarterly Report on Form 10-K10-Q for the
fiscal yearquarter ended JanuaryJuly 3, 19871999 [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 198810.30 Amended and March 1989, and 3-for-2 stock split effected in
September 1989.)
25
Exhibit
Number Description of Exhibit
10.30Restated Thermo Electron Corporation - Thermo Power
Corporation (formerly
Tecogen Inc.) Nonqualified Stock Option Plan (filed as Exhibit 10.1410.8
to the Registrant's AnnualQuarterly Report on Form 10-K10-Q for the fiscal yearquarter
ended JanuaryJuly 3, 19871999 [File No. 1-8002] and incorporated herein by
reference). (Amended in September 1995(On October 28, 1999, Thermo Power merged with Thermo
Electron. All outstanding options granted under this plan were
assumed by Thermo Electron and converted into options to extend the plan expiration
date to December 31, 2005.purchase
25,219 shares of Thermo Electron.)
10.31 Amended and Restated Thermo Electron Corporation - Thermo
Cardiosystems Inc. Nonqualified Stock Option Plan (filed as
Exhibit 10.1110.9 to the Registrant's AnnualQuarterly Report on Form 10-K10-Q
for the fiscal yearquarter ended December 29, 1990July 3, 1999 [File No. 1-8002] and
incorporated herein by reference).
(Maximum number22
Exhibit
Number Description of shares issuable is 250,000 shares, after adjustment to reflect share
increases approved in 1990, 1992,Exhibit
10.32 Amended 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.)
10.32Restated Thermo Electron Corporation - Thermo Ecotek
Corporation (formerly Thermo Energy Systems Corporation) Nonqualified Stock Option Plan (filed as Exhibit
10.1210.10 to the Registrant's AnnualQuarterly Report on Form 10-K10-Q for the
fiscal yearquarter ended December 29, 1990July 3, 1999 [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.)
10.33 Amended and Restated Thermo Electron Corporation - ThermoTrex Corporation (formerly Thermo
Electron Technologies Corporation) Nonqualified
Stock Option Plan (filed as Exhibit 10.1310.11 to the Registrant's AnnualQuarterly Report on Form
10-K10-Q for the fiscal yearquarter ended December 29, 1990July 3, 1999 [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 199310.34 Amended and share increase approved in March
1997.)
10.34Restated Thermo Electron Corporation - Thermo
Fibertek Inc. Nonqualified Stock Option Plan (filed as Exhibit
10.1410.12 to the Registrant's AnnualQuarterly Report on Form 10-K10-Q for the
fiscal yearquarter ended December 28, 1991July 3, 1999 [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 199210.35 Amended and 3-for-2 stock
split effected in September 1995 and June 1996.)
10.35Restated Thermo Electron Corporation - Thermo Voltek
Corp. (formerly Universal
Voltronics Corp.) Nonqualified Stock Option Plan (filed as Exhibit 10.1710.13 to
the Registrant's AnnualQuarterly Report on Form 10-K10-Q for the fiscal
yearquarter
ended January 2, 1993July 3, 1999 [File No. 1-8002] and incorporated herein by
reference). (Maximum number(On March 26, 1999, Thermo Voltek merged with
Thermedics. All outstanding options granted under this plan were
converted into options to purchase 24,462 shares 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,Thermedics.)
10.36 Amended and 3-for-2 stock
split effected in August 1996.)
10.36Restated Thermo Electron Corporation - Thermo
BioAnalysis Corporation Nonqualified Stock Option Plan (filed as
Exhibit 10.3110.14 to Thermo
Power's Annualthe Registrant's Quarterly Report on Form 10-K10-Q
for the fiscal yearquarter ended September 30, 1995July 3, 1999 [File No. 1-10573]1-8002] and
incorporated herein by reference).
(Maximum number of shares issuable is 150,000 shares,
after share increase approved in March 1997.)
10.37 Amended and Restated Thermo Electron Corporation - ThermoLyte Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.3210.15 to Thermo Power's Annualthe Registrant's Quarterly Report on Form
10-K10-Q for the fiscal yearquarter ended September 30, 1995July 3, 1999 [File No. 1-10573]1-8002] and incorporated herein by
reference).
(Maximum
number of shares issuable is 150,000 shares, after share increase
approved in March 1997.)
26
Exhibit
Number Description of Exhibit
10.38 Amended and Restated Thermo Electron Corporation - ThermoRetec
Corporation (formerly
Thermo Remediation Inc.) Nonqualified Stock Option Plan (filed as Exhibit
10.3310.16 to Thermo Power's Annualthe Registrant's Quarterly Report on Form 10-K10-Q for the
fiscal yearquarter ended September 30, 1995July 3, 1999 [File No. 1-10573]1-8002] and incorporated
herein by reference).
10.39 Amended and Restated Thermo Electron Corporation - ThermoSpectra
Corporation Nonqualified Stock Option Plan (filed as Exhibit
10.3410.17 to Thermo Power's Annualthe Registrant's Quarterly Report on Form 10-K10-Q for the
fiscal yearquarter ended September 30, 1995July 3, 1999 [File No. 1-10573]1-8002] and incorporated
herein by reference). (On December 6, 1999, ThermoSpectra merged
with Thermo Instrument. All outstanding options granted under
this plan were converted into options to purchase 22,646 shares
of Thermo Instrument.)
10.40 Amended and Restated Thermo Electron Corporation - ThermoLase Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.3510.18 to Thermo Power's Annualthe Registrant's Quarterly Report on Form
10-K10-Q for the fiscal yearquarter ended September 30, 1995July 3, 1999 [File No. 1-10573]1-8002] and incorporated herein by
reference).
10.41 Amended and Restated Thermo Electron Corporation - ThermoQuest
Corporation Nonqualified Stock Option Plan (filed as Exhibit
10.4110.19 to Thermo Cardiosystems'
Annualthe Registrant's Quarterly Report on Form 10-K10-Q for the
fiscal yearquarter ended December 30,
1995July 3, 1999 [File No. 1-10114]1-8002] and incorporated
herein by reference).
10.42 Amended and Restated Thermo Electron Corporation - Thermo Optek
Corporation Nonqualified Stock Option Plan (filed as Exhibit
10.4210.20 to Thermo Cardiosystems'
Annualthe Registrant's Quarterly Report on Form 10-K10-Q for the
fiscal yearquarter ended December 30,
1995July 3, 1999 [File No. 1-10114]1-8002] and incorporated
herein by reference).
23
Exhibit
Number Description of Exhibit
10.43 Amended and Restated Thermo Electron Corporation - Thermo Sentron Inc. Nonqualified Stock
Option Plan (filed as Exhibit 10.4310.21 to Thermo Cardiosystems' Annualthe Registrant's Quarterly Report on Form 10-K10-Q for
the fiscal yearquarter ended December 30, 1995July 3, 1999 [File No. 1-10114]1-8002] and incorporated herein by reference).
10.44 Amended and Restated Thermo Electron Corporation - Trex Medical
Corporation Nonqualified Stock Option Plan (filed as Exhibit
10.4410.22 to Thermo Cardiosystems'
Annualthe Registrant's Quarterly Report on Form 10-K10-Q for the
fiscal yearquarter ended December 30,
1995July 3, 1999 [File No. 1-10114]1-8002] and incorporated
herein by reference).
10.45 Amended and Restated Thermo Electron Corporation - Thermo
Fibergen Inc. Nonqualified Stock Option Plan (filed as Exhibit
10.1910.23 to Trex Medical's Annualthe Registrant's Quarterly Report on Form 10-K10-Q for the
fiscal yearquarter ended September 28, 1996July 3, 1999 [File No. 1-11827]1-8002] and incorporated
herein by reference).
10.46 Amended and Restated Thermo Electron Corporation - Thermedics Detection Inc. Nonqualified
Stock Option Plan (filed as Exhibit 10.4610.24 to the Registrant's AnnualQuarterly Report on Form
10-K10-Q for the yearquarter ended JanuaryJuly 3, 19981999 [File No. 1-8002] and incorporated herein by
reference).
10.47 Amended and Restated Thermo Electron Corporation - Metrika
Systems Corporation Nonqualified Stock Option Plan (filed as
Exhibit 10.4710.25 to the Registrant's AnnualQuarterly Report on Form 10-K10-Q
for the yearquarter ended JanuaryJuly 3, 19981999 [File No. 1-8002] and
incorporated herein by reference).
10.48 Amended and Restated Thermo Electron Corporation - Thermo Vision Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.4810.26 to the
Registrant's AnnualQuarterly Report on Form 10-K10-Q for the yearquarter ended
JanuaryJuly 3, 19981999 [File No. 1-8002] and incorporated herein by
reference). (On January 6, 2000, Thermo Vision merged with Thermo
Instrument. All outstanding options granted under this plan were
converted into options to purchase 39,870 shares of Thermo
Instrument.)
10.49 Amended and Restated Thermo Electron Corporation - ONIX Systems Inc. Nonqualified Stock
Option Plan (filed as Exhibit 10.4910.27 to the Registrant's AnnualQuarterly Report on Form 10-K10-Q for
the yearquarter ended JanuaryJuly 3, 19981999 [File No. 1-8002] and incorporated herein by reference).
27
Exhibit
Number Description of Exhibit
10.50 Amended and Restated Thermo Electron Corporation - The Randers Killam Group Inc.
(formerly
The Randers Group Incorporated) Nonqualified Stock Option Plan (filed as Exhibit 10.5010.28 to the Registrant's AnnualQuarterly
Report on Form 10-K10-Q for the yearquarter ended JanuaryJuly 3, 19981999 [File No. 1-8002] and incorporated
herein by reference).
10.51 Amended and Restated Thermo Electron Corporation - Trex
Communications Corporation Nonqualified Stock Option Plan (filed
as Exhibit 10.5110.29 to the Registrant's AnnualQuarterly Report on Form
10-K10-Q for the yearquarter ended JanuaryJuly 3, 19981999 [File No. 1-8002] and
incorporated herein by reference). (On November 8, 1999, Trex
Communications merged with ThermoTrex. All outstanding options
granted under this plan were converted into options to purchase
57,121 shares of ThermoTrex.)
10.52 Amended and Restated Thermo Electron Corporation - Thermo Trilogy
Corporation Nonqualified Stock Option Plan (filed as Exhibit
10.52 to the Registrant's Annual
Report on Form 10-K for the year ended January 3, 1998 [File No.
1-8002] and incorporated herein by reference).
10.53 Description of Arrangements Regarding Stock Ownership By Officers of the
Registrant (filed as Exhibit 10.210.30 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 4, 19983, 1999 [File No. 1-8002] and incorporated
herein by reference).
10.5424
Exhibit
Number Description of Exhibit
10.53 Letter Agreement dated as of February 21, 2000, between the Registrant and Mr. John N.
Hatsopoulos regarding termination of the Letter Agreement dated September 15, 1998,
between the Registrant and Mr. John N. Hatsopoulos (filed as Exhibit 10.2 toHatsopoulos.
10.54 Employment Agreement dated January 10, 2000, between the Registrant's
Quarterly Report on Form 10-Q for the quarter ended October 3, 1998
[File No. 1-8002]Registrant and incorporated herein by reference).Mr. Paul F.
Kelleher.
10.55 Subordinated Indenture, dated January 15, 1998, among the
Registrant, Thermo Instrument Systems Inc., and Bankers Trust
Company as trustee, relating to $250,000,000 principal amount of
4% Convertible Subordinated Debentures due 2005 issued by Thermo
Instrument Systems Inc. (filed as Exhibit 4.1 to Thermo
Instrument Systems' Current Report on Form 8-K filed with the
Commission on January 16, 1998 [File No. 1-9786] and incorporated
herein by reference).
10.56 Employment Agreement dated as of March 12, 1999, between the
Registrant and Mr. Richard F. Syron.
10.57 1997 Spectra-Physics Lasers, Inc. Stock Option Plan (filed as Exhibit 10.6 of Amendment
No. 1 to Spectra-Physics Lasers, Inc.'s Registration Statement on Form S-1 [File No.
333-38329] and is incorporated herein by reference).
10.58 Form of Indemnification Agreement between the Registrant and the directors and officers
of its majority-owned subsidiaries (filed as Exhibit 10.1 to the Registrant's
Registration Statement on Form S-4 [Reg. No. 333-90661] and incorporated herein by
reference).
10.59 Form of Amended and Restated Indemnification Agreement between the Registrant and its
directors and officers (filed as Exhibit 10.2 to the Registrant's Registration Statement
on Form S-4 [Reg. No. 333-90661] and incorporated herein by reference).
10.60 Description of severance arrangements for certain officers of
Thermo Electron.
13 Annual Report to Shareholders for the year ended January 2, 19991, 2000
(only those portions incorporated herein by reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
2727.1 Financial Data Schedule.Schedule for the year ended January 1, 2000
(restated for discontinued operations).
27.2 Financial Data Schedule for the year ended January 2, 1999
(restated for discontinued operations).
27.3 Financial Data Schedule for the year ended January 3, 1998
(restated for discontinued operations).