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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 1, 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.)
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 28, 2000, was approximately $2,493,791,000.
As of January 28, 2000, the Registrant had 156,800,687 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year ended
January 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 18, 2000, are incorporated by reference into
Part III.
PART I
Item 1. Business
(a) General Development of Business
Thermo Electron Corporation (also referred to in this document as the
Company or the Registrant) is a global leader in the development, manufacture,
and sale of measurement and detection instruments used in virtually every
industry to monitor, collect, and analyze data that provides knowledge for the
user. For example, the Company's powerful analysis technologies help researchers
sift through data to make the discoveries that will fight disease or prolong
life; allow manufacturers to fabricate ever-smaller components required to
increase the speed and quality of communications; or monitor and control
industrial processes on-line to ensure that critical quality standards are met
efficiently and safely.
In the late 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 development. By 1997, the
Company had spun 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 were taken
private, and a fourth in early 2000. Also in 1999, the Company's Thermo
Instrument Systems Inc. subsidiary completed the acquisition of Spectra-Physics
AB, a 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. (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 plans 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 intends to take private all of its remaining
public subsidiaries, except for SPLI. Except where indicated, the information
presented in this Form 10-K pertains to the Company's 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
1999* Annual Report to Shareholders, which is incorporated into 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.
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* References to 1999, 1998, and 1997 herein are for the fiscal years ended
January 1, 2000, January 2, 1999, and January 3, 1998, respectively.
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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 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 1999 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 1999 Annual
Report to Shareholders, which information is incorporated herein by reference.
(c) Description of Business
(i) Principal Products and Services
Thermo Electron has elected to focus on its instruments business, and, as
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 Control, and Power Generation. This represents a
change in the composition of its segments from prior periods, and the Company
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
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 used 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
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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 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 Company 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 pharmaceuticals 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 laboratories, industrial settings, and clinical testing sites.
The Company is a leading 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 distribution of lasers and laser systems for a
broad range of markets, is also part of the Optical Technologies segment.
Spectroscopy instrumentation is used for molecular and elemental analysis
based upon energy and light measurements. These precision instruments use optics
to determine, in a nondestructive manner, the composition of a wide range of
complex liquids and solids. Customers include pharmaceutical, specialty
chemical, and basic material producers, who use these instruments either in a
laboratory or integrated into the production line.
Semiconductor products are used in the manufacture of capital equipment
that produces and tests semiconductors. In particular, the Company is the
leading supplier of molecular beam epitaxy (MBE) reactors for the manufacture of
gallium arsenide and other 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.
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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 their products. In addition, the Company manufactures
products for precision temperature control necessary for analytical, laboratory,
industrial, research and development, 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 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 Control
The Company provides a range of real-time, on-line sensors, monitors, and
control systems through its Measurement and Control segment that not only help
manufacturers ensure their processes and industrial practices meet their own and
government standards for quality, reliability, and safety, but also reduce
costs, save materials, and increase productivity. These products are organized
into five groups: environmental, weighing and inspection, quality control, field
instruments and sensors, and oil and gas.
Environmental products include a complete line of instruments and systems
for monitoring environmental pollutants generated by industrial and mobile
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 and plant 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 on-line
weighing, force measurement, and inspection equipment for consumer products,
packaged goods, and bulk materials. Products for the packaged and consumer goods
sector provide customers with a quality and productivity solution 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
ultratrace 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 Company for the
continuous production of certain web-type finished materials, such as metal
strip, plastics, foil, rubber, glass, and paper. 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 ultrasonic flowmeters, in-line turbine meters,
pitostatic air flow monitors, and electronic 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 both topside and subsea wellhead safety and control systems. These
systems and the aftermarket services provided are required by oil and gas
companies throughout the world, particularly those operating offshore platforms.
The Company's electrical generators, switchgear, and motor control units are
used in a wide variety of industrial and commercial applications.
Power Generation
Through its Thermo Ecotek business, the Company develops, owns, and
operates independent (nonutility) electric power-generation facilities in this
country and overseas, as well as a natural gas gathering, storage, and marketing
business in the U.S.
Thermo Ecotek currently operates six 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 believes
that utility deregulation may present opportunities for updating, or 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 for repowering, and acquired the
rights to develop a similar site in Florida in January 1999. Overseas, the
Company indirectly acquired a majority interest in two energy centers in the
Czech Republic in early 1998, and in September 1999 acquired an electricity
generating facility in Germany.
Thermo Ecotek also established 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. 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, Thermo Ecotek entered into a Limited Partnership Agreement
with KFx Wyoming, Inc., a subsidiary of KFx, Inc., to develop, construct, and
operate a coal-beneficiation plant in Gillette, Wyoming. The facility employed
patented "clean coal" technology to remove excess moisture and increase energy
from low-grade regional coal. Although Thermo Ecotek believes the technology
employed at the plant was viable, and a 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 decided to cease operation of the plant
and hold for sale its investment in the facility.
Discontinued Operations
As a result of its 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
services
Thermo Coleman: systems engineering and analytical services
Peek: intelligent traffic control systems
NuTemp: industrial refrigeration systems
Thermo Trilogy: biopesticide products
Peter Brotherhood: industrial turbines and 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, and 1997, the Company expended $171.1 million, $128.0
million, and $123.9 million, respectively, on research and development.
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(iii) Raw Materials
Continuing 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.
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.
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(v) Seasonal Influences
Thermo Ecotek, which 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 provided 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. Due to the expiration of the fixed price contracts at
Thermo Ecotek's California plants, the seasonality of this business is expected
to be reduced in the future.
There are no other material seasonal influences on the Company's sales of
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.
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(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 principal
competitors include Agilent, Waters, Shimadzu Corporation, and PerkinElmer. The
Company competes primarily on the basis of technical performance, customer
service and 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.
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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 Control
Environmental. The Company's principal competitors include Monitor Labs
Incorporated; Advanced Pollution Instruments; Rupprecht & Pataschnick Co., Inc.;
and Mine Safety Appliances Co. The Company competes in this market primarily
on the basis of technical performance, price, reliability, and customer service.
Weighing and 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 Annual Report to
Shareholders, which information is incorporated herein by reference.
(e) Executive Officers of the Registrant
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
SCHEDULE II
THERMO ELECTRON CORPORATION
Valuation and Qualifying Accounts
(In thousands)
Provision Accounts
Balance at Charged to Written Balance
Beginning Expense Accounts Off at End
Description 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 $ 25,796 $ 5,002 $ 492 $ (8,754) $ 4,402 $ 26,938
Year Ended January 3, 1998 $ 20,835 $ 4,981 $ 304 $ (5,674) $ 5,350 $ 25,796
Balance at Established Activity Balance
Beginning as Cost of Charged at End
Description of Year Acquisitions to Reserve Other (c) of Year
- ------------------------------------------ ---------- ------------ ---------- --------- -------
Accrued Acquisition Expenses (b)
Year Ended January 1, 2000 $ 16,284 $ 18,144 $(11,539) $ (2,552) $ 20,337
Year Ended January 2, 1999 $ 20,683 $ 8,387 $(10,036) $ (2,750) $ 16,284
Year Ended January 3, 1998 $ 20,412 $ 24,579 $(19,367) $ (4,941) $ 20,683
Balance at Provision Activity Balance
Beginning Charged to Charged Other (f) at End
Description of Year Expense (e) to Reserve of Year
- ------------------------------- ---------- ------------- ---------- --------- -------
Accrued Restructuring Costs (d)
Year Ended January 1, 2000 $ 11,320 $ 13,404 $(12,491) $ (649) $11,584
Year Ended January 2, 1999 $ 244 $ 18,776 $(7,962) $ 262 $11,320
Year Ended January 3, 1998 $ - $ 953 $ (709) $ - $ 244
(a) Includes allowance of businesses acquired during the year as described in
Note 3 to Consolidated Financial Statements in the Registrant's 1999 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 1999 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 1999 Annual Report to
Shareholders.
(e) In 1999, includes the reversal of $2.3 million of previously recorded
restructuring costs, and excludes provision of $136.2 million in 1999 and
$4.8 million in 1998, primarily 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, (filed as Exhibit 1
to the Registrant's Amendment No. 3 to Registration Statement on Form 8-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 July 3, 1999 [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).
4.5 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 - 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 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).
10.8 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).
10.9 - 10.20 Reserved.
10.21 Amended and Restated Deferred Compensation Plan for Directors of
the Registrant (filed as Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended July 3, 1999
[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
10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended July 3, 1999
[File No. 1-8002] and incorporated herein by reference).
10.23 Incentive Stock Option Plan of the Registrant (filed as Exhibit
4(d) to the Registrant's Registration Statement on Form S-8 [Reg.
No. 33-8993] and incorporated herein by reference). (Maximum
number of shares issuable in the aggregate under this plan and
the Registrant's Nonqualified Stock Option Plan is 13,552,734
shares, after adjustment to reflect share increases approved in
1984 and 1986, share decrease approved in 1989, and 3-for-2 stock
splits effected in October 1986, October 1993, May 1995, and June
1996.)
21
Exhibit
Number Description of Exhibit
10.24 Amended and Restated Nonqualified Stock Option Plan of the
Registrant (filed as Exhibit 10.3 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended July 3, 1999 [File No.
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 10.4 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended July 3, 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 10.5 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
July 3, 1999 [File No. 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 10.6 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended July
3, 1999 [File No. 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. Nonqualified Stock Option Plan (filed as Exhibit
10.7 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 3, 1999 [File No. 1-8002] and incorporated
herein by reference).
10.30 Amended and Restated Thermo Electron Corporation - Thermo Power
Corporation Nonqualified Stock Option Plan (filed as Exhibit 10.8
to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended July 3, 1999 [File No. 1-8002] and incorporated herein by
reference). (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 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 10.9 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended July 3, 1999 [File No. 1-8002] and
incorporated herein by reference).
22
Exhibit
Number Description of Exhibit
10.32 Amended and Restated Thermo Electron Corporation - Thermo Ecotek
Corporation Nonqualified Stock Option Plan (filed as Exhibit
10.10 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 3, 1999 [File No. 1-8002] and incorporated
herein by reference).
10.33 Amended and Restated Thermo Electron Corporation - ThermoTrex Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.11 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended July 3, 1999 [File No. 1-8002] and incorporated herein by
reference).
10.34 Amended and Restated Thermo Electron Corporation - Thermo
Fibertek Inc. Nonqualified Stock Option Plan (filed as Exhibit
10.12 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 3, 1999 [File No. 1-8002] and incorporated
herein by reference).
10.35 Amended and Restated Thermo Electron Corporation - Thermo Voltek
Corp. Nonqualified Stock Option Plan (filed as Exhibit 10.13 to
the Registrant's Quarterly Report on Form 10-Q for the quarter
ended July 3, 1999 [File No. 1-8002] and incorporated herein by
reference). (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 Thermedics.)
10.36 Amended and Restated Thermo Electron Corporation - Thermo
BioAnalysis Corporation Nonqualified Stock Option Plan (filed as
Exhibit 10.14 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended July 3, 1999 [File No. 1-8002] and
incorporated herein by reference).
10.37 Amended and Restated Thermo Electron Corporation - ThermoLyte Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.15 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended July 3, 1999 [File No. 1-8002] and incorporated herein by
reference).
10.38 Amended and Restated Thermo Electron Corporation - ThermoRetec
Corporation Nonqualified Stock Option Plan (filed as Exhibit
10.16 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 3, 1999 [File No. 1-8002] and incorporated
herein by reference).
10.39 Amended and Restated Thermo Electron Corporation - ThermoSpectra
Corporation Nonqualified Stock Option Plan (filed as Exhibit
10.17 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 3, 1999 [File No. 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 10.18 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended July 3, 1999 [File No. 1-8002] and incorporated herein by
reference).
10.41 Amended and Restated Thermo Electron Corporation - ThermoQuest
Corporation Nonqualified Stock Option Plan (filed as Exhibit
10.19 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 3, 1999 [File No. 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
10.20 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 3, 1999 [File No. 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 10.21 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended July 3, 1999 [File No. 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
10.22 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 3, 1999 [File No. 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
10.23 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 3, 1999 [File No. 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 10.24 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended July 3, 1999 [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 10.25 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended July 3, 1999 [File No. 1-8002] and
incorporated herein by reference).
10.48 Amended and Restated Thermo Electron - Thermo Vision Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.26 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
July 3, 1999 [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 10.27 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended July 3, 1999 [File No. 1-8002] and incorporated herein by reference).
10.50 Amended and Restated Thermo Electron Corporation - The Randers Killam Group Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.28 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended July 3, 1999 [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 10.29 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended July 3, 1999 [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
10.30 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 3, 1999 [File No. 1-8002] and incorporated
herein by reference).
24
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.
10.54 Employment Agreement dated January 10, 2000, between the Registrant and 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 1, 2000
(only those portions incorporated herein by reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27.1 Financial Data Schedule for the year ended January 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).