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, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 1-8002
THERMO ELECTRON CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 04-2209186
(State or other jurisdiction of (I.R.S. Employer 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, was approximately $2,569,399,000.
As of January 29, 1999, the Registrant had 158,133,782 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, 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, are incorporated by reference into
Part III.
PART I
Item 1. Business
(a) General Development of Business
Thermo Electron Corporation and its subsidiaries (the Company or the
Registrant) develop and manufacture a broad range of products that are sold
worldwide. The Company is a world leader in monitoring, analytical, and
biomedical instrumentation; biomedical products including heart-assist devices,
respiratory-care equipment, and mammography systems; and paper recycling and
papermaking equipment. The Company also develops alternative-energy systems and
clean fuels, 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 by the public or
private investors.
A key element in the Company's growth has been its ability to commercialize
innovative products and services emanating from research and development
activities conducted by its various subsidiaries. The Company's strategy has
been to identify business opportunities arising from social, economic, and
regulatory issues, and to seek a leading market share through the application of
proprietary technology. As part of this strategy, the Company 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 Company adopted a strategy of spinning out certain of its businesses into
separate subsidiaries and having these subsidiaries sell a minority interest to
outside investors. The Company believes that this strategy provides additional
motivation 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, the Company had 29 subsidiaries that have
sold minority equity interests, 23 that are publicly traded and 6 that are
privately held. In addition, in February 1999, the Company's Thermo Instrument
Systems Inc. subsidiary completed the acquisition of Spectra-Physics AB, which
has an 80%-owned public subsidiary, Spectra-Physics Lasers, Inc.
During 1998, the Company announced a proposed reorganization involving the
Company and certain of its subsidiaries. The goals of the proposed
reorganization include consolidating and strategically realigning certain
businesses 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. Each component of the reorganization is subject to numerous
conditions, as outlined in Note 17 to Consolidated Financial Statements in the
Registrant's 1998* Annual Report to Shareholders, which information is
incorporated herein by reference.
The Company is a Delaware corporation and was incorporated in 1956. The
Company completed its initial public offering in 1967 and was listed on the New
York Stock Exchange in 1980.
Forward-looking Statements
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Annual Report on Form
10-K. For this purpose, any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "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 1998 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 1998 Annual
Report to Shareholders, which information is incorporated herein by reference.
(c) Description of Business
(i) Principal Products and Services
The Company's products and services are divided into four segments:
Measurement and Detection, Biomedical and Emerging Technologies, Energy and
Environment, and Recycling and Resource Recovery. Products or services within a
particular segment are provided by more than one subsidiary, and the businesses
of one subsidiary (Thermedics Inc.) are included in two segments. The principal
products and services offered by the Company in the four industry segments are
described below.
Measurement 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 the Company, is a
worldwide leader in the development, manufacture, and marketing of measurement
instruments used to monitor, collect, and analyze information. These systems are
used for multiple applications in a 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 analysis of the composition of raw materials in
basic-materials production processes including coal, cement, and minerals. In
addition, Metrika Systems manufactures advanced systems 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, and physical-properties analysis.
ThermoQuest is a leading manufacturer of mass spectrometers, liquid
chromatographs, and gas chromatographs for the pharmaceutical, environmental,
and industrial marketplaces. These analytical instruments are used in the
quantitative and qualitative chemical analysis of organic and inorganic
compounds at ultratrace levels of detection. ThermoQuest also supplies
scientific equipment for the preparation and preservation of chemical samples,
and consumables for the chromatography industry.
ThermoSpectra develops, manufactures, and markets precision imaging and
inspection, temperature-control, and test and measurement instruments. These
instruments are generally combined with proprietary operations and analysis
software to provide industrial and research customers with integrated systems to
address specific needs.
Thermo Vision designs, manufactures, 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. These products are used in applications
including medical diagnostics and analytical instrumentation; semiconductor
manufacturing; X-ray imaging; physics, chemistry, and biology research; and
telecommunications.
Thermo Instrument also includes wholly owned businesses, which produce
instruments and complete systems for detecting and monitoring environmental
pollutants from industrial and mobile sources, for worker safety, and for
detecting radioactive contamination.
4
Thermedics Inc.
Three majority-owned public subsidiaries of Thermedics, a majority-owned
public subsidiary of the Company, manufacture 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, packaged goods and bulk
materials, that use its products to meet quality and productivity objectives.
The company's checkweighers and metal detectors are used primarily by the
food-processing, pharmaceutical, and mail-order industries. Its bulk-materials
product line includes conveyor-belt scales, solid level-measurement and
conveyor-monitoring systems, and sampling systems sold to the mining and
material-processing industries, as well as to electric utilities 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 products 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 range of medical products such as medical
systems 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.
5
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.
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 of the Company, develops, owns,
and operates independent (non-utility) electric power-generation facilities that
use environmentally responsible technologies, develops and markets clean
alternative fuels, and produces and sells biopesticides.
Thermo Ecotek currently operates seven 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 aging plants, 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. 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, indirectly acquired a majority interest in two energy centers
in the Czech Republic.
Thermo Ecotek is also expanding beyond power generation into other products
and processes that protect the environment. 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- beneficiation plant in Gillette, Wyoming. The facility employs
patented "clean coal" technology to remove excess moisture and increase energy
from subbituminous coal extracted from Wyoming's Powder River Basin. Thermo
Ecotek has also recently established a natural gas gathering, storage, and
marketing business.
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 subsidiary of the Company,
provides industrial outsourcing services and manufacturing support encompassing
a broad range of specializations, including infrastructure engineering, design
and construction, environmental compliance, laboratory testing, and metal
treating.
ThermoRetec, a majority-owned public subsidiary of 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 comprehensive engineering and outsourcing 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 urban
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-designed 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 lighting 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 steam 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 1998, 1997, and 1996, the Company expended $367.3 million, $335.4
million, and $299.3 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.
(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, 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
(iv) Patents, Licenses, and Trademarks
The Company considers patents to be important in the present operation of
its business; however, the Company does not consider any patent, or related
group of patents, to be of such importance that its expiration or termination
would materially affect the Company's business taken as a whole. The Company
seeks patent protection for inventions and developments made by its personnel
and incorporated into its products or otherwise falling within its fields of
interest. Patent rights resulting from work sponsored by outside parties do not
always accrue exclusively to the Company and may be limited by agreements or
contracts.
The Company protects some of its technology as trade secrets and, where
appropriate, uses trademarks or registers its products. It also enters into
license agreements with others to grant and/or receive rights to patents and
know-how.
(v) Seasonal Influences
Certain businesses within the Energy and Environment segment are impacted by
seasonal influences:
Thermo Ecotek earns a disproportionately high share of its income from May
through October due to the rate structures under the power-sales agreements
relating to its California power plants, which provide strong incentives to
operate during this period of high demand. Conversely, Thermo Ecotek
historically has operated at a marginal profit during the first calendar quarter
due to the rate structure under these agreements.
Funding patterns of government entities, as well as seasonality, impact
quarterly revenues and income at Thermo Power's Peek subsidiary. Peek has
historically experienced relatively higher sales and net income in the second
and fourth calendar quarters and relatively lower sales and net income in the
first and third calendar quarters.
While Thermo TerraTech conducts significant operations year-round, the
majority of its businesses experience seasonal fluctuations due to adverse
weather during winter months.
There are no other material seasonal influences on the Company's sales of
products and services.
(vi) Working Capital Requirements
There are no special inventory requirements or credit terms extended to
customers that would have a material adverse effect on the Company's working
capital.
(vii) Dependency on a Single Customer
No single customer accounted for more than 10% of the Company's total
revenues in any of the past three years.
(viii) Backlog
The Company's backlog of firm orders at year-end 1998 and 1997 was:
(In thousands) 1998 1997
- -------------------------------------------------------------------------------------- ---------- ----------
Measurement and Detection $309,600 $331,600
Biomedical and Emerging Technologies 281,300 214,000
Energy and Environment 288,100 274,700
Recycling 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, 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
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.
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 at End
Beginning Expense Off of Year
of
Year
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Allowance for Doubtful Accounts
Year Ended January 2, 1999 $ 55,698 $ 10,038 $ 480 $(15,371) $ 1,762 $ 52,607
Year Ended January 3, 1998 $ 34,321 $ 9,078 $ 527 $ (8,594) $ 20,366 $ 55,698
Year Ended December 28, 1996 $ 29,318 $ 6,002 $ 760 $ (8,994) $ 7,235 $ 34,321
Description Balance at Established Activity Other (c) Balance
Beginning as Cost of Charged at End
of Acquisitions to of Year
Year Reserve
- ----------------------------------------- ------------ ------------- ------------ ----------- ------------
Accrued Acquisition Expenses (b)
Year Ended January 2, 1999 $ 32,505 $ 12,112 $(17,496) $(3,929) $ 23,192
Year Ended January 3, 1998 $ 23,473 $ 35,456 $(20,775) $(5,649) $ 32,505
Year Ended December 28, 1996 $ 17,961 $ 41,683 $(28,998) $(7,173) $ 23,473
Description Balance at Provision Activity Balance
Beginning Charged to Charged Other (f) at End
of Expense (e) to Reserve of Year
Year
- ----------------------------------------- ------------ ------------- ----------- ------------ ------------
Accrued Restructuring Costs (d)
Year Ended January 2, 1999 $ 826 $ 28,773 $(11,117) $ 258 $ 18,740
Year Ended January 3, 1998 $ 1,228 $ 4,340 $(4,748) $ 6 $ 826
Year Ended December 28, 1996 $ - $ 2,828 (1,653) $ 53 $ 1,228
(a) Includes allowance of businesses acquired during the year as described in
Note 3 to Consolidated Financial Statements in the Registrant's 1998 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 1998 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 1998 Annual Report to
Shareholders.
(e) Excludes provision of $15.7 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.
22
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
3.1 Restated Certificate of Incorporation of the Registrant, as amended
(filed as Exhibit 3(i) to the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 29, 1996 [File No. 1-8002] and
incorporated herein by reference).
3.2 By-laws of the Registrant, as amended (filed as Exhibit 3 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).
4.1 Fiscal Agency Agreement dated as of January 3, 1996, between the
Registrant and Chemical Bank pertaining to the Registrant's 4 1/4%
Subordinated Convertible Debentures due 2003 (filed as Exhibit 4.1 to
the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 30, 1995 [File No. 1-8002] and incorporated herein by
reference).
The Registrant agrees, pursuant to Item 601(b)(4)(iii)(A) of
Regulation S-K, to furnish to the Commission upon request, a copy of
each instrument with respect to other long-term debt of the
Registrant or its consolidated subsidiaries.
4.2 Rights Agreement dated as of January 19, 1996, between the Registrant
and The First National Bank of Boston, which includes as Exhibit A
the Form of Certificate of Designations, as Exhibit B the Form of
Rights Certificate, and as Exhibit C the Summary of Rights to
Purchase Preferred Stock (filed as Exhibit 1 to the Registrant's
Registration Statement on Form 8-A, declared effective by the
Commission on January 31, 1996 [File No. 1-8002] and incorporated
herein by reference).
4.3 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).
4.4 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).
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).
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).
10.9 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).
10.10 - 10.20 Reserved.
10.21 Deferred Compensation for Directors of the Registrant (filed as
Exhibit 10.5 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended January 3, 1987 [File No. 1-8002] and
incorporated herein by reference). (Maximum number of shares
issuable is 679,218 shares, after adjustment to reflect share
increases approved in 1986 and 1992 and 3-for-2 stock splits
effected in October 1986, October 1993, May 1995, and June
1996.)
10.22 Amended and Restated Directors' Stock Option Plan of the Registrant
(filed as Exhibit 10.25 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 [File No. 1-8002]
and incorporated herein by reference).
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.)
10.24 Nonqualified Stock Option Plan of the Registrant (filed as Exhibit
4(e) to the Registrant's Registration Statement on Form S-8 [Reg. No.
33-8993] and incorporated herein by reference). (Plan amended in 1984
to extend expiration date to December 14, 1994; maximum number of
shares issuable in the aggregate under this plan and the Registrant's
Incentive Stock Option Plan is 13,552,734 shares, after adjustment to
reflect share increases approved in 1984 and 1986, share decrease
approved in 1989, and 3-for-2 stock splits effected in October 1986,
October 1993, May 1995, and June 1996.)
10.25 Amended and Restated Equity Incentive Plan (filed as Exhibit 10.1 to
the Registrant's Quarterly Report on Form 10-Q for the quarter ended
July 4, 1998 [File No. 1-8002] and incorporated herein by reference).
10.26 Thermo Electron Corporation - Thermedics Inc. Nonqualified Stock
Option Plan (filed as Exhibit 4 to a Registration Statement on Form
S-8 of Thermedics [Reg. No. 2-93747] and incorporated herein by
reference). (Maximum number of shares issuable is 450,000 shares,
after adjustment to reflect share increase approved in 1988, 5-for-4
stock split effected in January 1985, 4-for-3 stock split effected in
September 1985, and 3-for-2 stock splits effected in October 1986 and
November 1993.)
10.27 Thermo Electron Corporation - Thermo Instrument Systems Inc. (formerly
Thermo Environmental Corporation) Nonqualified Stock Option
Plan (filed as Exhibit 4(c) to a Registration Statement on Form
S-8 of Thermo Instrument [Reg. No. 33-8034] and incorporated
herein by reference). (Maximum number of shares issuable is
527,343 shares, after adjustment to reflect 3-for-2 stock
splits effected in July 1993 and April 1995, 5-for-4 stock
splits effected in December 1995 and October 1997.)
10.28 Thermo Electron Corporation - Thermo Instrument Systems Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.12 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
January 3, 1987 [File No. 1-8002] and incorporated herein by
reference). (Maximum number of shares issuable is 750,356 shares,
after adjustment to reflect share increase approved in 1988, 3-for-2
stock splits effected in January 1988, July 1993, and April 1995, and
5-for-4 stock splits effected in December 1995 and October 1997.)
10.29 Thermo Electron Corporation - Thermo TerraTech Inc. (formerly Thermo
Process Systems Inc.) Nonqualified Stock Option Plan (filed as
Exhibit 10.13 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended January 3, 1987 [File No. 1-8002] and incorporated
herein by reference). (Maximum number of shares issuable is 108,000
shares, after adjustment to reflect 6-for-5 stock splits effected in
July 1988 and March 1989, and 3-for-2 stock split effected in
September 1989.)
25
Exhibit
Number Description of Exhibit
10.30 Thermo Electron Corporation - Thermo Power Corporation (formerly
Tecogen Inc.) Nonqualified Stock Option Plan (filed as Exhibit 10.14
to the Registrant's Annual Report on Form 10-K for the fiscal year
ended January 3, 1987 [File No. 1-8002] and incorporated herein by
reference). (Amended in September 1995 to extend the plan expiration
date to December 31, 2005.)
10.31 Thermo Electron Corporation - Thermo Cardiosystems Inc. Nonqualified
Stock Option Plan (filed as Exhibit 10.11 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 29, 1990 [File
No. 1-8002] and incorporated herein by reference). (Maximum number of
shares issuable is 250,000 shares, after adjustment to reflect share
increases approved in 1990, 1992, and 1997, 3-for-2 stock split
effected in January 1990, 5-for-4 stock split effected in May 1990,
2-for-1 stock split effected in November 1993, and 3-for-2 stock
split effected in May 1996.)
10.32 Thermo Electron Corporation - Thermo Ecotek Corporation
(formerly Thermo Energy Systems Corporation) Nonqualified Stock
Option Plan (filed as Exhibit 10.12 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 29, 1990
[File No. 1-8002] and incorporated herein by reference).
(Maximum number of shares issuable is 487,500 shares, after
adjustment to reflect 3-for-2 stock split effected in October
1996.)
10.33 Thermo Electron Corporation - ThermoTrex Corporation (formerly Thermo
Electron Technologies Corporation) Nonqualified Stock Option Plan
(filed as Exhibit 10.13 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 29, 1990 [File No. 1-8002]
and incorporated herein by reference). (Maximum number of shares
issuable is 225,000 shares, after adjustment to reflect 3-for-2 stock
split effected in October 1993 and share increase approved in March
1997.)
10.34 Thermo Electron Corporation - Thermo Fibertek Inc. Nonqualified Stock
Option Plan (filed as Exhibit 10.14 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 28, 1991 [File No.
1-8002] and incorporated herein by reference). (Maximum number of
shares issuable is 900,000 shares, after adjustment to reflect
2-for-1 stock split effected in September 1992 and 3-for-2 stock
split effected in September 1995 and June 1996.)
10.35 Thermo Electron Corporation - Thermo Voltek Corp. (formerly Universal
Voltronics Corp.) Nonqualified Stock Option Plan (filed as Exhibit
10.17 to the Registrant's Annual Report on Form 10-K for the fiscal
year ended January 2, 1993 [File No. 1-8002] and incorporated herein
by reference). (Maximum number of shares issuable is 86,250 shares,
after adjustment to reflect 3-for-2 stock split effected in November
1993, share increase approved in September 1995, and 3-for-2 stock
split effected in August 1996.)
10.36 Thermo Electron Corporation - Thermo BioAnalysis Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.31 to Thermo
Power's Annual Report on Form 10-K for the fiscal year ended
September 30, 1995 [File No. 1-10573] and incorporated herein by
reference). (Maximum number of shares issuable is 150,000 shares,
after share increase approved in March 1997.)
10.37 Thermo Electron Corporation - ThermoLyte Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.32 to Thermo Power's Annual
Report on Form 10-K for the fiscal year ended September 30, 1995
[File No. 1-10573] and incorporated herein by reference). (Maximum
number of shares issuable is 150,000 shares, after share increase
approved in March 1997.)
26
Exhibit
Number Description of Exhibit
10.38 Thermo Electron Corporation - ThermoRetec Corporation (formerly
Thermo Remediation Inc.) Nonqualified Stock Option Plan (filed as
Exhibit 10.33 to Thermo Power's Annual Report on Form 10-K for the
fiscal year ended September 30, 1995 [File No. 1-10573] and
incorporated herein by reference).
10.39 Thermo Electron Corporation - ThermoSpectra Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.34 to Thermo Power's Annual
Report on Form 10-K for the fiscal year ended September 30, 1995
[File No. 1-10573] and incorporated herein by reference).
10.40 Thermo Electron Corporation - ThermoLase Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.35 to Thermo Power's Annual
Report on Form 10-K for the fiscal year ended September 30, 1995
[File No. 1-10573] and incorporated herein by reference).
10.41 Thermo Electron Corporation - ThermoQuest Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.41 to Thermo Cardiosystems'
Annual Report on Form 10-K for the fiscal year ended December 30,
1995 [File No. 1-10114] and incorporated herein by reference).
10.42 Thermo Electron Corporation - Thermo Optek Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.42 to Thermo Cardiosystems'
Annual Report on Form 10-K for the fiscal year ended December 30,
1995 [File No. 1-10114] and incorporated herein by reference).
10.43 Thermo Electron Corporation - Thermo Sentron Inc. Nonqualified Stock
Option Plan (filed as Exhibit 10.43 to Thermo Cardiosystems' Annual
Report on Form 10-K for the fiscal year ended December 30, 1995 [File
No. 1-10114] and incorporated
herein by reference).
10.44 Thermo Electron Corporation - Trex Medical Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.44 to Thermo Cardiosystems'
Annual Report on Form 10-K for the fiscal year ended December 30,
1995 [File No. 1-10114] and incorporated herein by reference).
10.45 Thermo Electron Corporation - Thermo Fibergen Inc. Nonqualified Stock
Option Plan (filed as Exhibit 10.19 to Trex Medical's Annual Report
on Form 10-K for the fiscal year ended September 28, 1996 [File No.
1-11827] and incorporated herein by reference).
10.46 Thermo Electron Corporation - Thermedics Detection Inc. Nonqualified
Stock Option Plan (filed as Exhibit 10.46 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).
10.47 Thermo Electron Corporation - Metrika Systems Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.47 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).
10.48 Thermo Electron Corporation - Thermo Vision Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10.48 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).
10.49 Thermo Electron Corporation - ONIX Systems Inc. Nonqualified Stock
Option Plan (filed as Exhibit 10.49 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).
27
Exhibit
Number Description of Exhibit
10.50 Thermo Electron Corporation - The Randers Killam Group Inc. (formerly
The Randers Group Incorporated) Nonqualified Stock Option Plan (filed
as Exhibit 10.50 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).
10.51 Thermo Electron Corporation - Trex Communications Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.51 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).
10.52 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 10.2 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended July 4, 1998 [File No.
1-8002] and incorporated herein by reference).
10.54 Letter Agreement dated as of September 15, 1998, between the Registrant
and Mr. John N. Hatsopoulos (filed as Exhibit 10.2 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).
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.
13 Annual Report to Shareholders for the year ended January 2, 1999
(only those portions incorporated herein by reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.