SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________________________
AMENDMENT NO. 1 ON FORM 10-K/A
TO FORM 10-K
(mark one) X Annual Report Pursuant to Section 13 or
-----
15(d) of the Securities Exchange Act of 1934
Transition Report Pursuant to Section 13 or
-----
15(d) of the Securities Exchange Act of 1934
Commission file number 1-10574
THERMO VOLTEK CORP.
(Exact name of Registrant as specified in its charter)
Delaware 13-1946800
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
470 Wildwood Street, P.O. Box 2878
Woburn, Massachusetts 01888-1578
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------------
Common Stock, $.05 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to the filing requirements for at least
the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference into Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
PAGE
The aggregate market value of the voting stock held by
nonaffiliates of the Registrant as of January 24, 1997, was
approximately $56,019,000.
As of January 24, 1997, the Registrant had 9,759,238 shares of
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for
the fiscal year ended December 28, 1996, are incorporated by
reference into Parts I and II.
Part III, Item 10. Directors and Executive Officers of
the Registrant.
Part III, Item 11. Executive Compensation.
Part III, Item 12. Security Ownership of Certain
Beneficial Owners and
Management.
Part III, Item 13. Certain Relationships and
Transactions.
The information required under these items, originally to be
incorporated by reference from the Registrant's definitive proxy
statement to be filed with the Commission pursuant to Regulation
14A, not later than 120 days after the close of the fiscal year,
is contained in the following Attachment A, which is included
herein and made a part of this Annual Report on Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Amendment No. 1 on Form 10-K/A to be signed by the
undersigned, duly authorized.
THERMO VOLTEK CORP.
By: /s/ Sandra L. Lambert
-------------------------------
Sandra L. Lambert
Secretary
ATTACHMENT A
PAGE
DIRECTORS
Set forth below are the names of the persons serving as
directors, their ages, their offices in the Corporation, if any,
their principal occupation or employment for the past five years,
the length of their tenure as directors and the names of other
public corporations in which such persons hold directorships.
Information regarding their beneficial ownership of the
Corporation's Common Stock, and of the common stock of its parent
company, Thermedics Inc. ("Thermedics"), a manufacturer of
inspection and measurement instrumentation and biomedical
products, and Thermedics' parent company, Thermo Electron
Corporation ("Thermo Electron"), a diversified high technology
company, is reported under the caption "Stock Ownership."
Elias P. Dr. Gyftopoulos, 69, has been a director
Gyftopoulos of the Corporation since 1994. He is the
Professor Emeritus at The Massachusetts
Institute of Technology, where he was the
Ford Professor of Mechanical Engineering
and of Nuclear Engineering for more than
20 years until his retirement in 1996.
Dr. Gyftopoulos is also a director of
Thermo Electron, Thermo BioAnalysis
Corporation, Thermo Cardiosystems Inc.,
ThermoLase Corporation, Thermo Remediation
Inc., ThermoSpectra Corporation and Trex
Medical Corporation.
William W. Hoover Mr. Hoover, 65, has been a director of the
Corporation since 1986. Mr. Hoover is a
retired U.S. Air Force Major General and
former assistant secretary of the U. S.
Department of Energy. Since 1993, Mr.
Hoover has been president of Hoover
Associates, a consulting firm. Prior to
1993, Mr. Hoover was executive vice
president of Air Transport Association of
America, a position he held for more than
five years.
Sandra L. Lambert Ms. Lambert, 42, has been a director of
the Corporation since 1990. Ms. Lambert
has been secretary of the Corporation
since January 1991 and secretary and
senior counsel of Thermo Electron since
July 1990. For more than five years prior
to that time, she was associate general
counsel of Thermo Electron. Ms. Lambert
also serves as clerk of Thermedics.
PAGE
Theo Melas-Kyriazi Mr. Melas-Kyriazi, 37, has been a director
of the Corporation since 1990. Mr.
Melas-Kyriazi was treasurer of the
Corporation from January 1991 to September
1994 and was treasurer of Thermo Electron
from May 1988 to August 1994. Since
August 1994, he has served as president
and chief executive officer of
ThermoSpectra Corporation. Mr.
Melas-Kyriazi is also a director of Thermo
Remediation Inc. and ThermoSpectra
Corporation.
Peter Richman Mr. Richman, 69, has been a director of
the Corporation since 1993. Mr. Richman
was a consultant to Thermedics and its
subsidiaries, including the Corporation,
on corporate development and acquisition
strategies from March 1993 to March 1995.
For more than five years prior to that
time, he was president and chief executive
officer of Keytek Instrument Corp. Mr.
Richman is also a director of Thermo
Sentron Inc.
John W. Wood Jr. Mr. Wood, 53, has been a director of the
Corporation and chairman of the board
since 1990. Mr. Wood has been the chief
executive officer of the Corporation since
1992, and was also the president of the
Corporation from 1992 to February 1997.
Mr. Wood has been a senior vice president
of Thermo Electron since December 1995,
and, prior to that promotion, was a vice
president of Thermo Electron since
September 1994. Mr. Wood has been
president and chief executive officer of
Thermedics since 1984. Mr. Wood is also a
director of Thermedics, Thermedics
Detection Inc., Thermo Cardiosystems Inc.
and Thermo Sentron Inc.
Committees of the Board of Directors and Meetings
The Board of Directors has established an Audit Committee
and a Human Resources Committee, each consisting solely of
outside directors. The present members of the Audit Committee are
Mr. Richman (Chairman) and Mr. Hoover. The Audit Committee
reviews the scope of the audit with the Corporation's independent
public accountants and meets with them for the purpose of
reviewing the results of the audit subsequent to its completion.
The present members of the Human Resources Committee are Mr.
Hoover (Chairman) and Dr. Gyftopoulos. The Human Resources
Committee reviews the performance of senior members of
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PAGE
management, recommends executive compensation and administers the
Corporation's stock option and other stock-based compensation
plans. The Corporation does not have a nominating committee of
the Board of Directors. The Board of Directors met five times,
the Audit Committee met twice and the Human Resources Committee
met five times during fiscal 1996. Each director attended at
least 75% of all meetings of the Board of Directors and
committees on which he or she served held during fiscal 1996.
Compensation of Directors
Cash Compensation
Directors who are not employees of the Corporation, of
Thermo Electron or of any other companies affiliated with Thermo
Electron (also referred to as "outside directors") receive an
annual retainer of $2,000 and a fee of $1,000 per day for
attending regular meetings of the Board of Directors and $500 per
day for participating in meetings of the Board of Directors held
by means of conference telephone and for participating in certain
meetings of committees of the Board of Directors. Payment of
directors' fees is made quarterly. Ms. Lambert, Mr.
Melas-Kyriazi and Mr. Wood are employees of Thermo Electron or
its subsidiaries and do not receive any cash compensation from
the Corporation for their services as directors. Directors are
also reimbursed for out-of-pocket expenses incurred in attending
such meetings.
Deferred Compensation Plan
Under the Deferred Compensation Plan for directors (the
"Deferred Compensation Plan"), a director has the right to defer
receipt of his cash fees until he ceases to serve as a director,
dies or retires from his principal occupation. In the event of a
change in control or proposed change in control of the
Corporation that is not approved by the Board of Directors,
deferred amounts become payable immediately. Either of the
following is deemed to be a change of control: (a) the
occurrence, without the prior approval of the Board of Directors,
of the acquisition, directly or indirectly, by any person of 50%
or more of the outstanding Common Stock or the outstanding common
stock of Thermedics or 25% or more of the outstanding common
stock of Thermo Electron; or (b) the failure of the persons
serving on the Board of Directors immediately prior to any
contested election of directors or any exchange offer or tender
offer for the Common Stock or the common stock of Thermedics or
Thermo Electron to constitute a majority of the Board of
Directors at any time within two years following any such event.
Amounts deferred pursuant to the Deferred Compensation Plan are
valued at the end of each quarter as units of the Corporation's
Common Stock. When payable, amounts deferred may be disbursed
solely in shares of Common Stock accumulated under the Deferred
Compensation Plan. A total of 56,250 shares of Common Stock have
been reserved for issuance under the Deferred Compensation Plan.
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PAGE
As of March 1, 1997, deferred units equal to 3,576.39 shares of
Common Stock were accumulated under the Deferred Compensation
Plan.
Directors Stock Option Plan
The Corporation's directors stock option plan (the
"Directors Plan"), provides for the grant of stock options to
purchase shares of Common Stock of the Corporation to outside
directors as additional compensation for their service as
directors. Under the Directors Plan, outside directors are
automatically granted options to purchase 1,000 shares of the
Common Stock annually at the close of business on the date of
each Annual Meeting of the Stockholders of the Corporation.
Options evidencing annual grants may be exercised at any time
from and after the six-month anniversary of the grant date of the
option and prior to the expiration of the option on the third
anniversary of the grant date. Shares acquired upon exercise of
the options are subject to repurchase by the Corporation at the
exercise price if the recipient ceases to serve as a director of
the Corporation or any other Thermo Electron company prior to the
first anniversary of the grant date.
The exercise price for options granted under the Directors
Plan is the average of the closing prices of the Common Stock as
reported on the American Stock Exchange (or other principal
market on which the Common Stock is then traded) for the five
trading days preceding and including the date of grant, or, if
the shares are not then traded, at the last price per share paid
by third parties in an arms-length transaction prior to the
option grant. Options to purchase 56,250 shares of Common Stock
were reserved for issuance under the Directors Plan as of March
1, 1997.
Stock Ownership Policies for Directors
During 1996, the Human Resources Committee of the Board of
Directors (the "Committee") established a stock holding policy
for directors. The stock holding policy requires each director
to hold a minimum of 1,000 shares of Common Stock. Directors are
requested to achieve this ownership level by the 1998 Annual
meeting of Stockholders. Directors who are also executive
officers of the Corporation are required to comply with a
separate stock holding policy established by the Committee in
1996.
In addition, the Committee adopted a policy requiring
directors to hold shares of the Corporation's Common Stock equal
to one-half of their net option exercises over a period of five
years. The net option exercise is determined by calculating the
number of shares acquired upon exercise of a stock option, after
deducting the number of shares that could have been traded to
exercise the option and the number of shares that could have been
surrendered to satisfy tax withholding obligations attributable
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PAGE
to the exercise of the option. This policy is also applicable to
executive officers.
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of
Common Stock, as well as the common stock of Thermedics, the
Corporation's parent company, and of Thermo Electron, Thermedics'
parent company, as of January 1, 1996, with respect to (i) each
person who was known by the Corporation to own beneficially more
than 5% of the outstanding shares of Common Stock, (ii) each
director, (iii) each executive officer named in the summary
compensation table under the heading "Executive Compensation" and
(iv) all directors and current executive officers as a group
While certain directors and executive officers of the
Corporation are also directors and executive officers of
Thermedics or its subsidiaries other than the Corporation, all
such persons disclaim beneficial ownership of the shares of
Common Stock owned by Thermedics.
Thermo Thermo
Voltek Thermedics Electron
Name Corp. (2) Inc. (3) Corporation
(4)
Thermedics Inc. (5) 7,549,921 N/A N/A
Dominick R. Congiusti 26,092 14,143 11,413
Elias P. Gyftopoulos 3,750 4,500 71,070
William W. Hoover 23,394 0 0
Sandra L. Lambert 1,912 8,843 78,292
Theo Melas-Kyriazi 7,498 21,128 159,073
Michael D. Norton 94,776 19,350 25,837
Peter Richman 53,273 8,000 3,300
John W. Wood Jr. 93,071 175,347 263,199
All directors and current 352,296 337,154 1,284,116
executive
officers as a group (11
persons)
(1) Except as reflected in the footnotes to this table, shares
beneficially owned consist of shares owned by the indicated
person or by that person for the benefit of minor children and
all share ownership includes sole voting and investment power.
(2) Shares beneficially owned by Mr. Conguisti, Dr. Gyftopoulos,
Mr. Hoover, Mr. Melas-Kyriazi, Mr. Norton, Mr. Richman, Mr. Wood
and all directors and executive officers as a group include
24,698, 3,750, 18,296, 7,498, 82,950, 40,650, 78,450 and 298,790
shares, respectively, that such person or group has the right to
acquire within 60 days of March 1, 1997 through the exercise of
stock options. Shares beneficially owned by Mr. Richman and all
directors and executive officers as a group include 3,623 shares
allocated through March 1, 1997 to his account maintained under
the Corporation's deferred compensation plan for directors. No
director or executive officer beneficially owned more than 1% of
the Common Stock outstanding as of March 1, 1997; all directors
and executive officers as a group beneficially owned 3.5% of the
Common Stock outstanding as of such date.
(3) Shares of the common stock of Thermedics beneficially owned
by Mr. Conguisti, Dr. Gyftopoulos, Ms. Lambert, Mr.
Melas-Kyriazi, Mr. Norton, Mr. Richman, Mr. Wood and all
directors and executive officers as a group include 12,100,
4,500, 8,000, 20,000, 19,350, 4,500, 125,500 and 262,950 shares,
respectively, that such person or member of the group has the
right to acquire within 60 days of March 1, 1997 through the
exercise of stock options. Shares beneficially owned by Ms.
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Lambert, Mr. Melas-Kyriazi, and all directors and executive
officers as a group include 843, 984 and 4,588 full shares,
respectively, allocated through March 1, 1997 to their respective
accounts maintained pursuant to Thermo Electron's employee stock
ownership plan, of which the trustees, who have investment power
over its assets are executive officers of Thermo Electron (the
"ESOP"). Shares of the common stock of Thermo Voltek Corp.
beneficially owned by Mr. Wood include 2,600 shares held in trust
for the benefit of minor children. The directors and executive
officers did not individually or as a group beneficially own more
than 1.0% of Thermedics common stock outstanding as of March 1,
1997.
(4) The shares of the common stock of Thermo Electron shown in
the table reflect a three-for-two split of such stock distributed
in June 1996 in the form of a 50% stock dividend. Shares of the
common stock of Thermo Electron beneficially owned by Mr.
Conguisti, Dr. Gyftopoulos, Ms. Lambert, Mr. Melas-Kyriazi, Mr.
Norton, Mr. Wood and all directors and executive officers as a
group include 9,900, 9,375, 73,346, 116,772, 25,837, 227,658 and
990,147 shares, respectively, that such person or member of the
group has the right to acquire within 60 days of March 1, 1997
through the exercise of stock options. Shares beneficially owned
by Ms. Lambert, Mr. Melas-Kyriazi and all directors and executive
officers as a group include 849, 969 and 5,076 full shares,
respectively, allocated through March 1, 1997, to their
respective accounts maintained pursuant to Thermo Electron's
ESOP. The directors and executive officers did not individually
or as a group beneficially own more than 1% of the Thermo
Electron common stock outstanding as of March 1, 1997.
(5) Shares beneficially owned by Thermedics include 2,465,088
shares that Thermedics had the right to acquire within 60 days of
March 1, 1997 through the conversion of certain convertible notes
of the Corporation held by Thermedics. As of March 1, 1997,
Thermedics beneficially owned approximately 62% of the
outstanding Common Stock. Thermedics' address is 470 Wildwood
Street, Woburn, Massachusetts 01888-1799. As of March 1, 1997
Thermedic's had the power to elect all of the members of the
Corporation's Board of Directors. Thermedics is a majority owned
subsidiary of Thermo Electron and therefore, Thermo Electron may
be deemed a beneficial owner of the shares of Common Stock
beneficially owned by Thermo Instrument. Thermo Electron
disclaims beneficial ownership of these shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporation's directors and executive officers, and
beneficial owners of more than 10% of the Common Stock, such as
Thermedics and its parent company, Thermo Electron, to file with
the Securities and Exchange Commission initial reports of
ownership and periodic reports of changes in ownership of the
Corporation's securities. Based upon a review of such filings,
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PAGE
all Section 16(a) filing requirements applicable to such persons
were complied with during 1996, except in the following
instances. Thermedics filed five Forms 4 late, reporting a
total of 18 transactions, consisting of 16 open market purchases
ofshares of Common Stock, an additional acquisition of shares of
Common Stock through a merger with another entity, and the
conversion of a derivative security held by Thermedics into
shares of Common Stock. Thermo Electron filed eight Forms 4
late, reporting a total of 40 transactions, including the 18
transactions described above for Thermedics, an additional 19
open market purchases of shares of Common Stock and three grants
to employees of options to purchase shares of Common Stock as
part of its stock option plan.
EXECUTIVE COMPENSATION
NOTE: All share amounts reported below have, in all cases, been
adjusted as applicable to reflect a three-for-two stock splits
with respect to the Common Stock and common stock of Thermo
Electron, distributed in August 1996 and June 1996, respectively,
each in the form of a 50% stock dividend.
Summary Compensation Table
The following table summarizes compensation for services to
the Corporation in all capacities awarded to, earned by or paid
to the Corporation's chief executive officer and its two other
most highly compensated executive officers for the last three
fiscal years. No other executive officer of the Corporation met
the definition of "highly compensated" within the meaning of the
Securities and Exchange Commission's executive compensation
disclosure rules.
The Corporation is required to appoint certain executive
officers and full-time employees of Thermo Electron as executive
officers of the Corporation, in accordance with the Thermo
Electron Corporate Charter. The compensation for these executive
officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's
affairs is provided to the Corporation under the Corporate
Services Agreement between the Corporation and Thermo Electron.
Accordingly, the compensation for these individuals is not
reported in the following table.
Summary Compensation Table
Long Term
Compensation
Securities
Underlying
Annual Options (No. of
Name and Fiscal Compensation Shares All Other
Principal Position Year Salary Bonus and Company) (1) Compensation
(2)
John W. Wood Jr. 1996 $19,500 $17,200 2,100(TVL) $6,750
(3)
Chief Executive 1995 $18,000 $16,000 1,350(TVL) $6,750
Officer
1994 $24,750 $1,905 -- $6,639
Michael D. Norton 1996 $119,000 $60,000 2,550(TVL) $5,344
Vice President 150(TMO)
1995 $114,000 $49,000 1,650(TVL) $6,387
10,500(TMO)
1994 $110,000 $20,250 11,250(TMO) $4,436
800(THS)
Dominick R. 1996 $98,009 $10,000 900(TVL) $5,353
Congiusti (4)
Vice President 150(TMO)
1995 $95,014 $21,000 300(TVL) $5,621
7,500(TMO)
1994 $90,000 $30,000 7,500(TVL) $3,914
2,250(TMO)
(1) In addition to grants of options to purchase shares of
Common Stock of the Corporation (designated in the table as TVL),
the named executive officers of the Corporation have been granted
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options to purchase common stock of Thermo Electron and certain
of its other subsidiaries as part of Thermo Electron's stock
option program. Options have been granted during the last three
fiscal years in the following Thermo Electron companies:
Thermedics (designated in the table as TMD), Thermo Electron
(designated in the table as TMO) and ThermoSpectra Corporation
(designated in the table as THS).
(2) Represents the amount of matching contributions made by the
individual's employer on behalf of executive officers
participating in the Thermo Electron 401(k) plan.
(3) Mr. Wood is a senior vice president of Thermo Electron and
the president and chief executive officer of Thermedics, as well
as the president and chief executive officer of the Corporation.
A portion of Mr. Wood's annual cash compensation (salary and
bonus) has been allocated to and paid by each of Thermo Electron
and Thermedics in each of the last three fiscal years as
compensation for the services provided to these companies based
on the time he devoted to his responsibilities as a senior vice
president of Thermo Electron or as president and chief executive
officer of Thermedics. The annual cash compensation (salary and
bonus) reported in the table for Mr. Wood represents the amount
paid from all sources, including the Corporation, solely for Mr.
Wood's services as chief executive officer of the Corporation.
For 1996, 1995 and 1994, 10%, 10% and 15%, respectively, of Mr.
Wood's annual cash compensation (salary and bonus) was allocated
to the Corporation for his service as the Corporation's chief
executive officer. In addition, Mr. Wood has been granted
options to purchase common stock of Thermo Electron and certain
of its subsidiaries other than the Corporation from time to time
by Thermo Electron or such other subsidiaries. These options are
not reported here as they were granted as compensation for
service to Thermo Electron companies in capacities other than in
his capacity as chief executive officer of the Corporation.
(4) Mr. Congiusti was named an executive officer of the
Corporation in December 1994. Compensation is reported for Mr.
Congiusti for the entire 1994 fiscal year.
Stock Options Granted During Fiscal 1996
The following table sets forth information concerning
individual grants of stock options made during fiscal 1996 to the
Corporation's chief executive officer and the other named
executive officers. It has not been the Corporation's policy in
the past to grant stock appreciation rights, and no such rights
were granted during fiscal 1996.
Option Grants in Fiscal 1996
Percent Potential
of Realizable
Total Value at
Number of Options Assumed Annual
Securities Granted Rates of Stock
Underlying to Price
Options Employees Exercise Expira- Appreciation
Granted in Fiscal Price tion for Option
Name (1) Year(2) PerShare Date Term
5% 10%
John W. 2,100 (TVL) 1.8% $12.78 03/07/99 $4,221 $8,883
Wood,
Jr.(4)
Michael D. 2,550 (TVL) 2.1% $12.78 03/07/99 $5,126 $10,787
Norton
150 (TMO) 0.01%(3) $42.79 05/22/99 $1,011 $2,124
Dominick R. 900 (TVL) 0.8% $12.78 03/07/99 $1,809 $3,807
Congiusti
150 (TMO) 0.01%(3) $42.79 05/22/99 $1,011 $2,124
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(1) In addition to grants of options to purchase Common Stock of
the Corporation (designated in the table as TVL), the named
executive officers of the Corporation have been granted options
to purchase common stock of Thermo Electron (designated in the
table as TMO) as part of Thermo Electron's stock option program.
All of the options granted during the fiscal year are immediately
exercisable at the date of grant. In all cases, the shares
acquired upon exercise are subject to repurchase by the granting
companies at the exercise price if the optionee ceases to be
employed by such corporation or any other Thermo Electron
company. The granting corporation may exercise its repurchase
rights within six months after the termination of the optionee's
employment. For publicly traded companies, the repurchase rights
generally lapse ratably over a five- to ten-year period,
depending on the option term, which may vary from seven to twelve
years, provided that the optionee continues to be employed by the
granting corporation or another Thermo Electron company. The
granting corporations may permit the holders of options to
exercise options and to satisfy tax withholding obligations by
surrendering shares equal in fair market value to the exercise
price or withholding obligation.
(2) The amounts shown on this table represent hypothetical gains
that could be achieved for the respective options if exercised at
the end of the option term. These gains are based on assumed
rates of stock appreciation of 5% and 10% compounded annually
from the date the respective options were granted to their
expiration date. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock
option exercises will depend on the future performance of the
common stock of the granting corporation, the optionee's
continued employment through the option period and the date on
which the options are exercised.
(3) These options were granted under stock option plans
maintained by Thermo Electron or a subsidiary and accordingly are
reported as a percentage of total options granted to employees of
Thermo Electron and its subsidiaries.
(4) Mr. Wood has also served as an officer of Thermo Electron
since 1994 and the chief executive officer of Thermedics since
1984 and has been granted options to purchase common stock of
Thermo Electron and certain of its subsidiaries other than the
Corporation. These options are not reported in this table as
they were granted as compensation for service to other Thermo
Electron companies in capacities other than his capacity as the
chief executive officer of the Corporation.
Stock Options Exercised During Fiscal 1996
The following table reports certain information regarding
stock option exercises during fiscal 1996 and outstanding stock
options held at the end of fiscal 1996 by the Corporation's chief
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executive officer and the executive officers named in the Summary
Compensation Table. No stock appreciation rights were exercised
or were outstanding during fiscal 1996.
Aggregated Option Exercises In Fiscal 1996 And
Fiscal 1996 Year-End Option Values
Number of
Unexercised
Shares Options at
Acqui- Fiscal Year- Value of
red on End (Exercis- Unexercised
Exer- Value able/Unexer- In-the-Money
Name Company cise Realizedcisable)(1) Options
John W. Thermo 8,623 $61,645 78,450 /-- $319,074 /--
Wood, Jr. Voltek
(2)
Michael D. Thermo -- -- 82,950 /-- $507,020 /--
Norton Voltek
Thermo 1,006 $22,243 26,519 /--(3) $367,090 /--
Electron
Therme- 3,905 $72,878 22,345 /-- $105,988 /--
dics
Thermo -- -- 800 /-- $1,500 /--
Spectra
Dominick R. Thermo 2,000 $21,700 24,698 /-- $135,650 /--
Congiusti Voltek
Thermo -- -- 9,900 /-- $95,926 /--
Electron
Therme 2,400 $54,120 12,100 /-- $35,323 /--
-dics
(1) All of the options reported outstanding at the end of the
fiscal year are immediately exercisable as of the end of the
fiscal year. The shares acquired upon exercise of the options
reported in the table are subject to repurchase by the granting
corporation at the exercise price if the optionee ceases to be
employed by such corporation or any other Thermo Electron
company. The granting corporation may exercise its repurchase
rights within six months after the termination of the optionee's
employment. The repurchase rights generally lapse ratably over a
five- to ten-year period, depending on the option term, which may
vary from seven to twelve years, provided that the optionee
continues to be employed by the Corporation or another Thermo
Electron company.
(2) Mr. Wood also holds unexercised options to purchase common
stock of Thermo Electron and its subsidiaries other than the
Corporation. These options are not reported here as they were
granted as compensation for service to other Thermo Electron
companies in capacities other than his capacity as chief
executive officer of the Corporation.
(3) Options to purchase 11,250 shares of the common stock of
Thermo Electron granted to Mr. Norton are subject to the same
terms as described in footnote (1), except that the repurchase
rights of the granting corporation generally do not lapse until
the tenth anniversary of the grant date. In the event of the
employee's death or involuntary termination prior to the tenth
anniversary of the grant date, the repurchase rights of the
granting corporation shall be deemed to have lapsed ratably over
a five-year period, commencing with the fifth anniversary of the
grant date.
Pension Plan
The Corporation maintains a non-contributory defined benefit
plan for full-time employees of its Universal Voltronics
division, including officers and other salaried employees meeting
certain age and service requirements. Mr. Conguisti is the only
executive officer of the Corporation who participates in the
plan. The plan provides for payments in the event of normal,
early or deferred retirement, or total and permanent disability
or death. The plan also provides for the payment of benefits to
an employee's surviving spouse or designated beneficiary.
Covered compensation under this plan consists of salaries and
bonuses. Effective as of December 31, 1993, no additional
benefits have been accrued on behalf of any plan participant.
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The following table sets forth the estimated annual benefits
payable under the plan upon retirement to employees of Universal
Voltronics in specified compensation and years-of-service
classifications. The estimated benefits at certain compensation
levels reflect the statutory limits on compensation that can be
recognized for plan purposes. Such limit is currently $150,000
per year.
Years of Service
AnnualCompensation 15 20 25 30 35
$ 75,000 $15,187 $20,250 $25,312 $25,312 $25,312
$100,000 $20,250 $27,000 $33,750 $33,750 $33,750
$125,000 $25,313 $33,750 $42,188 $42,188 $42,188
$150,000 $30,375 $40,500 $50,625 $50,625 $50,625
Each eligible employee receives a monthly retirement
benefit, beginning at normal retirement age (65), based on a
percentage (1.35%) of the average monthly compensation of such
employee as of December 31, 1993, multiplied by years of service
(up to a maximum of 25 years) as of December 31, 1993, less
benefits paid upon cancellation of the Corporation's predecessor
pension plan. Benefits are reduced for retirement before normal
retirement age. Average monthly compensation is generally
defined as average monthly compensation over the five years of
highest compensation in the ten-year period preceding retirement.
The benefits shown in the above table are subject to reduction
for Social Security benefits. The plan benefits shown are
payable during the employee's lifetime unless the employee elects
another form of benefit that provides death benefit protection.
For Mr. Conguisti, the only executive officer who participates in
the plan, the compensation recognized for plan purposes is
$87,593, and the credited years of service for Mr. Conguisti was
3 years as of December 31, 1993.
Severance Agreements
In 1988, Thermo Electron entered into severance agreements
with several of its key employees, including key employees of the
Corporation and other majority-owned subsidiaries. These
agreements provide severance benefits if there is a change of
control of Thermo Electron that is not approved by the Board of
Directors of Thermo Electron and the employee's employment with
Thermo Electron or the majority-owned subsidiary is terminated,
for whatever reason, within one year thereafter. For purposes of
the agreement a change of control exists upon (i) the acquisition
of 50% or more of the outstanding common stock of Thermo Electron
by any person without the prior approval of the board of
directors of Thermo Electron, (ii) the failure of the Board of
Directors of Thermo Electron, within two years after any
contested election of directors or tender or exchange offer not
approved by the Board of Directors, to be constituted of a
majority of directors holding office prior to such event or (iii)
any other event that the Board of Directors of Thermo Electron
determines constitutes an effective change of control of Thermo
Electron. Each of the recipients of these agreements would
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receive a lump-sum benefit at the time of a qualifying severance
equal to the highest total cash compensation paid to the employee
by Thermo Electron or the majority-owned subsidiary in any
12-month period during the three years preceding the severance
event. A qualifying severance exists (i) if the employment of the
executive officer is terminated for any reason within one year
after a change in control of Thermo Electron or (ii) a group of
directors of Thermo Electron consisting of directors of Thermo
Electron on the date of the severance agreement or, if an
election contest or tender or exchange offer for Thermo
Electron's common stock has occurred, the directors of Thermo
Electron immediately prior to such election contest or tender or
exchange offer, and any future directors who are nominated or
elected by such directors, determines that any other termination
of the executive officer's employment should be treated as a
qualifying severance. The benefits to be provided are limited so
that the payments would not constitute so-called "excess
parachute payments" under applicable provisions of the Internal
Revenue Code of 1986. Assuming that severance benefits would have
been payable under these agreements as of March 1, 1997, Mr. Wood
would have received approximately $367,000.
RELATIONSHIP WITH AFFILIATES
Thermo Electron has adopted a strategy of selling a minority
interest in subsidiary companies to outside investors as an
important tool in its future development. As part of this
strategy, Thermo Electron and certain of its subsidiaries have
created several privately and publicly held subsidiaries.
Thermedics has created Thermedics Detection Inc., Thermo
Cardiosystems Inc. and Thermo Sentron Inc. as publicly held
subsidiaries, and has acquired the majority interest in the
Corporation, which until 1990 was an unaffiliated public company.
From time to time, Thermo Electron and its subsidiaries will
create other majority-owned subsidiaries as part of its spinout
strategy. (The Corporation and such other majority-owned Thermo
Electron subsidiaries are hereinafter referred to as the "Thermo
Subsidiaries.")
Thermo Electron and each of the Thermo Subsidiaries
recognize that the benefits and support that derive from their
affiliation are essential elements of their individual
performance. Accordingly, Thermo Electron and each of the Thermo
Subsidiaries have adopted the Thermo Electron Corporate Charter
(the "Charter") to define the relationships and delineate the
nature of such cooperation among themselves. The purpose of the
Charter is to ensure that (1) all of the companies and their
stockholders are treated consistently and fairly, (2) the scope
and nature of the cooperation among the companies, and each
company's responsibilities, are adequately defined, (3) each
company has access to the combined resources and financial,
managerial and technological strengths of the others, and (4)
Thermo Electron and the Thermo Subsidiaries, in the aggregate,
are able to obtain the most favorable terms from outside parties.
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To achieve these ends, the Charter identifies the general
principles to be followed by the companies, addresses the role
and responsibilities of the management of each company, provides
for the sharing of group resources by the companies and provides
for centralized administrative, banking and credit services to be
performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by
members, coordinating the access of Thermo Electron and the
Thermo Subsidiaries (the "Thermo Group") to external financing
sources, ensuring compliance with external financial covenants
and internal financial policies, assisting in the formulation of
long-range planning and providing other banking and credit
services. Pursuant to the Charter, Thermo Electron may also
provide guarantees of debt or other obligations of the Thermo
Subsidiaries or may obtain external financing at the parent level
for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on
behalf of, the consolidated entity or may obtain financing
directly from external financing sources. Under the Charter,
Thermo Electron is responsible for determining that the Thermo
Group remains in compliance with all covenants imposed by
external financing sources, including covenants related to
borrowings of Thermo Electron or other members of the Thermo
Group, and for apportioning such constraints within the Thermo
Group. In addition, Thermo Electron establishes certain internal
policies and procedures applicable to members of the Thermo
Group. The cost of the services provided by Thermo Electron to
the Thermo Subsidiaries is covered under existing corporate
services agreements between Thermo Electron and each of the
Thermo Subsidiaries.
The Charter presently provides that it shall continue in
effect so long as Thermo Electron and at least one Thermo
Subsidiary participate. The Charter may be amended at any time by
agreement of the participants. Any Thermo Subsidiary, including
the Corporation, can withdraw from participation in the Charter
upon 30 days' prior notice. In addition, Thermo Electron may
terminate a subsidiary's participation in the Charter in the
event the subsidiary ceases to be controlled by Thermo Electron
or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the
Charter automatically terminates the corporate services agreement
and tax allocation agreement (if any) in effect between the
withdrawing company and Thermo Electron. The withdrawal from
participation does not terminate outstanding commitments to third
parties made by the withdrawing company, or by Thermo Electron or
other members of the Thermo Group, prior to the withdrawal.
However, a withdrawing company is required to continue to comply
with all policies and procedures applicable to the Thermo Group
and to provide certain administrative functions mandated by
Thermo Electron so long as the withdrawing company is controlled
by or affiliated with Thermo Electron.
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As provided in the Charter, the Corporation and Thermo
Electron have entered into a Corporate Services Agreement (the
"Services Agreement") under which Thermo Electron's corporate
staff provides certain administrative services, including certain
legal advice and services, risk management, employee benefit
administration, tax advice and preparation of tax returns,
centralized cash management and financial and other services to
the Corporation. The Corporation was assessed an annual fee equal
to 1.0% of the Corporation's revenues for these services for
calendar 1996. The fee is reviewed annually and may be changed
by mutual agreement of the Corporation and Thermo Electron.
During fiscal 1996, Thermo Electron assessed the Corporation
$485,000 in fees under the Services Agreement. Management
believes that the charges under the Services Agreement are
reasonable and that the terms of the Services Agreement are fair
to the Corporation. For items such as employee benefit plans,
insurance coverage and other identifiable costs, Thermo Electron
charges the Corporation based on charges attributable to the
Corporation. The Services Agreement automatically renews for
successive one-year terms, unless canceled by the Corporation
upon 30 days' prior notice. In addition, the Services Agreement
terminates automatically in the event the Corporation ceases to
be a member of the Thermo Group or ceases to be a participant in
the Charter. In the event of a termination of the Services
Agreement, the Corporation will be required to pay a termination
fee equal to the fee that was paid by the Corporation for
services under the Services Agreement for the nine-month period
prior to termination. Following termination, Thermo Electron may
provide certain administrative services on an as-requested basis
by the Corporation or as required in order to meet the
Corporation's obligations under Thermo Electron's policies and
procedures. Thermo Electron will charge the Corporation a fee
equal to the market rate for comparable services if such services
are provided to the Corporation following termination.
As of December 28, 1996, $16,623,000 of the Corporation's
cash equivalents were invested in a repurchase agreement with
Thermo Electron. Under this agreement, the Corporation in effect
lends excess cash to Thermo Electron, which Thermo Electron
collateralizes with investments principally consisting of
corporate notes, government and agency securities, money market
funds, certificates of deposit and other marketable securities,
in the amount of at least 103% of such obligation. The
Corporation's funds subject to the repurchase agreement are
readily convertible into cash by the Corporation and have a
maturity of three months or less. The repurchase agreement earns
a rate based on the 90-day Commercial Paper Composite Rate plus
25 basis points, set at the beginning of each quarter.
Thermedics holds two subordinated convertible notes of the
Corporation. One is in the principal amount of $6.0 million,
bears interest at a rate of 6/%, is due 2002 and is convertible
into Common Stock at a conversion price of $4.27 per share (the
"6/% Note"). The other note is in the principal amount of $4
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million, bears interest at a rate of 5%, is due 2003 and is
convertible into Common Stock at a conversion price of $3.78 per
share (the "5% Note").
Thermo Electron and Thermedics owned of record approximately
0.5% and 51%, respectively, of the Corporation's outstanding
Common Stock on December 28, 1996. In January 1996, Thermedics
acquired 315,199 shares of the Corporation's Common Stock, or
approximately 6.5% of the Corporation's outstanding Common Stock,
from Thermo Electron. Thermedics intends for the foreseeable
future to maintain at least 50% ownership of the Corporation.
This may require the purchase by Thermedics of additional shares
of the Corporation's Common Stock from time to time as the number
of outstanding shares issued by the Corporation increases. These
purchases may be made either on the open market or directly from
the Corporation, at prevailing market prices, or pursuant to
conversion of the 6/% Note or the 5% Note.
Stock Holding Assistance Plan
During 1996, the Committee established a stock holding
policy for executive officers of the Corporation. The stock
holding policy specifies an appropriate level of ownership of the
Corporation's Common Stock as a multiple of the officer's
compensation. For the chief executive officer, the multiple is
one times his base salary and reference bonus for the calendar
year. For all other officers, the multiple is one times the
officer's base salary. The Committee deemed it appropriate to
permit officers to achieve these ownership levels over a
three-year period.
In order to assist officers in complying with the policy,
the Committee also adopted a stock holding assistance plan under
which the Corporation is authorized to make interest-free loans
to officers to enable them to purchase shares of the Common Stock
in the open market. The loans are required to be repaid upon the
earlier of demand or the fifth anniversary of the date of the
loan, unless otherwise authorized by the Committee. In 1996,
Mr. Michael D. Norton, a vice president of the Corporation,
received a loan in the amount of $65,166.00 under this plan to
purchase 5,000 shares of Common Stock.
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