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 1-9567 THERMEDICS INC. (Exact name of Registrant as specified in its charter) Massachusetts 04-2788806 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 470 Wildwood Street, P.O. Box 2999 Woburn, Massachusetts 01888-1799 (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, $.10 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 (or for such shorter period that the Company was required to file such reports), 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 $95,552,000. As of January 29, 1999, the Registrant had 41,696,696 pro forma 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 The businesses of Thermedics Inc. (the Company or the Registrant) operate in four reportable segments: Quality Assurance and Security Products, Precision Weighing and Inspection Equipment, Heart Assist and Blood Testing Devices, and Power Electronics and Test Equipment. Through the Company's Thermedics Detection Inc. subsidiary, the Quality Assurance and Security Products segment develops, manufactures, and markets high-speed, detection and measurement instruments used in a variety of on-line industrial process applications, security applications, and for laboratory analysis. On May 6, 1998, Thermedics Detection acquired Thermedics' Orion laboratory products division in exchange for the right to receive 5,961,225 shares of Thermedics Detection common stock. Orion manufactures electrochemistry systems that determine the quality of a wide variety of substances, including food, cosmetics, and household products by measuring components such as pH, specific ion concentration, dissolved oxygen, and conductivity. The issuance of the 5,961,225 shares of Thermedics Detection common stock issuable in the merger was approved by the January 1999 vote of Thermedics Detection shareholders. The Company's Precision Weighing and Inspection Equipment segment includes the Company's Thermo Sentron Inc. subsidiary, which develops, manufactures, and markets high-speed precision-weighing and inspection equipment for industrial production and packaging lines. The Heart Assist and Blood Testing Devices segment consists of the Company's Thermo Cardiosystems Inc. subsidiary, which has developed two implantable left ventricular-assist systems (LVAS): a pneumatic, or air-driven, system and an electric version. Thermo Cardiosystems' International Technidyne Corporation subsidiary is a leading manufacturer of near-patient, whole-blood coagulation testing equipment and related disposables and also manufactures premium-quality, single-use skin-incision devices. The Power Electronics and Test Equipment segment, through the Company's Thermo Voltek Corp. subsidiary, designs, manufactures, and markets a range of products related to power amplification, conversion, and quality and electronics-test instruments. On March 31, 1998, the Company proposed to acquire, through a merger, all of the outstanding shares of common stock of Thermo Voltek that the Company does not own, other than shares owned by Thermo Electron, at a price of $7.00 per share in cash. A meeting of Thermo Voltek's shareholders will occur on March 25, 1999, to consider this matter. The proposed merger is discussed in Note 16 to Consolidated Financial Statements in the Registrant's Fiscal 1998* Annual Report to Shareholders, which information is incorporated herein by reference. In addition, the Company develops, manufactures, and markets enteral nutrition-delivery systems and a line of medical-grade polymers used in medical disposables and in nonmedical, industrial applications, including safety glass and automotive coatings. The Company was incorporated in 1983 under the laws of Massachusetts as a wholly owned subsidiary of Thermo Electron. On February 5, 1998, the Company's Board of Directors voted to issue 4,880,533 shares of its common stock to Thermo Electron in exchange for 3,355,705 shares of Thermo Cardiosystems' common stock. The Company's issuance of the 4,880,533 shares of its common stock to Thermo Electron is subject to approval by the Company's shareholders at a meeting to occur on March 31, 1999. However, because Thermo Electron is the majority shareholder and intends to vote its shares in favor of the transaction, approval is assured. The shares of common stock will be exchanged at their respective fair market values as of February 5, 1998. As of January 2, 1999, on a pro forma - -------------------- * 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 basis, assuming the completion of the transaction discussed above, Thermo Electron owned 30,850,049 shares of the Company's common stock, representing 74% of such stock outstanding. Thermo Electron 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. Thermo Electron 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. Thermo Electron intends, for the foreseeable future, to maintain at least 50% ownership of the Company. This may require Thermo Electron to purchase additional shares of the Company's common stock (or debentures convertible into common stock) from time to time, as the number of the Company's outstanding shares increases. These or any other purchases may be made either in the open market or directly from the Company. See Notes 4 and 7 to Consolidated Financial Statements in the Company's 1998 Annual Report to Shareholders for a description of the Company's outstanding stock options and convertible debentures. During 1998, Thermo Electron purchased 4,828,895 shares of the Company's common stock in the open market for $52.8 million. Additionally, during 1998, Thermo Electron purchased in the open market 882,450 shares of common stock of Thermedics Detection for $8.2 million and 454,224 shares of common stock of Thermo Sentron for $4.3 million. During 1998, Thermo Electron announced a proposed reorganization involving certain of Thermo Electron's subsidiaries, including the Company. Under this plan, the Company may acquire Thermo Electron's wholly owned biomedical group for shares of Company common stock and the Company's equity interest in its Thermo Sentron, Thermedics Detection, and Thermo Voltek subsidiaries. Thermo Electron may, in turn, take Thermo Sentron and Thermedics Detection private, and shareholders of these subsidiaries would receive cash in exchange for their shares of common stock. The proposed transactions are subject to a number of conditions, as outlined in Note 16 to Consolidated Financial Statements in the Registrant's 1998 Annual Report to Shareholders, which information is incorporated herein by reference. Forward-looking Statements Forward-looking statements, within the meaning of Section 21E of the Securities and Exchange Act of 1934, are made throughout this Annual Report on Form 10-K. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words, "believes," "anticipates," "plans," "expects," "seeks," "estimates," and similar expressions are intended to identify forward-looking statements. There are a number of important factors that could cause the results of the Company to differ materially from those indicated by such forward-looking statements, including those detailed under the heading "Forward-looking Statements" in the Registrant's 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 13 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 3 Quality Assurance and Security Products Detection Instruments Thermedics Detection supplies high-speed detection and measurement systems to examine a variety of products and substances either on-line or in a laboratory to ensure their quality. The ALEXUS(R) systems detect trace amounts of constituents that would affect product quality in refillable plastic beverage containers. The InScan(R) high-speed X-ray imaging system uses high-speed X-ray imaging technology to determine accurate fill volume, net volume, proper contents, and package integrity of containers for the beverage, food, and other industries. Through its Moisture Systems division, Thermedics Detection designs, manufactures, and markets equipment that uses near-infrared spectroscopy to measure moisture and other product constituents, including fats, proteins, oils, flavorings, solvents, adhesives, and coatings, in a variety of products as they move along manufacturing lines. These systems are used across the food, pharmaceutical, chemical, petrochemical, tobacco, forest products, paper converting, plastics, textiles, corrugating, and other industries. Thermedics Detection's high-speed gas chromatograph, called Flash-GC(TM), provides information on the composition of a wide range of substances, such as pharmaceuticals, food, and water, at speeds 20 to 50 times faster than conventional gas chromatographs, while its EZ-Flash(TM) system is an upgrade kit that can be integrated with virtually any conventional gas chromatograph to enable it to conduct chemical analyses up to 30 times faster. Also through Thermedics Detection, the Company produces security instruments that use trace particle- and vapor-detection techniques for forensics, search, and screening applications under the direction of police, border police, transportation authorities, and carriers. Thermedics Detection's principal security instrument is the EGIS(R) system, a highly sensitive particle- and vapor-detection system for screening people, baggage, packages, freight, and electronic equipment such as personal computers, for the presence of a wide range of explosives, including plastic explosives that have proven difficult to detect using conventional methods. Currently, more than 275 EGIS units are deployed at airports, border crossings, and other checkpoints. In addition, EGIS units have been used in highly visible forensic investigations, including the crash of TWA Flight 800, as well as the bombings in Oklahoma City, at New York's World Trade Center, and at locations in Israel, Buenos Aries, and the United Kingdom. In 1998, Thermedics Detection introduced a new line of benchtop explosives-detection systems based on its EGIS technology. This family of products includes the EGIS II, the more sensitive EGIS III, and the EGIS IV, Thermedics Detection's most sensitive explosives detector to date. Thermedics Detection also has developed SecurScan(TM), a walk-through explosives detector. During 1998, 1997, and 1996, the Company derived revenues of $40.3 million, $51.3 million, and $43.8 million, respectively, from its detection instruments. Laboratory Products Through its Orion subsidiary, Thermedics Detection manufactures a wide range of electrochemistry products that determine the quality of many substances by measuring their pH, specific ion concentration, dissolved oxygen, and conductivity. Orion's products are used in the food, beverage, pharmaceutical, chemical, environmental analysis, drinking water, wastewater treatment, agricultural, biomedical research, and many other industries. Pure water monitors, also marketed under the Orion name, use ion-selective technology to evaluate water quality in the power, semiconductor, drinking water, and pharmaceutical industries. Other products include microweighing equipment and titration systems. During 1998, 1997, and 1996, the Company derived revenues of $51.3 million, $53.1 million, and $50.9 million, respectively, from its laboratory products. 4 Precision Weighing and Inspection Equipment Thermo Sentron serves two principal markets: packaged goods and bulk materials. Thermo Sentron's products for the packaged-goods market include a broad line of checkweighing equipment and metal detectors that can be integrated at various stages in production lines for process control and quality assurance, as well as hot foil and thermal printers and X-ray inspection equipment. These products are sold primarily to customers in the food-processing, pharmaceutical, mail-order, and other diverse industries. Products in Thermo Sentron's bulk-materials line include conveyor-belt scales, solid level-measurement and conveyor-monitoring systems, sampling systems, and small-capacity feeders. These products are sold primarily to customers in the mining and material-processing industries, as well as electric utilities and chemical and other manufacturing companies. In June 1998, Thermo Sentron acquired the three businesses that constituted the product-monitoring group of Graseby Limited (the product-monitoring businesses), a subsidiary of Smiths Industries plc. The product-monitoring businesses design, manufacture, and distribute specialized packaged-goods equipment, including checkweighers and metal detectors, for the food and pharmaceutical industries. In February 1997, Thermo Sentron acquired the business of RCC Industrial Electronics Pty. Limited, an Australia-based manufacturer of in-motion checkweighers for the food and pharmaceutical industries. In July 1997, Thermo Sentron acquired Westerland Engineering Ltd., a U. K.-based manufacturer of process-weighing and control equipment. Heart Assist and Blood Testing Devices Left Ventricular-assist Systems. The Company, through its Thermo Cardiosystems subsidiary, has developed two versions of its LVAS: an implantable pneumatic, or air-driven, system that can be controlled by either a bedside or portable console; and an electric system that features an internal electric motor powered by an external battery pack worn by the patient. Both of the Company's systems employ the Company's HeartMate(R) blood pump, and are designed for long-term use. This pump is implanted just below the diaphragm in a position that minimizes interference with normal circulation and other bodily functions. An inlet tube is inserted into the apex of the left ventricle to drain blood into the pump chamber. Blood is then forced out of the pump through an animal tissue valve and back into the aorta. The HeartMate blood pump works with the biological control mechanism of the natural heart to increase pumping capability when required for activities such as climbing stairs. The Company's LVAS are at various stages of regulatory approval. Air-driven LVAS. In October 1994, the FDA approved the air-driven system as a bridge to transplant for patients awaiting heart transplantation. This approval allows the Company to sell the air-driven LVAS to any of the nearly 900 cardiac surgery centers in the United States. In April 1994, the Company's air-driven LVAS received the CE Mark required for commercial sale of medical devices in all European Community countries. In August 1998, the Medical Devices Bureau of Health Canada issued a Notice of Compliance for the Company's air-driven HeartMate LVAS, permitting its sale throughout Canada. In the air-driven LVAS, the HeartMate blood pump is coupled to an external console connected to the body by a tube. The Company has also developed the HeartPak(TM), a lightweight portable console that can be carried over the shoulder. The portable console received the CE Mark for commercial sale in European Community countries in February 1995. In July 1995, the FDA approved the beginning of clinical trials of the HeartPak portable pneumatic driver. The Company is currently evaluating the safety of the system in the hospital, and the Company also plans to evaluate the system in the home environment. Electric LVAS. The Company has also developed an electric LVAS that uses the HeartMate blood pump driven by an internal electric motor mounted in the blood pump housing. The system is connected to its external battery pack by wires that exit the body. Since the power source and control elements are worn on a battery belt, the system allows the patient complete mobility. In August 1995, the electric LVAS received the CE Mark, allowing commercial sale of this system in all European Community countries. The electric system is used as a bridge to transplant in the United States, Europe, and other regions, and is also implanted as an alternative to heart transplant in Europe and other regions. In August 1998, the Medical Devices Bureau of Health Canada issued a Notice of Compliance for the 5 Company's electric system, permitting its sale throughout Canada. In September 1998, the FDA approved the electric system for commercial sale as a bridge to transplant for patients awaiting heart transplantation. In December 1995, the FDA approved the protocol for conducting clinical trials of the electric LVAS as a long-term solution for nontransplant candidates. The trial is expected to compare the results of approved patients using the device to a similar number using drug therapy. In December 1997, the FDA approved the Company's proposal to broaden the entrance criteria and increase the number of participating sites under this trial. The Company estimates that it will complete this trial in two to three years; however, no assurance can be given that the Company will complete this study in this time period or that it will receive FDA approval after the trial or at all. During 1998, 1997, and 1996, the Company derived revenues of $30.3 million, $27.0 million, and $30.0 million, respectively, from its LVAS. Blood-testing Equipment and Skin-incision Devices. Thermo Cardiosystems' International Technidyne subsidiary manufactures and supplies whole-blood coagulation testing equipment and related disposables, as well as skin-incision devices. International Technidyne's product lines offer whole-blood coagulation systems for bedside anticoagulation management, coagulation screening, and transfusion management. Each analyzes small blood samples, then processes and quickly displays comprehensive patient hemostatis information. Blood management of this type is essential for cardiopulmonary bypass surgery and angioplasty. The ProTime(R) Microcoagulation System is designed to allow self-testing for patients who take the blood-thinning drug warfarin (Coumadin). International Technidyne also manufactures a family of single-use skin-incision devices for drawing blood from adults, children, and infants. During 1998, 1997, and 1996, the Company derived revenues of $36.5 million, $35.9 million, and $34.0 million, respectively, from its blood-testing equipment and skin-incision devices. Power Electronics and Test Equipment Through its Thermo Voltek subsidiary, the Company designs, manufactures, and markets a range of products related to power amplification and conversion as well as instruments that test electronic systems and components. The Company's power products include radio frequency (RF) and microwave power amplifiers, power-conversion equipment, and application-specific power supplies. These power products are used in communications, broadcast, research, and medical imaging applications. Thermo Voltek's test instruments simulate pulsed electromagnetic interference, radio frequency interference, and changes in AC voltage, to allow manufacturers of electronic systems and integrated circuits to test for electromagnetic compatibility (EMC). These products are used in the product-development, design-verification, and quality-assurance stages, enabling customers to optimize performance, reliability, and safety in the final design, and to meet industry standards and regulatory requirements, including a European Union directive that took effect in January 1996. During 1997 and 1998, Thermo Voltek experienced lower demand for its EMC test products, due to the declining influence of IEC 801, the European Union directive on electromagnetic compatibility that took effect January 1, 1996, and, to a lesser extent, a decline in the component-reliability market for electrostatic discharge test equipment that resulted from a slowdown in capital expenditures by the semiconductor industry. Due in part to these developments, during 1997 and 1998 the Company implemented certain operational, organizational, and personnel changes. In November 1998, Thermo Voltek sold substantially all of the assets, excluding real property, of its Universal Voltronics division to an unrelated buyer. The purchase price for the transferred assets was $2,500,000 in cash, $2,250,000 of which had been received as of year-end 1998. 6 Other The Company's research relating principally to the development of its LVAS has resulted in the development of proprietary medical-grade plastics marketed under the names Tecoflex(R) and Tecothane(R). Tecoflex and Tecothane are thermoplastic polyurethanes used in medical disposables and industrial products. The Company sells Tecoflex and Tecothane in bulk form for fabrication by the customer, and also extrudes precision tubing to customer specifications. The Company's Corpak Inc. subsidiary designs, manufactures, and markets enteral feeding systems that introduce special nutritional solutions into the stomach or the small intestine through tubes entering the nose or stomach. Enteral therapy is used for patients who are unable to feed themselves but who do not require parenteral (intravenous) feeding. Corpak's products include bags for nutritional fluids, delivery pumps, associated pump sets that hook up to the pumps, and feeding tubes. In addition, Corpak markets catheters for peritoneal dialysis. (ii) and (xi) New Products; Research and Development The Company maintains research and development capability to support its existing products and to develop new products. A number of programs are underway, funded by the Company solely or jointly with an outside source. These programs include development of new products to perform substantially all or part of the pumping function of the left ventricle of the natural heart, quality assurance and security instruments, electronics-test instruments, and high voltage power supply products. The Company also develops new grades of polymers to meet specific customer requirements for industrial and medical applications. During 1998, 1997, and 1996, the Company expended $26.6 million, $24.3 million, $21.4 million, respectively, on internally sponsored research and development programs, and $4.2 million, $2.9 million, and $1.4 million, respectively, on research and development programs sponsored by others. As of January 2, 1999, 168 professional employees were engaged full-time in research and development activities. (iii) Raw Materials Certain raw materials used in the manufacture of the Company's LVAS are available from only one or two suppliers. The Company is making efforts to minimize the risks associated with sole sources and ensure long-term availability, including qualifying alternative materials and components or developing alternative sources for materials and components supplied by a single source. Although 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 the LVAS. The cost to the Company to evaluate and test alternative materials and components and the time necessary to obtain FDA approval for these materials and components are inherently difficult to determine because both time and cost are dependent on at least two factors: the similarity of alternative materials or components to the original materials or components, and the amount of third-party testing that may have already been completed on alternative materials or components. There can be no assurance that the substitution of alternative materials or components will not cause delays in the Company's LVAS development program or adversely affect the Company's ability to manufacture and ship LVAS to meet demand. (iv) Patents, Licenses, and Trademarks The Company considers its intellectual property important in the operation and growth of its business, and its policy is to protect this property through patents, license and confidentiality agreements, trademarks, and trade secret protection. The Company applies for and maintains patents in the U.S. and in foreign countries, particularly in the areas of biomedical materials, medical products, and analytical instruments. Although some of these patent rights may provide the Company with a competitive advantage, the Company primarily relies on its know-how and trade secrets. 7 In addition, there can be no assurance that third parties will not assert claims against the Company that the Company infringes the intellectual property rights of such parties. The Company could incur substantial costs and diversion of management resources with respect to the defense of any such claims, which could have a material adverse effect on the Company's business, financial condition, and results of operations. Furthermore, parties making such claims could secure a judgment awarding substantial damages, as well as injunctive or other equitable relief, which could effectively block the Company's ability to make, use, sell, distribute, or market its products and services in the U.S. or abroad. In the event that a claim relating to intellectual property is asserted against the Company, the Company may seek licenses to such intellectual property. There can be no assurance, however, that such licenses could be obtained on commercially reasonable terms, if at all. The failure to obtain the necessary licenses or other rights could preclude the sale, manufacture, or distribution of the Company's products and, therefore, could have a material adverse effect on the Company's business, financial condition, and results of operations. Thermo Cardiosystems has received correspondence from a third party alleging that the textured surface of the LVAS housing infringes certain patent rights of such third party. In general, an owner of intellectual property can prevent others from using such property without a license and is entitled to damages for unauthorized usage. The Company has investigated the bases of the allegation and, based on the opinion of its counsel and the Company's assessment of the proceedings in the United States Patent and Trademark Office to date, it believes that if it were sued on these bases, it would have meritorious defenses. Given the inherent uncertainties in dispute resolution, however, if the Company were sued and the outcome were unfavorable, the Company's results of operations or financial condition could be materially adversely affected in amounts the Company cannot reasonably estimate. In August 1998, Thermo Cardiosystems obtained an exclusive license to incorporate technology developed by Sulzer Electronics Ltd. into an advanced version of Thermo Cardiosystems' LVAS, HeartMate III. Sulzer Electronics Ltd., based in Switzerland, is a company within the Sulzer Corporation. HeartMate III is a miniature centrifugal pump featuring a magnetically controlled system that has been developed by Sulzer Electronics' Magnetics Group. Quality Assurance and Security Devices The Company has certain licenses to the technology resulting from its customer-sponsored development of the ALEXUS system. The Company's patents and agreements have varying lives ranging from one year to approximately twenty years, and the Company does not believe that the expiration or termination of any one of these patents or agreements would materially affect the Company's business. (v) Seasonal Influences There are no significant seasonal influences on the Company's sales of its products. (vi) Working Capital Requirements There are no special inventory requirements or credit terms extended to customers that would have a material adverse effect on the Company's working capital. (vii) Dependency on a Single Customer No customer represented 10% or more of the Company's total revenues in 1998, 1997, and 1996. 8 (viii) Backlog The Company's backlog of firm orders at year-end 1998 and 1997 was: (In thousands) 1998 1997 - ---------------------------------------------------------------------------------------- -------- --------- Quality Assurance and Security Products $ 6,065 $ 9,374 Precision Weighing and Inspection Equipment 14,683 13,142 Heart Assist and Blood Testing Devices 1,818 2,556 Power Electronics and Test Equipment 5,397 10,218 Other 1,843 1,292 ------- -------- $29,806 $ 36,582 ======= ======== Certain of these orders are cancelable by the customer upon payment of a cancellation charge. The Company anticipates that substantially all of the backlog at the end of 1998 will be shipped or completed during 1999. The decrease in backlog at the Quality Assurance and Security Products segment resulted primarily from completion of large orders for quality-assurance and security systems in 1998. The decrease in backlog at the Power Electronics and Test Equipment segment resulted primarily from lower demand. The Company does not believe the size of its backlog is necessarily indicative of intermediate or long-term trends in its business. (ix) Government Contracts Not applicable. (x) Competition Quality Assurance and Security Products The Company's quality assurance products compete with systems manufactured by numerous companies. The Company believes, however, that these companies are generally focused on particular niches in the process detection systems market, only in some of which the Company competes. Competition in the markets for each of the Company's quality assurance systems is based primarily on performance, durability, service and, to a lesser extent, price. The Company believes that its systems' performance and speed, as well as the Company's reputation for developing superior new technologies and for the innovative application of existing technologies to a variety of high-speed production environments and product quality-assurance problems, are competitive advantages. In the security instrument market, the Company competes with a small number of companies, including other makers of chemical trace detection instruments, and, to a lesser degree, makers of enhanced X-ray detectors. Competition in this market is based primarily on performance, including speed, accuracy, and the range of explosives that can be detected; ease of use; service; and price. The Company's principal competitor in the trace detection market is Barringer Technologies Inc., a Canadian firm that has placed several trace detectors in airport applications. In the laboratory products market, the Company competes with several international companies. The Company competes on the basis of performance, service, technology, and price. Competitors include Corning, Fisher Scientific, Mettler-Toledo, and Beckman Coulter. Precision Weighing and Inspection Equipment The Company's Thermo Sentron subsidiary encounters and expects to continue to encounter intense competition in the sale of its products. Thermo Sentron's principal competitors in the packaged-goods market are Ishida Scales 9 Mfg. Co., Ltd. and Mettler-Toledo AG. In the more fragmented bulk-materials market, Thermo Sentron competes on a worldwide basis primarily with Carl Schenck AG and Milltronics Corporation. Thermo Sentron believes that the principal competitive pressures affecting the market for precision-weighing and inspection equipment include customer service and support, quality and reliability, price, accuracy, ease of use, distribution channels, technical features, compatibility with customers' manufacturing processes, and regulatory approvals. Heart Assist and Blood Testing Devices Left Ventricular-assist Systems. The Company is aware of one other company that has received PMA approval from the FDA for an implantable LVAS similar to the Company's. Also, the Company is aware of one other company that has received commercial 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 received approval from the FDA for its IDE for a portable power source. In addition, the Company is aware that a total artificial heart is currently undergoing clinical trials. The Company is aware that other cardiac-assist devices are in various stages of development by other companies. 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. Blood-testing Equipment and Skin-incision Devices. International Technidyne's principal competitor for the HEMOCHRON coagulation monitoring instruments, used in the operating room and in cardiac catheterization, is the HemoTec division of Medtronic, Inc. The Roche Group competes with the ProTime with a blood coagulation monitor which is marketed to clinics and also for patient self-testing. There are also several new competitors that have recently entered the blood coagulation monitoring market. ITC's products compete primarily on the basis of reputation, utility, and price. The skin-incision devices compete with products offered by a number of companies including Organon Teknika; Becton, Dickinson and Company; and Owen-Mumford. The incision devices compete primarily on the basis of safety, quality, and reputation. Power Electronics and Test Equipment The Company is a leading supplier of EMC testing equipment. There are numerous companies worldwide that independently manufacture and market pulsed EMC test equipment for electronic products, and several more that independently manufacture and market component-reliability test equipment. In the market for RF power amplifiers and programmable power amplifiers, the Company competes with several companies worldwide. The Company competes in these markets primarily on the basis of performance, technical expertise, reputation, and price. Substantially all of the Company's contract and commercial revenues are subject to intense competitive bidding. Other In the market for medical-grade polymers and enteral nutrition-delivery systems, the Company competes primarily with large pharmaceutical, medical-device, and chemical companies, many of which have substantially greater financial, technical, and human resources than those of the Company. Competition within these markets is intense, and is based primarily on price, efficacy, and technological advances. 10 (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 As of January 2, 1999, the Company employed 2,045 people. (d) Financial Information About Geographic Areas Financial information about geographic areas is summarized in Note 13 to Consolidated Financial Statements in the Registrant's 1998 Annual Report to Shareholders, which information is incorporated herein by reference. (e) Executive Officers of the Registrant Name Age Present Title (Fiscal Year First Became Executive Officer) ----------------------------------------------------------------- John T. Keiser 63 President and Chief Executive Officer (1998) Victor L. Poirier 57 Senior Vice President (1983) Theo Melas-Kyriazi 39 Chief Financial Officer (1998) Paul F. Kelleher 56 Chief Accounting Officer (1985) Each executive officer serves until his successor is chosen or appointed and qualified, or until earlier resignation, death, or removal. All executive officers, except Messrs. Keiser and Melas-Kyriazi, have held comparable positions for at least five years, either with the Company or with its parent company, Thermo Electron. Mr. Keiser was appointed Senior Vice President of the Company in 1994. At the same time, he was named President of Thermo Biomedical, a newly created subsidiary of Thermo Electron. He was named President and Chief Executive Officer of the Company in March and December 1998, respectively. From 1985 until 1994, he was President of the Eberline Instrument division of Thermo Instrument Systems Inc., a majority-owned public subsidiary of Thermo Electron. Mr. Melas-Kyriazi was appointed Chief Financial Officer of the Company and Thermo Electron on January 1, 1999. He joined Thermo Electron in 1986 as Assistant Treasurer, and became Treasurer in 1988. In 1994, he was named President and Chief Executive Officer of ThermoSpectra Corporation, a public subsidiary of Thermo Instrument. In 1998, he became Vice President of Corporate Strategy for Thermo Electron. He remains a Vice President of Thermo Electron. Messrs. Keiser, Melas-Kyriazi, and Kelleher are full-time employees of Thermo Electron, and Mr. Poirier is a full-time employee of Thermo Cardiosystems, but they devote such time to the affairs of the Company as the Company's needs reasonably require. Item 2. Properties The Company believes that its facilities are in good condition and are adequate to meet its current needs and that other suitable space is readily available if any leases are not extended. The location and general character of the Company's properties by industry segment as of January 2, 1999, are as follows: Quality Assurance and Security Products The Quality Assurance and Security Products segment operates from two principal facilities: an 85,000-square foot office, research and development, and manufacturing facility in Massachusetts occupied under a lease expiring in 2006, subject to one five-year renewal option at the election of the Company; and a 115,000-square foot office and manufacturing facility in Massachusetts, occupied under a lease expiring in 2005. The Company also leases approximately 10,000 square feet in Enschede, Holland, occupied under a lease expiring in 2000. In addition, the 11 Company leases approximately 20,400 square feet of office space throughout the world for its sales and service operations, and owns approximately 14,300 square feet of manufacturing, office, and storage facilities in Scotland. Precision Weighing and Inspection Equipment The Precision Weighing and Inspection Equipment segment owns approximately 26,500 square feet of office, engineering, and production space in Canada and the United Kingdom and leases approximately 324,500 square feet of office, engineering, and production space principally in Minnesota, the United Kingdom, Australia, and Germany under leases expiring at various dates through 2068. Heart Assist and Blood Testing Devices The Company's Heart Assist and Blood Testing Devices segment owns approximately 61,000 square feet of office, engineering, laboratory, and production space in New Jersey and leases approximately 83,000 square feet of office, engineering, laboratory, and production space in California, Massachusetts, and New Jersey, under leases expiring at various dates through 2004. Power Electronics and Test Equipment The Power Electronics and Test Equipment segment leases approximately 110,000 square feet of office, engineering, laboratory, and production space principally in Massachusetts, Washington, California, the United Kingdom, and the Netherlands, under leases expiring at various dates through 2010. Approximately 40,400 square feet of office, engineering, laboratory, and production space that the Company owns in Mount Kisco, New York, is currently under agreement to be sold. Other The Company also leases approximately 131,000 square feet of office, engineering, laboratory, and production space in Massachusetts and Illinois, under leases expiring at various dates through 2004. Item 3. Legal Proceedings Not applicable. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. 12 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, $.10 par value, and dividend policy are 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 Information concerning the Registrant's selected financial data is included under the sections labeled "Selected Financial Information" 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, are included in the Registrant's 1998 Annual Report to Shareholders and are incorporated herein by reference. Item 9. Changes in and Disagreements with Public Accountants on Accounting and Financial Disclosure Not applicable. 13 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. 14 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a,d) Financial Statements and Schedules. (1)The consolidated financial statements set forth in the list below are filed as part of this Report. (2)The consolidated 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 Statement Schedules filed 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, the purpose of which was to provide an update to a proposed corporate reorganization by Thermo Electron, involving certain of Thermo Electron's subsidiaries, including the Company. (c) Exhibits See Exhibit Index on the page immediately preceding exhibits. 15 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 by the undersigned, thereunto duly authorized. Date: March 17, 1999 THERMEDICS INC. By: /s/ John T. Keiser John T. Keiser President and 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 17, 1999. Signature Title - --------- ----- By: /s/ John T. Keiser President, Chief Executive Officer, John T. Keiser and Director By: /s/ Theo Melas-Kyriazi Chief Financial Officer Theo Melas-Kyriazi By: /s/ Paul F. Kelleher Chief Accounting Officer Paul F. Kelleher By: /s/ T. Anthony Brooks Director T. Anthony Brooks By: /s/ Peter O. Crisp Director Peter O. Crisp By: /s/ Paul F. Ferrari Director Paul F. Ferrari By: /s/ George N. Hatsopoulos Director George N. Hatsopoulos By: /s/ John N. Hatsopoulos Director John N. Hatsopoulos By: /s/ John W. Wood Jr. Chairman of the Board and Director John W. Wood Jr. By: /s/ Nicholas T. Zervas Director Nicholas T. Zervas 16 Report of Independent Public Accountants To the Shareholders and Board of Directors of Thermedics Inc.: We have audited, in accordance with generally accepted auditing standards, the consolidated financial statements included in Thermedics Inc.'s Annual Report to Shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated February 11, 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 15 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. The 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 consolidated 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 11, 1999 17 SCHEDULE II THERMEDICS INC. Valuation and Qualifying Accounts (In thousands) Description Provision Accounts Accounts Other (a) Balance Balance at Charged to Recovered Written at End Beginning Expense of Year of Off Year - ----------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- Allowance for Doubtful Accounts Year Ended January 2, 1999 $4,207 $1,002 $ - $(1,614) $ 903 $4,498 Year Ended January 3, 1998 $4,903 $ 815 $ - $(1,406) $ (105) $4,207 Year Ended December 28, 1996 $4,244 $1,352 $ 206 $(1,048) $ 149 $4,903 Description Amount Expenditures Other (c) Balance Balance at Capitalized at End Beginning as Cost of of Year of Year Acquisition - --------------------------------------------- ----------- ----------- ------------- ----------- ----------- Accrued Acquisition Reserves (b) Year Ended January 2, 1999 $ 259 $1,309 $ (592) $ (11) $ 965 Year Ended January 3, 1998 $ 903 $ 299 $ (839) $ (104) $ 259 Year Ended December 28, 1996 $1,402 $ 758 $(1,151) $ (106) $ 903 (a) Includes allowance of businesses acquired and disposed of 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 the 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. 18 EXHIBIT INDEX Exhibit Number Description of Exhibit 2.1 Asset and Stock Purchase Agreement dated as of January 28, 1994, between Thermo Electron and Baker Hughes Incorporated (filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K relating to events occurring on March 16, 1994 [File No. 1-9567] and incorporated herein by reference). 2.2 Assignment and Assumption Agreement dated March 16, 1994, among Thermo Electron, the Registrant, and Thermo Instrument Systems Inc. (filed as Exhibit 2.2 to the Registrant's Current Report on Form 8-K relating to events occurring on March 16, 1994 [File No. 1-9567] and incorporated herein by reference). 2.3 Agreement and Plan of Merger dated as of November 29, 1995, by and among the Registrant, ATI Merger Corp., Analytical Technology, Inc., and, for certain limited purposes, Thermo Instrument Systems Inc. (filed as Exhibit 2 to the Registrant's Current Report on Form 8-K relating to events occurring on November 29, 1995 [File No. 1-9567] and incorporated herein by reference). 2.4 Asset and Share Purchase Agreement dated as of November 29, 1995, by and among Thermo Instrument Systems Inc., ATI Acquisition Corp., Analytical Technology, Inc., and, for certain limited purposes, the Registrant (filed as Exhibit 10(a) to the Registrant's Current Report on Form 8-K relating to events occurring on November 29, 1995 [File No. 1-9567] and incorporated herein by reference). 2.5 Asset Purchase Agreement dated as of January 25, 1996, among Thermedics Detection Limited, Moisture Systems Corporation, Moisture Systems Limited, and Anacon Corporation (filed as Exhibit 2.5 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 30, 1995 [File No. 1-9567] and incorporated herein by reference). Schedules to this Agreement have been omitted pursuant to Rule 601(b)(2) of Regulation S-K. The Registrant hereby undertakes to furnish supplementally a copy of any omitted schedule to the Commission upon request. 2.6 Agreement and Plan of Reorganization among Thermo Cardiosystems Inc., ITC Acquisition Corp., Thermo Electron Corporation, ITC Holdings Inc., and International Technidyne Corporation dated as of May 2, 1997 (filed as Exhibit 2.1 to Thermo Cardiosystems' Quarterly Report on Form 10-Q for the quarter ended March 29, 1997 [File No. 1-10114] and incorporated herein by reference). 3.1 Articles of Organization (filed as Exhibit 3(a) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1988 [File No. 1-9567] and incorporated herein by reference). 3.2 Amendment to Articles of Organization dated October 25, 1993 (filed as Exhibit 3(c) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended October 2, 1993 [File No. 1-9567] and incorporated herein by reference). 3.3 Amended and Restated Articles of Incorporation of the Registrant (filed as Exhibit 3(i) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 1996 [File No. 1-9567] and incorporated herein by reference). 3.4 Amended and Restated By-laws of the Registrant (filed as Exhibit 3(c) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 28, 1992 [File No. 1-9567] and incorporated herein by reference). 4.1 Fiscal Agency Agreement dated January 5, 1994, among Thermo Cardiosystems, Thermo Electron, and Chemical Bank (filed as Exhibit 4.11 to Thermo Cardiosystems' Annual Report on Form 10-K for the fiscal year ended January 1, 1994 [File No. 1-10114] and incorporated herein by reference). 19 Exhibit Number Description of Exhibit 4.2 Fiscal Agency Agreement dated November 19, 1993, among Thermo Voltek, Thermo Electron, and Chemical Bank (filed as Exhibit 4.3 to Thermo Voltek's Annual Report on Form 10-K for the fiscal year ended January 1, 1994 [File No. 1-10574] and incorporated herein by reference). 4.3 Fiscal Agency Agreement dated as of June 3, 1996, among Thermedics, Thermo Electron, and Chemical Bank, as fiscal agent (filed as Exhibit 4 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 1996 [File No. 1-9567] and incorporated herein by reference). 4.4 Guarantee Reimbursement Agreement dated February 7, 1994, among Thermo Cardiosystems, Thermo Voltek, the Registrant, and Thermo Electron (filed as Exhibit 4.4 to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 1, 1994 [File No. 1-9567] and incorporated herein by reference). 4.5 Fiscal Agency Agreement dated as of May 14, 1997, among Thermo Cardiosystems Inc., Thermo Electron Corporation, and Bankers Trust Company as fiscal agent relating to $70 million principal amount of 4 3/4% Convertible Subordinated Debentures due 2004 (filed as Exhibit 4 to Thermo Cardiosystems' Quarterly Report on Form 10-Q for the quarter ended June 28, 1997 [File No. 1-10114] and incorporated herein by reference). The Registrant hereby agrees, pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, to furnish to the Commission upon request, a copy of each other instrument with respect to other long-term debt of the Company or its subsidiaries. 10.1 Amended and Restated Corporate Services Agreement between Thermo Electron and the Registrant dated as of January 3, 1993 (filed as Exhibit 10(a) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 2, 1993 [File No. 1-9567] and incorporated herein by reference). 10.2 Lease dated November 1983 between WGO Limited Partnership, as Lessor and the Registrant, as Lessee (filed as Exhibit 10(l) to the Registrant's Registration Statement on Form S-1 [Reg. No. 2-96962] and incorporated herein by reference; amendments thereto filed as Exhibit 10(l) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1988 [File No. 1-9567] and incorporated herein by reference). 10.3 Thermo Electron Corporate Charter as amended and restated effective January 3, 1993 (filed as Exhibit 10(h) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 2, 1993 [File No. 1-9567] and incorporated herein by reference). 10.4 Lease dated August 25, 1978, between National Boulevard Bank of Chicago and Walpak Company (filed as Exhibit 10(p) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1988 [File No. 1-9567] and incorporated herein by reference). 10.5 Exclusive Base Technology License Agreement between Thermo Electron and the Registrant dated January 8, 1988 (filed as Exhibit 10(q) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended April 2, 1988 [File No. 1-9567] and incorporated herein by reference). 10.6 Research and Development Contract between Thermo Electron and the Registrant dated January 8, 1988 (filed as Exhibit 10(r) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended April 2, 1988 [File No. 1-9567] and incorporated herein by reference). 20 Exhibit Number Description of Exhibit 10.7 Exclusive License and Marketing Agreement between Thermo Electron and the Registrant dated January 8, 1988 (filed as Exhibit 10(s) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended April 2, 1988 [File No. 1-9567] and incorporated herein by reference). 10.8 Intellectual Property Cross-license Agreement between the Registrant and Thermo Cardiosystems (filed as Exhibit 10(i) to Thermo Cardiosystems' Registration Statement on Form S-1 [Reg. No. 33-25144] and incorporated herein by reference). 10.9 Amendment No. 1 dated March 29, 1991, to Exclusive License and Marketing Agreement between the Registrant and Thermo Electron (filed as Exhibit 10(r) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 1991 [File No. 1-9567] and incorporated herein by reference). 10.10 Management Agreement by and between Thermo Electron and the Registrant dated November 15, 1991 (filed as Exhibit 10(t) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 28, 1991 [File No. 1-9567] and incorporated herein by reference). 10.11 Agreement dated May 26, 1993, between Thermo Cardiosystems and The Polymer Technology Group, Incorporated (filed as Exhibit 10(nn) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended July 3, 1993 [File No. 1-9567] and incorporated herein by reference). 10.12 Amended and Restated Master Repurchase Agreement dated as of July 2, 1996, between the Registrant and Thermo Electron (filed as Exhibit 10.12 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 28, 1996 [File No. 1-9567] and incorporated herein by reference). 10.13 $38,000,000 Promissory Note dated as of December 11, 1995, issued by the Registrant to Thermo Electron (filed as Exhibit 10(b) to the Registrant's Current Report on Form 8-K relating to events occurring on November 29, 1995 [File No. 1-9567] and incorporated herein by reference). 10.14 $15,000,000 Promissory Note dated as of February 13, 1996, issued by the Company to Thermo Electron (filed as Exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 1996 [File No. 1-9567] and incorporated herein by reference). 10.15-17 Reserved. 10.18 Incentive Stock Option Plan of the Registrant (filed as Exhibit 10(d) to the Registrant's Registration Statement on Form S-1 [Reg. No. 33-84380] 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 1,931,923 shares, after adjustment to reflect share increases approved in 1986 and 1992, 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.) 10.19 Nonqualified Stock Option Plan of the Registrant (filed as Exhibit 10(e) to the Registrant's Registration Statement on Form S-1 [Reg. No. 33-84380] and incorporated herein by reference). (Maximum number of shares issuable in the aggregate under this plan and the Registrant's Incentive Stock Option Plan is 1,931,923 shares, after adjustment to reflect share increases approved in 1986 and 1992, 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.) 21 Exhibit Number Description of Exhibit 10.20 Equity Incentive Plan of the Registrant (filed as Appendix A to the Proxy Statement dated May 10, 1993, of the Registrant [File No. 1-9567] and incorporated herein by reference). (Maximum number of shares issuable is 1,500,000 shares, after adjustment to reflect 3-for-2 stock split effected in November 1993.) 10.21 Thermedics Inc. - Thermedics Detection Inc. Nonqualified Stock Option Plan (filed as Exhibit 10.20 to Thermo Electron's Annual Report on Form 10-K for the fiscal year ended January 2, 1993 [File No. 1-8002] and incorporated herein by reference). 10.22 Thermedics Inc. - Thermo Sentron Inc. Nonqualified Stock Option Plan (filed as Exhibit 10.51 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). 10.23 Thermedics Inc. - Thermo Cardiosystems Inc. Nonqualified Stock Option Plan (filed as Exhibit 4(b) to Thermo Cardiosystems' Registration Statement on Form S-8 [Reg. No. 33-45282] and incorporated herein by reference). 10.24 Thermedics Inc. - Thermo Voltek Corp. Nonqualified Stock Option Plan (filed as Exhibit 10.24 to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 3, 1998 [File No. 1-9567] and incorporated herein by reference). 10.25 Directors Stock Option Plan of the Registrant (filed as Exhibit 10.20 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 [File No. 1-9567] and incorporated herein by reference). 10.26 Deferred Compensation Plan for Directors of the Registrant (filed as Exhibit 10(g) to the Registrant's Registration Statement on Form S-1 [Reg. No. 33-96962] and incorporated herein by reference). In addition to the stock-based compensation plans of the Registrant, the executive officers of the Registrant may be granted awards under stock-based compensation plans of Thermo Electron for services rendered to the Registrant or to such affiliated corporations. The terms of such plans are substantially the same as those of the Registrant's Equity Incentive Plan. 10.27 Restated Stock Holdings Assistance Plan and Form of Promissory Note (filed as Exhibit 10.27 to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 3, 1998 [File No. 1-9567] and incorporated herein by reference). 10.28 Amended and Restated Master Guarantee Reimbursement and Loan Agreement, dated December 10, 1997, between Thermo Electron and the Registrant (filed as Exhibit 10.28 to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 3, 1998 [File No. 1-9567] and incorporated herein by reference). 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.