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 September 27, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 1-10573
THERMO POWER CORPORATION
(Exact name of Registrant as specified in its charter)
Massachusetts 04-2891371
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02254-9046
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
---------------------------- -----------------------------------------
Common Stock, $.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, 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 October 31, 1997, was approximately $30,918,000.
As of October 31, 1997, the Registrant had 11,916,247 shares of Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended September 27, 1997, 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 March 13, 1998, are incorporated by
reference into Part III.
PAGE
PART I
Item 1. Business
(a) General Development of Business
Thermo Power Corporation (the Company or the Registrant) develops and
commercializes environmentally sound and economically efficient power
generation, cooling, lighting, and related products. At fiscal year-end
1997, the Company's business was divided into three segments. The
Industrial Refrigeration Systems segment develops, manufactures, markets,
and services industrial refrigeration and commercial cooling equipment,
and also rents commercial cooling and industrial refrigeration equipment.
The Engines segment develops, manufactures, markets, and services
gasoline engines for recreational boats, propane and gasoline engines for
lift trucks, and natural gas engines for fleet vehicles and industrial
applications. The Cooling and Cogeneration Systems segment develops,
manufactures, markets, and services natural gas cooling and cogeneration
systems, and conducts research and development on applications of thermal
energy and pollution control. The Company's thermoelectric cooling
modules are used to control the temperature of laser diodes in
fiber-optic telecommunication equipment and biomedical instruments, as
well as thermal reference sources (TRSs), which are used for calibrating
infrared imaging systems. The Company is also researching other potential
applications for this technology. Through its 78%-owned ThermoLyte
Corporation (ThermoLyte) subsidiary, formed in March 1995, the Company is
developing and commercializing various gas-powered lighting products.
On November 6, 1997, the Company declared unconditional in all
respects its cash tender offer for the outstanding ordinary shares of
Peek plc (Peek). The aggregate cost to acquire all outstanding Peek
ordinary shares is estimated at approximately $163 million. The Company
paid $2.3 million for shares acquired in fiscal 1997 and $147.9 million
for shares acquired from September 28, 1997, through November 19, 1997.
The Company owned 92% of the outstanding ordinary shares of Peek as of
November 19, 1997. The Company expects to make payments for the remaining
ordinary shares outstanding during the first quarter of fiscal 1998. To
finance the acquisition of Peek, the Company used internal funds and
borrowed $160.0 million from Thermo Electron.
Peek, a London Stock Exchange-listed company, develops, markets,
installs, and services equipment to monitor and regulate traffic flow,
ease roadway congestion, improve safety, and collect data. Peek also
manufactures density and flow meters, primarily used by the water and oil
industries. Peek had revenues in calendar 1996, excluding revenues from
businesses sold in 1996 and 1997, of approximately 140 million pounds
sterling, or approximately $219 million, and profit on ordinary
activities after taxation, excluding profits from businesses sold in 1996
and 1997, of approximately 8 million pounds sterling, or approximately
$12 million. Peek's results of operations in calendar 1996 are unaudited
and were accounted for in accordance with generally accepted accounting
principles in the United Kingdom, which differ in certain respects from
U.S. generally accepted accounting principles.
2PAGE
The Company was originally incorporated in Massachusetts in June 1985
under the name Tecogen Inc., as a wholly owned subsidiary of Thermo
Electron to succeed the business of Thermo Electron's Thermal Products
Division. In March 1993, the Company's name was changed to Thermo Power
Corporation. As of September 27, 1997, Thermo Electron owned 8,127,906
shares of the Company's common stock, representing 68% of such stock
outstanding at that time. Thermo Electron is a world leader in
environmental monitoring and analysis instruments, biomedical products
such as heart-assist devices and mammography systems, papermaking and
recycling equipment, biomass electric power generation, and other
specialized products and technologies. Thermo Electron also provides a
range of services related to environmental quality. During fiscal 19971,
Thermo Electron purchased 213,100 shares of the Company's common stock in
the open market at a total price of $1,815,000.
Forward-looking Statements
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Annual Report
on Form 10-K. For this purpose, any statements contained herein that are
not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes,"
"anticipates," "plans," "expects," "seeks," "estimates," and similar
expressions are intended to identify forward-looking statements. There
are a number of important factors that could cause the results of the
Company to differ materially from those indicated by such forward-looking
statements, including those detailed under the heading "Forward-looking
Statements" in the Registrant's Fiscal 1997 Annual Report to
Shareholders, which statements are incorporated herein by reference.
(b) Financial Information About Industry Segments
Financial information concerning the Company's industry segments is
summarized in Note 11 to Consolidated Financial Statements in the
Registrant's Fiscal 1997 Annual Report to Shareholders, which information
is incorporated herein by reference.
(c) Description of Business
(i) Principal Products and Services
Traffic Products
The Company's Peek subsidiary develops, markets, installs, and
services equipment to monitor and regulate traffic flow in cities and
towns around the world. Peek offers hardware products and traffic
management systems to ease roadway congestion, improve safety, and
collect data. In addition, Peek develops and markets a series of field
measurement products.
1 References to fiscal 1997, 1996, and 1995 herein are for the fiscal
years ended September 27, 1997, September 28, 1996, and September 30,
1995, respectively.
3PAGE
Hardware Products. Peek's hardware products include detectors,
counter classifiers, traffic signals, controllers, and enforcement
equipment. Peek offers a variety of detectors, including loop detectors,
microwave detectors, and its Videotrak(R) video camera detectors.
Detectors determine the speed, size, and direction of vehicles for use in
traffic control. Counter classifiers analyze the data provided by
detectors in order to determine traffic flow patterns and the types of
vehicles on roadways for traffic planning. Peek manufactures and markets
traffic signals with advanced optical designs for both vehicle
intersections and pedestrian crossways. Controllers are electronic
devices that automatically control the timing of signals to optimize the
flow of traffic and coordinate pedestrian crossings in order to improve
safety. Peek has also developed the Peek Guardian(TM) camera for law
enforcement agencies. This product uses cameras to detect and record
motor vehicle violations such as speeding and red light violations.
Prices for Peek's hardware products range from approximately $60 for a
simple loop detector to approximately $20,000 for a large Videotrak video
camera. In addition, Peek supplies variable message signs, which display
messages advising drivers of roadway hazards. The price for a large
message sign can be more than $60,000.
Traffic Systems. Peek produces three types of traffic systems: urban
traffic control, motorway management, and public transport management.
Urban Traffic Control (UTC). Peek offers two types of UTC systems:
real-time adaptive control systems and traffic responsive systems.
- Real-time Adaptive Control Systems. These systems measure flow of
traffic and use the collected information to optimize the timing
of traffic signals to achieve maximum traffic capacity across a
city. Peek's SCOOT system runs algorithms on a central computer
and communicates traffic signal timing to controllers to optimize
traffic flow. Prices for a SCOOT system vary greatly depending on
the size, complexity, and scope of the project, and can range from
$150,000 to $25 million. Peek's SPOT system uses a distributed
approach to optimize traffic flow, whereby signal timing is
calculated by an individual controller using data from that
controller and nearby controllers. Prices for relatively simple
SPOT systems typically range from $50,000 to $150,000.
- Traffic Responsive Systems. These systems analyze current traffic
information provided by detectors and then select appropriate
signal timing for intersections from a set of patterns that have
been generated off-line. The Multi-Arterial Traffic System (MATS)
is sold predominantly in the United States. The Electronic Traffic
Control system (ETC), which is installed predominantly in
Scandinavia, caters to asymmetrical town plans. Prices for traffic
responsive systems generally range from $30,000 to $1.6 million
depending on the scope and complexity of the project.
Motorway Management. These systems identify when congestion,
accidents, or other traffic disruptions occur using detectors, and
generate information for message signs which can be used to broadcast
messages imposing speed restrictions or advising travelers of lane
4PAGE
closures and hazards. Peek provides systems that have direct control over
message signs, predominantly in The Netherlands. Peek also offers systems
in the United Kingdom that provide central control over message signs and
are controlled by an operator. The third type of motorway management
system is a low-cost PC-based system, which directly controls message
signs and is sold predominantly in developing markets. Prices for
Motorway Management Systems typically range from $500,000 to $8 million
depending on the scope and the complexity of the project.
Public Transport. Peek provides a range of public transport systems,
including intersection priority systems, passenger information systems,
fleet management systems, and bus terminal systems. Intersection priority
systems use electronic tags on buses, which communicate with intersection
controllers to ensure that buses are not delayed. The level of priority
can be adjusted based on occupancy levels and adherence to schedules.
Passenger information systems track the position of buses along a route
in order to provide anticipated arrival times to passengers waiting at
stops. Fleet management systems use electronic tags on buses to monitor
the adherence to bus schedules and occupancy levels of buses in order to
monitor the operating performance of the fleet, set vehicle maintenance
schedules, and optimize the size of the fleet to achieve a desired level
of service. Peek also designs and supplies electronic systems to bus
terminals to provide information to waiting passengers and to allow the
size of the terminals to be minimized. Prices for public transport
systems vary greatly depending on the scope and complexity of the project
and can range from $5,000 for a simple intersection priority system to
several million dollars for an integrated public transportation solution
for a city.
Approximately 90 percent of Peek's revenues in calendar 1996,
excluding revenues from businesses sold in 1996 and 1997, were from sales
of traffic products.
Field Measurement Products. Peek offers a series of field data
products, including density meters, which measure the density of liquids
and gases; flow meters, which are attached either to the inside or the
outside of pipes to measure liquid or gas flow rates; current to pressure
transducers, which are used in process control systems to convert
electrical signals to pressure levels for direct control of valves; and
alarm monitors, which are used in power stations to monitor turbine
engines so that they do not overheat. Prices for Peek's field measurement
products typically range from $400 to $10,000. In calendar 1996,
approximately 10 percent of Peek's revenues, excluding revenues from
businesses sold in 1996 and 1997, were from sales of field measurement
products.
Industrial Refrigeration Systems
Industrial Refrigeration Packages. The Company's FES division
designs, engineers, manufactures, and services industrial refrigeration
equipment used for cooling, freezing, and cold-storage applications
primarily in the food-processing, petrochemical, pharmaceutical, and
liquefied-gas storage industries. FES supplies complete industrial
refrigeration systems and various components for these systems.
5PAGE
FES equipment for food and beverage customers is primarily standard
products, such as screw-compressor packages, liquid-refrigerant pump
packages, state-of-the-art control systems, plate and frame heat
exchangers, and ASME (American Society of Mechanical Engineers) pressure
vessels. The screw-compressor package, which consists of a screw
compressor, an electric-drive motor, an oil separator, a control panel,
and piping and tubing, constitutes the majority of this equipment. FES
also manufactures screw-compressor packages powered by the Company's
natural gas TecoDrive(R) engines. Examples of applications of industrial
refrigeration equipment used by food and beverage processors include the
freezing, storing, and warehousing of meats, fish, fruits, and
vegetables; freezing of fruit juice concentrates; and controlling process
temperatures in brewing and wine-making, and in soft drink carbonization,
where the temperature of water is regulated to absorb a controlled
quantity of carbon dioxide. In addition, FES manufactures
screw-compressor packages used to cool inlet air for gas turbine
generators at utilities.
FES supplies custom-designed industrial refrigeration packages to
petrochemical, pharmaceutical, and related industries for integration
into their plants' refrigeration systems. These higher-cost packages
require significant design engineering and are used in a wide variety of
applications, such as chilling brine that cools chemicals used in the
production of penicillin. In another application of a custom package, FES
units are used to chill and condense toxic effluent gases normally
released to flare.
Approximately 83% of FES sales are of industrial refrigeration
packages, of which 63% are standard units for the food and beverage
industry, and approximately 37% are of custom units for the petrochemical
and pharmaceutical industries. The average price for a standard food and
beverage refrigeration package is approximately $50,000, and a
representative price for a custom unit would be approximately $400,000,
although prices for these units often exceed $1 million. FES
refrigeration packages can be designed for use with any common
refrigerant, but the majority of FES's units operate on ammonia. FES's
utilization of ammonia, a cost-effective and environmentally safe
substance compared with conventional chlorofluorocarbon (CFC)-based
refrigerants, places FES in a leadership position to target the reduction
of CFC systems. The production of CFCs was phased out in January 1996.
Ammonia does not harm the ozone layer, costs much less than conventional
refrigerants, and is widely available on a global basis.
The Company's NuTemp subsidiary is a supplier of both remanufactured
and new industrial refrigeration equipment for sale or rental. NuTemp
serves numerous markets with its industrial refrigeration equipment,
including the food-processing, petrochemical, and pharmaceutical
industries. Ongoing retrofit programs to replace CFC-based equipment
continue to provide a temporary rental business for NuTemp. One of
NuTemp's key services is responding to emergency cooling situations by
providing large-tonnage-capacity refrigeration equipment on short notice.
The demand for NuTemp's equipment is typically highest in the summer
period and can be adversely affected by cool summer weather.
6PAGE
NuTemp also buys new and surplus commercial cooling equipment,
which is remanufactured for sale or rental. NuTemp's customers in the
commercial cooling industry include institutions, commercial building
owners, and service contractors. The commercial cooling industry is
currently coming into compliance with the Montreal Protocol which
prohibits the production of CFC refrigerants effective January 1996. This
retrofit process is creating an increase in the rental market for
NuTemp's commercial cooling systems, which operate on alternative
refrigerants, while customers install new equipment. Its commercial
cooling equipment is used primarily in institutions and commercial
buildings, as well as by service contractors.
Revenues from industrial refrigeration packages were $65,205,000,
$66,565,000, and $55,193,000 in fiscal 1997, 1996, and 1995,
respectively.
Engines
Marine Engines. The Company's Crusader Engines division manufactures,
markets, and services inboard marine engines and accessories both to OEM
(original equipment manufacturer) boat companies and to a network of
distributors who support dealers servicing Crusader's products in the
field. Crusader's key customers are OEM manufacturers of the "cruiser"
class boats and yachts, generally ranging in size from 25 to 45 feet in
length. The purchase price of boats containing Crusader engines typically
is in the $50,000 to $250,000 range. In fiscal 1997, sales to Crusader's
top two customers accounted for approximately 44% of Crusader's marine
engine sales.
Revenues from marine engines were $17,007,000, $18,659,000, and
$21,536,000 in fiscal 1997, 1996, and 1995, respectively.
TecoDrive Gasoline and Natural Gas Engines for Vehicles. The
Company's extensive development work on gasoline and dedicated compressed
natural gas (CNG) engines has resulted in sales of a number of its
TecoDrive engines for use in school buses, package-delivery vehicles, and
other fleet vehicles. The CNG engines feature substantially lower
emissions than other commercially available gasoline or natural gas
engines.
TecoDrive Natural Gas Engines for Industrial Applications. The
Company manufactures natural gas engines for stationary and industrial
applications. As a result of the positive response the Company has
received from its customers in the industrial market, the Company has
developed TecoDrive engines for other stationary applications, such as
powering air and gas compressors. There are now four OEM manufacturers
incorporating the Company's TecoDrive engines into their natural gas
compressors for NGV refueling.
Propane and Gasoline Engines for Lift Trucks. The Company
manufactures 3.0-, 4.3-, 5.7-, and 7.4-liter propane and gasoline engines
for installation into lift trucks. The Company sells lift truck engines
to material handling equipment manufacturers and other lift-truck
manufacturers.
7PAGE
Cooling and Cogeneration Systems
The Company designs, develops, manufactures, markets, and services
packaged cooling and cogeneration systems fueled principally by natural
gas for sale to a wide range of commercial, institutional, industrial,
and multi-unit residential users. Many of these products are powered by
the Company's dedicated TecoDrive natural gas engines.
The Company's Tecochill commercial cooling and Tecogen(R)
cogeneration products incorporate several proprietary features that are
the result of the Company's advances in engine, thermal, and control
technologies. One such proprietary feature is the Company's
microprocessor-based control module, which automates the operation of
such systems and can also include remote control, monitoring, and
diagnostic capabilities. The standardized design of the Company's
products also enable rapid installation and startup, facilitate
maintenance, and allow competitive delivery time. The Company supports
its customers by offering a comprehensive maintenance contract under
which the Company assumes responsibility for substantially all
maintenance, repairs, and replacement parts.
The cost savings that result from use of the Company's packaged
cooling and cogeneration systems are directly related to the retail price
of electricity. In the past few years, electricity prices have declined
in many areas, and rates remain relatively low on a historical basis in
most regions. Given prevailing rate structures, demand for the Company's
cooling and cogeneration systems has been less than anticipated.
Tecochill Cooling Systems. The Company entered the gas-fueled cooling
business by introducing its 150-ton gas-fueled cooling unit in 1988. The
Company's Tecochill units are powered by the same TecoDrive engine used
in the Company's small-scale cogeneration systems. Tecochill products are
equipped with microprocessor controls allowing fully automated,
unattended operation. Tecochill units can be programmed to run at
different speeds to follow variable cooling loads for greater efficiency
than conventional electric motor-driven air conditioners that run at a
constant speed. These units are self-contained packages that are
delivered to customer sites as finished products for standard
installation. Tecochill units can be fitted with optional heat-recovery
packages yielding hot water. The Company is currently offering additional
gas-fueled air conditioning equipment for use in multi-unit residential
buildings, nursing homes, hospitals, and similar institutions. Although
the purchase price of the Company's Tecochill units is approximately
100-200% higher than that of electric motor-driven air conditioners of
comparable sizes, lower operating costs associated with the use of
Tecochill units generally lead to payback of the incremental capital cost
in approximately four years. The average expected useful life of a
Tecochill unit is comparable to that of an electric motor-driven air
conditioner, typically 15 years.
Sponsored Research and Development. The Company conducts research and
development supported by outside sponsors. Revenues from sponsored
research and development contracts were $4,688,000, $5,836,000, and
8PAGE
$4,917,000 in fiscal 1997, 1996, and 1995, respectively. See "Research
and Development."
Regulation
The demand for most of the Company's products is affected by various
federal, state, and local energy and environmental laws and regulations.
All of these laws and regulations are subject to revocation or amendment,
and the Company cannot predict what effect revocation or amendment may
have on the Company's sales, business, or operations.
Traffic Products
Demand for the Company's traffic products in the U.S. may be
influenced by the Intermodal Surface Transportation Efficiency Act
(ISTEA), which provides significant funding in the U.S. for intermodal
surface transportation and advanced traffic management systems. The ISTEA
has been extended through March 31, 1998. The failure of ISTEA to be
further extended or reauthorized could adversely effect the Company's
business.
Industrial Refrigeration Systems
The Company's ammonia-based refrigeration equipment and
alternative-refrigerant commercial cooling systems benefit from the
worldwide phaseout of CFC refrigerants. The Montreal Protocol was
negotiated in 1987 under the sponsorship of the United Nations
Environmental Program (UNEP) to protect the ozone layer. This agreement
establishes a process to control substances that could deplete the ozone
layer, including CFCs. Regulations have been promulgated by the EPA
implementing these protocols in this country through limits on the
production and consumption of CFCs and other ozone-depleting substances.
Engines
The market for the Company's TecoDrive natural gas engine is
influenced by federal legislation that allows states to establish
programs encouraging the use of alternative fuels, including natural gas,
methanol, and ethanol. Many states have some type of alternative-fuel
vehicles commission, legislation, or tax incentives.
Natural gas is one of many alternative fuels that is addressed by
these laws and regulations. Others include methanol, ethanol, liquefied
petroleum gas, hydrogen, electricity, and reformulated gasoline. There
can be no assurance that natural gas will become a preferred alternative
fuel for vehicles or that existing and future laws or regulations, or
their enforcement, will create material long-term demand for NGVs.
Cooling and Cogeneration Systems
The passage by Congress of the Public Utility Regulatory Policies Act
of 1978 (PURPA), the adoption of regulations thereunder by the Federal
Energy Regulatory Commission (FERC), and related state laws and
regulations provide incentives for the development of qualifying
9PAGE
small-power production and cogeneration systems such as those offered by
the Company. PURPA and FERC regulations promulgated thereunder address
three issues of importance to users that own or operate cogeneration
systems, including those sold by the Company. First, PURPA exempts
qualifying users from many federal and state regulations that pertain to
electric utilities. Second, PURPA requires electric utilities to allow
qualifying cogeneration providers to connect their cogeneration
facilities to utilities' electric power systems. This mandatory
connection enables users to purchase utility-generated electricity to
start their cogeneration systems and assures users of a back-up source of
electricity during peak periods of use and when the cogeneration systems
are shut down for maintenance and repair. Third, PURPA requires utilities
to purchase electricity produced by qualifying cogeneration providers at
a price equivalent to utilities' avoided costs.
Like all electric power-generating and other fossil fuel-burning
systems, the Company's cooling and cogeneration products must comply with
federal, state, and local environmental laws and regulations. Regulation
of systems such as those sold by the Company is conducted primarily at
the state and local level, where standards can vary. In particular,
applicable environmental standards in California are stricter than
comparable federal guidelines. The Company believes that its existing
Tecochill and other Tecogen products comply with applicable federal and
state environmental standards, including those currently in effect in
California, although the Company cannot predict whether its products will
comply with all environmental standards promulgated in the future.
(ii) New Products
The Company acquired Peek in November 1997. Peek's principal products
are described above under "Description of Business--Principal Products
and Services."
The ThermoLyte family of lighting products is based on the Company's
patented technology for a rigid mantle, the "bulb" in gas lights. This
durable mantle allows the Company to design products that are portable,
and use propane as a power source instead of batteries. Using propane
offers several advantages over batteries, including a potentially
infinite shelf life, substantially longer operating hours, constant
brightness, and no battery disposal.
ThermoLyte has introduced a line of propane-powered accent lights to
the marketplace through the L.L. Bean store in Freeport, Maine. The
accent light is a decorative, contemporary-style area light suitable for
providing an alternative to candles, oil lamps, or battery-powered lights
in the home or backyard. The Company is in the process of developing
trade channels through which the Company will sell its accent lights,
such as through home shopping - both through catalogs and television,
partnerships with other major retailers, and selling over the Internet.
(iii) Raw Materials
The Company purchases engine blocks for its marine and certain other
engines, as well as engines for certain of its smaller cooling and
10PAGE
cogeneration products, from one supplier. It does not have a firm
contract with this supplier. The Company generally maintains inventories
of engine blocks sufficient to meet its needs for a three-month period.
However, the inability of the Company to obtain either engines or engine
blocks from this supplier would have a material adverse effect upon the
Company's operations.
(iv) Patents, Licenses, and Trademarks
The Company considers its patents and licenses to be important in the
present operation of its business. The Company, however, does not
consider any one of its patents or related group of patents to be of such
importance that its expiration, termination, or invalidity would
materially affect the Company's business.
The Company has research and development arrangements with the
natural gas industry and various governmental agencies, and is required
to pay royalties for any technologies developed or products
commercialized under several of these arrangements.
(v) Seasonal Influences
Crusader's marine engine sales historically have been stronger in the
first quarter of each calendar year, when boat builders purchase engines
for boats to be sold for the upcoming boating season. Sales of marine
engines generally decline gradually during the last three quarters of the
calendar year, reaching their lowest levels in the fourth quarter. In
addition, the demand for NuTemp's equipment is typically highest in the
summer period and can be adversely affected by cool summer weather. There
are no significant seasonal influences in the Company's other lines of
business.
(vi) Working Capital Requirements
There are no special inventory requirements or credit terms extended
to customers that would have a material adverse effect on the Company's
working capital.
(vii) Dependency on a Single Customer
No single customer accounted for more than 10% of the Company's total
revenues in fiscal 1997. In fiscal 1997, revenues from two customers
accounted for 13% and 12% of Engines segment revenues. The loss of one or
both of these customers would have a material adverse effect on the
Engines segment.
(viii) Backlog
The backlog of firm orders for the Company's Peek subsidiary was
approximately $80.2 million as of October 31, 1997. The backlog of firm
orders for the Industrial Refrigeration Systems segment was $15.7 million
as of September 27, 1997, compared with $22.2 million as of September 28,
1996. The backlog of firm orders for the Engines segment was $1.7 million
as of September 27, 1997, compared with $1.0 million as of September 28,
11PAGE
1996. The backlog of firm orders for the Cooling and Cogeneration Systems
segment was $2.5 million as of September 27, 1997, compared with $4.0
million as of September 28, 1996. The decrease in backlog for the
Industrial Refrigeration Systems segment was primarily due to two large
orders at fiscal year-end 1996. A significant portion of the Company's
sales within the Industrial Refrigeration and Engines segments are large
orders, the timing of which can lead to variability in the Company's
quarterly revenues and net income.
The Company believes that the majority of this backlog will be
shipped during fiscal 1998. The Company does not believe that the size of
its backlog is necessarily indicative of intermediate- or long-term
trends in its business.
(ix) Government Contracts
Certain of the Company's contracts or subcontracts, in particular
those of the Company's recently acquired Peek subsidiary, are with
governmental entities and are subject to renegotiation of profits or
termination. There are, however, no pending or, to the Company's
knowledge, threatened renegotiations or terminations that are material to
the Company.
(x) Competition
The Company experiences competition in most of its product lines.
Additional competition may arise if markets in which the Company is
active develop significantly. The Company is aware of several competitors
for its product lines, some of whom have financial, marketing, and other
resources greater than those of the Company.
Traffic Products
The market for traffic products and services is extremely
competitive, and the Company expects that competition will continue to
increase. The Company believes that the principal competitive factors in
the traffic industry are price, functionality, reliability, service and
support, and vendor and product reputation. The Company believes that its
ability to compete successfully will depend on a number of factors both
within and outside its control, including the pricing policies of its
competitors and suppliers, the timing and quality of products introduced
by the Company and others, the Company's ability to maintain a strong
reputation in the traffic industry, and industry and general economic
trends. The Company believes that it is a leading manufacturer and
supplier of traffic products and considers its major competitor to be
Siemens AG. However, the traffic market is highly fragmented and
competition varies significantly depending on the individual product. The
Company's competitors in the field measurement market include Air Monitor
Corporation, Milltronics Limited, Panametrics, Inc., and Solartron
Limited, a subsidiary of The Roxboro Group PLC.
12PAGE
Industrial Refrigeration Systems
The Company's sale of industrial refrigeration systems is subject to
intense competition. The industrial refrigeration market is mature,
highly fragmented, and extremely dependent on close customer contacts.
Major industrial refrigeration companies, of which FES is one, account
for approximately one-half of worldwide sales, with the balance generated
by many smaller companies. The worldwide market is characterized by
strong local manufacturers. The market leader worldwide, as well as in
North America, is Frick Company and its affiliates, subsidiaries of York
International Corporation (York). The Company believes that FES competes
on the basis of its advanced control systems and overall quality,
reliability, service, and to a lesser extent, price.
The Company believes NuTemp is a leader in remanufactured
refrigeration equipment. As part of its rental program, NuTemp offers an
option to buy its equipment, a service that is unique in the industry.
NuTemp's largest competitor is Aggreko, a subsidiary of Christian
Salvesen PLC. Aggreko is a major supplier of rental equipment for the
industrial refrigeration and commercial cooling markets. The Company
believes that NuTemp competes on the basis of price, delivery time, and
customized equipment.
Engines
Competition in the CNG vehicle and alternative-fuel engine markets is
intense, and current or potential competitors in some or all segments of
these markets include major automotive and natural gas companies and
other companies that have greater financial resources than those of the
Company.
The Company believes it has the second largest share of the inboard
marine engine market for "cruiser" class boats and yachts in the United
States, behind the Mercury division of Brunswick Corporation. Crusader
has experienced intense competition in the marine engine business in
recent years, primarily from vertical integration of boat and engine
manufacturers that has led to the acquisition of former Crusader
customers by competing engine manufacturers. The Company believes that
Crusader competes on the basis of quality, reliability, service, and
pricing.
Cooling and Cogeneration Systems
The Company's Tecochill products are subject to competition from
absorption air conditioning systems and electric motor-driven vapor
compressor systems. Other manufacturers of natural gas-fueled
engine-driven cooling systems have also entered the market. The Company
believes it competes with producers of conventional cooling equipment on
the basis of relative operating costs at times of peak electrical demand,
and with other producers of natural gas-fueled cooling systems on the
basis of quality, reliability, service, operational savings, and track
record.
13PAGE
In 1995, York entered the gas-engine cooling market, in partnership
with Caterpillar Inc., and is a major competitor in large-capacity (+400
tons) cooling equipment. However, the Company's most competitive range is
in smaller-capacity equipment.
The Company's sale of cogeneration systems is subject to intense
competition, both direct and indirect. Direct competitors consist of
companies that sell cogeneration products resembling those sold by the
Company. In addition, electric utility pricing programs provide
competition for the Company's cogeneration products. Indirect competitors
include manufacturers of conventional water heaters, air conditioners,
and electric generator sets, since the economic benefits of the Company's
cogeneration and cooling systems depend on the cost of conventional
energy systems. The Company believes that it competes on the basis of
several factors, including product quality and reliability, operational
savings, ease of installation, service, and pricing.
The Company's sponsored research and development is also subject to
intense competition from many larger and smaller firms, universities, and
other private and public research facilities. The Company competes for
sponsored research and development contracts on the basis of several
factors, including technical expertise, market experience, and past
performance.
(xi) Research and Development
The Company has conducted research and development on applications of
thermal energy for more than 30 years. The Company's research and
development capability and expertise in engine, instrumentation, control,
and heat-recovery technologies have enabled it to obtain support from
outside sponsors, develop new products, and support existing products.
The Company has experienced a decrease in sponsored research and
development due to a reduction in funding. See "Description of Business
-- Principle Products and Services -- Cooling and Cogeneration Systems."
The Company's sponsored programs have been supported principally by
the domestic natural gas industry and the federal government. Within the
natural gas industry, the Company's principal sponsors have been the Gas
Research Institute (GRI) and the Southern California Gas Company, which
is the nation's largest gas utility. The Company has also obtained
research and development funding from state governments and industrial
companies. Sponsors of the Company's research and development generally
own the rights to technology that is developed under these programs.
During fiscal 1997, 1996, and 1995, the Company spent $2,296,000,
$3,214,000, and $3,065,000, respectively, on internally funded research
and development, and $3,776,000, $4,475,000, and $3,548,000,
respectively, on research and development sponsored by others.
In addition, in calendar 1996, Peek continued development of
Videotrak video camera and commenced development of Peek Guardian camera
and a motorway outstation to meet new Dutch specifications. Peek also
continued to develop and enhance other traffic and field measurement
products. In calendar 1996, Peek spent approximately $11.1 million on
14PAGE
internally funded research and development, excluding research and
development from businesses sold in 1996 and 1997.
(xii) Environmental Protection Regulations
The Company believes that compliance with federal, state, and local
environmental protection regulations will not have a material adverse
effect on its capital expenditures, earnings, or competitive position.
(xiii) Number of Employees
As of September 27, 1997, the Company employed approximately 486
people. Approximately 36 employees at the Company's Crusader division are
represented by a labor union under a three-year collective bargaining
agreement which expired on October 15, 1997, and has been extended for
one year. The Company has experienced no work stoppages, and considers
its relations with employees to be good.
In addition, the Company's Peek subsidiary employed 1,486 employees
as of September 27, 1997. Of these employees, 382 were located in The
Netherlands, Denmark, Finland, and Sweden, and, in accordance with
applicable law, were represented by a labor union. Peek has experienced
no work stoppages and believes that its relations with its employees are
good.
(d) Financial Information about Exports by Domestic Operations
Financial information about exports by domestic operations is
summarized in Note 11 to Consolidated Financial Statements in the
Registrant's Fiscal 1997 Annual Report to Shareholders, which information
is incorporated herein by reference.
(e) Executive Officers of the Registrant
Present Title (Year First Became Executive
Name Age Officer)
----------------------------------------------------------------------
J. Timothy Corcoran 51 President and Chief Executive Officer (1992)
John N. Hatsopoulos 63 Chief Financial Officer and Vice
President (1988)
Paul F. Kelleher 55 Chief Accounting Officer (1985)
Each executive officer serves until his successor is chosen or
appointed by the Board of Directors and qualified or until earlier
resignation, death, or removal. Mr. Corcoran has been Chief Executive
Officer of the Company since October 1996, and President since April
1995. From November 1992 to April 1995, Mr. Corcoran was a Vice President
of the Company, and has been President of FES since June 1990. Mr.
Corcoran is a full-time employee of the Company, and Messrs. Hatsopoulos
and Kelleher are full-time employees of Thermo Electron, but devote such
time to the affairs of the Company as the Company's needs reasonably
require.
15PAGE
Item 2. Properties
The location and general character of the Company's principal
properties by industry segment as of September 27, 1997, are as follows:
Industrial Refrigeration Systems
The Company owns approximately 157,000 square feet of office and
manufacturing space in York, Pennsylvania, subject to a mortgage on the
property, and approximately 15,000 square feet of manufacturing space in
Humble, Texas. The Company also occupies approximately 164,000 square
feet of office and manufacturing space in Chicago, Illinois, under a
lease expiring in 2006.
Engines
The Company occupies approximately 104,000 square feet of
manufacturing, engineering, and office space in Sterling Heights,
Michigan, under leases expiring in 2000 and 2004.
Cooling and Cogeneration Systems
The Company occupies approximately 40,000 square feet of office and
laboratory space in Waltham, Massachusetts, under an agreement providing
for the sublease of the facility from Thermo Electron expiring in 2002.
In addition, the Company leases approximately 8,000 square feet of office
and manufacturing space in Salisbury, Maryland, under a lease agreement
with an unrelated party expiring in 1999.
In addition, the location and general character of the principal
properties of the Company's Peek subsidiary, which was acquired in
November 1997, are as follows:
Peek owns an office and manufacturing facility of approximately
37,846 square feet in Winchester, Hampshire, in the United Kingdom. Peek
also occupies approximately 78,585 square feet of office and
manufacturing space in Hilversum, The Netherlands, pursuant to a lease
agreement expiring in 1998. Peek intends to relocate its Hilversum
operations to Amersfoort, The Netherlands, in 1998 and is currently
negotiating a lease. Peek leases approximately 32,500 square feet of
office and manufacturing space in Tallahassee, Florida, pursuant to a
lease agreement expiring in 2004, and approximately 28,800 square feet of
office and manufacturing space in Houston, Texas, pursuant to a lease
agreement expiring in 2000. In addition, Peek owns approximately 96,300
additional square feet of manufacturing and office space worldwide and
leases approximately 261,200 additional square feet of manufacturing and
office space worldwide pursuant to lease arrangements that expire between
1998 and 2020.
Item 3. Legal Proceedings
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
16PAGE
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 related matters, is
included under the sections labeled "Common Stock Market Information" and
"Dividend Policy" in the Registrant's Fiscal 1997 Annual Report to
Shareholders and is incorporated herein by reference.
Item 6. Selected Financial Data
The information required under this item is included under the
sections labeled "Selected Financial Information" and "Dividend Policy"
in the Registrant's Fiscal 1997 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 Fiscal 1997 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 September
27, 1997, and Supplementary Data are included in the Registrant's Fiscal
1997 Annual Report to Shareholders and are incorporated herein by
reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
Not applicable.
17PAGE
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.
18PAGE
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 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
None.
(c) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
19PAGE
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: December 4, 1997 THERMO POWER CORPORATION
By: J. Timothy Corcoran
-----------------------------
J. Timothy Corcoran
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 December 4, 1997.
Signature Title
--------- -----
By:J. Timothy Corcoran President, Chief Executive Officer,
--------------------------- and Director
J. Timothy Corcoran
By:John N. Hatsopoulos Vice President, Chief Financial
--------------------------- Officer, and Director
John N. Hatsopoulos
By:Paul F. Kelleher Chief Accounting Officer
---------------------------
Paul F. Kelleher
By:Arvin H. Smith Chairman of the Board and Director
---------------------------
Arvin H. Smith
By:Marshall J. Armstrong Director
---------------------------
Marshall J. Armstrong
By:Peter O. Crisp Director
---------------------------
Peter O. Crisp
By:Donald E. Noble Director
---------------------------
Donald E. Noble
20PAGE
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Thermo Power Corporation:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Thermo Power
Corporation's Annual Report to Shareholders incorporated by reference in
this Form 10-K, and have issued our report thereon dated October 31, 1997
(except with respect to the matter discussed in Note 13 as to which the
date is November 19, 1997). Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. The schedule
listed in Item 14 on page 19 is the responsibility of the Company's
management and is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic consolidated
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic consolidated financial
statements and, in our opinion, fairly states in all material respects
the 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
October 31, 1997
21PAGE
SCHEDULE II
THERMO POWER CORPORATION
Valuation and Qualifying Accounts
(In thousands)
Balance Provision
at Charged Accounts Balance
Beginning to Accounts Written at End
Description of Year Expense Recovered Off of Year
---------------------------------------------------------------------------
Allowance for Doubtful
Accounts
Year Ended
September 27, 1997 $ 589 $ 252 $ 3 $ (87) $ 757
Year Ended
September 28, 1996 $ 530 $ 191 $ 26 $ (158) $ 589
Year Ended
September 30, 1995 $ 590 $ 3 $ 16 $ (79) $ 530
22PAGE
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
3.1 Articles of Organization of the Registrant, as amended (filed
as Exhibit 3(a) to the Registrant's Quarterly Report on Form
10-Q for the quarter ended April 3, 1993 [File No. 1-10573]
and incorporated herein by reference).
3.2 By-laws of the Registrant, as amended (filed as Exhibit 3(b)
to the Registrant's Annual Report on Form 10-K for the fiscal
year ended October 2, 1993 [File No. 1-10573] and incorporated
herein by reference).
4.1 Specimen Common Stock Certificate (filed as Exhibit 4(b) to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended October 2, 1993 [File No. 1-10573] and incorporated
herein by reference).
10.1 $160,000,000 Promissory Note dated as of November 17, 1997,
issued by the Registrant to Thermo Electron (filed as Exhibit
10.1 to the Registrant's Current Report on Form 8-K dated
November 6, 1997 [File No. 1-10573] and incorporated herein by
reference).
10.2 Amended and Restated Corporate Services Agreement between the
Registrant and Thermo Electron, dated as of January 3, 1993
(filed as Exhibit 10(b) to the Registrant's Annual Report on
Form 10-K for the fiscal year ended September 26, 1992 [File
No. 1-10573] and incorporated herein by reference).
10.3 First Amendment to Lease dated September 30, 1994, between the
Registrant and Thermo Electron Corporation (filed as Exhibit
10.2 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended October 1, 1994 [File No. 1-10573] and
incorporated herein by reference).
10.4 Form of Indemnification Agreement between the Registrant and
its directors and officers (filed as Exhibit 10(e) to the
Registrant's Registration Statement on Form S-1 [Reg. No.
33-14017] and incorporated herein by reference).
10.5 Tax Allocation Agreement dated September 25, 1985, between the
Registrant and Thermo Electron (filed as Exhibit 10(f) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended October 3, 1987 [File No. 0-15920] and incorporated
herein by reference).
10.6 Thermo Electron Corporate Charter, as amended and restated
effective January 3, 1993 (filed as Exhibit 10(n) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 26, 1992 [File No. 1-10573] and incorporated
herein by reference).
23PAGE
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.7 Master Repurchase Agreement dated January 1, 1994, between the
Registrant and Thermo Electron Corporation.
10.8 Master Reimbursement Agreement dated as of January 2, 1994,
between the Registrant and Thermo Electron Corporation (filed
as Exhibit 10.7 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended October 1, 1994 [File No. 1-10573]
and incorporated herein by reference).
10.9 Lease, dated as of January 20, 1988, between Thermo Electron
Corporation and Michael I. Gilson, Trustee (subsequently
assigned to the Registrant; filed as Exhibit 10(q) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 26, 1992 [File No. 1-10573] and incorporated
herein by reference).
10.10 Agreement, dated October 15, 1991, between Thermo Electron
Corporation and International Union, United Automobile,
Aerospace and Agricultural Implement Workers of America Local
203 (subsequently assigned to the Registrant) (filed as
Exhibit 10(r) to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 26, 1992 [File No.
1-10573] and incorporated herein by reference).
10.11 Form of Redemption Rights of ThermoLyte Corporation and
related Guarantee of Thermo Electron Corporation (filed as
Exhibit 10.11 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1995 [File No.
1-10573] and incorporated herein by reference).
10.12 Guarantee Agreement between ThermoLyte Corporation and Thermo
Electron Corporation (filed as Exhibit 10.12 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1995 [File No. 1-10573] and incorporated
herein by reference).
10.13 Incentive Stock Option Plan of the Registrant, as amended
(filed as Exhibit 10(h) to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended April 3, 1993 [File No.
1-10573] 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 950,000
shares, after adjustment to reflect share increases approved
in 1990, 1992, and 1993.)
24PAGE
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.14 Nonqualified Stock Option Plan of the Registrant, as amended
(filed as Exhibit 10(i) to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended April 3, 1993 [File No.
1-10573] 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 950,000
shares, after adjustment to reflect share increases approved
in 1990, 1992, and 1993.)
10.15 Equity Incentive Plan of the Registrant (filed as Attachment A
to the Proxy Statement dated February 18, 1994, of the
Registrant [File No. 1-10573] and incorporated herein by
reference).
10.16 Deferred Compensation Plan for Directors of the Registrant
(filed as Exhibit 10(k) to the Registrant's Registration
Statement on Form S-1 [Reg. No. 33-14017] and incorporated
herein by reference).
10.17 Directors' Stock Option Plan of the Registrant, as amended
(filed as Exhibit 10.1 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended April 1, 1995 [File No.
1-10573] and incorporated herein by reference).
10.18 ThermoLyte Corporation Equity Incentive Plan (filed as Exhibit
10.71 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1995 [File No. 1-10573] and
incorporated herein by reference).
10.19 Thermo Power - ThermoLyte Corporation Nonqualified Stock
Option Plan (filed as Exhibit 10.84 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).
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 such
affiliated corporations. Thermo Electron's plans were filed as
Exhibits 10.21 through 10.45 to the Annual Report on Form 10-K
of Thermo Electron for the year ended December 28, 1996 [File
No. 1-8002] and are incorporated herein by reference.
10.20 Amended and Restated Stock Holding Assistance Plan and Form of
Promissory Note.
25PAGE
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
13 Annual Report to Shareholders for the fiscal year ended
September 27, 1997 (only those portions incorporated herein by
reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27 Financial Data Scehdule.