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 October 3, 1998
[ ] 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 incorporation or organization (I.R.S. Employer Identification No.)
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02454-9046
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of 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 30, 1998, was approximately $18,451,000.
As of October 30, 1998, the Registrant had 11,830,163 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended October 3, 1998, 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 10, 1999, are incorporated by reference into
Part III.
PART I
Item 1. Business
(a) General Development of Business
Thermo Power Corporation (the Company or the Registrant) develops and
commercializes intelligent traffic-control systems and related products,
industrial refrigeration equipment, and commercial cooling and cogeneration
systems. The Company also conducts research and development on advanced power
and pollution-control technologies, and offers propane-powered lighting products
as well as lighting products for the automotive, sporting goods, and marine
markets. The Company's business is divided into three segments. The Traffic
Control segment develops, manufactures, markets, installs, and services
equipment that monitors and regulates vehicular traffic flow in cities and towns
around the world. The Industrial Refrigeration Systems segment develops,
manufactures, markets, services, and rents industrial refrigeration and
commercial cooling equipment. 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. Through its majority-owned ThermoLyte
Corporation subsidiary, formed in March 1995, the Company is developing and
commercializing various propane-powered lighting products, and provides lights
for the automotive, sporting goods, and marine markets.
The results of operations of the Engines segment, which consists of the
Crusader Engines division, have been classified as discontinued operations in
the financial statements as a result of the Company's decision to divest this
business. In December 1998, the Company completed the sale of the industrial and
marine engine product lines of its Crusader Engines division to two unrelated
third parties. Such sale represents a complete divestiture of the Engines
segment. The aggregate sales price for the two product lines consists of $6.4
million in cash, the assumption of certain liabilities, and a receivable of $1.0
million. The receivable is due in December 1999 and is secured by an irrevocable
letter of credit. The aggregate sales price is subject to certain post-closing
adjustments as defined in the respective agreements. See Note 4 to Consolidated
Financial Statements in the Registrant's Fiscal 1998* Annual Report to
Shareholders, which information is incorporated herein by reference.
On November 6, 1997, the Company declared unconditional in all respects
its cash tender offer for the outstanding ordinary shares of Peek plc. The
aggregate cost to acquire all outstanding Peek ordinary shares, including
related expenses, was $166.7 million. The purchase price includes $2.3 million
that was paid for shares acquired in fiscal 1997. The Company made final
payments for the Peek ordinary shares outstanding in the second quarter of
fiscal 1998. To finance the Peek acquisition, the Company borrowed $160.0
million from Thermo Electron Corporation. Peek develops, manufactures, markets,
installs, and services equipment that monitor and regulate vehicular traffic
flow in cities and towns around the world. Subsequent to Peek's acquisition by
the Company, the Company sold Peek's Measurement business to ONIX Systems Inc.,
a majority-owned subsidiary of Thermo Instrument Systems Inc., effective
November 6, 1997, for $19.1 million in cash. Thermo Instrument is a
majority-owned subsidiary of Thermo Electron. The components of the sales price
for the Measurement business consisted of the net tangible book value of the
Measurement business, cost in excess of net assets of acquired company, and the
estimated tax liability relating to the sale. The cost in excess of net assets
of acquired company was determined based upon a percentage of the Company's
total cost in excess of net assets of acquired company associated with its
acquisition of Peek, based on the 1997 revenues of the Measurement business
relative to Peek's total 1997 consolidated revenues. The Measurement business
developed and marketed field measurement products. During fiscal 1998, the
Company also sold the stock of Peek Fleetlogic B.V. for $1.1 million in cash.
In addition, in March 1998, the Company acquired the assets, subject to
certain liabilities, of Traffic Control Technology, Inc. for $1.3 million in
cash and, in July 1998, ThermoLyte acquired the outstanding stock of Optronics,
Inc. for $6.7 million in cash, including the repayment of $1.2 million of debt.
The Optronics acquisition is subject to a post-closing adjustment. Traffic
Control Technology is a manufacturer of traffic control equipment and Optronics
is a manufacturer of lighting products for the automotive, sporting goods, and
marine markets.
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* References to fiscal 1998, 1997, and 1996 herein are for the fiscal years
ended October 3, 1998, September 27, 1997, and September 28, 1996,
respectively.
2
As of October 3, 1998, the Company owned 6,500,000 shares of ThermoLyte
common stock, representing 78% of such stock outstanding. The remaining
1,845,000 shares of ThermoLyte common stock which are outstanding at October 3,
1998, are subject to redemption at the option of the holder at a price of $10.00
per share in December 1998 or December 1999, for a total redemption value of
$18.5 million. The Company plans to continue operating ThermoLyte as a wholly
owned subsidiary in the event that all of its shares are redeemed.
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 October
3, 1998, Thermo Electron owned 9,300,806 shares of the Company's common stock,
representing 79% 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
communications, and electronic information-management technologies. During
fiscal 1998, Thermo Electron purchased 1,174,400 shares of the Company's common
stock in the open market at a total price of $11,132,000.
On August 12, 1998, Thermo Electron announced a proposed reorganization
involving certain of Thermo Electron's subsidiaries, including the Company. As
part of this reorganization, Thermo Electron announced that the Company may be
taken private and become a wholly owned subsidiary of Thermo Electron. It is
currently contemplated that the Company's shareholders would receive cash in
exchange for their shares of common stock of the Company. The completion of this
transaction is subject to numerous conditions, including the establishment of
the price; the approval of the Board of Directors of Thermo Electron; the
negotiation and execution of a definitive purchase and sale or merger agreement;
the receipt of a fairness opinion from an investment banking firm that the
transaction is fair to the Company's shareholders (other than Thermo Electron)
from a financial point of view; the approval of the Company's Board of
Directors, including its independent directors; and clearance by the Securities
and Exchange Commission of any necessary documents regarding the proposed
transaction.
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 1998 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 12 to Consolidated Financial Statements in the Registrant's
Fiscal 1998 Annual Report to Shareholders, which information is incorporated
herein by reference.
3
(c) Description of Business
(i) Principal Products and Services
Traffic Control
The Company's Peek subsidiary develops, manufactures, markets, installs, and
services equipment that monitors and regulates vehicular traffic flow in cities
and towns around the world. Peek offers hardware products, software, and traffic
management systems to reduce roadway congestion, fuel consumption, and travel
time; improve motorist and pedestrian safety; collect data; and improve the
efficiency and attractiveness of public transportation.
Hardware Products. Hardware products include vehicle detectors, traffic
controllers, conflict monitors, traffic signals, vehicle counters, classifiers,
weigh-in-motion systems, and an automated vehicular law enforcement system.
Vehicle detectors determine presence, speed, size, and direction of travel of
vehicles, and include the Company's VideoTrak(R) video vehicle tracking and
detection system, microwave inductive loop detectors, and electric sensors.
Traffic controllers are electronic devices that automatically control the timing
of roadway signals to optimize the flow of traffic, thereby reducing traffic
congestion, fuel consumption, and motorist travel time. These devices also
coordinate pedestrian crossing intervals to improve safety. Traffic controllers
are manufactured to meet various worldwide operational and hardware/software
standards. Conflict monitors continually evaluate the functions of traffic
controllers to ensure that, if a traffic controller malfunctions, conflicting
signal indications are not passed on to motorists. Peek manufactures and markets
traffic signals with advanced optical designs for both vehicle intersections and
pedestrian crossways. Vehicle counters and classifiers analyze the data provided
by vehicle detectors in order to determine traffic flow patterns and vehicle
type on roadways for traffic planning. Weigh-in-motion systems consist of
electronic equipment and in-road sensors that determine a vehicle's weight,
classification, and speed. Weigh-in-motion systems are used on highways to guard
against premature wear and tear of pavement from overweight trucks and to
protect the integrity of small roads and bridges. Peek's automated vehicular law
enforcement system, the Peek Guardian(TM), detects and records digital video
images of motorist infractions such as speeding and red light violations in
accordance with local, state, or provincial traffic laws. Prices for Peek's
hardware products range from approximately $60 for a simple loop detector
amplifier to approximately $20,000 for a more complex VideoTrak camera system.
Peek also manufactures variable message signs advising motorists of roadway
hazards. The price for a large variable message sign can exceed $60,000.
Traffic Management Systems. Peek produces four types of traffic
systems: urban traffic control, motorway management, public transport
management, and parking guidance.
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 traffic
speed, occupancy, and flow collected over specified time periods to
optimize traffic signal timing to improve traffic capacity and overall
traffic flow across a city or within a specified region. Peek's SCOOT
system runs algorithms on a central computer and communicates traffic
signal timing to traffic controllers to optimize traffic flow. Peek's
SPOT system uses a distributed approach to optimize traffic flow,
whereby signal timing is calculated by an individual traffic controller
using its data and data from nearby traffic controllers. Prices for a
SCOOT or SPOT system vary greatly depending on the scope and complexity
of the project, and can range from $150,000 to $25 million.
4
-Traffic-responsive Systems. These systems analyze current traffic
detector information and dynamically select optimal intersection
signal-timing plans from a set of patterns that have been generated and
reviewed off-line. The Multi-Arterial Traffic System (MATS)(TM), sold
predominantly in North America, has closed-loop and central system
configurations. The Electronic Traffic Control (ETC) system, which is
sold predominantly in Scandinavia and the Netherlands, caters to
asymmetrical town plans. Prices for traffic-responsive systems are
dependent upon the scope and complexity of the project and can range
from $10,000 to $1.6 million.
Motorway Management. These systems identify when congestion, accidents, or
other traffic disruptions occur using traffic detectors, and generate
information for message signs that can be used to broadcast messages imposing
speed restrictions or advising travelers of lane closures and other hazards.
Peek provides systems, predominantly in the Netherlands, that have direct
control over message signs. 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 Management. Peek provides a range of public transport
management systems, including intersection priority systems, passenger
information systems, fleet management systems, and bus terminal systems.
Intersection priority systems use electronic tags on buses that 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, as a result, to allow the size of the terminals to be minimized.
Prices for public transport management 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.
Parking Guidance. Peek's parking guidance systems give drivers real-time
information on parking availability in parking areas through the use of traffic
detectors at each space and strategically located variable message signs. These
systems are designed to minimize unnecessary signage, as well as unnecessary
searching and, as a result, minimize the number of vehicles circulating the
parking area.
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, chemical, petrochemical, and pharmaceutical industries. FES
supplies complete industrial refrigeration systems and various components for
these systems.
FES equipment for food and beverage customers consists primarily of standard
industrial refrigeration 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 natural gas engines. Examples
of applications of industrial refrigeration equipment used by food and beverage
processors include the freezing, storing, and warehousing of meats, fish,
fruits, prepared meals, and vegetables; freezing of fruit juice concentrates;
and controlling process temperatures in brewing and wine-making, soft drink
carbonization, and in dairy applications.
5
FES supplies custom-designed industrial refrigeration packages to chemical,
petrochemical, pharmaceutical, and other 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 the Industrial Refrigeration segment revenues are of
industrial refrigeration packages, of which approximately 60% are standard units
for the food and beverage industry, and approximately 40% are of custom units
for the chemical, 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 rental cooling and
industrial refrigeration equipment. The Company also offers custom-made and
remanufactured equipment for sale. NuTemp serves numerous markets with its
equipment, including the commercial heat, ventilating, and air conditioning
(HVAC) market, as well as the food-processing, chemical, petrochemical, and
pharmaceutical industries. The commercial cooling industry is continuing to come
into compliance with the Montreal Protocol which prohibits the production of CFC
refrigerants effective January 1996. This retrofit process is continuing to
create 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. Additionally, one
of NuTemp's key services is responding to emergency cooling situations by
providing large-capacity cooling 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.
Cooling and Cogeneration Systems
The Company develops, manufactures, markets, and services preassembled
cooling and cogeneration systems fueled principally by natural gas for sale to a
wide range of commercial, institutional, industrial, and multi-unit residential
users. The Company's Tecochill(R) commercial cooling equipment includes, as a
component, TecoDrive natural gas engines supplied by the Crusader Engines
division. The Company sold the industrial engine product line, which includes
TecoDrive engines, of the Crusader Engines division in December 1998 and plans
to continue purchasing engines from the acquirer of this business in the future.
The Company's Tecochill(R) 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.
Given prevailing rate structures, demand for the Company's cooling and
cogeneration systems has remained relatively unchanged.
6
The Company's ThermoLyte subsidiary is developing and commercializing
various propane-powered lighting products, including four styles of a
decorative, tabletop accent light, as well as a camping light. These lighting
products are 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 very long shelf
life, substantially longer operating hours, constant brightness, and no battery
disposal.
Optronics, Inc., acquired by ThermoLyte in July 1998, also offers over 400
lighting and associated products for the automotive, sporting goods, and marine
markets. Examples include tail lights and turn-signal lights for trailers,
portable lights for fishing and hunting, and docking lights.
Sponsored Research and Development. The Company conducts research and
development supported by outside sponsors. Revenues from sponsored
research and development contracts were $4,220,000, $4,688,000, and
$5,836,000 in fiscal 1998, 1997, and 1996, respectively. See "Research
and Development."
Regulation
The demand for certain 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.
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.
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 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.
7
(ii) and (xi) New Products; Research and Development
In fiscal 1998, the Traffic Control segment continued development of its
VideoTrak video vehicle tracking and detection system, the Peek Guardian
automated vehicular law enforcement system, the EuroSignal, the EuroController,
and several other traffic management products, systems, and data collection
devices.
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 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 continued to
experience 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.
ThermoLyte introduced a line of propane-powered accent lights in the fall of
1997. 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. In the summer of 1998,
ThermoLyte introduced the Backpacker. Created as an alternative to existing
camping lights, the Backpacker is designed to deliver up to 10 hours of light
from a single propane canister. In addition, the Backpacker's compact design and
light weight (less than 1 1/2 pounds) make it easy to pack and transport.
During fiscal 1998, 1997, and 1996, the Company's continuing operations
expended $7,921,000, $1,929,000, and $2,633,000, respectively, on internally
funded research and development, and $3,874,000, $3,776,000, and $4,475,000,
respectively, on research and development sponsored by others. During fiscal
1998, 1997, and 1996, the Company's discontinued operations expended $411,000,
$367,000, and $581,000 on internally funded research and development. The
Company's discontinued operations had no expenditures on research and
development sponsored by others in fiscal 1998, 1997, and 1996.
(iii) Raw Materials
Raw materials, components, and supplies for all the Company's significant
products are available either from a number of different suppliers or from
alternative sources that could be developed without a material adverse effect on
the Company's business.
(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.
8
(v) Seasonal Influences
The quarterly revenues and income of the Traffic Control segment fluctuate
significantly based on funding patterns of governmental entities and
seasonality. As a result of these factors, Peek has historically experienced
higher sales and income in the first and third fiscal quarters and lower sales
and income in the second and fourth fiscal quarters. Additionally, a portion of
the Traffic Control segment's revenues result from the sale of large systems,
the timing of which can lead to variability in the Company's quarterly revenues
and income. In addition, the demand for NuTemp's equipment is typically highest
in the summer period and can be adversely affected by cool summer weather.
(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
Sales to governmental entities accounted for 26% of the Company's total
revenues in fiscal 1998, of which 92% related to sales to foreign governmental
entities. Sales to governmental entities related principally to the Traffic
Control segment, representing 39% of its revenues in fiscal 1998. A decrease in
sales to governmental entities could have an adverse effect on the Company's
business and future results of operations.
(viii) Backlog
The backlog of firm orders for the Traffic Control segment, which consists
of the Company's Peek subsidiary, was $50.7 million as of October 3, 1998,
compared with $64.4 million at the date of acquisition, excluding $15.8 million
of backlog of businesses sold and divested. The $13.7 million decrease in
backlog occurred principally in the Netherlands and United Kingdom and was
primarily due to a decrease in orders from foreign governmental entities as a
result of a reduction in funding allocated by those entities to traffic control
projects. The backlog of firm orders for the Industrial Refrigeration Systems
segment was $22.2 million as of October 3, 1998, compared with $15.7 million as
of September 27, 1997. The backlog of firm orders for the Cooling and
Cogeneration Systems segment was $8.2 million as of October 3, 1998, compared
with $2.5 million as of September 27, 1997. The Company believes that the
majority of this backlog will be shipped during fiscal 1999. A significant
portion of the Company's sales within the Traffic Control and Industrial
Refrigeration segments are large orders, the timing of which can lead to
variability in the Company's quarterly revenues and net income.
(ix) Government Contracts
Approximately 2% of the Company's total revenues in fiscal 1998 were derived
from contracts or subcontracts with the federal government, which are subject to
renegotiation of profits or termination. The Company does not have any knowledge
of threatened or pending renegotiation or terminations of any material contract
or subcontract.
(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.
9
Traffic Control
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, technical support, and training, as
well as 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
general industry and economic trends. The Company believes that it is a leading
manufacturer and supplier of traffic products and systems and considers its
major competitors to be Siemens Corporation and Econolite Control Products, Inc.
However, the traffic market is geographically fragmented and competition varies
significantly by product line and market niche.
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. 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. 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.
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. In addition, 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. Also, 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 price.
(xii) Environmental Protection Regulations
The Company believes that compliance with federal, state, and local
environmental regulations will not have a material adverse effect on its capital
expenditures, earnings, or competitive position.
10
(xiii) Number of Employees
As of October 3, 1998, the Company employed approximately 1,589 people,
excluding employees of the Company's discontinued Engines segment. Of these
employees, 90 people located in Denmark, the Netherlands, Sweden, Croatia, and
Finland were represented by labor unions. The Company has experienced no work
stoppages, and considers its relations with employees to be good.
(d) Financial Information about Exports by Domestic Operations
Financial information about exports by domestic operations and about foreign
operations is summarized in Note 12 to Consolidated Financial Statements in the
Registrant's Fiscal 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)
-----------------------------------------------------------------
J. Timothy Corcoran 52 President and Chief Executive Officer
(1992)
John N. Hatsopoulos* 64 Chief Financial Officer and Senior
Vice President (1988)
Paul F. Kelleher 56 Chief Accounting Officer (1985)
* John Hatsopoulos will retire as Chief Financial Officer and Senior
Vice President on December 31, 1998. Theo Melas-Kyriazi has been
appointed to succeed Mr. Hatsopoulos as Chief Financial Officer.
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 is a full-time employee of the Company. 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. Mr. Melas-Kyriazi joined Thermo Electron in 1986 as Assistant
Treasurer, and became Treasurer in 1988. He was named President and Chief
Executive Officer of ThermoSpectra Corporation, a public subsidiary of Thermo
Instrument Systems Inc., in 1994. In 1997, he became Vice President of Corporate
Strategy for Thermo Electron. Mr. Melas-Kyriazi will remain a full-time employee
of Thermo Electron, and, when he succeeds Mr. Hatsopoulos as Chief Financial
Officer, will also devote such time to the affairs of the Company as the
Company's needs reasonably require.
Item 2. Properties
The location and general character of the Company's principal properties by
industry segment as of October 3, 1998, are as follows:
Traffic Control
The Company owns approximately 101,000 square feet of office, laboratory,
and production space in Florida and the United Kingdom, and leases approximately
297,000 square feet of office, laboratory, and production space principally in
California, Florida, the Netherlands, the United Kingdom, Finland, Norway, and
Sweden, under leases expiring from fiscal 2001 to 2021.
Industrial Refrigeration Systems
The Company owns approximately 158,000 square feet of office and
manufacturing space in Pennsylvania, subject to a mortgage on the property, and
approximately 15,000 square feet of manufacturing space in Texas. The Company
also occupies approximately 172,000 square feet of office and manufacturing
space in Illinois and Louisiana under leases expiring from fiscal 2000 and 2006.
11
Cooling and Cogeneration Systems
The Company owns approximately 65,000 square feet of office and
manufacturing space in Oklahoma. In addition, the Company leases approximately
40,000 square feet of office and laboratory space in Massachusetts under an
agreement providing for the sublease of the facility from Thermo Electron
expiring in 2002, and leases approximately 8,000 square feet of office and
manufacturing space in Maryland under a lease agreement expiring in 1999.
Other
The Company's discontinued Engines segment occupies approximately 104,000
square feet of manufacturing, engineering, and office space in Michigan under a
lease expiring in 2004. The Company sold the industrial and marine engine
product lines of this division in December 1998. The acquirer of the industrial
engine product line will sublease the facility from the Company through December
1999. Subsequent to the expiration of the sublease, the Company intends to
either renew the sublease with the acquirer or sublet the facility to a third
party, although the Company currently has no such agreement to do so.
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 related matters, is included under the
sections labeled "Common Stock Market Information" and "Dividend Policy" in the
Registrant's Fiscal 1998 Annual Report to Shareholders and is incorporated
herein by reference.
Item 6. Selected Financial Data
The information required under this item is included under the sections
labeled "Selected Financial Information" and "Dividend Policy" in the
Registrant's Fiscal 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 Fiscal 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 Fiscal 1998 Annual Report to Shareholders and is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The Registrant's Consolidated Financial Statements and Supplementary Data
are included in the Registrant's Fiscal 1998 Annual Report to Shareholders and
are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
Not applicable.
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 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 August 13, 1998, the Company filed a Current Report on Form 8-K dated
August 12, 1998, with respect to a proposed corporate reorganization by
the Company's parent corporation, Thermo Electron Corporation, 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: December 23, 1998 THERMO POWER CORPORATION
By:/s/ 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 23, 1998.
Signature Title
By: /s/ J. Timothy Corcoran President, Chief Executive
Officer, and Director
J. Timothy Corcoran
By: /s/ John N. Hatsopoulos Senior Vice President,
Chief Financial Officer, and
John N. Hatsopoulos Director
By: /s/ Paul F. Kelleher Chief Accounting Officer
Paul F. Kelleher
By: /s/ Brian D. Holt Chairman of the Board and
Director
Brian D. Holt
By: /s/ Marshall J. Armstrong Director
Marshall J. Armstrong
By: /s/ Peter O. Crisp Director
Peter O. Crisp
By: /s/ Donald E. Noble Director
Donald E. Noble
By: /s/ John J. Setnicka Director
John J. Setnicka
16
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 November 9, 1998 (except with respect to
certain matters discussed in Notes 4 and 16, as to which the date is December
18, 1998). 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. 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
November 9, 1998
17
SCHEDULE II
THERMO POWER CORPORATION
Valuation and Qualifying Accounts
(In thousands)
Description Balance Provision
at Charged
Beginning to Accounts Balance
of Expense Accounts Written at End
Year Recovered Off Other (a) of Year
- ----------------------------------- ---------- ------------- ----------- ---------- ----------- -----------
Allowance for Doubtful Accounts
Year Ended October 3, 1998 $ 757 $ 200 $ 208 $ (491) $ 9,625 $10,299
Year Ended September 27, 1997 $ 589 $ 252 $ 3 $ (87) $ - $ 757
Year Ended September 28, 1996 $ 530 $ 191 $ 26 $ (158) $ - $ 589
Description Balance Established Activity Other (c) Balance
at as Cost of Charged at End
Beginning Acquisitions to of Year
of Reserve
Year
- ----------------------------------- ---------- ------------- ----------- ---------- -----------
Accrued Acquisition Expenses (b)
Year Ended October 3, 1998 $ 33 $ 21,607 $(10,557) $ - $11,083
Year Ended September 27, 1997 $ 519 $ - $ (7) $ (479) $ 33
Year Ended September 28, 1996 $ 680 $ - $ (109) $ (52) $ 519
Description Balance Provision Activity Other Balance
at Charged Charged at End
Beginning to to of Year
of Expense Reserve
Year
- ----------------------------------- ---------- ------------- ----------- ---------- -----------
Reserve for Discontinued
Operations (d)
Year Ended October 3, 1998 $ - $ 993 $ - $ - $ 993
(a) Includes allowances of businesses acquired and discontinued during the year
as described in Notes 3 and 4, respectively, to Consolidated Financial
Statements in the Registrant's Fiscal 1998 Annual Report to Shareholders and
the effect of foreign currency translation.
(b) The nature of activity in this account is described in Note 3 to
Consolidated Financial Statements in the Registrant's Fiscal 1998 Annual
Report to Shareholders.
(c) Represents reductions of cost in excess of net assets of acquired companies
for accrued acquisition expenses no longer considered necessary.
(d) The nature of activity in this account is described in Note 4 to
Consolidated Financial Statements in the Registrant's Fiscal 1998 Annual
Report to Shareholders.
18
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
2.1 Share Purchase Agreement dated as of January 29, 1998, among the
Company, ONIX Systems Inc., Radley services Ltd., and Peek
Corporation (filed as Exhibit 2.1 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended January 3, 1998 [File No.
1-10573] and incorporated herein by reference).
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).
10.7 Master Repurchase Agreement dated January 1, 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
September 27, 1997 [File No. 1-10573] and incorporated herein by
reference).
19
Exhibit
Number Description of Exhibit
10.8 Amended and Restated Master Guarantee Reimbursement and Loan
Agreement dated as of December 10, 1997, between the Registrant and
Thermo Electron Corporation (filed as Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
January 3, 1998 [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).
10.11 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.)
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).
20
Exhibit
Number Description of Exhibit
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. The terms of such plans are substantially
the same as those of the Registrant's Equity Incentive Plan.
10.20 Amended and Restated Stock Holding Assistance Plan and Form of
Promissory Note (filed as Exhibit 10.20 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September 27, 1997
[File No. 1-10573] and incorporated herein by reference).
13 Annual Report to Shareholders for the fiscal year ended October 3,
1998 (only those portions incorporated herein by reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27.1 Financial Data Schedule for the fiscal year ended October 3, 1998.
27.2 Financial Data Schedule for the fiscal year ended September 28, 1996
(restated for discontinued operations).
27.3 Financial Data Schedule for the quarter ended December 28, 1996
(restated for discontinued operations).
27.4 Financial Data Schedule for the six months ended March 29, 1997
(restated for discontinued operations).
27.5 Financial Data Schedule for the nine months ended June 28, 1997
(restated for discontinued operations).
27.6 Financial Data Schedule for the fiscal year ended September 27, 1997
(restated for discontinued operations).
27.7 Financial Data Schedule for the quarter ended January 3, 1998
(restated for discontinued operations).
27.8 Financial Data Schedule for the six months ended April 4, 1998
(restated for discontinued operations).
27.9 Financial Data Schedule for the nine months ended July 4, 1998
(restated for discontinued operations).