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 28, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-10791
THERMOTREX CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 52-1711436
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10455 Pacific Center Court
San Diego, California 92121-4339
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on which registered
---------------------------- ------------------------------------
Common Stock, $.01 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 November 22, 1996, was approximately $304,566,000.
As of November 22, 1996, the Registrant had 19,170,568 shares of Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended September 28, 1996, 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 12, 1997, are incorporated by
reference into Part III.
PAGE
PART I
Item 1. Business
(a) General Development of Business
ThermoTrex Corporation (the Company or the Registrant) has two
publicly traded subsidiaries, 64%-owned ThermoLase Corporation
(ThermoLase) and 80%-owned Trex Medical Corporation (Trex Medical).
Through its ThermoLase subsidiary, the Company has developed a
laser-based system for the removal of unwanted hair (the SoftLight(SM)
system), which is being marketed in the U.S. through ThermoLase's Spa
Thira salons and through licensing agreements with physicians, and in
foreign countries through joint ventures and other licensing arrangements
with companies or individuals that are experienced in those locations. In
addition, ThermoLase's wholly owned CBI Laboratories, Inc. (CBI)
subsidiary manufactures and markets skin-care and other personal-care
products. Through its Trex Medical subsidiary, the Company designs,
manufactures, and markets mammography and minimally invasive stereotactic
breast-biopsy systems used for the detection of breast cancer, as well as
general-purpose and specialty X-ray equipment. The Company also conducts
advanced technology research in communications, avionics, X-ray
detection, signal processing, advanced-materials technology, and lasers.
In April 1995, ThermoLase received clearance from the U.S. Food and
Drug Administration (FDA) to market services using the SoftLight system,
and began earning revenue from the SoftLight system in the first quarter
of fiscal 1996* as a result of opening its first commercial salon (Spa
Thira) in La Jolla, California, in November 1995. ThermoLase opened
additional salons in Dallas in June 1996, in Houston and Beverly Hills in
September 1996, in Denver in October 1996, and in Boca Raton in November
1996. ThermoLase also plans to open a spa in suburban Detroit in December
1996 and has signed leases for four additional sites in Greenwich,
Connecticut; Manhasset, New York; suburban Minneapolis; and Palm Beach,
Florida. Lease negotiations are under way for additional sites.
In January 1996, ThermoLase entered into a joint venture to market
the SoftLight process in Japan, as well as its laser-based skin-
rejuvenation process, if and when available. Before opening the first spa
in Japan, the joint venture must obtain Japanese regulatory clearance to
market the SoftLight process, for which it is presently conducting
clinical studies to obtain data to submit to the appropriate Japanese
regulatory authorities. ThermoLase currently holds a 50% stake in the
joint venture, with an option to increase its ownership to 51% pursuant
to a fair-value purchase option.
In June 1996, ThermoLase initiated a program to license its
SoftLight technology to doctors. In this program, ThermoLase licenses its
technology to doctors and receives a per-procedure royalty that varies
depending on the location treated. ThermoLase also provides the doctors
with the lasers and supplies that are necessary to perform the service. A
total of 55 doctors were licensees as of December 1, 1996.
* In September 1995, the Company changed its fiscal year end from the
Saturday nearest December 31 to the Saturday nearest September 30.
References to "fiscal 1996," "fiscal 1995," and "1994" herein are for
the year ended September 28, 1996, the nine months ended September 30,
1995, and the year ended December 31, 1994, respectively.
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In June 1996, ThermoLase purchased $4.4 million of convertible
preferred stock of AntiCancer Incorporated (AntiCancer), representing an
approximate 10% equity interest on a fully diluted basis. San Diego-based
AntiCancer is developing technology that may have the potential to
enhance the effectiveness of the SoftLight process. In this technology,
liposomes, which have been proven to be effective delivery agents in
other applications, might provide a more efficient method of delivering
carbon, which is the primary ingredient in the lotion used in the
SoftLight process, to hair follicles. ThermoLase has signed an agreement
to license this technology as it pertains not only to hair removal, but
also to stimulation of hair growth, suppression of hair growth, and hair
coloring.
In November 1996, ThermoLase entered into a joint venture to market
its SoftLight process in France, as well as its laser-based skin-
rejuvenation process, if and when available. ThermoLase's partner in the
joint venture is an affiliate of Groupe Jacques Dessange, which is a
leading provider of premium hair- and skin-care services in France. The
joint venture plans to open Spa Thira salons in France and to sublicense
to French physicians and others the right to perform services using the
SoftLight system.
In November 1996, ThermoLase entered into a license agreement to
allow a third party to market the SoftLight process in Saudi Arabia, as
well as its laser-based skin-rejuvenation process, if and when available.
ThermoLase is investigating other applications for its laser-based
technology, and in June 1995 was granted a patent covering a laser-based
skin-rejuvenation system, which ThermoLase believes may be used to remove
the outer layers of dead skin cells. Carbon dioxide (CO2) lasers have
recently been used to remove wrinkles, but their use has been associated
with long healing times and, in some cases, undesirable side effects.
ThermoLase believes that the skin-rejuvenation process that it is
developing will cause less skin damage than existing laser skin
treatments that use a CO2 laser. Although the safety of using lasers for
skin treatments has been established by several systems that are already
approved by the FDA for the removal of birthmarks and tattoos, ThermoLase
may not commercially sell its skin-rejuvenation system, or services using
the system, until it has received clearance from the FDA. ThermoLase is
currently conducting clinical trials and plans to submit a 510(k)
application containing clinical data by the end of the second quarter of
fiscal 1997.
In July 1996, the Company completed the public spinout of its Trex
Medical subsidiary. Trex Medical issued 2,875,000 shares of its common
stock in an initial public offering, and 871,832 shares of its common
stock in a concurrent rights offering, for net proceeds of $49.1 million.
Trex Medical, which was incorporated in September 1995, consists of
four operating units: Lorad, Bennett X-Ray Corporation (Bennett), XRE
Corporation (XRE), and Continental X-Ray Corporation (Continental). In
September 1995, ThermoTrex acquired and subsequently transferred to Trex
Medical all of the outstanding capital stock of Bennett; in May 1996,
Trex Medical acquired substantially all of the assets and liabilities of
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XRE for approximately $18.5 million in cash, net of cash acquired and
including the repayment of debt; and in September 1996, Trex Medical
acquired substantially all of the assets and liabilities of Continental
for approximately $18.4 million in cash, net of cash acquired and
including the repayment of debt.
Each of Trex Medical's operating units specializes in manufacturing
a particular type of imaging equipment for different market segments.
Lorad, acquired by the Company in 1992 and transferred to Trex Medical in
September 1995, manufactures and markets mammography and minimally
invasive stereotactic breast-biopsy systems, which provide a
cost-effective, less-invasive alternative to open surgery for the biopsy
of suspicious breast lesions. Bennett's product line consists primarily
of general-purpose X-ray equipment, but also includes mammography
systems, a stereotactic breast-biopsy system, and X-ray units used by
chiropractors and veterinarians. XRE manufactures and markets X-ray
imaging systems used by interventional cardiologists in the diagnosis and
treatment of blockages in coronary arteries and other vessels. XRE also
manufactures electrophysiology products that aid doctors in diagnosing
and treating cardiac arrhythmia. Continental manufactures and markets a
broad line of general-purpose and specialty X-ray systems, including
radiographic fluoroscopy (R/F) systems used to diagnose gastrointestinal
disorders. Continental also manufactures electrophysiology products and
mammography systems.
Trex Medical is currently developing a full-breast digital
mammography system that is intended to yield higher image quality, permit
the enhancement of an X-ray image through software, and allow off-site
analysis of the X-ray image. Trex Medical believes this technology may
also provide better images of dense breast tissue, which is often found
in younger women. Trex Medical is currently collecting clinical data to
be submitted with its 510(k) application to the FDA, which must grant
market clearance before this system can be sold commercially. Trex
Medical has designed its new, high-end conventional mammography systems
so that radiologists can upgrade to this digital technology when it
becomes available. Trex Medical believes that the digital imaging
technology being developed for this system may be adaptable to its
general and specialized radiography systems, and will seek to develop
applications in these markets. Trex Medical is also working on a more
advanced version of its existing digital technology, which incorporates a
flat-panel, direct-digital detector and could provide even more
information for earlier diagnoses.
The Company continues to focus on applying its core technologies to
the development of new commercial products, including a passive microwave
camera and a laser communication system called lasercom. The passive
microwave camera could be used to enhance safety in aircraft navigation
during low-visibility conditions and in certain security applications.
The lasercom system could one day be used as a satellite-to-satellite
communication system to transmit phone calls, faxes, and video
teleconferences across the globe. The Company continues to perform
substantial amounts of government-sponsored research and development.
At September 28, 1996, Thermo Electron Corporation (Thermo
Electron) owned 9,711,282 shares of the common stock of the Company,
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representing 51% of such stock then outstanding. Thermo Electron is a
world leader in environmental monitoring and analysis instruments,
biomedical products such as heart-assist devices and mammography systems,
papermaking and paper-recycling equipment, biomass electric power
generation, and other specialized products and technologies. Thermo
Electron also provides a range of services related to environmental
quality.
Thermo Electron intends for the foreseeable future to maintain at
least 50% ownership of the Company. This will require the purchase by
Thermo Electron of additional shares of Company common stock from time to
time as the number of outstanding shares issued by the Company increases.
These and any other purchases may be made either on the open market or
directly from the Company. During fiscal 1996, Thermo Electron purchased
50,000 shares of the Company's common stock in the open market for a
total price of $1.8 million. See Note 6 to Consolidated Financial
Statements in the Registrant's Fiscal 1996 Annual Report to Shareholders
for a description of outstanding stock options.
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. These statements involve a number of risks and
uncertainties, including those detailed under the caption "Forward-
looking Statements" in the Registrant's Fiscal 1996 Annual Report to
Shareholders incorporated herein by reference.
(b) Financial Information About Industry Segments
The Company's business is divided into three industry segments:
Medical Products manufactured by the Company's Trex Medical subsidiary,
Personal-care Products and Services provided by the Company's ThermoLase
subsidiary, and Advanced Technology Research. The principal products
produced and services rendered by the Company in these three segments are
described in detail below. (See "Principal Products and Services.")
Financial information concerning the Company's industry segments is
provided in Note 13 to Consolidated Financial Statements in the
Registrant's Fiscal 1996 Annual Report to Shareholders and is
incorporated herein by reference.
(c) Description of Business
(i) Principal Products and Services
Medical Products
Through its Trex Medical subsidiary, the Company designs,
manufactures, and markets mammography and minimally invasive stereotactic
breast-biopsy systems used for the detection of breast cancer, as well as
general-purpose and specialty X-ray equipment and radiographic
fluoroscopy systems. Trex Medical sells its products through a worldwide
network of more than 100 independent dealers and, to a lesser extent, on
5PAGE
a direct basis. In addition to manufacturing and marketing its own
systems, the Company manufactures systems and system components as an OEM
for other medical equipment companies such as United States Surgical
Corporation (U.S. Surgical), the GE Medical Systems division of General
Electric Company, Inc. (GE), the Philips Medical Systems North America
Company subsidiary of Philips N.V. (Philips), and the Picker
International, Inc. subsidiary of GEC, Inc. (Picker International).
Mammography and Breast-biopsy Systems
Trex Medical is the world's leading manufacturer of mammography
equipment and minimally invasive breast-biopsy systems. Trex Medical's
systems are differentiated on the basis of price and performance, with
high-end models including the recently introduced Lorad M-IV and the
Bennett Contour, which offers a patented tilt C-arm that permits the
system to tilt toward, or away from, the patient to allow for imaging of
a greater area of the breast. The M-IV incorporates the optional
High-Transmission Cellular (HTC)(TM) grid, which reduces X-ray scattering
while blocking fewer primary X-rays, resulting in higher-contrast images
with lower radiation doses. The Company's lower-priced models include the
Lorad M-III and the Bennett MF-150, which do not offer all of the
features of the high-end models and are marketed to more cost-conscious
consumers. In addition, the Company offers two mobile mammography
systems.
The Company currently has a prototype full-breast digital imaging
mammography system and expects to submit data using this prototype to the
FDA for clearance, which is required before the Company can commercially
market it. The Company is currently developing a next-generation
full-breast digital mammography system, which would replace the film with
a solid-state detector capable of directly recording the X-ray image in
an electronic format. The system is designed to substantially increase
image contrast without a significant decrease in image resolution.
Trex Medical also offers a variety of minimally invasive
stereotactic breast-biopsy systems, designed to provide an alternative to
surgical breast biopsies. Compared with open surgery, a stereotactic
breast-biopsy procedure generally removes only a small tissue sample,
resulting in minimal scarring, which can affect the accuracy of future
mammograms, and is generally performed under local anesthetic on an
outpatient basis, resulting in significantly lower cost. Recent studies
indicate that stereotactic needle biopsy is equally effective compared
with surgical biopsy in determining whether a suspicious lesion is
malignant, and the typical cost of a stereotactic needle-biopsy procedure
is approximately one third of the cost of a surgical biopsy. The Company
offers a dedicated, prone table called the StereoGuide(R) and upright,
add-on systems that can be attached to most of its mammography systems.
Trex Medical's StereoGuide system is the subject of a lawsuit alleging
infringement of a Fischer Imaging Corporation (Fischer) patent. See "Item
3 - Legal Proceedings."
Trex Medical offers a digital spot imaging option with all of its
stereotactic breast-biopsy systems. Although not capable of imaging the
entire breast, digital spot imagers are capable of capturing an area
large enough to cover a suspicious lesion. The Company's digital spot
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imaging systems can record and display an X-ray image in approximately 10
seconds. Since the image is recorded in electronic format, a computer can
quickly plot the location of the lesion and aim the needle gun once the
lesion has been located with a cursor on the computer screen. A
stereotactic breast-biopsy procedure using digital spot imaging can be
performed in as short a time as 10 minutes, compared with a typical time
of 45 minutes using a film-based system.
The Company believes that demand in the market for mammography
systems is driven primarily by technological innovation that result in
better image quality. Although growth of the installed base has slowed,
demand for new systems continues as older models are replaced with those
offering technological innovations. In addition, Trex Medical believes
that the market outside the United States will grow as more countries
adopt mammography quality standards similar to those recently adopted in
the United States. Trex Medical believes that the stereotactic
breast-biopsy system market will grow as the procedure becomes more
widely accepted by the medical community and as pressures to contain
healthcare costs increase.
General Radiography
Trex Medical addresses the general radiography (X-ray) market
through its Bennett and Continental subsidiaries. Bennett designs,
manufactures, and markets office-based X-ray systems, which are basic
systems generally used in medical outpatient facilities, such as doctors'
offices and surgi-care centers. Bennett has focused on this segment of
the market by providing low-cost, reliable systems. Bennett and
Continental also design, manufacture, and market more sophisticated and
expensive radiographic systems typically used in hospitals and clinics.
In addition, Bennett manufactures and markets imaging systems designed
specifically for chiropractors and veterinarians.
The U.S. market for general X-ray systems is stable, and consists
primarily of replacement sales as customers upgrade older equipment. Trex
Medical believes that the international market is substantially larger
than the U.S. market and that the installed base of systems is still
growing, particularly in developing countries. Trex Medical has recently
expanded its international sales efforts.
Trex Medical offers two linear tomography systems: the Bennett
BT-300 and the Continental Precision Movement Tomography (PMT)
radiographic/tomographic system. In a linear tomography procedure, the
X-ray tube sweeps over the patient in one direction with the film tray
sweeping under the patient in the opposite direction. The resulting image
provides an unobstructed view at a desired plane within the patient's
body, of the kidneys, for example. The Company believes that for a number
of applications its tomography systems may be a cost-effective
alternative to computed tomography (CT) scanners.
The Company believes digital imaging will have significant
application in the general and specialized radiographic markets and that
the technology it develops for its full-breast digital imaging system may
be adaptable to these applications. In general X-ray applications, the
Company believes digital imaging will produce better quality images and
7PAGE
reduce operating costs by eliminating the need for film, processing
equipment, and chemicals. In addition, digital imaging will permit the
electronic storage of images on magnetic or optical media, as well as the
transmission of images to multiple locations. Furthermore, the Company
believes digital imaging could make the image intensifiers, which are
large and expensive components in certain imaging systems, obsolete.
Cardiac Catheterization, Angiography, and Electrophysiology
Through its XRE subsidiary, acquired in May 1996, Trex Medical
designs, manufactures, and markets complete cardiac catheterization
laboratories (also called cath labs) and positioners for cardiovascular
imaging systems. XRE's imaging equipment is used in cath labs where
angiography (examination of the blood vessels using X-rays following the
injection of a radio-opaque contrast medium) is performed by an
interventional cardiologist. The entire system is designed to provide
real-time images of the heart and coronary arteries for physicians
performing interventional procedures, such as a diagnostic angiogram or
balloon angioplasty, which has become a common alternative to open-heart
bypass surgery.
Both XRE and Continental design, manufacture, and sell
electrophysiology systems used in the diagnosis and treatment of cardiac
arrhythmia, which is characterized by the sudden, erratic beating of the
heart and can result in cardiac arrest.
Radiographic Fluoroscopy Systems
Through its Continental subsidiary, acquired in September 1996,
Trex Medical designs, manufactures and markets R/F products. An R/F
system is able to record dynamic events by capturing a series of images
in a short period of time. For example, R/F systems are used for various
gastrointestinal procedures to image the progress of a radio-opaque
ingested solution (typically barium) through the digestive tract.
Continental produces R/F systems that use advanced high-frequency
generators that provide pulsed power, resulting in substantially reduced
radiation exposure to the patient. Continental's R/F products include the
new DigiSpot 2000, a high-speed digital imaging system that records the
image in an electronic format, permitting the electronic storage of
images on magnetic or optical media and the transmission of images to
multiple locations with image quality comparable with film-based systems.
Personal-care Products and Services
Laser-based Hair Removal
ThermoLase's patented SoftLight system uses a low-energy,
dermatology laser in combination with a lotion that absorbs the laser's
energy to disable hair follicles. Unlike electrolysis, the SoftLight
system can disable numerous hair follicles at one time. As a result,
ThermoLase believes that it will be able to address a larger market than
electrolysis by offering hair removal from large areas, such as the legs.
The lasers, which are similar to those used for tattoo and birthmark
8PAGE
removal, are manufactured for ThermoLase by Trex Medical. The lotion is
manufactured by ThermoLase's CBI Laboratories subsidiary.
In a typical treatment, the area from which hair is to be removed
is first waxed to open each hair duct. The lotion is then applied, and
the area is scanned with the laser beam. The laser energy passes through
the skin and is absorbed by the lotion that has penetrated the hair duct,
causing the temperature of the lotion to increase to a level that
disables the hair follicles. Each client typically has a series of
treatments, for which each Spa Thira currently offers several pricing
programs, including fixed fees for one or more treatments and fixed fees
for treatments during specified time periods. ThermoLase continues to
invest in research and development to improve the efficacy of the system
and increase the length of time between treatments.
In April 1995, ThermoLase received clearance from the FDA to market
services using the SoftLight system, and began earning revenue from the
SoftLight system in the first quarter of fiscal 1996 as a result of
opening its first commercial salon (Spa Thira) in La Jolla, California,
in November 1995. ThermoLase opened additional salons in Dallas in June
1996, in Houston and Beverly Hills in September 1996, in Denver in
October 1996, and in Boca Raton in November 1996. ThermoLase also plans
to open a spa in suburban Detroit in December 1996, and has signed leases
for four additional sites in Greenwich, Connecticut; Manhasset, New York;
suburban Minneapolis; and Palm Beach, Florida. Lease negotiations are
under way for additional sites.
In June 1996, ThermoLase initiated a program to license its
SoftLight technology to doctors. In this program, ThermoLase licenses its
technology to doctors and receives a per-procedure royalty that varies
depending on the location treated. ThermoLase also provides the doctors
with the lasers and supplies that are necessary to perform the service. A
total of 55 doctors were licensees as of December 1, 1996.
In January 1996, ThermoLase entered into a joint venture to market
the SoftLight process in Japan, as well as its laser-based skin-
rejuvenation process, if and when available. Before opening the first spa
in Japan, the joint venture must obtain Japanese regulatory clearance to
market the SoftLight process, for which it is presently conducting
clinical studies to obtain data to submit to the appropriate Japanese
regulatory authorities. ThermoLase currently holds a 50% stake in the
joint venture, with an option to increase its ownership to 51% pursuant
to a fair-value purchase option. During fiscal 1996, ThermoLase received
$2.0 million in minimum guaranteed payments in accordance with
contractual terms. ThermoLase will receive $1.0 million in minimum
guaranteed payments in fiscal 1997, subject to certain exceptions in the
event the joint venture is unable to obtain patent protection in Japan on
prescribed terms.
In November 1996, ThermoLase entered into a joint venture to market
its SoftLight process in France, as well as its laser-based skin-
rejuvenation process, if and when available. The joint venture plans to
open Spa Thira salons in France and to sublicense to French physicians
and others the right to perform services using the SoftLight system.
ThermoLase has committed to provide up to $5.0 million to fund working
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capital requirements of the joint venture in exchange for its 50% stake
in the joint venture. ThermoLase's partner in the venture has also
committed to fund up to $5.0 million in exchange for its 50% ownership.
ThermoLase has licensed the technology to perform the SoftLight process
to the joint venture, and will receive a royalty based on the joint
venture's revenues.
In November 1996, ThermoLase entered into a license agreement with
a third party, which will market the SoftLight process through Spa Thira
salons and sublicensing arrangements in Saudi Arabia, as well as its
laser-based skin-rejuvenation process, if and when available. Pursuant to
the agreement, ThermoLase will receive up-front fees totaling $1.0
million over a two-year period and a fee based on revenues derived from
SoftLight services.
ThermoLase's existing and planned spas are designed to reflect the
environment of a luxurious day spa. ThermoLase believes that the
uniformity of its centers will foster brand recognition and facilitate
the opening of new spas. ThermoLase advertises the SoftLight system
through an advertising and public relations campaign focused on exposure
in fashion and health magazines as well as the national news media.
Skin-care and Other Personal-care Products
In December 1993, ThermoLase acquired CBI, a designer, developer,
manufacturer, and packager of high-quality personal-care products for
sale to retailers under its own brand names and as a contract
manufacturer under arrangements with third parties. CBI develops and
manufactures most of its products using botanicals and herbal extracts,
with no animal fats, chemical dyes, or artificial aromas. CBI has the
facilities and personnel to develop new product formulations, design
packaging layouts, mix and fill formulations, and package final products
for distribution. CBI does not manufacture packaging such as containers
and boxes, but contracts with third parties for these supplies. CBI has a
portfolio of approximately 3,000 formulations, and may manufacture up to
300 different products in a quarter.
CBI divides its business into three primary groups: Salon, Custom
Design, and Store Brands. The Salon group, which represents CBI's
original business, develops and manufactures a line of products primarily
sold directly by CBI to professional estheticians in skin-care salons and
spas. The Custom Design group markets CBI's manufacturing and design
services primarily to major retailers and multilevel marketing groups for
custom design of private-label product lines. The Store Brands group
markets complete proprietary product lines created by CBI, including
product formulations, packaging, brand name, and promotional materials,
which can be purchased by a customer for sale in its retail outlets as an
exclusive product line.
CBI's marketing and sales strategy varies by product line, but
generally includes phone solicitations and local representatives. In
addition, ThermoLase expects its network of Spa Thira salons and
physicians' offices where SoftLight services are offered to provide a
retail outlet for CBI's salon products. To support its marketing
activities, CBI attends industry trade shows and advertises in major
trade publications.
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Advanced Technology Research
The Company is currently focusing its advanced technology research
efforts in the areas of communications, avionics, X-ray detection, signal
processing, materials technology, and lasers. The Company has developed
its expertise in these core technologies in connection with
government-sponsored research and development.
Passive Microwave Camera
The Company is developing a passive microwave camera (PMC) to see
objects hidden by fog and clouds and to see through certain opaque
objects, such as building partitions. The Company's PMC could thus
improve safety in aircraft navigation and provide enhanced surveillance
capabilities.
The Company's PMC is intended to combine the capabilities and
advantages of infrared imaging and radar detection to form thermal images
at microwave frequencies. Like infrared imaging, but unlike radar, the
PMC will be a totally passive device that emits no radiation and can
produce real-time video images during the day or night without the
clutter typical of radar. Like radar, but unlike infrared imaging, the
PMC will have the ability to see through fog, smoke, clouds, and some
opaque objects. For example, microwave imaging devices have penetrated
cloud cover to produce identifiable images of highways from helicopters.
The Company's goal is that its PMC will achieve resolution of objects
that are several feet, to several tens of feet, in size at a distance of
one mile and that resolution will increase as distances decrease.
The Company believes the largest potential application of the PMC
would be the incorporation of the device into airplanes for use during
takeoffs, landings, and taxiing in adverse weather conditions. The
Company's PMC is subject to approval by the Federal Aviation
Administration (FAA). The U.S. Army has provided approximately $6.0
million in funding for PMC development over the last four years. In
fiscal 1996, the U.S. Army Research Laboratory awarded ThermoTrex an
additional $4.0 million contract to continue development. Under the
previous funding, ThermoTrex built and field-tested a first-generation
camera. The additional funding will be used to conduct further upgrades
that are intended to improve performance and make the camera more user
friendly. In addition, ThermoTrex is developing a flightworthy
second-generation camera for in-flight testing. Because the Army is
interested in the potential for using this system on unmanned aircraft,
the Company plans to develop a new system architecture that is compatible
with an unmanned vehicle, with the goal of producing very-high-resolution
images from long distances.
Under a two-year $1.7 million cooperative agreement announced in
early 1995, the Company is developing a more compact version of the PMC
for the National Aeronautics and Space Administration. Under the terms of
this agreement, the Company will provide matching funds of $1.3 million
and its subcontractor, Aerojet GenCorp., will contribute $0.8 million.
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Laser Communication System (lasercom)
The Company is developing a laser communication system called
lasercom that could help ease the burden that data transmission is
placing on existing communication systems. The commercial lasercom system
envisioned by ThermoTrex would employ a constellation of low-earth-orbit
satellites. The information being transmitted would be uplinked via radio
waves to the closest satellite, then relayed via laser beams to
intermediate satellites before being downlinked via radio waves near the
recipient.
Since 1989, the Company has developed lasercom under the
sponsorship of The Ballistic Missile Defense Organization, which has
provided funding totaling approximately $11.8 million through the end of
fiscal 1996. The military would benefit from the speed and security that
lasercom could provide. In September 1995, the Company successfully
demonstrated the data transmission capability of the system when data
were broadcast over a distance of almost 100 miles.
In September 1996, the Company received a $4.9 million contract
(with options for an additional $0.4 million) from the Defense Airborne
Reconnaissance Office (DARO) for advanced development of the lasercom
system for use on aircraft. Under this contract, the Company will apply
its lasercom technology to develop a system that could be used on
unmanned reconnaissance aircraft. Lasercom would provide a horizontal
communications link to quickly transmit digitized images of the ground
below the aircraft, for example, to another unmanned aircraft flying near
a command post hundreds of miles away, where the information could be
downlinked and analyzed. Under the contract, the Company is developing a
fully functional prototype to be tested using small commercial jets.
Other Projects
The Company is developing a more advanced version of its existing
digital medical imaging technology, which Trex Medical currently
incorporates into certain of its mammography systems. This
next-generation system would incorporate a flat-panel, direct-digital
detector that could provide even more information for earlier diagnoses.
This system is based on complementary metal oxide semiconductor (CMOS)
technology. The CMOS system would "directly" detect the X-rays and
convert them into digital information, as opposed to converting them into
visible light first before being digitized, as is the case with the
Company's current full-breast digital technology. Trex Medical has the
right to license this technology as it pertains to certain medical
applications. The Company is also exploring other nonmedical applications
for this flat-panel direct-digital technology.
The Company is currently working on government projects in several
areas, including: (1) space surveillance -- Under an $8.0 million
contract from the U.S. Air Force Phillips Laboratory that was awarded in
1993, the Company is designing and building a system to produce
high-resolution images of low-earth-orbit satellites. (2) ROBS (rapid
optical beam steering) laser radar system -- ThermoTrex has developed and
extensively tested the ROBS system over the last nine years, supported by
more than $23 million in government funding. In fiscal 1996, the Company
12PAGE
received a three-year $8.8 million contract from the U.S. Naval Air
Warfare Center at China Lake, California, to continue development of this
system, which is designed to simultaneously track multiple, fast-moving
airborne objects with extreme precision. In July 1996, the Company
received a $5.9 million contract from the U.S. Army Missile Command to
build a new version of ROBS to meet Army specifications.
One of the Company's long-term research and development programs is
the development of a Sonic CT(TM) (Computed Tomography) system that uses
acoustic waves to form high-resolution images of breast tissue. The
Company has deferred spending additional resources on Sonic CT at the
present time, so that it may concentrate its resources more directly on
its digital imaging research and development.
(ii) New Products
The Company's business includes the research and development of new
products. (see "Principal Products and Services.")
(iii) Raw Materials
Raw materials, components, and supplies purchased by the Company
are either available from a number of different suppliers or from
alternative sources that could be developed without a material adverse
effect on the Company. To date, the Company has experienced no
difficulties in obtaining these materials.
(iv) Patents, Licenses, and Trademarks
The Company protects its intellectual property through patents,
trademarks, and trade secrets, as appropriate. In addition to relying on
patents, the Company protects some of its technology as trade secrets and
uses trademarks in association with certain products. The Company also
enters into licensing arrangements to acquire rights in technology.
The technology underlying the SoftLight system, including all
patents issued thereon, belongs to the Company by virtue of a license
agreement executed in February 1993 between ThermoLase and the inventor
of the system, which grants ThermoLase an irrevocable, exclusive,
worldwide, perpetual license to the technology in exchange for a $0.1
million commitment fee and a royalty equal to 0.25% of revenues generated
from the sale or use of the SoftLight system through February 10, 2010.
Patented inventions of the Company include certain mammography and
other X-ray equipment, lasers, telescopes, high-power diamond switches,
laser-radar devices, microwave cameras, a laser-based hair-removal
process, a Sonic CT system, a wind-shear detector, and methods of
producing composites and ultrafine particles. Patent applications are
pending on certain mammography equipment, a passive microwave camera, and
a free-space laser communication system.
The Company is a defendant in certain patent litigation and has
been notified that it allegedly infringes certain other technologies
owned by third parties. See information under the heading "Intellectual
13PAGE
Property Rights, Uncertainties and Litigation" under the caption
"Forward-looking Statements" in the Registrant's Fiscal 1996 Annual
Report to Shareholders incorporated herein by reference.
Several of the Company's patents were the result of research
programs funded by the U.S. government. With the exception of a
prohibition on disclosure of classified technology, the government does
not impose significant restrictions on the Company's use of
government-sponsored technology. The government retains a non-exclusive,
royalty-free license to use technology developed under government
contracts for government purposes, and could, in certain circumstances,
transfer all commercial rights to technology to a third party if the
Company does not pursue its development.
(v) Seasonal Influences
There are no significant seasonal influences on the Company's sales
of products and services.
(vi) Working Capital Requirements
There are no special inventory requirements or credit terms
extended to customers that would have a material adverse effect on the
Company's working capital.
(vii) Dependency on a Single Customer
No single customer accounted for 10% or more of the Company's total
revenues in fiscal 1996. Medical Products segment revenues from OEM sales
of a modified design of Trex Medical's stereotactic prone breast-biopsy
system to U.S. Surgical accounted for 11% of Medical Products segment
revenues in fiscal 1996. No single customer accounted for more than 10%
of the revenues of the Personal-care Products and Services segment.
Advanced Technology Research segment revenues from U.S. government
agencies accounted for 85% of that segment's revenues in fiscal 1996. The
Company's Advanced Technology Research segment is heavily dependent on
government funding through several agencies, and the loss of any of such
agencies or customers would have a material adverse effect on this
segment.
(viii) Backlog
The backlog of firm orders for the Medical Products segment was
$65.3 million as of September 28, 1996, compared with $45.4 million as of
September 30, 1995. The backlog of firm orders for the Personal-care
Products and Services segment was $5.5 million as of September 28, 1996,
compared with $4.6 million as of September 30, 1995. The backlog of firm
orders for the Advanced Technology Research segment was $17.9 million as
of September 28, 1996, compared with $10.6 million as of September 30,
1995. This backlog includes government contract orders that are firm but
not yet funded of $1.6 million at September 30, 1995. The Company
believes that substantially all of its fiscal 1996 backlog will be
completed during fiscal 1997.
14PAGE
(ix) Government Contracts
Less than 10% of the Company's total revenues in fiscal 1996 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 renegotiations or
terminations.
(x) Competition
Medical Products
The healthcare industry in general, and the market for imaging
products in particular, is highly competitive. Trex Medical competes with
a number of companies, many of which have substantially greater
financial, marketing, and other resources than Trex Medical. Trex
Medical's competitors include large companies such as GE, Philips, the
Siemens Corporation subsidiary of Siemens AG (Siemens), Toshiba American
Medical Systems, Inc. and Toshiba America MRI, Inc. (collectively,
Toshiba), Shimadzu and Picker International, which compete in most
diagnostic imaging modalities, including X-ray imaging. In addition, a
significant portion of Trex Medical's sales are to U.S. Surgical, GE, and
Philips through OEM arrangements. The products sold through such OEM
agreements compete with those offered by Trex Medical and its independent
dealers. Trex Medical competes in these markets primarily on the basis of
product features, product performance, and reputation as well as price
and service. Trex Medical believes that competition is likely to increase
as a result of healthcare cost-containment pressures and the development
of alternative diagnostic and interventional technologies.
Personal-care Products and Services
ThermoLase expects that, in the near term, the principal
competitors relative to treatment using the SoftLight system will be
electrolysis providers. The electrolysis market is characterized by many
small practitioners. Although ThermoLase believes that it has a
significant competitive advantage over electrolysis, it does not have the
well-established network of client relationships that many electrologists
have. In addition, a number of laser manufacturers have announced that
they have filed applications with the FDA seeking to obtain clearance to
market a laser for hair removal. Although, to date, none of these
companies has been successful in obtaining such a clearance, a number of
them are currently marketing substantially similar devices for
indications other than hair removal. The Company believes that certain of
these devices are being used "off-label" for hair removal by some
physicians in the U.S. and are being marketed for hair removal in some
foreign jurisdictions where regulatory clearance is not as stringent as
it is in the United States. ThermoLase's products and services will also
compete with other hair-removal products. If ThermoLase's technology is
accepted by the general public, it expects that others will seek to
develop similar technologies and products that may compete directly with
the SoftLight system.
15PAGE
The professional skin-care and bath-and-body products markets are
highly competitive. In selling its Salon product line, CBI competes with
a number of small manufacturers and divisions of larger companies. The
competition in this market is fragmented with no one competitor
dominating the market. In the Custom Design and Store brands groups, CBI
competes with numerous contract packaging companies that can prepare and
package custom formulations for customers. Some of these competitors have
substantially greater financial, marketing, and research and development
resources than those of the Company. CBI competes in these markets by
offering its customers an exclusive product line that the Company
believes can generally be sold at a lower price but with higher margins
than CBI's competitors.
Advanced Technology Research
The Company competes for its research and development programs
principally on the basis of technological innovations. As government
funding becomes more scarce, particularly for defense projects, the
competition for such funding will become more intense. In addition, as
the Company's programs move from the development stage to procurement of
large-scale, electro-optical systems, competition is expected to develop
and intensify. Some of the Company's competitors for research and
development funding and procurement have substantially greater resources
than those of the Company.
As the Company develops commercial products, it expects to
encounter competition from various sources, including companies that will
have substantially greater technical, marketing, and financial resources
than those of the Company. The Company believes that its overall success
will depend primarily on its ability to continue to make technological
advances.
(xi) Research and Development
During the year ended September 28, 1996, the nine months ended
September 30, 1995, and the year ended December 31, 1994, the Company
incurred approximately $24,986,000, $13,430,000, and $14,172,000,
respectively, on internally sponsored research and development programs,
and $10,278,000, $11,803,000, and $14,452,000, respectively, on research
and development programs sponsored by others. Approximately 268
professional employees were engaged full-time in research and development
activities at September 28, 1996.
(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.
(xiii) Number of Employees
As of September 28, 1996, the Company had a total of 1,383
employees.
(d) Financial Information about Exports by Domestic Operations
Financial information about exports by domestic operations is
summarized in Note 13 to Consolidated Financial Statements in the
16PAGE
Company's Fiscal 1996 Annual Report to Shareholders and is incorporated
herein by reference.
(e) Executive Officers of the Registrant
Present Title (Fiscal Year First
Name Age Became Executive Officer)
------------------------------------------------------------------
Gary S. Weinstein 39 Chief Executive Officer (1996)
Firooz Rufeh 59 President (1990)
Dr. Kenneth Y. Tang 49 Senior Vice President (1990)
Anthony J. Pellegrino 56 Senior Vice President (1992)
John N. Hatsopoulos* 62 Vice President and Chief Financial
Officer (1990)
David A. Teitel 33 Vice President, Finance (1996)
Dr. Brett Spivey 36 Vice President, Commercial Technology
Development (1990)
Hal Kirshner 55 President and Chief Executive Officer,
Trex Medical Corporation (1992)
Paul F. Kelleher 54 Chief Accounting Officer (1990)
* John N. Hatsopoulos and George N. Hatsopoulos, a director of the
Company, are brothers.
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. All executive officers, except Messrs.
Weinstein, Pellegrino, Teitel, and Kirshner, have held comparable
positions for at least five years with the Company or Thermo Electron.
Mr. Weinstein has been Chief Executive Officer of the Company since
February 1996. Prior to joining the Company, Mr. Weinstein held various
positions at Lehman Brothers, including heading its global syndicate and
equity capital market group from March 1995 until joining the Company.
Mr. Pellegrino is the founder of Lorad and has been Chairman of Lorad
since its inception in 1984. Mr. Teitel has been Vice President, Finance,
of the Company since August 1996. Prior to joining the Company, Mr.
Teitel was Vice President, Finance, of Deknatel Snowden Pencer, Inc.
(Deknatel), a manufacturer of specialty surgical products, from May 1995
to August 1996, and was Director of Finance at Deknatel from August 1994
to May 1995. From August 1985 to August 1994, Mr. Teitel held various
positions at Arthur Andersen LLP, a professional services firm. Mr.
Kirshner has been President of Lorad since February 1991. 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.
Item 2. Properties
The location and general character of the Company's principal
properties as of September 28, 1996, are as follows:
Medical Products
Trex Medical owns two office and manufacturing facilities: a 63,500
square-foot facility in Danbury, Connecticut, and a 163,000 square-foot
facility in Broadview, Illinois. Trex Medical leases a 120,000
17PAGE
square-foot office and manufacturing facility in Copiague, New York,
under a lease expiring in 2005, and a 156,000 square-foot office and
manufacturing facility in Littleton, Massachusetts, under a lease
expiring in 2012. Trex Medical has entered into a lease for a new 60,000
square-foot building to be constructed adjacent to its existing facility
in Danbury, Connecticut. The lease will commence upon completion of the
building, which is expected to occur in December 1996, and has a term of
10 years.
Personal-care Products and Services
ThermoLase occupies approximately 213,000 square feet of office and
manufacturing space in Carrollton, Texas, under a lease expiring in 2004,
through its CBI subsidiary. ThermoLase also occupies approximately 43,000
square feet of retail space in California, Texas, Colorado, and Florida
for its Spa Thira salons, under leases expiring from 2000 through 2006.
Advanced Technology Research
The Company currently leases 90,000 square feet of office,
engineering, and laboratory space in San Diego under a lease expiring in
2006. The Company also leases a 10,000 square-foot office and warehouse
facility in San Diego as a tenant-at-will.
The Company believes that its facilities are in good condition and
are suitable and adequate to meet current needs.
Item 3. Legal Proceedings
In April 1992, Fischer Imaging Corporation (Fischer) commenced a
lawsuit in the United States District Court, District of Colorado,
against Lorad, alleging that Lorad's prone breast-biopsy system infringes
a Fischer patent on a precision mammographic needle-biopsy system. As of
September 28, 1996, the Company had aggregate revenues of approximately
$63.1 million from the sale of such systems. The suit requests a
permanent injunction, treble damages, and attorneys' fees and expenses.
If the Company is unsuccessful in defending this lawsuit, it may be
enjoined from manufacturing and selling its StereoGuide system without a
license from Fischer. No assurance can be given that the Company will be
able to obtain such a license, if required, on commercially reasonable
terms, if at all. In addition, the Company may be subject to damages for
past infringement. No assurance can be given as to the amount that the
Company may eventually be required to pay in expenses or in such damages.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
18PAGE
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, $.01 par value, and dividend policy is
included under the sections labeled "Common Stock Market Information" and
"Dividend Policy" in the Registrant's Fiscal 1996 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 1996 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 1996 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 1996 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.
19PAGE
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.
20PAGE
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.
21PAGE
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 5, 1996 THERMOTREX CORPORATION
By: Gary S. Weinstein
---------------------------------
Gary S. Weinstein
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
5, 1996.
Signature Title
By: Gary S. Weinstein Chief Executive Officer, Chairman
------------------------- of the Board, and Director
Gary S. Weinstein
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: Morton Collins Director
-------------------------
Morton Collins
By: Peter O. Crisp Director
-------------------------
Peter O. Crisp
By: Paul F. Ferrari Director
-------------------------
Paul F. Ferrari
By: Dr. George N. Hatsopoulos Director
-------------------------
Dr. George N. Hatsopoulos
By: Robert C. Howard Director
-------------------------
Robert C. Howard
By: Firooz Rufeh President and Director
------------------------
Firooz Rufeh
By: Nicholas T. Zervas Director
-------------------------
Nicholas T. Zervas
22PAGE
Report of Independent Public Accountants
----------------------------------------
To the Shareholders and Board of Directors of ThermoTrex Corporation:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in ThermoTrex
Corporation's Annual Report to Shareholders incorporated by reference in
this Form 10-K, and have issued our report thereon dated November 1,
1996. 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 21 is
the responsibility of the company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic consolidated financial statements. The
schedule has been subjected to the auditing procedures applied in the
audits of the basic consolidated financial statements and, in our
opinion, fairly states in all material respects the consolidated
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
November 1, 1996
23PAGE
SCHEDULE II
THERMOTREX CORPORATION
Valuation and Qualifying Accounts
(In thousands)
Balance Provision Balance
at Charged Accounts at
Beginning to Written End of
Description of Period Expense Off Other (a) Period
----------------------------------------------------------------------------
Year Ended
September 28, 1996
Allowance for
Doubtful Accounts $1,141 $ 336 $ (163) $ 272 $1,586
Nine Months Ended
September 30, 1995
Allowance for
Doubtful Accounts $ 643 $ 178 $ - $ 320 $1,141
Year Ended
December 31, 1994
Allowance for
Doubtful Accounts $ 438 $ 215 $ (10) $ - $ 643
(a) Allowances of businesses acquired during the year as described in Note 4
to Consolidated Financial Statements in the Registrant's Fiscal 1996
Annual Report to Shareholders.
24PAGE
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
3.1 Restated Certificate of Incorporation, as amended (filed as
Exhibit 3(i) to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended July 2, 1994, [File No.
1-10791] and incorporated herein by reference).
3.2 By-Laws of the Registrant, as amended and restated (filed as
Exhibit 3.2 to the Registrant's Transition Report on Form
10-K for the transition period January 1, 1995, [File No.
1-10791] through September 30, 1995 and incorporated herein
by reference).
10.1 Asset Transfer Agreement dated December 29, 1990, between
Thermo Electron Corporation and the Registrant (filed as
Exhibit 10(a) to the Registrant's Registration Statement on
Form S-1 [Reg. No. 33-40972] and incorporated herein by
reference).
10.2 Amended and Restated Corporate Services Agreement dated
January 3, 1993, between Thermo Electron Corporation and the
Registrant (filed as Exhibit 10(b) to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 2, 1993
[File No. 1-10791] and incorporated herein by reference).
10.3 Form of Indemnification Agreement between the Registrant and
its officers and directors (filed as Exhibit 10(f) to the
Registrant's Registration Statement on Form S-1
[Reg. No. 33-40972] and incorporated herein by reference).
10.4 Thermo Electron Corporate Charter as amended and restated
effective January 3, 1993 (filed as Exhibit 10(g) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1993 [File No. 1-10791] and incorporated
herein by reference).
10.5 Stock Option Agreement granted to Anthony J. Pellegrino dated
November 16, 1992 (filed as Exhibit 10(n) to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 2, 1993 [File No. 1-10791] and incorporated herein by
reference).
10.6 Stock Option Agreement granted to Hal Kirshner dated
November 16, 1992 (filed as Exhibit 10(o) to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 2, 1993 [File No. 1-10791] and incorporated herein by
reference).
10.7 Lease dated October 12, 1988 between CBI Laboratories, Inc.,
Trammell Crow Company No. 91 and Petula Associates Ltd., as
amended (filed as Exhibit 10.18 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 1, 1994
[File No. 1-10791] and incorporated herein by reference).
25PAGE
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
10.8 Lease dated September 1, 1993 between CBI Laboratories, Inc.
and Lincoln Valwood, Ltd. (filed as Exhibit 10.19 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 1, 1994 [File No. 1-10791] and incorporated
herein by reference).
10.9 Master Repurchase Agreement dated January 1, 1994 between the
Registrant and Thermo Electron Corporation (filed as Exhibit
10.20 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended January 1, 1994 [File No. 1-10791] and
incorporated herein by reference).
10.10 Master Guarantee Reimbursement Agreement dated as of January
1, 1994 among ThermoLase Corporation, the Registrant and
Thermo Electron Corporation (filed as Exhibit 10.5 to
ThermoLase's Registration Statement on Form S-1 [Reg. No.
33-78052] and incorporated herein by reference).
10.11 Lease executed February 9, 1995 between LMP Properties Ltd.
and the Registrant (filed as Exhibit 10.22 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 [File No. 1-10791] and incorporated
herein by reference).
10.12 Stock purchase agreement dated as of September 15, 1995, by
and among Bennett X-Ray Corporation, ThermoTrex Corporation,
and Calvin Kleinman, Robert P. Coe, Walter F. Schneider, and
Martin Koening (filed as Exhibit 2 to the Registrant's
Current Report on Form 8-K dated September 14, 1995 [File No.
1-10791] and incorporated herein by reference).
10.13 Lease dated as of September 15, 1995, by and among the
Registrant and BK Realty Associates, L.P. and Calrob Realty
Associates (filed as Exhibit 10.26 to the Registrant's
Transition Report on Form 10-K for the transition period
January 1, 1995 through September 30, 1995 [File No. 1-10791]
and incorporated herein by reference).
10.14 Incentive Stock Option Plan of the Registrant (filed as
Exhibit 10(h) to the Registrant's Registration Statement on
Form S-1 [Reg. No. 33-40972] and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Registrant's Nonqualified
Stock Option Plan is 1,945,000 shares, after adjustment to
reflect share increases approved in 1992 and 1993 and 3-for-2
stock split effected in October 1993).
26PAGE
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
10.15 Nonqualified Stock Option Plan of the Registrant (filed as
Exhibit 10(i) to the Registrant's Registration Statement on
Form S-1 [Reg. No. 33-40972] and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Registrant's Incentive
Stock Option Plan is 1,945,000 shares, after adjustment to
reflect share increases approved in 1992 and 1993 and 3-for-2
stock split effected in October 1993).
10.16 ThermoTrex Corporation - ThermoLase Corporation (formerly
ThermoLase Inc.) Nonqualified Stock Option Plan (filed as
Exhibit 10.53 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended January 1, 1994 [File No. 1-10791]
and incorporated herein by reference).
10.17 ThermoTrex Corporation - Trex Medical Corporation
Nonqualified Stock Option Plan (filed as Exhibit 10.73 to
Thermo Cardiosystems' Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 [File No. 1-10114] and
incorporated herein by reference).
10.18 Deferred Compensation Plan for Directors of the Registrant
(filed as Exhibit 10(j) to the Registrant's Registration
Statement on Form S-1 [Reg. No. 33-40972] and incorporated
herein by reference).
10.19 Directors Stock Option Plan of the Registrant (filed as
Exhibit 10.26 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 [File No.
1-10791] 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 Corporation for services rendered to the Registrant
or such affiliated corporations. Such plans were filed as
Exhibits 10.21 through 10.44 to the Annual Report on Form
10-K of Thermo Electron for the fiscal year ended December
30, 1995 [File No. 1-8002] and as Exhibit 10.19 to Trex
Medical Corporation's Annual Report on Form 10-K for the
fiscal year ended September 28, 1996 [File No. 1-11827] and
are incorporated herein by reference.
10.20 Operating Agreement of ThermoLase Japan L.L.C. dated as of
January 22, 1996 between ThermoLase Corporation and Fox River
Japan Partners, L.P. (filed as Exhibit 10.1 to ThermoLase's
Quarterly Report on Form 10-Q for the quarter ended December
30, 1995 [File No. 1-13104] and incorporated herein by
reference).
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
10.21 License Agreement dated as of January 22, 1996 between
ThermoLase Corporation and ThermoLase Japan L.L.C. (filed as
Exhibit 10.2 to ThermoLase's Quarterly Report on Form 10-Q
for the quarter ended December 30, 1995 [File No. 1-13104]
and incorporated herein by reference).
10.22 Option Agreement dated as of January 22, 1996 between
ThermoLase Corporation and Fox River Japan Partners, L.P.
(filed as Exhibit 10.3 to ThermoLase's Quarterly Report on
Form 10-Q for the quarter ended December 30, 1995 [File No.
1-13104] and incorporated herein by reference).
10.23 License Agreement dated as of October 30, 1995 between
ThermoLase Corporation and Ronald G. Wheeland, M.D.,
Professional Corporation (filed as Exhibit 10.4 to
ThermoLase's Quarterly Report on Form 10-Q for the quarter
ended December 30, 1995 [File No. 1-13104] and incorporated
herein by reference).
10.24 Management Agreement dated as of October 30, 1995 between
ThermoLase Corporation and Ronald G. Wheeland, M.D.,
Professional Corporation (filed as Exhibit 10.5 to
ThermoLase's Quarterly Report on Form 10-Q for the quarter
ended December 30, 1995 [File No. 1-13104] and incorporated
herein by reference).
10.25 Sublease Agreement dated as of October 30, 1995 between
ThermoLase Corporation and Ronald G. Wheeland, M.D.,
Professional Corporation (filed as Exhibit 10.6 to
ThermoLase's Quarterly Report on Form 10-Q for the quarter
ended December 30, 1995 [File No. 1-13104] and incorporated
herein by reference).
10.26 Lease dated as of April 12, 1995 between ThermoLase
Corporation and The Goldberg Family Trust (filed as Exhibit
10.7 to ThermoLase's Quarterly Report on Form 10-Q for the
quarter ended December 30, 1995 [File No. 1-13104] and
incorporated herein by reference).
10.27 Lease dated as of December 8, 1995 between ThermoLase
Corporation and Canon Properties (filed as Exhibit 10.8 to
ThermoLase's Quarterly Report on Form 10-Q for the quarter
ended December 30, 1995 [File No. 1-13104] and incorporated
herein by reference).
10.28 Lease dated as of January 17, 1996 between ThermoLase
Corporation and Trammell Crow Equity Partners (filed as
Exhibit 10.9 to ThermoLase's Quarterly Report on Form 10-Q
for the quarter ended December 30, 1995 [File No. 1-13104]
and incorporated herein by reference).
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
10.29 Lease dated as of December 20, 1995, between Melvyn J. Powers
and Mary P. Powers D/B/A M&M Realty and Trex Medical
Corporation as amended (filed as Exhibit 10.14 to Trex
Medical's Registration Statement on Form S-1 [Reg. No.
333-2926] and incorporated herein by reference).
10.30 Lease dated May 29, 1996 between John K. Grady, Trustee of
Concord Associates Foster Street Trust and XRE Corporation
(filed as Exhibit 10.89 to Trex Medical's Registration
Statement on Form S-1 [Reg. No. 333-2926] and incorporated
herein by reference).
10.31 Asset Purchase Agreement dated September 4, 1996 by and among
CXR Acquisition Corp., Trex Medical Corporation, Continental
X-Ray Corporation, Alphatek Corporation, Broadview
Manufacturing Corporation, Haymarket Square Associates,
Advanced Medical Imaging, Inc., Trans-Continental X-ray
Corporation and the Stockholders and Partners thereof (filed
as Exhibit 10.21 to Trex Medical's Registration Statement on
Form S-1 [Reg. No. 333-15381] and incorporated herein by
reference).
10.32 Master Joint Venture Agreement dated as of October 30, 1996
among ThermoLase Corporation, Franklin Holdings, S.A. and
Yves Micheli (filed as Exhibit 10.26 to ThermoLase's Annual
Report on Form 10-K for the fiscal year ended September 28,
1996 [File No. 1-13104] and incorporated herein by
reference).
10.33 SoftLight and Spa Thira Franchise and License Agreement dated
as of November 8, 1996 between ThermoLase Corporation and
Medical Supply & Service Co. (filed as Exhibit 10.27 to
ThermoLase's Annual Report on Form 10-K for the fiscal year
ended September 28, 1996 [File No. 1-13104] and incorporated
herein by reference).
10.34 Equipment License Agreement for SoftLight Lasers dated as of
November 8, 1996 between ThermoLase Corporation and Medical
Supply & Service Co. (filed as Exhibit 10.28 to ThermoLase's
Annual Report on Form 10-K for the fiscal year ended
September 28, 1996 [File No. 1-13104] and incorporated herein
by reference).
10.35 Promissory Note Due April 30, 1997 issued by the Registrant
to Thermo Electron Corporation.
10.36 Stock Holding Assistance Plan and Form of Promissory Note.
11 Statement re: Computation of Earnings per Share.
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
13 Annual Report to Shareholders for the fiscal year ended
September 28, 1996 (only those portions incorporated herein
by reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.