SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
___________________________________________
FORM 10-K
(mark one)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended January 3, 1998
[ ]Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-11406
THERMO FIBERTEK INC.
(Exact name of Registrant as specified in its charter)
Delaware 52-1762325
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
81 Wyman Street
Waltham, Massachusetts 02254-9046
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
---------------------------- -----------------------------------------
Common Stock, $.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 (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to the filing requirements for at least the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy
or information statements incorporated by reference into Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of
the Registrant as of January 30, 1998, was approximately $74,178,000.
As of January 30, 1998, the Registrant had 61,549,894 shares of Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year
ended January 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 June 1, 1998, are incorporated by
reference into Part III.
PAGE
PART I
Item 1. Business
(a) General Development of Business
Thermo Fibertek Inc. (the Company or the Registrant) designs and
manufactures processing machinery, accessories, and water-management
systems for the paper and paper recycling industries. The Company's
principal products include custom-engineered systems and equipment for
the preparation of wastepaper for conversion into recycled paper;
accessory equipment and related consumables important to the efficient
operation of papermaking machines; and water-management systems essential
for draining, purifying, and recycling process water.
The Company's predecessors have been in operation for more than 100
years, and the Company has a large, stable customer base that includes
most papermakers worldwide. The Company seeks to expand its business
through the introduction of new products and technologies to these
customers. The Company currently manufactures its products in several
countries in Europe and North America, and licenses certain of its
products for manufacture in South America and the Pacific Rim.
In May 1997, the Company acquired a majority of the assets, subject
to certain liabilities, of the stock-preparation business of Black
Clawson Company and affiliates. In August 1997, the Company acquired the
remaining assets of the stock-preparation business of Black Clawson
Company and affiliates. This business has been renamed Thermo Black
Clawson. The aggregate purchase price was approximately $103.4 million in
cash. Thermo Black Clawson is a leading supplier of recycling equipment
used in processing fiber for the production of "brown paper," such as
that used in the manufacture of corrugated boxes.
Pursuant to a promissory note, the Company borrowed $110.0 million
from Thermo Electron Corporation to finance the acquisition of Thermo
Black Clawson. The note was repaid in July 1997 with the net proceeds
from the sale of $153.0 million principal amount of 4 1/2% subordinated
convertible debentures due 2004.
In September 1996, the Company's Thermo Fibergen Inc. subsidiary sold
4,715,000 units, each unit consisting of one share of Thermo Fibergen
common stock and one redemption right, in an initial public offering at
$12.75 per unit for net proceeds of $55.8 million. The common stock and
redemption rights began trading separately on December 13, 1996. Holders
of a redemption right have the option to require Thermo Fibergen to
redeem one share of Thermo Fibergen common stock at $12.75 per share in
September 2000 or 2001. The redemption rights are guaranteed, on a
subordinated basis, by Thermo Electron. The Company has agreed to
reimburse Thermo Electron in the event Thermo Electron is required to
make a payment under the guarantee.
2PAGE
As of January 3, 1998, the Company owned 10,419,950 shares of Thermo
Fibergen common stock, representing 71% of such outstanding common stock.
During 1997*, the Company purchased 419,950 shares of Thermo Fibergen
common stock for $3.8 million.
The Company is a majority-owned subsidiary of Thermo Electron. As of
January 3, 1998, Thermo Electron owned 55,150,063 shares of the Company's
common stock, representing 90% of such outstanding common stock. In
addition to the Company's products, Thermo Electron provides analytical
and monitoring instruments; biomedical products including heart-assist
devices, respiratory-care equipment, and mammography systems;
alternative-energy systems; industrial process equipment; and other
specialized products. Thermo Electron also provides industrial
outsourcing, particularly in environmental-liability management,
laboratory analysis, and metallurgical processing; and conducts
advanced-technology research and development. During 1997, Thermo
Electron purchased 1,779,400 shares of the Company's common stock in the
open market at a total cost of $16.3 million.
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 1997 Annual Report to Shareholders, which
statements are incorporated herein by reference.
(b) Financial Information About Industry Segments
The Company is engaged in one business segment: the design and
manufacture of equipment, accessory products, and water-management
systems for the paper and paper recycling industries.
(c) Description of Business
(i) Principal Products and Services
Recycling
The Company develops, designs, and manufactures custom-engineered
systems that remove debris, impurities, and ink from wastepaper, and
process it into a fiber mix used to produce either white or brown grades
of recycled paper. The Company offers more than 20 products related to
* References to 1997, 1996, and 1995 herein are for the fiscal years
ended January 3, 1998, December 28, 1996, and December 30, 1995,
respectively.
3PAGE
all aspects of the recycling process. Some of the systems include:
Pulping and Trash Removal Systems, including specialized high- and
low-consistency pulpers that blend wastepaper with water and certain
chemicals to form pulp without contaminant breakdown, thus increasing the
efficiency of debris removal; and poires (scavengers) that remove large
debris.
Cleaning and Screening Systems, including high-density screens and
cleaners to remove metals and sand from the pulp mixture, fine screens to
filter microscopic particles of glue and plastic from the pulp mixture,
and the patented Gyroclean(R) system to remove "stickies" and the
lightest plastics from the pulp.
De-inking Systems, including the patented MacCell that uses the
latest generation of Autoclean injectors to produce small air bubbles in
the bottom of the pulp slurry. The ink bonds to the air bubbles and rises
to the surface, where it is removed through a unique propellant system.
The efficiency of this unit and the reduced floor space required for
equivalent ink removal make the MacCell one of the Company's most
important products within a de-inking system.
Reject-handling and Water-treatment Systems, including gravity type
strainers and in-line filtration, developed by the Company's Engineered
Systems Division (AES), as well as compactors and sand separators
designed to recapture "good" fiber rejected with debris in the primary
process line.
Thermo Fibergen's GranTek subsidiary employs patented technology to
produce absorbing granules from papermaking sludge. These granules,
marketed under the trade name Biodac, are principally used as a carrier
to deliver chemicals for agricultural, professional turf, home lawn and
garden, and mosquito-control applications.
Revenues from the Company's recycling business were $93.6 million,
$56.2 million, and $77.0 million in 1997, 1996, and 1995, respectively.
Accessories
The Company designs, develops, and manufactures a wide range of
accessories that continuously clean the rolls of a papermaking machine,
remove the sheet (web) from the roll, automatically cut the web during
sheet breaks, and remove curl from the sheet. These functions are
critical for paper manufacturers because they help manufacturers avoid
potential catastrophic damage to the papermaking equipment while reducing
expensive machine downtime and improving paper quality. Accessories
include:
Doctors and related equipment, that shed the sheet from the roll
during sheet breaks and start-ups and keep rolls clean by removing stock
accumulations, water rings, fuzz, pitch, and filler buildup.
Profiling Systems, that help ensure a uniform gloss on the web and
control moisture and curl within the sheet.
4PAGE
Revenues from the Company's accessories business were $83.0 million,
$82.2 million, and $73.9 million in 1997, 1996, and 1995, respectively.
Water-management
The Company designs, develops, and manufactures equipment used to
drain water from the pulp slurry, form the sheet web, and reuse the
process water. These systems include:
Formation Tables, consisting of free-draining elements and vacuum
augmented elements to control the amount of water removed from the pulp
slurry to form the paper web.
Showers and Felt-conditioning Systems, used to clean and condition
the fabrics and felts which in turn are used to transport the paper web
through various stages of the papermaking machine.
Water-filtration Systems, consisting of pressure, gravity, and vacuum
assisted filters and strainers used to remove extraneous contaminants
from the process water before reuse and to recover reusable fiber for
recycling back into the pulp slurry.
Revenues from the Company's water-management business were $44.0
million, $40.0 million, and $40.8 million in 1997, 1996, and 1995,
respectively.
Other
The Company also manufactures and markets dryers and pollution-
control equipment for the printing, papermaking, and converting
industries. The Company's dryers transfer heat efficiently from the dryer
to the paper web resulting in significant energy savings and improved
paper and printing quality. The Company's thermal incinerators reduce
volatile organic compounds (VOCs) that are produced when solvents
contained in the printed or coated material evaporate. The Company's
Thermo Black Clawson subsidiary also manufactures and markets the
Chemi-Washer (R), a horizontal belt washer used in the virgin pulping
process. The Chemi-Washer consumes less energy than other commercial
washing systems and significantly decreases the amount of water used and
effluent produced.
(ii) and (xi) New Products; Research and Development
The Company believes that it has a reputation as a technological
innovator in the market niches it serves, although rapid technological
obsolescence is not characteristic of the Company's business. The
Company, which maintains active programs for the development of new
products using both new and existing technologies, has technology centers
in Europe and the U.S. dedicated to specific research projects and
markets.
For recycling equipment, the Company maintains a stock-preparation
pilot laboratory adjacent to the manufacturing facility at its E. & M.
Lamort, S.A. (Lamort) subsidiary and one at Thermo Black Clawson's
5PAGE
Middletown, Ohio, facility, both of which contain all equipment necessary
to replicate a commercial stock-preparation system. A customer's
wastepaper can be tested to determine the exact system configuration that
would be recommended for its future facility. The testing laboratories
are also used to evaluate prototype equipment, enabling research teams to
quickly and thoroughly evaluate new designs. In addition, the Company
works closely with its customers in the development of products,
typically field testing new products on the customers' papermaking
machines. In the U.S., one facility houses an operation for continued
development of accessory products, while another is devoted to
development of new water-management products.
In 1996, Thermo Fibergen constructed a mobile pilot plant that it
uses to demonstrate its fiber-recovery process and test the sludge
streams of mills in the United States and Canada. In 1997, Thermo
Fibergen continued research and development efforts relating to its
fiber-recovery systems. In addition, GranTek's processing center in Green
Bay, Wisconsin, contains a pilot plant that it uses to develop
sludge-based products and processes employed at its main facility. In
1997, GranTek successfully completed commercial introduction of a new
row-crop granule in the South African market that it intends to introduce
in the U.S. market during 1998. GranTek also introduced a granule for
oil- and grease-absorption on a limited basis and completed development
of two formulations of cat box filler product, which GranTek expects to
begin marketing in 1998.
The Company seeks to develop a broad range of equipment for all
facets of the markets it serves. Over the next several years the Company
expects to focus its research and development efforts on the advancement
of paper recycling equipment to further improve the quality of recycled
paper.
Research and development expenses for the Company were $6.8 million,
$5.5 million, and $4.1 million in 1997, 1996, and 1995, respectively.
(iii) Raw Materials
Raw materials, components, and supplies for all of 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. To date, the Company
has experienced no difficulties in obtaining these materials.
(iv) Patents, Licenses, and Trademarks
The Company protects its intellectual property rights by applying for
and obtaining patents when appropriate. The Company also relies on
technical know-how, trade secrets, and trademarks to maintain its
competitive position. The Company has numerous U.S. and foreign patents,
expiring on various dates ranging from 1998 to 2014.
6PAGE
Third parties have certain rights in two of the Company's patents
that were jointly developed with such parties. The initial development of
the Company's Gyroclean equipment was provided by Centre Technique du
Papier (CTP), to which the Company provided further design refinement and
applications expertise. The Company currently holds an exclusive
long-term, worldwide license for a patent on technology that CTP
developed. The Company and CTP have joint ownership of a second patent on
technology that was jointly developed.
The Company maintains a worldwide network of licensees and cross-
licensees of products with other companies servicing the pulp,
papermaking, converting, and paper recycling industries. The Company
holds an exclusive worldwide license for its de-inking cells under an
agreement that extends until 2007. The Company also has license
arrangements with several companies with regard to its dryers, pollution-
control equipment, and accessory equipment. Thermo Fibergen has granted
two companies nonexclusive licenses under two of its patents to sell
cellulose-based granules produced at an existing site for sale in the
oil- and grease-absorption and cat box filler markets.
(v) Seasonal Influences
There are no material 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 more than 10% of the Company's
revenues in any of the past three years.
(viii) Backlog
The Company's backlog of firm orders as of January 3, 1998, and
December 28, 1996, was $60.0 million and $37.1 million, respectively. The
Company anticipates that substantially all of the backlog at January 3,
1998, will be shipped or completed during the next twelve months. Certain
of these orders may be canceled by the customer upon payment of a
cancellation fee. The Company's backlog of firm orders increased
principally due to the inclusion of $22.8 million of backlog at Thermo
Black Clawson, acquired May 1997.
(ix) Government Contracts
Not applicable.
7PAGE
(x) Competition
The Company faces significant competition in each of its principal
markets. The Company competes principally on the basis of quality,
service, technical expertise, product innovation, and price. The Company
believes that the reputation it has established over more than 100 years
for quality products and in-depth process knowledge provides it with a
competitive advantage. In addition, a significant portion of the
Company's business is generated from its existing customer base. To
maintain this base, the Company has emphasized service and a
problem-solving relationship with its customers.
The Company is a leading supplier of recycling equipment for the
preparation of wastepaper to be used in the production of recycled paper.
There are several major competitors that supply various pieces of
equipment for this process. The Company's principal competitors on a
worldwide basis are Voith Sulzer Papiertechnik, Beloit Corporation,
Ahlstrom Machine Company, Kvaerner Pulping Technologies, Sunds Defibrator
Inc., and Maschinenfabrik Andritz AG. Various competitors tend to
specialize in segments within the white and brown paper markets. The
Company competes in the recycling-equipment marketplace primarily on the
basis of systems knowledge, product innovation, and price.
The Company is a leading supplier of specialty accessory equipment
for papermaking machines. Because of the high capital costs of
papermaking machines and the role of the Company's accessories in
maintaining the efficiency of these machines, the Company generally
competes in this market on the basis of service, technical expertise, and
performance.
The Company is a leading supplier of water-management systems.
Various competitors exist in the formation table, conditioning and
cleaning systems, and filtration systems markets. JWI Group/Johnson Foils
is a major supplier of formation tables while a variety of smaller
companies compete within the cleaning and conditioning and filtration
markets. In each of these areas, process knowledge, application
experience, product quality, service, and price are key factors.
(xii) Environmental Protection Regulations
The Company believes that compliance by the Company with federal,
state, and local environmental protection regulations will not have a
material adverse effect on its results of operations, financial
condition, or competitive position.
(xiii) Number of Employees
As of January 3, 1998, the Company employed approximately 1,404
people. Approximately 78 employees at the Company's Kaukauna, Wisconsin,
operation are represented by a labor union under a collective bargaining
agreement expiring May 31, 1998. Approximately 30 employees at the
Company's Pointe Claire, Quebec, Canada, operation are represented by a
labor union under a collective bargaining agreement expiring August 31,
1999. Approximately 18 employees at the Company's Middletown, Ohio,
8PAGE
operation are represented by a labor union under a collective bargaining
agreement expiring November 1, 2000. Approximately 39 employees at the
Company's Guadalajara, Mexico, operation are represented by a labor union
under an annual collective bargaining agreement. In addition, employees
of the Company's subsidiaries in France and England are represented by
trade unions. The Company has had no work stoppages and considers its
relations with employees and unions to be good.
(d) Financial Information About Exports by Domestic Operations and About
Foreign Operations
Financial information about exports by domestic operations and about
foreign operations is summarized in Note 13 to Consolidated Financial
Statements in the Registrant's 1997 Annual Report to Shareholders, which
information is incorporated herein by reference.
(e) Executive Officers of the Registrant
Present Title (Year First Became
Name Age Executive Officer)
--------------------------------------------------------------------
William A. Rainville 56 President and Chief Executive
Officer (1991)
John N. Hatsopoulos* 63 Chief Financial Officer and Senior Vice
President (1991)
Jonathan W. Painter 39 Executive Vice President, Operations
(1997)
Jan-Eric Bergstedt 62 Vice President (1996)
Edwin D. Healy 60 Vice President (1994)
Bruno Lamort de Gail 63 Vice President (1991)
Thomas M. O'Brien 46 Vice President, Finance (1994)
Edward J. Sindoni 53 Vice President; President, Thermo Web
Systems, Inc. (1994)
Paul F. Kelleher 55 Chief Accounting Officer (1991)
* John N. Hatsopoulos and Dr. 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. Messrs. Rainville, Hatsopoulos, Lamort de
Gail, and Kelleher have held comparable positions for at least five years
with the Company or with its parent company, Thermo Electron. Mr. Painter
was Vice President, Strategic Planning, from 1993 to 1994, Treasurer of
Thermo Electron from 1994 to 1997, and became an Executive Officer of the
Company in 1997. Mr. Bergstedt has been a Vice President of the Company
since November 1993, and was designated an executive officer in 1996.
Prior to joining the Company, Mr. Bergstedt was Group Vice President,
Pulp and Paper, at Andritz Sprout-Bauer, Inc., a supplier of equipment to
the pulp and paper industry, from January 1991 to December 1992. Mr.
Healy has been a Vice President of the Company since November 1991,
Chairman of Thermo Black Clawson Ltd. since 1997, and President of
Fiberprep from May 1988 to 1997, and was designated an executive officer
of the Company in 1994. Mr. O'Brien has been Vice President, Finance, of
9PAGE
the Company since November 1991, and was designated an executive officer
in 1994. Mr. Sindoni has been a Vice President of the Company since
November 1991, President of the Company's Thermo Web Systems, Inc.
subsidiary since January 1993, and was Senior Vice President of Thermo
Web Systems Inc. from 1987 to January 1993, and was designated an
executive officer in 1994. 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 Company owns approximately 1,061,000 square feet and leases
approximately 323,000 square feet of manufacturing, engineering, and
office space worldwide under leases expiring at various dates ranging
from 1998 to 2005. The Company's principal engineering and manufacturing
space is located in Auburn, Massachusetts; Guadalajara, Mexico;
Queensbury, New York; Middletown, Ohio; Green Bay, Wisconsin; Kaukauna,
Wisconsin; Pointe Claire, Quebec, Canada; Vitry-le-Francois, France; and
Bury, England. The Company believes that its facilities are in good
condition and are suitable and adequate for its present operations and
that suitable space is readily available if any of such leases are not
extended.
Item 3. Legal Proceedings
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
10PAGE
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 1997 Annual Report to Shareholders
and is incorporated herein by reference.
Item 6. Selected Financial Data
The information required under this item is included under the
sections labeled "Selected Financial Information" and "Dividend Policy"
in the Registrant's 1997 Annual Report to Shareholders and is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required under this item is included under the
heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Registrant's 1997 Annual Report to
Shareholders and is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The Registrant's Consolidated Financial Statements as of January 3,
1998, and Supplementary Data are included in the Registrant's 1997 Annual
Report to Shareholders and are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
11PAGE
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.
12PAGE
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
During the Company's quarter ended January 3, 1998, the Company
was not required to file, and did not file, any Current Report
on Form 8-K.
(c) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
13PAGE
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 on its behalf by the undersigned, thereunto duly authorized.
Date: March 20, 1998 THERMO FIBERTEK INC.
By: William A. Rainville
--------------------------
William A. Rainville
President, Chief Executive
Officer, and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated, as of March 20, 1998.
Signature Title
By: William A. Rainville President, Chief Executive Officer,
-------------------------
William A. Rainville and Director
By: John N. Hatsopoulos Chief Financial Officer, Senior
-------------------------
John N. Hatsopoulos Vice President, and Director
By: Paul F. Kelleher Chief Accounting Officer
-------------------------
Paul F. Kelleher
By: Walter J. Bornhorst Director
-------------------------
Walter J. Bornhorst
By: George N. Hatsopoulos Director
-------------------------
George N. Hatsopoulos
By: Director
-------------------------
Francis L. McKone
By: Donald E. Noble Chairman of the Board and Director
-------------------------
Donald E. Noble
14PAGE
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Thermo Fibertek Inc.:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Thermo
Fibertek Inc.'s Annual Report to Shareholders incorporated by reference
in this Form 10-K, and have issued our report thereon dated February 9,
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 13 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
February 9, 1998
15PAGE
SCHEDULE II
THERMO FIBERTEK INC.
Valuation and Qualifying Accounts
(In thousands)
Balance Provision Balance
at Charged Accounts at End
Beginning to Accounts Written of
Description of Year Expense Recovered Off Other(a) Year
----------------------------------------------------------------------------
Allowance for
Doubtful
Accounts
Year Ended
Jan. 3, 1998 $1,948 $ 362 $ - $ (576) $ 831 $2,565
Year Ended
Dec. 28, 1996 $2,552 $ (450) $ 74 $ (202) $ (26) $1,948
Year Ended
Dec. 30, 1995 $2,097 $ 440 $ - $ (110) $ 125 $2,552
(a) Represents translation adjustment, net of $1,113 and $30 allowances of
businesses acquired during 1997 and 1996, respectively, as described in
Note 3 to Consolidated Financial Statements in the Registrant's 1997
Annual Report to Shareholders.
16PAGE
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
2.1 Share Redemption Agreement, dated as of December 22, 1994,
by and among the Registrant, Fiberprep, and Aikawa Iron
Works Co., Ltd. (filed as Exhibit 2.1 to the Registrant's
Current Report on Form 8-K relating to events occurring on
January 2, 1995 [File No 1-11406] and incorporated herein by
reference).
2.2 Asset Purchase Agreement dated as of May 22, 1997 among BC
Acquisition Corp., Thermo Fibertek Inc., The Black Clawson
Company, Black Clawson Shartle Mfg. Co. Inc., Black Clawson
International, Ltd., Black Clawson Canada Fibre Processing
Ltd., Black Clawson Europe S.A. and Carl C. Landegger (filed
as Exhibit 2.1 to the Registrant's Current Report on Form
8-K relating to events occurring on May 22, 1997 [File No
1-11406] and incorporated herein by reference).
3.1 Certificate of Incorporation, as amended, of the Registrant
(filed as Exhibit 3 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 28, 1997 [File No.
1-11406] and incorporated herein by reference).
3.2 By-Laws of the Registrant (filed as Exhibit 3(b) to the
Registrant's Registration Statement on Form S-1 [Reg. No.
33-51172] and incorporated herein by reference).
4.1 - 4.4 Reserved.
4.5 Fiscal Agency Agreement dated as of July 16, 1997, among the
Registrant, Thermo Electron, and Bankers Trust Company as
fiscal agent, relating to $153 million principal amount of 4
1/2% Convertible Subordinated Debentures due 2004 (filed as
Exhibit 4 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 28, 1997 [File No. 1-11406] and
incorporated herein by reference).
10.1 Exchange Agreement dated as of December 28, 1991, between
Thermo Electron and the Registrant (filed as Exhibit 10(a)
to the Registrant's Registration Statement on Form S-1 [Reg.
No. 33-51172] and incorporated herein by reference).
10.2 Amended and Restated Corporate Services Agreement dated
January 3, 1993, between Thermo Electron 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. 1-11406] and incorporated herein by reference).
10.3 Thermo Electron Corporate Charter, as amended and restated
effective January 3, 1993 (filed as Exhibit 10(e) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1993 [File No. 1-11406] and incorporated
herein by reference).
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.4 Thermo Web Systems, Inc. (formerly Thermo Electron Web
Systems, Inc.) Retirement Plan, as amended (filed as Exhibit
10(g) to the Registrant's Registration Statement on Form S-1
[Reg. No. 33-51172] and incorporated herein by reference).
10.5 Noncompetition Agreement dated May 30, 1990, between Thermo
Electron and Bruno Lamort de Gail (filed as Exhibit 10(h) to
the Registrant's Registration Statement on Form S-1 [Reg.
No. 33-51172] and incorporated herein by reference).
10.6 Lamort Retirement Plan (filed as Exhibit 10(i) to the
Registrant's Registration Statement on Form S-1 [Reg. No.
33-51172] and incorporated herein by reference).
10.7 Lamort Retirement Plan for Key Employees (filed as Exhibit
10(j) to the Registrant's Registration Statement on Form S-1
[Reg. No. 33-51172] and incorporated herein by reference).
10.8 Severance Agreement dated January 8, 1988, between Thermo
Electron and William A. Rainville (filed as Exhibit 10(p) to
the Registrant's Registration Statement on Form S-1 [Reg.
No. 33-51172] and incorporated herein by reference).
10.9 Employment Agreement dated as of May 30, 1990, between the
Registrant and Bruno Lamort de Gail (filed as Exhibit 10(q)
to the Registrant's Registration Statement on Form S-1
[Reg. No. 33-51172] and incorporated herein by reference).
10.10 Form of Indemnification Agreement for officers and directors
(filed as Exhibit 10(s) to the Registrant's Registration
Statement on Form S-1 [Reg. No. 33-51172] and incorporated
herein by reference).
10.11 Tax Allocation Agreement dated as of December 28, 1991,
between the Registrant and Thermo Electron (filed as Exhibit
10.13 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended January 1, 1994 [File No. 1-11406] and
incorporated herein by reference).
10.12 Amended and Restated Master Repurchase Agreement dated as of
December 28, 1996 (filed as Exhibit 10.12 to the
Registrant's Annual Report on Form 10-K for the year ended
December 28, 1996 [File No. 1-11406] and incorporated herein
by reference).
18PAGE
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.13 Assignment Agreement dated as of December 22, 1994, between
Thermo Electron and TE Great Lakes, Inc. (filed as Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1995 [File No. 1-11406] and
incorporated herein by reference).
10.14 Management Services Agreement dated as of December 22, 1994,
between TE Great Lakes, Inc. and Fiberprep (filed as Exhibit
10.2 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1995 [File No. 1-11406] and
incorporated herein by reference).
10.15 Equipment Supply Agreement dated as of December 22, 1994,
between TE Great Lakes, Inc. and Fiberprep (filed as Exhibit
10.3 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1995 [File No. 1-11406] and
incorporated herein by reference).
10.16 Amended and Restated Master Guarantee Reimbursement and Loan
Agreement dated as of December 9, 1997, between the
Registrant and Thermo Electron.
10.17 Form of Guarantee of Thermo Electron relating to Thermo
Fibergen's Redemption Rights (filed as Exhibit 4.1 to Thermo
Fibergen's Registration Statement on Form S-1 [Reg. No.
333-07585] and incorporated herein by reference).
10.18 Guarantee Agreement among Thermo Fibergen, Thermo Electron,
and the Representatives of the Underwriters (filed as
Exhibit 4.2 to Thermo Fibergen's Registration Statement on
Form S-1 [Reg. No. 333-07585] and incorporated herein by
reference).
10.19 Form of Thermo Fibergen's Redemption Right Certificate
(filed as Exhibit 4.4 to Thermo Fibergen's Registration
Statement on Form S-1 [Reg. No. 333-07585] and incorporated
herein by reference).
10.20 Incentive Stock Option Plan of the Registrant (filed as
Exhibit 10(k) to the Registrant's Registration Statement on
Form S-1 [Reg. No. 33-51172] and incorporated herein by
reference).
10.21 Nonqualified Stock Option Plan of the Registrant (filed as
Exhibit 10(l) to the Registrant's Registration Statement on
Form S-1 [Reg. No. 33-51172] and incorporated herein by
reference).
19PAGE
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.22 Equity Incentive Plan of the Registrant (filed as Attachment
A to the Proxy Statement dated May 3, 1994, of the
Registrant [File No. 1-11406] and incorporated herein by
reference).
10.23 Deferred Compensation Plan for Directors of the Registrant
(filed as Exhibit 10(m) to the Registrant's Registration
Statement on Form S-1 [Reg. No. 33-51172] and incorporated
herein by reference).
10.24 Directors' Stock Option Plan of the Registrant (filed as
Exhibit 10.23 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 [File No.
1-11406] and incorporated herein by reference).
10.25 Thermo Fibergen Equity Incentive Plan (filed as Exhibit
10.11 to Thermo Fibergen's Registration Statement on Form
S-1 [Registration No. 333-07585] and incorporated herein by
reference).
10.26 Thermo Fibertek - Thermo Fibergen Nonqualified Stock Option
Plan (filed as Exhibit 10.25 to the Registrant's Annual
Report on Form 10-K for the year ended December 28, 1996
[File No. 1-11406] and incorporated herein by reference).
In addition to the stock-based compensation plans of the
Registrant, the executive officers of the Registrant may be
granted awards under stock-based compensation plans of
Thermo Electron for services rendered to the Registrant or
to such affiliated corporations. The terms of such plans are
substantially the same as those of the Registrant's Equity
Incentive Plan.
10.27 Restated Stock Holding Assistance Plan and Form of
Promissory Note.
13 Annual Report to Shareholders for the year ended January 3,
1998 (only those portions incorporated herein by reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule for the Year Ended January 3, 1998.
27.1 Financial Data Schedule for the Quarter Ended March 29, 1997
(Restated for the adoption of SFAS No. 128).