SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------------------------------------------
FORM 10-K
(mark one)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended January 2, 1999.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission file number 1-13876
THERMOSPECTRA CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 04-3242970
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8 East Forge Parkway
Franklin, Massachusetts 02038
(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 29, 1999, was approximately $12,301,000.
As of January 29, 1999, the Registrant had 15,327,197 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year ended
January 2, 1999, are incorporated by reference into Parts I and II.
Portions of the Registrant's definitive Proxy Statement for the Annual Meeting
of Shareholders to be held on May 27, 1999, are incorporated by reference into
Part III.
PART I
Item 1. Business
(a) General Development of Business
ThermoSpectra Corporation (the Company or the Registrant) develops,
manufactures, and markets imaging and inspection, temperature control, and test
and measurement instruments. These instruments are generally combined with
proprietary operations and analysis software to provide industrial and research
customers with integrated systems that address their specific needs. The
Company's businesses operate in three segments. The Imaging and Inspection
segment develops, manufactures, and markets X-ray instruments, X-ray sources,
and X-ray imaging systems as well as an assortment of scanning probe and
confocal laser scanning microscopes, all of which are used in a variety of
analytical- and inspection-oriented applications. In October 1998, the Imaging
and Inspection segment purchased the assets, subject to certain liabilities, of
TopoMetrix Corporation, a manufacturer of scanning probe microscopes, for
approximately $8 million in cash, subject to a post-closing adjustment. This
segment is also engaged in the manufacture of systems that rework and repair
printed circuit boards that have failed quality control inspection. The
Temperature Control segment manufactures and markets precision temperature
control systems for analytical, laboratory, industrial, R&D, laser, and
semiconductor applications. The Test and Measurement segment develops,
manufactures, and markets data-acquisition systems, digital oscilloscopes, and
recording systems used primarily in product development and process monitoring
settings.
The Company has achieved and maintains its competitive position primarily by
providing customers with a broad array of technologically advanced
instrumentation. The Company's strategy for growth includes the continued
development of new applications for its technology to address related market
segments, identifying and acquiring complementary businesses, and strengthening
its presence in selected geographic markets.
The Company was incorporated in Delaware in August 1994 as an indirect,
wholly owned subsidiary of Thermo Instrument Systems Inc. As of January 2, 1999,
Thermo Instrument owned 12,637,417 shares of the Company's common stock,
representing 82% of such stock outstanding. During 1998*, Thermo Instrument
purchased 880,900 shares of Company common stock in the open market for a total
purchase price of $9.0 million. Thermo Instrument develops, manufactures,
markets, and services instruments and software used for the identification and
quantification of complex molecular compounds and elements in gases, liquids,
and solids. Uses include pharmaceutical drug research and clinical diagnostics,
monitoring and measuring environmental pollutants, industrial inspection, and
test and control for quality assurance and productivity improvement. In
addition, Thermo Instrument develops, manufactures, markets, and services
equipment for the measurement, preparation, storage, and automation of sample
materials, and photonics and vacuum components for original equipment
manufacturers. Thermo Instrument is an 85%-owned subsidiary of Thermo Electron
Corporation. As of January 2, 1999, Thermo Electron owned 1,491,453 shares of
the Company's common stock, representing 10% of such stock outstanding. During
1998, Thermo Electron purchased 537,200 shares of Company common stock in the
open market for a total purchase price of $5.6 million. Thermo Electron is a
world leader in monitoring, analytical, and biomedical instrumentation;
biomedical products including heart-assist devices, respiratory-care equipment,
and mammography systems; and paper recycling and papermaking equipment. Thermo
Electron also develops alternative-energy systems and clean fuels, provides a
range of services including industrial outsourcing and environmental-liability
management, and conducts research and development in advanced imaging, laser,
and electronic information-management technologies.
On August 12, 1998, Thermo Electron announced a proposed
reorganization involving certain of Thermo Electron's subsidiaries,
including the Company. As part of this reorganization, Thermo Electron
announced that the Company may be taken private. It is currently
contemplated that the Company's public shareholders would receive cash in
exchange for their shares of common stock of the Company. The proposed
transaction is subject to a number of conditions, as outlined in Note 14 to
Consolidated Financial Statements in the Registrant's 1998 Annual Report to
Shareholders, which information is incorporated herein by
reference.
- --------------------
* References to 1998, 1997, and 1996 herein are for the fiscal years ended
January 2, 1999, January 3, 1998, and December 28, 1996, respectively.
2
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 1998 Annual Report to
Shareholders, which statements are incorporated herein by reference.
(b) Financial Information About Industry Segments
Financial information concerning the Company's industry segments is
summarized in Note 11 to Consolidated Financial Statements in the Registrant's
1998 Annual Report to Shareholders and is incorporated herein by reference.
(c) Description of Business
(i) Principal Products and Services
The Company manufactures and markets a variety of advanced instrumentation
that employs a broad range of technologies.
Imaging and Inspection
The Company's Kevex Instruments and NORAN Instruments subsidiaries
manufacture X-ray analytical instruments enhanced by real-time digital imaging
technology for the electronics, aerospace, and automotive industries, among
others. Product lines in this segment include several X-ray microanalysis
instruments that analyze the chemical composition of microscopic samples by
detecting, collecting, sorting, and measuring X-rays emitted by a sample that
has been excited by an energy source. The Company also manufactures a range of
X-ray fluorescence instruments that incorporate an X-ray source into the
instrument to excite the sample.
Industrial customers, universities, and government laboratories represent
the majority of the end users of X-ray microanalysis systems. Over 50% of the
Company's sales of X-ray microanalyzers are to electron microscope
manufacturers, including Japan Electro Optical Laboratories, Hitachi, Ltd., and
Amray, for resale to end users. The Company sells its X-ray microanalyzers and
X-ray fluorescence instruments in the U.S. through a direct sales force; through
a combination of direct salespeople, distributors, and sales representatives in
Europe, Japan, and the rest of the Pacific Rim; and through original equipment
manufacturer (OEM) relationships with electron microscope manufacturers.
The Company's Kevex X-Ray subsidiary is a manufacturer of specialized X-ray
sources used by industrial users for imaging, inspection, analytical, and
thickness-gauging applications. Kevex X-Ray also supplies X-ray sources for
advanced medical diagnostic imaging equipment. The Company sells its X-ray
sources primarily to OEMs through a direct sales force in the United States, a
distributor in Japan, and through both a direct sales force and distributors in
the remainder of the world.
The Company's Nicolet Imaging Systems (NIS) division manufactures real-time,
nondestructive X-ray imaging systems for quality-control inspection. NIS'
products are used to inspect high-reliability, high-liability products (i.e.,
components for the telecommunications industry and those used in airbag assembly
in the automotive industry). The Company's line of X-ray inspection products are
among the most complete on the market, ranging from manual, industrial
inspection systems to fully automated, conveyorized circuit board analysis
systems for high-volume electronics manufacturing. The Company markets its X-ray
inspection systems worldwide through a network of domestic and international
sales representatives.
3
Through the Company's Sierra Research and Technology (SRT) subsidiary, the
Company manufactures systems for the rework and repair of printed circuit boards
that have failed quality-control inspection. The product line includes systems
that remove defective components from the board, clean away excess solder,
redispense solder to the board, and replace components. This is facilitated by
proprietary software that allows for increased automation and ease of use when
incorporated into the system. The Company sells its circuit board-repair systems
through a combination of distributors and sales representatives.
Through its ThermoMicroscopes Corporation subsidiary, which includes
TopoMetrix Corporation, acquired in October 1998, the Company designs,
manufactures, and sells a family of scanning probe microscopes including vacuum,
ambient air, and liquid cell systems. Scanning probe microscopy is a new imaging
tool that offers three-dimensional resolution used for studying the surface
properties of materials down to the atomic level. Scanning probe microscopes can
measure such physical surface properties as magnetic fields, surface
conductivity, and static-charge distribution. ThermoMicroscopes' instruments are
used for academic, semiconductor, computer storage, materials science, optics,
and life science applications. The Company sells its scanning probe microscopes
through a direct sales force, representatives, and distributors throughout the
world.
The Company's NORAN subsidiary manufactures confocal laser scanning
microscopes that create an image of a sample by rapidly scanning it with a laser
light source. Confocal microscopes provide greatly enhanced depth resolution
over conventional optical microscopes. The Company sells its confocal laser
scanning microscopes through a direct sales force and through distributors and
sales representatives.
Revenues from imaging and inspection systems represented 45%, 46%, and 54%
of the Company's total revenues in 1998, 1997, and 1996, respectively.
Temperature Control
Through its NESLAB subsidiary, acquired effective March 1997, the Company
manufactures and markets precision temperature control systems for analytical,
laboratory, industrial, R&D, laser, and semiconductor applications. The
laboratory product line includes constant-temperature bath/circulators and
immersion coolers typically used for cell culture, incubations, refractometer
cooling, and general research and development. The industrial product line
features self-contained cooling systems that pump chilled water through
water-cooled equipment such as lasers; analytical instrumentation such as X-ray
diffraction; and, in the semiconductor industry, etchers and ion implanters.
The Company sells its temperature control systems through a direct sales
force in the U.S. and Europe, and through a network of distributors and sales
representatives in the rest of the world.
Revenues from temperature control systems represented 32% and 28% of the
Company's total revenues in 1998 and 1997, respectively.
Test and Measurement
The Company's Nicolet Instrument Technologies and Gould Instrument Systems
subsidiaries manufacture data-acquisition systems, digital oscilloscopes, and
recording systems addressing a broad range of applications, primarily in product
development and process monitoring settings. Markets served include automotive,
power, medical research, telecommunications, and TV and video. The product
family enables the analysis and display of most common signal types such as
voltage, pressure, current, strain, acceleration, and temperature.
The Company markets its test and measurement instruments in the United
States and Europe through a combination of direct salespeople, distributors, and
sales representatives, and in the rest of the world through over 90 distributors
and sales representatives.
Revenues from test and measurement instruments represented 23%, 26%, and 46%
of the Company's total revenues in 1998, 1997, and 1996, respectively.
4
(ii) and (xi) New Products; Research and Development
The Company maintains active programs for the development of both hardware
and software to create new applications for its instruments that address related
market segments and to enhance existing applications. Research and development
expenses for the Company were $16.3 million, $17.3 million, and $12.9 million in
1998, 1997, and 1996, respectively.
(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's business.
To date, the Company has experienced no difficulties in obtaining these
materials.
(iv) Patents, Licenses, and Trademarks
The Company's policy is to protect its intellectual property rights and to
apply for patent protection when appropriate. The Company is the owner of a
number of patents. Patent protection provides the Company with competitive
advantages with respect to certain instruments. The Company believes, however,
that technical know-how and trade secrets are more important to its business
than patent protection.
(v) Seasonal Influences
There are no significant seasonal influences on the Company's sales of its
products.
(vi) Working Capital Requirements
There are no special inventory requirements or credit terms extended to
customers that would have a material adverse effect on the Company's working
capital.
(vii) Dependency on a Single Customer
No single customer accounted for more than 10% of the Company's total
revenues in any of the past three years.
(viii) Backlog
The Company's backlog of firm orders at year-end 1998 and 1997 was:
(In thousands) 1998 1997
- -------------------------------------------------------------------------------------- ---------- ----------
Imaging and Inspection $17,579 $19,482
Temperature Control 6,043 17,963
Test and Measurement 2,419 2,946
------- -------
$26,041 $40,391
======= =======
Decreases in backlog at the Imaging and Inspection and Temperature Control
segments were primarily due to the downturn in orders from customers in the
semiconductor industry which is currently experiencing a slowdown in demand. The
Company believes that substantially all of the backlog as of January 2, 1999,
will be shipped during 1999. Certain of such firm orders are cancelable by the
customer upon payment of a cancellation charge.
5
(ix) Government Contracts
Not applicable.
(x) Competition
The Company competes primarily on the basis of technical advances that
result in new products and improved price/performance ratios and reputation
among customers as a quality leader for products and services. To a lesser
extent, the Company competes on the basis of price. The Company is not aware of
any other company that competes with it in all of its product lines. Some of the
Company's competitors have resources substantially greater than those of the
Company.
Imaging and Inspection
The Company competes in both the high- and mid-end of the X-ray
microanalysis market. In the high-end of this market, the Company offers
superior imaging and user-interface software. By incorporating high performance
workstations in some of its systems, the Company believes it offers its
customers superior ability to collect, analyze, and display images, and to
network into a broader laboratory environment. The Company also offers mid-level
products in this market, with instruments that operate on a personal-computer
platform. The Company competes in the mid-end of this market on the basis of
quality, performance, and price. The primary competitors in this segment are
Link Analytical Limited, a wholly owned subsidiary of Oxford Instruments plc,
and EDAX Inc.
The Company's X-ray fluorescence product offerings compete in the high-end
of this market. The Company believes that its strong X-ray source and detector
technology gives its products unique capabilities for industrial process
analysis. The Company competes on the basis of quality, performance, technology,
and price. The primary competitors in this segment are Horiba Ltd., Seiko
Instruments Inc., and Jordan Valley Applied Radiation, Ltd.
The Company competes in the specialty X-ray source market on the basis of
quality and price. Competitors in such markets include Hamamatsu Photonics KK,
True Focus Inc., and Oxford.
In the X-ray inspection market, the Company competes on the basis of
superior imaging performance, imaging analysis algorithms, customer-applications
expertise, overall machine flexibility and quality, and price. In the manual
segment of the X-ray inspection market, the Company competes primarily with a
few small companies. In the automated segment, its main competitor is Four Pi, a
subsidiary of Hewlett-Packard Company. No company occupies an across-the-board
dominant position. Competitors also include manufacturers of visible and
laser-based inspection systems.
SRT competes primarily on the basis of technological innovation,
performance, and price. SRT's main competitors are Fine Tech, AirVac,
Conceptronics, OK Industries, APE, Manncorp, Pace, Mannix, and SEC.
The Company competes in the scanning probe microscope market on the
basis of quality, performance, and price. The dominant competitor in this
market is Digital Instruments Inc. In addition, Seiko Instruments USA
Inc. is also a significant competitor.
The Company competes primarily in the high-speed imaging segment of the
confocal microscopy market. The Company competes by offering a higher-speed
imaging capability than its competitors. The Company also competes by offering a
highly integrated software package to its customers. The Company competes to a
lesser extent on the basis of price. Major competitors in the overall confocal
life sciences market include Bio-Rad Laboratories, Inc., Carl Zeiss, Inc., Leica
PLC, and Nikon, Inc.
6
Temperature Control
NESLAB competes primarily on the basis of performance, price, and customer
service. The Company's main competitors are Brinkmann Instruments Inc. and
Julabo USA Inc. NESLAB has established a strong competitive position in the
laboratory/research and development market and in the semiconductor market. The
Company believes NESLAB has distinguished itself from its competitors in the
areas of software control systems and customizing design capabilities.
Test and Measurement
In the broad-based test and measurement market, the Company competes with
products offering a wide range of measurement capabilities and price points. The
Company competes on the basis of quality of the measurement and analysis
capability of its products. The Company's product lines compete in certain
markets in the industry, mostly differentiating themselves on the quality of
measurement and analysis capabilities. To a much lesser degree, the Company
competes on price.
A common competitor for the Company across all test and measurement product
lines is Yokogawa Corporation. The Company also competes with Hewlett Packard
and Tektronix in the general-purpose digital storage oscilloscope marketplace.
In the oscillographic recorder marketplace, the primary competition comes from
Astro-Med and Graphtec Corporation of Japan. In the data-acquisition
marketplace, the Company competes in a variety of applications and markets
against a range of competitors. Primary competition at the low end of the
marketplace comes from companies such as National Instruments and IOTech and in
the high-performance segments competition comes from companies such as
Hewlett-Packard, as well as many smaller regional suppliers.
(xii) Environmental Protection Regulations
The Company believes that compliance by the Company with federal, state, and
local environmental protection regulations will not have a material adverse
effect on its capital expenditures, earnings, or competitive position.
(xiii) Number of Employees
As of January 2, 1999, the Company employed approximately 1,119 people.
(d) Financial Information About Geographic Areas
Financial information about geographic areas is summarized in Note 11 to
Consolidated Financial Statements in the Registrant's 1998 Annual Report to
Shareholders and is incorporated herein by reference.
(e) Executive Officers of the Registrant
Name Age Present Title (Fiscal Year First
Became Executive Officer)
-----------------------------------------------------------------
Barry S. Howe 42 President and Chief Executive Officer (1998)
Richard S. Melanson 45 Senior Vice President (1997)
Christopher J. Barron 50 Vice President (1994)
Ronald W. Lindell 47 Vice President (1994)
Theo Melas-Kyriazi 39 Chief Financial Officer (1994)
Paul F. Kelleher 56 Chief Accounting Officer (1994)
7
Each executive officer serves until his successor is chosen or
appointed by the Board of Directors and qualified or until earlier
resignation, death, or removal. Mr. Kelleher has held comparable
positions for at least five years with Thermo Instrument and Thermo
Electron. Mr. Howe has been President and Chief Executive Officer of the
Company since March 1998. Prior to joining the Company, Mr. Howe was
President and Chief Executive Officer of Thermo BioAnalysis Corporation, a
publicly traded, majority-owned subsidiary of Thermo Instrument, from
February 1995 to March 1998, and President of Thermo Instrument's Thermo
Separation Products Inc. subsidiary and its predecessor, a manufacturer of
liquid chromatography instruments, from September 1989 to December 1995.
Mr. Melas-Kyriazi was appointed Chief Financial Officer of the Company and
Thermo Electron on January 1, 1999. He joined Thermo Electron in 1986 as
Assistant Treasurer, and became Treasurer in 1988. He was named President
and Chief Executive Officer of the Company in 1994, a position he held
until becoming Vice President of Corporate Strategy for Thermo Electron in
1998. Mr. Melas-Kyriazi remains a Vice President of Thermo Electron. Mr.
Melanson has been a Senior Vice President of the Company since October
1997 and served as President of NESLAB Instruments Inc. from October 1997
to January 1999. Mr. Melanson was Vice President and General Manager of
Philips ElectroScan from July 1996 to September 1997 and was President and
Chief Executive Officer of ElectroScan Corporation from September 1989 to
July 1996. Mr. Barron has been a Vice President of the Company since
August 1994 and President of Nicolet Instrument Technologies, Inc. since
August 1993. Mr. Barron held various positions within Nicolet Instrument
Corporation (Nicolet) from May 1988 to August 1993. Nicolet is a wholly
owned subsidiary of Thermo Optek Corporation, a publicly traded,
majority-owned subsidiary of Thermo Instrument. Mr. Lindell has been a
Vice President of the Company since August 1994 and President of Nicolet
Imaging Systems since January 1994. Mr. Lindell was a founder of Imaging
Systems International, Inc. and its President from November 1992 to
January 1994. Each of the above-named officers is a full-time employee of
the Company except for Messrs. Melas-Kyriazi and Kelleher, who 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 119,000 square feet of office, engineering,
laboratory, and manufacturing space. The Imaging and Inspection segment owns
approximately 117,000 square feet in Middleton, Wisconsin and Valencia,
California. The Temperature Control segment owns approximately 2,000 square feet
in Kempen, Cheshire, United Kingdom.
The Company leases approximately 431,000 square feet of additional office,
engineering, laboratory, and manufacturing space under leases expiring from 1999
through 2005. The Imaging and Inspection segment leases approximately 151,000
square feet principally in Sunnyvale, San Diego, and Scotts Valley, California,
and Westford, Massachusetts. The Test and Measurement segment leases
approximately 110,000 square feet principally in Valley View, Ohio, and Madison,
Wisconsin. The Temperature Control segment leases approximately 170,000
principally in Newington, New Hampshire.
The Company believes that its facilities are in good condition and are
suitable and adequate for its present operations. With respect to leases
expiring in the near future, in the event the Company does not renew such
leases, the Company believes suitable alternate space is available for lease on
acceptable terms.
Item 3. Legal Proceedings
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
8
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 1998 Annual Report to Shareholders and is incorporated herein by
reference.
Item 6. Selected Financial Data
Information concerning the Registrant's selected financial data required
under this item is included under the sections labeled "Selected Financial
Information" and "Dividend Policy" in the Registrant's 1998 Annual Report to
Shareholders and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required under this item is included under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Registrant's 1998 Annual Report to Shareholders and
is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required under this item is included under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Registrant's 1998 Annual Report to Shareholders and
is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The Registrant's Consolidated Financial Statements as of January 2, 1999,
and Supplementary Data are included in the Registrant's 1998 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.
9
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.
10
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 schedules set forth in the list
below are filed as part of this Report.
(3) Exhibits filed herewith or incorporated herein by reference are set
forth in Item 14(c) below.
List of Financial Statements and Schedules Referenced in this Item 14
Information incorporated by reference from Exhibit 13 filed herewith:
Consolidated Statement of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Comprehensive Income and Shareholders'
Investment
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
Financial Statement Schedules filed herewith:
Schedule II: Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or not
required, or because the required information is shown either in the
financial statements or in the notes thereto.
(b) Reports on Form 8-K
On December 10, 1998, the Company filed a Current Report on Form 8-K, with
respect to a proposed reorganization by the Company's ultimate parent
corporation, Thermo Electron Corporation, involving certain of Thermo
Electron's subsidiaries, including the Company.
(c) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
11
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 16, 1999 THERMOSPECTRA CORPORATION
By:/s/ Barry S. Howe
Barry S. Howe
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, as of March 16, 1999.
Signature Title
By: /s/ Barry S. Howe President, Chief Executive Officer,
Barry S. Howe and Director
By: /s/ Theo Melas-Kyriazi Chairman of the Board, Chief Financial
Theo Melas-Kyriazi Officer, and Director
By: /s/ Paul F. Kelleher Chief Accounting Officer
Paul F. Kelleher
By: /s/ Joseph A. Baute Director
Joseph A. Baute
By: /s/ David J. Beaubien Director
David J. Beaubien
By: /s/ Robert E. Finnigan Director
Robert E. Finnigan
By: /s/ Elias P. Gyftopoulos Director
Elias P. Gyftopoulos
By: /s/ Earl R. Lewis Director
Earl R. Lewis
12
Report of Independent Public Accountants
To the Shareholders and Board of Directors of ThermoSpectra Corporation:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements included in ThermoSpectra Corporation's
Annual Report to Shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated February 16, 1999. Our audits were made for
the purpose of forming an opinion on those statements taken as a whole. The
schedule listed in Item 14 on page 11 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 16, 1999
13
SCHEDULE II
THERMOSPECTRA CORPORATION
Valuation And Qualifying Accounts
(In thousands)
Description Provision Accounts Accounts Other (a) Balance
Balance at Charged to Recovered Written at End
Beginning Expense Off of Year
of
Year
- -------------------------------- ------------ ----------- ------------ ----------- ------------ -----------
Allowance for Doubtful Accounts
Year Ended January 2, 1999 $ 1,934 $ 689 $ 9 $ (449) $ 203 $ 2,386
Year Ended January 3, 1998 $ 1,516 $ 521 $ 135 $ (704) $ 466 $ 1,934
Year Ended December 28, 1996 $ 1,095 $ 199 $ 1 $ (436) $ 657 $ 1,516
Description Balance at Established Activity Other (c) Balance
Beginning as Cost of Charged to at End
of Year Acquisition Reserve of Year
- --------------------------------------------- ----------- ------------ ----------- ------------ -----------
Accrued Acquisition Expenses (b)
Year Ended January 2, 1999 $ 586 $ 747 $ (676) $ (211) $ 446
Year Ended January 3, 1998 $ 776 $ 761 $ (517) $ (434) $ 586
Year Ended December 28, 1996 $ 1,559 $ 1,108 $(1,586) $ (305) $ 776
Description Provision Balance
Balance at Charged to Cash Paid at End
Beginning Expense(e) of Year
of
Year
- --------------------------------------------------------- ------------ ----------- ------------ -----------
Restructuring Reserves (d)
Year Ended January 2, 1999 $ 244 $ 3,830 $ (1,615) $ 2,459
Year Ended January 3, 1998 $ 1,024 $ 953 $ (1,733) $ 244
Year Ended December 28, 1996 $ 308 $ 1,038 $ (322) $ 1,024
(a) Includes allowance of businesses acquired during the year as described in Note 3 to Consolidated
Financial Statements in the Registrant's 1998 Annual Report to Shareholders and the effect of
foreign currency translation.
(b) The nature of activity in this account is described in Note 3 to Consolidated Financial Statements in the Registrant's
1998 Annual Report to Shareholders.
(c) Represents reversal of accrued acquisition expenses and corresponding reduction in cost in excess
of net assets of acquired companies resulting from finalization of restructuring plans and the
effect of foreign currency translation.
(d) The nature of activity in this account is described in Note 4 to Consolidated Financial Statements
in the Registrant's 1998 Annual Report to Shareholders.
(e) Excludes provision of $0.5 million for an asset write-down.
14
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
2.1 Asset Purchase Agreement dated as of August 5, 1996, between the
Registrant and Thermo Instrument Systems Inc. for the purchase of the
Kevex businesses (filed as Exhibit 2 to the Registrant's Quarterly
Report on form 10-Q for the quarter ended June 29, 1996 [File No.
1-13876] and incorporated herein by reference).
2.2 Agreement and Plan of Merger dated as of January 30, 1997, by
and among the Registrant, Park Acquisition Corp., and Park
Scientific Instruments Corporation (filed as Exhibit 2.2 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 28, 1996 [File No. 1-13876] and incorporated
herein by reference). Pursuant to Item 601(b)(2) of Regulation
S-K, schedules to this Agreement have been omitted. The
Registrant hereby undertakes to furnish supplementally a copy
of such schedules to the Commission upon request.
2.3 Share Purchase Agreement dated as of July 30, 1997, between the
Registrant and Thermo Instrument for the purchase of NESLAB
Instruments Inc. (filed as Exhibit 2.1 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 28, 1997 [File No.
1-13876] and incorporated herein by reference).
3.1 Certificate of Incorporation of the Registrant (filed as Exhibit 3.1
to the Registrant's Registration Statement on Form S-1 [Reg. No.
33-93778] and incorporated herein by reference).
3.2 By-Laws of the Registrant (filed as Exhibit 3.2 to the
Registrant's Registration Statement on Form S-1 [Reg. No.
33-93778] and incorporated herein by reference).
10.1 Corporate Services Agreement dated as of August 10, 1994, between the
Registrant and Thermo Electron Corporation (filed as Exhibit 10.1 to
the Registrant's Registration Statement on Form S-1 [Reg. No.
33-93778] and incorporated herein by reference).
10.2 Thermo Electron Corporate Charter, as amended and restated effective
January 3, 1993 (filed as Exhibit 10.1 to Thermo Electron's Annual
Report on Form 10-K for the fiscal year ended January 2, 1993 [File
No. 1-8002] and incorporated herein by reference).
10.3 Tax Allocation Agreement dated as of August 10, 1994, between the
Registrant and Thermo Electron (filed as Exhibit 10.3 to the
Registrant's Registration Statement on Form S-1 [Reg. No. 33-93778]
and incorporated herein by reference).
10.4 Amended and Restated Master Repurchase Agreement dated as of December
28, 1996, between the Registrant and Thermo Electron (filed as
Exhibit 10.4 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 28, 1996 [File No. 1-13876] and
incorporated herein by reference).
10.5 Amended and Restated Master Guarantee Reimbursement and Loan
Agreement dated as of December 4, 1997, between the Registrant and
Thermo Electron (filed as Exhibit 10.40 to Thermo Instrument's Annual
Report on Form 10-K for the fiscal year ended January 3, 1998 [File
No. 1-9786] and incorporated herein by reference).
10.6 Amended and Restated Master Guarantee Reimbursement and Loan
Agreement dated as of December 4, 1997, between the Registrant and
Thermo Instrument (filed as Exhibit 10.6 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 3, 1998 [File
No. 1-13876] and incorporated
herein by reference).
15
Exhibit
Number Description of Exhibit
10.7 ThermoSpectra - Park Scientific Instruments Corporation 1988
Incentive Stock Option Plan (filed as Exhibit 10.7 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 28, 1996 [File No. 1-13876] and incorporated
herein by reference).
10.8 Lease Agreement dated as of November 30, 1995, between Nicolet
Instrument Corporation and Nicolet Instrument Technologies, Inc.
(filed as Exhibit 10.8 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 30, 1995 [File No. 1-13876] and
incorporated herein by reference).
10.9 Lease Agreement dated as of July 26, 1989, between Gould
Instrument Systems, Inc. (successor-in-interest to Gould, Inc.)
and Linclay (filed as Exhibit 10.9 to the Registrant's
Registration Statement on Form S-1 [Reg. No. 33-93778] and
incorporated herein by reference).
10.10 Lease Agreement dated as of October 19, 1994, between RREEF
West-VI, Inc. and Thermo Instrument (filed as Exhibit 10.10 to
the Registrant's Registration Statement on Form S-1 [Reg. No.
33-93778] and incorporated herein by reference).
10.11 Stock Purchase Agreement dated as of May 10, 1995, among the
Registrant, Thermo Instrument, and Japan Energy Corporation (filed as
Exhibit 10.11 to the Registrant's Registration Statement on Form S-1
[Reg. No. 33-93778] and incorporated herein by reference).
10.12 $7.3 Million Note due September 2001 issued to Thermo Instrument
(filed as Exhibit 10.17 to the Registrant's Registration Statement
on Form S-1 [Reg. No. 33-93778] and incorporated herein by
reference).
10.13 Equity Incentive Plan of the Registrant (filed as Exhibit 10.18
to the Registrant's Registration Statement on Form S-1 [Reg.
No. 33-93778] 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 and Thermo
instrument for services rendered to the Registrant or such affiliated
corporations. The terms of such plans are substantially the same as
those of the Registrant's Equity Incentive Plan.
10.14 Deferred Compensation Plan for Directors of the Registrant
(filed as Exhibit 10.19 to the Registrant's Registration
Statement on Form S-1 [Reg. No. 33-93778] and incorporated
herein by reference).
10.15 Directors' Stock Option Plan of the Registrant (filed as
Exhibit 10.20 to the Registrant's Registration Statement on
Form S-1 [Reg. No. 33-93778] and incorporated herein by
reference).
10.16 Form of Indemnification Agreement for Officers and Directors
(filed as Exhibit 10.21 to the Registrant's Registration
Statement on Form S-1 [Reg. No. 33-93778] and incorporated
herein by reference).
10.17 Restated Stock Holdings Assistance Plan and Form of Promissory Note
(filed as Exhibit 10.17 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 28, 1996 [File No. 1-13876]
and incorporated herein by reference).
16
Exhibit
Number Description of Exhibit
10.18 $5,000,000 Promissory Note dated as of August 1, 1997, issued by the
Registrant to Thermo Electron (filed as Exhibit 10 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended June
28, 1997 [File No. 1-13876] and incorporated herein by reference).
10.19 $45,000,000 Promissory Note dated as of September 12, 1997, issued by
the Registrant to Thermo Electron (filed as Exhibit 10 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 27, 1997 [File No. 1-13876] and
incorporated herein by reference).
13 Annual Report to Shareholders for the year ended January 2, 1999
(only those portions incorporated herein by reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.