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 December 28, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-11757
THERMO OPTEK CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 04-3283973
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8E Forge Parkway
Franklin, Massachusetts 02038
(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 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 24, 1997, was approximately $38,563,000.
As of January 24, 1997, the Registrant had 48,450,000 shares of Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year
ended December 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 June 2, 1997, are incorporated by
reference into Part III.
PAGE
PART I
Item 1. Business
(a) General Development of Business
Thermo Optek Corporation (the Company or the Registrant) is a
worldwide leader in the development, manufacture, and marketing of
analytical instruments and has technologies in electro-optic components
and systems. The Company's instruments are used in the quantitative and
qualitative chemical analysis of elements and molecular compounds in
solids, liquids, and gases. These products are used by its customers for
productivity enhancement, research and development, quality control, and
testing applications in the environmental testing, chemical,
metallurgical, food and beverage, pharmaceutical, and petroleum
industries; and by forensic laboratories, research organizations, and
educational institutions. The Company was incorporated in Delaware in
August 1995 as a wholly owned subsidiary of Thermo Instrument Systems
Inc. (Thermo Instrument). Thermo Instrument is a publicly traded,
majority-owned subsidiary of Thermo Electron Corporation (Thermo
Electron).
An element of the Company's strategy is to combine its internal
growth with the acquisition of complementary products and technologies.
In December 1995, Thermo Instrument acquired the assets of the analytical
instruments division of Analytical Technology, Inc. (the ATI Division), a
manufacturer of analytical instruments, for $42.5 million. In April 1996,
the Company acquired the ATI Division's Mattson and Unicam businesses
from Thermo Instrument for an aggregate purchase price of $36.6 million.
These businesses have been included in the Company's historical results
of operations from December 1, 1995, the date on which they were acquired
by Thermo Instrument. Mattson is a Wisconsin-based manufacturer of FT-IR
spectroscopy instruments and Unicam is a Cambridge, UK-based manufacturer
of atomic absorption and ultraviolet/visible spectroscopy instruments.
Effective March 29, 1996, the Company acquired two businesses, A.R.L.
Applied Research Laboratories S.A. (ARL) and VG Elemental, and four
associated sales organizations located in South Africa, Austria, Sweden,
and Canada from Thermo Instrument for approximately $55.2 million in cash
and the assumption of $16.6 million in debt. These businesses were
originally part of the Scientific Instruments Division of Fisons plc
(Fisons), a wholly owned subsidiary of Rhone-Poulenc Rorer, Inc., a
substantial portion of which was acquired by Thermo Instrument on March
29, 1996. The purchase price is subject to a post-closing adjustment
based on a post-closing adjustment to be negotiated with Fisons by Thermo
Instrument in connection with the negotiations for settlement of the
final purchase price for all of the businesses of Fisons acquired by
Thermo Instrument. ARL is a Switzerland-based manufacturer of arc/spark
AE spectrometers and X-ray fluorescence instruments. VG Elemental is a
U.K.-based manufacturer of inductively coupled plasma/mass spectrometers.
In June and July 1996, the Company sold 3,450,000 shares of its
common stock in an initial public offering at $13.50 per share for net
proceeds of $42.9 million. In October 1995, the Company issued and sold
2PAGE
$96.3 million principal amount of 5% subordinated convertible debentures
due 2000. The debentures are convertible into shares of the Company's
common stock at a conversion price of $14.85 per share and are guaranteed
on a subordinated basis by Thermo Electron. As of December 28, 1996,
Thermo Instrument owned 45,000,000 shares of the common stock of the
Company, representing 93% of such stock outstanding. Thermo Instrument
develops, manufactures, and markets instruments used to detect and
measure air pollution, radioactivity, complex chemical compounds, toxic
metals, and other elements in a broad range of liquids and solids, as
well as to control and monitor various industrial processes. As of
December 28, 1996, Thermo Electron owned 144,900 shares of the common
stock of the Company, representing 0.3% of such stock outstanding. These
shares were purchased during 1996* in the open market for a total
purchase price of $1,967,000. Thermo Electron is a world leader in
environmental monitoring and analysis instruments, biomedical products
such as heart-assist devices and mammography systems, paper-recycling and
papermaking equipment, biomass electric power generation, and other
specialized products and technologies. Thermo Electron also provides a
range of services related to environmental quality.
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 caption "Forward-looking
Statements" in the Registrant's 1996 Annual Report to Shareholders
incorporated herein by reference.
(b) Financial Information About Industry Segments
The Company is engaged in one business segment: developing,
manufacturing, and selling analytical instruments.
(c) Description of Business
(i) Principal Products and Services
Analytical instruments are generally classified by their principal
operating technologies. The Company's atomic emission (AE) and atomic
absorption (AA) spectrometers comprise its elemental analysis product
line, and FT-IR and FT-Raman spectrometers comprise its molecular
analysis product line. In addition, through its Thermo Vision Corporation
(Thermo Vision) subsidiary, the Company addresses the photonics
marketplace for optical components, imaging systems, analytical
* References to 1996, 1995, and 1994 herein are for the fiscal years
ended December 28, 1996, December 30, 1995, and December 31, 1994,
respectively.
3PAGE
instruments, and lasers. Thermo Vision develops and manufactures
cost-effective, application-specific instruments, as well as components,
systems, and subassemblies for analytical instruments.
Elemental Analysis - AE and AA Spectrometers
The Company produces a range of AE and AA spectrometers that are used
to detect and measure metals and other elements in solid and liquid
samples from ultratrace (parts per billion) to major concentrations.
These instruments are used in a wide variety of applications, including
testing environmental samples, such as soil and water, and food and
drugs; analyzing blood, urine, and animal tissue; and process quality
control and product quality assurance. The Company sells its products to
customers in a wide range of industries, including those in manufacturing
industries such as producers of aircraft, automobiles and trucks,
computers, chemicals, food, pharmaceuticals, and primary metals; service
industries such as waste management companies and commercial testing
laboratories; and government and university laboratories.
In AE spectrometers, the samples are excited by an energy source,
causing the sample atoms to emit radiation. The radiation is then
dispersed by a grating into its component light wavelengths, which are
detected by a photo multiplier tube or a solid state detector. Each
element has a characteristic wavelength that acts as a "fingerprint" for
that element, which the instrument compares against a library of spectra
for identification. The resulting data may be stored and manipulated by
computer. AE spectrometers use either an electrical discharge (arc/spark)
or a high frequency inductively coupled plasma (ICP) as the energy
source.
Arc/spark instruments are used primarily for solid samples in highly
capital-intensive processes such as steel and other primary metal
production, foundries that fabricate raw metals, and production of
products such as pipe and machine parts. Customers in these industries
use the arc/spark instrument in near line quality control as part of the
production process. Due to the high cost of these processes, the
minimization of downtime and the maintenance of quality control are
critical. For these reasons, reliability is frequently the most important
feature to an arc/spark user. ARL, acquired in 1996, is a worldwide
supplier of spectrochemical instrumentation based on arc/spark optical
emission spectrometry and wavelength dispersive x-ray fluorescence
(WDXRF) spectrometry. WDXRF spectrometers offer elemental analysis of a
wide variety of materials in a highly precise and generally
nondestructive manner.
ICP spectrometers are used for both solid and liquid samples and
allow for simultaneous multi-element testing. The largest users of ICP
instruments are public and private environmental laboratories, which must
test for multiple elements but which have well defined testing
objectives. These users test for compliance with applicable environmental
regulations, which prescribe the specific pollutants and concentrations
to be identified. The Company has recently developed the first ultratrace
ICP spectrometer that incorporates a solid state detector, the IRIS(TM),
and the first combined optical emission mass spectrometer, the POEMS(R),
which allows customers to perform with one instrument analyses that
4PAGE
previously would have required multiple instruments. In addition, the
IRIS incorporates Windows(TM)-based software that facilitates use of the
instrument with relatively minimal training. ICP instruments can also be
coupled with a mass spectrometer (ICP/MS) to provide detection at the
parts per trillion level. This high level of sensitivity is often
required by semiconductor, pharmaceutical, and chemical companies in both
research and development and quality control functions. The Company has
recently introduced the second generation of its POEMS ICP/MS, which
incorporates several significant advances, including automated sample
preparation and Windows-based software. POEMS is the first ICP/MS
instrument to integrate a CID detector, which enhances the flexibility of
the instrument. VG Elemental, acquired in November 1996, manufactures
ICP/MS instruments that are utilized in the environmental, nuclear,
semiconductor, biological, metals, and chemicals industries where
critical, ultratrace detection of elements is required.
Due to their sensitivity and relatively low cost, AA spectrometers
are the instrument of choice for environmental applications. Certain of
the EPA's protocols for the determination of toxic metals in water and
wastes are written for AA spectrometers. In addition to environmental
testing, AA spectrometers are used in biological testing and for testing
in the agricultural and petroleum industries. AA spectrometers use a
graphite furnace or flame to heat the sample and incorporate a hollow
cathode lamp that contains the element to be measured. Because the hollow
cathode lamp radiates at the same wavelength as the sample atoms, the
sample atoms absorb radiation from the lamp, and the detector measures
this absorption. The 1996 acquisition of Unicam has increased the
Company's product base in AA spectrometers, as well as its presence in
the European market, and will complement its other products and presence
in the environmental, life science research, pharmaceutical, and chemical
markets.
Molecular Analysis - FT-IR and FT-Raman Spectrometers
Thermo Optek is among the world's largest manufacturers of molecular
analysis instruments that utilize FT-IR and FT-Raman spectroscopic
techniques. Using these "vibrational" spectroscopic techniques, customers
are able to nondestructively analyze liquids and solids for their
molecular composition. These techniques permit the analysis of samples in
their packaging, which eliminates much of the time involved with sample
preparation.
The Company's FT-IR and FT-Raman spectrometers are used principally
in research and development and quality control in a variety of
industries. Chemical and pharmaceutical companies use FT-IR and FT-Raman
spectrometers for verification, identification, and quantification of
chemical materials and mixtures because of the superior ability of these
instruments to provide detailed structural information. Other
applications involve analysis of total petroleum hydrocarbon content and
other contamination in soil and water, and monitoring of industrial waste
streams.
The Company also offers several lines of infrared microscopes and
micro-imaging accessories. The Company believes it is the world's leading
supplier of these devices, which are utilized, individually or in
5PAGE
conjunction with FT-IR spectrometers, to obtain the infrared spectrum of
small samples in the range from 20 to 1000 microns.
Thermo Vision Corporation
Through its Thermo Vision subsidiary, the Company addresses the
photonics marketplace for optical components, imaging systems, analytical
instruments, and lasers. Thermo Vision is pursuing applications of its
photonics technologies in a wide array of markets such as dental imaging,
semiconductor processing, high-energy physics, and nuclear inspection, in
addition to analytical instrumentation. Within instrumentation, Thermo
Vision addresses the market for cost-effective, application-specific
instruments and for optical components, systems, and subassemblies for
analytical instrumentation. The Company believes that there is a trend in
the market for analytical instruments toward the development of
lower-cost instruments that are easy to use and capable of performing
discrete analyses accurately and reliably. Thermo Vision is building a
sales and service channel for optical components and lower-cost
instruments that cannot be effectively or profitably sold or serviced
through the channels used for larger, higher-performance analytical
instruments.
In February 1996, Thermo Vision acquired Corion Corporation (Corion),
a manufacturer of commercial optical filters, for $5.1 million in cash
and Oriel Corporation (Oriel), a manufacturer and distributor of
electro-optical instruments and components, for $11.8 million in cash and
the assumption of $0.7 million in debt. In addition, Thermo Vision
acquired Laser Science, Inc. (LSI), a manufacturer of nitrogen, tunable
dye, and pulsed lasers, in February 1997 for $3.6 million in cash. The
Company believes that these acquisitions will further Thermo Vision's
strategic move into the photonics marketplace by broadening its product
offerings and providing a base for low-cost distribution.
In 1996 and 1995, the Company derived revenues of $30.5 million and
$6.1 million, respectively, from its Thermo Vision businesses.
In September 1996, the Company announced its intent to spin out
Thermo Vision through a distribution of all of its outstanding capital
stock in the form of a dividend to the Company's shareholders. The
Company anticipates completing the spinout in 1997, and is seeking a
Letter Ruling from the Internal Revenue Service stating that the proposed
spinout will have no current tax effect on Thermo Optek or its
shareholders. The Company would distribute the shares upon receipt of the
Letter Ruling and satisfaction of other conditions, including the listing
of the Thermo Vision shares on the American Stock Exchange. Upon
completion of this proposed transaction, Thermo Vision would be a
majority-owned subsidiary of Thermo Instrument.
Sales and Marketing
The Company markets its instruments internationally through its own
worldwide sales force and through a network of dealers and distributors.
In addition, the Company sells certain components and instruments
pursuant to original equipment manufacturer (OEM) arrangements under
which third parties purchase and resell the Company's products. The
6PAGE
Company's sales force is supported throughout the world by a customer
support group which provides training, instrument servicing, and parts
replacement.
(ii) and (xi) New Products; Research and Development
The Company maintains active programs for the development of new
technologies and the enhancement of existing products. In addition, the
Company seeks to develop new applications for its products and
technologies. Research and development expenses for the Company were
$22.0 million, $13.0 million, and $10.5 million in 1996, 1995, and 1994,
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. 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,
including applying for and obtaining patents when appropriate. The
Company holds numerous patents relating to its technologies, with
additional patents pending. The Company also enters into licensing
agreements with other companies and government agencies in which it
grants or receives rights to specific patents and technical know-how. The
Company also considers technical know-how, trade secrets, and trademarks
to be important to its business.
(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 was $67.2 million and $50.1
million as of December 28, 1996, and December 30, 1995, respectively. The
Company believes that substantially all of the backlog at December 28,
1996, will be shipped or completed during 1997. The Company does not
7PAGE
believe that the size of its backlog is necessarily indicative of
intermediate or long-term trends in its business.
(ix) Government Contracts
Not applicable.
(x) Competition
The Company competes in each of its markets primarily on performance,
reliability, customer service, and price. In the market for AE and AA
spectrometers and ICP/MS instruments, the Company competes primarily with
The Perkin-Elmer Corporation and, to a lesser extent, Varian Associates,
Inc. The Company competes in the arc/spark market primarily with Spectro.
In the FT-IR and FT-Raman markets, the Company competes primarily with
Perkin-Elmer; the Digilab division of Bio-Rad Laboratories, Inc.; Bruker
Instruments, Inc.; and Bomem Inc. The Company entered the market for
UV/Vis instruments with its acquisition of Unicam in 1996. The primary
competitors in this market are Perkin-Elmer, Shimadzu, and
Hewlett-Packard Co.
(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 December 28, 1996, the Company employed approximately 2,065
people.
(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 10 to Consolidated Financial
Statements in the Registrant's 1996 Annual Report to Shareholders and is
incorporated herein by reference.
(e) Executive Officers of the Registrant
Present Title (Year First Became
Name Age Executive Officer)
------------------------ --- ----------------------------------
Earl R. Lewis 53 President, Chief Executive Officer,
and Director (1995)
Dr. Robert J. Rosenthal 40 Executive Vice President and
Chief Operating Officer (1995)
John N. Hatsopoulos 62 Vice President and Chief Financial
Officer (1995)
Kristine A. Langdon 38 Vice President (1995)
Paul F. Kelleher 54 Chief Accounting Officer (1995)
8PAGE
Each executive officer serves until his successor is chosen or
appointed by the Board of Directors and qualified or until his earlier
resignation, death, or removal. Mr. Lewis, Dr. Rosenthal, and Ms. Langdon
have held their respective positions in the Company since its inception
in August 1995. Mr. Lewis is also a Vice President of Thermo Electron and
Executive Vice President and Chief Operating Officer of Thermo
Instrument. Mr. Lewis served as President of Thermo Jarrell Ash until
December 1995. Mr. Rosenthal has been President of Nicolet since 1993.
Ms. Langdon has served as Chief Executive Officer and President of Thermo
Vision since its inception in January 1995. Ms. Langdon served as
Director of Business Development of Thermo Jarrell Ash from April 1994
until January 1995. 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 600,000 square feet of office and
manufacturing space in Wisconsin, Colorado, England, and Switzerland, and
leases an additional 600,000 square feet of office and manufacturing
space under leases expiring from 1997 through 2013, principally in
Massachusetts, Connecticut, and England. The Company believes that its
facilities are in good condition and are suitable and adequate to meet
current needs.
Item 3. Legal Proceedings
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
9PAGE
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 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 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 1996 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 December 28,
1996, and Supplementary Data are included in the Registrant's 1996 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.
10PAGE
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.
11PAGE
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.
12PAGE
SIGNATURES
Pursuant to the requirements of Section 13 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 17, 1997 THERMO OPTEK CORPORATION
By: Earl R. Lewis
-------------------------
Earl R. Lewis
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 below, as of March 17,
1997.
Signature Title
--------- -----
By: Earl R. Lewis President, Chief Executive Officer,
-----------------------
Earl R. Lewis and Director
By: John N. Hatsopoulos Vice President and Chief Financial
-----------------------
John N. Hatsopoulos Officer
By: Paul F. Kelleher Chief Accounting Officer
-----------------------
Paul F. Kelleher
By: George N. Hatsopoulos Director
-----------------------
George N. Hatsopoulos
By: Stephen R. Levy Director
-----------------------
Stephen R. Levy
By: Robert A. McCabe Director
-----------------------
Robert A. McCabe
By: Arvin H. Smith Chairman of the Board and Director
-----------------------
Arvin H. Smith
13PAGE
Report of Independent Public Accountants
----------------------------------------
To the Shareholders and Board of Directors of Thermo Optek Corporation:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Thermo Optek
Corporation's Annual Report to Shareholders incorporated by reference in
this Form 10-K, and have issued our report thereon dated February 11,
1997. Our audits were made for the purpose of forming an opinion on those
statements taken as a whole. The schedule listed in Item 14 on page 12 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 11, 1997
14PAGE
SCHEDULE II
THERMO OPTEK CORPORATION
Valuation and Qualifying Accounts
(In thousands)
Balance at Provision Accounts Balance
Beginning Charged to Accounts Written at End
of Year Expense Recovered Off Other (a) Year
---------- ---------- --------- -------- --------- --------
Year Ended
December 28, 1996
Allowance for
Doubtful
Accounts $5,669 $ 907 $ (30) $(2,687) $ 577 $4,436
Year Ended
December 30, 1995
Allowance for
Doubtful
Accounts $2,783 $ 378 $ 32 $ (788) $3,264 $5,669
Year Ended
December 31, 1994
Allowance for
Doubtful
Accounts $2,649 $ 521 $ 69 $ (373) $ (83) $2,783
(a) Includes allowance of businesses acquired during the year as described in
Note 2 to Consolidated Financial Statements in the Registrant's 1996 Annual
Report to Shareholders and the effect of foreign currency translation.
15PAGE
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
2.1 Stock Purchase Agreement dated as of November 4, 1996,
among Thermo Instrument Systems Inc., SID Instruments Inc.,
and ATI Acquisition Corp. (filed as Exhibit 2.1 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 28, 1996 [File No. 1-11757] and
incorporated herein by reference).
2.2 Stock Purchase Agreement dated as of November 4, 1996,
between Thermo Instrument and the Company (filed as Exhibit
2.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 28, 1996 [File No. 1-11757] and
incorporated herein by reference).
3.1 Certificate of Incorporation, as amended, of the Company
(filed as Exhibit 3.l to the Company's Registration
Statement on Form S-1 [Reg. No. 333-03630] and incorporated
herein by reference).
3.2 By-laws of the Company (filed as Exhibit 3.2 to the
Company's Registration Statement on Form S-1 [Reg. No.
333-03630] and incorporated herein by reference).
10.1 Corporate Services Agreement dated as of August 18, 1995,
between Thermo Electron Corporation and the Company (filed
as Exhibit 10.1 to the Company's Registration Statement on
Form S-1 [Reg. No. 333-03630] 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 18, 1995,
between Thermo Electron and the Company (filed as Exhibit
10.3 to the Company's Registration Statement on Form S-1
[Reg. No. 333-03630] and incorporated herein by reference).
10.4 Amended and Restated Master Repurchase Agreement dated as
of December 28, 1996, between Thermo Electron and the
Company.
10.5 Master Guarantee Reimbursement Agreement dated as of August
18, 1995, between Thermo Electron, Thermo Instrument, and
the Company (filed as Exhibit 10.5 to the Company's
Registration Statement on Form S-1 [Reg. No. 333-03630] and
incorporated herein by reference).
16PAGE
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.6 Master Guarantee Reimbursement Agreement dated as of August
18, 1995, between Thermo Instrument and the Company (filed
as Exhibit 10.5A to the Company's Registration Statement on
Form S-1 [Reg. No. 333-03630] and incorporated herein by
reference).
10.7 Equity Incentive Plan of the Company (filed as Exhibit 10.6
to the Company's Registration Statement on Form S-1 [Reg.
No. 333-03630] 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. Thermo
Electron's 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 the Annual Report on Form 10-K of
Trex Medical Corporation for the fiscal year ended
September 28, 1996 [File No. 1-11827], and Thermo
Instrument's plans were filed as Exhibits 10.18 through
10.27 to the Annual Report on Form 10-K of Thermo
Instrument for the fiscal year ended December 28, 1996
[File No. 1-9786], and are incorporated herein by
reference.
10.8 Deferred Compensation Plan for Directors of the Company
(filed as Exhibit 10.7 to the Company's Registration
Statement on Form S-1 [Reg. No. 333-03630] and incorporated
herein by reference).
10.9 Directors Stock Option Plan of the Company (filed as
Exhibit 10.8 to the Company's Registration Statement on
Form S-1 [Reg. No. 333-03630] and incorporated herein by
reference).
10.10 Form of Indemnification Agreement for Officers and
Directors (filed as Exhibit 10.9 to the Company's
Registration Statement on Form S-1 [Reg. No. 333-03630] and
incorporated herein by reference).
10.11 Fiscal Agency Agreement dated as of October 12, 1995,
between the Company and The Chase Manhattan Bank (formerly
Chemical Bank) (filed as Exhibit 10.10 to the Company's
Registration Statement on Form S-1 [Reg. No. 333-03630] and
incorporated herein by reference).
10.12 Stock Purchase Agreement dated as of April 11, 1996,
between the Company and Thermo Instrument (filed as Exhibit
10.11 to the Company's Registration Statement on Form S-1
[Reg. No. 333-03630] and incorporated herein by reference).
17PAGE
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.13 Asset Transfer Agreement dated as of December 31, 1995, by
and among the Company, Nicolet Instrument Corporation, and
Thermo Instrument (filed as Exhibit 10.12 to the Company's
Registration Statement on form S-1 [Reg. No. 333-03630] and
incorporated herein by reference).
10.14 Indemnification Agreement dated as of November 4, 1996,
between Thermo Instrument and the Company (filed as Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 28, 1996 [File No. 1-11757] and
incorporated herein by reference).
10.15 Restated Stock Holdings Assistance Plan and Form of
Promissory Note.
11 Statement re: Computation of Earnings per Share.
13 Annual Report to Shareholders for the year ended
December 28, 1996 (only those portions incorporated
herein by reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.