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 1-11757
THERMO OPTEK CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 04-3283973
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8E 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 $25,607,000.
As of January 29, 1999, the Registrant had 49,140,164 actual shares and
51,215,506 pro forma 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
Thermo Optek Corporation (the Company or the Registrant) is a worldwide
leader in spectroscopy instrumentation for molecular and elemental analysis
based upon energy and light measurements, as well as systems for materials
science, including surface analysis, characterization, preparation, and
physical-properties analysis. Thermo Optek provides industry, government, and
academia with complete solutions to specific analytical problems, moving
sophisticated analytical technology outside the laboratory. The Company's
instruments are used in virtually every industry for research and development,
manufacturing, and quality control. The businesses of the Company operate in two
segments: Spectroscopy (molecular and elemental analysis) and Materials Science
(surface analysis, characterization, and preparation and physical-properties
analysis).
An element of the Company's strategy is to acquire products and technologies
that complement those of existing Thermo Optek companies. In August 1998, the
Company acquired Gebrueder Haake GmbH (Haake) from Thermo Instrument. This
business was originally part of the Scientific Instruments Division of Fisons
plc (Fisons), a wholly owned subsidiary of Rhone-Pulenc Rorer, Inc. In addition
to Haake, Thermo Optek has acquired three other Fisons companies from Thermo
Instrument - ARL Applied Research Laboratories (ARL) and VG Elemental, in
November 1996 and VG Systems in July 1997. Because Thermo Optek, Haake, ARL, VG
Elemental, and VG Systems were deemed for accounting purposes to be under
control of Thermo Instrument, their common majority owner, the transactions have
been accounted for in a manner similar to a pooling of interests. This means
that the effective date for all four acquisitions is March 29, 1996 - the date
that the businesses were acquired by Thermo Instrument.
Haake is a supplier of viscometry and rheometry systems used by a wide
variety of manufacturers to measure the physical properties of liquid
substances. ARL is a manufacturer of Arc/Spark spectrometers used to analyze
solids, such as metals, and X-ray fluorescence instruments, used to analyze
nonmetallic solids, such as ceramics. VG Elemental is a manufacturer of
inductively coupled plasma (ICP) and mass spectroscopy instruments used to
analyze elemental liquids, particularly in high-sensitivity applications, such
as the evaluation of nutrition content of baby formulas. VG Systems manufactures
instrumentation and equipment for material and surface science analysis.
On December 15, 1997, the Company distributed 100% of Thermo Vision's
outstanding capital stock in the form of a dividend to the Company's
shareholders. As a result of the distribution, Thermo Vision, which is in the
photonics business, is a publicly traded, majority-owned subsidiary of Thermo
Instrument Systems Inc.
Thermo Optek was incorporated in Delaware in August 1995 as a wholly owned
subsidiary of Thermo Instrument. 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. As of January 2, 1999, Thermo
Instrument owned 47,567,689 shares of the Company's common stock, which include
2,075,342 pro forma shares relating to the acquisition of Haake, representing
93% of such stock outstanding. The 2,075,342 shares of common stock to be issued
to Thermo Instrument will be issued when they are listed for trading on the
American Stock Exchange. During 1998*, Thermo Instrument purchased 504,600
shares of the Company's common stock in the open market for a total purchase
price of $3.8 million. Thermo Instrument develops, manufactures, markets, and
services instruments and software used for identification and quantification of
complex molecular compounds and elements in gases, liquids, and solids. Uses
include pharmaceutical 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 1,028,860 shares of the Company's common
stock, representing 2% of such stock outstanding. During 1998, Thermo Electron
purchased 297,788 shares of the Company's common stock in the open market for a
total purchase
- --------------------
* 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
price of $4.0 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.
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 Segments
Financial information concerning the Company's segments is summarized in
Note 11 to Consolidated Financial Statements in the Registrant's 1998 Annual
Report to Shareholders, which information is incorporated herein by reference.
(c) Description of Business
(i) Principal Products and Services
Almost every element in the periodic table, and nearly all molecules,
provide a unique response when exposed to energy (usually light). The Company's
light-based instruments "look" at these distinctive signatures to determine the
elemental and molecular composition of solids, liquids, and gases. Because light
is nondestructive, the Company's technologies do not destroy the sample being
tested. The Company's instruments can be found in crime laboratories throughout
the world. They are also ideally suited for use in manufacturing, both on and
off the production line.
The Company's lines of business include spectroscopy instruments for
molecular and elemental analysis, and systems for materials science. The
Company's goal is to design instruments that both analyze substances and
synthesize information. Instead of providing raw data that must be interpreted
by an expert user, the Company integrates information about the application with
a database in its instruments to provide the user with a specific answer
relevant to his or her task. For example, the airline industry uses the
Company's Fourier transform infrared (FT-IR) instruments to analyze jet engine
lubricants to determine when the oil needs to be changed and uses the Company's
Arc/Spark products to identify and quantify metals present in the airplane's
engine oil. The Company's instruments use this information to pinpoint for
airplane maintenance workers when specific engine components need to be serviced
or replaced. In another example, automobile recyclers use the Company's
Arc/Spark instruments to sort metal components of automobiles. In addition, they
use its FT-IR instruments to classify plastics which, to be effectively
recycled, cannot be mixed. The Company's instruments instantly identify each of
the plastics and indicate to plant workers how to sort the components, without
the necessity of interpreting complex data. Similarly, commercial recyclers can
use these instruments to assist in the sorting of plastics collected in curbside
recycling programs.
The applications for the Company's products continue to grow as the Company
continues to develop increasingly sophisticated instruments that have enormous
analytical power, but are easy to use by operators with varying levels of
education and technical expertise. Examples of some of the uses for the
Company's products follow:
3
Spectroscopy Products. Pharmaceutical and chemical manufacturers use the
Company's FT-IR and UV/Vis instruments to assess the quality of active
ingredients during the production process. They use FT-Raman instruments to
"look" through the plastic or glass container to ensure that the contents match
the label on the outside. Semiconductor manufacturers use FT-IR instruments in
quality control, and to monitor the air in production labs to ensure the safety
of their workers.
The beverage industry uses the Company's UV/Vis instruments to ensure that
fruit juice concentrate formulations are blended consistently to specification,
and ICP instruments to validate the vitamin and mineral content for nutrition
labels.
The Company's portable UV/Vis spectrophotometers are available in many home
decorating stores, designed to take the frustration and guesswork out of paint
color matching. Customers can bring paint or fabric samples to the paint store
or can bring home a hand-held device, take a reading from a wall, drape, rug, or
whatever needs to be matched, and bring it back to the store where the device is
plugged into a computer. The dealer uses the formula from the samples to create
a color prescription and a paint-dispensing system automatically mixes a matched
can of paint.
The Company's ICP and atomic absorption spectroscopy instruments are also
used by municipalities in environmental monitoring to ensure the quality of the
air we breathe and the water we drink.
Police departments and forensic labs around the world use the Company's
UV/Vis instruments to identify the type and country-of-origin of illicit
substances and to analyze crime scene evidence.
Materials Science Products. Semiconductor manufacturers rely on the
Company's Auger and ESCA instruments to help them in building the next
generation of processors, analyzing the surface properties of chips in R&D, and
failure analysis. The Company's molecular beam epitaxy products are used in the
production of devices for telecommunications equipment, such as mobile phones,
high-speed networks, and digital switches. These instruments are used to grow
and measure the thin films, with the precision of a single atomic layer, that
are the heart of these devices.
The food and beverage industries are significant customers for the Company's
instruments for physical-properties analysis. For instance, consumers can count
on the famous smooth body of German beer to remain the same glass after glass
because many German beer manufacturers use Thermo Optek's high-precision
viscometers to maintain the quality and consistency of their products. The
Company's rheometers are key instruments when it comes to controlling the
texture of foods to ensure consumer satisfaction as well as shelf life
stability, particularly in emulsions, such as mayonnaise or whipped cream.
The Company's strategy is to continue to develop products and technologies,
to acquire product lines and technologies through acquisitions, and to provide
its customers with quality support services and applications expertise.
Sales and Marketing
The Company markets its instruments internally 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 arrangements under which third parties purchase and resell the
Company's products. The Company's sales force is supported throughout the world
by a customer support group which provides training, instrument servicing, and
parts replacement.
4
(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. Research and development
expenses for the Company were $25.0 million in 1998, $30.9 million in 1997, and
$26.8 million in 1996.
(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 material difficulties in obtaining these items.
(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
patents relating to its technologies expiring at various dates, with additional
patents pending. The Company also enters into licensing agreements with other
companies pursuant to which it has obtained 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:
(In thousands) 1998 1997
- ------------------------------------------------------------------------------------- ---------- ----------
Spectroscopy $ 62,543 $ 74,655
Materials Science 22,833 26,296
-------- --------
$ 85,376 $100,951
======== ========
The Company believes that substantially all of the backlog at January 2,
1999, will be shipped or completed during 1999. Certain of these orders are
subject to cancellation by the customer upon payment of a cancellation charge.
The Company's sales to Asia have been adversely affected by the unstable
economic conditions there. The unstable conditions and, to a lesser extent,
decreased order activity in the semiconductor industry, have resulted in a
decrease in backlog. The Company does not believe that the size of its backlog
is necessarily indicative of intermediate or long-term trends in its business.
However, if the Asia economies were to continue to worsen and order activity
were to continue to decrease, the Company could experience a further decrease in
revenues, which could adversely impact the Company's business and operating
results.
5
(ix) Government Contracts
Not applicable.
(x) Competition
The Company competes in each of its markets primarily on product
performance, reliability, customer service, and price. In the Spectroscopy
segment, the Company competes primarily with the AI division of The Perkin-Elmer
Corporation, Varian Associates, Inc., Hewlett-Packard Company, Spectro
Analytical Instruments, Inc., the Digilab division of Bio-Rad Laboratories,
Inc., Bruker Instruments, Inc., and Shimadzu Corporation. In the Materials
Science segment, the Company competes primarily with Physical Electronics, Inc.,
Riber Instruments S.A., Kratos (a division of Shimadzu), Omnicron Associates,
Brookfield Engineering Laboratories, Inc., and TA Instruments, Inc. (a
subsidiary of Waters Corporation).
(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 2,437 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 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)
--------------------------------------------------------------------
Dr. Robert J. Rosenthal 42 President and Chief Executive Officer (1995)
Gerard Abraham 51 Vice President (1998)
Roger Herd 61 Vice President (1998)
Fredric T. Walder 41 Vice President (1998)
Theo Melas-Kyriazi 39 Chief Financial Officer (1998)
Paul F. Kelleher 56 Chief Accounting Officer (1995)
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. Dr. Rosenthal has been President and
Chief Executive Officer since January 1998, and from August 1995 to 1997,
was Executive Vice President and Chief Operating Officer. Dr. Rosenthal
was President of Nicolet from 1993 until December 1997. Mr. Abraham has
been Vice President since January 1998, and from 1993 to 1997, was
President of ARL. Mr. Herd has been Vice President since January 1998,
and Managing Director of VG Systems since April 1996. Mr. Herd was
Manager of International Business Development for Thermo Instrument from
April 1994 to April 1996, and prior to April 1994, was Managing Director
of Thermo Instrument Australia PTY Ltd. Mr. Walder has been Vice
President since April 1998, and President of Nicolet since December
1997. Mr. Walder was General Manager of Nicolet from January 1997 to
December 1997, Vice President of Marketing and Sales from January 1996 to
December 1996, Director of Marketing from April 1994 to December 1995, and
prior to April 1994, was a Marketing/Product Manager. Mr. Melas-Kyriazi
was appointed
6
Chief Financial Officer of the Company and Thermo Electron on January 1,
1999. Mr. Melas-Kyriazi joined Thermo Electron in 1986 as Assistant
Treasurer, and became Treasurer in 1988. He was named President and Chief
Executive Officer of ThermoSpectra Corporation, a public subsidiary of
Thermo Instrument, in 1994. In 1998, he became Vice President of
Corporate Strategy for Thermo Electron. Mr. Melas-Kyriazi remains a Vice
President of Thermo Electron. Mr. Kelleher has held comparable positions
for at least five years with Thermo Instrument or Thermo Electron. Dr.
Rosenthal and Messrs. Abraham, Herd, and Walder are full-time employees of
the Company. Messrs. Melas-Kyriazi 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's Spectroscopy segment owns approximately 678,000 square feet of
office and manufacturing space principally in Wisconsin, New York, Colorado,
Germany, the United Kingdom, and Switzerland, and leases an additional 512,000
square feet of office and manufacturing space under leases expiring from 1999
through 2017, principally in Massachusetts, Connecticut, and the United Kingdom.
The Company's Materials Science segment leases approximately 180,000 square
feet of office and manufacturing space under leases expiring from 1999 through
2013, principally in the United Kingdom and New Jersey.
In addition, the Company leases office space throughout the world for its
sales and service operations. The Company believes that its facilities are in
good condition and are suitable and adequate to meet current needs and that
suitable alternate 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.
7
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
The information 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 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 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 in this document 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.
8
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.
9
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 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
None.
(c) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
10
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 18, 1999 THERMO OPTEK CORPORATION
By: /s/ Robert J. Rosenthal
Robert J. Rosenthal
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 18, 1999.
Signature Title
By: /s/ Robert J. Rosenthal President, Chief Executive Officer,
Robert J. Rosenthal and Director
By: /s/ Theo Melas-Kyriazi Chief Financial Officer
Theo Melas-Kyriazi
By: /s/ Paul F. Kelleher Chief Accounting Officer
Paul F. Kelleher
By: /s/ George N. Hatsopoulos Director
George N. Hatsopoulos
By: /s/ Stephen R. Levy Director
Stephen R. Levy
By: /s/ Earl R. Lewis Chairman of the Board and Director
Earl R. Lewis
By: /s/ Robert A. McCabe Director
Robert A. McCabe
11
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 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 10 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
12
SCHEDULE II
THERMO OPTEK 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 $ 5,709 $ 519 $ 238 $(1,492) $ (14) $4,960
Year Ended January 3, 1998 $5,541 $ 629 $ 83 $(1,036) $ 492 $5,709
Year Ended December 28, 1996 $5,669 $1,078 $ (33) $(3,062) $1,889 $5,541
Description Balance at Established Cash Other (c) Balance
Beginning as Cost of Payments at End
of Year Acquisitions of Year
- ------------------------------------- ------------- ------------- ------------ ------------- -------------
Accrued Acquisition Expenses (b)
Year Ended January 2, 1999 $ 2,844 $ 763 $(1,640) $ (832) $ 1,135
Year Ended January 3, 1998 $ 10,303 $ 2,153 $(7,346) $ (2,266) $ 2,844
Year Ended December 28, 1996 $ 11,464 $ 19,832 $(15,800) $ (5,193) $ 10,303
Description Balance at Provision Other (f) Balance
Beginning Charged to Cash Payments at End
of Year Expense (e) of Year
- ------------------------------------- ------------- ------------ -------------- ------------- -------------
Accrued Restructuring Costs (d)
Year Ended January 2, 1999 $ - $ 7,422 $ (2,663) $ 184 $ 4,943
(a) Includes allowance of businesses acquired during the year as described in
Note 2 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 2 to
Consolidated Financial Statements in the Registrant's 1998 Annual Report to
Shareholders.
(c) Primarily represents reversal of accrued acquisition expenses and
corresponding reduction of cost in excess of net assets of acquired
companies resulting from finalization of restructuring plans.
(d) The nature of activity in this account is described in Note 9 to
Consolidated Financial Statements in the Registrant's 1998 Annual Report to
Shareholders.
(e) Excludes provision of $0.2 million for an asset write-down and $0.4 million
for the loss on the sale of a division.
(f) Represents the effect of foreign currency translation.
13
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
2.1 Stock Purchase Agreement dated as of November 4, 1996, among Thermo
Instrument, 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).
2.3 Share Purchase Agreement dated as of July 30, 1997, between the
Company and Thermo Instrument (filed as Exhibit 2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 28, 1997
[File No. 1-11757] and incorporated herein by reference).
2.4 Share Purchase Agreement dated as of August 10, 1998, between the
Company and Thermo Instrument Systems Inc. Pursuant to Item 601(b)(2)
of Regulation S-K, schedules to this Agreement have been omitted. The
Company hereby undertakes to furnish supplementally a copy of such
schedules to the Commission upon request (filed as Exhibit 2 to the
Company's Quarterly Report on Form 10-Q for the quarter ended October
3, 1998 [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 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 (filed as Exhibit
10.4 to the Company's Annual Report on Form 10-K for the fiscal year
ended December 28, 1996 [File No. 1-11757] and incorporated herein by
reference).
10.5 Amended and Restated Master Guarantee Reimbursement and Loan
Agreement dated as December 5, 1997, between Thermo Electron and the
Company (filed as Exhibit 10.35 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).
14
Exhibit
Number Description of Exhibit
10.6 Amended and Restated Master Guarantee Reimbursement and Loan
Agreement dated as of December 5, 1997 between Thermo Instrument and
the Company (filed as Exhibit 10.6 to the Company's Annual Report on
Form 10-K for the fiscal year ended January 3, 1998 [File No.
1-11757] 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. The terms of such plans are substantially the same as
those of the Company's Equity Incentive Plan.
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).
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
(filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 28, 1996 [File No. 1-11757] and
incorporated herein by reference).
10.16 $40,000,000 Promissory Note dated as of August 5, 1997, issued by the
Company to Thermo Electron (filed as Exhibit 10 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 28, 1997
[File No. 1-11757] and incorporated herein by reference).
15
Exhibit
Number Description of Exhibit
10.17 $3,800,000 Promissory Note dated as of July 14, 1997, issued by
Thermo Vision Corporation to Thermo Electron Corporation (filed as
Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 27, 1997 [File No. 1-11757] and incorporated
herein by reference).
10.18 $3.6 Million Principal Amount Promissory Note and $347,438 Principal
Amount Promissory Note, both due February 18, 2000, issued by Thermo
Vision to Thermo Optek (filed as Exhibit 10.17 to the Thermo Vision's
Registration Statement on Form 10 [File No. 1-13391] 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.
27.1 Financial Data Schedule for the year ended January 2, 1999.
27.2 Financial Data Schedule for the year ended January 3, 1998 (restated
for the acquisition of Haake).
27.3 Financial Data Schedule for the year ended December 28, 1996
(restated for the acquisition of Haake).