-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HNi/GGBBFv7eFTRT0Svt/nQrpuHC12/6m4SOITCRX5tRfArZMSZVtbsw5UGjkmv0 gyXNx5ZMTl7fxDSKzEfhjg== 0000795986-00-000034.txt : 20000515 0000795986-00-000034.hdr.sgml : 20000515 ACCESSION NUMBER: 0000795986-00-000034 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000401 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: THERMO INSTRUMENT SYSTEMS INC CENTRAL INDEX KEY: 0000795986 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 042925809 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09786 FILM NUMBER: 629272 BUSINESS ADDRESS: STREET 1: 81 WYMAN ST STREET 2: PO BOX 9046 CITY: WALTHAM STATE: MA ZIP: 02454-9046 BUSINESS PHONE: 7816221000 MAIL ADDRESS: STREET 1: 81 WYMAN ST STREET 2: PO BOX 9046 CITY: WALTHAM STATE: MA ZIP: 02454 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ---------------------------------------------------- FORM 10-Q (mark one) [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarter Ended April 1, 2000 [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 1-9786 THERMO INSTRUMENT SYSTEMS INC. (Exact name of Registrant as specified in its charter) Delaware 04-2925809 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 81 Wyman Street, P.O. Box 9046 Waltham, Massachusetts 02454-9046 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (781) 622-1000 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date. Class Outstanding at April 28, 2000 Common Stock, $.10 par value 129,407,639 PART I - FINANCIAL INFORMATION Item 1 - Financial Statements THERMO INSTRUMENT SYSTEMS INC. Consolidated Balance Sheet (Unaudited) Assets
April 1, January 1, (In thousands) 2000 2000 - ----------------------------------------------------------------------------------- ----------- ---------- Current Assets: Cash and cash equivalents $ 188,588 $ 185,492 Advance to affiliate 274,335 256,522 Accounts receivable, less allowances of $29,315 and $29,837 458,063 489,264 Inventories: Raw materials and supplies 154,068 152,865 Work in process 66,067 60,227 Finished goods 125,789 114,809 Deferred tax asset and refundable income taxes 66,343 67,627 Other current assets 46,621 45,280 ---------- ---------- 1,379,874 1,372,086 ---------- ---------- Property, Plant, and Equipment, at Cost 443,154 441,577 Less: Accumulated depreciation and amortization 160,742 154,170 ---------- ---------- 282,412 287,407 ---------- ---------- Other Assets 147,841 159,574 ---------- ---------- Cost in Excess of Net Assets of Acquired Companies 1,041,155 1,066,291 ---------- ---------- $2,851,282 $2,885,358 ========== ========== 2 THERMO INSTRUMENT SYSTEMS INC. Consolidated Balance Sheet (continued) (Unaudited) Liabilities and Shareholders' Investment April 1, January 1, (In thousands except share amounts) 2000 2000 - ----------------------------------------------------------------------------------- ----------- ---------- Current Liabilities: Short-term obligations and current maturities of long-term $ 268,196 $ 292,702 obligations (includes advance from affiliate of $72,359 and $54,855 and related-party debt of $8,755) Short-term obligations and current maturities of long-term 153,800 153,800 obligations, due to parent company Accounts payable 118,273 119,956 Accrued payroll and employee benefits 66,205 73,077 Accrued income taxes 100,433 90,734 Accrued installation and warranty expenses 41,040 41,796 Deferred revenue 55,052 46,592 Other accrued expenses (Notes 5 and 6) 156,700 175,436 Due to parent company and affiliated companies 10,023 9,193 ---------- ---------- 969,722 1,003,286 ---------- ---------- Deferred Income Taxes 18,015 22,034 ---------- ---------- Other Deferred Items 36,465 35,433 ---------- ---------- Long-term Obligations: Senior convertible obligations (includes $140,000 due to parent 172,500 312,500 company in 1999; Note 9) Subordinated convertible obligations (includes $3,000 of related-party debt) 250,000 250,000 Other 32,061 33,994 ---------- ---------- 454,561 596,494 ---------- ---------- Minority Interest 242,621 243,545 ---------- ---------- Shareholders' Investment (Note 9): Common stock, $.10 par value, 250,000,000 shares authorized; 13,400 12,359 133,996,730 and 123,591,238 shares issued Capital in excess of par value 488,392 343,891 Retained earnings 783,114 763,782 Treasury stock at cost, 4,635,300 and 4,824,335 shares (73,940) (75,914) Deferred compensation (331) (373) Accumulated other comprehensive items (Note 2) (80,737) (59,179) ---------- ---------- 1,129,898 984,566 ---------- ---------- $2,851,282 $2,885,358 ========== ========== The accompanying notes are an integral part of these consolidated financial statements. 3 THERMO INSTRUMENT SYSTEMS INC. Consolidated Statement of Income (Unaudited) Three Months Ended April 1, April 3, (In thousands except per share amounts) 2000 1999 - ----------------------------------------------------------------------------------- ----------- ---------- Revenues $521,086 $463,579 -------- -------- Costs and Operating Expenses: Cost of revenues 276,202 252,123 Selling, general, and administrative expenses 150,737 130,444 Research and development expenses 44,842 34,193 Restructuring and other unusual costs (income), net (Note 6) (12,477) 1,243 -------- -------- 459,304 418,003 -------- -------- Operating Income 61,782 45,576 Interest Income 5,906 6,326 Interest Expense (includes $3,055 and $2,986 to parent company) (12,583) (12,185) Equity in Losses of Unconsolidated Subsidiaries (13,402) - Other Income (Expense), Net 1,567 (570) -------- -------- Income Before Provision for Income Taxes and Minority Interest 43,270 39,147 Provision for Income Taxes 19,482 16,008 Minority Interest Expense 4,456 4,254 -------- -------- Net Income $ 19,332 $ 18,885 ======== ======== Earnings per Share (Note 3): Basic $ .16 $ .16 ======== ======== Diluted $ .15 $ .15 ======== ======== Weighted Average Shares (Note 3): Basic 124,462 119,302 ======== ======== Diluted 130,225 131,088 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 4 THERMO INSTRUMENT SYSTEMS INC. Consolidated Statement of Cash Flows (Unaudited) Three Months Ended April 1, April 3, (In thousands) 2000 1999 - ----------------------------------------------------------------------------------- ----------- ---------- Operating Activities: Net income $ 19,332 $ 18,885 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 20,729 17,405 Provision for losses on accounts receivable 1,304 943 Gain on sale of businesses (Note 6) (12,393) - Equity in losses of unconsolidated subsidiaries (Note 6) 13,402 - Minority interest expense 4,456 4,254 Increase (decrease) in deferred income taxes (1,528) 29 Other noncash items (1,044) 5,839 Changes in current accounts, excluding the effects of acquisitions and dispositions: Accounts receivable 12,732 13,200 Inventories (32,386) (9,093) Other current assets (1,720) (707) Accounts payable (4,071) (5,111) Other current liabilities (1,640) (12,604) Other (60) (1,971) ---------- --------- Net cash provided by operating activities 17,113 31,069 ---------- --------- Investing Activities: Acquisitions, net of cash acquired (4,744) (322,996) Acquisition of minority interest of subsidiaries (Note 7) (11,520) - Proceeds from sale of businesses, net of cash divested (Note 6) 38,484 - Advances to affiliate, net (19,875) - Purchases of property, plant, and equipment (12,578) (9,204) Proceeds from sale of property, plant, and equipment 1,317 4,802 Other, net 2,018 1,541 ---------- --------- Net cash used in investing activities $ (6,898) $(325,857) ---------- --------- 5 THERMO INSTRUMENT SYSTEMS INC. Consolidated Statement of Cash Flows (continued) (Unaudited) Three Months Ended April 1, April 3, (In thousands) 2000 1999 - ------------------------------------------------------------------------- --------- ----------- ---------- Financing Activities: Net proceeds from issuance of Company and subsidiary common stock $ 5,615 $ 442 Purchases of Company and subsidiary common stock and subordinated - (12,042) convertible debentures Net proceeds from issuance of short-term obligation to parent company - 200,000 Repayment of long-term obligations to parent company - (10,000) Increase (decrease) in short-term obligations, net (18,589) 309 Proceeds from issuance of long-term obligations 3,019 14,484 Repayment of long-term obligations (3,519) (3,118) ---------- --------- Net cash provided by (used in) financing activities (13,474) 190,075 ---------- --------- Exchange Rate Effect on Cash 6,355 (6,043) ---------- --------- Increase (Decrease) in Cash and Cash Equivalents 3,096 (110,756) Cash and Cash Equivalents at Beginning of Period 185,492 553,825 ---------- --------- Cash and Cash Equivalents at End of Period $ 188,588 $ 443,069 ========== ========= Noncash Activities: Fair value of assets of acquired companies $ 7,479 $ 560,910 Cash paid for acquired companies (5,000) (363,498) Cash to be paid for remaining outstanding shares of tender offer - (2,452) ---------- --------- Liabilities assumed of acquired companies $ 2,479 $ 194,960 ========== ========= Conversions of Company convertible obligations by parent company $ 140,000 $ - ========== ========= The accompanying notes are an integral part of these consolidated financial statements. 6 THERMO INSTRUMENT SYSTEMS INC. Notes to Consolidated Financial Statements 1. General The interim consolidated financial statements presented have been prepared by Thermo Instrument Systems Inc. (the Company) without audit and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the financial position at April 1, 2000, and the results of operations and cash flows for the three-month periods ended April 1, 2000, and April 3, 1999. Interim results are not necessarily indicative of results for a full year. The consolidated balance sheet presented as of January 1, 2000, has been derived from the consolidated financial statements that have been audited by the Company's independent public accountants. The consolidated financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in the annual financial statements and notes of the Company. The consolidated financial statements and notes included herein should be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2000, filed with the Securities and Exchange Commission. 2. Comprehensive Income Comprehensive income combines net income and "other comprehensive items," which represents certain amounts that are reported as components of shareholders' investment in the accompanying balance sheet, including foreign currency translation adjustments and unrealized net of tax gains and losses on available-for-sale investments. During the first quarter of 2000 and 1999, the Company had comprehensive income of $0.8 million and a comprehensive loss of $8.3 million, respectively. 3. Earnings per Share Basic and diluted earnings per share were calculated as follows: Three Months Ended April 1, April 3, (In thousands except per share amounts) 2000 1999 - ------------------------------------------------------------- ---------- ----------- ---------- ---------- Basic Net Income $19,332 $ 18,885 ------- -------- Weighted Average Shares 124,462 119,302 ------- -------- Basic Earnings per Share $ .16 $ .16 ======= ======== Diluted Net Income $19,332 $ 18,885 Effect of: Convertible obligations 357 855 Majority-owned subsidiaries' dilutive securities (781) (503) ------- -------- Income Available to Common Shareholders, as Adjusted $18,908 $ 19,237 ------- -------- Weighted Average Shares 124,462 119,302 Effect of: Convertible obligations 4,771 11,409 Stock options 992 377 ------- -------- Weighted Average Shares, as Adjusted 130,225 131,088 ------- -------- Diluted Earnings per Share $ .15 $ .15 ======= ======== 7 3. Earnings per Share (continued) The computation of diluted earnings per share for the first quarter of 2000 and 1999 excludes the effect of assuming the conversion of the Company's $250.0 million principal amount 4% subordinated convertible debentures, convertible at $35.65 per share, and $172.5 million principal amount 4 1/2% senior convertible debentures, convertible at $34.46 per share, because the effect would be antidilutive. In addition, options to purchase 355,000 and 449,000 shares of common stock were not included in the computation of diluted earnings per share for the first quarter of 2000 and 1999, respectively, because their effect would have been antidilutive due to the options' exercise prices exceeding the average market price for the common stock. 4. Business Segment Information Three Months Ended April 1, April 3, (In thousands) 2000 1999 - -------------------------------------------------------------- --- ------------- ------------ ------------ Revenues: Life Sciences $178,076 $169,236 Optical Technologies 198,011 178,478 Measurement and Control 147,673 118,673 Intersegment sales eliminations (a) (2,674) (2,808) -------- -------- $521,086 $463,579 ======== ======== Income Before Provision for Income Taxes and Minority Interest: Life Sciences $25,970 $ 24,529 Optical Technologies (b) 29,634 15,118 Measurement and Control (c) 7,517 6,891 Corporate (d) (1,339) (962) ------- -------- Total operating income 61,782 45,576 Interest and other expense, net (e) (18,512) (6,429) ------- -------- $43,270 $ 39,147 ======= ======== (a) Intersegment sales are accounted for at prices that are representative of transactions with unaffiliated parties. (b) Includes restructuring and other unusual income of $12.5 million in the first quarter of 2000 and restructuring costs of $1.2 million in the first quarter of 1999. Also includes charges of $1.4 million in the first quarter of 1999 for the sale of inventories revalued in connection with the acquisition of Spectra-Physics AB. (c) Includes charges of $3.2 million in the first quarter of 1999 for the sale of inventories revalued in connection with the acquisition of Spectra-Physics AB. (d) Primarily corporate general and administrative expenses. (e) Includes equity in losses of unconsolidated subsidiaries of $13.4 million in the first quarter of 2000 (Note 6). 8 5. Accrued Acquisition Expenses The Company has undertaken restructuring activities at certain acquired businesses. The Company's restructuring activities, which were accounted for in accordance with Emerging Issues Task Force Pronouncement (EITF) 95-3, primarily have included reductions in staffing levels and the abandonment of excess facilities. In connection with these restructuring activities, as part of the cost of the acquisitions, the Company established reserves, primarily for severance and excess facilities. In accordance with EITF 95-3, the Company finalizes its restructuring plans no later than one year from the respective dates of the acquisitions. Accrued acquisition expenses are included in other accrued expenses in the accompanying balance sheet. A summary of the changes in accrued acquisition expenses for acquisitions completed before and during 1997 is as follows:
1997 Acquisitions -------------------------------------- Abandonment Other of Excess Pre-1997 (In thousands) Severance Facilities Acquisitions Total - -------------------------------- -------------- -------------- -------------- -------------- ------------- Balance at January 1, 2000 $ 23 $1,420 $ 248 $7,437 $9,128 Usage - (14) - (318) (332) Currency translation (5) (27) (15) (164) (211) ------ ------ ------ ------ ------ Balance at April 1, 2000 $ 18 $1,379 $ 233 $6,955 $8,585 ====== ====== ====== ====== ====== The remaining accrued acquisition expenses for pre-1997 acquisitions primarily represent lease obligations for a building in Uxbridge, England, and an operating facility in Hayworth, England, with obligations through 2007. The remaining accrued acquisition expenses for 1997 acquisitions primarily represent lease obligations for an operating location in Runcorn, England, with an obligation through 2014. The amounts captioned as "other" in 1997 primarily represent costs to exit certain joint venture arrangements. A summary of the changes in accrued acquisition expenses for acquisitions completed during 1998 is as follows:
Abandonment of Excess (In thousands) Severance Facilities Other Total - ----------------------------------------------- -------------- -------------- -------------- ------------- Balance at January 1, 2000 $ 281 $ 117 $ 43 $ 441 Usage (52) (5) (10) (67) Decrease recorded to cost in excess of net (1) (94) - (95) assets of acquired companies Currency translation (9) - - (9) ----- ----- ----- ----- Balance at April 1, 2000 $ 219 $ 18 $ 33 $ 270 ===== ===== ===== ===== The remaining accrued acquisition expenses for abandonment of excess facilities for 1998 acquisitions primarily represent a lease obligation for a facility in Maryland. The amounts captioned as "other" in 1998 primarily represent relocation costs. 9 5. Accrued Acquisition Expenses (continued) A summary of the changes in accrued acquisition expenses for acquisitions completed during 1999 is as follows: Abandonment of Excess (In thousands) Severance Facilities Other Total - ----------------------------------------------- -------------- -------------- -------------- ------------- Balance at January 1, 2000 $4,984 $2,065 $2,611 $9,660 Reserves established 101 55 - 156 Usage (1,013) (52) (226) (1,291) Decrease due to finalization of (127) - - (127) restructuring plans, recorded as a decrease to cost in excess of net assets of acquired companies Currency translation (84) (63) (41) (188) ------ ------ ------ ------ Balance at April 1, 2000 $3,861 $2,005 $2,344 $8,210 ====== ====== ====== ====== The principal accrued acquisition expenses for 1999 acquisitions are severance for approximately 175 employees across all functions and for abandoned facilities, primarily at Spectra-Physics AB. The abandoned facilities at Spectra-Physics include operating facilities in Sweden, Germany, and France with obligations through 2000. The amounts captioned as "other" primarily represent relocation, contract termination, and other exit costs. The Company expects to pay amounts accrued for severance and other primarily in 2000 and amounts accrued for abandoned facilities over the respective lease terms. The Company finalized its restructuring plans for Spectra-Physics in 1999. Unresolved matters at April 1, 2000, included completion of planned severances and abandonment of excess facilities for other acquisitions completed in 1999. Such matters will be resolved no later than one year from the respective acquisition dates. 6. Restructuring Costs and Other Unusual Income During the first quarter of 2000, the Optical Technologies segment recorded $12.4 million of unusual income resulting from the sale of its Nicolet Imaging Systems (NIS) and Sierra Research and Technology, Inc. (SRT) subsidiaries. The businesses manufacture products that include imaging systems used in assembling complex printed circuit boards and in airbag manufacturing. NIS and SRT were sold for aggregate proceeds of $40.0 million and had aggregate revenues and operating income of $28.3 million and $2.2 million, respectively, in 1999. These units were sold due to a consolidation trend among manufacturers of test equipment in the markets these businesses serve. The Company has decided to focus on growth in other sectors of the instruments market. During the first quarter of 2000, this segment also recorded a noncash charge of $13.4 million associated with its equity method investment in FLIR Systems, Inc., acquired as part of the February 1999 acquisition of Spectra-Physics. FLIR recorded significant charges in its fourth quarter of 1999 and the segment has recorded its pro rata share of FLIR's loss. The segment records FLIR's results on a one quarter lag. This charge was recorded to equity in losses of unconsolidated subsidiaries in the accompanying statement of income. In addition, the Optical Technologies segment recorded other noncash income of $1.7 million related to hedging transactions of its majority-owned Spectra-Physics Lasers, Inc. (SPLI) subsidiary, which elected early adoption of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities." During 1998 and 1999, the Company and its subsidiaries recorded restructuring costs, which were accounted for in accordance with EITF 94-3, primarily for severance for 723 employees and abandoned-facility payments. As of January 1, 2000, the Company had terminated 711 employees and during the first quarter of 2000, the Company terminated 7 additional employees. As of January 1, 2000, the Company had $1.7 million accrued for severance and facility-closing costs relating to these activities. During the first quarter of 2000, the Optical Technologies segment reversed $0.1 million of previously established restructuring reserves. The Company expects to incur additional restructuring costs totaling $0.2 million in the remainder of 2000, which are not permitted as charges until incurred pursuant to the requirements of EITF 94-3. 10 6. Restructuring Costs and Other Unusual Income (continued) A summary of the changes in accrued restructuring costs, which are included in other accrued expenses in the accompanying balance sheet, is as follows: Abandonment of Excess (In thousands) Severance Facilities Other Total - ----------------------------------------------- -------------- -------------- -------------- ------------- Balance at January 1, 2000 $ 893 $ 224 $ 565 $1,682 Reversal of reserves - (84) - (84) Usage (357) - - (357) Currency translation (24) (2) (9) (35) ------ ------ ------ ------ Balance at April 1, 2000 $ 512 $ 138 $ 556 $1,206 ====== ====== ====== ====== 7. Acquisition of Thermo Vision Minority Interest In July 1999, the Company's Thermo Vision Corporation subsidiary announced that it had entered into a definitive agreement and plan of merger with the Company pursuant to which the Company would acquire all of the outstanding shares of common stock of Thermo Vision held by the public shareholders in exchange for $7.00 per share in cash. The merger of Thermo Vision was completed in January 2000 and its common stock has ceased to be publicly traded. 8. Proposed Reorganization In January 2000, the Company announced plans to take private Thermo Optek Corporation, ThermoQuest Corporation, Thermo BioAnalysis Corporation, Metrika Systems Corporation, and ONIX Systems Inc. In addition, the Company announced that Thermo Electron Corporation plans to take the Company private. These actions are part of a major reorganization plan under which Thermo Electron will spin in, spin off, and sell various businesses to focus solely on its core measurement and detection instruments business. Because the Company owned more than 90% of the outstanding shares of Thermo Optek and ThermoQuest common stock, these two companies were spun in for cash through a "short-form" merger, at $15.00 and $17.00 per share, respectively, during the second quarter of 2000 and their common stock has ceased to be publicly traded. Also during the second quarter of 2000, the Company successfully completed cash tender offers of $28.00 per share for Thermo BioAnalysis, $9.00 per share for Metrika Systems, and $9.00 per share for ONIX Systems, in order to bring its own equity ownership, collective with Thermo Electron, in each of these companies to at least 90%. The Company subsequently completed the acquisition of the outstanding minority interest in each of these companies through short-form mergers at the same cash prices as the tender offers and their common stock has ceased to be publicly traded. As a result, the Company currently owns approximately 79.2%, 91.5%, and 97.9% of the outstanding shares of Thermo BioAnalysis, Metrika Systems, and ONIX Systems common stock, respectively, and Thermo Electron currently owns approximately 20.8%, 8.5%, and 2.1% of the outstanding shares of Thermo BioAnalysis, Metrika Systems, and ONIX Systems common stock, respectively. During the second quarter of 2000, Thermo Electron commenced an exchange offer for any and all of the outstanding shares of the Company's common stock held by minority shareholders. The Company's shareholders would receive 0.85 shares of Thermo Electron common stock for each share of Company common stock held. Thermo Electron, which currently owns approximately 88.6% of the outstanding shares of the Company's common stock, has conditioned the exchange offer on receiving acceptances from holders of enough shares so that, when combined with its current share ownership, Thermo Electron's ownership reaches at least 90%. If Thermo Electron achieves this 90%-ownership threshold, it will acquire all remaining outstanding shares of the Company's common stock through a short-form merger. In the short-form merger, minority shareholders who do not participate in the exchange offer would also receive shares of Thermo Electron common stock in exchange for their shares of the Company's common stock at the same ratio. 11 8. Proposed Reorganization (continued) The exchange offer will require Securities and Exchange Commission (SEC) clearance of necessary filings. The exchange offer and subsequent short-form merger of the Company with Thermo Electron would not require approval by the Company's Board of Directors or shareholders. If Thermo Electron successfully obtains ownership of at least 90% of the outstanding shares of the Company's common stock, it expects to complete the spin-in of the Company by the end of the third quarter of 2000. Obligations under the Company's 4% subordinated convertible debentures due January 15, 2005, and its 4 1/2% senior convertible debentures due October 15, 2003, would be assumed by Thermo Electron in the short-form merger, and the debentures would be convertible into Thermo Electron common stock. SPLI, acquired indirectly by the Company as part of its February 1999 acquisition of Spectra-Physics, will remain a public subsidiary while the Company and Thermo Electron continue to evaluate the SPLI business. The Company owns approximately 78.5% of the outstanding shares of SPLI common stock. 9. Conversion of Senior Convertible Note Due to Parent Company On February 15, 2000, the Company's $140.0 million principal amount 3 3/4% senior convertible note, convertible at $13.55 per share, was converted by Thermo Electron into 10,334,620 shares of Company common stock. Accordingly, the note was classified as noncurrent in the accompanying 1999 balance sheet. 10. Recent Accounting Pronouncement In December 1999, the SEC issued Staff Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial Statements." SAB 101 includes requirements for when shipments may be recorded as revenue when the terms of the sale include customer acceptance provisions or an obligation of the seller to install the product. In such instances, SAB 101 generally requires that revenue recognition occur upon customer acceptance and/or at completion of installation. SAB 101 requires that companies conform their revenue recognition practices to the requirements therein no later than the second quarter of calendar 2000 through recording a cumulative net of tax effect of the change in accounting as of January 2, 2000. The Company has not yet completed the analysis to determine the effect that SAB 101 will have on its financial statements. 11. Subsequent Event On May 11, 2000, the Company announced that it had entered into an agreement to sell its wholly owned Spectra Precision, Inc. businesses to Trimble Navigation Limited for approximately $200 million in cash and $80 million in seller debt financing. Spectra Precision, part of the Measurement and Control segment, was acquired in February 1999 as part of Spectra-Physics and provides the construction, surveying, and heavy machine industries with precision positioning equipment. These businesses are being sold as they are outside the Company's renewed focus on measurement and detection instrumentation. Closing of the transaction, expected at the end of the second quarter of 2000, is subject to regulatory approval, financing, and other customary conditions. 12 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, are made throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations. 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 Exhibit 13 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2000, filed with the Securities and Exchange Commission. Overview The Company is a worldwide leader in the development, manufacture, and sale of measurement and detection instruments used in virtually every industry to monitor, collect, and analyze data that provide knowledge for the user. For example, the Company's powerful analysis technologies help researchers sift through data to make the discoveries that will fight disease or prolong life; allow manufacturers to fabricate ever-smaller components required to increase the speed and quality of communications; or monitor and control industrial processes on-line to ensure that critical quality standards are met efficiently and safely. The Company's businesses operate in three instrumentation segments: Life Sciences, Optical Technologies, and Measurement and Control. The Life Sciences segment includes the Company's Thermo BioAnalysis Corporation and ThermoQuest Corporation subsidiaries, as well as certain wholly owned subsidiaries. This segment develops and manufactures systems for drug discovery and medical diagnosis and for chemical analysis at ultratrace levels. The Optical Technologies segment consists of Thermo Optek Corporation, ThermoSpectra Corporation, Thermo Vision Corporation, Spectra-Physics Lasers, Inc. (SPLI), and certain other wholly owned businesses. This segment develops and manufactures optical and energy-based analytical systems; high-power laser systems; and industrial imaging, inspection, and measurement instruments. The Measurement and Control segment includes the Company's ONIX Systems Inc. and Metrika Systems Corporation subsidiaries, as well as certain wholly owned subsidiaries, including businesses of Spectra-Physics AB, acquired in February 1999. This segment develops and manufactures on-line systems for industrial processes and quality control, field-measurement instruments, and real-time sensors. International sales account for a significant portion of the Company's total revenues. Although the Company seeks to charge its customers in the same currency as its operating costs, the Company's financial performance and competitive position can be affected by currency exchange rate fluctuations. Where appropriate, the Company uses short-term forward foreign exchange contracts to reduce its exposure to currency fluctuations. Results of Operations First Quarter 2000 Compared With First Quarter 1999 Revenues increased $57.5 million to $521.1 million in the first quarter of 2000 from $463.6 million in the first quarter of 1999. Revenues increased $53.6 million due to the inclusion of revenues from 1999 acquisitions for the full period and an acquisition made in 2000, net of dispositions that reduced revenues by $3.6 million. This increase in revenues was offset in part by a decrease in revenues of $14.9 million due to the unfavorable effects of currency translation as a result of the strengthening of the U.S. dollar relative to foreign currencies in countries in which the Company operates. Excluding the impact of acquisitions, dispositions, and currency translation, revenues increased $18.8 million. 13 First Quarter 2000 Compared With First Quarter 1999 (continued) Life Sciences segment revenues increased to $178.1 million in the first quarter of 2000 from $169.2 million in the first quarter of 1999. Revenues increased $7.5 million due to acquisitions. The unfavorable effects of currency translation decreased revenues in this segment by $7.4 million. Excluding the effect of acquisitions and currency translation, revenues increased $8.8 million. Revenues from pharmaceutical and biochemical research products increased $3.9 million due to higher demand for the segment's immunoassay testing and newly introduced Multiblock deoxyribonucleic acid (DNA) amplification products. Revenues from analytical instruments increased $3.2 million due to higher sales of mass spectrometers in Europe and Asia. Revenues from scientific equipment increased $2.2 million due to higher demand for controlled-environment laboratory equipment. These increases in revenues were offset in part by lower revenues from information management systems due to lower demand in the U.S. Optical Technologies segment revenues increased to $198.0 million in the first quarter of 2000 from $178.5 million in the first quarter of 1999. Revenues increased $13.8 million due to acquisitions, net of dispositions, primarily the acquisition of SPLI, in which the Company acquired a majority interest on February 22, 1999. The dispositions primarily included the segment's Nicolet Imaging Systems (NIS) and Sierra Research and Technology, Inc. (SRT) businesses that were sold in March 2000 (Note 6). These units were sold due to a consolidation trend among manufacturers of test equipment in the markets these businesses serve. The Company has decided to focus on growth in other sectors of the instruments market. The unfavorable effects of currency translation decreased revenues in this segment by $5.4 million in 2000. Excluding the effect of acquisitions, dispositions, and currency translation, revenues increased $11.1 million. The increase in revenues was due in part to $4.6 million of increased demand for products sold to the semiconductor industry by the segment's physical properties business. The semiconductor sector is experiencing renewed growth after a downturn in the first half of 1999. Revenues from elemental analysis instruments increased $3.2 million in 2000, primarily due to new product introductions, and revenues from photonics products increased $2.8 million, primarily due to strong demand for gratings used in systems for semiconductor manufacturers and in telecommunications. Measurement and Control segment revenues increased to $147.7 million in the first quarter of 2000 from $118.7 million in the first quarter of 1999. Revenues increased $32.3 million due to acquisitions, primarily that of Spectra-Physics AB's wholly owned businesses, acquired on February 22, 1999. The unfavorable effects of currency translation decreased revenues in this segment by $2.1 million. Excluding the effect of acquisitions and currency translation, revenues decreased $1.2 million. Revenues from process control products decreased $1.5 million, primarily as a result of reduced discretionary capital spending by companies in the process control industry and by the oil and gas production sector. Revenues from process-optimization systems decreased $1.2 million, primarily due to a reduction in spending in the metals industry due to depressed pricing. These decreases in revenues were offset in part by higher revenues from the sale of environmental-monitoring instruments. The gross profit margin increased to 47% in the first quarter of 2000 from 46% the first quarter of 1999. The 1999 period included lower-margin revenues from Spectra-Physics, which recorded a charge of $4.6 million relating to the sale of inventories revalued at the date of acquisition, of which $3.2 million was recorded by the Measurement and Control segment and $1.4 million by the Optical Technologies segment. Excluding the charge for the sale of revalued inventories in 1999, the gross profit margin remained unchanged at 47% in 2000 and 1999. Selling, general, and administrative expenses as a percentage of revenues increased to 29% in the first quarter of 2000 from 28% in the first quarter of 1999, principally due to the inclusion of higher selling, general, and administrative expenses as a percentage of revenues at the wholly owned businesses of Spectra-Physics. Research and development expenses increased to $44.8 million in the first quarter of 2000 from $34.2 million in the first quarter of 1999, primarily due to the inclusion of expenses at Spectra-Physics and, to a lesser extent, other acquired businesses. In addition, research and development expenses increased due to spending on new product development, including the V150 molecular beam epitaxy system. Research and development expenses as a percentage of revenues were 8.6% in 2000, compared with 7.4% in 1999. Excluding the expenses at acquired businesses, research and development expenses as a percentage of revenues were 7.7% in 2000. 14 First Quarter 2000 Compared With First Quarter 1999 (continued) The Optical Technologies segment recorded unusual income of $12.4 million in the first quarter of 2000 resulting from the sale of NIS and SRT (Note 6). In connection with the restructuring actions undertaken by the Company in 1998, this segment reversed previously established restructuring reserves of $0.1 million in the first quarter of 2000. In connection with the closing of certain facilities, the Company expects to incur approximately $0.2 million of additional costs in 2000. Interest income decreased to $5.9 million in the first quarter of 2000 from $6.3 million in the first quarter of 1999, primarily due to a reduction in invested balances as a result of acquisitions, including the acquisition of Spectra-Physics in February 1999. Interest expense increased to $12.6 million in the first quarter of 2000 from $12.2 million in the first quarter of 1999, primarily due to borrowings from Thermo Electron Corporation in connection with the acquisition of Spectra-Physics. This increase was offset in part by a decrease in interest expense as a result of the repayment of certain promissory notes to Thermo Electron that were issued in connection with acquisitions and the conversion by Thermo Electron of the Company's $140.0 million principal amount 3 3/4% senior convertible note in February 2000 (Note 9). Equity in losses of unconsolidated subsidiaries of $13.4 million in the first quarter of 2000 primarily relates to charges associated with Spectra-Physics' minority investment in FLIR Systems, Inc., which recorded significant charges in its fourth quarter of 1999. The Company reports its pro rata share of FLIR's results on a one quarter lag (Note 6). Other income (expense), net, in the first quarter of 2000 and 1999 primarily represents currency gains and losses resulting from hedging activities at SPLI, which elected early adoption of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (Note 6). The effective tax rate was 45% in the first quarter of 2000, compared with 41% in the first quarter of 1999. The effective tax rate exceeded the statutory federal income tax rate in both periods due to foreign tax rate and tax law differences, nondeductible amortization of cost in excess of net assets of acquired companies, and the impact of state income taxes. The effective tax rate increased in 2000 primarily due to the tax benefit for the loss at FLIR being recorded at 28%, the tax rate of the Swedish subsidiary that holds the investment in FLIR. Minority interest expense remained relatively unchanged at $4.5 million in the first quarter of 2000 and $4.3 million in the first quarter of 1999. Liquidity and Capital Resources Consolidated working capital was $410.2 million at April 1, 2000, compared with $368.8 million at January 1, 2000. Included in working capital are cash and cash equivalents of $188.6 million at April 1, 2000, compared with $185.5 million at January 1, 2000. Of the cash and cash equivalents balance at April 1, 2000, $149.1 million was held by the Company's majority-owned subsidiaries and the balance was held by the Company and its wholly owned subsidiaries. In addition, as of April 1, 2000, the Company had $274.3 million invested in an advance to affiliate. Of the advance to affiliate at April 1, 2000, $270.7 million was held by the Company's majority-owned subsidiaries and the balance was advanced by the Company and its wholly owned subsidiaries. At April 1, 2000, $149.6 million of the Company's cash and cash equivalents was held by its foreign subsidiaries. While this cash can be used outside of the United States, for activities including acquisitions, repatriation of this cash into the United States would be subject to foreign withholding taxes and could also be subject to a United States tax. Also reflected in working capital are $153.8 million of short-term obligations and current maturities of long-term obligations due to Thermo Electron in 2000 and an aggregate $130.0 million principal amount of ThermoQuest and Thermo Optek 5% subordinated convertible debentures due August and October 2000, respectively. Of the $153.8 million due to Thermo Electron, $150.0 million represents a promissory note due August 2000. 15 Liquidity and Capital Resources (continued) Cash provided by operating activities was $17.1 million in the first three months of 2000. A decrease in accounts receivable provided cash of $12.7 million, primarily in the Optical Technologies and Life Sciences segments due to lower sales volume in the first quarter of 2000, compared with the fourth quarter of 1999. Cash of $32.4 million was used to fund an increase in inventories, primarily in the Optical Technologies and Life Sciences segments due to a build-up of inventory in preparation of new product releases and the replenishment of year-end inventory levels. Cash of $5.7 million was used to fund a decrease in accounts payable and other current liabilities, primarily due to the timing of payments, offset in part by an increase in deferred revenue, primarily in the Optical Technologies and Life Sciences segments due to annual service contract billings in the first quarter of 2000. As of April 1, 2000, the Company had $1.2 million of accrued restructuring costs, primarily all of which it expects to pay in 2000. As of April 1, 2000, the Company had accrued $17.0 million for acquisition expenses. Accrued acquisition expenses includes $4.1 million of severance obligations, which the Company expects to pay primarily in 2000. The balance, which primarily represents abandoned-facility payments, will be paid over the remaining terms of the leases through 2014. During the first three months of 2000, the Company's primary investing activities, excluding advance to affiliate activity, included the acquisition of the minority interest of Thermo Vision, dispositions, and the purchase of property, plant, and equipment. During the first three months of 2000, the Company expended $11.2 million to acquire the minority interest of Thermo Vision (Note 7) and expended an additional $0.3 million related to the acquisition of the minority interest of ThermoSpectra, which was completed in December 1999. The Company will expend additional cash of approximately $260 million, primarily in the second quarter of 2000, for the repurchases of the public shares that it does not already own of its majority-owned subsidiaries, excluding SPLI (Note 8). The Company received aggregate net proceeds of $38.5 million, net of cash divested, from the sale of NIS and SRT in March 2000 (Note 6). The Company expended $12.6 million for purchases of property, plant, and equipment and $4.7 million, net of cash acquired, for an acquisition. During the remainder of 2000, the Company plans to make expenditures of approximately $53 million for property, plant, and equipment. The Company's financing activities used $13.5 million of cash in the first three months of 2000, primarily as a result of the repayment of $22.1 million of short- and long-term obligations. On May 11, 2000, the Company announced that it had entered into an agreement to sell its wholly owned Spectra Precision, Inc. businesses to Trimble Navigation Limited for approximately $200 million in cash and $80 million in seller debt financing (Note 11). The Company has short-term obligations and current maturities of long-term obligations due to Thermo Electron primarily in August 2000, totaling $153.8 million at April 1, 2000. In addition, ThermoQuest's $61.0 million and Thermo Optek's $69.0 million principal amount 5% subordinated convertible debentures are due in August and October 2000, respectively, although earlier repayment is expected upon completion of the transactions discussed in Note 8. The Company has an agreement with Thermo Electron under which the Company may borrow up to $400 million on a short-term basis in connection with the acquisition of the minority interest of its publicly held subsidiaries, excluding SPLI, and the redemption of the subsidiary debentures. As of May 12, 2000, the Company has borrowed $231 million under this agreement. Thermo Electron has indicated that it will seek repayment from the Company of such borrowings, in addition to the Company's $150.0 million promissory note, only to the extent the Company's cash flow permits such repayments. Excluding such debt and the 5% subordinated convertible debentures of ThermoQuest and Thermo Optek, the Company believes that its existing resources are sufficient to meet the capital requirements of its existing operations for the foreseeable future. The Company has historically complemented internal development with acquisitions of businesses or technologies that extend the Company's presence in current markets or provide opportunities to enter and compete effectively in new markets. The Company will consider making acquisitions of such businesses or technologies that are consistent with its plans for strategic growth. The Company expects that it will finance these acquisitions through a combination of internal funds, and/or short-term borrowings from Thermo Electron although there is no agreement with Thermo Electron to ensure that funds will be available on acceptable terms or at all. 16 Item 3 - Quantitative and Qualitative Disclosures About Market Risk The Company's exposure to market risk from changes in foreign currency exchange rates, interest rates, and equity prices has not changed materially from its exposure at year-end 1999. PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits See Exhibit Index on the page immediately preceding exhibits. (b) Reports on Form 8-K On February 1, 2000, the Company filed a Current Report on Form 8-K dated January 31, 2000, with respect to certain corporate transactions affecting it and its majority-owned public subsidiaries. 17 SIGNATURES Pursuant to the requirements 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 as of the 12th day of May 2000. THERMO INSTRUMENT SYSTEMS INC. /s/ Theo Melas-Kyriazi Theo Melas-Kyriazi Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 18
EXHIBIT INDEX Exhibit Number Description of Exhibit 3 Amended By-Laws of the Registrant. 27 Financial Data Schedule. EX-3.(I) 2 Exhibit 3 As Amended through March 29, 2000 THERMO INSTRUMENT SYSTEMS INC. BY-LAWS TABLE OF CONTENTS Title Page Article I - General 1 Section 1.1. Offices 1 Section 1.2. Seal 1 Section 1.3. Fiscal Year 1 Article II - Stockholders 1 Section 2.1. Place of Meeting 1 Section 2.2. Annual Meeting 1 Section 2.3. Quorum 1 Section 2.4. Right to Vote; Proxies 2 Section 2.5. Record Date 2 Section 2.6. Voting 2 Section 2.7. Notice of Annual Meetings 2 Section 2.8. Stockholders' List 2 Section 2.9. Special Meetings 2 Section 2.10. Notice of Special Meetings 2 Section 2.11. Stockholders' Action by Consent 3 Article III - Directors 3 Section 3.1. Number of Directors 3 Section 3.2. Change in Number of Directors; Vacancies 3 Section 3.3. Resignation 4 Section 3.4. Removal 4 Section 3.5. Place of Meetings and Books 4 Section 3.6. General Powers 4 Section 3.7. Executive Committee 4 Section 3.8. Other Committees 4 Section 3.9. Power Denied to Committees 4 Section 3.10. Substitute Committee Member 5 Title Page Section 3.11. Compensation of Directors 5 Section 3.12. Notice of Meetings 5 Section 3.13. Regular Meetings 5 Section 3.14. Special Meetings 5 Section 3.15. Quorum 5 Section 3.16. Telephonic Participation in Meetings 6 Section 3.17. Action by Consent 6 Article IV - Officers 6 Section 4.1. Selection; Statutory Officers 6 Section 4.2. Time of Election 6 Section 4.3. Additional Officers 6 Section 4.4. Terms of Office 6 Section 4.5. Compensation of Officers 6 Section 4.6. Chairman of the Board 6 Section 4.7. President 7 Section 4.8. Vice-Presidents 7 Section 4.9. Treasurer 7 Section 4.10. Secretary 7 Section 4.11. Assistant Secretary 8 Section 4.12. Assistant Treasurer 8 Section 4.13. Subordinate Officers 8 Article V - Stock 8 Section 5.1 Stock 8 Section 5.2. Transfers of Stock 8 Section 5.3. Record Date 9 Section 5.4. Transfer Agent and Registrar 9 Section 5.5. Dividends 9 1. Power to Declare 9 2.Reserves 9 Section 5.6. Lost, Stolen or Destroyed Certificates 9 Section 5.7. Inspection of Books 9 Article VI - Miscellaneous Management Provisions 10 Section 6.1. Checks, Drafts and Notes 10 Section 6.2. Notices 10 Section 6.3. Conflict of Interest 10 Section 6.4. Voting of Securities Owned by this Corporation 11 Title Page Article VII - Indemnification 11 Section 7.1. Power to Indemnify in Actions, Suits or Proceedings other than those by or in the Right of the Corporation 11 Section 7.2. Power to Indemnify in Actions, Suits o or Proceedings by or in the Right of the Corporation 11 Section 7.3. Authorization of Indemnification 12 Section 7.4. Good Faith Defined 12 Section 7.5. Indemnification by a Court 13 Section 7.6. Expenses Payable in Advance 13 Section 7.7. Non-Exclusivity of Indemnification and Advancement of Expenses 13 Section 7.8. Insurance 13 Section 7.9. Meaning of "Corporation" for Purposes of Article VII 13 Section 7.10. Survival of Indemnification and Advancement of Expenses 14 Section 7.11. Severability 14 Section 7.12. Intent of Article 14 Article VIII - Amendments 14 Section 8.1. Amendments 14 THERMO INSTRUMENT SYSTEMS INC. BY-LAWS ARTICLE I - GENERAL Section 1.1. Offices. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require. Section 1.2. Seal. The seal of the corporation shall, upon issuance, be in the form of a circle and shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware" and may reside at the corporate offices. Section 1.3. Fiscal Year. The fiscal year of the corporation shall be the 52 or 53 weeks ending on the Saturday nearest December 31 in each year. ARTICLE II- STOCKHOLDERS Section 2.1. Place of Meetings. All meetings of the stockholders shall be held at such place or places within or without the State of Delaware as may be fixed from time to time by the Board of Directors. Section 2.2. Annual Meeting. The annual meeting of the stockholders shall be held each year on such date and at such time as the Board of Directors may determine. At each annual meeting the stockholders entitled to vote shall elect a Board of Directors by plurality vote by ballot, and they may transact such other corporate business as may properly be brought before the meeting. At the annual meeting any business may be transacted, irrespective of whether the notice calling such meeting shall have contained a reference thereto, except where notice is required by law, the certificate of incorporation, or these by-laws. Section 2.3. Quorum. At all meetings of the stockholders the holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum requisite for the transaction of business except as otherwise provided by law, by the certificate of incorporation or by these by-laws. If, however, such majority shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or by proxy, by a majority vote, shall have power to adjourn the meeting from time to time without notice other than announcement at the meeting until the requisite amount of voting stock shall be present. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At such adjourned meeting, at which the requisite amount of voting stock shall be represented, any business may be transacted which might have been transacted if the meeting had been held as originally called. Section 2.4. Right to Vote, Proxies. Each stockholder having the right to vote at any meeting shall be entitled to one vote for each share of stock held by him. Any stockholder entitled to vote at any meeting of stockholders may vote either in person or by proxy, but no proxy which is dated more than three years prior to the meeting at which it is offered shall confer the right to vote thereat unless the proxy provides that it shall be effective for a longer period. Every proxy shall be in writing, subscribed by a stockholder or his duly authorized attorney in fact, and dated, but need not be sealed, witnessed, or acknowledged. Section 2.5. Record Date. Except where the transfer books of the corporation shall have been closed, or a date shall have been fixed as the record date for the determination of its stockholders entitled to vote as provided in Section 5.3 of these by-laws, no share of stock shall be voted at any election for directors which shall have been transferred on the books of the corporation within twenty (20) days next preceding said election of directors. Section 2.6. Voting. At all meetings of stockholders all questions, except as otherwise expressly provided for by statute, the certificate of incorporation or these by-laws, shall be determined by a majority vote of the stockholders present in person or represented by proxy. All elections shall be decided by a majority of the shares voting thereon. Section 2.7. Notice of Annual Meetings, Written notice of the annual meeting of the stockholders shall be mailed to each stockholder entitled to vote thereat at such address as appears on the stock books of the corporation at least ten (10) days (and not more than sixty (60) days) prior to the meeting. It shall be the duty of every stockholder to furnish to the Secretary of the corporation or to the transfer agent, if any, of the class of stock owned by him, his post-office address and to notify said Secretary or transfer agent of any change therein. Section 2.8. Stockholders' List. A complete list of the stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order and showing the address of each stockholder, and the number of shares registered in the name of each stockholder, shall be prepared by the Secretary and filed either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held, at least ten days before such meeting, and shall at all times during the usual hours for business, and during the whole time of said election, be open to the examination of any stockholder for a purpose germane to the meeting. Section 2.9. Special Meetings. Special meetings of the stockholders for any purpose or purposes, unless otherwise provided by statute, may be called by the Board of Directors, the Chairman of the Board, if any, the President or any Vice President. Section 2.10. Notice of Special Meetings. Written notice of a special meeting of stockholders, stating the time and place and object thereof shall be mailed, postage prepaid, not less than ten (10) nor more than sixty (60) days before such meeting, to each stockholder entitled to vote thereat, at such address as appears on the books of the corporation. No business may be transacted at such meeting except that referred to in said notice, or in a supplemental notice given also in compliance with the provisions hereof, or such other business as may be germane or supplementary to that stated in said notice or notices. Section 2.11. Stockholders' Action by Consent. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of the statutes, the certificate of incorporation, or these by-laws, the meeting and vote of stockholders may be dispensed with, and any corporate action upon which a vote of stockholders is required or permitted may be taken with the written consent of stockholders having not less than 50% of all of the stock entitled to vote upon the action if a meeting were held; provided that in no case shall the written consent be by holders having less than the minimum percentage of the total vote required by statute for the proposed corporate action and provided that prompt notice be given to all stockholders of the taking of such corporate action without a meeting and by less than unanimous consent. ARTICLE III- DIRECTORS Section 3.1. Number of Directors. Except as otherwise provided by law, the certificate of incorporation or these by-laws, the property and business of the corporation shall be managed by or under the direction of a board of not less than two nor more than thirteen directors. Within the limits specified, the number of directors shall be determined by resolution of the Board of Directors or by the stockholders at the annual meeting. Directors need not be stockholders. The directors shall be elected by ballot at the annual meeting of the stockholders and each director shall be elected to serve until his successor shall be elected and shall qualify or until his earlier resignation or removal; provided that in the event of failure to hold such meeting or to hold such election at such meeting, such election may be held at any special meeting of the stockholders called for that purpose. If the office of any director becomes vacant by reason of death, resignation, disqualification, removal, failure to elect, or otherwise, the remaining directors, although less than a quorum, by a majority vote of such remaining directors may elect a successor or successors who shall hold office for the unexpired term or until their earlier resignation or removal. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are elected and qualified or until their earlier resignation or removal. Section 3.2. Change in Number of Directors; Vacancies. The maximum number of directors may be increased by an amendment to these by-laws adopted by a majority vote of the Board of Directors or by a majority vote of the capital stock having voting power, and if the number of directors is so increased by action of the Board of Directors or of the stockholders or otherwise, then the additional directors may be elected in the manner provided in Section 3.1 of these by-laws for the filling of vacancies in the Board of Directors or at the annual meeting of stockholders or at a special meeting called for that purpose. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law or these bylaws, may exercise the powers of the full board until the vacancy is filled. Section 3.3 Resignation. Any director of this corporation may resign at any time by giving written notice to the Chairman of the Board, if any, the President or the Secretary of the corporation. Such resignation shall take effect at the time specified therein, at the time of receipt if no time is specified therein and at the time of acceptance if the effectiveness of such resignation is conditioned upon its acceptance. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 3.4. Removal. Any director or the entire Board of Directors may be removed with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. Section 3.5. Place of Meetings and Books. The Board of Directors may hold their meetings and keep the books of the corporation outside the State of Delaware, at such places as they may from time to time determine. Section 3.6. General Powers. In addition to the powers and authority expressly conferred upon them by these by-laws, the board may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. Section 3.7. Executive Committee. There may be an executive committee of one or more directors designated by resolution passed by a majority of the whole board. The act of a majority of the members of such committee shall be the act of the committee. Said committee may meet at stated times or on notice to all by any of their own number, and shall have and may exercise those powers of the Board of Directors in the management of the business affairs of the Company as are provided by law and may authorize the seal of the corporation to be affixed to all papers which may require it. Vacancies in the membership of the committee shall be filled by the Board of Directors at a regular meeting or at a special meeting called for that purpose. Section 3.8. Other Committees. The Board of Directors may also designate one or more committees in addition to the executive committee, by resolution or resolutions passed by a majority of the whole board; such committee or committees shall consist of one or more directors of the corporation, and to the extent provided in the resolution or resolutions designating them, shall have and may exercise specific powers of the Board of Directors in the management of the business and affairs of the corporation to the extent permitted by statute and shall have power to authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Section 3.9. Powers Denied to Committees. Committees of the Board of Directors shall not, in any event, have any power or authority to amend the certificate of incorporation, adopt an agreement of merger or consolidation, recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommend to the stockholders a dissolution of the corporation or a revocation or a dissolution or to amend the bylaws of the corporation. Further, committees of the Board of Directors shall not have any power or authority to declare a dividend or to authorize the issuance of stock. Section 3.10. Substitute Committee Member. In the absence or on the disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of such absent or disqualified member. Any committee shall keep regular minutes of its proceedings and report the same to the board as may be required by the board. Section 3.11. Compensation of Directors. The Board of Directors shall have the power to fix the compensation of directors and members of committees of the Board. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and/or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. Section 3.12. Notice of Meetings. The newly elected board may meet at such place and time as shall be fixed and announced by the Chairman of the Board, the President or Secretary, for the purpose of organization or otherwise, and no further notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such place and time as shall be stated in a notice given to such directors either personally or by telephone, telecopy, cable, commercial delivery service, telex, telegram or similar means twenty-four (24) hours prior to such meeting, or as shall be fixed by the consent in writing of all the directors. Section 3.13. Regular Meetings. Regular meetings of the board may be held without notice at such time and place as shall from time to time be determined by the board. Section 3.14. Special Meetings. Special meetings of the board may be called by the Chairman of the Board, if any, the President or Secretary, on twenty-four (24) hours' notice to each director, either personally or by telephone, telecopy, cable, commercial delivery service, telex, telegram, or similar means to his business or home address; special meetings shall be called by the Secretary in like manner and on like notice, on the written request of two directors. Section 3.15. Quorum. At all meetings of the Board of Directors, a majority of the total number of directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically permitted or provided by statute, or by the certificate of incorporation, or by these by-laws. If at any meeting of the board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at said meeting which shall be so adjourned. Section 3.16. Telephonic Participation in Meetings. Members of the Board of Directors or any committee designated by such board may participate in a meeting of the board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this section shall constitute presence in person at such meeting. Notwithstanding anything to the contrary in these by-laws, meetings of the board or a committee by means of conference telephone or similar communications equipment may be called by the Chairman of the Board, if any, the President or Secretary on one (1) hours' notice to each director delivered by telephone to his business address. Section 3.17. Action by Consent. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if written consent thereto is signed by all members of the board or of such committee as the case may be and such written consent is filed with the minutes of proceedings of the board or committee. ARTICLE IV - OFFICERS Section 4.1. Selection; Statutory Officers. The officers of the corporation shall be chosen by the Board of Directors. There shall be a President, a Secretary and a Treasurer, and there may be a Chairman of the Board of Directors, one or more Vice Presidents, one or more Assistant Secretaries, and one or more Assistant Treasurers, as the Board of Directors may elect. The office of President and Secretary shall not be held by the same person. Section 4.2. Time of Election. The officers above named shall be chosen by the Board of Directors at its first meeting after each annual meeting of stockholders. None of said officers need be a director. Section 4.3. Additional Officers. The board may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4.4. Terms of Office. Each officer of the corporation shall hold office until his successor is chosen and qualified, or until his earlier resignation or removal. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors. Section 4.5. Compensation of Officers. The Board of Directors shall have power to fix the compensation of all officers of the corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the compensation of such subordinate officers. Section 4.6. Chairman of the Board. The Chairman of the Board of Directors shall preside at all meetings of the stockholders and directors, and shall have such other duties as may be assigned to him from time to time by the Board of Directors. Section 4.7. President. Unless the Board of Directors otherwise determines, the President shall be the chief executive officer and head of the corporation. Unless there is a Chairman of the Board, the President shall preside at all meetings of directors and stockholders. Under the supervision of the Board of Directors and of the executive committee, the President shall have the general control and management of its business and affairs, subject, however, to the right of the Board of Directors and of the executive committee to confer any specific power, except such as may be by statute exclusively conferred on the President, upon any other officer or officers of the corporation. The President shall perform and do all acts and things incident to the position of President and such other duties as may be assigned to him from time to time by the Board of Directors or the executive committee. Section 4.8. Vice Presidents. The Vice Presidents shall perform such of the duties of the President on behalf of the corporation as may be respectively assigned to them from time to time by the Board of Directors or by the executive committee or by the President. The Board of Directors or the executive committee may designate one of the Vice Presidents as the Executive Vice President, and in the absence or inability of the President to act, such Executive Vice President shall have and possess all of the powers and discharge all of the duties of the President, subject to the control of the board and of the executive committee. Section 4.9. Treasurer. The Treasurer shall have the care and custody of all the funds and securities of the corporation which may come into his hands as Treasurer, and the power and authority to endorse checks, drafts and other instruments for the payment of money for deposit or collection when necessary or proper and to deposit the same to the credit of the corporation in such bank or banks or depository as the Board of Directors or the executive committee, or the officers or agents to whom the Board of Directors or the executive committee may delegate such authority, may designate, and he may endorse all commercial documents requiring endorsements for or on behalf of the corporation. He may sign all receipts and vouchers for the payments made to the corporation. He shall render an account of his transactions to the Board of Directors or to the executive committee as often as the board or the committee shall require the same. He shall enter regularly in the books to be kept by him for that purpose full and adequate account of all moneys received and paid by him on account of the corporation. He shall perform all acts incident to the position of Treasurer, subject to the control of the Board of Directors and of the executive committee. He shall when requested, pursuant to vote of the Board of Directors or the executive committee, give a bond to the corporation conditioned for the faithful performance of his duties, the expense of which bond shall be borne by the corporation. Section 4.10. Secretary. The Secretary shall keep the minutes of all meetings of the Board of Directors and of the stockholders; he shall attend to the giving and serving of all notices of the corporation. Except as otherwise ordered by the Board of Directors or the executive committee, he shall attest the seal of the corporation upon all contracts and instruments executed under such seal and shall affix the seal of the corporation thereto and to all certificates of shares of the Capital Stock. He shall have charge of the stock certificate book, transfer book and stock ledger, and such other books and papers as the Board of Directors or the executive committee may direct. He shall, in general, perform all the duties of Secretary, subject to the control of the Board of Directors and of the executive committee. Section 4.11. Assistant Secretary. The Board of Directors or any two of the officers of the corporation acting jointly may appoint or remove one or more Assistant Secretaries of the corporation. Any Assistant Secretary upon his appointment shall perform such duties of the Secretary, and also any and all such other duties as the executive committee or the Board of Directors or the President or the Executive Vice President or the Treasurer or the Secretary may designate. Section 4,12. Assistant Treasurer. The Board of Directors or any two of the officers of the corporation acting jointly may appoint or remove one or more Assistant Treasurers of the corporation. Any Assistant Treasurer upon his appointment shall perform such of the duties of the Treasurer, and also any and all such other duties as the executive committee or the Board of Directors or the President or the Executive Vice President or the Treasurer or the Secretary may designate. Section 4.13. Subordinate Officers. The Board of Directors may select such subordinate officers as it may deem desirable. Each such officer shall hold office for such period, have such authority, and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove subordinate officers and to prescribe the powers and duties thereof. ARTICLE V - STOCK Section 5.1. Stock. Each stockholder shall be entitled to a certificate or certificates of stock of the corporation in such form as the Board of Directors may from time to time prescribe. The certificates of stock of the corporation shall be numbered and shall be entered in the books of the corporation as they are issued. They shall certify the holder's name and number and class of shares and shall be signed by both of (a) either the President or a Vice President, and (b) any one of the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, and shall be sealed with the corporate seal of the corporation. If such certificate is countersigned (1) by a transfer agent other than the corporation or its employee, or, (2) by a registrar other than the corporation or its employee, the signature of the officers of the corporation and the corporate seal may be facsimiles. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates shall cease to be such officer or officers of the corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the corporation, such certificate or certificates may nevertheless be adopted by the corporation and be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature shall have been used thereon had not ceased to be such officer or officers of the corporation. Section 5.2. Transfers of Stock. Subject to any transfer restrictions then in force, the shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers or to such other person as the directors may designate by whom they shall be canceled and new certificates shall thereupon be issued. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof save as expressly provided by the laws of Delaware. Section 5.3. Record Date. The Board of Directors shall fix in advance a date, not exceeding sixty (60) days preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock is to occur, and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of; and to vote at, such meeting, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. Section 5.4. Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents or transfer clerks and one or more registrars and may require all certificates of stock to bear the signature or signatures of any of them. Section 5.5. Dividends. 1. Power to Declare. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation and the laws of Delaware. 2. Reserves. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. Section 5.6. Lost, Stolen or Destroyed Certificates. No certificates for shares of stock of the corporation shall be issued in place of any certificate alleged to have been lost, stolen or destroyed, except upon production of such evidence of the loss, theft or destruction and upon indemnification of the corporation and its agents to such extent and in such manner as the Board of Directors may from time to time prescribe. Section 5.7. Inspection of Books. The stockholders of the corporation, by a majority vote at any meeting of stockholders duly called, or in case the stockholders shall fail to act, the Board of Directors shall have power from time to time to determine whether and to what extent and what times and places and under what conditions and regulations and books of the corporation (other than the stock ledger) or any of them, shall be open to inspection of stockholders; and no stockholder shall have any right to inspect any account or book or document of the corporation except as conferred by the statute or authorized by the Board of Directors or by a resolution of the stockholders. ARTICLE VI- MISCELLANEOUS MANAGEMENT PROVISIONS Section 6.1. Checks. Drafts and Notes. All checks, drafts or orders for the payment of money, and all notes and acceptances of the corporation shall be signed by such officer or officers, agent or agents as the Board of Directors may designate. Section 6.2. Notices. 1. Unless otherwise specified in these by-laws, notices to directors and stockholders shall be in writing and delivered personally or mailed to the directors or stockholders at their addresses appearing on the books of the corporation. Notice by mail shall be deemed to be given at the time when the same shall be mailed. Notice to directors may also be given by telephone, telecopy, cable, commercial delivery service, telex, telegram or similar means. 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these bylaws, a written waiver of notice, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting, or, in the case of a meeting of the Board of Directors, participation in a meeting by means of conference telephone or similar communications equipment, shall constitute a waiver of notice of such meeting except when the person attends, or participates in, a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Section 6.3. Conflict of Interest. No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose if (i) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareholders; or (iii) the contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the shareholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. Section 6.4. Voting of Securities Owned by this Corporation. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by this corporation may be voted in person at any meeting of security holders of such other corporation by the President of this corporation if he is present at such meeting, or in his absence by the Treasurer of this corporation if he is present at such meeting, and (b) whenever, in the judgment of the President, it is desirable for this corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other corporation and owned by this corporation, such proxy or consent shall be executed in the name of this corporation by the President, without the necessity of any authorization by the Board of Directors, affixation of corporate seal or countersignature or attestation by another officer, provided that if the President is unable to execute such proxy or consent by reason of sickness, absence from the United States or other similar cause, the Treasurer may execute such proxy or consent. Any person or persons designated in the manner above stated as the proxy or proxies of this corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this corporation the same as such shares or other securities might be voted by this corporation. ARTICLE VII- INDEMNIFICATION Section 7.1. Power to Indemnify in Actions, Suits or Proceedings other than those by or in the Right of the Corporation. Subject to Section 3 of this Article VII, the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself; create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 7.2. Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation. Subject to Section 3 of this Article VII, the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Section 7.3. Authorization of Indemnification. Any indemnification under this Article VII (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article VII, as the case may be. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. To the extent, however, that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith, without the necessity of authorization in the specific case. Section 7.4. Good Faith Defined. For purposes of any determination under Section 3 of this Article VII, a person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is based on the records or books of account of the corporation or another enterprise, or on information supplied to him by the officers of the corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the corporation or another enterprise or on information or records given or reports made to the corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the corporation or another enterprise. The term "another enterprise" as used in this Section 4 shall mean any other corporation or any partnership, joint venture, trust or other enterprise of which such person is or was serving at the request of the corporation as a director, officer, employee or agent. The provisions of this Section 4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 1 or 2 of this Article VII, as the case may be. Section 7.5. Indemnification by a Court. Notwithstanding any contrary determination in the specific case under Section 3 of this Article VII, and notwithstanding the absence of any determination thereunder, any director, officer, employee or agent may apply to any court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Sections 1 and 2 of this Article VII. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standards of conduct set forth in Sections 1 or 2 of this Article VII, as the case may be. Notice of any application for indemnification pursuant to this Section 5 shall be given to the corporation promptly upon the filing of such application. Section 7.6. Expenses Payable in Advance. Expenses incurred in defending or investigating a threatened or pending action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the corporation as authorized in this Article VII. Section 7.7. Non-Exclusivity of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by or granted pursuant to this Article VII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any By-Law, agreement, contract, vote of stockholders or disinterested directors or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, it being the policy of the corporation that indemnification of the persons specified in Sections 1 and 2 of this Article VII shall be made to the fullest extent permitted by law. The provisions of this Article VII shall not be deemed to preclude the indemnification of any person who is not specified in Sections 1 or 2 of this Article VII but whom the corporation has the power or obligation to indemnify under the provisions of the General Corporation Law of the State of Delaware, or otherwise. Section 7.8. Insurance. The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power or the obligation to indemnify him against such liability under the provisions of this Article VII. Section 7.9. Meaning of "Corporation" for Purposes of Article VII. For purposes of this Article VII, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VII with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. Section 7.10. Survival of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 7.11. Severabilitv. If any word, clause or provision of this Article VII or any award made hereunder shall for any reason be determined to be invalid, the provisions hereof shall not otherwise be affected thereby but shall remain in full force and effect. Section 7.12. Intent of Article. The intent of this Article VII is to provide for indemnification to the fullest extent permitted by applicable law, including Section 145 of the General Corporation Law of Delaware. To the extent that such Section or any successor Section may be amended or supplemented from time to time, this Article VII shall be amended automatically and construed so as to permit indemnification to the fullest extent from time to lime permitted by law. ARTICLE VIII- AMENDMENTS Section 8.1. Amendments. The by-laws of the corporation may be altered, amended or repealed at any meeting of the Board of Directors upon notice thereof in accordance with these by-laws, or at any meeting of the stockholders by the vote of the holders of the majority of the stock issued and outstanding and entitled to vote at such meeting, in accordance with the provisions of the certificate of incorporation and of the laws of Delaware. EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO INSTRUMENT SYSTEMS INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED APRIL 1,2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-30-2000 APR-01-2000 188,588 0 487,378 29,315 345,924 1,379,874 443,154 160,742 2,851,282 969,722 451,561 0 0 13,400 1,116,498 2,851,282 521,086 521,086 276,202 276,202 32,365 1,304 12,583 43,270 19,482 19,332 0 0 0 19,332 0.16 0.15
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