UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(mark one)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number 1-8002
A. Full title of the plan and address of the plan, if different from that
of the issuer named below:
Thermo Electron Corporation Choice Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of the principal executive office:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02454-9046
Thermo Electron Corporation Choice Plan
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed by the undersigned hereunto duly
authorized.
THERMO ELECTRON CORPORATTION CHOICE PLAN
By: Thermo Electron Corporation, Pension Committee
By: /s/ Theo Melas-Kyriazi
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Theo Melas-Kyriazi
Chief Financial Officer and Member of the Plan Administrator
Date: June 25, 2003
THERMO ELECTRON CORPORATION CHOICE PLAN
FINANCIAL STATEMENTS
AND
SUPPLEMENTARY INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
WITH
REPORTS OF INDEPENDENT ACCOUNTANTS
Thermo Electron Corporation Choice Plan
Table of Contents
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Page
Reports of Independent Accountants 1-2
Financial Statements:
Statements of Net Assets Available for Benefits 3
Statement of Changes in Net Assets Available for Benefits 4
Notes to Financial Statements 5-7
Supplementary Information:
Schedule of Assets Held (at End of Year) 8
Exhibit Index 9
Thermo Electron Corporation Choice Plan
Report of Independent Accountants
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To the Participants, Administrator and Pension Committee of
Thermo Electron Corporation Choice Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of Thermo Electron Corporation Choice Plan (the "Plan") at December 31, 2002,
and the changes in net assets available for benefits for the year ended December
31, 2002 in conformity with accounting principles generally accepted in the
United States of America. These financial statements are the responsibility of
the Plan's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimate made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion. The financial statements of
the Plan as of December 31, 2001 and for the year then ended were audited by
other independent accountants whose report dated June 27, 2002 expressed an
unqualified opinion on those statements.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule is presented
for the purpose of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 16, 2003
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Thermo Electron Corporation Choice Plan
Report of Independent Accountants
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To the Pension Committee of
Thermo Electron Corporation Choice Plan
Waltham, Massachusetts
We have audited the accompanying statement of net assets available for benefits
of the Thermo Electron Corporation Choice Plan (the Plan) as of December 31,
2001. This financial statement is the responsibility of the Plan's management.
Our responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the Plan's management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above present fairly, in all
material respects, the net assets available for benefits of the Plan as of
December 31, 2001 in conformity with accounting principles generally accepted in
the United States of America.
CARLIN, CHARRON, & ROSEN LLP
Worcester, Massachusetts
June 27, 2002
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Thermo Electron Corporation Choice Plan
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001
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2002 2001
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Assets
Cash and cash equivalents $ 565,679 $ 762,879
Investments, at fair value 333,208,996 281,948,235
Employer Security Thermo Electron Corporation 11,861,344 15,216,739
Loans to participants 5,976,961 4,569,758
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351,612,980 302,497,611
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Receivables:
Employer contributions 546,587 674,807
Participant contributions 1,082,122 901,560
Other 5,616 -
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1,634,325 1,576,367
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Total assets 353,247,305 304,073,978
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Liabilities
Operating payables 3,469 -
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Net assets available for benefits $353,243,836 $304,073,978
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See accompanying notes to financial statements.
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Thermo Electron Corporation Choice Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 2002
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2002
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Addition to net assets attributed to investment income
Interest and dividends $ 7,424,061
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Total investment income 7,424,061
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Contributions:
Employers 9,165,350
Participants 19,368,208
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28,533,558
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Deductions from net assets attributed to:
Benefits paid to participants 34,930,220
Administrative expenses 30,128
Net depreciation in fair value of investments 49,911,891
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Total deductions 84,872,239
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Net decrease before transfer from other plans 48,914,620
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Net transfers to this plan 98,084,478
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Net increase in net assets available for benefits 49,169,858
Net assets available for benefits:
Beginning of year 304,073,978
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End of year $353,243,836
============
See accompanying notes to financial statements.
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Thermo Electron Corporation Choice Plan
Notes to Financial Statements
For the Years Ended December 31, 2002 and 2001
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1. Plan Description
The following description of the Thermo Electron Corporation Choice
Plan (the Plan) provides only general information. Participants should
refer to the Plan agreement for a more complete description of the
Plan's provisions.
General
The Thermo Electron Corporation Choice Plan (the Plan) is a defined
contribution plan. The Plan covers eligible full-time and part-time
employees of Thermo Electron Corporation and subsidiaries (the Company)
who have completed two months of service. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
Contributions
Each year participants may contribute up to 50 percent of pre-tax
annual compensation or $11,000, as defined in the Plan. Participants
may also contribute amounts representing distributions from other
qualified defined benefit or defined contribution plans. Beginning on
the first day of the calendar quarter following completion of one year
of service, the Company makes non-discretionary matching contributions
equal to 200 percent of the first 2 percent and 25 percent of the next
2 percent of base compensation that a participant contributes to the
Plan. Participants direct the investment of their contributions and the
Company match into various investment options offered by the Plan. The
Plan currently offers the Company's common stock and eighteen
investment funds as investment options for participants. Contributions
are subject to certain limitations.
Participant Accounts
Each participant's account is credited with the participant's
contributions and allocations of the Company's contribution and plan
earnings, and charged with an allocation of administrative expenses.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's vested account.
Vesting
Participants are immediately vested in their voluntary contributions
plus actual earning thereon. Vesting in the Company matching
contributions plus actual earnings thereon is based on years of
service. A participant is 100 percent vested after three years of
credited service.
A participant is automatically 100 percent vested in all contributions
upon the attainment of age 65, upon becoming permanently disabled, or
upon death while still an active participant.
Due to the number of divestitures in 2002 and 2001, the Company may
have experienced partial terminations. As a result, the Company has
accelerated the vesting of all contributions for all participants
involved in the divestitures.
Participant Loans
Participants may only borrow from their employee portion of fund
accounts a minimum of $1,000 up to a maximum equal to $50,000 or 50% of
the vested account balance, whichever is less. The term of the loan is
generally five years except when use of the proceeds is for the
purchase of a primary residence, for which the term can be up to 30
years. The loans are secured by the balance in the participant's
account and bear interest at a rate commensurate with local prevailing
rates as determined by the plan administrator. The interest rates on
plan loans range from 5.25% to 7% at December 31, 2002. Principal and
interest are repaid through payroll deductions.
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Thermo Electron Corporation Choice Plan
Notes to Financial Statements
For the Years Ended December 31, 2002 and 2001
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Benefit Payments and Plan Withdrawals
On termination of service due to death, disability or retirement, a
participant (or beneficiary) may elect to receive either a lump-sum
amount equal to the value of the participant's vested interest in his
or her account or periodic instalments. For termination of service due
to other reasons, a participant may receive the value of the vested
interest in his or her account as a lump-sum distribution. Withdrawals
may be made under certain other circumstances in accordance with the
Plan document.
Forfeitures
Upon a participant's break in service, as defined, the nonvested
portion of the participant's account is forfeited and is used to reduce
the Company's future funding requirements. If a participant who has
terminated employment is rehired by the Company before the greater of a
five-year break in service or the number of the participant's years of
service prior to the participant's break in service, the participant
shall be reinstated in such forfeited amount. In 2002, employer
contributions were reduced by $240,519 from forfeited nonvested
accounts.
Transfer In/Out
In connection with certain reorganization activities at the Company,
the assets of certain other plans sponsored by subsidiaries of the
Company have been transferred into the Choice Plan in connection with
the termination of those plans. Additionally, the reorganization has
involved a number of business dispositions. As a result, the plan
assets in the accounts of the affected employees have sometimes been
transferred to plans sponsored by the acquirers of these businesses
disposed. These transfers to and from other plans are captioned "net
transfers to this plan" in the financial statements.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of plan assets and
liabilities and changes therein, and disclosure of contingent assets
and liabilities. Actual results could differ from those estimates.
Investment Valuation
Investments are stated at fair value as determined by Fidelity
Management Trust Company (the "Trust Company"), a trust company that is
the trustee and custodian of the Plan's investment assets. Common
shares are valued based on quoted market prices. Registered investment
companies and bank collective investment funds are valued based on net
asset value. Participant loans are valued at cost plus accrued
interest, which approximates fair value.
Payment of Benefits
Benefits are recorded when paid.
3. Tax Status
The Plan has received a favorable determination letter from the
Internal Revenue Service dated May 15, 1995. The Plan has been amended
since that date and a revised application for a determination letter is
pending approval by the IRS; however, the plan administrator and Plan's
tax counsel believe the Plan is currently designed and being operated
in compliance with the applicable requirements of the Internal Revenue
Code.
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Thermo Electron Corporation Choice Plan
Notes to Financial Statements
For the Years Ended December 31, 2002 and 2001
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4. Investments
Investments that represent five percent or more of the Plan's net assets are as follows:
December 31, December 31,
2002 2001
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Managed Income Portfolio II: Class II $ 82,028,407 $ -
Fidelity Equity - Income II Fund 46,954,580 43,815,474
Fidelity Blue Chip Growth Fund 43,974,327 47,921,091
Fidelity Balanced Fund 42,617,193 40,077,454
Fidelity Magellan Fund 24,014,123 -
Fidelity Growth Company Fund 20,369,301 25,193,042
U.S. Equity Index Commingled Pool 18,548,584 17,742,087
PIMCO Total Return Fund: Class ADM 17,699,913 6,389,802
Janus Worldwide Fund 13,749,138 19,271,006
Thermo Electron Corporation 11,861,344 15,216,739
Stable Value Fund - 61,893,402
Purchases and sales of investments are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are
recorded on ex-dividend date.
5. Related Party Transactions
Plan investments are managed by the Trust Company, which is a trustee
as defined by the Plan. Therefore, these transactions qualify as
party-in-interest transactions. There were no fees paid by the Plan for
investment management services for the period ended December 31, 2002.
6. Plan Termination
Although it has not expressed an intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA. In the event
of Plan termination, participants would become 100% vested in their
employer contributions.
7. Administrative Expenses
The Company pays for administrative expenses associated with management
of and professional services for the Plan. Administrative fees for
hardship withdrawals and loan transactions are paid by the
participants. The administrative expenses included in the statement of
changes in net assets available for benefits represent expenses paid by
the participants.
8. Plan Mergers
On May 31, 2002, the Thermo Neslab, Inc. 401(k) Plan was merged into
the Plan. The balance of $14,627,249 for the net assets available for
benefits as of May 31, 2002 was transferred into the Plan.
On July 31, 2002, the Thermo Finnigan LLC 401(k) Plan was merged into
the Plan. The balance of $47,453,179 for the net assets available for
benefits as of July 31, 2002 was transferred into the Plan.
As of December 31, 2002, the participant accounts and the net assets of
the Spectra Physics 401(k) Plan were transferred into the Plan,
totalling $36,004,050. The financial statements reflect the merger as
if it occurred at the close of business December 31, 2002.
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Thermo Electron Corporation Choice Plan
Schedule of Assets Held (at End of Year)
December 31, 2002 Supplemental Schedule
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Units/ Current
Shares Value
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Description of Investments (1)
Mutual Funds:
Fidelity Balanced Fund 3,206,711 $ 42,617,193
Fidelity Blue Chip Growth Fund 1,376,779 43,974,327
Fidelity Diversified International Fund 244,593 4,197,209
Fidelity Equity - Income II Fund 2,700,091 46,954,580
Fidelity Growth Company Fund 575,079 20,369,301
Fidelity Magellan Fund 304,130 24,014,123
Fidelity Overseas Fund 50,600 1,113,208
Fidelity 2000 Fund 39,811 438,316
Fidelity 2010 Fund 74,870 856,507
Fidelity 2020 Fund 168,457 1,792,381
Fidelity 2030 Fund 125,117 1,281,195
Fidelity 2040 Fund 21,429 125,572
Freedom Income Fund 59,677 632,575
Janus Worldwide Fund 427,922 13,749,138
PIMCO Total Return Fund: Class ADM 1,658,848 17,699,913
T. Rowe Price Small - Cap Stock Fund, Inc. 596,115 12,816,467
Fidelity Group Trust for Employee Benefit Plans:
Managed Income Portfolio II: Class II 82,028,407 82,028,407
U.S. Equity Index Commingled Pool 706,075 18,548,584
Employer Security:
Thermo Electron Corporation 589,530 11,861,344
Loans to participants
(for a term not exceeding 30 years, at interest rates of 5.25% to 7% per annum) 5,976,961
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$351,047,301
============
(1) All investments are a party in interest to the Plan.
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Thermo Electron Corporation Choice Plan
Exhibit Index
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Exhibit
Number Description of Exhibit
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23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Carlin, Charron, & Rosen LLP.
99.1 Certification of the Vice President of Human Resources Pursuant to
18 U.S.C. Section 1350.
99.2 Certification of the Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350.
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