UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------------------------------------------
FORM 11-K
(mark one)
[ X ] Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of
1934 for the Fiscal Year Ended December 31, 2004
[ ] Transition Report Pursuant to Section 15(d) of the Securities Exchange Act
of 1934
Commission File Number 1-8002
THERMO ELECTRON CORPORATION CHOICE PLAN
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
P.O. Box 9046 Waltham, Massachusetts 02454-9046
Thermo Electron Corporation Choice Plan
December 31, 2004 and 2003
--------------------------------------------------------------------------------
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 CORPORATION CHOICE PLAN
By: Thermo Electron Corporation, Pension Committee
By: /s/ Peter M. Wilver
------------------------------------------------------------
Peter M. Wilver
Chief Financial Officer and Member of the Plan Administrator
Date: June 27, 2005
Thermo Electron Corporation Choice Plan
Financial Statements and Supplementary Information
December 31, 2004 and 2003
Thermo Electron Corporation Choice Plan
Index
December 31, 2004 and 2003
--------------------------------------------------------------------------------
Page(s)
Report of Independent Registered Public Accounting Firm ................ 1
Financial Statements
Statements of Net Assets Available for Benefits ........................ 2
Statement of Changes in Net Assets Available for Benefits .............. 3
Notes to Financial Statements .......................................... 4-7
Supplementary Schedule*
Schedule H, line 4i - Schedule of Assets (Held at End of Year) ......... 8
* Other supplemental schedules required by Section 2520-103.10 of the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974 have been omitted because they
are not applicable.
Thermo Electron Corporation Choice Plan
Report of Independent Registered Public Accounting Firm
--------------------------------------------------------------------------------
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, 2004 and
2003, and the changes in net assets available for benefits for the year ended
December 31, 2004 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 audits. We conducted our audits of these
statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States). 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule H, line 4i -
schedule of assets (held at end of year) 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, 2005
<
1
>
Thermo Electron Corporation Choice Plan
Statements of Net Assets Available for Benefits
December 31, 2004 and 2003
--------------------------------------------------------------------------------
2004 2003
------------ ------------
Assets
Investments, at fair value $440,863,541 $427,399,405
Loans to participants 4,753,201 5,636,340
------------ ------------
445,616,742 433,035,745
Receivables
Employer contributions 592,222 712,594
Participant contributions 1,169,561 1,442,413
Accrued income 1,175 548
------------ ------------
1,762,958 2,155,555
Net assets available for benefits $447,379,700 $435,191,300
============ ============
See accompanying notes to financial statements.
<
2
>
Thermo Electron Corporation Choice Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 2004
--------------------------------------------------------------------------------
Addition to net assets attributed to investment income
Interest and dividends $ 11,802,787
Net appreciation in fair value of investments 33,116,814
------------
Total investment income 44,919,601
------------
Contributions
Employer 10,389,386
Participants 23,357,094
------------
Total contributions 33,746,480
------------
Deductions from net assets attributed to
Benefits paid to participants (45,707,507)
Administrative expenses (76,925)
------------
Total deductions (45,784,432)
------------
Transfers
Distribution of plan assets from divestiture of Spectra-Physics (20,715,716)
Merger with CRS Robotics 401(k) plan 22,467
------------
Total transfers (20,693,249)
------------
Net increase in net assets available for benefits 12,188,400
Net assets available for benefits
Beginning of year 435,191,300
------------
End of year $447,379,700
============
See accompanying notes to financial statements.
<
3
>
Thermo Electron Corporation Choice Plan
Notes to Financial Statements
December 31, 2004 and 2003
--------------------------------------------------------------------------------
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 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).
In 2002, the Company purchased CRS Robotics Corporation. On May 17,
2004, the CRS Robotics 401(k) Plan was merged into the Plan. The balance
of $22,467 for the net assets available for benefits as of May 17, 2004
was transferred into the Plan.
In July 2004, the Company sold its Spectra-Physics, Inc. business. In
connection with the sale, Plan participants who were Spectra-Physics
employees became terminated employees and as such, were eligible to
receive a distribution of their account balances. In 2004, the Plan
distributed a direct rollover of such participants' account balances
totaling $20,715,716 to the defined contribution plan of
Spectra-Physics' acquirer.
Contributions
Each year participants may contribute up to 50% of pre-tax annual
compensation or $13,000, 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 month following completion of one year of service,
the Company makes non-discretionary matching contributions equal to 200%
of the first 2% and 25% of the next 2% 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 fund and sixteen investment funds as investment options for
participants. Contributions are subject to certain limitations. Employee
contributions and Company match are recorded on a monthly basis.
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, if
any. 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 earnings thereon. Vesting in the Company matching
contributions plus actual earnings thereon is based on years of service.
A participant is 100% vested after three years of credited service.
A participant is automatically 100% vested in all contributions upon the
attainment of age 65, upon becoming permanently disabled, or upon death
while still an active participant.
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
<
4
>
Thermo Electron Corporation Choice Plan
Notes to Financial Statements
December 31, 2004 and 2003
--------------------------------------------------------------------------------
a rate commensurate with local prevailing rates as determined by the
plan administrator. The interest rates on plan loans range from 5% to
10.75% at December 31, 2004, and 5% to 11% at December 31, 2003.
Principal and interest are repaid through payroll deductions.
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 installments. 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 2004, Company
contributions were reduced by $318,207 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 Plan in connection with the merger 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.
2. Summary of Significant Accounting Policies
Use of Estimates
The Plan's financial statements are prepared on the accrual basis of
accounting. The preparation of the financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and changes
therein. Actual results could differ from those estimates.
Investment Valuation
Investments are stated at fair value as determined by Fidelity
Management 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.
Purchases and sales of investments are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded
on the ex-dividend date.
In the statement of changes in net assets available for benefits, the
Plan presents the net appreciation in the fair value of its investments,
which consists of realized gains or losses and unrealized appreciation
on investments. The cost of investments is determined using the
average-cost basis for calculating realized gains or losses.
Payment of Benefits
Benefits are recorded when paid.
<
5
>
Thermo Electron Corporation Choice Plan
Notes to Financial Statements
December 31, 2004 and 2003
--------------------------------------------------------------------------------
Risks and Uncertainties
The Plan invests in a combination of investment securities that are
exposed to various risks, such as interest rate, market and credit. Due
to the level of risk associated with certain investment securities and
the level of uncertainty related to changes in the value of investment
securities, it is at least reasonably possible that changes in risks in
the near term would materially affect participants' account balances and
the amounts reported in the statement of net assets available for
benefits and the statement of changes in net assets available for
benefits.
3. Tax Status
The Plan has received a favorable determination letter dated September
18, 2003, from the Internal Revenue Service. The Plan has been amended
since receiving the determination letter; however, the Plan
administrator, management and the Plan's tax counsel believe that the
Plan has been designed and operated in compliance with the applicable
requirements of the Internal Revenue Code.
4. Investments
The fair value of the Plan investments is determined by quoted market
prices. Investments of the Plan's net assets are as follows:
December 31,
------------------------------
2004 2003
------------ ------------
Mutual Funds:
Dodge and Cox Stock Fund * $ 83,953,751 $ 68,531,423
Fidelity Balanced Fund* 53,653,572 53,083,335
Fidelity Blue Chip Growth Fund* 48,564,525 53,078,631
Spartan U.S. Equity Index Fund* 46,959,389 -
Fidelity Growth Company Fund* 33,206,584 31,880,444
Fidelity Diversified International Fund* 32,820,890 25,597,955
T. Rowe Price Small-Cap Stock Fund, Inc. * 22,373,284 17,910,263
Fidelity Magellan Fund - 30,880,451
Freedom 2000 Fund 568,472 623,829
Freedom 2010 Fund 1,930,488 1,596,544
Freedom 2020 Fund 4,011,945 3,225,503
Freedom 2030 Fund 2,980,369 2,198,563
Freedom 2040 Fund 809,797 508,701
Freedom Income Fund 811,008 817,014
PIMCO Total Return Fund: Class ADM 18,431,355 19,075,530
Common Collective Trusts:
Managed Income Portfolio II: Class II* 74,567,391 80,699,253
U.S. Equity Index Commingled Pool - 23,610,546
Common Stock:
Thermo Electron Corporation, 480,417 and 533,692 shares, respectively 14,503,789 13,449,038
Cash 716,932 632,382
------------ ------------
Total investments $440,863,541 $427,399,405
============ ============
*Investments that represent five percent or more of the Plan's net assets.
<
6
>
Thermo Electron Corporation Choice Plan
Notes to Financial Statements
December 31, 2004 and 2003
--------------------------------------------------------------------------------
4. Investments (continued)
During 2004, the Plan's investments (including investments bought, sold
and held during the year) appreciated in value by $33,116,814, as
follows:
Year Ended
December 31, 2004
-----------------
Mutual funds $30,021,043
Common collective trusts 558,639
Common stock 2,537,132
-----------
Net change in fair value $33,116,814
===========
5. Related-party Transactions
Certain Plan investments are managed by the Fidelity Management Trust
Company (Fidelity), which is a trustee as defined by the Plan.
Therefore, transactions in these investments qualify as
party-in-interest transactions. There were no fees paid by the Plan for
investment management services for the period ended December 31, 2004.
However, there were administrative expenses paid by the Plan to Fidelity
in the amount of $37,258. These transactions, as well as participant
loans, qualify as party-in-interest transactions.
The Plan invests in common stock of the Company and transactions in this
common stock are related-party transactions. In 2004, the Plan purchased
shares of Company common stock on the open market having a value of
$152,093. In 2004 and 2003, the Plan sold shares of Company common stock
on the open market having values of $1,256,619 and $793,012,
respectively.
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 the majority of 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, and are included in the statement of changes in net assets
available for benefits. During 2004, the Company received a settlement
of approximately $53,000 from the prior recordkeeper for the Plan. The
proceeds from the settlement were utilized to offset administrative
expenses.
<
7
>
Thermo Electron Corporation Choice Plan
Schedule H, Line 4i
Schedule of Assets (Held at End of Year)
December 31, 2004
--------------------------------------------------------------------------------
Supplemental Schedule
----------------------------------------------------------------------------------------------------------------------------------
Identity of Issue/Borrower, Description of investments including maturity date, Current
Lessor or Similar Party rate of interest, collateral, par, or maturity value Cost Value
----------------------------------------------------------------------------------------------------------------------------------
Common Collective Trust
Fidelity Managed Income Portfolio II: Class II (1) (2) $ 74,567,391
------------
Mutual Funds
Dodge and Cox Dodge and Cox Stock Fund (2) 83,953,751
Fidelity Balanced Fund (1) (2) 53,653,572
Fidelity Blue Chip Growth Fund (1) (2) 48,564,525
Fidelity Growth Company Fund (1) (2) 33,206,584
Fidelity Diversified International Fund (1) (2) 32,820,890
Fidelity Freedom 2000 Fund (1) (2) 568,472
Fidelity Freedom 2010 Fund (1) (2) 1,930,488
Fidelity Freedom 2020 Fund (1) (2) 4,011,945
Fidelity Freedom 2030 Fund (1) (2) 2,980,369
Fidelity Freedom 2040 Fund (1) (2) 809,797
Fidelity Freedom Income Fund (1) (2) 811,008
Fidelity Spartan U.S. Equity Index Fund (1) (2) 46,959,389
PIMCO Total Return Fund: Class ADM (2) 18,431,355
T. Rowe Price Small-Cap Stock Fund, Inc. (2) 22,373,284
------------
Total mutual funds 351,075,429
------------
Thermo Electron Corporation Common Stock Fund (1) (2) 14,503,789
Cash 716,932
------------
Total Thermo Electron Corporation Stock Fund 15,220,721
------------
Participants Participant loans (for a term not exceeding 30 years
at interest rates ranging from 5% to 10.75%) (1) (2) 4,753,201
------------
Total $445,616,742
============
(1) All investments are a party in interest to the Plan.
(2) Cost information is not required for participant directed investments and, therefore, is not included.
<
8
>
Thermo Electron Corporation Choice Plan
Exhibit Index
December 31, 2004 and 2003
--------------------------------------------------------------------------------
Exhibit
Number Description of Exhibit
--------------------------------------------------------------------------------
23.1 Consent of PricewaterhouseCoopers LLP.
<
9
>