<DOCUMENT>
<TYPE>10-K
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<FILENAME>tmok03.txt
<TEXT>

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

              ----------------------------------------------------

                                    FORM 10-K

(mark one)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the fiscal year ended December 31, 2003

[   ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

                          Commission file number 1-8002

                           THERMO ELECTRON CORPORATION
             (Exact name of Registrant as specified in its charter)

Delaware                                                              04-2209186
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

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

           Securities registered pursuant to Section 12(b) of the Act:

Title of each class                    Name of each exchange on which registered
-------------------------------        -----------------------------------------
Common Stock, $1.00 par value                            New York Stock Exchange
Preferred Stock Purchase Rights                          New York Stock Exchange
3 1/4% Subordinated Convertible Debentures due 2007      American Stock Exchange

           Securities registered pursuant to Section 12(g) of the Act:
                                      None

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to the filing requirements for
at least the past 90 days. Yes [ X ] No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference into Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ X ]  No [   ]

As of June 27, 2003, the aggregate market value of the voting stock held by
nonaffiliates of the Registrant was approximately $3,541,484,000 (based on the
last reported sale of common stock on the New York Stock Exchange Composite Tape
reporting system on June 27, 2003).

As of January 30, 2004, the Registrant had 165,628,053 shares of Common Stock
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Sections of Thermo Electron Corporation's definitive Proxy Statement for the
2004 Annual Meeting of Shareholders are incorporated by reference into Parts II
and III of this report.


<PAGE>


                           THERMO ELECTRON CORPORATION

                           ANNUAL REPORT ON FORM 10-K
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

                                TABLE OF CONTENTS
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                                                                                                                           Page
                                                                                                                           ----
                                     PART I

Item 1.      Business                                                                                                        3

Item 2.      Properties                                                                                                     12

Item 3.      Legal Proceedings                                                                                              12

Item 4.      Submission of Matters to a Vote of Security Holders                                                            12

                                     PART II

Item 5.      Market for the Registrant's Common Equity and Related Stockholder Matters                                      13

Item 6.      Selected Financial Data                                                                                        14

Item 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations                          15

             Forward-looking Statements                                                                                     32

Item 7A.     Quantitative and Qualitative Disclosures About Market Risk                                                     35

Item 8.      Financial Statements and Supplementary Data                                                                    36

Item 9.      Changes in and Disagreements with Accountants on Accounting and Financial Disclosures                          37

Item 9A.     Controls and Procedures                                                                                        37

                                    PART III

Item 10.     Directors and Executive Officers of the Registrant                                                             38

Item 11.     Executive Compensation                                                                                         38

Item 12.     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                 38

Item 13.     Certain Relationships and Related Transactions                                                                 38

Item 14.     Principal Accountant Fees and Services                                                                         38

                                     PART IV

Item 15.     Exhibits, Financial Statement Schedules, and Reports on Form 8-K                                               39


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                                     PART I
Item 1.    Business

General Development of Business

       Thermo Electron Corporation (also referred to in this document as "Thermo
Electron," "we," the "company," or the "registrant") is a world leader in
high-tech instruments. The company helps life science, laboratory, and
industrial customers advance scientific knowledge, enable drug discovery,
improve manufacturing processes, and protect people and the environment with
instruments, scientific equipment, services, and software solutions. The
company's powerful technologies help researchers make discoveries that will
fight disease or prolong life. They automatically monitor and control online
production to ensure the quality and safety of raw materials as well as the end
products. And they are critical components embedded as enabling technologies
within scientific and industrial devices.

       In the late 1980s, Thermo Electron adopted a strategy of spinning out
certain businesses into separate public subsidiaries in which we kept a majority
ownership. By 1997, we had spun out 22 public entities serving many diverse
markets. To simplify our structure, we announced in January 2000 a major
reorganization that ultimately resulted in taking private all of our public
subsidiaries, selling noncore businesses, and spinning off our paper recycling
and medical products businesses. As part of the reorganization, we divested of
businesses with aggregate annual revenues of approximately $2 billion. This
reorganization was substantially completed in February 2002, when we took
private Spectra-Physics, Inc., our last publicly traded subsidiary. The
businesses spun off and sold as part of our reorganization have been accounted
for as discontinued operations (see "Business Segments and Products"). The
company's continuing operations are comprised solely of its instrument
businesses. During the first quarter of 2003, the company sold its last
remaining business in discontinued operations. Except where indicated, the
information presented in this report pertains to our continuing operations.

       Our strategy going forward is to focus on internal growth by pursuing
developments in the markets that we serve that have potential for high growth.
Our strategy is also to continue to improve productivity, enabling us to better
serve our customers with improved products, technologies, and complete
integrated systems and services. In addition, we plan to augment that growth
with strategic acquisitions that expand the reach of our technology by either
rounding out our product lines or bringing them to new markets.

       Thermo Electron is a Delaware corporation and was incorporated in 1956.
The company completed its initial public offering in 1967 and was listed on the
New York Stock Exchange in 1980.

Forward-looking Statements

       Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934 (the Exchange Act), are made throughout this
Annual Report on Form 10-K. 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. While the company may elect to update
forward-looking statements in the future, it specifically disclaims any
obligation to do so, even if the company's estimates change, and readers should
not rely on those forward-looking statements as representing the company's views
as of any date subsequent to the date of the filing of this report.

       A number of important factors 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 Part
II, Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

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Business Segments and Products

       We report our business in three principal segments: Life and Laboratory
Sciences, Measurement and Control, and Optical Technologies.

       During 2003, the company transferred management responsibility and the
related financial reporting and monitoring for several small business units
between segments as follows: (1) the compositional-metrology business was moved
to the Life and Laboratory Sciences segment from the Optical Technologies
segment; (2) the ultra-high-vacuum systems and semiconductor-testing businesses
were moved to the Measurement and Control segment from the Optical Technologies
segment; and (3) the organic elemental analysis business was moved to the Life
and Laboratory Sciences segment from the Measurement and Control segment. The
company has historically moved a business unit between segments when a shift in
strategic focus of either the business unit or a segment more closely aligns the
business unit with a segment different than that in which it had previously been
reported. Prior-period segment information has been conformed to reflect these
changes.

Life and Laboratory Sciences

       We serve the pharmaceutical, biotechnology, academic, and other research
and industrial laboratory markets, as well as the clinical laboratory and
healthcare industries, through our Life and Laboratory Sciences segment. During
2003, this segment was organized as four divisions: Bioscience Technologies,
Scientific Instruments, Informatics and Services, and Clinical Diagnostics.

       Bioscience Technologies encompasses a broad range of instruments,
consumables, and robotic systems such as microplate-based handling and reading
equipment; polymerase chain reaction (PCR) thermal cyclers for deoxyribonucleic
acid (DNA) amplification; magnetic particle-based molecular separation
instruments; laboratory automation, software, and instruments; and single
nucleotide polymorphism (SNP) scoring systems. Consumables include reagents,
microtiter plates, liquid-handling pipettes, and pipette tips. Robotic systems
include individual microplate movers and other instrumentation combined with
sophisticated integration software to produce application-specific workstations.
These products are used primarily by pharmaceutical companies for drug discovery
and development, testing, and quality control, and by biotechnology companies
and universities for life science research to help fight disease and prolong
life. These products are typically used on the "front end" of multi-instrument
systems, to prepare and handle samples prior to the samples being loaded into
other advanced instruments.

       This division also includes a range of scientific equipment used for the
preparation and preservation of chemical and biological samples, principally in
research settings for pharmaceutical, academic, and government customers. The
division's products are also used to capture and preserve samples in clinical
laboratories and blood banks. Products include cell culture incubators,
ultralow-temperature freezers, a full range of centrifuges (from
microcentrifuges to floor models), centrifugal vacuum concentrators, biological
safety cabinets, cryopreservation storage tanks, laboratory freeze-dryers,
baths, and ovens.

       On December 31, 2003, we broadened our sample preparation business with
the acquisition of Jouan SA. Jouan, headquartered in France, is a global
supplier of instruments and equipment used primarily by life science researchers
in academic, pharmaceutical, biotech, and clinical markets to prepare and
preserve samples. Jouan products include a broad range of centrifuges, laminar
flow and safety cabinets, ultra-low freezers, and incubators. Jouan had revenues
of approximately $94 million in 2003. Having completed the acquisition of Jouan
at the close of business on the last day of the company's fiscal year, Jouan's
results of operations for 2003 have not been included in the company's results.

       Scientific Instruments brings together the company's core offering of
instrumentation for laboratory and industrial settings, along with the
automation, accessories, consumables, software, spectral reference databases,
and services, to provide a complete solution.

       In the life sciences arena, we offer ion trap, quadrupole, and hybrid
mass spectrometers (MSs), liquid chromatographs (LCs) and columns, and
hyphenated multi-instrument combinations of these products as integrated
solutions (LC-MS). These systems are tailored to meet the rigorous demands of
lab professionals in applications such as drug discovery, life science research,
and analytical quantitation.

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       A significant and growing application for these instruments is
proteomics, the study of proteins. Most drugs - about 90 percent - interact with
proteins, so multi-instrument systems that can rapidly identify and quantify
proteins are of increasing value to pharmaceutical and biotechnology customers.
We continue to introduce new systems that address the breadth of primary
analytical needs for high-throughput analysis and proteomics research. The
sensitivity of our Finnigan LTQ ion trap and the power of our Finnigan LTQ FT
hybrid MS are being used to improve protein detection, and our SEQUEST software
provides higher sensitivity and accuracy for protein identification.

       Beyond the life sciences market, our chemical analysis instrumentation
uses various optical techniques to determine the elemental and molecular
composition of a wide range of complex liquids and solids. We manufacture gas
chromatography (GC), GC mass spectrometry (GC-MS), combustion analysis, atomic
absorption (AA), inductively coupled plasma-mass spectrometer (ICP-MS), Fourier
transform infrared (FT-IR), near-infrared (NIR), Optical Emission (OE), Raman,
ultraviolet/visible (UV-Vis), fluorescence, X-ray diffractometry (XRD), X-ray
fluorescence (XRF), and infrared and X-ray microspectroscopy instruments. We
also develop state-of-the-art advanced instrumentation, including magnetic
sector MS, auger, and X-ray photoelectron spectroscopy systems. Customers
include environmental, pharmaceutical, polymer, petrochemical, food,
semiconductor, energy, coatings, geological, steel, and basic material
producers, who frequently use these instruments for quality assurance and
quality control applications, primarily in a laboratory.

       Informatics and Services offers laboratory information management systems
(LIMS), chromatography data systems, analytical data archival, and instrument
integration solutions to customers in regulated and nonregulated industries such
as pharmaceuticals, biotechnology, petrochemicals, chemicals, and food and
beverage. We also provide desktop spectroscopy software for data processing,
data management, 3-D data viewing, spectral reference databases, and
chemometrics. These systems are critical to regulatory compliance because they
facilitate the monitoring and analysis of samples by storing and organizing the
massive amounts of analytical data gathered in laboratories, industrial
settings, and clinical-testing sites.

       We also provide a global services network of experienced consultants
focused on the successful implementation of our customers' projects.
Wide-ranging services include project planning, management of user workshops,
defining business requirements, milestone delivery, systems integration,
workflow modeling, and validation consultancy - in short, everything from
installation to complete integration and automation of the laboratory.

       In November 2003, we expanded our services offering with the acquisition
of Laboratory Management Systems, Inc. (LMSi). LMSi provides laboratory
instrument services, including instrument and computer systems validation,
regulatory compliance, metrology, and certification as well as a range of
consulting services to the pharmaceutical and related industries.

       Clinical Diagnostics provides equipment and supplies used by healthcare
laboratories in doctors' offices and hospitals to detect and diagnose disease.
Products in this group include sample-preparation instruments and materials to
highlight abnormal cells, blood gas and ion-selective electrolyte (ISE)
consumables, chemistry reagents, clinical-biochemistry instruments and
automation equipment, and rapid diagnostic tests for use in physicians' offices.
Our rapid diagnostic products have extremely high sensitivity and specificity to
test for infectious diseases, including Group A and B streptococcus; influenza A
and B; chlamydia; respiratory syncytial virus (RSV), the most common cause of
lower respiratory tract infections in children worldwide; and Clostridium
difficile toxin A. We also supply a complete line of equipment and consumables
for anatomical pathology laboratories.

Measurement and Control

       We provide a range of real-time, online sensors, monitors, and control
systems to customers in key industrial markets - from chemical, pharmaceutical,
and food and beverage to minerals and mining, and steel - through our
Measurement and Control segment. These products enable customers to control and
optimize their manufacturing processes to increase quality, improve
productivity, and ensure worker safety, environmental protection, and

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regulatory compliance. In addition, we offer a comprehensive range of fixed and
portable chemical-, radiation-, and explosives-detection instruments to help
ensure the safety of public places and people. During 2003, this segment was
organized as three divisions: Process Instruments, Environmental Instruments,
and Control Technologies.

       Process Instruments provides the process manufacturing industries with
online instrumentation products, solutions, and services that cover packaging,
regulatory inspection, quality control, process measurements, elemental and
compositional analysis, surface and thickness measurements, remote
communications, and flow and blend optimization. This division serves the oil
and gas, chemical, semiconductor, pharmaceutical, food and beverage, consumer
products, power-generation, metal, cement, minerals and mining, water and
wastewater treatment, and pulp and paper markets.

       For weighing and inspection applications in the consumer products,
packaged goods, and bulk materials markets, we provide equipment to help our
customers attain safety and quality standards while checking the quantity of
specific items. We use a variety of technologies, for example X-ray imaging and
ultratrace chemical detection, to inspect food, beverage, and pharmaceutical
packages to ensure they are free of physical contaminants, have the appropriate
quantity of material, or have no missing or broken parts. In bulk materials, our
product line provides capabilities for solids-flow-monitoring and level
measurement for a wide variety of processing applications in the food, chemical,
plastics, and pharmaceutical markets.

       In the area of online process-optimization for blending and control
applications, we provide proprietary systems that use ultrahigh-speed,
noninvasive measurement technologies to analyze, in real time, the physical and
chemical properties of raw materials streams, such as coal, cement, and
minerals. Our technology allows direct online analysis of entire streams of
material, thereby eliminating off-line sampling and reducing processing time,
waste, and cost. We also manufacture systems that measure total thickness, basis
weight, and coating thickness of flat-sheet materials, such as metal strip,
plastics, foil, rubber, glass, paper, and web-type products.

       In the area of high-tech process measurements, we provide sophisticated
field-measurement and sensor systems for the process-control market to improve
efficiency, provide process and quality control, maintain regulatory compliance,
and increase worker safety. These systems provide real-time direct and remote
data collection, analysis, and local control functions using a variety of
technologies, including radiation, radar, ultrasonic, and vibration measurement
principles. Additionally, we provide flow-monitoring meters, gas chromatography,
mass spectrography, and X-ray fluorescence capabilities for a wide range of
petrochemical and related process-manufacturing applications.

       Environmental Instruments serves four major markets: air quality and gas
detection, water analysis, radiation measurement and protection, and security.
Our portfolio of instruments helps our customers protect people and the
environment, with particular focus on regulatory compliance, product quality,
worker safety, and process efficiency.

       Air-quality instruments are used for environmental air monitoring,
process monitoring, gas detection, and hazardous chemical detection. These
include continuous gaseous and aerosol instruments for monitoring ambient air
and emissions, measuring such compounds as common air pollutants, aerosols,
organic halogens, and carbon. We also provide a comprehensive line of gas
detectors for controlling and detecting the presence of combustible and toxic
gases for worker and plant safety. These products range from simple hand-held,
general-purpose portable equipment to more sophisticated fixed systems.

       Used both in laboratory and online process environments, our
water-analysis products are used for quality assurance, environmental testing,
and regulatory compliance applications in water and wastewater, food and
beverage, chemical, pharmaceutical, and power-generation industries. These
products are used to determine the quality of water and other aqueous solutions
by measuring pH, specific ion concentrations, dissolved oxygen content, and
conductivity.

       Radiation measurement and protection products monitor and detect
radiation in nuclear, environmental, industrial, medical, and security
applications. Products include hand-held survey meters, vehicle and pedestrian
portals, environmental monitors, automated contamination-detection systems, and
networked industrial-process systems, as well as personal dosimetry products
used for protecting workers that are at risk of radiation exposure.

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       Our security products include a comprehensive range of fixed and portable
instruments used for chemical, radiation, and trace explosives detection. These
products are used in airports, embassies, cargo facilities, border crossings,
and other high-threat facilities for the detection and prevention of terrorist
acts. They are also used by emergency response teams for emergency and forensic
response to such acts, as well as other events involving potentially hazardous
substances.

       Control Technologies provides products and services to ensure the precise
operation of a broad range of applications, including laser, semiconductor,
analytical, medical, laboratory, general industrial, and R&D. We are a leading
manufacturer of precision temperature-control products for the global industrial
and laboratory markets. The product line includes heated/refrigerated
circulating baths, immersion coolers, and recirculating chillers. In addition,
we supply instruments that analyze materials for viscosity, surface tension, and
thermal properties. Customers include the food and pharmaceutical industries as
well as manufacturers of paints, inks, coatings, and adhesives, who depend on
high-precision viscometers to maintain the quality and consistency of their
products.

       Our compliance-test systems and simulators ensure that electronic
components and systems meet international and industry standards for
electromagnetic compatibility and electrostatic discharge. The primary markets
served are manufacturers of semiconductor and telecommunications equipment. Also
included in this division are components, assemblies, and systems used to
produce high- and ultra-high vacuum operations in industrial, educational, and
R&D applications. These products range from small gaskets to walk-in chambers.

Optical Technologies

       We are a leader in lasers and photonics. Products within the Optical
Technologies segment are used in multiple markets - particularly the scientific
instrument, microelectronics, industrial processes, and biomedical industries.
During 2003, these products were grouped into one division: Spectra-Physics.

       Spectra-Physics is a leader in the design, development, manufacture, and
distribution of high-power semiconductor and solid-state lasers for industrial,
scientific, electronics, and biomedical markets. For example, nitrogen lasers
used as an ionization source in mass spectrometers enable scientists to study
proteins, peptides, and other large molecules in biomedical research. High-power
semiconductor lasers are used in such applications as pumping, direct-to-press
printing, and cosmetic and therapeutic medical procedures. High-power
solid-state lasers are used in PC board manufacturing, and they are key in the
drive to make next-generation semiconductor devices smaller, thinner, and
faster. Additionally, they are used in various industrial processes, such as
welding, cutting, and rapid prototyping, as well as bioinstrumentation and
scientific research.

       This division also includes optical and optoelectronic components and
systems that make, move, manipulate, and measure light. These products are used
in a variety of applications and industries, including scientific and medical
instruments and semiconductor manufacturing. For example, our diffraction
gratings are used in the line-narrowing packages of excimer lasers used for
photolithography systems in semiconductor manufacturing. Our products also
include Corion thin-film interference filters, Hilger scintillation and
electro-optic crystals, Oriel optical components and instruments, and CIDTEC
charged-injection device (CID) solid-state video cameras. We offer catalog
customers a full complement of laser and photonics products, as well as
technical information.

       For financial information about segments, including domestic and
international operations and export sales, see Note 3 to our Consolidated
Financial Statements, which begin on page F-1 of this report.

Discontinued Operations

       As a result of our January 2000 reorganization plan, a number of
businesses have been accounted for as discontinued operations. Businesses in
this category included Kadant Inc., a supplier of systems to the papermaking and
paper recycling industry, as well as fiber-based consumer products; and Viasys
Healthcare Inc., a manufacturer of a range of medical products for diagnosis

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and monitoring. Kadant was spun off to shareholders in August 2001 and Viasys
was spun off in November 2001. These businesses, together with a number of
operating units that were sold, constituted the company's former Energy and
Environment, Biomedical and Emerging Technologies, and Recycling and Resource
Recovery segments. During the first quarter of 2003, the company sold its last
remaining business in discontinued operations. The company has retained some
lease liabilities as well as responsibility for several litigation matters
related to discontinued operations.

New Products and Research and Development

       Our business includes the development and introduction of new products
and may include entry into new business segments. We are not currently committed
to any new products that require the investment of a material amount of our
assets, nor do we have any definitive plans to enter new businesses that would
require such an investment.

       During 2003, 2002, and 2001, we spent $146.4 million, $155.1 million, and
$171.6 million, respectively, on research and development.

Raw Materials

       Our management team believes that we have a readily available supply of
raw materials for all of our significant products from various sources. We do
not anticipate any difficulties obtaining the raw materials essential to our
business.

Patents, Licenses, and Trademarks

       Patents are important in each segment of our business; no particular
patent, or related group of patents, is so important, however, that its loss
would significantly affect our operations as a whole. Generally, we seek patent
protection for inventions and developments made by our personnel and
incorporated into our products or otherwise falling within our fields of
interest. Patent rights resulting from work sponsored by outside parties do not
always accrue exclusively to the company and may be limited by agreements or
contracts.

       We protect some of our technology as trade secrets and, where
appropriate, we use trademarks or register our products. We also enter into
license agreements with others to grant and/or receive rights to patents and
know-how.

Seasonal Influences

       Revenues in the fourth calendar quarter are historically stronger than in
the other quarters due to capital spending patterns of industrial,
pharmaceutical, and government customers.

Working Capital Requirements

       There are no special inventory requirements or credit terms extended to
customers that would have a material adverse effect on our working capital.

Dependency on a Single Customer

       There is no single customer the loss of which would have a material
adverse effect on our business. No customer accounted for more than 10% of our
total revenues in any of the past three years.

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Backlog

       Our backlog of firm orders at year-end 2003 and 2002 was as follows:

<TABLE>
<CAPTION>
       <S>                                                                                                  <C>          <C>

                                                                                                              2003         2002
                                                                                                            --------     --------
                                                                                                               (In thousands)

       Life and Laboratory Sciences                                                                         $260,718     $221,409
       Measurement and Control                                                                               109,794      106,679
       Optical Technologies                                                                                   59,250       55,777
       Intersegment                                                                                           (4,337)      (3,270)
                                                                                                            --------     --------

                                                                                                            $425,425     $380,595
                                                                                                            ========     ========

</TABLE>

       We believe that virtually all of our backlog at the end of 2003 will be
filled during 2004. Year over year changes in backlog are affected by currency
translation, acquisitions, and divestitures, among other factors.

Government Contracts

       Although the company transacts business with various government agencies,
no government contract is of such magnitude that a renegotiation of profits or
termination of the contract at the election of the government agency would have
a material adverse effect on the company's financial results.

Competition

General

       The company encounters aggressive and able competition in virtually all
of the markets we serve. Because of the diversity of our products and services,
we face many different types of competitors and competition. Our competitors
range from large organizations that produce a comprehensive array of products
and services for a variety of markets to small organizations producing a limited
number of products and services for specialized markets. In general, competitive
climates in the markets we serve are characterized by changing technology and
customer demands that require continuing research and development. Our success
in these markets primarily depends on five factors:

       - technical performance and advances in technology that result in new
         products and improved price/performance ratios;
       - our reputation among customers as a quality provider of products and
         services;
       - customer service and support;
       - active research and application-development programs; and
       - relative prices of our products and services.

Life and Laboratory Sciences

       Bioscience Technologies. In the markets served by this division, our
principal competitors include Eppendorf AG; Gilson, Inc.; Tecan Group Ltd.;
PerkinElmer, Inc.; Molecular Devices Corp.; Kendro Laboratory Products (a
subsidiary of SPX Corporation); and Beckman Coulter, Inc.

       Scientific Instruments. In the markets served by this division, our
principal competitors include Applied Biosystems Inc.; Agilent Technologies
Inc.; Waters Corporation; Shimadzu Corporation; PerkinElmer; Bruker Daltonics
Inc.; Hitachi, Ltd.; and Varian Inc.

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       Informatics and Services. In the markets served by this division, our
principal competitors include PerkinElmer; Applied Biosystems; Beckman Coulter;
Agilent; and LabVantage Solutions.

       Clinical Diagnostics. In the markets served by this division, our
principal competitors include Leica Microsystems; Sakura Finetechnical Co.,
Ltd.; Becton, Dickinson and Company; Quidel Corporation; and Roche-Boeringher
Manheim.

Measurement and Control

       Process Instruments. In the markets served by this division, our
principal competitors include Mettler-Toledo International Inc.; Yokogawa
Electric Corporation; Fisher-Rosemount (a division of Emerson Electric Co.,
Inc.); Asea Brown Boveri (Holding) Ltd.; Endress & Hauser; Integrated
Measurement Systems, Inc.; and Antek Instruments, Inc.

       Environmental Instruments. In the markets served by this division, our
principal competitors include Danaher Corporation; Mettler-Toledo; Horiba;
Fisher-Rosemount; Teledyne Advanced Pollution Instrumentation, Inc.; RAE Systems
Inc.; ISC; Canberra Industries, Inc.; synOdys Group; GE Interlogix; and Smiths-
Barringer.

       Control Technologies. In the markets served by this division, our
principal competitors include SMC; Lytron Inc.; Julabo; TA Instruments;
Gottfert; Brabender; and MDC.

Optical Technologies

       Spectra-Physics. In the markets served by this division, our principal
competitors include Coherent, Inc.; Continuum and Quantronix (divisions of Excel
Technology, Inc.); Lightwave; JDS Uniphase Corporation; Jobin Yvon Inc.;
Thorlabs, Inc.; Omega; Chroma Technology Corp.; and Saint-Gobain.

Environmental Protection Regulations

       Complying with federal, state, and local environmental protection
regulations should not significantly affect our capital spending, earnings, or
competitive position.

Number of Employees

       As of December 31, 2003, we had approximately 10,800 employees.

Financial Information About Geographic Areas

       Financial information about geographic areas is summarized in Note 3 to
our Consolidated Financial Statements, which begin on page F-1 of this report.

Available Information

       The company files annual, quarterly, and current reports, proxy
statements, and other documents with the Securities and Exchange Commission
(SEC) under the Exchange Act. The public may read and copy any materials that we
file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. Also, the SEC
maintains a Web site that contains reports, proxy and information statements,
and other information regarding issuers, including the company, that file
electronically with the SEC. The public can obtain any documents that we file
with the SEC at www.sec.gov. We also make available free of charge on or through
our own Web site at www.thermo.com our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable,
amendments to those reports filed or furnished pursuant to section 13(a) of the
Exchange Act as soon as reasonably practicable after we electronically file such
material with, or furnish it to, the SEC. In addition, paper copies of these
documents may be obtained free of charge by writing to the company care of its
Investor Relations Department at our principal executive office located at 81
Wyman Street, Waltham, Massachusetts 02451.

<
                                       10
<PAGE>
>


Executive Officers of the Registrant

<TABLE>
<CAPTION>
<S>                          <C>    <C>

Name                         Age    Present Title (Fiscal Year First Became Executive Officer)
------------------           ---    ---------------------------------------------------------------------

Marijn E. Dekkers             46    President and Chief Executive Officer (2000)
Guy Broadbent                 40    Vice President; President, Spectra-Physics Division (2001)
Marc N. Casper                35    Senior Vice President; President, Life and Laboratory Sciences (2001)
Seth H. Hoogasian             49    Vice President, General Counsel, and Secretary (2001)
Peter E. Hornstra             44    Corporate Controller and Chief Accounting Officer (2001)
Theo Melas-Kyriazi            44    Vice President and Chief Financial Officer (1998)
Stephen G. Sheehan            48    Vice President, Human Resources (2003)
Peter M. Wilver               44    Vice President, Financial Operations (2003)

</TABLE>

       Mr. Dekkers was appointed Chief Executive Officer in November 2002 and
President in July 2000. He was Chief Operating Officer from July 2000 to
November 2002. From June 1999 to June 2000, Mr. Dekkers served as president of
Honeywell International's (formerly Allied Signal) electronic materials
division, and from August 1997 to May 1999 he served as vice president and
general manager of its fluorine products division.

       Mr. Broadbent was appointed President, Spectra-Physics Division in
December 2003 and Vice President of Thermo Electron in January 2001. He was
President, Optical Technologies, from October 2000 to December 2003. From May
2000 to October 2000, Mr. Broadbent was vice president and general manager of
the amorphous metals division of Honeywell International, and from November 1998
to April 2000, he was business director for Honeywell International's specialty
fluorine division.

       Mr. Casper was appointed Senior Vice President of Thermo Electron in
December 2003 and President, Life and Laboratory Sciences in December 2001. He
was Vice President of Thermo Electron from December 2001 to December 2003. From
July 2000 to July 2001, Mr. Casper was president and chief executive officer of
Kendro Laboratory Products, a life sciences company that provides
sample-preparation and processing equipment. From May 1999 to June 2000, Mr.
Casper was president for the Americas at Dade Behring Inc., a manufacturer of
clinical-diagnosis products. From January 1997 to May 1999, Mr. Casper was
executive vice president for Europe, Asia, and Intercontinental at Dade Behring
Inc.

       Mr. Hoogasian was appointed Secretary in 2001, Vice President in 1996,
and General Counsel in 1992.

       Mr. Hornstra was appointed Chief Accounting Officer in January 2001 and
Corporate Controller in 1996.

       Mr. Melas-Kyriazi was appointed Chief Financial Officer in January 1999.
He was Vice President of Corporate Strategy from 1998 to January 1999. From 1994
to 1998, Mr. Melas-Kyriazi was President and Chief Executive Officer of the
company's ThermoSpectra subsidiary, and from 1988 to 1994 he was Treasurer of
Thermo Electron. He was Assistant Treasurer of the company from 1986 to 1988.

       Mr. Sheehan was appointed Vice President, Human Resources in August 2001.
From 1997 to July 2001, Mr. Sheehan served as vice president of human resources
for Merck Research Labs, the research unit of the pharmaceutical company.

       Mr. Wilver was appointed Vice President, Financial Operations in October
2000. From February 2000 to September 2000, Mr. Wilver was vice president and
chief financial officer of Honeywell International's electronic materials
division, and from May 1998 to January 2000, he was finance director of its
aerospace aftermarket services business.

<
                                       11
<PAGE>
>


Item 2.    Properties

       The location and general character of our principal properties by segment
as of December 31, 2003, are as follows:

Life and Laboratory Sciences

       We own approximately 1,614,000 square feet of office, engineering,
laboratory, and production space, principally in Wisconsin, Ohio, California,
Virginia, and Texas within the U.S., and in Germany, Italy, and Switzerland. We
lease approximately 1,662,000 square feet of office, engineering, laboratory,
and production space, principally in Massachusetts and Colorado within the U.S.,
and in Finland, France, England, and Japan, under various leases that expire
between 2004 and 2022.

Measurement and Control

       We own approximately 700,000 square feet of office, engineering,
laboratory, and production space, principally in New Hampshire, Minnesota, and
New Mexico within the U.S., and in Germany and England. We lease approximately
884,000 square feet of office, engineering, laboratory, and production space,
principally in Massachusetts, Texas, and California within the U.S., and in
England and The Netherlands, under various leases that expire between 2004 and
2013.

Optical Technologies

       We own approximately 269,000 square feet of office, engineering,
laboratory, and production space, principally in New York, Arizona, and
California. We lease approximately 359,000 square feet of office, engineering,
laboratory, and production space, principally in California and Massachusetts,
under various leases that expire between 2004 and 2019.

Corporate Headquarters

       We own approximately 81,000 square feet of office space in Massachusetts.

       We believe that all of the facilities that we are currently utilizing are
in good condition and are suitable and adequate to meet our current needs. If we
are unable to renew any of the leases that are due to expire in the next year or
two, we believe that suitable replacement properties are available on
commercially reasonable terms.

Item 3.    Legal Proceedings

       We are a party to a number of claims and lawsuits relating to our
business. Information regarding litigation is contained in Note 11 to our
Consolidated Financial Statements, which begin on page F-1 of this report, and
is incorporated herein by reference.

Item 4.    Submission of Matters to a Vote of Security Holders

       No matters were submitted to a vote of security holders, whether through
the solicitation of proxies or otherwise, during our 2003 fourth fiscal quarter.

<
                                       12
<PAGE>
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                                     PART II

Item 5.    Market for the Registrant's Common Equity and Related Stockholder
           Matters

Market Price of Common Stock

       Our common stock is traded on the New York Stock Exchange under the
symbol TMO. The following table sets forth the high and low sale prices of the
company's common stock for 2003 and 2002, as reported in the consolidated
transaction reporting system.

<TABLE>
<CAPTION>
       <S>                                                                       <C>           <C>          <C>            <C>


                                                                                         2003                       2002
                                                                                 --------------------       ---------------------
                                                                                   High           Low         High            Low
                                                                                 ------        ------       ------         ------

       First Quarter                                                             $20.38        $17.02       $24.37         $19.30
       Second Quarter                                                             22.36         17.57        20.60          15.60
       Third Quarter                                                              23.33         21.00        17.80          14.50
       Fourth Quarter                                                             25.37         21.40        20.52          15.19

</TABLE>

Holders of Common Stock

       As of January 30, 2004, the company had 10,430 holders of record of its
common stock. This does not include holdings in street or nominee names.

Dividend Policy

       The company has never paid cash dividends and does not expect to pay cash
dividends in the foreseeable future because its policy has been to use earnings
to finance expansion and growth. Payment of dividends will rest within the
discretion of the company's Board of Directors and will depend upon, among other
factors, the company's earnings, capital requirements, and financial condition.

Securities Authorized for Issuance Under Equity Compensation Plans

       The information with respect to securities authorized for issuance under
equity compensation plans required by this Item is contained in our definitive
proxy statement to be filed with the SEC not later than 120 days after the close
of the fiscal year ("2004 Definitive Proxy Statement") under the heading "EQUITY
COMPENSATION PLAN INFORMATION," and is incorporated in this report by reference.

<
                                       13
<PAGE>
>



Item 6.    Selected Financial Data

<TABLE>
<CAPTION>
<S>                                                              <C>           <C>           <C>           <C>           <C>

                                                                 2003 (a)      2002 (b)      2001 (c)      2000 (d)      1999 (e)
                                                                 --------      --------      --------      --------      --------
                                                                              (In millions except per share amounts)

Statement of Operations Data
Revenues                                                         $2,097.1      $2,086.4      $2,188.2      $2,280.5      $2,294.6
Operating Income                                                    184.8         155.5          34.2         266.0         182.1
Income from Continuing Operations Before Cumulative Effect
 of Change in Accounting Principle                                  172.7         194.4          50.7          62.6          38.8
Income (Loss) Before Cumulative Effect of Change in
 Accounting Principle                                               200.0         309.7           0.2         (23.2)       (174.6)
Net Income (Loss)                                                   200.0         309.7          (0.8)        (36.1)       (174.6)
Earnings per Share from Continuing Operations Before
 Cumulative Effect of Change in Accounting Principle:
    Basic                                                            1.06          1.15           .28           .37           .25
    Diluted                                                          1.04          1.12           .28           .36           .23
Earnings (Loss) per Share:
    Basic                                                            1.23          1.84             -          (.22)        (1.10)
    Diluted                                                          1.20          1.73             -          (.22)        (1.12)

Balance Sheet Data
Working Capital                                                  $  710.5      $  667.8      $  823.2      $1,737.0      $1,291.6
Total Assets                                                      3,389.0       3,651.5       3,825.1       4,863.0       5,071.8
Long-term Obligations                                               229.5         451.3         727.5       1,528.5       1,566.0
Minority Interest                                                       -             -           6.9          24.7         348.4
Shareholders' Equity                                              2,382.8       2,030.3       1,908.1       2,534.0       2,013.5

</TABLE>

       Through 2002, the company had a fiscal year end ending the Saturday
nearest December 31. In 2003, the company changed its year end to December 31.
The consolidated financial statements for fiscal years 1999 through 2001 were
audited by Arthur Andersen LLP, which has ceased operations. A copy of the
report previously issued by Arthur Andersen on the company's financial
statements as of December 29, 2001, and December 30, 2000, and for each of the
three years in the period ended December 29, 2001, is included elsewhere in this
document. Such report has not been reissued by Arthur Andersen. Amounts prior to
2003 have been conformed to the presentation required by SFAS No. 145 for gains
and losses on the early retirement of debt.

(a) Reflects a $48.8 million pre-tax charge for restructuring and other costs;
    $16.3 million of pre-tax gains from the sale of shares of Thoratec
    Corporation; $13.7 million of pre-tax gains from the sale of shares of
    FLIR Systems, Inc.; an after-tax gain of $27.3 million related to the
    company's discontinued operations; and the repurchase and redemption of
    $356.9 million of the company's debt and equity securities.
(b) Reflects a $61.3 million pre-tax charge for restructuring and other costs;
    $111.4 million of pre-tax gains from the sale of shares of FLIR; an
    after-tax gain of $115.4 million related to the company's discontinued
    operations; the repurchase and redemption of $924.9 million of the
    company's debt and equity securities; and the reclassification of the
    company's $71.9 million principal amount 4 3/8% subordinated convertible
    debentures from long-term obligations to current liabilities as a result
    of the company's decision to redeem them in April 2003. Also reflects the
    adoption of SFAS No. 142, under which amortization of goodwill ceased.
(c) Reflects a $161.6 million pre-tax charge for restructuring and other
    costs; $35.1 million of pre-tax gains from the sale of shares of FLIR; an
    after-tax charge of $50.4 million related to the company's discontinued
    operations; a $1.0 million after-tax charge reflecting the cumulative
    effect of a change in accounting principle for the adoption of SFAS No.

<
                                       14
<PAGE>
>


    133; and the reclassification of $468.1 million of subordinated convertible
    debentures from long-term obligations to current liabilities as a result of
    the company's decision to redeem them in March 2002. Also reflects the
    spinoff of the company's Kadant and Viasys Healthcare subsidiaries, and the
    repurchase of $511.4 million of the company's debt and equity securities.
(d) Reflects $3.4 million of pre-tax restructuring and other income, net; an
    after-tax charge of $100 million related to the company's discontinued
    operations; the issuance of company common stock valued at $448.7 million
    to acquire the minority interest of certain subsidiaries; and a $12.9
    million after-tax charge reflecting the cumulative effect of a change in
    accounting principle for the adoption of SAB No. 101.
(e) Reflects a $65.2 million pre-tax charge for restructuring and other costs
    and an after-tax charge of $50 million related to the company's
    discontinued operations.

Item 7.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations

       Reference is made throughout this Management's Discussion and Analysis of
Financial Condition and Results of Operations to footnotes included in Notes to
Consolidated Financial Statements, which begin on page F-1 of this report.

Overview of Results of Operations and Liquidity

       The company develops and manufactures a broad range of products that are
sold worldwide. The company expands the product lines and services it offers by
developing and commercializing its own core technologies and by making strategic
acquisitions of complementary businesses. During 2000 and 2001, the company
carried out the principal aspects of a major reorganization plan under which it
sold or spun off many noncore businesses. As a result of these actions, the
company's continuing operations are comprised solely of its instrument
businesses. The businesses that have been spun off and sold have been presented
as discontinued operations in the accompanying financial statements. The
company's continuing operations fall into three principal business segments:
Life and Laboratory Sciences, Measurement and Control, and Optical Technologies.
The company has historically moved a business unit between segments when a shift
in strategic focus of either the business unit or a segment more closely aligns
the business unit with a segment different than that in which it had previously
been reported.

<TABLE>
<CAPTION>
       <S>                                                                      <C>             <C>       <C>             <C>

       Revenues                                                                         2003                       2002
       --------                                                                 ---------------------     ---------------------
                                                                                            (Dollars in thousands)

       Life and Laboratory Sciences                                             $1,291,430      61.6%     $1,204,232      57.7%
       Measurement and Control                                                     606,197      28.9%        636,025      30.5%
       Optical Technologies                                                        211,758      10.1%        258,640      12.4%
       Intersegment                                                                (12,250)     (0.6%)       (12,542)     (0.6%)
                                                                                ----------      -----     ----------      -----

                                                                                $2,097,135       100%     $2,086,355       100%
                                                                                ==========      =====     ==========      =====

</TABLE>

       The company's revenues grew nominally in 2003. The strengthening of
non-U.S. currencies relative to the dollar caused an increase in reported
revenues, offset by lower demand in several businesses in the company's
Measurement and Control and Optical Technologies segments. In addition to the
change in revenues caused by currency translation and divestitures, net of
acquisitions, which are discussed below, sales decreased 5% in 2003, primarily
due to lower demand. The company also reported this same percentage revenue
decrease in 2002 compared with 2001. The most recent year in which the company
reported positive comparative sales growth was 2001 compared with 2000. The
trend of lower sales has resulted primarily from a slowdown in the worldwide
economy that has adversely affected capital spending across most markets
addressed by the company. Fourth quarter 2003 results suggest the trend of lower
sales is reversing. For example, the Life and Laboratory Sciences segment
reported higher fourth quarter sales over the year ago quarter, while the
Optical Technologies segment had sequential sales growth over the third quarter
and increased its backlog 11% in the quarter. The Measurement and Control
segment increased its backlog at year-end 2003 by 3% over that of a year ago.

<
                                       15
<PAGE>
>


       The company's strategy over time is to augment internal growth at
existing businesses with complementary acquisitions such as those completed in
2003. These acquisitions included Jouan SA, a manufacturer of products used to
prepare and preserve laboratory samples, which was acquired on December 31,
2003; Laboratory Management Services, Inc., a supplier of regulatory instrument
and consulting services to the pharmaceutical and related industries; and the
personal radiation-detection instruments product line from Siemens plc.

       In 2003, the company's operating income and operating income margin
improved to $184.8 million and 8.8%, respectively, from $155.5 million and 7.5%,
respectively, in 2002. (Operating income margin is operating income divided by
revenues.) During the economic slowdown, the company undertook actions to reduce
its cost structure and promote operating efficiency, principally through
consolidating real estate locations and reducing related headcount. The
annualized cost savings of actions initiated in 2003 and 2002 total
approximately $58 million. As these actions were taken during periods of
declining revenues, the corresponding income benefit was offset in part by the
effect on income of lower sales. Restructuring and other costs, net, reduced
pre-tax income by $48.8 million and $61.3 million in 2003 and 2002,
respectively.

       Income from continuing operations declined to $172.7 million in 2003,
from $194.4 million in 2002. The decrease resulted primarily from an $87.6
million pre-tax decrease in gains on sale of investments in 2003. The company
had a large equity interest in FLIR Systems, Inc. resulting from shares acquired
as part of an acquisition completed in 1999. The company sold shares of FLIR and
had significant gains in 2002 and, to a lesser extent, in 2003. As of the end of
2003, the company no longer owned shares of FLIR. The 2003 investment gains also
included gains from the sale of shares of Thoratec Corporation. As of the end of
2003, the company owned 5.7 million shares of Thoratec with a fair market value
of $74 million. The company obtained the shares of Thoratec in 2001 as
consideration for a divestiture.

       The company has reduced its effective tax rate over the past two years.
In 2003, the tax rate was 21.0%, which included some benefits discussed below
that the company does not expect to have in 2004. Several initiatives, however,
will continue to provide a benefit in the future, principally a reorganization
of the company's non-U.S. subsidiary structure that has resulted in a more
tax-efficient corporate structure. The company expects its effective tax rate in
2004 will be approximately 28% - 29%.

       During 2003, the company's cash flow from operations totaled $216.7
million, compared with $110.3 million in 2002. In 2002, cash of $85.2 million
was used to reduce other current liabilities, including tax payments on
investment gains. In 2003, a decrease in other current liabilities used cash of
$7.5 million, resulting in a year over year difference of $77.7 million. In
addition, decreases in accounts receivable and inventories in 2003 generated
$20.3 million more cash than did decreases in these accounts in 2002.

       During 2003, the company used cash of $665.6 million for financing
activities, principally the repayment of short-term debt as well as the early
redemption of long-term obligations with the objective of reducing interest
costs. As of year-end 2003, the company's outstanding debt totaled $275.5
million, of which 82% is due in 2007 and thereafter. The company expects that
its existing cash and investments of $418.2 million as of December 31, 2003, and
its future cash flow from operations together with available unsecured
borrowings of up to $250 million under its revolving credit agreements are
sufficient to meet the capital requirements of its existing businesses for the
foreseeable future, including at least the next 24 months.

Critical Accounting Policies

       The company's discussion and analysis of its financial condition and
results of operations is based upon its financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
the company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenue and expenses, and related disclosure of contingent
liabilities. On an on-going basis, the company evaluates its estimates,
including those related to bad debts, inventories, intangible assets, warranty
obligations, income taxes, pension costs, contingencies and litigation,
restructuring, and sale of businesses. The company bases its estimates on
historical experience, current market and economic conditions, and other

<
                                       16
<PAGE>
>


assumptions that management believes are reasonable. The results of these
estimates form the basis for judgments about the carrying value of assets and
liabilities where the values are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions.

       The company believes the following represent its critical accounting
policies and estimates used in the preparation of its financial statements:

       (a) The company maintains allowances for doubtful accounts for estimated
           losses resulting from the inability of its customers to pay amounts
           due. Such allowances totaled $26.1 million at December 31, 2003. The
           company estimates the amount of customer receivables that are
           uncollectible based on the age of the receivable, the
           creditworthiness of the customer, and any other information that is
           relevant to the judgment. If the financial condition of the company's
           customers were to deteriorate, reducing their ability to make
           payments, additional allowances would be required.

       (b) The company writes down its inventories for estimated obsolescence
           for differences between the cost and estimated net realizable value
           based on usage in the preceding 12 months, expected demand, and any
           other information that is relevant to the judgment. If ultimate usage
           or demand vary significantly from expected usage or demand,
           additional writedowns may be required.

       (c) The company periodically evaluates goodwill for impairment using
           market comparables for similar businesses or forecasts of discounted
           future cash flows. Goodwill totaled $1.6 billion at December 31,
           2003. Estimates of future cash flows require assumptions related to
           revenue and operating income growth, asset-related expenditures,
           working capital levels, and other factors. Different assumptions from
           those made in the company's analysis could materially affect
           projected cash flows and the company's evaluation of goodwill for
           impairment. Should the fair value of the company's goodwill decline
           because of reduced operating performance, market declines, or other
           indicators of impairment, charges for impairment of goodwill may be
           necessary.

       (d) The company reviews other long-lived assets for impairment when
           indication of potential impairment exists, such as a significant
           reduction in cash flows associated with the assets. Other long-lived
           assets totaled $436.5 million at December 31, 2003, including $300.7
           million of fixed assets. In testing a long-lived asset for
           impairment, assumptions are made concerning projected cash flows
           associated with the asset. Estimates of future cash flows require
           assumptions related to revenue and operating income growth and
           asset-related expenditures associated with the asset being reviewed
           for impairment. Should future cash flows decline significantly from
           estimated amounts, charges for impairment of other long-lived assets
           may be necessary.

       (e) In instances where the company sells equipment with a related
           installation obligation, the company generally recognizes revenue
           related to the equipment when title passes. The company recognizes
           revenue related to the installation when it performs the
           installation. The allocation of revenue between the equipment and the
           installation is based on relative fair value at the time of sale.
           Should the fair value of either the equipment or the installation
           change, the company's revenue recognition would be affected.

       (f) In instances where the company sells equipment with customer-
           specified acceptance criteria, the company must assess whether it can
           demonstrate adherence to the acceptance criteria prior to the
           customer's acceptance testing to determine the timing of revenue
           recognition. If the nature of customer-specified acceptance criteria
           were to change or grow in complexity such that the company could not
           demonstrate adherence, the company would be required to defer
           additional revenues upon shipment of its products until completion of
           customer acceptance testing.

       (g) At the time the company recognizes revenue, it provides for the
           estimated cost of product warranties based primarily on historical
           experience and knowledge of any specific warranty problems that
           indicate projected warranty costs may vary from historical patterns.
           The liability for warranty obligations totaled $29.6 million at
           December 31, 2003. Should product failure rates or the actual cost of
           correcting product failures vary from estimates, revisions to the
           estimated warranty liability would be necessary.

<
                                       17
<PAGE>
>


       (h) The company estimates the degree to which tax assets and loss
           carryforwards will result in a benefit based on expected
           profitability by tax jurisdiction, and provides a valuation allowance
           for tax assets and loss carryforwards that it believes will more
           likely than not go unused. If it becomes more likely than not that a
           tax asset or loss carryforward will be used, the company reverses the
           related valuation allowance. The company's tax valuation allowance
           totaled $75.3 million at December 31, 2003. Should the company's
           actual future taxable income by tax jurisdiction vary from estimates,
           additional allowances or reversals thereof may be necessary.

       (i) The company provides a liability for future income tax payments in
           the worldwide tax jurisdictions in which it operates. Accrued income
           taxes totaled $100.2 million at December 31, 2003. Should tax return
           positions that the company expects are sustainable not be sustained
           upon audit, the company could be required to record an incremental
           tax provision for such taxes. Should disputed positions that are
           reserved ultimately be sustained, the company would recognize an
           incremental tax benefit.

       (j) The company estimates losses on contingencies and litigation and
           provides a reserve for these losses. Should the ultimate losses on
           contingencies and litigation vary from estimates, adjustments to
           those reserves may be required.

       (k) One of the company's U.S. subsidiaries and several non-U.S.
           subsidiaries sponsor defined benefit pension plans. Major assumptions
           used in the accounting for these employee benefit plans include the
           discount rate, expected return on plan assets, and rate of increase
           in employee compensation levels. Assumptions are determined based on
           company data and appropriate market indicators in consultation with
           the company's actuaries, and are evaluated each year as of the plans'
           measurement date. Net periodic pension costs for defined benefit
           plans totaled $7.5 million in 2003. Should any of these assumptions
           change, they would have an effect on net periodic pension costs.

       (l) The company records restructuring charges for the cost of vacating
           facilities based on future lease obligations and expected sub-rental
           income. The company's accrued restructuring costs for abandoned
           facilities totaled $14.7 million at December 31, 2003. Should actual
           cash flows associated with sub-rental income from vacated facilities
           vary from estimated amounts, adjustments may be required.

       (m) The company estimates the expected proceeds from any businesses held
           for sale and, when necessary, records losses to reduce the carrying
           value of these businesses to estimated realizable value. Should the
           actual or estimated proceeds, which would include post-closing
           purchase price adjustments, vary from current estimates, results
           could differ from expected amounts.

Results of Operations

2003 Compared With 2002

Continuing Operations

       Sales in 2003 were $2.097 billion, an increase of $10.8 million from
2002. The favorable effects of currency translation resulted in an increase in
revenues of $120.8 million in 2003. Sales decreased $10.6 million due to
divestitures, net of acquisitions. In addition to the changes in revenue
resulting from currency translation, acquisitions, and divestitures, revenues
decreased $99.4 million, or 5%, primarily due to lower demand, as described by
segment below.

<TABLE>
<CAPTION>
       <S>                                                                                                  <C>         <C>

       Operating Income Margin                                                                               2003        2002
       -----------------------                                                                              ------      ------

       Life and Laboratory Sciences                                                                          14.1%       14.4%
       Measurement and Control                                                                                7.3%        7.2%
       Optical Technologies                                                                                  (5.5%)     (12.0%)

       Consolidated                                                                                           8.8%        7.5%

</TABLE>

<
                                       18
<PAGE>
>


       Operating income was $184.8 million in 2003, compared with $155.5 million
in 2002. Operating income margin increased to 8.8% in 2003 from 7.5% in 2002.
Operating income in 2003 was reduced by additional charges associated with
restructuring actions initiated in 2003, restructuring plans initiated prior to
2003, and certain other costs, net (Note 15). Operating income in 2002 was
reduced by charges associated with restructuring plans initiated during 2002 and
2001, and certain other costs, net. The restructuring and other items totaled
$48.8 million and $61.3 million in 2003 and 2002, respectively, and are
discussed by segment below. Operating income increased primarily due to a lower
cost base following recent restructuring actions. Among the other actions
contributing to a lower cost base is lower spending on research and development
activities, which decreased 6% to $146.4 million in 2003 as the company focuses
on those projects with the highest estimated returns. The company expects to
continue spending on research and development at a rate of approximately 7% of
revenues.

       In response to a continued downturn in markets served by the company and
in connection with the company's overall reorganization, restructuring actions
were initiated in 2003 in a number of business units to reduce costs and
redundancies, principally through headcount reductions and consolidation of
facilities. These actions resulted in annual cost reductions beginning in mid-
to late 2003 and continuing in early 2004 of approximately $15 million,
including $7 million in the Life and Laboratory Sciences segment, $4 million in
the Measurement and Control segment, and $4 million in the Optical Technologies
segment. The company expects to incur an additional $3 million of restructuring
costs, primarily in 2004, for charges associated with these actions that cannot
be recorded until incurred. The company believes that restructuring actions
undertaken in 2003 will be substantially completed in 2004. The company does not
currently expect to undertake significant restructuring actions in 2004.

       In November 2002, the Emerging Issues Task Force (EITF) reached a
consensus on EITF No. 00-21, "Accounting for Revenue Arrangements with Multiple
Deliverables." The company began applying the consensus prospectively in the
first quarter of 2003. Under EITF No. 00-21, the company recognizes revenue and
related costs for arrangements with customers that have multiple deliverables,
such as equipment and installation, as each element is delivered or completed
based on its fair value. When a portion of the customer's payment is not due
until installation, the company defers that portion of the revenue until
completion of installation. Prior to 2003, the company followed Staff Accounting
Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements," adopted
in 2000, for multiple element arrangements. Under SAB No. 101, revenue was
recognized at shipment with the estimated cost of installation accrued for most
products requiring installation. For those products requiring installations of
longer duration, the company previously deferred revenue until completion of
installation. The adoption of EITF No. 00-21 increased revenues and diluted
earnings per share by $7.6 million and $.01, respectively, during the first
quarter of 2003. Where EITF No. 00-21 has had an impact, the company has
disclosed such impact.

Life and Laboratory Sciences

<TABLE>
<CAPTION>
       <S>                                                                                 <C>            <C>             <C>
                                                                                              2003           2002         Change
                                                                                           ----------     ----------      ------
                                                                                                  (Dollars in thousands)

       Revenues                                                                            $1,291,430     $1,204,232        7.2%
       Operating Income Margin                                                                  14.1%          14.4%       (0.3%)

</TABLE>

       Sales in the Life and Laboratory Sciences segment increased $87.2
million, or 7%, to $1.291 billion in 2003. The favorable effects of currency
translation resulted in an increase in revenues of $86.3 million in 2003. Sales
decreased $9.7 million due to product line divestitures, net of acquisitions. In
addition to the changes in revenue resulting from currency translation,
divestitures, and acquisitions, revenues increased $10.6 million, or 0.9%,
including 0.5% from the effect of the adoption of EITF No. 00-21. A $14.8
million increase in sales of clinical diagnostic products was offset in part by
decreased sales of bioscience instrumentation, principally due to a downturn in
demand from pharmaceutical and industrial markets. The increase in sales of
clinical diagnostic products resulted primarily from higher demand for rapid
diagnostic tests during a harsh flu season in the United States and, to a lesser
extent, increased demand for a newly released tissue processor used in
anatomical pathology laboratories.

<
                                       19
<PAGE>
>


       Operating income margin decreased to 14.1% in 2003 from 14.4% in 2002.
Operating income margin was affected by restructuring and other costs, net, of
$21.8 million and $19.2 million in 2003 and 2002, respectively. In addition to
the increase in restructuring and other costs in 2003, the decrease in operating
income margin resulted from higher marketing and selling expenses due to several
key commercial initiatives. The segment's commercial initiatives include key
customer account management, increased advertising costs for a branding
transition, and establishment of customer call centers and product demonstration
facilities. These cost increases were offset in part by cost savings from
facility consolidations and related productivity measures. The cost reduction
measures in 2002 and 2003 reduced the segment's cost base by an aggregate of
approximately $14 million on an annualized basis.

       In 2003, the segment recorded restructuring and other costs, net, of
$21.8 million, including $18.8 million of cash costs, primarily for severance,
abandoned facilities, employee retention, and relocation expenses at businesses
being consolidated. In addition, the segment recorded net charges of $3.4
million to write down the carrying value of fixed assets, primarily buildings
held for sale, to expected disposal value, offset by $0.4 million of net gains,
primarily from the sale of a product line. In 2002, the segment recorded
restructuring and other costs, net, of $19.2 million, including $12.2 million of
cash costs, primarily for severance, abandoned facilities, and employee
retention at businesses being consolidated. The segment also recorded charges to
cost of revenues of $1.3 million, primarily for the sale of inventories revalued
at the date of acquisition. In addition, the segment realized a net loss of $4.3
million on the sale of assets, principally its Dynex automated diagnostics
product line, and wrote down $1.4 million of fixed assets at abandoned
facilities (Note 15).

Measurement and Control

<TABLE>
<CAPTION>
       <S>                                                                                   <C>            <C>           <C>
                                                                                               2003           2002        Change
                                                                                             --------       --------      ------
                                                                                                   (Dollars in thousands)

       Revenues                                                                              $606,197       $636,025       (4.7%)
       Operating Income Margin                                                                   7.3%           7.2%        0.1%

</TABLE>

       Sales in the Measurement and Control segment decreased $29.8 million, or
5%, to $606.2 million in 2003. The favorable effects of currency translation
resulted in an increase in revenues of $30.1 million in 2003. Sales increased
$3.3 million due to acquisitions, net of divestitures. In addition to the
changes in revenue resulting from currency translation, acquisitions, and
divestitures, revenues decreased $63.2 million, or 10%. Of this amount, $26.8
million, or 4%, was due to the inclusion in the fourth quarter of 2002 of a
shipment of explosives-detection equipment to the U.S. Transportation Security
Administration following a congressional mandate to screen all checked airline
baggage in the United States by the end of 2002. The balance of the decrease was
primarily the result of weaker demand arising from economic conditions facing
customers, particularly in the process instruments businesses where
approximately 60% of the remaining decrease occurred. Process instruments are
generally used in industrial markets such as minerals and mining and
petrochemical applications, where capital expenditures have slowed. In addition,
a 7% decrease in sales of equipment used primarily in semiconductor applications
was offset in part by higher revenues from equipment used in homeland security.

       Operating income margin increased to 7.3% in 2003 from 7.2% in 2002.
Operating income margin was affected by restructuring and other costs, net, of
$10.3 million and $13.6 million in 2003 and 2002, respectively. The increase in
operating income margin resulted primarily from cost reduction measures
following restructuring actions in 2002 and 2003 and, to a lesser extent, $3.3
million of lower restructuring and other costs, net, offset in part by the
effect on operating margin of lower revenues. The cost reduction measures in
2002 and 2003 reduced the segment's cost base by an aggregate of approximately
$17 million on an annualized basis.

<
                                       20
<PAGE>
>


       The company completed its annual analysis of the segment's goodwill in
December 2003 and determined that no impairment existed. Several of the
segment's businesses are cyclical, and their results follow closely the business
trends of industries such as semiconductor and oil and gas, which have slowed
capital spending since 2001. Although recent industry and internal indicators
(such as year-end backlog growth in the segment of 3% over 2002) suggest the
downturn may be reversing, were the downward year over year sales trend of 2001
to 2003 to continue for an extended period of time, the segment's goodwill may
become impaired. The segment's goodwill totaled $414 million at the end of 2003.

       In 2003, the segment recorded restructuring and other costs, net, of
$10.3 million, including cash costs of $10.3 million, principally for severance,
abandoned facilities, employee retention, and relocation expenses at businesses
being consolidated. In addition, the segment recorded charges of $2.0 million,
primarily for the writedown of goodwill in the test and measurement business to
reduce the carrying value to disposal value, and for the writedown of assets at
facilities being consolidated, offset by a gain of $2.1 million on the sale of a
building. The segment also recorded charges to cost of revenues of $0.1 million,
primarily for the sale of inventories revalued at the date of acquisition. In
2002, the segment recorded restructuring and other costs, net, of $13.6 million,
including $20.4 million of cash costs principally for severance, abandoned
facilities, and employee retention. In addition, the segment recorded $8.7
million of net gains, primarily from the sale of its Thermo BLH and Thermo Nobel
subsidiaries, which were noncore businesses held for sale since 2001. In 2002,
the segment recorded charges to cost of revenues of $1.4 million for the sale of
inventories revalued at the date of acquisition and $0.5 million of asset
writedowns (Note 15).

Optical Technologies

<TABLE>
<CAPTION>
       <S>                                                                                   <C>            <C>           <C>

                                                                                               2003           2002        Change
                                                                                             --------       --------      ------
                                                                                                   (Dollars in thousands)

       Revenues                                                                              $211,758       $258,640      (18.1%)
       Operating Income Margin                                                                  (5.5%)        (12.0%)       6.5%

</TABLE>

       Sales in the Optical Technologies segment decreased $46.9 million, or
18%, to $211.8 million in 2003. The favorable effects of currency translation
resulted in an increase in revenues of $4.4 million in 2003. Sales decreased
$4.2 million as a result of two product line divestitures. In addition to the
changes in revenue resulting from currency translation and divestitures,
revenues decreased $47.1 million, or 19%, primarily due to weaker demand. The
weaker demand was principally the result of the severe slowdown in the
semiconductor and other industrial markets that has adversely affected customers
in the segment's businesses. These industries are highly cyclical and have
experienced downturns that began in 2001. Research funding for the scientific
laser market has also remained slow and this, together with the downturn in
industrial markets, has heightened competition in sales to academic and research
customers.

       Operating income margin was negative 5.5% in 2003, compared with negative
12.0% in 2002. Operating income margin was affected by restructuring and other
costs, net, of $11.6 million and $25.9 million in 2003 and 2002, respectively.
The decrease in the segment's operating loss was principally due to cost
reduction and productivity measures undertaken in 2002 and 2003, the suspension
of telecommunications activities in the second quarter of 2002 and, to a lesser
extent, lower restructuring and other costs. These were offset in part by the
impact of lower revenues. The cost reduction measures in 2002 and 2003 reduced
the segment's cost base by an aggregate of approximately $27 million on an
annualized basis.

       The company completed its annual analysis of the segment's goodwill in
December 2003 and determined that no impairment existed. The segment's
businesses are cyclical, and their results follow closely the business trends of
industries such as semiconductor and other industrial markets that have slowed
capital spending since 2001. Although recent industry and internal indicators
(such as 9% sequential fourth quarter sales growth in the segment over the
preceding quarter) suggest the downturn is reversing, were the downward year
over year sales trend of 2001 to 2003 to continue for an extended period of
time, the segment's goodwill may become impaired. The segment's goodwill totaled
$122 million at the end of 2003.

<
                                       21
<PAGE>
>



       In 2003, the segment recorded restructuring and other costs, net, of
$11.6 million, including cash costs of $5.8 million, principally for abandoned
facilities and severance and related costs for terminated employees. These
charges were offset by a gain of $1.0 million for the reversal of contract
cancellation fees that were disputed and ultimately not required. In addition,
the segment recorded a charge of $4.8 million, primarily for the writedown to
disposal value of a noncore product line that was sold in October 2003. The
segment also recorded charges of $2.0 million including the writedown of a
facility held for sale to estimated disposal value, and abandoned assets, net of
recoveries. In 2002, the segment recorded restructuring and other costs, net, of
$25.9 million, including $9.7 million of cash costs, principally for severance
and abandoned-equipment leases associated with suspended telecom initiatives.
The cash costs also included $0.7 million for the settlement of litigation. In
addition, this segment wrote off assets totaling $8.8 million, primarily for
abandoned telecommunication and other manufacturing equipment. This segment also
recorded a charge of $0.8 million resulting from employee options to purchase
shares of Spectra-Physics becoming options to purchase shares of Thermo Electron
following the acquisition of the minority interest in this business in February
2002. In 2002, the segment also recorded $6.5 million of charges to cost of
revenues for two discontinued product lines and a charge of $0.1 million for the
loss on the sale of a small business unit (Note 15).

Other Income, Net

       The company reported other income, net, of $33.9 million and $131.0
million in 2003 and 2002, respectively (Note 4). Other income, net, includes
interest income, interest expense, gain on investments, net, equity in earnings
of unconsolidated subsidiaries, and other items, net. Interest income decreased
to $19.7 million in 2003 from $47.9 million in 2002, primarily due to lower
invested cash balances following the repurchase and redemption of company
securities and the payment of short-term notes payable and, to a lesser extent,
lower prevailing interest rates. Interest expense decreased to $18.7 million in
2003 from $40.9 million in 2002 as a result of the redemption, maturity, and
repurchase of debentures, as well as the full year effect of entering into
interest-rate swap arrangements in the first quarter of 2002, offset in part by
interest on borrowings under securities-lending arrangements. The company
expects that interest expense will exceed interest income in 2004, continuing
the trend of the second half of 2003.

       During 2003 and 2002, the company had gains on investments, net, of $35.5
million and $123.1 million, respectively. The gains included $16.3 million in
2003 from the sale of shares of Thoratec and $13.7 million and $111.4 million in
2003 and 2002, respectively, from the sale of shares of FLIR. The company
obtained common shares of Thoratec as part of the sale of Thermo Cardiosystems
Inc. in 2001 (Note 16) and obtained an equity interest in FLIR as part of the
acquisition of Spectra-Physics AB in 1999. Of the total gain from the sale of
FLIR shares, $3.9 million and $31.0 million in 2003 and 2002, respectively,
represent a recovery of amounts written down in prior years when the company
deemed an impairment of its investment in FLIR to be other than temporary. The
company recorded income from equity in earnings of unconsolidated subsidiaries
of $2.5 million in 2002, primarily related to the investment in FLIR. Effective
March 30, 2002, following a reduction in the company's percentage ownership of
FLIR to less then 20%, the company no longer reported its pro-rata share of FLIR
earnings but instead accounted for its remaining investment as an
available-for-sale security (Note 4). In addition, the company repurchased and
redeemed debentures, resulting in charges of $1.0 million and $1.5 million
during 2003 and 2002, respectively.

Provision for Income Taxes

       The company's effective tax rate was 21.0% and 32.3% in 2003 and 2002,
respectively. The effective tax rate decreased in 2003 primarily due to $9.0
million of tax benefit from the reversal of a valuation allowance due to
expected utilization of foreign tax credit carryforwards (Note 6) and $3.7
million of tax benefit from the sale of a business. These tax benefits reduced
the company's 2003 effective tax rate by 5.8%. The decrease was also due in part
to the full-year impact on the 2003 effective tax rate of a reorganization
throughout 2002 of the company's subsidiaries in several European countries that
resulted in a more tax-efficient corporate structure and a decrease in 2003 of
gains from the sale of investment securities. In addition, the company reduced
its effective tax rate by 1.8% in 2003 through repatriation of cash from
non-U.S. subsidiaries, which resulted in foreign tax credits. The company
expects its effective tax rate in 2004 will be approximately 28% - 29%.

<
                                       22
<PAGE>
>


       In the normal course of business, the company and its subsidiaries are
examined by various tax authorities, including the Internal Revenue Service
(IRS). The IRS has concluded its field examination for the tax years 1997
through 2000 as part of its routine examinations of the company's income tax
returns. At the conclusion of the field examination, several issues were
unresolved and are currently being reviewed at the Appeals Office of the IRS. In
2004, the company expects to resolve the disputed issues and complete the
examination. Although the outcome of these matters cannot presently be
determined, management believes that it may reach favorable settlement of the
examinations upon completion of the appellate review by the IRS. Unfavorable
settlement of any particular issue would require use of cash. Favorable
resolution would result in a reduction to the company's effective tax rate in
the quarter of resolution. Any additional impact on the company's liability for
income taxes cannot presently be determined; however, the company believes its
accrued income tax liabilities are adequate.

Contingent Liabilities

       At year-end 2003, the company was contingently liable with respect to
certain lawsuits. An unfavorable outcome in the matter described in Note 11
could materially affect the company's financial position as well as its results
of operations and cash flows for a particular quarterly or annual period.

Income from Continuing Operations

       Income from continuing operations was $172.7 million in 2003, compared
with $194.4 million in 2002. Results in both periods were affected by
restructuring, gains on the sale of Thoratec and FLIR shares, and other items,
discussed above.

Recent Accounting Pronouncements

       Several recent accounting pronouncements may affect the company's
financial statements in the future. These rule changes are summarized in Note 1.

       The company announced its intention to begin recording the effect of
stock options in its consolidated statement of operations in 2005 when final
Financial Accounting Standards Board rules are expected to become effective.

Discontinued Operations

       The company had after-tax gains of $27.3 million in 2003 and $115.4
million in 2002 from the disposal of discontinued operations. The 2003 gain
consists of two pre-tax components and two tax components. In 2003, the company
resolved several disputes and related claims that it had retained following the
sale of businesses in its discontinued operations. In connection with the
resolution of these matters on favorable terms relative to the damages estimated
and amount of established reserves as well as the settlement of lease
obligations, the company's pre-tax gain recorded in prior years on disposal of
the related businesses increased by $27.1 million. In 2003, the company also
sold the last remaining business in discontinued operations, Peter Brotherhood
Ltd., and received additional proceeds associated with businesses sold prior to
2003, including post-closing purchase price adjustments. The company recorded
pre-tax gains from the disposal of discontinued operations of $8.3 million,
substantially as a result of these transactions. The company recorded a tax
provision of $13.2 million on the above gains and realized $5.1 million of
additional tax benefits from the disposal of businesses sold prior to 2003,
principally foreign tax credits.

       During 2002, primarily as a result of new tax regulations concerning
deductible losses from divested businesses, the company revised its estimate of
the tax consequences of business disposals in discontinued operations and
recorded a tax benefit of $46.6 million. In addition, in 2002 the company sold
its Trophy Radiologie business for approximately $51 million in cash and,
principally as a result of this transaction, recorded an after-tax gain of $17.4
million. Also, the company sold the last remaining component of its former
power-generation business in 2002 and realized a gain from the disposition
totaling $13.0 million, primarily for previously unrecognized tax benefits that
were realized upon the sale.

<
                                       23
<PAGE>
>


       In February 2001, the company sold its interest in Thermo Cardiosystems
to Thoratec in exchange for 19.3 million shares of Thoratec common stock.
Certain restrictions, which lapsed in August 2002, limited the timing of the
company's ability to sell these shares. The company recorded an after-tax charge
of $66.0 million in the first quarter of 2001 for a decline in market value of
Thoratec common stock as a loss on disposal of discontinued operations.
Following a sale of shares in February 2002 for net proceeds of $104 million and
an after-tax gain of $38.4 million, the company owned less than 20% of
Thoratec's outstanding shares and began accounting for its investment as an
available-for-sale security in continuing operations in the first quarter of
2002, with unrealized gains or losses recorded as part of accumulated other
comprehensive items in the accompanying balance sheet (Note 16).

2002 Compared With 2001

Continuing Operations

<TABLE>
<CAPTION>
       <S>                                                                      <C>             <C>       <C>             <C>

       Revenues                                                                          2002                      2001
       --------                                                                 ---------------------     ---------------------
                                                                                            (Dollars in thousands)

       Life and Laboratory Sciences                                             $1,204,232      57.7%     $1,173,032      53.6%
       Measurement and Control                                                     636,025      30.5%        705,093      32.2%
       Optical Technologies                                                        258,640      12.4%        323,888      14.8%
       Intersegment                                                                (12,542)     (0.6%)       (13,803)     (0.6%)
                                                                                ----------      -----     ----------      -----

                                                                                $2,086,355       100%     $2,188,210       100%
                                                                                ==========      =====     ==========      =====

</TABLE>

       Sales in 2002 were $2.086 billion, a decrease of $101.9 million, or 5%,
from 2001. The favorable effects of currency translation resulted in an increase
in revenues of $28.7 million in 2002. Sales decreased $29.3 million due to
divestitures, net of acquisitions. In addition to the changes in revenue
resulting from currency translation, acquisitions, and divestitures, revenue
decreased $101.3 million, or 5%, primarily due to lower demand, as detailed by
segment below.

<TABLE>
<CAPTION>
       <S>                                                                                                  <C>          <C>

       Operating Income Margin                                                                               2002        2001
       -----------------------                                                                              ------      ------

       Life and Laboratory Sciences                                                                          14.4%        8.6%
       Measurement and Control                                                                                7.2%        2.2%
       Optical Technologies                                                                                 (12.0%)     (13.4%)

       Consolidated                                                                                           7.5%        1.6%

</TABLE>

       Operating income was $155.5 million in 2002, compared with $34.2 million
in 2001. Operating income margin increased to 7.5% in 2002 from 1.6% in 2001.
Operating income in 2002 was reduced by additional charges associated with
restructuring plans initiated during the fourth quarter of 2001, other
restructuring actions initiated in 2002, and certain other costs, net (Note 15).
Operating income in 2001 was reduced by charges associated with restructuring
plans initiated during 2001 and certain other costs, net. The restructuring and
other items totaled $61.3 million and $158.8 million in 2002 and 2001,
respectively, and are discussed by segment below and in more detail in Note 15.
The 2001 period also included $40.2 million of goodwill amortization.
Amortization of goodwill ceased following the adoption of Statement of Financial
Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets,"
effective in 2002 (Note 1). Operating income increased primarily due to lower
restructuring and other costs, net, in 2002, the amortization of goodwill in
2001, and a lower cost base following recent restructuring actions offset by
lower revenues and the resulting reduced profitability at a number of
businesses, discussed below. Among the factors contributing to a lower cost base
was lower spending for selling, general, and administrative expenses, which
decreased 9% to $564.7 million in 2002, primarily due to cost reduction measures
including facility consolidations. In addition, spending on research and
development activities declined 10% to $155.1 million in 2002, as the company
focused its spending on those projects with the highest estimated returns.

<
                                       24
<PAGE>
>


       In response to a continued downturn in semiconductor and other industrial
markets served by the company, and in an effort to further integrate business
units and reduce the number of real estate locations, the company continued
restructuring initiatives in 2002 at a number of business units. The
restructuring and related actions primarily consisted of headcount reductions,
writedowns of production equipment and abandonment of leases for
telecommunications products, and consolidation of facilities to streamline
operations and reduce costs. These actions resulted in annual cost reductions
beginning in late 2002 and continuing in early 2003 of approximately $43
million, including $7 million in the Life and Laboratory Sciences segment, $13
million in the Measurement and Control segment, and $23 million in the Optical
Technologies segment.

Life and Laboratory Sciences

<TABLE>
<CAPTION>
       <S>                                                                                 <C>            <C>             <C>
                                                                                              2002           2001         Change
                                                                                           ----------     ----------      ------
                                                                                                  (Dollars in thousands)

       Revenues                                                                            $1,204,232     $1,173,032        2.7%
       Operating Income Margin                                                                  14.4%           8.6%        5.8%

</TABLE>

       Sales in the Life and Laboratory Sciences segment increased $31.2 million
to $1.204 billion in 2002. The favorable effects of currency translation
resulted in an increase in revenues of $23.1 million in 2002. Sales increased
$2.6 million due to acquisitions, net of divestitures. In addition to the
changes in revenue resulting from currency translation, acquisitions, and
divestitures, revenues grew nominally, increasing $5.5 million, or 0.5%.
Increased demand for high-end technology mass spectrometry equipment and
histology and cytology products was offset in part by weakened demand for
spectroscopy instruments and sample-preparation products that had
mid-single-digit percentage declines in sales, primarily due to lower capital
spending. The company believes that many pharmaceutical customers, for example,
were delaying purchases except for high-end equipment where recent technological
advances may provide a competitive advantage.

       Operating income margin increased to 14.4% in 2002 from 8.6% in 2001.
Operating income margin was affected by goodwill amortization of $26.3 million
in 2001. Goodwill amortization was discontinued in 2002 as a result of the
adoption of SFAS No. 142. Operating income margin was also affected by
restructuring and other costs, net, of $19.2 million and $47.9 million in 2002
and 2001, respectively. The increase in operating income margin resulted
primarily from lower restructuring and other costs, the discontinuance of
goodwill amortization in 2002, cost reduction and productivity measures
undertaken in 2001 and 2002 and, to a lesser extent, revenue growth of
higher-margin products.

       In 2002, the segment recorded restructuring and other costs, net, of
$19.2 million, including $12.2 million of cash costs, primarily for severance,
abandoned facilities, and employee retention at businesses being consolidated.
The segment also recorded charges to cost of revenues of $1.3 million, primarily
for the sale of inventories revalued at the date of acquisition. In addition,
the segment realized a net loss of $4.3 million on the sale of assets,
principally its Dynex automated diagnostics product line, and wrote down $1.4
million of fixed assets at abandoned facilities. In 2001, the segment recorded
restructuring and other costs, net, of $47.9 million, including cash costs of
$29.9 million, primarily for severance and abandoned facilities; $8.0 million of
asset writedowns; $6.9 million of charges to cost of revenues, principally for
discontinued product lines; a charge of $3.4 million for the writeoff of
in-process research and development at an acquired business; $0.7 million of
noncash severance costs; and $1.0 million of gains on the sale of a small
business unit and a product line (Note 15).

<
                                       25
<PAGE>
>


Measurement and Control
<TABLE>
<CAPTION>
       <S>                                                                                   <C>            <C>           <C>
                                                                                               2002           2001        Change
                                                                                             --------       --------      ------
                                                                                                   (Dollars in thousands)

       Revenues                                                                              $636,025       $705,093       (9.8%)
       Operating Income Margin                                                                   7.2%           2.2%        5.0%

</TABLE>

       Sales in the Measurement and Control segment decreased $69.1 million, or
10%, to $636.0 million in 2002. Sales decreased $29.4 million due to
divestitures, net of acquisitions. The favorable effects of currency translation
resulted in an increase in revenues of $8.3 million in 2002. In addition to the
changes in revenue resulting from divestitures, acquisitions, and currency
translation, revenues decreased $48.0 million, or 7%, primarily due to weaker
demand. The decrease was due to a decline in revenues in each of the segment's
principal businesses, particularly the control technologies business, where over
half of the decrease occurred. The weaker demand was primarily due to economic
conditions facing customers, particularly in the semiconductor, energy, and
steel industries. The decrease in revenues was offset in part by a $26.8 million
sale of explosives-detection equipment in the fourth quarter of 2002 following a
congressional mandate to begin screening all checked airline baggage in the
United States by the end of 2002.

       The principal divestitures by the segment included the July 2002 sale of
Thermo BLH and Thermo Nobel, which manufacture and sell strain-gauges, and were
placed for sale in 2001 (Note 2); the August 2001 sale of its Pharos Marine
unit, which manufactures and sells marine-navigation equipment; the April 2001
sale of the CAC and Mid South businesses, which provide the oil and gas industry
with wellhead safety and control products; and the July 2001 sale of its
ThermoMicroscopes unit, a manufacturer of scanning probe microscopes. The
principal acquisition by the segment was the July 2002 purchase of the
radiation-monitoring products business of Saint-Gobain Corporation (Note 2).

       Operating income margin increased to 7.2% in 2002 from 2.2% in 2001.
Operating income margin was affected by goodwill amortization of $11.9 million
in 2001. Goodwill amortization was discontinued in 2002 as a result of the
adoption of SFAS No. 142. Operating income was also affected by restructuring
and other costs, net, of $13.6 million and $46.0 million in 2002 and 2001,
respectively. The increase in operating income margin resulted primarily from
lower restructuring and other costs, the discontinuance of goodwill amortization
in 2002, and the effects of cost reduction and productivity measures undertaken
in 2001 and 2002, offset in part by the decrease in revenues.

       In 2002, the segment recorded restructuring and other charges, net, of
$13.6 million, including $20.4 million of cash costs, principally for severance,
abandoned facilities, and employee retention. In addition, the segment recorded
$8.7 million of net gains, primarily from the sale of businesses, principally
its Thermo BLH and Thermo Nobel subsidiaries. In 2002, the segment recorded
charges to cost of revenues of $1.4 million for the sale of inventories revalued
at the date of acquisition and $0.5 million of asset writedowns. In 2001, the
segment recorded restructuring and other costs, net, of $46.0 million including
$21.2 million of cash costs, primarily for severance, abandoned facilities, and
other exit costs; $12.0 million, net, for the loss on sale of businesses or
writedowns of businesses subsequently sold; $9.2 million of charges to cost of
revenues, principally for discontinued product lines; $3.5 million of asset
writedowns; $1.0 million for impairment of a note receivable; and $0.2 million
of other costs. These charges were offset in part by a gain of $1.1 million on
the sale of a building (Note 15).

<
                                       26
<PAGE>
>



Optical Technologies

<TABLE>
<CAPTION>
       <S>                                                                                   <C>            <C>           <C>
                                                                                               2002           2001        Change
                                                                                             --------       --------      ------
                                                                                                   (Dollars in thousands)

       Revenues                                                                              $258,640       $323,888      (20.1%)
       Operating Income Margin                                                                 (12.0%)        (13.4%)       1.4%

</TABLE>

       Sales in the Optical Technologies segment decreased $65.2 million, or
20%, to $258.6 million in 2002. The unfavorable effects of currency translation
resulted in a decrease in revenues of $2.7 million in 2002. Sales decreased $2.5
million due to divestitures. In addition to the changes in revenue resulting
from currency translation and divestitures, revenues decreased $60.0 million, or
19%, primarily due to weaker demand. The weaker demand was due to a severe
slowdown in the semiconductor and other industrial markets that has adversely
affected all of the segment's principal businesses.

       In the third quarter of 2002, following the company's acquisition of the
remaining minority interest in Spectra-Physics, the company conformed this
division's backlog policy to the prevailing practice at the company's other
businesses of including in backlog only product orders that are expected to ship
within six months. Spectra-Physics' historical practice had been to include
orders expected to ship within 12 months. This change resulted in a reduction of
backlog of $39.3 million. Excluding the effect of this change, the segment's
backlog decreased 40% during 2002, and totaled $55.8 million as of December 28,
2002.

       Operating income margin was negative 12.0% in 2002, compared with
negative 13.4% in 2001. Operating income margin was affected by goodwill
amortization of $2.0 million in 2001. Goodwill amortization was discontinued in
2002 as a result of the adoption of SFAS No. 142. Operating income was also
affected by restructuring and other costs, net, of $25.9 million and $53.3
million in 2002 and 2001, respectively. The increase in operating income margin
resulted primarily from lower restructuring and other costs, the discontinuance
of goodwill amortization in 2002, and the effect of cost reduction and
productivity measures undertaken in 2001 and 2002, offset in part by lower
revenues at each of the segment's principal businesses, particularly the lasers
business.

       In 2002, the segment recorded restructuring and other charges, net, of
$25.9 million, including $9.7 million of cash costs, principally for severance
and abandoned-equipment leases associated with suspended telecom initiatives.
The cash costs also included $0.7 million for the settlement of litigation. In
addition, this segment wrote off assets totaling $8.8 million, primarily for
abandoned telecommunication and other manufacturing equipment. The segment also
recorded a charge of $0.8 million resulting from employee options to purchase
shares of Spectra-Physics becoming options to purchase shares of Thermo Electron
following the acquisition of the minority interest in this business in February
2002 (Note 16). In 2002, the segment also recorded $6.5 million of charges to
cost of revenues for two discontinued product lines, and a charge of $0.1
million for the loss on sale of a small business unit. In 2001, the segment
recorded restructuring and other costs, net, of $53.3 million including $24.2
million of asset writedowns, principally fixed assets associated with
telecommunication initiatives; $19.1 million of cash costs for severance, lease
obligations for abandoned equipment and facilities, litigation loss, and other
exit costs; $9.9 million of charges to cost of revenues for inventory
writedowns; and a charge of $0.1 million, net, for the sale of a small business
unit and a facility (Note 15).

Other Income, Net

       The company reported other income, net, of $131.0 million and $38.2
million in 2002 and 2001, respectively (Note 4). Interest income decreased to
$47.9 million in 2002 from $68.5 million in 2001, primarily due to lower
invested cash balances following the repurchase and redemption of company
securities, acquisitions and, to a lesser extent, lower prevailing interest
rates. Interest expense decreased to $40.9 million in 2002 from $71.8 million in
2001 as a result of the redemption, maturity, and repurchase of debentures, as
well as entering into interest-rate swap arrangements, offset in part by
interest on borrowings under securities-lending arrangements (Note 10).

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                                       27
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       During 2002 and 2001, the company had gains on investments, net, of
$123.1 million and $35.6 million, respectively. The gains included $111.4
million and $35.1 million in 2002 and 2001, respectively, from the sale of
shares of FLIR. Of the total gain from the sale of FLIR shares, $31.0 million
and $14.2 million in 2002 and 2001, respectively, represent a recovery of
amounts written down in prior years. Gains on investments in 2001 were reduced
by a charge of $2.8 million to write down two available-for-sale securities due
to impairment that the company deemed other than temporary. The company recorded
income from equity in earnings of unconsolidated subsidiaries of $2.5 million in
2002 and $4.7 million in 2001, primarily related to the investment in FLIR
through the first quarter of 2002. In 2001, other income, net, included $0.5
million of other expense, principally currency losses. In addition, the company
repurchased and redeemed debentures, resulting in a charge of $1.5 million in
2002 and a gain of $1.7 million in 2001.

Provision for Income Taxes

       The company's effective tax rate was 32.3% and 38.1% in 2002 and 2001,
respectively. The effective tax rate decreased in 2002, primarily due to the
absence of nondeductible goodwill amortization following the adoption of SFAS
No. 142 and, to a lesser extent, a reorganization of the company's subsidiaries
in several European countries that resulted in a more tax-efficient corporate
structure. The effective tax rate exceeded the statutory federal income tax rate
in 2001 due to the impact of state income taxes and nondeductible expenses,
which included goodwill amortization.

Minority Interest Income

       Minority interest income of $0.3 million and $5.8 million in 2002 and
2001, respectively, represents minority shareholders' allocable share of losses
at Spectra-Physics through the date on which the company acquired the minority
interest in this subsidiary in February 2002 (Note 16).

Income from Continuing Operations

       Income from continuing operations before cumulative effect of change in
accounting principle was $194.4 million in 2002, compared with $50.7 million in
2001. Results in both periods were affected by restructuring, gains on the sale
of FLIR shares, and other items, discussed above. Results were also affected by
the absence of goodwill in 2002.

Cumulative Effect of Change in Accounting Principle

       The company adopted SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," as amended, in the first quarter of 2001, and recorded
an after-tax charge of $1.0 million representing the cumulative effect of the
change in accounting principle.

Discontinued Operations

       During 2002, primarily as a result of new tax regulations concerning
deductible losses from divested businesses, the company revised its estimate of
the tax consequences of business disposals in discontinued operations and
recorded a tax benefit of $46.6 million. In addition, in 2002 the company sold
its Trophy Radiologie business for approximately $51 million in cash and,
principally as a result of this transaction, recorded an after-tax gain of $17.4
million. Also, the company sold the last remaining component of its former
power-generation business in 2002 and realized a gain from the disposition
totaling $13.0 million, primarily for previously unrecognized tax benefits that
were realized upon the sale.

       In February 2001, the company sold its interest in Thermo Cardiosystems
to Thoratec in exchange for 19.3 million shares of Thoratec common stock.
Certain restrictions, which lapsed in August 2002, limited the timing of the
company's ability to sell these shares. The company recorded an after-tax charge
of $66.0 million in the first quarter of 2001 for a decline in market value of
Thoratec common stock as a loss on disposal of discontinued operations.

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                                       28
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Following a sale of shares in February 2002 for net proceeds of $104 million and
an after-tax gain of $38.4 million, the company owned less than 20% of
Thoratec's outstanding shares and began accounting for its investment as an
available-for-sale security in continuing operations in the first quarter of
2002, with unrealized gains or losses recorded as part of accumulated other
comprehensive items in the accompanying balance sheet (Note 16).

       In 2001, the company sold a substantial portion of its discontinued
power-generation business for net proceeds of $249 million and realized an
after-tax gain of $15.6 million on the disposition.

Liquidity and Capital Resources

       Consolidated working capital was $710.5 million at December 31, 2003,
compared with $667.8 million at December 28, 2002. Included in working capital
were cash, cash equivalents, and short-term available-for-sale investments of
$418.2 million at December 31, 2003, compared with $875.5 million at December
28, 2002. This decrease was due to cash of $665.6 million used in financing
activities, offset in part by cash provided by operating and investing
activities, as discussed below.

2003

       Cash provided by operating activities was $216.7 million during 2003,
including $223.4 million provided by continuing operations and $6.7 million used
by discontinued operations. Payments for restructuring actions of the company's
continuing operations, principally severance, lease costs, and other expenses of
real estate consolidation, used cash of $38.5 million, net of taxes, in 2003.
Decreases in inventories and accounts receivable of $28.3 million and $18.1
million, respectively, resulted from continuing efforts to improve working
capital. The use of cash of $6.7 million for discontinued operations was
principally due to the payment of liabilities, including settlement of
litigation and lease payments on abandoned facilities.

       In connection with restructuring actions undertaken by continuing
operations, the company had accrued $25.2 million for restructuring costs at
December 31, 2003. The company expects to pay approximately $10.5 million of
this amount for severance, employee retention, and other costs primarily through
2004. The balance of $14.7 million will be paid for lease obligations over the
remaining terms of the leases, with approximately 82% to be paid through 2005
and the remainder through 2016. In addition, at December 31, 2003, the company
had accrued $15.8 million for acquisition expenses. Accrued acquisition expenses
included $5.3 million of severance and relocation obligations, which the company
expects to pay primarily through 2004. The balance primarily represents
abandoned-facility payments that will be paid over the remaining terms of the
leases through 2014.

       During 2003, the primary investing activities of the company's continuing
operations, excluding available-for-sale investment activities, included
acquisitions, the purchase of property, plant, and equipment, and collection of
a note receivable. The company expended $134.9 million, net of cash acquired,
for acquisitions (Note 2). The company expended $39.5 million for purchases of
property, plant, and equipment, net of dispositions. In April and June 2003, the
company received aggregate cash payments of $75.6 million, including $69.1
million of principal payments, plus interest, from Trimble Navigation Limited as
complete and early payment of Trimble's note to the company (Note 2).

       The company's financing activities used $665.6 million of cash during
2003, including $661.9 million for continuing operations. During 2003, the
company's continuing operations expended $377.0 million to reduce short-term
notes payable. The company received net proceeds of $75.0 million from the
exercise of employee stock options. During 2003, the company expended $268.1
million to redeem its debt securities (Note 10). In addition, the company
expended $88.9 million to repurchase its debt and equity securities, of which
$57.8 million was used to repurchase 3.0 million shares of the company's common
stock. As of March 1, 2004, the company had approximately $100.0 million
remaining under Board of Directors' authorizations to repurchase its own
securities through February 25, 2005. The debt repurchases and redemptions have
been made with the objective of reducing interest costs.


<
                                       29
<PAGE>
>


2002

       Cash provided by operating activities was $110.3 million during 2002,
including $119.8 million provided by continuing operations. Payments for
restructuring actions of the company's continuing operations, principally
severance, lease costs, and other expenses of real estate consolidation, used
cash of $44.2 million, net of taxes, in 2002. Aside from cash used for
restructuring actions, a decrease in other current liabilities used cash of
$64.2 million, including $44.8 million of income tax payments and $10.8 million
of accrued interest, principally due to the debt redemptions discussed in Note
10. The income tax payments included approximately $39.0 million related to
gains on investments. The use of cash of $9.5 million from discontinued
operations was principally due to the payment of liabilities, primarily for the
settlement of litigation, including a patent-infringement matter (Note 11),
offset in part by cash from tax benefits associated with discontinued
operations.

       During 2002, the primary investing activities of the company's continuing
operations, excluding available-for-sale investment activities, included the
sale of other investments, acquisitions and divestitures, the collection of
notes receivable, the purchase of shares of a majority-owned subsidiary, and the
purchase of property, plant, and equipment. The company's continuing operations
received proceeds of $65.5 million from the sale of other investments,
principally shares of FLIR (Note 4), and proceeds of $23.6 million from the sale
of businesses, net of cash divested (Note 2). In addition, the company's
continuing operations expended $78.7 million for acquisitions (Note 2), $23.2
million to purchase the remaining minority-owned shares of its Spectra-Physics
subsidiary (Note 16), and $40.2 million for purchases of property, plant, and
equipment, net of dispositions. The company's continuing operations collected
$76.4 million from notes receivable, which included the repayment of Viasys
Healthcare's $33.4 million principal amount note in May 2002, the August 2002
repayment of a $25.0 million principal amount note receivable related to the
sale of a business in 2000, and partial repayment from Trimble Navigation
Limited in March 2002 (Note 2). During 2002, investing activities of the
company's discontinued operations provided $151.0 million of cash, primarily
representing proceeds of $104 million from the sale of Thoratec common stock and
the sale of Trophy Radiologie (Note 16).

       The company's financing activities used $593.0 million of cash during
2002, including $592.7 million for continuing operations. During 2002, the
company's continuing operations expended $590.7 million to redeem certain
convertible debentures. The company increased short-term notes payable by $311.1
million to partially fund debt redemptions (Note 10). The company's continuing
operations received net proceeds of $25.3 million from the exercise of employee
stock options. During 2002, the company expended $334.2 million to repurchase
its debt and equity securities, of which $285.6 million was expended to
repurchase 15.4 million shares of the company's common stock. In December 2002,
the company entered into arrangements under which the company may borrow up to
$250 million for working capital needs and possible acquisitions (Note 10).

2001

       Cash provided by operating activities was $190.4 million in 2001,
including $186.4 million from continuing operations. Accounts receivable used
$19.0 million of cash, principally as a result of strong fourth quarter revenue
growth in 2001 over the fourth quarter of 2000 at the company's Life and
Laboratory Sciences segment. Accounts payable decreased $19.1 million, primarily
due to a lower volume of purchasing activities resulting from slowdowns in
several businesses. Other current liabilities increased by $52.5 million,
including $39.7 million of restructuring reserves and $10.2 million of accrued
interest, due to the timing of payments.

       During 2001, the company's investing activities expended $73.2 million,
net of dispositions, for purchases of property, plant, and equipment; $69.5
million for the purchase of shares of a majority-owned subsidiary; and $14.1
million, net of cash acquired, for acquisitions. In addition, the company
recorded proceeds from the sale of businesses, net of cash divested, of $46.8
million, and $43.3 million for the sale of other investments, principally shares
of FLIR.


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                                       30
<PAGE>
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       The company's financing activities used $696.3 million of cash during
2001, including $503.0 million for continuing operations. The company's
continuing operations expended $43.1 million for the repayment of long-term
obligations and received net proceeds of $69.9 million from the exercise of
employee stock options. In addition, the company expended $511.4 million to
repurchase its debt and equity securities in 2001. During 2001, the company's
discontinued operations used $193.3 million of cash, including cash at the
company's Kadant subsidiary, which was spun off in August 2001, and for the
repayment of debt.

Off-Balance Sheet Arrangements

       The company does not use special purpose entities or other
off-balance-sheet financing arrangements except for letters of credit, surety
bonds, and guarantees disclosed in the table below. Of the amounts disclosed in
the table below for letters of credit, bank guarantees, surety bonds, and other
guarantees, $24.5 million relates to guarantees of the performance of third
parties, principally in connection with businesses that were sold (Note 11). The
balance relates to guarantees of the company's own performance, primarily in the
ordinary course of business.

Contractual Obligations and Other Commercial Commitments

       The table below summarizes, by period due or expiration of commitment,
the company's contractual obligations and other commercial commitments as of
December 31, 2003, which are principally for its continuing operations.

<TABLE>
<CAPTION>
       <S>                                        <C>               <C>              <C>             <C>                <C>

                                                                Payments Due by Period or Expiration of Commitment
                                                  ------------------------------------------------------------------------------
                                                                    2005 and         2007 and          2009 and
                                                      2004              2006             2008        Thereafter            Total
                                                  --------          --------         --------        ----------         --------
                                                                                 (In thousands)
       Contractual Obligations and Other
        Commercial Commitments:
           Long-term debt obligations             $  4,676          $  1,371         $215,383          $  3,370         $224,800
           Capital lease obligations                 1,205             2,069            2,099             5,217           10,590
           Operating lease obligations              37,793            54,241           30,964            87,758          210,756
           Purchase obligations                     67,022             1,877                8                 -           68,907
                                                  --------          --------         --------          --------         --------

             Total contractual
               obligations                         110,696            59,558          248,454            96,345          515,053
                                                  --------          --------         --------          --------         --------

       Other Commitments:
           Letters of credit and bank
             guarantees                             38,110             6,885              563               232           45,790
           Surety bonds and other
             guarantees                             18,032               742               65             6,479           25,318
                                                  --------          --------         --------          --------         --------

             Total other commitments                56,142             7,627              628             6,711           71,108
                                                  --------          --------         --------          --------         --------

                                                  $166,838          $ 67,185         $249,082          $103,056         $586,161
                                                  ========          ========         ========          ========         ========

</TABLE>

       This table excludes $80.3 million of other long-term liabilities,
principally pension liabilities, and $11.6 million of deferred income taxes, as
these liabilities are not subject to fixed payment schedules.

       The company has no material commitments for purchases of property, plant,
and equipment but expects that for 2004, such expenditures will approximate $55
to $65 million.

       The company believes that its existing resources, including cash and
investments, future cash flow from operations, and available borrowings under
credit facilities, are sufficient to meet the working capital requirements of
its existing businesses for the foreseeable future, including at least the next
24 months.


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Forward-looking Statements

       In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, we caution readers that the following important
factors, among others, in some cases have affected, and in the future could
affect, our actual results and could cause our actual results in 2004 and beyond
to differ materially from those expressed in any forward-looking statements made
by us.

       We must develop new products, adapt to rapid and significant
technological change, and respond to introductions of new products in order to
remain competitive. Our growth strategy includes significant investment in and
expenditures for product development. We sell our products in several industries
that are characterized by rapid and significant technological changes, frequent
new product and service introductions, and enhancements and evolving industry
standards. Without the timely introduction of new products, services, and
enhancements, our products and services will likely become technologically
obsolete over time, in which case our revenue and operating results would
suffer.

       Our customers use many of our products to develop, test, and manufacture
their own products. As a result, we must anticipate industry trends and develop
products in advance of the commercialization of our customers' products. If we
fail to adequately predict our customers' needs and future activities, we may
invest heavily in research and development of products and services that do not
lead to significant revenue.

       Many of our existing products and those under development are
technologically innovative and require significant planning, design,
development, and testing at the technological, product, and
manufacturing-process levels. These activities require us to make significant
investments.

       Products in our markets undergo rapid and significant technological
change because of quickly changing industry standards and the introduction of
new products and technologies that make existing products and technologies
uncompetitive or obsolete. Our competitors may adapt more quickly to new
technologies and changes in customers' requirements than we can. The products
that we are currently developing, or those we will develop in the future, may
not be technologically feasible or accepted by the marketplace, and our products
or technologies could become uncompetitive or obsolete.

       We sell our products and services to a number of companies that operate
in cyclical industries, which would adversely affect our results of operations
when those industries experience a downturn. The growth and profitability of
some of our businesses depend in part on sales to industries that are subject to
cyclical downturns. For example, our Optical Technologies segment depends in
part on sales to the semiconductor industry, and our Measurement and Control
segment depends in part on sales to the steel and cement industries. Slowdowns
in these industries would adversely affect sales by these segments, which in
turn would adversely affect our revenues and results of operations.

       Our business is impacted by general worldwide economic conditions and
related uncertainties affecting markets in which we operate. Adverse economic
conditions worldwide could adversely impact our business in 2004 and beyond,
resulting in:

       - reduced demand for some of our products;

       - increased rate of order cancellations or delays;

       - increased risk of excess and obsolete inventories;

       - increased pressure on the prices for our products and services; and

       - greater difficulty in collecting accounts receivable.

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                                       32
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       Changes in governmental regulations may reduce demand for our products or
increase our expenses. We compete in many markets in which we and our customers
must comply with federal, state, local, and international regulations, such as
environmental, health and safety, and food and drug regulations. We develop,
configure, and market our products to meet customer needs created by those
regulations. Any significant change in regulations could reduce demand for our
products. For example, many of our instruments are marketed to the
pharmaceutical industry for use in discovering and developing drugs. Changes in
the U.S. Food and Drug Administration's regulation of the drug discovery and
development process could have an adverse effect on the demand for these
products.

       Demand for most of our products depends on capital spending policies of
our customers and on government funding policies. Our customers include
manufacturers of semiconductors and products incorporating semiconductors,
pharmaceutical and chemical companies, laboratories, universities, healthcare
providers, government agencies, and public and private research institutions.
Many factors, including public policy spending priorities, available resources,
and product and economic cycles, have a significant effect on the capital
spending policies of these entities. These policies in turn can have a
significant effect on the demand for our products.

       Our inability to protect our intellectual property could have a material
adverse effect on our business. In addition, third parties may claim that we
infringe their intellectual property, and we could suffer significant litigation
or licensing expense as a result. We place considerable emphasis on obtaining
patent and trade secret protection for significant new technologies, products,
and processes because of the length of time and expense associated with bringing
new products through the development process and into the marketplace. Our
success depends in part on our ability to develop patentable products and obtain
and enforce patent protection for our products both in the United States and in
other countries. We own numerous U.S. and foreign patents, and we intend to file
additional applications, as appropriate, for patents covering our products.
Patents may not be issued for any pending or future patent applications owned by
or licensed to us, and the claims allowed under any issued patents may not be
sufficiently broad to protect our technology. Any issued patents owned by or
licensed to us may be challenged, invalidated, or circumvented, and the rights
under these patents may not provide us with competitive advantages. In addition,
competitors may design around our technology or develop competing technologies.
Intellectual property rights may also be unavailable or limited in some foreign
countries, which could make it easier for competitors to capture increased
market position. We could incur substantial costs to defend ourselves in suits
brought against us or in suits in which we may assert our patent rights against
others. An unfavorable outcome of any such litigation could materially adversely
affect our business and results of operations.

       We also rely on trade secrets and proprietary know-how which we seek to
protect our products, in part, by confidentiality agreements with our
collaborators, employees, and consultants. These agreements may be breached and
we may not have adequate remedies for any breach. In addition, our trade secrets
may otherwise become known or be independently developed by our competitors.

       Third parties may assert claims against us to the effect that we are
infringing on their intellectual property rights. We could incur substantial
costs and diversion of management resources in defending these claims, which
could have a material adverse effect on our business, financial condition, and
results of operations. In addition, parties making these claims could secure a
judgment awarding substantial damages, as well as injunctive or other equitable
relief, which could effectively block our ability to make, use, sell,
distribute, or market our products and services in the United States or abroad.
In the event that a claim relating to intellectual property is asserted against
us, or third parties not affiliated with us hold pending or issued patents that
relate to our products or technology, we may seek licenses to such intellectual
property or challenge those patents. However, we may be unable to obtain these
licenses on commercially reasonable terms, if at all, and our challenge of the
patents may be unsuccessful. Our failure to obtain the necessary licenses or
other rights could prevent the sale, manufacture, or distribution of our
products and, therefore, could have a material adverse effect on our business,
financial condition, and results of operations.

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                                       33
<PAGE>
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       We have retained contingent liabilities from businesses that we have
sold. From 1997 through 2003, we divested over 60 businesses with aggregate
annual revenues in excess of $2 billion. As part of these transactions, we
retained responsibility for some of the contingent liabilities related to these
businesses, such as lawsuits, product liability claims, and potential claims by
buyers that representations and warranties we made about the businesses were
inaccurate. The resolution of these contingencies has not had a material adverse
effect on our results of operations or financial condition; however, we can not
be certain that this favorable pattern will continue.

       Our results could be impacted if we are unable to realize potential
future benefits from new productivity initiatives. In addition to the real
estate consolidations and cost-saving initiatives that we have pursued over the
past three years, we are instituting practical process improvement (PPI)
programs at our locations to further enhance our productivity, efficiency, and
customer satisfaction. While we anticipate continued benefits from these PPI
initiatives as well as our continuing sourcing activities, future benefits are
expected to be fewer and smaller in size and may be more difficult to achieve.

       Our new branding strategy could be unsuccessful. We historically operated
our business largely as autonomous, unaffiliated companies, and as a result,
each of our businesses independently created and developed its own brand names.
Our new marketing and branding strategy transitions multiple, unrelated brands
to two brands, Thermo Electron and Spectra-Physics. Several of our former brands
such as Finnigan, Nicolet, and Oriel commanded strong market recognition and
customer loyalty. We believe the transition to the two new brands enhances and
strengthens our collective brand image and brand awareness across the entire
company. Our success in promoting our brands depends on many factors, including
effective communication of the transition to our customers, acceptance and
recognition by customers of these new brands, and successful execution of the
branding campaign by our marketing and sales teams. If we are not successful
with this strategy, we may experience erosion in our product recognition, brand
image and customer loyalty, and a decrease in demand for our products.

       It may be difficult for us to implement our strategies for improving
internal growth. Some of the markets in which we compete have been flat or
declining over the past several years. To address this issue, we are pursuing a
number of strategies to improve our internal growth, including:

       - finding new markets for our products;

       - developing new applications for our technologies;

       - combining sales and marketing operations in appropriate markets to
         compete more effectively;

       - allocating research and development funding to products with higher
         growth prospects;

       - continuing key customer initiatives;

       - strengthening our presence in selected geographic markets; and

       - continuing the development of commercial tools and infrastructure to
         increase and support cross-selling opportunities of products and
         services to take advantage of our breadth in product offerings.

       We may not be able to successfully implement these strategies, and these
strategies may not result in the growth of our business.

       As a multinational corporation, we are exposed to fluctuations in
currency exchange rates, which could adversely affect our cash flows and results
of operations. International revenues account for a substantial portion of our
revenues, and we intend to continue expanding our presence in international
markets. In 2003, our international revenues from continuing operations,
including export revenues from the United States, accounted for approximately

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                                       34
<PAGE>
>


56% of our total revenues. The exposure to fluctuations in currency exchange
rates takes on different forms. International revenues are subject to the risk
that fluctuations in exchange rates could adversely affect product demand and
the profitability in U.S. dollars of products and services provided by us in
international markets, where payment for our products and services is made in
the local currency. As a multinational corporation, our businesses occasionally
invoice third-party customers in currencies other than the one in which they
primarily do business (the "functional currency"). Movements in the invoiced
currency relative to the functional currency could adversely impact our cash
flows and our results of operations. In addition, reported sales made in
non-U.S. currencies by our international businesses, when translated into U.S.
dollars for financial reporting purposes, fluctuate due to exchange rate
movement. Should our international sales grow, exposure to fluctuations in
currency exchange rates could have a larger effect on our financial results. In
fiscal 2003 and 2002, currency translation had a favorable effect on revenues of
our continuing operations of $120.8 million and $28.7 million, respectively,
while in fiscal 2001, the unfavorable effects of currency translation decreased
revenues of our continuing operations by $46.5 million.

       Our inability to successfully identify and complete acquisitions or
successfully integrate any new or previous acquisitions could have a material
adverse effect on our business. Our business strategy includes the acquisition
of technologies and businesses that complement or augment our existing products
and services. Promising acquisitions are difficult to identify and complete for
a number of reasons, including competition among prospective buyers and the need
for regulatory, including antitrust, approvals. We may not be able to identify
and successfully complete transactions. Any acquisition we may complete may be
made at a substantial premium over the fair value of the net assets of the
acquired company. Further, we may not be able to integrate any acquired
businesses successfully into our existing businesses, make such businesses
profitable, or realize anticipated cost savings or synergies, if any, from these
acquisitions, which could adversely affect our business.

       Moreover, we previously acquired several companies and businesses. As a
result of these acquisitions, we recorded significant goodwill on our balance
sheet, which amounts to approximately $1.6 billion as of December 31, 2003. We
assess the realizability of the goodwill we have on our books annually as well
as whenever events or changes in circumstances indicate that the goodwill may be
impaired. These events or circumstances generally include operating losses or a
significant decline in earnings associated with the acquired business or asset.
Our ability to realize the value of the goodwill will depend on the future cash
flows of these businesses. These cash flows in turn depend in part on how well
we have integrated these businesses. If we are not able to realize the value of
the goodwill, we may be required to incur material charges relating to the
impairment of those assets.

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

       The company is exposed to market risk from changes in interest rates,
currency exchange rates, and equity prices, which could affect its future
results of operations and financial condition. The company manages its exposure
to these risks through its regular operating and financing activities.
Additionally, the company uses short-term forward contracts to manage certain
exposures to currencies. The company enters into forward currency-exchange
contracts to hedge firm purchase and sale commitments denominated in currencies
other than its subsidiaries' local currencies. The company does not engage in
extensive currency hedging activities; however, the purpose of the company's
currency hedging activities is to protect the company's local currency cash
flows related to these commitments from fluctuations in currency exchange rates.
The company's forward currency-exchange contracts principally hedge transactions
denominated in U.S. dollars, euros, British pounds sterling, Japanese yen, and
Swiss francs. Income and losses arising from forward contracts are recognized as
offsets to losses and income resulting from the underlying exposure being
hedged. The company does not enter into speculative currency agreements.

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Interest Rates

       Certain of the company's short-term available-for-sale investments and
long-term obligations are sensitive to changes in interest rates. Interest rate
changes would result in a change in the fair value of these financial
instruments due to the difference between the market interest rate and the rate
at the date of purchase or issuance of the financial instrument. A 10% decrease
in year-end 2003 and 2002 market interest rates would result in a negative
impact to the company of $1 million and $2 million, respectively, on the net
fair value of its interest-sensitive financial instruments.

       In addition, interest rate changes would result in a change in the
company's interest expense due to variable-rate debt instruments. A
100-basis-point increase in 90-day LIBOR at December 31, 2003, and December 28,
2002, would increase the company's annual pre-tax interest expense by $1 million
and $4 million, respectively.

Currency Exchange Rates

       The company views its investment in international subsidiaries with a
functional currency other than the company's reporting currency as long-term.
The company's investment in international subsidiaries is sensitive to
fluctuations in currency exchange rates. The functional currencies of the
company's international subsidiaries are principally denominated in euros,
British pounds sterling, and Japanese yen. The effect of a change in currency
exchange rates on the company's net investment in international subsidiaries is
reflected in the "accumulated other comprehensive items" component of
shareholders' equity. A 10% depreciation in year-end 2003 and 2002 functional
currencies, relative to the U.S. dollar, would result in a reduction of
shareholders' equity of $89 million and $76 million, respectively.

       The fair value of forward currency-exchange contracts is sensitive to
changes in currency exchange rates. The fair value of forward currency-exchange
contracts is the estimated amount that the company would pay or receive upon
termination of the contract, taking into account the change in currency exchange
rates. A 10% depreciation in year-end 2003 and 2002 currency exchange rates
related to the company's contracts would result in an increase in the unrealized
loss on forward currency-exchange contracts of $2.3 million and $3.3 million,
respectively. The unrealized gains or losses on forward currency-exchange
contracts resulting from changes in currency exchange rates are expected to
approximately offset losses or gains on the exposures being hedged.

       Certain of the company's cash and cash equivalents are denominated in
currencies other than the functional currency of the depositor and are sensitive
to changes in currency exchange rates. A 10% depreciation in the related
year-end 2003 and 2002 currency exchange rates would result in a negative impact
of $2.1 million and $1.2 million, respectively, on the company's net income.

Equity Prices

       The company's available-for-sale investment portfolio includes equity
securities that are sensitive to fluctuations in price. In addition, the
company's convertible obligations are sensitive to fluctuations in the price of
the company's common stock. Changes in equity prices would result in changes in
the fair value of the company's available-for-sale investments and convertible
obligations due to the difference between the current market price and the
market price at the date of purchase or issuance of the financial instrument. A
10% decrease in year-end 2003 and 2002 market equity prices would result in a
negative impact to the company of $10 million and $9 million, respectively, on
the net fair value of its price-sensitive equity financial instruments,
principally its available-for-sale investments.

Item 8.    Financial Statements and Supplementary Data

       This data is submitted as a separate section to this report. See Item 15
"Exhibits, Financial Statement Schedules, and Reports on Form 8-K."


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Item 9.    Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosures

       In June 2002, we changed our independent accountants as reported in our
Current Report on Form 8-K dated June 21, 2002.

       Our consolidated financial statements for the fiscal year ended December
29, 2001, were audited by Arthur Andersen LLP, independent accountants. On
August 31, 2002, Arthur Andersen ceased practicing before the SEC. Therefore,
Arthur Andersen did not participate in the preparation of this Form 10-K, did
not reissue its audit report with respect to the financial statements included
in this Form 10-K, and did not consent to the inclusion of its audit report in
this Form 10-K. As a result, holders of our securities may have no effective
remedy against Arthur Andersen in connection with a material misstatement or
omission in the financial statements to which its audit report relates. In
addition, even if such holders were able to assert such a claim, because it has
ceased operations, Arthur Andersen may fail or otherwise have insufficient
assets to satisfy claims made by holders of our securities that might arise
under federal securities laws or otherwise with respect to Arthur Andersen's
audit report.

Item 9A.   Controls and Procedures

       The company's management, with the participation of the company's chief
executive officer and chief financial officer, evaluated the effectiveness of
the company's disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) as of December 31, 2003. Based on this
evaluation, the company's chief executive officer and chief financial officer
concluded that, as of December 31, 2003, the company's disclosure controls and
procedures were effective in providing reasonable assurance that information
required to be disclosed by the company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized, and reported within
the time periods specified in the SEC's rules and forms.

       There have been no changes in the company's internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
during the fiscal quarter ended December 31, 2003, that have materially affected
or are reasonably likely to materially affect the company's internal control
over financial reporting.


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                                    PART III

Item 10.   Directors and Executive Officers of the Registrant

       The information with respect to directors required by this Item is
contained in our definitive proxy statement to be filed with the SEC not later
than 120 days after the close of business of the fiscal year ("2004 Definitive
Proxy Statement") under the headings "Election of Directors" and "Corporate
Governance PRINCIPLES AND BOARD MATTERS," and is incorporated in this report by
reference.

       The information with respect to executive officers required by this Item
is included in Item 1 of Part I of this report.

       The information with respect to audit committee financial expert and
identification of the audit committee of the Board of Directors required by this
Item is contained in our 2004 Definitive Proxy Statement under the heading
"Corporate Governance PRINCIPLES AND BOARD MATTERS," and is incorporated in this
report by reference. Copies of the audit committee charter, as well as the
charters for the compensation committee and nominating and corporate governance
committee, are available on our Web site at www.thermo.com. Paper copies of
these documents may be obtained free of charge by writing to the company care of
its Investor Relations Department at our principal executive office located at
81 Wyman Street, Waltham, Massachusetts 02451.

       The company has adopted a code of ethics that applies to its principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. This code of ethics is
incorporated in our code of business conduct and ethics that applies to all of
our officers, directors, and employees. A copy of our code of business conduct
and ethics is available on our Web site at www.thermo.com. We intend to satisfy
the SEC's disclosure requirements regarding amendments to, or waivers of, the
code of business conduct and ethics by posting such information on our Web site.
A paper copy of our code of business conduct and ethics may be obtained free of
charge by writing to the company care of its Investor Relations Department at
our principal executive office.

       In addition, the Board of Directors has adopted corporate governance
guidelines of the company. A copy of the company's corporate governance
guidelines are available on the company's Web site at www.thermo.com. Paper
copies of the corporate governance guidelines may be obtained free of charge by
writing to the company care of its Investor Relations Department at our
principal executive office.

Item 11.   Executive Compensation

       The information required by this Item is contained in our 2004 Definitive
Proxy Statement under the heading "Executive Compensation," and under the
sub-heading "Director Compensation" under the heading "Corporate Governance
PRINCIPLES AND BOARD MATTERS," and is incorporated in this report by reference.

Item 12.   Security Ownership of Certain Beneficial Owners and Management and
           Related Stockholder Matters

       The information with respect to security ownership of certain beneficial
owners and management required by this Item is contained in our 2004 Definitive
Proxy Statement under the heading "Stock Ownership," and is incorporated in this
report by reference.

       The information with respect to securities authorized for issuance under
equity compensation plans is contained in our 2004 Definitive Proxy Statement
under the heading "Equity Compensation Plan Information," and is incorporated in
this report by reference.

Item 13.   Certain Relationships and Related Transactions

       The information required by this Item is contained in our 2004 Definitive
Proxy Statement under the heading "Certain Relationships and Related
Transactions," and is incorporated in this report by reference.

Item 14.   Principal Accountant Fees and Services

       The information required by this Item is contained in our 2004 Definitive
Proxy Statement under the heading "Independent Public Accountants," and is
incorporated in this report by reference.

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                                     PART IV

Item 15.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) The following documents are filed as part of this report:

        (1) Consolidated Financial Statements (see Index on page F-1 of this
            report):

                Report of Independent Auditors (PricewaterhouseCoopers LLP)
                Report of Independent Accountants (Arthur Andersen LLP)
                Consolidated Statement of Operations Consolidated Balance Sheet
                Consolidated Statement of Cash Flows Consolidated Statement of
                Comprehensive Income and Shareholders' Equity Notes to
                Consolidated Financial Statements

        (2) Consolidated Financial Statement Schedule (see Index on page F-1 of
            this report):

                Schedule II: Valuation and Qualifying Accounts
                Report of Independent Auditors (PricewaterhouseCoopers LLP)
                Report of Independent Accountants (Arthur Andersen LLP)

                All other schedules are omitted because they are not applicable
                or not required, or because the required information is included
                either in the consolidated financial statements or in the notes
                thereto.

(b) Reports on Form 8-K

        On October 22, 2003, the company furnished a Current Report on Form 8-K
        with respect to the company's financial results for the quarter ended
        September 27, 2003.

(c) Exhibits

        See the Exhibit Index on page 41.


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                                       39
<PAGE>
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                                   SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date:  March 2, 2004                THERMO ELECTRON CORPORATION

                                    By: /s/ Marijn E. Dekkers
                                        -------------------------------------
                                        Marijn E. Dekkers
                                        President and Chief Executive Officer

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, as of March 2, 2004.

Signature                           Title
---------                           -----

<TABLE>
<CAPTION>
<S>                                 <C>

By: /s/ Marijn E. Dekkers           President, Chief Executive Officer, and Director
    ------------------------------  (Principal Executive Officer)
    Marijn E. Dekkers

By: /s/ Jim P. Manzi                Chairman of the Board and Director
    ------------------------------
    Jim P. Manzi

By: /s/ Theo Melas-Kyriazi          Vice President and Chief Financial Officer
    ------------------------------  (Principal Financial Officer)
    Theo Melas-Kyriazi

By: /s/ Peter E. Hornstra           Corporate Controller and Chief Accounting Officer
    ------------------------------  (Principal Accounting Officer)
    Peter E. Hornstra

By: /s/ John L. LaMattina           Director
    ------------------------------
    John L. LaMattina

By: /s/ Peter J. Manning            Director
    ------------------------------
    Peter J. Manning

By: /s/ Robert A. McCabe            Director
    ------------------------------
    Robert A. McCabe

By: /s/ Robert W. O'Leary           Director
    ------------------------------
    Robert W. O'Leary

By: /s/ Michael E. Porter           Director
    ------------------------------
    Michael E. Porter

By: /s/ Elaine S. Ullian            Director
    ------------------------------
    Elaine S. Ullian

</TABLE>

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                                       40
<PAGE>
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                                  EXHIBIT INDEX

Exhibit
Number            Description of Exhibit
-------           ----------------------

  3.1             Amended and Restated Certificate of Incorporation of the
                  Registrant (filed as Exhibit 1 to the Registrant's Amendment
                  No. 3 to Registration Statement on Form 8-A/A [File No.
                  1-8002] and incorporated in this document by reference).

  3.2             By-laws of the Registrant, as amended and effective as of
                  November 20, 2003.

                  The Registrant agrees, pursuant to Item 601(b)(4)(iii)(A) of
                  Regulation S-K, to furnish to the Commission upon request, a
                  copy of each instrument with respect to long-term debt of the
                  Registrant or its consolidated subsidiaries.

  4.1             Rights Agreement dated as of October 29, 2001, between the
                  Registrant and American Stock Transfer & Trust Company, which
                  includes as Exhibit A the Form of Certificate of Designations,
                  as Exhibit B the Form of Rights Certificate, and as Exhibit C
                  the Summary of Rights to Purchase Preferred Stock (filed as
                  Exhibit 4.2 to the Registrant's Annual Report on Form 10-K for
                  the fiscal year ended December 29, 2001 [File No. 1-8002] and
                  incorporated in this document by reference).

  4.2             Amendment No. 1 to Rights Agreement dated as of February 7,
                  2002, between the Registrant and American Stock Transfer &
                  Trust Company (filed as Exhibit 4.3 to the Registrant's Annual
                  Report on Form 10-K for the fiscal year ended December 29,
                  2001 [File No. 1-8002] and incorporated in this document by
                  reference).

 10.1             Revolving Credit Facility Letters from Barclays Bank PLC in
                  favor of the Registrant and its subsidiaries (filed as Exhibit
                  10.8 to the Registrant's Annual Report on Form 10-K for the
                  fiscal year ended January 3, 1998 [File No. 1-8002] and
                  incorporated in this document by reference).

 10.2             Amended and Restated Deferred Compensation Plan for Directors
                  of the Registrant (filed as Exhibit 10.1 to the Registrant's
                  Quarterly Report on Form 10-Q for the quarter ended July 3,
                  1999 [File No. 1-8002] and incorporated in this document by
                  reference).

 10.3             Thermo Electron Corporation Directors Stock Option Plan, as
                  amended and restated as of May 15, 2003 (filed as Exhibit 10.2
                  to the Registrant's Quarterly Report on Form 10-Q for the
                  quarter ended June 28, 2003 [File No. 1-8002] and incorporated
                  in this document by reference).

 10.4             Incentive Stock Option Plan of the Registrant (filed as
                  Exhibit 4(d) to the Registrant's Registration Statement on
                  Form S-8 [Reg. No. 33-8993] and incorporated in this document
                  by reference).

 10.5             Thermo Electron Corporation 2003 Annual Incentive Award Plan,
                  effective May 14, 2003 (filed as Appendix B to the
                  Registrant's Definitive Proxy on Schedule 14A for the 2003
                  Annual Shareholders Meeting [File No. 1-8002] and incorporated
                  in this document by reference).

 10.6             Amended and Restated Nonqualified Stock Option Plan of the
                  Registrant (filed as Exhibit 10.3 to the Registrant's
                  Quarterly Report on Form 10-Q for the quarter ended July 3,
                  1999 [File No. 1-8002] and incorporated in this document by
                  reference). (Plan amended in 1984 to extend expiration date to
                  December 14, 1994.)

 10.7             Thermo Electron Corporation Equity Incentive Plan, as amended
                  and restated as of February 7, 2002 (filed as Exhibit 10.10 to
                  the Registrant's Annual Report on Form 10-K for the fiscal
                  year ended December 29, 2001 [File No. 1-8002] and
                  incorporated in this document by reference).

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                                       41
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                                  EXHIBIT INDEX

Exhibit
Number            Description of Exhibit
-------           ----------------------

 10.8             Thermo Electron Corporation 2001 Equity Incentive Plan, as
                  amended and restated as of February 7, 2002 (filed as Exhibit
                  10.11 to the Registrant's Annual Report on Form 10-K for the
                  fiscal year ended December 29, 2001 [File No. 1-8002] and
                  incorporated in this document by reference).

 10.9             Thermo Electron Corporation Employees' Equity Incentive Plan,
                  as amended and restated as of February 7, 2002 (filed as
                  Exhibit 10.12 to the Registrant's Annual Report on Form 10-K
                  for the fiscal year ended December 29, 2001 [File No. 1-8002]
                  and incorporated in this document by reference).

 10.10            Thermo Electron Corporation Deferred Compensation Plan,
                  effective November 1, 2001 (filed as Exhibit 10.13 to the
                  Registrant's Annual Report on Form 10-K for the fiscal year
                  ended December 29, 2001 [File No. 1-8002] and incorporated in
                  this document by reference).

 10.11            Thermo Electron Corporation 2000 Employees Equity Incentive
                  Plan as amended and restated as of May 15, 2003 (filed as
                  Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q
                  for the quarter ended June 28, 2003 [File No. 1-8002] and
                  incorporated in this document by reference).

                  Each of the plans listed in Exhibits 10.12 to 10.43 originally
                  provided for the grant of options to acquire the shares of the
                  Registrant's formerly majority-owned subsidiaries. In
                  connection with the reorganization of the Registrant commenced
                  in 1999, all of the Registrant's formerly majority-owned
                  subsidiaries were taken private and as a result, these plans
                  were frozen and all of the options originally granted under
                  the plans ultimately became options to purchase shares of
                  Common Stock of the Registrant.

 10.12            Amended and Restated Thermo Electron Corporation - Thermo
                  Information Solutions Inc. Nonqualified Stock Option Plan
                  (filed as Exhibit 10.12 to the Registrant's Annual Report on
                  Form 10-K for the fiscal year ended December 28, 2002 [File
                  No. 1-8002] and incorporated in this document by reference).
                  (Thermo Information Solutions merged with Thermo Coleman
                  Corporation on September 17, 1999, and Thermo Coleman merged
                  with Thermo Electron on October 15, 1999.)

 10.13            Amended and Restated Thermo Information Solutions Inc. Equity
                  Incentive Plan (filed as Exhibit 10.13 to the Registrant's
                  Annual Report on Form 10-K for the fiscal year ended December
                  28, 2002 [File No. 1-8002] and incorporated in this document
                  by reference). (Thermo Information Solutions merged with
                  Thermo Coleman Corporation on September 17, 1999, and Thermo
                  Coleman merged with Thermo Electron on October 15, 1999.)

 10.14            Amended and Restated Thermo Coleman Corporation Equity
                  Incentive Plan (filed as Exhibit 10.15 to the Registrant's
                  Annual Report on Form 10-K for the fiscal year ended December
                  28, 2002 [File No. 1-8002] and incorporated in this document
                  by reference). (Thermo Coleman merged with Thermo Electron on
                  October 15, 1999.)

 10.15            Nonqualified Stock Option Plan of Thermo Power Corporation, as
                  amended (filed as Exhibit 10(i) to the Quarterly Report on
                  Form 10-Q of Thermo Power for the quarter ended April 3, 1993
                  [File No. 1-10573] and incorporated in this document by
                  reference). (Thermo Power merged with Thermo Electron on
                  October 28, 1999.)

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                                       42
<PAGE>
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                                  EXHIBIT INDEX

Exhibit
Number            Description of Exhibit
-------           ----------------------

 10.16            Amended and Restated Trex Communications Corporation Equity
                  Incentive Plan (filed as Exhibit 10.18 to the Registrant's
                  Annual Report on Form 10-K for the fiscal year ended December
                  28, 2002 [File No. 1-8002] and incorporated in this document
                  by reference). (Trex Communications merged with ThermoTrex on
                  November 8, 1999, and ThermoTrex merged with Thermo Electron
                  on August 14, 2000.)

 10.17            Equity Incentive Plan of ThermoSpectra Corporation (filed as
                  Exhibit 10.18 to ThermoSpectra's Registration Statement on
                  Form S-1 [Reg. No. 33-93778] and incorporated in this document
                  by reference). (ThermoSpectra merged with Thermo Instrument on
                  December 9, 1999, and Thermo Instrument merged with Thermo
                  Electron on June 30, 2000.)

 10.18            Equity Incentive Plan of Thermo Vision Corporation (filed as
                  Exhibit 10.9 to the Annual Report on Form 10-K of Thermo
                  Vision for the fiscal year ended January 3, 1998 [File No.
                  1-13391] and incorporated in this document by reference).
                  (Thermo Vision merged with Thermo Instrument on January 6,
                  2000, and Thermo Instrument merged with Thermo Electron on
                  June 30, 2000.)

 10.19            Amended and Restated Thermo Electron Corporation - Thermo
                  Sentron Inc. Nonqualified Stock Option Plan (filed as Exhibit
                  10.21 to the Registrant's Quarterly Report on Form 10-Q for
                  the quarter ended July 3, 1999 [File No. 1-8002] and
                  incorporated in this document by reference). (Thermo Sentron
                  merged with Thermedics Inc. on April 4, 2000, and Thermedics
                  merged with Thermo Electron on June 30, 2000.)

 10.20            Equity Incentive Plan of Thermo Sentron Inc. (filed as Exhibit
                  10.7 to Thermo Sentron's Registration Statement on Form S-1
                  [Reg. No. 333-806] and incorporated in this document by
                  reference). (Thermo Sentron merged with Thermedics Inc. on
                  April 4, 2000, and Thermedics merged with Thermo Electron on
                  June 30, 2000.)

 10.21            Equity Incentive Plan of Thermedics Detection Inc. (filed as
                  Exhibit 10.7 to Thermedics Detection's Registration Statement
                  on Form S-1 [File No. 333-19199] and incorporated in this
                  document by reference). (Thermedics Detection merged with
                  Thermedics on April 12, 2000, and Thermedics merged with
                  Thermo Electron on June 30, 2000.)

 10.22            Amended and Restated Equity Incentive Plan of Thermedics Inc.
                  (filed as Exhibit 10.7 to the Quarterly Report on Form 10-Q of
                  Thermedics for the quarter ended July 3, 1999 [File No.
                  1-9567] and incorporated in this document by reference).
                  (Thermedics merged with Thermo Electron on June 30, 2000.)

 10.23            Amended and Restated Equity Incentive Plan of ONIX Systems
                  Inc. (filed as Exhibit 10.11 to the Annual Report on Form 10-K
                  of ONIX for the fiscal year ended January 1, 2000 [File No.
                  1-13975] and incorporated in this document by reference).
                  (ONIX merged with Thermo Instrument on April 12, 2000, and
                  Thermo Instrument merged with Thermo Electron on June 30,
                  2000.)

 10.24            Amended and Restated Equity Incentive Plan of Thermo
                  BioAnalysis Corporation (filed as Exhibit 10.3 to the
                  Quarterly Report on Form 10-Q of Thermo BioAnalysis for the
                  quarter ended July 3, 1999 [File No. 1-12179] and incorporated
                  in this document by reference). (Thermo BioAnalysis merged
                  with Thermo Instrument on April 19, 2000, and Thermo
                  Instrument merged with Thermo Electron on June 30, 2000.)

<
                                       43
<PAGE>
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                                  EXHIBIT INDEX

Exhibit
Number            Description of Exhibit
-------           ----------------------

 10.25            Amended and Restated Thermo Electron Corporation - Thermo
                  BioAnalysis Corporation Nonqualified Stock Option Plan (filed
                  as Exhibit 10.14 to the Registrant's Quarterly Report on Form
                  10-Q for the quarter ended July 3, 1999 [File No. 1-8002] and
                  incorporated in this document by reference). (On April 19,
                  2000, Thermo BioAnalysis merged with Thermo Instrument Systems
                  Inc. and on June 30, 2000, Thermo Instrument merged with
                  Thermo Electron and all outstanding options granted under this
                  plan were ultimately assumed by Thermo Electron.)

 10.26            Amended and Restated Equity Incentive Plan of Metrika Systems
                  Corporation (filed as Exhibit 10.3 to the Quarterly Report on
                  Form 10-Q of Metrika for the quarter ended July 3, 1999 [File
                  No. 1-13085] and incorporated in this document by reference).
                  (Metrika merged with Thermo Instrument on May 3, 2000, and
                  Thermo Instrument merged with Thermo Electron on June 30,
                  2000.)

 10.27            Amended and Restated Thermo Instrument Systems Inc. -
                  ThermoQuest Corporation Nonqualified Stock Option Plan (filed
                  as Exhibit 10.8 to the Quarterly Report on Form 10-Q of Thermo
                  Instrument for the quarter ended July 3, 1999 [File No.
                  1-9786] and incorporated in this document by reference).
                  (ThermoQuest merged with Thermo Instrument on May 11, 2000,
                  and Thermo Instrument merged with Thermo Electron on June 30,
                  2000.)

 10.28            Amended and Restated Equity Incentive Plan of ThermoQuest
                  Corporation (filed as Exhibit 10.2 to the Quarterly Report on
                  Form 10-Q of ThermoQuest for the quarter ended July 3, 1999
                  [File No. 1-14262] and incorporated in this document by
                  reference). (ThermoQuest merged with Thermo Instrument on May
                  11, 2000, and Thermo Instrument merged with Thermo Electron on
                  June 30, 2000.)

 10.29            Amended and Restated Thermo Electron Corporation - ThermoQuest
                  Corporation Nonqualified Stock Option Plan (filed as Exhibit
                  10.19 to the Registrant's Quarterly Report on Form 10-Q for
                  the quarter ended July 3, 1999 [File No. 1-8002] and
                  incorporated in this document by reference). (On May 11, 2000,
                  ThermoQuest merged with Thermo Instrument and on June 30,
                  2000, Thermo Instrument merged with Thermo Electron and all
                  outstanding options granted under this plan were ultimately
                  assumed by Thermo Electron.)

 10.30            Amended and Restated Equity Incentive Plan of Thermo Optek
                  Corporation (filed as Exhibit 10.2 to the Quarterly Report on
                  Form 10-Q of Thermo Optek for the quarter ended July 3, 1999
                  [File No. 1-11757] and incorporated in this document by
                  reference). (Thermo Optek merged with Thermo Instrument on
                  May 11, 2000, and Thermo Instrument merged with Thermo
                  Electron on June 30, 2000.)

 10.31            Amended and Restated Thermo Electron Corporation - Thermo
                  Optek Corporation Nonqualified Stock Option Plan (filed as
                  Exhibit 10.20 to the Registrant's Quarterly Report on Form
                  10-Q for the quarter ended July 3, 1999 [File No. 1-8002] and
                  incorporated in this document by reference). (On May 11, 2000,
                  Thermo Optek merged with Thermo Instrument and on June 30,
                  2000, Thermo Instrument merged with Thermo Electron and all
                  outstanding options granted under this plan were ultimately
                  assumed by Thermo Electron.)

 10.32            Equity Incentive Plan of The Randers Killam Group Inc. (filed
                  as Exhibit 10.7 to the Quarterly Report on Form 10-Q of
                  Randers Killam for the quarter ended January 3, 1998 [File No.
                  0-18095] and incorporated in this document by reference).
                  (Randers Killam merged with Thermo TerraTech on May 15, 2000,
                  and Thermo TerraTech merged with Thermo Electron on September
                  22, 2000.)

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                                  EXHIBIT INDEX

Exhibit
Number            Description of Exhibit
-------           ----------------------

 10.33            Amended and Restated Equity Incentive Plan of Thermo
                  Instrument Systems Inc. (filed as Exhibit 10.6 to the
                  Quarterly Report on Form 10-Q of Thermo Instrument for the
                  quarter ended July 3, 1999 [File No. 1-9786] and incorporated
                  in this document by reference). (Thermo Instrument merged with
                  Thermo Electron on June 30, 2000.)

 10.34            Amended and Restated Thermo Instrument Systems Inc. - Thermo
                  BioAnalysis Corporation Nonqualified Stock Option Plan (filed
                  as Exhibit 10.9 to the Quarterly Report on Form 10-Q of Thermo
                  Instrument for the quarter ended July 3, 1999 [File No.
                  1-9786] and incorporated in this document by reference).
                  (Thermo Instrument merged with Thermo Electron on June 30,
                  2000.)

 10.35            Amended and Restated Thermo Instrument Systems Inc. - Thermo
                  Optek Corporation Nonqualified Stock Option Plan (filed as
                  Exhibit 10.10 to the Quarterly Report on Form 10-Q of Thermo
                  Instrument for the quarter ended July 3, 1999 [File No.
                  1-9786] and incorporated in this document by reference).
                  (Thermo Instrument merged with Thermo Electron on June 30,
                  2000.)

 10.36            Amended and Restated Nonqualified Stock Option Plan of Thermo
                  Ecotek Corporation (filed as Exhibit 10.6 to the Quarterly
                  Report on Form 10-Q of Thermo Ecotek for the quarter ended
                  July 3, 1999 [File No. 1-13572] and incorporated in this
                  document by reference). (Thermo Ecotek merged with Thermo
                  Electron on August 10, 2000.)

 10.37            Amended and Restated Nonqualified Stock Option Plan of
                  ThermoTrex Corporation (filed as Exhibit 10.2 to the Quarterly
                  Report on Form 10-Q of ThermoTrex for the quarter ended July
                  3, 1999 [File No. 1-10791] and incorporated in this document
                  by reference). (ThermoTrex merged with Thermo Electron on
                  August 14, 2000.)

 10.38            Amended and Restated Nonqualified Stock Option Plan of
                  ThermoLase Corporation (filed as Exhibit 10.5 to the Quarterly
                  Report on Form 10-Q of ThermoLase for the quarter ended July
                  3, 1999 [File No. 1-13104] and incorporated in this document
                  by reference). (ThermoLase merged with Thermo Electron on
                  August 14, 2000.)

 10.39            Amended and Restated Nonqualified Stock Option Plan of Thermo
                  TerraTech Inc. (filed as Exhibit 10.34 to the Annual Report on
                  Form 10-K of Thermo TerraTech for the fiscal year ended April
                  1, 2000 [File No. 1-09549] and incorporated in this document
                  by reference). (Thermo TerraTech merged with Thermo Electron
                  on September 22, 2000.)

 10.40            Amended and Restated Thermo Electron Corporation - Trex
                  Medical Corporation Nonqualified Stock Option Plan (filed as
                  Exhibit 10.22 to the Registrant's Quarterly Report on Form
                  10-Q for the quarter ended July 3, 1999 [File No. 1-8002] and
                  incorporated in this document by reference). (Trex Medical
                  merged with Thermo Electron on November 29, 2000.)

 10.41            Amended and Restated Equity Incentive Plan of Trex Medical
                  Corporation (filed as Exhibit 10.2 to the Quarterly Report on
                  Form 10-Q of Trex Medical for the quarter ended July 3, 1999
                  [File No. 1-11827] and incorporated in this document by
                  reference). (Trex Medical merged with Thermo Electron on
                  November 29, 2000.)

 10.42            1997 Spectra-Physics Lasers, Inc. Stock Option Plan (filed as
                  Exhibit 10.6 of Amendment No. 1 to Spectra-Physics'
                  Registration Statement on Form S-1 [File No. 333-38329] and
                  incorporated in this document by reference). (Spectra-Physics
                  merged with Thermo Electron on February 25, 2002.)

<
                                       45
<PAGE>
>

                                  EXHIBIT INDEX

Exhibit
Number            Description of Exhibit
-------           ----------------------

 10.43            2000 Spectra-Physics Lasers, Inc. Stock Option Plan (filed as
                  Exhibit 10.1 to Spectra-Physics' Quarterly Report on Form 10-Q
                  for the quarter ended September 30, 2000 [File No. 000-23461]
                  and incorporated in this document by reference).
                  (Spectra-Physics merged with Thermo Electron on February 25,
                  2002.)

 10.44            Description of Amendments to Certain Stock Option Plans made
                  in February 2002 (filed as Exhibit 10.31 to the Registrant's
                  Annual Report on Form 10-K for the fiscal year ended December
                  29, 2001 [File No. 1-8002] and incorporated in this document
                  by reference).

 10.45            Form of Indemnification Agreement between the Registrant and
                  the directors and officers of its majority-owned subsidiaries
                  (filed as Exhibit 10.1 to the Registrant's Registration
                  Statement on Form S-4 [Reg. No. 333-90661] and incorporated in
                  this document by reference).

 10.46            Form of Amended and Restated Indemnification Agreement between
                  the Registrant and its directors and officers (filed as
                  Exhibit 10.2 to the Registrant's Registration Statement on
                  Form S-4 [Reg. No. 333-90661] and incorporated in this
                  document by reference).

 10.47            Amended and Restated Employment Agreement between the
                  Registrant and Mr. Marijn Dekkers (filed as Exhibit 99.1 to
                  the Registrant's Current Report on Form 8-K dated December 12,
                  2002 [File No. 1-8002] and incorporated in this document by
                  reference).

 10.48            Amended and Restated Employment Agreement between the
                  Registrant and Mr. Richard F. Syron (filed as Exhibit 99.2 to
                  the Registrant's Current Report on Form 8-K dated December 12,
                  2002 [File No. 1-8002] and incorporated in this document by
                  reference).

 10.49            Employment Offer Letter dated October 3, 2000, between the
                  Registrant and Mr. Guy Broadbent (filed as Exhibit 10.40 to
                  the Registrant's Annual Report on Form 10-K for the fiscal
                  year ended December 30, 2000 [File No. 1-8002] and
                  incorporated in this document by reference).

 10.50            Amendment to Amended and Restated Employment Agreement dated
                  as of March 14, 2001, between the Registrant and Mr. Richard
                  F. Syron (filed as Exhibit 10.41 to the Registrant's Annual
                  Report on Form 10-K for the fiscal year ended December 30,
                  2000 [File No. 1-8002] and incorporated in this document by
                  reference).

 10.51            Plan and Agreement of Distribution dated August 3, 2001,
                  between the Registrant and Kadant Inc. (filed as Exhibit 99.3
                  to the Registrant's Current Report on Form 8-K dated August 6,
                  2001 [File No. 1-8002] and incorporated in this document by
                  reference).

 10.52            Tax Matters Agreement effective as of August 8, 2001, between
                  the Registrant and Kadant Inc. (filed as Exhibit 99.4 to the
                  Registrant's Current Report on Form 8-K dated August 6, 2001
                  [File No. 1-8002] and incorporated in this document by
                  reference).

 10.53            Transition Services Agreement dated August 3, 2001, between
                  the Registrant and Kadant Inc. (filed as Exhibit 99.5 to the
                  Registrant's Current Report on Form 8-K dated August 6, 2001
                  [File No. 1-8002] and incorporated in this document by
                  reference).

<
                                       46
<PAGE>
>

                                  EXHIBIT INDEX

Exhibit
Number            Description of Exhibit
-------           ----------------------

 10.54            Amendment to the Plan and Agreement of Distribution dated
                  December 27, 2001, between the Registrant and Kadant Inc.
                  (filed as Exhibit 10.48 to the Registrant's Annual Report on
                  Form 10-K for the fiscal year ended December 29, 2001 [File
                  No. 1-8002] and incorporated in this document by reference).

 10.55            Plan and Agreement of Distribution dated November 15, 2001,
                  between the Registrant and Viasys Healthcare Inc. (filed as
                  Exhibit 99.2 to the Registrant's Current Report on Form 8-K
                  dated November 15, 2001 [File No. 1-8002] and incorporated in
                  this document by reference).

 10.56            Tax Matters Agreement dated November 15, 2001, between the
                  Registrant and Viasys Healthcare Inc. (filed as Exhibit 99.3
                  to the Registrant's Current Report on Form 8-K dated November
                  15, 2001 [File No. 1-8002] and incorporated in this document
                  by reference).

 10.57            Transition Services Agreement dated November 15, 2001, between
                  the Registrant and Viasys Healthcare Inc. (filed as Exhibit
                  99.4 to the Registrant's Current Report on Form 8-K dated
                  November 15, 2001 [File No. 1-8002] and incorporated in this
                  document by reference).

 10.58            Employment Agreement dated as of November 29, 2001, between
                  the Registrant and Mr. Marc N. Casper (filed as Exhibit 10.54
                  to the Registrant's Annual Report on Form 10-K for the fiscal
                  year ended December 29, 2001 [File No. 1-8002] and
                  incorporated in this document by reference).

 10.59            Letter Agreement dated as of November 27, 2001, among SPX
                  Corporation, Kendro Laboratory Products, L.P., the Registrant,
                  and Mr. Marc N. Casper (filed as Exhibit 10.55 to the
                  Registrant's Annual Report on Form 10-K for the fiscal year
                  ended December 29, 2001 [File No. 1-8002] and incorporated in
                  this document by reference).

 10.60            Master Securities Loan Agreement between Thermo Electron
                  Corporation and JPMorgan Chase Bank (filed as Exhibit 10.1 to
                  the Registrant's Quarterly Report on Form 10-Q for the quarter
                  ended June 29, 2002 [File No. 1-8002] and incorporated in this
                  document by reference).

 10.61            Master Securities Loan Agreement between Thermo Electron
                  Corporation and ABN AMRO Inc. (filed as Exhibit 10.2 to the
                  Registrant's Quarterly Report on Form 10-Q for the quarter
                  ended June 29, 2002 [File No. 1-8002] and incorporated in this
                  document by reference).

 10.62            Amended and Restated 364-Day Credit Agreement among the
                  Registrant, the Several Lenders thereto, Barclays Bank Plc, as
                  Lead Arranger, Book Runner and Administrative Agent, ABN AMRO
                  Bank N.V., as Lead Arranger and Syndication Agent, and Fleet
                  National Bank and JPMorgan Chase Bank, as co-documentation
                  agents, dated as of December 19, 2003.

 10.63            Three-Year Credit Agreement among the Registrant, the Several
                  Lenders thereto, Barclays Bank Plc, as Lead Arranger, Book
                  Runner and Administrative Agent, ABN AMRO Bank N.V., as Lead
                  Arranger and Syndication Agent, and Fleet National Bank and
                  JPMorgan Chase Bank, as co-documentation agents, dated as of
                  December 20, 2002 (filed as Exhibit 10.73 to the Registrant's
                  Annual Report on Form 10-K for the fiscal year ended December
                  28, 2002 [File No. 1-8002] and incorporated in this document
                  by reference).

<
                                       47
<PAGE>
>

                                  EXHIBIT INDEX

Exhibit
Number            Description of Exhibit
-------           ----------------------

 10.64            Executive Registry Program at the Massachusetts General
                  Hospital (filed as Exhibit 10.74 to the Registrant's Annual
                  Report on Form 10-K for the fiscal year ended December 28,
                  2002 [File No. 1-8002] and incorporated in this document by
                  reference).

 10.65            Form of Executive Change in Control Retention Agreement dated
                  November 19, 2003, between the Registrant and its executive
                  officers (other than Mr. Marijn Dekkers) and certain other key
                  employees.

 10.66            Form of Executive Severance Agreement dated November 19, 2003,
                  between the Registrant and its executive officers (other than
                  Mr. Marijn Dekkers) and certain other key employees.

 10.67            Restricted Stock Agreement dated February 26, 2003, by and
                  between the Registrant and Mr. Marc Casper.

 10.68            Restricted Stock Units Agreement dated November 19, 2003, by
                  and between the Registrant and Mr. Marc Casper.

 10.69            Severance Agreement dated November 26, 2003, between the
                  Registrant and Mr. Barry Howe.

 10.70            Letter Agreement dated December 12, 2003, between the
                  Registrant and Mr. Richard Syron.

 10.71            Restricted Stock Agreement dated December 12, 2003, by and
                  between the Registrant and Mr. Jim Manzi.

 10.72            Stock Option Agreement dated December 12, 2003, by and between
                  the Registrant and Mr. Jim Manzi.

 10.73            Form of Thermo Electron Corporation Restricted Stock Agreement
                  for Chief Executive Officer dated January 7, 2004, between the
                  Registrant and Mr. Marijn Dekkers.

 10.74            Letter Agreement dated February 11, 2004, between the
                  Registrant and Mr. Marijn Dekkers.

 10.75            Restricted Stock Agreement dated February 26, 2004, by and
                  between the Registrant and Mr. Peter Wilver.

 16.1             Letter from Arthur Andersen LLP to the Securities and Exchange
                  Commission, dated June 25, 2002 (filed as Exhibit 16 to the
                  Registrant's Current Report on Form 8-K dated June 21, 2002
                  [File No. 1-8002] and incorporated in this document by
                  reference).

 21               Subsidiaries of the Registrant.

 23.1             Consent of PricewaterhouseCoopers LLP.

 23.2             Limitation of Remedies Against Arthur Andersen LLP (Reference
                  is made to Item 9 of this Report.)

 31.1             Certification of Chief Executive Officer required by Exchange
                  Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002.

 31.2             Certification of Chief Financial Officer required by Exchange
                  Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002.

<
                                       48
<PAGE>
>

                                  EXHIBIT INDEX

Exhibit
Number            Description of Exhibit
-------           ----------------------

 32.1             Certification of Chief Executive Officer required by Exchange
                  Act Rules 13a-14(b) and 15d-14(b), as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.*

 32.2             Certification of Chief Financial Officer required by Exchange
                  Act Rules 13a-14(b) and 15d-14(b), as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.*


*Certification is not deemed "filed" for purposes of Section 18 of the Exchange
 Act, or otherwise subject to the liability of that section. Such certification
 is not deemed to be incorporated by reference into any filing under the
 Securities Act or the Exchange Act, except to the extent that the registrant
 specifically incorporates it by reference.


<
                                       49
<PAGE>
>


                           THERMO ELECTRON CORPORATION

                           ANNUAL REPORT ON FORM 10-K
             INDEX OF CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

       The following Consolidated Financial Statements of the Registrant and its
subsidiaries are required to be included in Item 8:

<TABLE>
<CAPTION>
<S>                                                                                                                      <C>
                                                                                                                         Page
                                                                                                                         ----

Report of Independent Auditors on financial statements at December 31, 2003, and for the two years then ended            F-2

Report of Independent Accountants on financial statements at December 29, 2001, and for the year then ended              F-3

Consolidated Statement of Operations for the years ended December 31, 2003, December 28, 2002, and December 29,
     2001                                                                                                                F-4

Consolidated Balance Sheet as of December 31, 2003, and December 28, 2002                                                F-5

Consolidated Statement of Cash Flows for the years ended December 31, 2003, December 28, 2002, and December 29,
     2001                                                                                                                F-7

Consolidated Statement of Comprehensive Income and Shareholders' Equity for the years ended December 31, 2003,
     December 28, 2002, and December 29, 2001                                                                            F-9

Notes to Consolidated Financial Statements                                                                               F-11


       The following Consolidated Financial Statement Schedule of the Registrant and its subsidiaries is filed
as part of this Report as required to be included in Item 15(a):
                                                                                                                         Page
                                                                                                                         ----

Schedule II - Valuation and Qualifying Accounts                                                                          F-59

Report of Independent Auditors at December 31, 2003, and for the two years then ended                                    F-60

Report of Independent Accountants at December 29, 2001, and for the year then ended                                      F-61

Note:  All other financial statement schedules are omitted because they are not applicable or not required, or
       because the required information is included in the consolidated financial statements or in the notes
       thereto.
</TABLE>




<
                                      F-1
<PAGE>
>


                           THERMO ELECTRON CORPORATION

                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of
Thermo Electron Corporation:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, statements of cash flows, and statements
of comprehensive income and shareholders' equity present fairly, in all material
respects, the financial position of Thermo Electron Corporation and its
subsidiaries as of December 31, 2003 and December 28, 2002, and the results of
their operations and their cash flows for each of the two years in the period
ended December 31, 2003 in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the company'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 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 estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion. The
consolidated financial statements of the company for the year ended December 29,
2001, prior to the revisions discussed in Notes 1 and 3, were audited by other
independent accountants who have ceased operations. Those independent
accountants expressed an unqualified opinion on those financial statements in
their report dated February 7, 2002, except with respect to the matters
discussed in Note 19, as to which the date is February 25, 2002. The discussion
of the subsequent events discussed in Note 19 in 2001, is now included in Note 1
and Note 10.

As disclosed in Note 1 to the consolidated financial statements, the company
changed the manner in which it accounts for goodwill and other intangible assets
upon adoption of Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets" on December 30, 2001 and the company also changed
the manner in which it accounts for gains and losses on the early retirement of
debt upon the adoption of Statement of Financial Accounting Standards No. 145,
"Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No.
13, and Technical Corrections" on December 29, 2002.

As discussed above, the consolidated financial statements of Thermo Electron
Corporation for the year ended December 29, 2001, were audited by other
independent accountants who have ceased operations. As described in Note 1,
these financial statements have been restated to include the transitional
disclosures required by Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," which was adopted by the company on
December 30, 2001. These financial statements have also been restated to reflect
the change in the manner in which the company accounts for gains and losses on
the early retirement of debt as required by Statement of Financial Accounting
Standards No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of
FASB Statement No. 13, and Technical Corrections," which the company adopted on
December 29, 2002. As described in Note 3, these financial statements have also
been restated to reflect the change in the composition of the company's
reportable segments. We audited the transitional disclosures and the restatement
of gains and losses on the early retirement of debt for 2001 described in Note
1. We also audited the adjustments described in Note 3 that were applied to
restate the 2001 consolidated financial statements. In our opinion, all such
adjustments and transitional disclosures are appropriate and have been properly
applied. However, we were not engaged to audit, review, or apply any procedures
to the 2001 consolidated financial statements of the company other than with
respect to such adjustments and transitional disclosures and, accordingly, we do
not express an opinion or any other form of assurance on the 2001 consolidated
financial statements taken as a whole.




PricewaterhouseCoopers LLP
Boston, Massachusetts
February 24, 2004

<
                                      F-2
<PAGE>
>


                           THERMO ELECTRON CORPORATION

                        REPORT OF INDEPENDENT ACCOUNTANTS

THE FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN
LLP AND HAS NOT BEEN REISSSUED BY ARTHUR ANDERSEN LLP.

AS DISCUSSED IN NOTE 1, THERMO ELECTRON CORPORATION HAS RESTATED ITS FINANCIAL
STATEMENTS FOR THE YEAR ENDED DECEMBER 29, 2001, TO INCLUDE THE TRANSITIONAL
DISCLOSURES REQUIRED BY STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 142,
"GOODWILL AND OTHER INTANGIBLE ASSETS," AND TO REFLECT THE CHANGE IN THE MANNER
IN WHICH THERMO ELECTRON CORPORATION ACCOUNTS FOR GAINS AND LOSSES ON THE EARLY
RETIREMENT OF DEBT as required by Statement of Financial Accounting Standards
No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections," which the company adopted on
December 29, 2002 AND AS DISCUSSED IN NOTE 3, THERMO ELECTRON CORPORATION HAS
RESTATED ITS BUSINESS SEGMENT INFORMATION TO REFLECT A TRANSFER OF MANAGEMENT
RESPONSIBILITY FOR SEVERAL BUSINESSES BETWEEN SEGMENTS. THE REVISIONS TO THE
2001 FINANCIAL STATEMENTS RELATED TO THESE TRANSITIONAL DISCLOSURES, THE
RECLASSIFICATION OF GAINS AND LOSSES ON THE EARLY RETIREMENT OF DEBT, AND THE
CHANGE IN BUSINESS SEGMENT INFORMATION WERE REPORTED ON BY
PRICEWATERHOUSECOOPERS LLP, AS STATED IN THEIR REPORT APPEARING HEREIN.

To the Shareholders and Board of Directors of Thermo Electron Corporation:

       We have audited the accompanying consolidated balance sheets of Thermo
Electron Corporation (a Delaware corporation) and subsidiaries as of December
29, 2001, and December 30, 2000,* and the related consolidated statements of
operations, cash flows, and comprehensive loss and shareholders' investment for
each of the three years in the period ended December 29, 2001.* These
consolidated financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
       We conducted our audits in accordance with auditing standards generally
accepted in the 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. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
       In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Thermo
Electron Corporation and subsidiaries as of December 29, 2001, and December 30,
2000, and the results of their operations and their cash flows for each of the
three years in the period ended December 29, 2001,* in conformity with
accounting principles generally accepted in the United States.
       As explained in Note 1 to the consolidated financial statements,
effective December 31, 2000, the company changed its method of accounting for
derivative instruments and hedging activities through the adoption of Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended. As explained in Notes 1 and 16
to the consolidated financial statements, effective January 2, 2000, the company
changed its method of accounting for revenue recognition on certain product
shipments through the adoption of Staff Accounting Bulletin No. 101 "Revenue
Recognition in Financial Statements."

                                                     Arthur Andersen LLP

Boston, Massachusetts
February 7, 2002 (except with respect
to the matters discussed in Note 19*, as
to which the date is February 25, 2002)

*The company's consolidated balance sheets as of December 29, 2001, and
 December 30, 2000, and the consolidated statements of operations, cash flows,
 and comprehensive loss and shareholders' investment for the years ended
 December 30, 2000, and January 1, 2000, are not included in this Form 10-K.
 Additionally, the discussion of the adoption of Staff Accounting Bulletin No.
 101 discussed in Note 16 in 2001, is now included in Note 1 and the
 discussion of the subsequent events discussed in Note 19 in 2001, is now
 included in Note 1 and Note 10.


<
                                      F-3
<PAGE>
>


                           THERMO ELECTRON CORPORATION

                      CONSOLIDATED STATEMENT OF OPERATIONS
                     (In thousands except per share amounts)

<TABLE>
<CAPTION>
<S>                                                                                      <C>             <C>             <C>

                                                                                            2003            2002            2001
                                                                                         ----------      ----------      ----------

Revenues (Notes 1 and 3)                                                                 $2,097,135      $2,086,355      $2,188,210
                                                                                         ----------      ----------      ----------

Costs and Operating Expenses:
 Cost of revenues (Note 15)                                                               1,149,120       1,158,979       1,229,588
 Selling, general, and administrative expenses                                              568,138         564,656         620,104
 Research and development expenses                                                          146,394         155,121         171,614
 Restructuring and other costs, net (Note 15)                                                48,709          52,146         132,702
                                                                                         ----------      ----------      ----------

                                                                                          1,912,361       1,930,902       2,154,008
                                                                                         ----------      ----------      ----------

Operating Income                                                                            184,774         155,453          34,202
Other Income, Net (Notes 4 and 15)                                                           33,859         131,041          38,177
                                                                                         ----------      ----------      ----------

Income from Continuing Operations Before Provision for Income Taxes, Minority
 Interest, and Cumulative Effect of Change in Accounting Principle                          218,633         286,494          72,379
Provision for Income Taxes (Note 6)                                                         (45,936)        (92,465)        (27,566)
Minority Interest Income                                                                          -             331           5,840
                                                                                         ----------      ----------      ----------

Income from Continuing Operations Before Cumulative Effect of Change in Accounting
 Principle                                                                                  172,697         194,360          50,653
Gain (Loss) on Disposal of Discontinued Operations, Net (net of income tax provision
 of $8,141 in 2003; includes tax benefit of $21,008 and $22,741 in 2002 and 2001;
 Note 16)                                                                                    27,312         115,370         (50,440)
                                                                                         ----------      ----------      ----------

Income Before Cumulative Effect of Change in Accounting Principle                           200,009         309,730             213
Cumulative Effect of Change in Accounting Principle (net of income tax benefit of
 $663; Note 1)                                                                                    -               -            (994)
                                                                                         ----------      ----------      ----------

Net Income (Loss)                                                                        $  200,009      $  309,730      $     (781)
                                                                                         ==========      ==========      ==========

Earnings per Share from Continuing Operations Before Cumulative Effect of Change in
 Accounting Principle (Note 7)
    Basic                                                                                $     1.06      $     1.15      $      .28
                                                                                         ==========      ==========      ==========
    Diluted                                                                              $     1.04      $     1.12      $      .28
                                                                                         ==========      ==========      ==========

Earnings (Loss) per Share (Note 7)
    Basic                                                                                $     1.23      $     1.84      $        -
                                                                                         ==========      ==========      ==========
    Diluted                                                                              $     1.20      $     1.73      $        -
                                                                                         ==========      ==========      ==========

Weighted Average Shares (Note 7)
    Basic                                                                                   162,713         168,572         180,560
                                                                                         ==========      ==========      ==========
    Diluted                                                                                 170,730         186,611         183,916
                                                                                         ==========      ==========      ==========




                     The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

<
                                      F-4
<PAGE>
>


                           THERMO ELECTRON CORPORATION

                           CONSOLIDATED BALANCE SHEET
                                 (In thousands)

<TABLE>
<CAPTION>
<S>                                                                                                    <C>             <C>

                                                                                                          2003            2002
                                                                                                       ----------      ----------

Assets
Current Assets:
 Cash and cash equivalents                                                                             $  303,912      $  339,038
 Short-term available-for-sale investments, at quoted market value (Notes 4 and 9)                        114,326         536,430
 Accounts receivable, less allowances of $26,102 and $25,576                                              460,926         429,740
 Inventories (Note 15)                                                                                    343,758         332,804
 Deferred tax assets (Note 6)                                                                             113,167          79,057
 Other current assets                                                                                      59,167          54,490
                                                                                                       ----------      ----------

                                                                                                        1,395,256       1,771,559
                                                                                                       ----------      ----------

Property, Plant, and Equipment, at Cost, Net (Note 15)                                                    300,702         272,908
                                                                                                       ----------      ----------

Other Assets (Note 2)                                                                                     135,834         190,803
                                                                                                       ----------      ----------

Goodwill (Notes 2 and 15)                                                                               1,557,177       1,416,205
                                                                                                       ----------      ----------

                                                                                                       $3,388,969      $3,651,475
                                                                                                       ==========      ==========



<
                                      F-5
<PAGE>
>


                           THERMO ELECTRON CORPORATION

                    CONSOLIDATED BALANCE SHEET - (Continued)
                       (In thousands except share amounts)

                                                                                                          2003            2002
                                                                                                       ----------      ----------

Liabilities and Shareholders' Equity
Current Liabilities:
 Short-term obligations and current maturities of long-term obligations (Note 10)                      $   45,981      $  484,480
 Accounts payable                                                                                         114,206         111,994
 Accrued payroll and employee benefits                                                                    100,706          97,856
 Accrued income taxes                                                                                     100,163          44,519
 Deferred revenue                                                                                          65,224          58,490
 Accrued restructuring costs (Note 15)                                                                     25,198          41,579
 Other accrued expenses (Note 2)                                                                          184,502         170,996
 Net liabilities of discontinued operations (Note 16)                                                      48,813          93,806
                                                                                                       ----------      ----------

                                                                                                          684,793       1,103,720
                                                                                                       ----------      ----------

Deferred Income Taxes (Note 6)                                                                             11,589          10,144
                                                                                                       ----------      ----------

Other Long-term Liabilities (Note 5)                                                                       80,272          55,993
                                                                                                       ----------      ----------

Long-term Obligations (Note 10):
 Senior notes                                                                                             137,874         141,032
 Subordinated convertible obligations                                                                      77,234         304,549
 Other                                                                                                     14,401           5,760
                                                                                                       ----------      ----------

                                                                                                          229,509         451,341
                                                                                                       ----------      ----------

Commitments and Contingencies (Note 11)

Shareholders' Equity (Notes 5 and 12):
 Preferred stock, $100 par value, 50,000 shares authorized; none issued Common
 stock, $1 par value, 350,000,000 shares authorized; 175,479,994 and
    169,952,419 shares issued                                                                             175,480         169,952
 Capital in excess of par value                                                                         1,298,881       1,212,145
 Retained earnings                                                                                      1,019,420         819,411
 Treasury stock at cost, 10,416,770 and 7,098,501 shares                                                 (192,469)       (129,675)
 Deferred compensation                                                                                     (2,834)         (4,852)
 Accumulated other comprehensive items (Note 8)                                                            84,328         (36,704)
                                                                                                       ----------      ----------

                                                                                                        2,382,806       2,030,277
                                                                                                       ----------      ----------

                                                                                                       $3,388,969      $3,651,475
                                                                                                       ==========      ==========





                     The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

<
                                      F-6
<PAGE>
>


                           THERMO ELECTRON CORPORATION

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
<S>                                                                                    <C>             <C>             <C>

                                                                                          2003            2002            2001
                                                                                       ---------       ---------       ---------

Operating Activities
 Net income (loss)                                                                     $ 200,009       $ 309,730       $    (781)
 (Gain) loss on disposal of discontinued operations, net (Note 16)                       (27,312)       (115,370)         50,440
                                                                                       ---------       ---------       ---------

 Income from continuing operations                                                       172,697         194,360          49,659

 Adjustments to reconcile income from continuing operations to net cash provided
    by operating activities:
      Depreciation and amortization                                                       58,548          56,376          98,521
      Noncash restructuring and other costs, net (Note 15)                                 6,365          11,750          41,144
      Provision for losses on accounts receivable                                          2,123           4,114           6,316
      Equity in earnings of unconsolidated subsidiaries                                     (490)         (2,533)         (4,699)
      Change in deferred income taxes                                                    (16,123)         23,770         (16,751)
      (Gain) loss on sale of businesses (Notes 2 and 15)                                   4,590          (2,484)         10,943
      Gain on investments, net (Notes 4, 9, and 15)                                      (35,536)       (123,134)        (35,579)
      Minority interest income                                                                 -            (331)         (5,840)
      Cumulative effect of change in accounting principle, net of income
        tax benefit (Note 1)                                                                   -               -             994
      Other                                                                                6,467          15,136          32,692
      Changes in current accounts, excluding the effects of
        acquisitions and dispositions:
          Accounts receivable                                                             18,065           4,535         (19,041)
          Inventories                                                                     28,289          21,470           7,724
          Other current assets                                                              (819)          9,888         (13,097)
          Accounts payable                                                               (13,286)         (8,000)        (19,082)
          Other current liabilities                                                       (7,499)        (85,164)         52,508
                                                                                       ---------       ---------       ---------

            Net cash provided by continuing operations                                   223,391         119,753         186,412
            Net cash provided by (used in) discontinued operations                        (6,672)         (9,462)          4,025
                                                                                       ---------       ---------       ---------

            Net cash provided by operating activities                                    216,719         110,291         190,437
                                                                                       ---------       ---------       ---------

Investing Activities
 Proceeds from maturities of available-for-sale investments                              349,229         217,011         250,345
 Proceeds from sale of available-for-sale investments (Note 4)                           116,346         122,094         248,036
 Purchases of available-for-sale investments                                                (179)            (83)       (680,337)
 Proceeds from sale of other investments (Note 4)                                          2,257          65,540          43,255
 Acquisitions, net of cash acquired (Note 2)                                            (134,924)        (78,683)        (14,130)
 Purchases of property, plant, and equipment                                             (46,136)        (51,212)        (84,799)
 Proceeds from sale of property, plant, and equipment                                      6,685          11,016          11,638
 Collection of notes receivable (Note 2)                                                  69,136          76,392               -
 Proceeds from sale of businesses, net of cash divested (Note 2)                          16,427          23,559          46,767
 Acquisition of minority interests of subsidiaries (Note 16)                                   -         (23,212)        (69,528)
 Advance to affiliates                                                                         -               -         (16,088)
 Increase in other assets                                                                 (6,634)        (12,951)         (5,077)
 Other                                                                                    (1,078)            618          (3,616)
                                                                                       ---------       ---------       ---------

            Net cash provided by (used in) continuing operations                         371,129         350,089        (273,534)
            Net cash provided by discontinued operations                                   7,661         150,991         447,654
                                                                                       ---------       ---------       ---------

            Net cash provided by investing activities                                    378,790         501,080         174,120
                                                                                       ---------       ---------       ---------


<
                                      F-7
<PAGE>
>


                           THERMO ELECTRON CORPORATION

               CONSOLIDATED STATEMENT OF CASH FLOWS - (Continued)
                                 (In thousands)

                                                                                          2003            2002            2001
                                                                                       ---------       ---------       ---------

Financing Activities
 Redemption and repayment of long-term obligations (Note 10)                           $(271,109)      $(598,050)      $ (43,129)
 Purchases of company and subsidiary common stock and subordinated
    convertible debentures (Note 10)                                                     (88,871)       (334,152)       (511,393)
 Increase (decrease) in short-term notes payable                                        (377,007)        311,134         (16,870)
 Net proceeds from issuance of company common stock (Note 5)                              75,049          25,335          69,873
 Other                                                                                        40           3,001          (1,511)
                                                                                       ---------       ---------       ---------

            Net cash used in continuing operations                                      (661,898)       (592,732)       (503,030)
            Net cash used in discontinued operations                                      (3,708)           (234)       (193,283)
                                                                                       ---------       ---------       ---------

            Net cash used in financing activities                                       (665,606)       (592,966)       (696,313)
                                                                                       ---------       ---------       ---------

Exchange Rate Effect on Cash of Continuing Operations                                     34,965          14,986          (3,760)
Exchange Rate Effect on Cash of Discontinued Operations                                      (23)            476           4,464
                                                                                       ---------       ---------       ---------

Increase (Decrease) in Cash and Cash Equivalents                                         (35,155)         33,867        (331,052)
Cash and Cash Equivalents at Beginning of Year                                           339,067         305,200         636,252
                                                                                       ---------       ---------       ---------

                                                                                         303,912         339,067         305,200
Cash and Cash Equivalents of Discontinued Operations at End of Year                            -             (29)         (7,643)
                                                                                       ---------       ---------       ---------

Cash and Cash Equivalents at End of Year                                               $ 303,912       $ 339,038       $ 297,557
                                                                                       =========       =========       =========

See Note 14 for supplemental cash flow information.






                     The accompanying notes are an integral part of these consolidated financial statements.


<
                                      F-8
<PAGE>
>


                           THERMO ELECTRON CORPORATION

                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                            AND SHAREHOLDERS' EQUITY
                       (In thousands except share amounts)

                                                                                         2003            2002            2001
                                                                                      ----------      ----------      ----------

Comprehensive Income
Net Income (Loss)                                                                     $  200,009      $  309,730      $     (781)
                                                                                      ----------      ----------      ----------

Other Comprehensive Items (Note 8):
 Currency translation adjustment                                                         124,711          91,261         (24,606)
 Unrealized gains (losses) on available-for-sale investments, net of
    reclassification adjustment                                                           28,195         (65,894)         20,320
 Unrealized gains (losses) on hedging instruments, net of reclassification
    adjustment                                                                            (1,033)         (2,828)          1,338
 Minimum pension liability adjustment                                                     (6,302)        (21,995)              -
                                                                                      ----------      ----------      ----------

                                                                                         145,571             544          (2,948)
 Minority interest                                                                             -               -             (81)
                                                                                      ----------      ----------      ----------

                                                                                         145,571             544          (3,029)
                                                                                      ----------      ----------      ----------

                                                                                      $  345,580      $  310,274      $   (3,810)
                                                                                      ==========      ==========      ==========

Shareholders' Equity
Common Stock, $1 Par Value:
 Balance at beginning of year (169,952,419; 199,816,264; and 195,877,421
    shares)                                                                           $  169,952      $  199,816      $  195,877
 Issuance of stock under employees' and directors' stock plans
    (5,527,575; 2,136,155; and 3,938,843 shares)                                           5,528           2,136           3,939
 Restoration of stock to authorized but unissued status (32,000,000 shares;
    Note 12)                                                                                   -         (32,000)              -
                                                                                      ----------      ----------      ----------

 Balance at end of year (175,479,994; 169,952,419; and 199,816,264 shares)               175,480         169,952         199,816
                                                                                      ----------      ----------      ----------

Capital in Excess of Par Value:
 Balance at beginning of year                                                          1,212,145       1,758,567       1,681,452
 Activity under employees' and directors' stock plans                                     74,717          31,669          56,542
 Tax benefit related to employees' and directors' stock plans                             12,019           6,696           9,461
 Effect of subsidiaries' equity transactions                                                   -             613          11,112
 Restoration of stock to authorized but unissued status (Note 12)                              -        (585,400)              -
                                                                                      ----------      ----------      ----------

 Balance at end of year                                                                1,298,881       1,212,145       1,758,567
                                                                                      ----------      ----------      ----------

Retained Earnings:
 Balance at beginning of year                                                            819,411         509,681       1,005,857
 Net income (loss)                                                                       200,009         309,730            (781)
 Distribution of Kadant and Viasys Healthcare subsidiaries to
    shareholders (Note 16)                                                                     -               -        (495,395)
                                                                                      ----------      ----------      ----------

 Balance at end of year                                                               $1,019,420      $  819,411      $  509,681
                                                                                      ----------      ----------      ----------


<
                                      F-9
<PAGE>
>


                           THERMO ELECTRON CORPORATION

                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                     AND SHAREHOLDERS' EQUITY - (Continued)
                       (In thousands except share amounts)

                                                                                         2003            2002            2001
                                                                                      ----------      ----------      ----------

Treasury Stock:
 Balance at beginning of year (7,098,501; 23,458,555; and 13,708,863
    shares)                                                                           $ (129,675)     $ (457,475)     $ (246,228)
 Purchases of company common stock (3,033,400; 15,444,000; and 9,179,500
    shares)                                                                              (57,838)       (285,632)       (196,544)
 Activity under employees' and directors' stock plans (284,869; 195,946;
    and 463,695 shares)                                                                   (4,956)         (3,968)        (12,305)
 Receipt of company common stock as repayment of notes receivable
    (106,497 shares)                                                                           -               -          (2,398)
 Restoration of stock to authorized but unissued status (32,000,000
    shares; Note 12)                                                                           -         617,400               -
                                                                                      ----------      ----------      ----------

 Balance at end of year (10,416,770; 7,098,501; and 23,458,555 shares)                  (192,469)       (129,675)       (457,475)
                                                                                      ----------      ----------      ----------

Deferred Compensation (Note 5):
 Balance at beginning of year                                                             (4,852)         (3,157)         (6,640)
 Awards under employees' stock plans                                                      (1,577)         (4,207)           (429)
 Amortization of deferred compensation                                                     2,256           2,272           3,700
 Forfeitures under employees' stock plans                                                  1,339             240             212
                                                                                      ----------      ----------      ----------

 Balance at end of year                                                                   (2,834)         (4,852)         (3,157)
                                                                                      ----------      ----------      ----------

Accumulated Other Comprehensive Items (Note 8):
 Balance at beginning of year                                                            (36,704)        (99,290)        (96,342)
 Other comprehensive items                                                               121,032         (48,080)         (2,948)
 Reclassification of equity interests to available-for-sale investments
    (Notes 4 and 16)                                                                           -         110,666               -
                                                                                      ----------      ----------      ----------

 Balance at end of year                                                                   84,328         (36,704)        (99,290)
                                                                                      ----------      ----------      ----------

                                                                                      $2,382,806      $2,030,277      $1,908,142
                                                                                      ==========      ==========      ==========




                     The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

<
                                      F-10
<PAGE>
>


                           THERMO ELECTRON CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.    Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

       A world leader in high-tech instruments, Thermo Electron Corporation (the
company) helps life science, laboratory, and industrial customers advance
scientific knowledge, enable drug discovery, improve manufacturing processes,
and protect people and the environment with instruments, scientific equipment,
services, and software solutions. The company's powerful technologies help
researchers make discoveries that will fight disease or prolong life. They
automatically monitor and control online production to ensure the quality and
safety of raw materials as well as the end products. And they are critical
components embedded as enabling technologies within scientific and industrial
devices.

Principles of Consolidation

       The accompanying financial statements include the accounts of the company
and its wholly and majority-owned subsidiaries. All material intercompany
accounts and transactions have been eliminated. The company accounts for
investments in businesses in which it owns between 20% and 50% using the equity
method.

Presentation

       During 2000 and 2001, the company completed the principal aspects of a
major corporate reorganization. As part of this reorganization, the company spun
off two businesses and sold a number of operating units. In addition, the
company has taken private all of its majority-owned subsidiaries in its
continuing operations, including Spectra-Physics, Inc., effective February 2002.
The results of operations of certain major lines of business that have been spun
off or sold have been classified as discontinued operations in the accompanying
financial statements (Note 16). The company transferred management
responsibility and the related financial reporting and monitoring for several
small business units in 2002 and 2003 between segments (Note 3). In 2003, the
company changed the reporting of gains and losses arising from the early
retirement of debt and conformed the presentation in 2002 and 2001, as discussed
elsewhere in Note 1.

Fiscal Year

       Through 2002, the company had a fiscal year ending the Saturday nearest
December 31. In 2003, the company changed its year end to December 31.
References to 2003, 2002, and 2001 are for the fiscal years ended December 31,
2003, December 28, 2002, and December 29, 2001, respectively.

Revenue Recognition and Accounts Receivable

       In November 2002, the Emerging Issues Task Force (EITF) reached a
consensus on EITF No. 00-21, "Accounting for Revenue Arrangements with Multiple
Deliverables." The company began applying the consensus prospectively in the
first quarter of 2003. Under EITF No. 00-21, the company recognizes revenue and
related costs for arrangements with customers that have multiple deliverables,
such as equipment and installation, as each element is delivered or completed
based on its fair value. When a portion of the customer's payment is not due
until installation, the company defers that portion of the revenue until
completion of installation. Prior to 2003, the company followed Staff Accounting
Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements," adopted
in 2000, for multiple element arrangements. Under SAB No. 101, revenue was
recognized at shipment with the estimated cost of installation accrued for most
products requiring installation. For those products requiring installations of
longer duration, the company previously deferred revenue until completion of
installation. The adoption of EITF No. 00-21 increased revenues and diluted
earnings per share by $7.6 million and $.01, respectively, during the first
quarter of 2003.

<
                                      F-11
<PAGE>
>


                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

       The company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to pay amounts due.
Deferred revenue in the accompanying balance sheet consists primarily of
unearned revenue on service contracts, which is recognized ratably over the
terms of the contracts. Substantially all of the deferred revenue in the
accompanying 2003 balance sheet will be recognized within one year.

Warranty Obligations

       The company provides for the estimated cost of product warranties,
primarily from historical information, in cost of revenues at the time product
revenue is recognized. While the company engages in extensive product quality
programs and processes, including actively monitoring and evaluating the quality
of its component supplies, the company's warranty obligation is affected by
product failure rates, utilization levels, material usage, service delivery
costs incurred in correcting a product failure, and supplier warranties on parts
delivered to the company. Should actual product failure rates, utilization
levels, material usage, service delivery costs, or supplier warranties on parts
differ from the company's estimates, revisions to the estimated warranty
liability would be required. The changes in the carrying amount of warranty
obligations are as follows (in thousands):

<TABLE>
<CAPTION>
       <S>                                                                                                            <C>

       Balance at December 29, 2001                                                                                   $ 26,396
        Provision charged to income                                                                                     17,266
        Usage                                                                                                          (19,645)
        Other, net (a)                                                                                                   3,344
                                                                                                                      --------

       Balance at December 28, 2002                                                                                     27,361
        Provision charged to income                                                                                     29,491
        Usage                                                                                                          (25,811)
        Adjustments to previously provided warranties, net                                                              (3,805)
        Other, net (a)                                                                                                   2,371
                                                                                                                      --------

       Balance at December 31, 2003                                                                                   $ 29,607
                                                                                                                      ========

       (a) Primarily represents the effects of currency translation.

</TABLE>

       The provision charged to income in 2002 includes amounts accrued for
equipment at the time of shipment, adjustment within the year for changes in
estimated warranty costs on equipment shipped in the year, and changes in
estimated warranty costs on equipment shipped in prior years. It is not
practicable to determine the amounts applicable to each of the components.

       The liability for warranties is included in other accrued expenses in the
accompanying balance sheet.

Stock-based Compensation Plans and Pro Forma Stock-based Compensation Expense

       The company applies Accounting Principles Board Opinion (APB) No. 25,
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its stock-based compensation plans (Note 5). Accordingly, no
accounting recognition is given to stock options granted at fair market value
until they are exercised. Upon exercise, net proceeds, including tax benefits
realized, are credited to shareholders' equity.

<
                                      F-12
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

       In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," which sets forth a fair-value-based method of
recognizing stock-based compensation expense. As permitted by SFAS No. 123, the
company has elected to continue to apply APB No. 25 to account for its
stock-based compensation plans. Had compensation cost for awards granted after
1994 under the company's stock-based compensation plans been determined based on
the fair value at the grant dates consistent with the method set forth under
SFAS No. 123, the effect on certain financial information of the company would
have been as follows:

<TABLE>
<CAPTION>
       <S>                                                                                  <C>           <C>            <C>

                                                                                              2003          2002           2001
                                                                                            --------      --------       --------
                                                                                                    (In thousands except
                                                                                                     per share amounts)
       Income from Continuing Operations Before Cumulative Effect of Change in
        Accounting Principle:
           As reported                                                                      $172,697      $194,360       $ 50,653
           Add: Stock-based employee compensation expense included in reported
             results, net of tax                                                               1,677         3,117          2,294
           Deduct: Total stock-based employee compensation expense determined under
             the fair-value-based method for all awards, net of tax                          (21,601)      (25,667)       (24,467)
                                                                                            --------      --------       --------

           Pro forma                                                                        $152,773      $171,810       $ 28,480
                                                                                            ========      ========       ========

       Basic Earnings per Share from Continuing Operations Before Cumulative
        Effect of Change in Accounting Principle:
           As reported                                                                      $   1.06      $   1.15       $    .28
           Pro forma                                                                        $   0.94      $   1.02       $    .16

       Diluted Earnings per Share from Continuing Operations Before Cumulative
        Effect of Change in Accounting Principle:
           As reported                                                                      $   1.04      $   1.12       $    .28
           Pro forma                                                                        $   0.92      $   1.00       $    .15

       Net Income (Loss):
           As reported                                                                      $200,009      $309,730       $   (781)
           Add: Stock-based employee compensation expense included in reported net
             income, net of tax                                                                1,677         3,117          2,294
           Deduct: Total stock-based employee compensation expense determined under
             the fair-value-based method for all awards, net of tax                          (21,601)      (25,667)       (24,467)
                                                                                            --------      --------       --------

           Pro forma                                                                        $180,085      $287,180       $(22,954)
                                                                                            ========      ========       ========

       Basic Earnings (Loss) per Share:
           As reported                                                                      $   1.23      $   1.84       $      -
           Pro forma                                                                        $   1.11      $   1.70       $   (.13)

       Diluted Earnings (Loss) per Share:
           As reported                                                                      $   1.20      $   1.73       $      -
           Pro forma                                                                        $   1.08      $   1.62       $   (.12)


<
                                      F-13
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

       The weighted average fair value per share of options granted was $6.73,
$9.23, and $9.85 in 2003, 2002, and 2001, respectively. The fair value of each
option grant was estimated on the grant date using the Black-Scholes option-
pricing model assuming an expected dividend yield of zero and with the following
weighted-average assumptions:

                                                                                                2003          2002         2001
                                                                                             ---------     ---------    ---------

       Volatility                                                                                  38%           42%          45%
       Risk-free Interest Rate                                                                    2.9%          4.2%         4.1%
       Expected Life of Options                                                              4.4 years     6.0 years    5.0 years

</TABLE>

       The Black-Scholes option-pricing model was developed for use in
estimating the fair value of traded options, which have no vesting restrictions
and are fully transferable. In addition, option-pricing models require the input
of highly subjective assumptions, including expected stock price volatility.
Because the company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

Income Taxes

       In accordance with SFAS No. 109, "Accounting for Income Taxes," the
company recognizes deferred income taxes based on the expected future tax
consequences of differences between the financial statement basis and the tax
basis of assets and liabilities, calculated using enacted tax rates in effect
for the year in which the differences are expected to be reflected in the tax
return.

Earnings (Loss) per Share

       Basic earnings (loss) per share has been computed by dividing net income
(loss) by the weighted average number of shares outstanding during the year.
Except where the result would be antidilutive to income from continuing
operations, diluted earnings (loss) per share has been computed assuming the
conversion of convertible obligations and the elimination of the related
interest expense, and the exercise of stock options, as well as their related
income tax effects (Note 7).

Cash and Cash Equivalents

       Cash equivalents consists principally of money market funds, commercial
paper, and other marketable securities purchased with an original maturity of
three months or less. These investments are carried at cost, which approximates
market value.

Available-for-sale Investments

       The company's marketable debt and equity securities are considered
available-for-sale investments in the accompanying balance sheet and are carried
at market value, with the difference between cost and market value, net of
related tax effects, recorded in the "Accumulated other comprehensive items"
component of shareholders' equity (Notes 8 and 9). Decreases in market values of
individual securities below cost for a duration of six to nine months are deemed
indicative of other than temporary impairment, and the company assesses the need
to write down the carrying amount of the investments to market value through
other income, net, in the accompanying statement of operations.

<
                                      F-14
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

Inventories

       Inventories are stated at the lower of cost (on a first-in, first-out or
weighted average basis) or net realizable value and include materials, labor,
and manufacturing overhead. The components of inventories are as follows:

<TABLE>
<CAPTION>
       <S>                                                                                                <C>            <C>

                                                                                                            2003           2002
                                                                                                          --------       --------
                                                                                                              (In thousands)

       Raw Materials                                                                                      $134,352       $134,039
       Work in Progress                                                                                     56,323         50,894
       Finished Goods (includes $12,478 and $18,982 at customer locations)                                 153,083        147,871
                                                                                                          --------       --------

                                                                                                          $343,758       $332,804
                                                                                                          ========       ========

       The company periodically reviews its quantities of inventories on hand
and compares these amounts to expected use of each particular product or product
line. The company records as a charge to cost of revenues any amounts required
to reduce the carrying value of inventories to net realizable value (Note 15).

Property, Plant, and Equipment

       The costs of additions and improvements are capitalized, while
maintenance and repairs are charged to expense as incurred. The company provides
for depreciation and amortization using the straight-line method over the
estimated useful lives of the property as follows: buildings and improvements, 3
to 40 years; machinery and equipment, 2 to 20 years; and leasehold improvements,
the shorter of the term of the lease or the life of the asset. Property, plant,
and equipment consists of the following:

                                                                                                            2003           2002
                                                                                                          --------       --------
                                                                                                               (In thousands)

       Land                                                                                               $ 36,739       $ 34,221
       Buildings and Improvements                                                                          167,422        156,812
       Machinery, Equipment, and Leasehold Improvements                                                    401,530        362,316
                                                                                                          --------       --------

                                                                                                           605,691        553,349
       Less: Accumulated Depreciation and Amortization                                                     304,989        280,441
                                                                                                          --------       --------

                                                                                                          $300,702       $272,908
                                                                                                          ========       ========

</TABLE>

       Depreciation and amortization expense of property, plant, and equipment
was $48.6 million, $48.1 million, and $51.4 million in 2003, 2002, and 2001,
respectively.

<
                                      F-15
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

Other Assets

       Other assets in the accompanying balance sheet includes intangible
assets, deferred tax assets, notes receivable, deferred debt expense, cash
surrender value of life insurance, and other assets. Intangible assets include
the costs of acquired product technology, patents, trademarks, and other
specifically identifiable intangible assets, and are being amortized using the
straight-line method over their estimated useful lives, which range from 2 to 20
years. The company has no intangible assets with indefinite lives. The company
reviews other intangible assets for impairment when indication of potential
impairment exists, such as a significant reduction in cash flows associated with
the assets. Acquired intangible assets are as follows:

<TABLE>
<CAPTION>
       <S>                                                                        <C>             <C>                    <C>

                                                                                                   Accumulated
                                                                                     Gross        Amortization                Net
                                                                                  --------        ------------           --------
                                                                                                  (In thousands)

       2003
        Product technology                                                        $ 65,584            $(22,257)          $ 43,327
        Patents                                                                     40,823             (21,085)            19,738
        Trademarks                                                                   2,824                (656)             2,168
        Other                                                                        7,245              (1,575)             5,670
                                                                                  --------            --------           --------

                                                                                  $116,476            $(45,573)          $ 70,903
                                                                                  ========            ========           ========

       2002
        Product technology                                                        $ 58,250            $(17,877)          $ 40,373
        Patents                                                                     41,103             (20,409)            20,694
        Trademarks                                                                   4,489              (1,143)             3,346
        Other                                                                        4,663                (729)             3,934
                                                                                  --------            --------           --------

                                                                                  $108,505            $(40,158)          $ 68,347
                                                                                  ========            ========           ========

</TABLE>

       The estimated future amortization expense of acquired intangible assets
is as follows (in thousands):

<TABLE>
<CAPTION>
       <S>                                                                                                                <C>

       2004                                                                                                               $10,251
       2005                                                                                                                 9,458
       2006                                                                                                                 8,850
       2007                                                                                                                 8,214
       2008                                                                                                                 7,869
       2009 and thereafter                                                                                                 26,261
                                                                                                                          -------

                                                                                                                          $70,903

</TABLE>

       The company expects that future amortization expense will increase
following completion of the purchase price allocation for Jouan SA (Note 2).

       Amortization of acquired intangible assets was $9.9 million, $8.3
million, and $6.9 million in 2003, 2002, and 2001, respectively.



<
                                      F-16
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

Goodwill

       The company amortized goodwill through December 29, 2001, using the
straight-line method over periods ranging from 5 to 40 years. Accumulated
amortization was $233.0 million at year-end 2001. In June 2001, the FASB issued
SFAS No. 142, "Goodwill and Other Intangible Assets." The company adopted SFAS
No. 142 effective December 30, 2001. Under SFAS No. 142, amortization of
goodwill ceased and the company assesses the realizability of this asset
annually and whenever events or changes in circumstances indicate it may be
impaired. Such events or circumstances generally include the occurrence of
operating losses or a significant decline in earnings associated with one or
more of the company's reporting units. The company estimates the fair value of
its reporting units by using market comparables for similar businesses and
forecasts of discounted future cash flows. When an impairment is indicated, any
excess of carrying value over fair value of goodwill is recorded as an operating
loss (Note 15).

       The company completed annual tests for impairment at December 31, 2003,
and December 28, 2002, and determined that goodwill was not impaired.

       Pro forma results for 2001, as if SFAS No. 142 had been adopted at the
beginning of 2001, are as follows (in thousands except per share amounts):

<TABLE>
<CAPTION>
       <S>                                                                                                               <C>

                                                                                                                           2001
                                                                                                                         -------

       Income from Continuing Operations Before Cumulative Effect of Change in
        Accounting Principle:
           As reported                                                                                                   $50,653
           Pro forma                                                                                                      87,451
       Basic Earnings per Share from Continuing Operations Before Cumulative Effect of
        Change in Accounting Principle:
           As reported                                                                                                       .28
           Pro forma                                                                                                         .48
       Diluted Earnings per Share from Continuing Operations Before Cumulative Effect of
        Change in Accounting Principle:
           As reported                                                                                                       .28
           Pro forma                                                                                                         .48

       Net Income (Loss):
           As reported                                                                                                   $  (781)
           Pro forma                                                                                                      36,017
       Basic Earnings (Loss) per Share:
           As reported                                                                                                         -
           Pro forma                                                                                                         .20
       Diluted Earnings (Loss) per Share:
           As reported                                                                                                         -
           Pro forma                                                                                                         .20


</TABLE>

<
                                      F-17
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

       The changes in the carrying amount of goodwill by segment are as follows:

<TABLE>
<CAPTION>
       <S>                                                        <C>             <C>              <C>                <C>

                                                                    Life and
                                                                  Laboratory      Measurement           Optical
                                                                    Sciences      and Control      Technologies            Total
                                                                  ----------      -----------      ------------       ----------
                                                                                         (In thousands)

       Balance at December 29, 2001                               $  830,192       $  408,742        $  109,459       $1,348,393
        Acquisitions                                                  22,666            2,361                 -           25,027
        Write off due to sale of businesses                             (463)          (3,332)             (517)          (4,312)
        Acquisition of minority interest of subsidiary                     -                -            15,807           15,807
        Other (a)                                                        351           (2,239)           (3,036)          (4,924)
        Currency translation                                          27,003            8,883               328           36,214
                                                                  ----------       ----------        ----------       ----------

       Balance at December 28, 2002                                  879,749          414,415           122,041        1,416,205
        Acquisitions                                                 103,398                -                 -          103,398
        Write off due to sale of businesses                                -          (11,976)                -          (11,976)
        Other                                                              -              106                 -              106
        Currency translation                                          37,671           11,715                58           49,444
                                                                  ----------       ----------        ----------       ----------

       Balance at December 31, 2003                               $1,020,818       $  414,260        $  122,099       $1,557,177
                                                                  ==========       ==========        ==========       ==========

       (a) Principally represents use of previously reserved acquired net operating losses and reversal of acquisition reserves that
           were not required.

</TABLE>

       The 2003 acquisitions include Jouan, for which the purchase price
allocation has not been finalized (Note 2).

Currency Translation

       All assets and liabilities of the company's non-U.S. subsidiaries are
translated at year-end exchange rates, and revenues and expenses are translated
at average exchange rates for the year in accordance with SFAS No. 52, "Foreign
Currency Translation." Resulting translation adjustments are reflected in the
"Accumulated other comprehensive items" component of shareholders' equity.
Currency transaction gains and losses are included in the accompanying statement
of operations and are not material for the three years presented.

Forward Contracts

       Effective in the first quarter of 2001, the company adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133, as
amended, requires that all derivatives, including forward currency-exchange
contracts, be recognized in the balance sheet at fair value. Derivatives that
are not hedges must be recorded at fair value through earnings. If a derivative
is a hedge, depending on the nature of the hedge, changes in the fair value of
the derivative are either offset against the change in fair value of the hedged
item through earnings or recognized in other comprehensive income until the
hedged item is recognized in earnings. The company immediately records in
earnings the extent to which a hedge is not effective in achieving offsetting
changes in fair value or cash flows. Adoption of SFAS No. 133 in the first
quarter of 2001 resulted in the deferral of a gain of $1.0 million, net of tax,
and a corresponding loss for periods prior to 2001, which was classified as
"Cumulative effect of the change in accounting principle" in the accompanying
2001 statement of operations. This deferred gain related to forward
currency-exchange contracts that were marked to market through earnings prior to
the adoption of SFAS No. 133. The entire deferred gain recorded upon adoption
was reclassified into earnings during 2001 as the underlying hedged transactions
occurred.

<
                                      F-18
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

       The company uses forward currency-exchange contracts primarily to hedge
certain operational (cash-flow hedges) and balance sheet (fair-value hedges)
exposures resulting from changes in currency exchange rates. Such exposures
result from sales that are denominated in currencies other than the functional
currencies of the respective operations. These contracts principally hedge
transactions denominated in U.S. dollars, euros, British pounds sterling,
Japanese yen, and Swiss francs. The company enters into these currency-exchange
contracts to hedge anticipated product sales and recorded accounts receivable
made in the normal course of business. Accordingly, the hedges are not
speculative in nature. As part of the company's overall strategy to manage the
level of exposure to the risk of currency-exchange fluctuations, some operating
units hedge a portion of their currency exposures anticipated over the ensuing
12-month period, using exchange contracts that have maturities of 12 months or
less. The company does not hold or engage in transactions involving derivative
instruments for purposes other than risk management.

       The company records its forward currency-exchange contracts at fair value
in its balance sheet as other current assets or other accrued expenses and, for
cash-flow hedges, the related gains or losses on these contracts are deferred as
a component of accumulated other comprehensive items in the accompanying balance
sheet. These deferred gains and losses are recognized in earnings in the period
in which the underlying anticipated transaction occurs. Unrealized gains and
losses resulting from the impact of currency exchange rate movements on
fair-value hedges are recognized in earnings in the period in which the exchange
rates change and offset the currency losses and gains on the underlying exposure
being hedged. Cash flows resulting from currency-exchange contracts qualifying
as cash-flow hedges are recorded in the accompanying statement of cash flows in
the same category as the item being hedged. At December 31, 2003, the company
had deferred losses, net of income taxes, relating to forward currency-exchange
contracts of approximately $2.5 million, substantially all of which is expected
to be recognized as expense over the next 12 months to approximately offset
gains on the exposures being hedged. The ineffective portion of the gain or loss
on derivative instruments is recorded in other income, net, in the accompanying
statement of operations and is not material for the three years presented.

Recent Accounting Pronouncements

       In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 addresses accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. The company adopted the standard during the
first quarter of 2003. The adoption of this standard did not have a material
impact on the company's financial statements.

       In May 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." The company adopted this standard in the first quarter of 2003.
Under the standard, all of the transactions previously classified by the company
as extraordinary items are no longer treated as such, but instead are reported
as other income, net, in the accompanying statement of operations. A previously
reported extraordinary charge of $1.0 million in 2002 and an extraordinary gain
of $1.1 million in 2001 were reclassified as a result of adopting this
pronouncement.

       In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which supersedes EITF No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (Including Certain Costs Incurred in a Restructuring)." The
standard affects the accounting for restructuring charges and related activities
and generally lengthens the timeframe for reporting of expenses relating to
restructuring activities beyond the period in which a plan is initiated. The
company adopted the provisions of this statement for exit or disposal activities
that were initiated in 2003. The provisions of EITF No. 94-3 continue to apply
with regard to the company's restructuring plans that commenced prior to 2003.

<
                                      F-19
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

       In November 2002, the FASB issued FASB Interpretation (FIN) No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." FIN No. 45 clarifies that a
guarantor is required to recognize, at the inception of a guarantee, a liability
for the fair value of the obligation undertaken in issuing the guarantee. The
initial recognition and initial measurement provisions of FIN No. 45 became
applicable for guarantees issued or modified after December 31, 2002. The
company is complying with the requirements of FIN No. 45, the adoption of which
did not materially affect the company's financial statements.

       In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure - an amendment of FASB
Statement No. 123." SFAS No. 148 amends SFAS No. 123, "Accounting for
Stock-Based Compensation," to provide alternative methods of transition for a
voluntary change to the fair-value-based method of accounting for stock-based
employee compensation. In addition, SFAS No. 148 amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results. As
provided for in SFAS No. 123, the company has elected to apply APB No. 25
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its stock-based compensation plans. APB No. 25 does not require
options to be expensed when granted with an exercise price equal to fair market
value of common stock. The company is complying with the disclosure requirements
of SFAS No. 148.

       In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable
Interest Entities" and, in December 2003, issued a revision to that
interpretation. FIN No. 46R replaces FIN No. 46 and addresses consolidation by
business enterprises of variable interest entities that possess certain
characteristics. A variable interest entity (VIE) is defined as (a) an
ownership, contractual or monetary interest in an entity where the ability to
influence financial decisions is not proportional to the investment interest, or
(b) an entity lacking the invested capital sufficient to fund future activities
without the support of a third party. FIN No. 46R establishes standards for
determining under what circumstances VIEs should be consolidated with their
primary beneficiary, including those to which the usual condition for
consolidation does not apply. The company adopted FIN No. 46 in the year ended
December 31, 2003, and will adopt FIN No. 46R in the first quarter of 2004 for
non-special purpose entities created prior to February 1, 2003. The company does
not expect a material effect from the adoption of FIN No. 46R.

       In December 2003, the FASB revised SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits." The revised statement
requires additional disclosures, including information about plan assets and the
benefits expected to be paid and contributions expected to be made in future
years. The additional disclosure requirements are effective for U.S. plans in
2003 financial statements and for non-U.S. plans in 2004 financial statements.
The company has provided the disclosures required for its U.S. plan in 2003
(Note 5).

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 assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. In addition, significant estimates were made in determining
the loss on disposition of the company's discontinued operations, including
post-closing adjustments (Note 16), in estimating future cash flows to quantify
impairment of assets, and in determining the ultimate loss from abandoning
leases at facilities being exited (Note 15). Actual results could differ from
those estimates.


<
                                      F-20
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 2.    Acquisitions and Dispositions

Acquisitions

       On December 31, 2003, the Life and Laboratory Sciences segment acquired
Jouan for 110.9 million euros in cash ($137.8 million, or $122.7 million, net of
cash acquired) and the assumption of approximately 11.8 million euros of debt
($14.7 million). Jouan is a global supplier of products used by life science
researchers in academic, pharmaceutical, biotech, and clinical markets to
prepare and preserve laboratory samples and will broaden the company's offerings
in these markets. Having completed the acquisition of Jouan at the close of
business on the last day of the company's fiscal year, the balance sheet of
Jouan has been included in the accompanying financial statements, however, no
results of operations or cash flows for 2003 have been included. The company has
undertaken a review to determine the fair value of Jouan's identifiable
intangible assets and to complete the purchase price allocation. Pending the
results of that review, which the company expects to complete in the first
quarter of 2004, the excess of the purchase price over the fair value of the
acquired tangible net assets, or $99.3 million, has been recorded as an increase
to goodwill.

       In 2003, in addition to the acquisition of Jouan, the company made four
other acquisitions for $12.3 million in cash, net of cash acquired, and up to
$4.0 million of additional consideration through 2005 based on post-acquisition
results of one of the acquired businesses. The additional consideration will be
recorded as an increase to goodwill, if earned. One of the acquisitions is
subject to a post-closing adjustment that the company does not expect will be
material.

       In July 2002, the Measurement and Control segment acquired the
radiation-monitoring products business (RMP) of Saint-Gobain Corporation to
further enhance its line of security products. The aggregate purchase price was
$31.4 million in cash. The purchase price exceeded the fair value of the
acquired net assets and, accordingly, $2.4 million was allocated as goodwill.
RMP is a major supplier of radiation safety, security, and industrial equipment
to the U.S. market, and the leader in personal radiation monitoring in the
United Kingdom.

       In a transaction undertaken in April and May 2002, the Life and
Laboratory Sciences segment acquired CRS Robotics Corporation (CRS), a Toronto
Stock Exchange-listed company, for 5.75 Canadian dollars per share
(approximately $3.68 per share). The segment subsequently renamed the business
Thermo CRS. The aggregate purchase price was $43.0 million in cash, net of cash
acquired. The purchase price exceeded the fair value of the acquired net assets
and, accordingly, $21.9 million was allocated as goodwill. Thermo CRS is a
global supplier of lab automation robotics, software, and equipment to the
drug-discovery market. The acquisition was made to further enhance the segment's
product offering for laboratory automation equipment.

       In 2002, in addition to the acquisitions of RMP and CRS, the company made
two other acquisitions for $4.3 million in cash.

       In 2001, the company made several acquisitions for $14.1 million in cash,
net of cash acquired.

       These acquisitions have been accounted for using the purchase method of
accounting, and the acquired companies' results have been included in the
accompanying financial statements from their respective dates of acquisition.
Allocation of the purchase price for acquisitions was based on estimates of the
fair value of the net assets acquired and, for acquisitions completed in 2003,
is subject to adjustment upon finalization of the purchase price allocation. The
company has gathered no information that indicates the final purchase price
allocations will differ materially from the preliminary estimates, except for
Jouan as discussed above. Pro forma results are not presented as the
acquisitions did not materially affect the company's results of operations
individually or in the aggregate.

<
                                      F-21
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 2.    Acquisitions and Dispositions (continued)

       The components of the purchase price allocation for 2003 acquisitions are
as follows:

<TABLE>
<CAPTION>
       <S>                                                                           <C>               <C>              <C>

                                                                                        Jouan             Other            Total
                                                                                     --------          --------         --------
                                                                                                    (In thousands)

       Purchase Price:
        Cash paid (a)                                                                $137,838          $ 12,422         $150,260
        Cash acquired                                                                 (15,188)             (148)         (15,336)
                                                                                     --------          --------         --------

                                                                                     $122,650          $ 12,274         $134,924
                                                                                     ========          ========         ========

       Allocation:
        Current assets                                                               $ 43,146          $  3,713         $ 46,859
        Property, plant, and equipment                                                 27,405               851           28,256
        Acquired intangible assets (b)                                                    242             8,078            8,320
        Goodwill                                                                       99,316             4,082          103,398
        Other assets                                                                        7                 2                9
        Debt                                                                          (14,653)             (234)         (14,887)
        Other liabilities assumed                                                     (32,813)           (4,218)         (37,031)
                                                                                     --------          --------         --------

                                                                                     $122,650          $ 12,274         $134,924
                                                                                     ========          ========         ========

       (a) Includes acquisition expenses.
       (b) Jouan's acquired intangible assets will be determined in 2004, following finalization of the purchase price allocation.
</TABLE>
<TABLE>
<CAPTION>
       <S>                                                                                                                <C>

       Acquired intangible assets for 2003 acquisitions are as follows (in thousands):

       Product Technology                                                                                                 $4,755
       Patents                                                                                                             1,550
       Other                                                                                                               2,015
                                                                                                                          ------

                                                                                                                          $8,320
                                                                                                                          ======

</TABLE>

       The weighted-average amortization periods for intangible assets acquired
in 2003 are: 9 years for product technology; 10 years for patents; and 3 years
for other intangible assets. The weighted-average amortization period for all
intangible assets acquired in 2003 is 6 years.

<
                                      F-22
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 2.    Acquisitions and Dispositions (continued)

       The components of the purchase price allocation for 2002 acquisitions are
as follows:

<TABLE>
<CAPTION>
       <S>                                                          <C>              <C>               <C>              <C>

                                                                         CRS              RMP             Other            Total
                                                                    --------         --------          --------         --------
                                                                                           (In thousands)

       Purchase Price:
        Cash paid (a)                                               $ 43,187         $ 31,367          $  4,271         $ 78,825
        Cash acquired                                                   (142)               -                 -             (142)
                                                                    --------         --------          --------         --------

                                                                    $ 43,045         $ 31,367          $  4,271         $ 78,683
                                                                    ========         ========          ========         ========

       Allocation:
        Current assets                                              $  5,874         $ 15,620          $  3,137         $ 24,631
        Property, plant, and equipment                                   837            6,799                 -            7,636
        Acquired intangible assets                                    22,935           11,800             2,330           37,065
        Goodwill                                                      21,946            2,361               720           25,027
        Other assets                                                       -              380                 -              380
        Liabilities assumed and other                                 (8,547)          (5,593)           (1,916)         (16,056)
                                                                    --------         --------          --------         --------

                                                                    $ 43,045         $ 31,367          $  4,271         $ 78,683
                                                                    ========         ========          ========         ========

       (a) Includes acquisition expenses.

       Acquired intangible assets for 2002 acquisitions are as follows:

                                                                         CRS              RMP             Other            Total
                                                                    --------         --------          --------         --------
                                                                                           (In thousands)

       Product Technology                                           $ 20,367         $  8,451          $  2,330         $ 31,148
       Patents                                                             -              499                 -              499
       Trademarks                                                      1,183              864                 -            2,047
       Other                                                           1,385            1,986                 -            3,371
                                                                    --------         --------          --------         --------

                                                                    $ 22,935         $ 11,800          $  2,330         $ 37,065
                                                                    ========         ========          ========         ========

       The weighted-average amortization periods for intangible assets acquired
in 2002 are: 11 years for product technology and patents; 6 years for
trademarks; and 8 years for other intangible assets. The weighted-average
amortization period for all intangible assets acquired in 2002 is 10 years.

       The company has undertaken restructuring activities at acquired
businesses. These activities, which were accounted for in accordance with EITF
No. 95-3, "Recognition of Liabilities in Connection with a Purchase Business
Combination," have primarily included reductions in staffing levels and the
abandonment of excess facilities. In connection with these restructuring
activities, as part of the cost of acquisitions, the company established
reserves as detailed below, primarily for severance and excess facilities. In
accordance with EITF No. 95-3, the company finalizes its restructuring plans no
later than one year from the respective dates of the acquisitions. Upon
finalization of restructuring plans or settlement of obligations for less than
the expected amount, any excess reserves have been reversed with a corresponding
decrease in goodwill or other intangible assets when no goodwill exists. Accrued
acquisition expenses are included in other accrued expenses in the accompanying
balance sheet.

<
                                      F-23
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 2.    Acquisitions and Dispositions (continued)

       The changes in accrued acquisition expenses for acquisitions completed
during 2003 are as follows:

                                                                                  Abandonment
                                                                                    of Excess
                                                                 Severance         Facilities             Other             Total
                                                                 ---------        -----------            ------            ------
                                                                                            (In thousands)

        Reserves established                                        $5,043             $3,954            $   99            $9,096
        Payments                                                       (62)               (44)                -              (106)
        Currency translation                                            17                 15                 7                39
                                                                    ------             ------            ------            ------

       Balance at December 31, 2003                                 $4,998             $3,925            $  106            $9,029
                                                                    ======             ======            ======            ======

       The principal accrued acquisition expenses for 2003 acquisitions were for
severance for approximately 100 employees at Jouan across all functions and
closure of a Jouan manufacturing facility in Denmark, with a lease expiring in
2007. The company expects to pay amounts accrued for severance and other
expenses primarily through 2004 and amounts accrued for abandonment of excess
facilities through 2007.

       The changes in accrued acquisition expenses for acquisitions completed
during 2002 are as follows:

                                                                                  Abandonment
                                                                                    of Excess
                                                                 Severance         Facilities             Other             Total
                                                                 ---------        -----------           -------           -------
                                                                                          (In thousands)

        Reserves established                                       $ 1,727            $   509           $   487           $ 2,723
        Payments                                                      (477)                 -                 -              (477)
        Currency translation                                            69                 79                12               160
                                                                   -------            -------           -------           -------

       Balance at December 28, 2002                                  1,319                588               499             2,406
        Payments                                                      (904)              (130)             (194)           (1,228)
        Decrease recorded as a reduction in goodwill
           and other intangible assets                                (488)              (401)             (186)           (1,075)
        Currency translation                                            73                (37)               28                64
                                                                   -------            -------           -------           -------

       Balance at December 31, 2003                                $     -            $    20           $   147           $   167
                                                                   =======            =======           =======           =======

       The principal accrued acquisition expenses for 2002 acquisitions were for
severance for approximately 102 employees at the acquired businesses, primarily
in manufacturing, research and development, and sales and service; closure of a
Thermo CRS manufacturing facility in Austria, with a lease that expired in 2003
and whose operations were consolidated into other existing facilities; and
relocation of RMP employees from the seller's operations in Ohio and the United
Kingdom to the company's facilities. The company expects to pay amounts accrued
for acquisition expenses primarily through the first half of 2004.



<
                                      F-24
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 2.    Acquisitions and Dispositions (continued)

       The changes in accrued acquisition expenses for acquisitions completed
prior to 2001 are as follows:

                                                                                  Abandonment
                                                                                    of Excess
                                                                 Severance         Facilities             Other             Total
                                                                 ---------        -----------           -------           -------
                                                                                            (In thousands)

       Balance at December 30, 2000                                $ 1,846            $ 7,677           $   513           $10,036
        Payments                                                      (467)            (1,038)             (358)           (1,863)
        Decrease recorded as a reduction in other
           intangible assets                                          (720)              (194)                -              (914)
        Currency translation                                           (33)              (219)              (24)             (276)
                                                                   -------            -------           -------           -------

       Balance at December 29, 2001                                    626              6,226               131             6,983
        Payments                                                      (353)              (452)              (73)             (878)
        Decrease recorded as a reduction in goodwill
           and other intangible assets                                (329)                 -               (73)             (402)
        Currency translation                                            56                648                15               719
                                                                   -------            -------           -------           -------

       Balance at December 28, 2002                                      -              6,422                 -             6,422
        Payments                                                         -               (523)                -              (523)
        Currency translation                                             -                721                 -               721
                                                                   -------            -------           -------           -------

       Balance at December 31, 2003                                $     -            $ 6,620           $     -           $ 6,620
                                                                   =======            =======           =======           =======

</TABLE>

       The principal acquisition expenses for pre-2001 acquisitions were for
severance for approximately 776 employees across all functions and for abandoned
facilities, primarily related to the company's acquisitions of Life Sciences
International PLC in 1997, the product-monitoring businesses of Graseby Limited
in 1998, and Spectra-Physics AB in 1999. The abandoned facilities for the 1997
and 1998 acquisitions include two operating facilities in North America with
leases that expired in 2001 and four operating facilities in England with leases
expiring through 2014. The abandoned facilities at Spectra-Physics include
operating facilities in Sweden, Germany, and France with obligations that
principally expired in 2001. The amounts captioned as "other" primarily
represent employee relocation, contract termination, and other exit costs.

       The company did not establish material reserves for restructuring
businesses acquired in 2001.

Dispositions

       The company's continuing operations sold several noncore businesses for
net cash proceeds of $16.4 million in 2003, $23.6 million in 2002, and $46.8
million in 2001 and recorded $4.6 million and $10.9 million of pre-tax losses in
2003 and 2001, respectively, and $2.5 million of net pre-tax gains in 2002,
which are included in restructuring and other costs, net, in the accompanying
statement of operations.

       In 2000, the company's Measurement and Control segment sold its Spectra
Precision businesses to Trimble Navigation Limited. As part of the sale
proceeds, the company obtained an $80.0 million note from Trimble, which carried
interest at 10%. Trimble and the company negotiated a change in the note's terms
in March 2002. Under the revised terms, Trimble paid $11 million of principal,
together with $10 million of accrued interest. The amended note carried an

<
                                      F-25
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 2.    Acquisitions and Dispositions (continued)

interest rate of 10.41% and under certain conditions allowed the
interest to be added to the note's principal. As of December 28, 2002, the
principal balance of the note had increased to $69.1 million as a result of this
provision. In addition, the company obtained warrants to purchase shares of
Trimble, which became exercisable at various times and prices depending on the
outstanding balance of the note. The warrants were recorded at their fair value.
During 2003, Trimble repaid the note in full and the company sold all of the
warrants that it had obtained from Trimble. The company recorded a gain of $1.2
million on the sale of the warrants as other income in the accompanying 2003
statement of operations.

Note 3.    Business Segment and Geographical Information

       The company's businesses are managed in three segments:

       Life and Laboratory Sciences: serves the pharmaceutical, biotechnology,
and other research and industrial laboratory markets, as well as scientists in
government and academia, with advanced instrument systems and software that
enable discovery, R&D, and quality assurance. The segment also serves the
healthcare market with rapid point-of-care diagnostic tests, and with equipment,
laboratory-automation systems, and consumables for clinical and anatomical
pathology laboratories. All products within this segment are marketed under the
Thermo Electron brand.

       Measurement and Control: enables customers in key industrial markets,
such as chemical, semiconductor, pharmaceutical, food and beverage, minerals and
mining, and steel, to control and optimize their manufacturing processes. The
segment provides analytical tools, online process instruments, and precision
temperature-control systems that are used to increase quality, improve
productivity, and meet environmental and other regulatory standards. The segment
also offers a comprehensive range of chemical-, radiation-, and
explosives-detection instruments. All products within this segment are marketed
under the Thermo Electron brand.

       Optical Technologies: provides high-power semiconductor and solid-state
lasers, as well as other photonic components and devices used in applications
ranging from industrial and microelectronic manufacturing to scientific research
to medical diagnostics. The segment also offers a broad range of photonics
products, an extensive catalog, and specialized services for the design,
prototyping, and manufacturing of optical-based equipment. All products within
this segment are marketed under the Spectra-Physics brand.

       During 2003, the company transferred management responsibility and the
related financial reporting and monitoring for several small business units
between segments as follows: (1) the compositional-metrology business was moved
to the Life and Laboratory Sciences segment from the Optical Technologies
segment; (2) the ultra-high-vacuum systems and semiconductor-testing businesses
were moved to the Measurement and Control segment from the Optical Technologies
segment; and (3) the organic elemental analysis business was moved to the Life
and Laboratory Sciences segment from the Measurement and Control segment. The
company has historically moved a business unit between segments when a shift in
strategic focus of either the business unit or a segment more closely aligns the
business unit with a segment different than that in which it had previously been
reported. In addition to these changes, during the first quarter of 2003, the
company began allocating certain costs, which had previously been classified as
corporate expenses, to the business segments based on the estimated extent to
which the segment benefited from the costs. Allocated costs principally include
e-commerce, global sourcing, and marketing as well as some legal, human
resources, and information systems costs. Prior-period segment information has
been conformed to reflect these changes.

<
                                      F-26
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 3.    Business Segment and Geographical Information (continued)

       During 2002, the company transferred management responsibility and the
related financial reporting and monitoring for several businesses between
segments as follows: (1) the spectroscopy businesses were moved to the Life and
Laboratory Sciences segment from the Measurement and Control segment; (2) the
temperature-control businesses were moved to the Measurement and Control segment
from the Optical Technologies segment; (3) the electrochemistry products
business was moved to the Measurement and Control segment from the Life and
Laboratory Sciences segment; and (4) the Thermo Projects unit was moved from a
separate segment (previously included as "Other") to the Life and Laboratory
Sciences segment. Prior-period segment information has been conformed to reflect
these changes.

<TABLE>
<CAPTION>
       <S>                                                                              <C>            <C>            <C>

                                                                                           2003           2002           2001
                                                                                        ----------     ----------     ----------
                                                                                                    (In thousands)

       Business Segment Information
       Revenues:
           Life and Laboratory Sciences                                                 $1,291,430     $1,204,232     $1,173,032
           Measurement and Control                                                         606,197        636,025        705,093
           Optical Technologies                                                            211,758        258,640        323,888
           Intersegment (a)                                                                (12,250)       (12,542)       (13,803)
                                                                                        ----------     ----------     ----------

                                                                                        $2,097,135     $2,086,355     $2,188,210
                                                                                        ==========     ==========     ==========

       Income from Continuing Operations Before Provision for Income Taxes,
        Minority Interest, and Cumulative Effect of Change in Accounting
        Principle:
           Life and Laboratory Sciences (b)                                             $  182,589     $  172,910     $  100,970
           Measurement and Control (c)                                                      44,549         45,862         15,536
           Optical Technologies (d)                                                        (11,731)       (30,986)       (43,398)
           Intersegment                                                                        323            449           (290)
                                                                                        ----------     ----------     ----------

             Total Operating Income - Segments                                             215,730        188,235         72,818
           Corporate/Other (e)                                                               2,903         98,259           (439)
                                                                                        ----------     ----------     ----------

                                                                                        $  218,633     $  286,494     $   72,379
                                                                                        ==========     ==========     ==========

       Total Assets:
           Life and Laboratory Sciences                                                 $2,119,851     $1,719,544     $1,591,948
           Measurement and Control                                                         894,772        982,224      1,137,502
           Optical Technologies                                                            277,909        307,416        391,257
           Corporate (f)                                                                    96,437        642,291        704,363
                                                                                        ----------     ----------     ----------

                                                                                        $3,388,969     $3,651,475     $3,825,070
                                                                                        ==========     ==========     ==========


<
                                      F-27
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 3.    Business Segment and Geographical Information (continued)

                                                                                           2003           2002           2001
                                                                                        ----------     ----------     ----------
                                                                                                     (In thousands)

       Depreciation:
           Life and Laboratory Sciences                                                 $   23,211     $   21,616     $   22,274
           Measurement and Control                                                          10,698         11,065         14,155
           Optical Technologies                                                             11,523         12,496         12,899
           Corporate                                                                         3,212          2,880          2,100
                                                                                        ----------     ----------     ----------

                                                                                        $   48,644     $   48,057     $   51,428
                                                                                        ==========     ==========     ==========

       Amortization:
           Life and Laboratory Sciences                                                 $    6,591     $    5,630     $   30,694
           Measurement and Control                                                           2,446          1,613         13,166
           Optical Technologies                                                                867          1,076          3,233
                                                                                        ----------     ----------     ----------

                                                                                        $    9,904     $    8,319     $   47,093
                                                                                        ==========     ==========     ==========

       Capital Expenditures:
           Life and Laboratory Sciences                                                 $   26,033     $   25,596     $   29,052
           Measurement and Control                                                           9,320         10,759         15,155
           Optical Technologies                                                              4,735         12,892         34,586
           Corporate                                                                         6,048          1,965          6,006
                                                                                        ----------     ----------     ----------

                                                                                        $   46,136     $   51,212     $   84,799
                                                                                        ==========     ==========     ==========

       Geographical Information
       Revenues (g):
           United States                                                                $1,308,670     $1,379,673     $1,480,033
           England                                                                         297,395        293,643        315,033
           Germany                                                                         286,455        244,396        184,175
           Other                                                                           638,530        567,649        520,133
           Transfers among geographical areas (a)                                         (433,915)      (399,006)      (311,164)
                                                                                        ----------     ----------     ----------

                                                                                        $2,097,135     $2,086,355     $2,188,210
                                                                                        ==========     ==========     ==========

       Long-lived Assets (h):
           United States                                                                $  165,095     $  168,044     $  199,111
           England                                                                          23,604         27,544         24,613
           Germany                                                                          30,548         27,319         21,358
           Other                                                                            93,336         57,785         46,840
                                                                                        ----------     ----------     ----------

                                                                                        $  312,583     $  280,692     $  291,922
                                                                                        ==========     ==========     ==========

       Export Sales Included in United States Revenues Above (i)                        $  390,535     $  376,142     $  386,799
                                                                                        ==========     ==========     ==========



<
                                      F-28
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 3.    Business Segment and Geographical Information (continued)

       (a) Intersegment sales and transfers among geographical areas are
           accounted for at prices that are representative of transactions with
           unaffiliated parties.
       (b) Includes restructuring and other costs, net, of $21.8 million, $19.2
           million, and $47.9 million in 2003, 2002, and 2001, respectively.
       (c) Includes restructuring and other costs, net, of $10.3 million, $13.6
           million, and $46.0 million in 2003, 2002, and 2001, respectively.
       (d) Includes restructuring and other costs, net, of $11.6 million, $25.9
           million, and $53.3 million in 2003, 2002, and 2001, respectively.
       (e) Includes corporate general and administrative expenses and other
           income and expense. Includes corporate restructuring and other costs
           of $5.1 million, $2.6 million, and $11.5 million at the company's
           corporate offices in 2003, 2002, and 2001, respectively. Other income
           and expense includes $29.0 million, $109.9 million, and $33.4 million
           of income in 2003, 2002, and 2001, respectively, primarily related to
           the company's investment in FLIR and Thoratec (Note 4), and other
           expense of $2.8 million for impairment of investments in 2001
           (Note 15).
       (f) Primarily cash and cash equivalents, short- and long-term
           investments, and property and equipment at the company's corporate
           office.
       (g) Revenues are attributed to countries based on selling location.
       (h) Includes property, plant, and equipment, net, and other long-term
           tangible assets.
       (i) In general, export revenues are denominated in U.S. dollars.

Note 4.    Other Income, Net

       The components of other income, net, in the accompanying statement of
operations are as follows:

                                                                                               2003          2002          2001
                                                                                             --------      --------      --------
                                                                                                       (In thousands)

       Interest Income                                                                       $ 19,673      $ 47,874      $ 68,490
       Interest Expense (Note 10)                                                             (18,676)      (40,916)      (71,769)
       Gain on Investments, Net (Notes 9 and 15)                                               35,536       123,134        35,579
       Equity in Earnings of Unconsolidated Subsidiaries                                          490         2,533         4,699
       Other Items, Net (Note 10)                                                              (3,164)       (1,584)        1,178
                                                                                             --------      --------      --------

                                                                                             $ 33,859      $131,041      $ 38,177
                                                                                             ========      ========      ========

</TABLE>

       As a result of a divestiture, the company acquired shares of Thoratec
Corporation (Note 16). The company sold 2,000,000 shares of Thoratec common
stock during 2003 and realized a gain of $16.3 million. At December 31, 2003,
the company owned 5.7 million shares of Thoratec with a fair market value of $74
million.

       The company acquired 4,162,000 shares of FLIR Systems, Inc. common stock
in connection with a business acquired in 1999. FLIR designs, manufactures, and
markets thermal imaging and broadcast camera systems that detect infrared
radiation or heat emitted directly by all objects and materials. Through the
first quarter of 2002, the company accounted for its investment in FLIR using
the equity method with a one quarter lag to ensure the availability of FLIR's
operating results in time to enable the company to include its pro-rata share of
FLIR's results with its own. In December 2001, following a sale of shares, the
company's ownership of FLIR fell below 20%. In the first quarter of 2002, the
company recorded $2.1 million of income as its share of FLIR's fourth quarter
2001 earnings through the date on which the company's ownership fell below 20%.
Effective March 30, 2002, the company accounted for its investment in FLIR as an
available-for-sale security and no longer recorded its share of FLIR's earnings.


<
                                      F-29
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 4.    Other Income, Net (continued)

As an available-for-sale security, the investment in FLIR was recorded at quoted
market value in current assets, and unrealized gains or losses were recorded as
a part of accumulated other comprehensive items in the accompanying 2002 balance
sheet.

       The company sold 334,175, 2,669,700, and 1,150,000 shares of FLIR common
stock during 2003, 2002, and 2001, respectively, and realized gains of $13.7
million, $111.4 million, and $35.1 million, respectively. These gains included
$3.9 million, $31.0 million, and $14.2 million in 2003, 2002, and 2001,
respectively, from the recovery of amounts written down in prior years when the
company deemed an impairment of its investment in FLIR to be other than
temporary. At December 31, 2003, the company no longer owned shares of FLIR.

       Summary unaudited financial information for FLIR for the 12 months ended
September 30, 2001, includes revenues of $206.6 million, cost of revenues of
$95.6 million, gross profit of $111.0 million, and net earnings of $18.2
million.

Note 5.    Employee Benefit Plans

Stock-based Compensation Plans

Stock Option Plans
------------------

       The company has stock-based compensation plans for its key employees,
directors, and others. These plans permit the grant of a variety of stock and
stock-based awards, including restricted stock, stock options, stock bonus
shares, or performance-based shares, as determined by the compensation committee
of the company's Board of Directors (the Board Committee) or in limited
circumstances, by the company's option committee, which consists of its chief
executive officer. Generally, options granted prior to July 2000 under these
plans are exercisable immediately, but shares acquired upon exercise are subject
to certain transfer restrictions and the right of the company to repurchase the
shares at the exercise price upon certain events, primarily termination of
employment. The restrictions and repurchase rights lapse over periods ranging
from 0-10 years, depending on the term of the option, which may range from 3-12
years. Options granted in or after July 2000 under these plans generally vest
over three to five years, assuming continued employment with certain exceptions.
Upon a change in control of the company, all options, regardless of grant date,
become immediately exercisable and shares acquired upon exercise cease to be
subject to transfer restrictions and the company's repurchase rights.
Nonqualified options are generally granted at fair market value, although
options may be granted at a price at or above 85% of the fair market value on
the date of grant. Incentive stock options must be granted at not less than the
fair market value of the company's stock on the date of grant. Stock options
have been granted at fair market value. The company also has a directors' stock
option plan that provides for the annual grant of stock options of the company
to outside directors. Options awarded under this plan prior to 2003 are
immediately exercisable and expire three to seven years after the date of grant.
Options awarded in 2003 vest over three years, assuming continued service on the
board and expire seven years after the date of grant.

       Following the completion of a cash tender offer in December 2001 for all
the shares of Spectra-Physics it did not previously own, the company completed a
short-form merger with Spectra-Physics in February 2002. Options to purchase
shares of Spectra-Physics became options to purchase 2,242,000 shares of Thermo
Electron common stock, which was accounted for in accordance with the
methodology set forth in FIN No. 44, "Accounting for Certain Transactions
Involving Stock Compensation" (Note 16).

       In August and November 2001, the company distributed all of its shares of
two subsidiaries to the company's shareholders (Note 16). The intrinsic value of
the options issued under the company's employee stock plans prior to the
spinoffs was maintained following the spinoffs in accordance with the
methodology set forth in FIN No. 44. The data in the accompanying tables has
been adjusted to reflect the spinoffs. Options to purchase 908,000 shares of
company common stock held by employees of these businesses were cancelled on the
dates of the spinoffs. These employees received equivalent options in stock of
their respective business.

<
                                      F-30
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 5.    Employee Benefit Plans (continued)

       In 2003, 2002, and 2001, the company awarded to a number of key employees
75,000, 323,000, and 17,120 shares, respectively, of restricted company common
stock or restricted units that convert into an equivalent number of shares of
common stock assuming continued employment, with some exceptions. The awards had
an aggregate value of $1.6 million, $6.5 million, and $0.4 million,
respectively. The awards generally vest over three years, assuming continued
employment, with some exceptions. Of the shares/units awarded in 2002, 112,000
units vested immediately but do not become shares of company common stock until
cessation of employment. The company recorded $2.6 million, $4.5 million, and
$3.7 million of compensation expense related to these awards in 2003, 2002, and
2001, respectively.

       A summary of the company's stock option activity is as follows:

<TABLE>
<CAPTION>
       <S>                                                 <C>         <C>          <C>         <C>          <C>        <C>

                                                                   2003                     2002                     2001
                                                           --------------------     --------------------     -------------------
                                                                       Weighted                 Weighted                Weighted
                                                           Number       Average     Number       Average     Number      Average
                                                               of      Exercise         of      Exercise         of     Exercise
                                                           Shares         Price     Shares         Price     Shares        Price
                                                           ------      --------     ------      --------     ------     --------
                                                                                 (Shares in thousands)

       Options Outstanding, Beginning of Year              22,472        $20.11     19,663        $17.78     24,579       $16.62
        Granted                                             1,534         18.82      5,322         19.69      3,086        22.00
        Assumed in merger with subsidiary (Note 16)             -             -      2,242         42.71          -            -
        Exercised                                          (5,200)        14.69     (2,049)        13.03     (4,258)       13.16
        Forfeited                                          (2,891)        25.21     (2,706)        26.46     (2,836)       19.27
        Cancelled due to spinoffs                               -             -          -             -       (908)       17.53
                                                           ------                   ------                   ------

       Options Outstanding, End of Year                    15,915        $20.83     22,472        $20.11     19,663       $17.78
                                                           ======        ======     ======        ======     ======       ======

       Options Exercisable                                  8,916        $21.57     11,391        $19.44     15,612       $16.83
                                                           ======        ======     ======        ======     ======       ======

       Options Available for Grant                          3,842                    3,667                    8,234
                                                           ======                   ======                   ======

       A summary of the status of the company's stock options at December 31, 2003, is as follows:

</TABLE>
<TABLE>
<CAPTION>
       <S>                                 <C>        <C>                         <C>                 <C>               <C>

                                                         Options Outstanding                             Options Exercisable
                                           -----------------------------------------------            --------------------------
                                                              Weighted            Weighted                              Weighted
                                           Number              Average             Average            Number             Average
       Range of                                of            Remaining            Exercise                of            Exercise
       Exercise Prices                     Shares     Contractual Life               Price            Shares               Price
       -----------------                   ------     ----------------            --------            ------            --------
                                                                          (Shares in thousands)

       $  3.49 - $ 11.00                    1,412            2.5 years              $ 9.30             1,109              $ 9.42
         11.01 -   19.00                    4,427            3.6 years               15.40             2,524               14.75
         19.01 -   21.00                    5,252            6.3 years               19.82             1,900               19.76
         21.01 -   30.00                    3,305            4.8 years               23.47             2,143               23.58
         30.01 -   40.00                      837            4.7 years               33.30               652               33.12
         40.01 -   70.00                      591            6.3 years               55.14               512               54.95
         70.01 -  196.48                       91            5.8 years               88.24                76               89.13
                                           ------                                                     ------

       $  3.49 - $196.48                   15,915            4.8 years              $20.83             8,916              $21.57
                                           ======                                                     ======

</TABLE>

<
                                      F-31
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 5.    Employee Benefit Plans (continued)

Employee Stock Purchase Plan
----------------------------

       Qualifying employees are eligible to participate in an employee stock
purchase plan sponsored by the company. Under this program, shares of the
company's common stock may be purchased at 85% of the lower of the fair market
value at the beginning or end of the purchase period, and the shares purchased
are subject to a one-year resale restriction. Shares are purchased through
payroll deductions of up to 10% of each participating employee's gross wages.
Effective with the 2002 plan year, the company changed the fiscal year-end of
its plan from October 31 to December 31. In February 2004 and 2003, the company
issued 185,000 and 147,000 shares, respectively, of its common stock for the
2003 and 2002 plan years. During 2001, the company issued 184,000 shares of its
common stock under this plan.

401(k) Savings Plan and Other Defined Contribution Plans

       The company's 401(k) savings plan covers the majority of the company's
eligible full-time U.S. employees. Contributions to the plan are made by both
the employee and the company. Company contributions are based on the level of
employee contributions.

       Certain of the company's subsidiaries offered retirement plans in lieu of
participation in the company's principal 401(k) savings plan. Company
contributions to these plans were based on formulas determined by the company.
As of December 31, 2003, these plans have been combined with the company's
principal 401(k) savings plan.

       For these plans, the company contributed and charged to expense $19.3
million, $18.8 million, and $18.0 million in 2003, 2002, and 2001, respectively.

Defined Benefit Pension Plans

       Several of the company's non-U.S. subsidiaries and one U.S. subsidiary
have defined benefit pension plans covering substantially all full-time
employees at those subsidiaries. Some of the plans are unfunded, as permitted
under the plans and applicable laws. Net periodic benefit costs for the plans in
aggregate included the following components:

<TABLE>
<CAPTION>
       <S>                                                                                     <C>           <C>          <C>

                                                                                                 2003          2002         2001
                                                                                               -------       -------      -------
                                                                                                         (In thousands)

       Service Cost                                                                            $ 3,749       $ 3,127      $ 3,732
       Interest Cost on Benefit Obligation                                                       8,696         7,318        6,230
       Expected Return on Plan Assets                                                           (6,890)       (7,476)      (7,536)
       Recognized Net Actuarial (Gain) Loss                                                      1,831           114          (64)
       Amortization of Unrecognized Initial Obligation and Prior Service Cost                      127            35           32
                                                                                               -------       -------      -------

                                                                                               $ 7,513       $ 3,118      $ 2,394
                                                                                               =======       =======      =======

</TABLE>

<
                                      F-32
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 5.    Employee Benefit Plans (continued)

       The activity under the company's defined benefit plans is as follows:

<TABLE>
<CAPTION>
       <S>                                                                                                <C>            <C>

                                                                                                            2003           2002
                                                                                                          --------       --------
                                                                                                              (In thousands)

       Change in Benefit Obligation:
        Benefit obligation, beginning of year                                                             $143,733       $117,472
        Service cost                                                                                         3,749          3,127
        Interest cost                                                                                        8,696          7,318
        Benefits paid                                                                                       (4,549)        (4,322)
        Actuarial loss                                                                                      12,790          7,521
        Currency translation                                                                                18,167         12,617
                                                                                                          --------       --------

        Benefit obligation, end of year                                                                    182,586        143,733
                                                                                                          --------       --------

       Change in Plan Assets:
        Fair value of plan assets, beginning of year                                                        90,288         98,567
        Company contributions                                                                                4,269          2,343
        Benefits paid                                                                                       (4,549)        (4,322)
        Actual return on plan assets                                                                        13,932        (14,268)
        Currency translation                                                                                 9,951          7,968
                                                                                                          --------       --------

        Fair value of plan assets, end of year                                                             113,891         90,288
                                                                                                          --------       --------

       Funded Status                                                                                       (68,695)       (53,445)
       Unrecognized Net Actuarial Loss                                                                      51,401         41,918
       Unrecognized Initial Obligation and Prior Service Cost                                                  401            103
                                                                                                          --------       --------

       Net Amount Recognized                                                                              $(16,893)      $(11,424)
                                                                                                          ========       ========

       Amounts Recognized in the Balance Sheet:
        Accrued pension liability                                                                         $(57,850)      $(42,948)
        Intangible asset                                                                                       401            103
        Accumulated other comprehensive items                                                               40,556         31,421
                                                                                                          --------       --------

       Net Amount Recognized                                                                              $(16,893)      $(11,424)
                                                                                                          ========       ========

       The aggregate projected benefit obligation, accumulated benefit
obligation, and fair value of plan assets for the pension plans with accumulated
benefit obligations in excess of plan assets were $182.6 million, $169.3
million, and $113.9 million, respectively, at year-end 2003, and $143.7 million,
$129.9 million, and $90.3 million, respectively, at year-end 2002. For the
company's U.S.-based plan, plan assets totaled $16.6 million at the measurement
date of December 31, 2003, and the expected long-term rate of return on assets
for 2003 was 9%.

<
                                      F-33
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 5.    Employee Benefit Plans (continued)

       The weighted average rates used to determine the net periodic benefit
costs were as follows:

                                                                                                 2003         2002           2001
                                                                                                 ----         ----           ----

       Discount Rate                                                                             6.0%         6.2%           5.9%
       Rate of Increase in Salary Levels                                                         3.7%         3.9%           4.2%
       Expected Long-term Rate of Return on Assets                                               7.3%         7.5%           7.2%

       The weighted average rates used to determine benefit obligations at the respective year ends were as follows:

                                                                                                              2003           2002
                                                                                                              ----           ----

       Discount Rate                                                                                          5.6%           6.0%
       Rate of Increase in Salary Levels                                                                      3.7%           3.7%

       In determining the expected long-term rate of return on plan assets, the
company considers the relative weighting of plan assets, the historical
performance of total plan assets and individual asset classes, and economic and
other indicators of future performance. In addition, the company may consult
with and consider the opinions of financial and other professionals in
developing appropriate return benchmarks.

       For the company's U.S.-based plan, the asset allocation at the respective year ends by asset category was as follows:

                                                                                                              2003           2002
                                                                                                              ----           ----

       Equity Securities                                                                                       60%            55%
       Debt Securities                                                                                         39%            45%
       Real Estate                                                                                               -              -
       Other                                                                                                    1%              -
                                                                                                              ----           ----

                                                                                                              100%           100%
                                                                                                              ====           ====

</TABLE>

       Asset management objectives include maintaining an adequate level of
diversification to reduce interest rate and market risk and providing adequate
liquidity to meet immediate and future benefit payment requirements.

       The company expects to make a contribution to its U.S.-based plan in 2004
of approximately $1.2 million.

Note 6.    Income Taxes

       The components of income from continuing operations before provision for
income taxes, minority interest, and cumulative effect of change in accounting
principle are as follows:

<TABLE>
<CAPTION>
       <S>                                                                                 <C>            <C>            <C>

                                                                                             2003           2002           2001
                                                                                           --------       --------       --------
                                                                                                     (In thousands)

       U.S.                                                                                $132,142       $208,679       $  7,443
       Non-U.S.                                                                              86,491         77,815         64,936
                                                                                           --------     ----------       --------

                                                                                           $218,633       $286,494       $ 72,379
                                                                                           ========       ========       ========


<
                                      F-34
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 6.    Income Taxes (continued)

       The components of the provision for income taxes of continuing operations
are as follows:

                                                                                             2003           2002           2001
                                                                                           --------       --------       --------
                                                                                                       (In thousands)
       Currently Payable:
        Federal                                                                            $ 30,768       $ 53,632       $ 11,754
        Non-U.S.                                                                             31,749         24,115         23,572
        State                                                                                 1,172          1,837          3,318
                                                                                           --------       --------       --------

                                                                                             63,689         79,584         38,644
                                                                                           --------       --------       --------

       Net Deferred (Prepaid):
        Federal                                                                             (19,934)        11,086        (12,787)
        Non-U.S.                                                                              1,621          1,429          2,667
        State                                                                                   560            366           (958)
                                                                                           --------       --------       --------

                                                                                            (17,753)        12,881        (11,078)
                                                                                           --------       --------       --------

                                                                                           $ 45,936       $ 92,465       $ 27,566
                                                                                           ========       ========       ========

       The total provision for income taxes included in the accompanying statement of operations is as follows:

                                                                                             2003           2002           2001
                                                                                           --------       --------       --------
                                                                                                       (In thousands)

       Continuing Operations                                                               $ 45,936       $ 92,465       $ 27,566
       Gain/Loss on Disposal of Discontinued Operations                                       8,141        (21,008)       (22,741)
       Cumulative Effect of Change in Accounting Principle                                        -              -           (663)
                                                                                           --------       --------       --------

                                                                                           $ 54,077       $ 71,457       $  4,162
                                                                                           ========       ========       ========

       The company receives a tax deduction upon the exercise of nonqualified
stock options by employees for the difference between the exercise price and the
market price of the underlying common stock on the date of exercise. The
provision for income taxes that is currently payable does not reflect $12.0
million, $6.7 million, and $9.5 million, of such benefits of the company that
have been allocated to capital in excess of par value in 2003, 2002, and 2001,
respectively.




<
                                      F-35
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 6.    Income Taxes (continued)

       The provision for income taxes in the accompanying statement of
operations differs from the provision calculated by applying the statutory
federal income tax rate of 35% to income from continuing operations before
provision for income taxes, minority interest, and cumulative effect of change
in accounting principle due to the following:

                                                                                             2003           2002           2001
                                                                                           --------       --------       --------
                                                                                                      (In thousands)

       Provision for Income Taxes at Statutory Rate                                        $ 76,522       $100,273       $ 25,333
       Increases (Decreases) Resulting From:
        Federal tax credits                                                                 (13,678)        (7,105)        (2,955)
        Non-U.S. tax rate and tax law differential                                          (12,747)         2,216         (1,017)
        Basis difference of businesses sold or terminated                                    (4,988)           206              -
        Foreign sales corporation/extraterritorial income exclusion                          (3,605)        (2,357)        (2,401)
        Losses not benefited in the year they occurred                                        2,224         (3,192)        (4,687)
        State income taxes, net of federal tax                                                1,126          1,432          1,577
        Nondeductible expenses                                                                1,102            927            926
        Amortization and write off of goodwill                                                    -            151         13,095
        Other, net                                                                              (20)           (86)        (2,305)
                                                                                           --------       --------       --------

                                                                                           $ 45,936       $ 92,465       $ 27,566
                                                                                           ========       ========       ========


       Net deferred tax asset in the accompanying balance sheet consists of the following:

</TABLE>
<TABLE>
<CAPTION>
       <S>                                                                                                <C>            <C>

                                                                                                            2003           2002
                                                                                                          --------       --------
                                                                                                              (In thousands)

       Deferred Tax Asset (Liability):
        Net operating loss and credit carryforwards                                                       $121,449       $ 74,642
        Reserves and accruals                                                                               81,297         49,408
        Inventory basis difference                                                                          29,718         31,308
        Accrued compensation                                                                                 8,229         19,506
        Depreciation and amortization                                                                      (16,414)        (5,252)
        Available-for-sale investments                                                                     (20,132)       (15,162)
        Other, net                                                                                          (2,118)           734
                                                                                                          --------       --------

                                                                                                           202,029        155,184
        Less: Valuation allowance                                                                           75,253         73,259
                                                                                                          --------       --------

                                                                                                          $126,776       $ 81,925
                                                                                                          ========       ========

</TABLE>

       The company estimates the degree to which tax assets and loss
carryforwards will result in a benefit based on expected profitability by tax
jurisdiction and provides a valuation allowance for tax assets and loss
carryforwards that it believes will more likely than not go unused. The
valuation allowance primarily relates to the uncertainty surrounding the
realization of acquired tax loss and credit carryforwards. Any tax benefit
resulting from the use of acquired loss carryforwards will be used to reduce
goodwill.


<
                                      F-36
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 6.    Income Taxes (continued)

       At December 31, 2003, the company had federal, state, and non-U.S. net
operating loss carryforwards of $4 million, $352 million, and $193 million,
respectively. Use of the carryforwards is limited based on the future income of
certain subsidiaries. The federal and state net operating loss carryforwards
expire in the years 2004 through 2021. Of the non-U.S. net operating loss
carryforwards, $15 million expire in the years 2004 through 2017, and the
remainder do not expire.

       A provision has not been made for U.S. or additional non-U.S. taxes on
$617 million of undistributed earnings of international subsidiaries that could
be subject to taxation if remitted to the U.S. because the company plans to keep
these amounts permanently reinvested overseas except for instances where the
company can remit such earnings to the U.S. without an associated net tax cost.

Note 7.    Earnings (Loss) per Share

<TABLE>
<CAPTION>
       <S>                                                                                <C>            <C>             <C>

                                                                                            2003           2002            2001
                                                                                          --------       --------        --------
                                                                                                  (In thousands except
                                                                                                   per share amounts)

       Income from Continuing Operations Before Cumulative Effect of Change in
        Accounting Principle                                                              $172,697       $194,360        $ 50,653
       Gain (Loss) on Disposal of Discontinued Operations, Net                              27,312        115,370         (50,440)
       Cumulative Effect of Change in Accounting Principle                                       -              -            (994)
                                                                                          --------       --------        --------

       Net Income (Loss) for Basic Earnings per Share                                      200,009        309,730            (781)
       Effect of Convertible Debentures                                                      4,830         13,986               -
                                                                                          --------       --------        --------

       Income (Loss) Available to Common Shareholders, as Adjusted for Diluted
        Earnings per Share                                                                $204,839       $323,716        $   (781)
                                                                                          --------       --------        --------

       Basic Weighted Average Shares                                                       162,713        168,572         180,560
       Effect of:
        Convertible debentures                                                               5,737         15,952             463
        Stock options                                                                        2,085          2,068           2,893
        Contingently issuable shares                                                           195             19               -
                                                                                          --------       --------        --------

       Diluted Weighted Average Shares                                                     170,730        186,611         183,916
                                                                                          --------       --------        --------


<
                                      F-37
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 7.    Earnings (Loss) per Share (continued)

                                                                                            2003           2002            2001
                                                                                          --------       --------        --------
                                                                                                  (In thousands except
                                                                                                   per share amounts)

       Basic Earnings (Loss) per Share:
        Continuing operations before cumulative effect of change in accounting
           principle                                                                      $   1.06        $  1.15        $    .28
        Discontinued operations                                                                .17            .68            (.28)
        Cumulative effect of change in accounting principle                                      -              -            (.01)
                                                                                          --------       ---------       --------

                                                                                          $   1.23       $   1.84        $      -
                                                                                          ========       ========        ========

       Diluted Earnings (Loss) per Share:
        Continuing operations before cumulative effect of change in accounting
           principle                                                                      $   1.04       $   1.12        $    .28
        Discontinued operations                                                                .16            .62            (.27)
        Cumulative effect of change in accounting principle                                      -              -            (.01)
                                                                                          --------       --------        --------

                                                                                          $   1.20       $   1.73        $      -
                                                                                          ========       ========        ========

</TABLE>

       Options to purchase 6,678,000, 10,786,000, and 4,755,000 shares of common
stock were not included in the computation of diluted earnings (loss) per share
for 2003, 2002, and 2001, respectively, because the options' exercise prices
were greater than the average market price for the common stock and their effect
would have been antidilutive.

       The computation of diluted earnings per share for 2003 and 2002 excludes
the effect of assuming the conversion of the company's 4 3/8% subordinated
convertible debentures convertible at $111.83 per share because the effect would
be antidilutive. These debentures were no longer outstanding as of December 31,
2003, having previously been redeemed. The computation of diluted earnings
(loss) per share for 2001 excludes the effect of all convertible debentures
except the company's noninterest-bearing subordinated convertible debentures
because the effect would be antidilutive.

Note 8.    Comprehensive Income

       Comprehensive income combines net income (loss) and other comprehensive
items. Other comprehensive items represents certain amounts that are reported as
components of shareholders' equity in the accompanying balance sheet, including
currency translation adjustments, unrealized gains and losses, net of tax, on
available-for-sale investments and hedging instruments, and minimum pension
liability adjustment.

       Accumulated other comprehensive items in the accompanying balance sheet
consists of the following:

<TABLE>
<CAPTION>
       <S>                                                                                               <C>             <C>

                                                                                                           2003            2002
                                                                                                         --------        --------
                                                                                                            (In thousands)

       Cumulative Translation Adjustment                                                                 $ 83,263        $(41,448)
       Net Unrealized Gains on Available-for-sale Investments                                              31,885          28,229
       Net Unrealized Losses on Hedging Instruments                                                        (2,523)         (1,490)
       Minimum Pension Liability Adjustment (net of tax benefit of $12,259 and $9,426)                    (28,297)        (21,995)
                                                                                                         --------        --------

                                                                                                         $ 84,328        $(36,704)
                                                                                                         ========        ========

</TABLE>

<
                                      F-38
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 8.    Comprehensive Income (continued)

       Comprehensive income in 2002 excludes the effect of unrealized gains of
$111 million that existed at the date the company reclassified equity interests
in FLIR and Thoratec to available-for-sale investments (Notes 4 and 16).

       The change in unrealized gains (losses) on available-for-sale
investments, a component of other comprehensive items in the accompanying
statement of comprehensive income and shareholders' equity, includes the
following:

<TABLE>
<CAPTION>
       <S>                                                                                <C>            <C>             <C>

                                                                                            2003           2002            2001
                                                                                          --------       --------        --------
                                                                                                      (In thousands)

       Unrealized Holding Gains (Losses) Arising During the Year (net of
        income tax provision (benefit) of $14,407, $(22,067), and $12,136)                $ 26,754       $(34,481)       $ 21,077
       Reclassification Adjustment for (Gains) Losses Included in Net
        Income/Loss (net of income tax provision (benefit) of $(1,366),
        $15,746, and $505)                                                                   1,441        (31,413)           (757)
                                                                                          --------       --------        --------

       Net Unrealized Gains (Losses) (net of income tax provision (benefit)
        of $15,773, $(37,813), and $11,631)                                               $ 28,195       $(65,894)       $ 20,320
                                                                                          ========       ========        ========

       The change in unrealized gains (losses) on hedging instruments, a component of other comprehensive items in the accompanying
statement of comprehensive income and shareholders' equity, includes the following:

                                                                                            2003           2002            2001
                                                                                          --------       --------        --------
                                                                                                      (In thousands)

       Unrealized Holding Gains (Losses) Arising During the Year (net of income
        tax provision (benefit) of $(2,137), $(1,794), and $2,861)                        $ (4,261)      $ (2,852)       $  4,330
       Reclassification Adjustment for (Gains) Losses Included in Net
        Income/Loss (net of income tax provision (benefit) of $(1,686), $15,
        and $(1,995))                                                                        3,228             24          (2,992)
                                                                                          --------       --------        --------

       Net Unrealized Gains (Losses) (net of income tax provision (benefit)
        of $(451), $(1,779), and $866)                                                    $ (1,033)      $ (2,828)       $  1,338
                                                                                          ========       ========        ========

</TABLE>


<
                                      F-39
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 9.    Available-for-sale Investments

       The aggregate market value, cost basis, and gross unrealized gains and
losses of short-term available-for-sale investments by major security type are
as follows:

<TABLE>
<CAPTION>
       <S>                                                           <C>              <C>            <C>              <C>

                                                                                                          Gross            Gross
                                                                       Market             Cost       Unrealized       Unrealized
                                                                        Value            Basis            Gains           Losses
                                                                     --------         --------       ----------       ----------
                                                                                             (In thousands)

       2003
       Corporate Bonds and Notes                                     $ 18,638         $ 18,578         $     60         $      -
       Equity Investments                                              95,688           46,695           48,993                -
                                                                     --------         --------         --------         --------

                                                                     $114,326         $ 65,273         $ 49,053         $      -
                                                                     ========         ========         ========         ========

       2002
       Corporate Bonds and Notes                                     $431,222         $424,681         $  6,731         $   (190)
       Equity Investments                                             105,208           68,321           37,138             (251)
                                                                     --------         --------         --------         --------

                                                                     $536,430         $493,002         $ 43,869         $   (441)
                                                                     ========         ========         ========         ========

</TABLE>

       Short-term available-for-sale investments in the accompanying 2003
balance sheet include equity securities of $95.7 million and debt securities of
$18.6 million with contractual maturities of one year or less. Actual maturities
may differ from contractual maturities as a result of the company's intent to
sell these securities prior to maturity.

       The cost of available-for-sale investments that were sold was based on
specific identification in determining realized gains and losses recorded in the
accompanying statement of operations. The net gain on the sale of
available-for-sale investments resulted from gross realized gains of $38.2
million, $126.6 million, and $5.0 million, and gross realized losses of $2.7
million, $3.5 million, and $3.7 million, in 2003, 2002, and 2001, respectively.



<
                                      F-40
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 10.   Long-term Obligations and Other Financing Arrangements

<TABLE>
<CAPTION>
       <S>                                                                                                <C>            <C>

                                                                                                            2003           2002
                                                                                                          --------       --------
                                                                                                            (In thousands except
                                                                                                             per share amounts)

       7 5/8% Senior Notes, Due 2008                                                                      $137,874       $141,032
       3 1/4% Subordinated Convertible Debentures, Due 2007, Convertible at $41.84 per Share                77,234         78,048
       4% Subordinated Convertible Debentures, Due 2005, Convertible at $35.77 per Share
        (called for redemption in July 2003)                                                                     -        226,501
       4 3/8% Subordinated Convertible Debentures, Due 2004, Convertible at $111.83 per Share
        (called for redemption in April 2003)                                                                    -         71,873
       Noninterest-bearing Subordinated Convertible Debentures, Due 2003, Convertible at $61.67
        per Share                                                                                                -         31,320
       2 7/8% Subordinated Convertible Debentures, Due 2003, Convertible at $28.16 per Share                     -         11,536
       Other                                                                                                20,282          8,175
                                                                                                          --------       --------

                                                                                                           235,390        568,485
       Less: Current Maturities                                                                              5,881        117,144
                                                                                                          --------       --------

                                                                                                          $229,509       $451,341
                                                                                                          ========       ========

</TABLE>

       As a result of the spinoffs to shareholders discussed in Note 16, the
conversion price of each of the company's convertible debentures was reduced in
2001 to approximately 85% of the conversion price at December 30, 2000, in
accordance with the terms of the convertible debentures.

       The annual requirements for long-term obligations are as follows (in
thousands):

<TABLE>
<CAPTION>
       <S>                                                                                                               <C>

       2004                                                                                                              $  5,881
       2005                                                                                                                 1,803
       2006                                                                                                                 1,637
       2007                                                                                                                78,393
       2008                                                                                                               139,089
       2009 and thereafter                                                                                                  8,587
                                                                                                                         --------

                                                                                                                         $235,390
                                                                                                                         ========

</TABLE>

       See Note 13 for fair value information pertaining to the company's
long-term obligations.

       Short-term obligations and current maturities of long-term obligations in
the accompanying balance sheet included $39.9 million and $75.4 million at
year-end 2003 and 2002, respectively, of short-term bank borrowings and
borrowings under lines of credit of certain of the company's subsidiaries. The
weighted average interest rate for these borrowings was 1.5% and 2.3% at
year-end 2003 and 2002, respectively. Unused lines of credit for non-U.S.
subsidiaries were $205 million as of year-end 2003. The unused lines of credit
generally provide for short-term unsecured borrowings at various interest rates.
In addition, the company has facilities of $250 million discussed below.

       In 2003 and 2002, the company redeemed the convertible debentures
discussed below with the objective of reducing interest expense. The redemption
price was 100% of the principal amount of the debentures plus accrued interest.
In 2003, the company redeemed all of its outstanding 4 3/8% subordinated
convertible debentures due 2004 and 4% subordinated convertible debentures due
2005. The principal amounts redeemed for the 4 3/8% and 4% debentures were $70.9
million and $197.1 million, respectively.

<
                                      F-41
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 10.   Long-term Obligations and Other Financing Arrangements (continued)

       In 2002, the company redeemed all of its outstanding 4 1/2% senior
convertible debentures due 2003, 4 1/4% and 4 5/8% subordinated convertible
debentures due 2003, and 4 7/8% subordinated convertible debentures due 2004.
The principal amounts redeemed for the 4 1/2%, 4 1/4%, 4 5/8%, and 4 7/8%
debentures were $121.1 million, $398.4 million, $57.9 million, and $13.3
million, respectively. Redemptions and repurchases of subordinated convertible
debentures resulted in charges of $1.0 million and $1.5 million in 2003 and
2002, respectively, and a gain of $1.7 million in 2001, recorded as other
income, net, in the accompanying statement of operations.

       In connection with the 2002 debt redemption discussed above, the company
entered into securities-lending agreements with third parties under which the
company borrowed funds for short-term needs. Borrowings were collateralized by
available-for-sale investments. As of December 28, 2002, the company had
outstanding borrowings of $292.0 million under these arrangements, with
maturities between January 2003 and June 2003 and a weighted average interest
rate of 1.87%. The proceeds of the borrowings were used to partially fund the
2002 debt redemptions discussed above. The company had pledged $306.6 million of
available-for-sale securities in the accompanying 2002 balance sheet as
collateral for such borrowings. The company had no borrowings outstanding under
this arrangement as of December 31, 2003, as it had expired.

       In December 2002, the company entered into revolving credit agreements,
as amended, with a bank group that provide for up to $250 million of unsecured
borrowings. These arrangements consist of a 364-day revolving credit facility of
$125 million that will expire in December 2004, and a three-year, $125 million
revolving credit facility that will expire in December 2005. The agreements call
for interest at either a LIBOR-based rate or a rate based on the prime lending
rate of the agent bank, at the company's option. The rate at December 31, 2003,
was 1.90% under the more favorable of the two rates. The company has agreed to
certain financial covenants, including interest coverage and debt-to-capital
ratios. At December 31, 2003, no borrowings were outstanding. The company may
use the credit facilities for working capital needs and possible acquisitions.

       During 2002, the company entered into interest-rate swap arrangements for
its $128.7 million principal amount 7 5/8% senior notes, due in 2008, with the
objective of reducing interest costs. The arrangements provide that the company
will receive a fixed interest rate of 7 5/8%, and will pay a variable rate of
90-day LIBOR plus 2.19% (3.38% as of December 31, 2003). The swaps have terms
expiring at the maturity of the debt. The swaps are designated as fair-value
hedges and as such, are carried at fair value, which resulted in an increase in
other long-term assets and long-term debt of $9.2 million at December 31, 2003,
and $12.3 million at December 28, 2002. The swap arrangements are with different
counterparties than the holders of the underlying debt. Management believes that
any credit risk associated with the swaps is remote based on the
creditworthiness of the financial institutions issuing the swaps.

Note 11.   Commitments and Contingencies

Operating Leases

       The company leases portions of its office and operating facilities under
various operating lease arrangements. Income from continuing operations includes
expense from operating leases of $40.1 million, $36.0 million, and $43.9 million
in 2003, 2002, and 2001, respectively. Future minimum payments due under
noncancellable operating leases at December 31, 2003, are $37.8 million in 2004,
$30.9 million in 2005, $23.3 million in 2006, $17.1 million in 2007, $13.8
million in 2008, and $87.8 million in 2009 and thereafter. Total future minimum
lease payments are $210.7 million.

<
                                      F-42
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 11.   Commitments and Contingencies (continued)

Purchase Obligations

       At December 31, 2003, the company had outstanding noncancellable purchase
obligations, principally for inventory purchases, totaling $68.9 million.

Letters of Credit and Guarantees

       Outstanding letters of credit and bank guarantees totaled $45.8 million
at December 31, 2003, including $3.7 million for businesses that have been sold.
The expiration of these credits and guarantees ranges through 2013 for existing
businesses and through 2005 for businesses that have been sold.

       Outstanding surety bonds totaled $24.8 million at December 31, 2003,
including $20.8 million for businesses that have been sold. The expiration of
these bonds ranges through 2010 for existing businesses and primarily through
2009 for businesses that have been sold.

       The letters of credit, bank guarantees, and surety bonds principally
secure performance obligations, and allow the holder to draw funds up to the
face amount of the letter of credit, bank guarantee, or bond if the applicable
business unit does not perform as contractually required. With respect to
letters of credit, guarantees, and surety bonds that were issued for businesses
that were sold, the buyer is obligated to indemnify the company in the event
such letters of credit and/or surety bonds are drawn.

       The company also has an outstanding guarantee of $0.5 million at December
31, 2003, that relates to the third-party indebtedness of an equity investee.
The guarantee carries no expiration.

       In connection with the sale of businesses of the company, the buyers have
assumed certain contractual obligations of such businesses and have agreed to
indemnify the company with respect to those assumed liabilities. In the event a
third party to a transferred contract does not recognize the transfer of
obligations or a buyer defaults on its obligations under the transferred
contract, the company could be liable to the third party for such obligations.
However, in such event, the company would be entitled to indemnification by the
buyer.

Indemnifications

       In conjunction with certain transactions, primarily divestitures, the
company has agreed to indemnify the other parties with respect to certain
liabilities related to the businesses that were sold or leased properties that
were abandoned (e.g., retention of certain environmental, tax, employee, and
product liabilities). The scope and duration of such indemnity obligations vary
from transaction to transaction. Where appropriate, an obligation for such
indemnifications is recorded as a liability. Generally, a maximum obligation
cannot be reasonably estimated. Other than obligations recorded as liabilities
at the time of divestiture, historically the company has not made significant
payments for these indemnifications.

       In connection with the company's efforts to reduce the number of
facilities that it occupies, the company has vacated some of its leased
facilities or sublet them to third parties. When the company sublets a facility
to a third party, it remains the primary obligor under the master lease
agreement with the owner of the facility. As a result, if a third party vacates
the sublet facility, the company would be obligated to make lease or other
payments under the master lease agreement. The company believes that the
financial risk of default by sublessors is individually and in the aggregate not
material to the company's financial position or results of operations.


<
                                      F-43
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 11.   Commitments and Contingencies (continued)

       In connection with the sale of products in the ordinary course of
business, the company often makes representations affirming, among other things,
that its products do not infringe on the intellectual property rights of others
and agrees to indemnify customers against third-party claims for such
infringement. The company has not been required to make material payments under
such provisions.

Litigation and Related Contingencies

Continuing Operations
---------------------

       The company has been named a defendant, along with many other companies,
in a patent-infringement lawsuit brought by the Lemelson Medical, Education &
Research Foundation, L.P. The suit asserts that products manufactured, used, or
sold by the defendants infringe one or more patents related to methods of
machine vision or computer-image analysis. The Lemelson action seeks damages,
including enhanced damages for alleged willful infringement, attorney's fees,
and injunctive relief.

       The company intends to vigorously defend this matter. In the opinion of
management, an unfavorable outcome could have a material adverse effect on the
company's financial position as well as its results of operations and cash flows
for a particular quarter or annual period.

Discontinued Operations
-----------------------

       During 2002, the company settled a patent-infringement matter that
Fischer Imaging Corporation had brought against the company's former Trex
Medical subsidiary. The company sold Trex Medical in 2000, but retained this
obligation as a term of the sale. Under the settlement, the company paid Fischer
$25 million and agreed to pay an additional $7.2 million over eight years. The
portion of the settlement that was paid was charged against a reserve
established for this matter. The balance of the amount to be paid will also be
charged against the reserve as paid.

       The company's continuing and discontinued operations are a defendant in a
number of other pending legal proceedings incidental to present and former
operations. The company does not expect the outcome of these proceedings, either
individually or in the aggregate, to have a material adverse effect on its
financial position, results of operations, or cash flows.

Note 12.   Common and Preferred Stock

       At December 31, 2003, the company had reserved 21,917,949 unissued shares
of its common stock for possible issuance under stock-based compensation plans
and for possible conversion of the company's convertible debentures.

       The company has 50,000 shares of authorized but unissued $100 par value
preferred stock.

       In 2002, the company restored 32,000,000 shares of common stock to
authorized but unissued status, which had been held in treasury stock.

       The company has distributed rights under a shareholder rights plan
adopted by the company's Board of Directors to holders of outstanding shares of
the company's common stock. Each right entitles the holder to purchase one
ten-thousandth of a share (a Unit) of Series B Junior Participating Preferred
Stock, $100 par value, at a purchase price of $250 per Unit, subject to
adjustment. The rights will not be exercisable until the earlier of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (an Acquiring Person) has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares of common
stock (the Stock Acquisition Date), or (ii) 10 business days following the
commencement of a tender offer or exchange offer for 15% or more of the
outstanding shares of common stock.

<
                                      F-44
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 12.   Common and Preferred Stock (continued)

       In the event that a person becomes the beneficial owner of 15% or more of
the outstanding shares of common stock, except pursuant to an offer for all
outstanding shares of common stock approved by at least a majority of the
members of the Board of Directors, each holder of a right (except for the
Acquiring Person) will thereafter have the right to receive, upon exercise, that
number of shares of common stock that equals the exercise price of the right
divided by one-half of the current market price of the common stock. In the
event that, at any time after any person has become an Acquiring Person, (i) the
company is acquired in a merger or other business combination transaction in
which the company is not the surviving corporation or its common stock is
changed or exchanged (other than a merger that follows an offer approved by the
Board of Directors), or (ii) 50% or more of the company's assets or earning
power is sold or transferred, each holder of a right (except for the Acquiring
Person) shall thereafter have the right to receive, upon exercise, the number of
shares of common stock of the acquiring company that equals the exercise price
of the right divided by one-half of the current market price of such common
stock.

       At any time until 10 days following the Stock Acquisition Date, the
company may redeem the rights in whole, but not in part, at a price of $.01 per
right (payable in cash or stock). The rights expire on January 29, 2006, unless
earlier redeemed or exchanged.

Note 13.   Fair Value of Financial Instruments

       The company's financial instruments consist mainly of cash and cash
equivalents, short-term available-for-sale investments, accounts receivable,
short-term obligations and current maturities of long-term obligations, accounts
payable, long-term obligations, forward currency-exchange contracts and, in
2002, a note receivable from Trimble (Note 2). The carrying amounts of cash and
cash equivalents, accounts receivable, short-term obligations and current
maturities of long-term obligations (excluding convertible obligations), and
accounts payable approximate fair value due to their short-term nature.

       Available-for-sale investments are carried at fair value in the
accompanying balance sheet. The fair values were determined based on quoted
market prices (Note 9).

       The carrying amount and fair value of the company's note receivable,
long-term obligations, and forward currency-exchange contracts are as follows:

<TABLE>
<CAPTION>
       <S>                                                                <C>             <C>            <C>             <C>

                                                                                    2003                           2002
                                                                          ------------------------       ------------------------
                                                                          Carrying            Fair       Carrying            Fair
                                                                            Amount           Value         Amount           Value
                                                                          --------        --------       --------        --------
                                                                                              (In thousands)

       Note Receivable                                                    $      -        $      -       $ 69,136        $ 70,002
                                                                          ========        ========       ========        ========

       Current Maturities of Convertible Obligations                      $      -        $      -       $114,729        $112,121
                                                                          ========        ========       ========        ========

       Long-term Obligations:
        Convertible obligations                                           $ 77,234        $ 76,269       $304,549        $292,138
        Other                                                              152,275         152,275        146,792         146,792
                                                                          --------        --------       --------        --------

                                                                          $229,509        $228,544       $451,341        $438,930
                                                                          ========        ========       ========        ========

       Forward Currency-exchange Contracts Payable                        $  2,795        $  2,795       $  1,111        $  1,111

</TABLE>

<
                                      F-45
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 13.   Fair Value of Financial Instruments (continued)

       The fair value of the note receivable was determined based on borrowing
rates available to companies of comparable creditworthiness at December 28,
2002.

       The fair value of long-term obligations was determined based on quoted
market prices and on borrowing rates available to the company at the respective
year ends.

       The notional amounts of forward currency-exchange contracts outstanding
totaled $131.1 million and $89.2 million at year-end 2003 and 2002,
respectively. The fair value of such contracts is the estimated amount that the
company would receive upon liquidation of the contracts, taking into account the
change in currency exchange rates.

Note 14.   Supplemental Cash Flow Information

<TABLE>
<CAPTION>
       <S>                                                                          <C>               <C>              <C>

                                                                                       2003              2002             2001
                                                                                    ---------         ---------        ---------
                                                                                                  (In thousands)
       Cash Paid For
        Interest                                                                    $  23,430         $  51,156        $  61,797
                                                                                    =========         =========        =========

        Income taxes                                                                $  33,029         $  64,309        $  44,822
                                                                                    =========         =========        =========

       Noncash Activities
        Fair value of assets of acquired businesses and product lines               $ 202,178         $  94,881        $  18,161
        Cash paid for acquired businesses and product lines                          (150,260)          (78,825)         (14,834)
                                                                                    ---------         ---------        ---------

             Liabilities assumed of acquired businesses and product lines           $  51,918         $  16,056        $   3,327
                                                                                    =========         =========        =========
</TABLE>

Note 15.   Restructuring and Other Costs, Net

2003

       In response to a continued downturn in markets served by the company and
in connection with the company's overall reorganization, restructuring actions
were initiated in 2003 in a number of business units to reduce costs and
redundancies, principally through headcount reductions and consolidation of
facilities. These charges totaled $48.8 million and are detailed by segment
below. The company expects to incur an additional $3 million of restructuring
costs, primarily in 2004, for charges associated with these actions that cannot
be recorded until incurred. The company believes that restructuring actions
undertaken in 2003 will be substantially completed in 2004.

       The company recorded net restructuring and other costs by segment for
2003 as follows:

<TABLE>
<CAPTION>
       <S>                                      <C>              <C>             <C>                  <C>               <C>

                                                  Life and
                                                Laboratory       Measurement          Optical
                                                  Sciences       and Control     Technologies         Corporate            Total
                                                ----------       -----------     ------------         ---------         --------
                                                                               (In thousands)

       Cost of Revenues                            $     -          $     71         $      -          $      -         $     71
       Restructuring and Other Costs, Net           21,808            10,214           11,559             5,128           48,709
                                                   -------          --------         --------          --------         --------

                                                   $21,808          $ 10,285         $ 11,559          $  5,128         $ 48,780
                                                   =======          ========         ========          ========         ========

</TABLE>

<
                                      F-46
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 15.   Restructuring and Other Costs, Net (continued)

       The components of net restructuring and other costs by segment are as
follows:

Life and Laboratory Sciences
----------------------------

       The Life and Laboratory Sciences segment recorded $21.8 million of net
restructuring and other charges in 2003. These charges included $18.8 million of
cash costs, principally associated with facility consolidations, including $9.8
million of severance for 415 employees across all functions; $4.2 million of
ongoing lease costs through 2006 for abandoned facilities described below; $1.5
million of employee-retention costs; and $3.3 million of other cash costs,
primarily relocation expenses. The charges for severance are net of reversals of
$1.5 million that the segment had provided prior to 2003 and were not required,
primarily due to employee attrition. The charges for abandoned facilities
included the consolidation of four manufacturing facilities in the United
States; the closure of a manufacturing facility in the United Kingdom, the
activities of which were transferred to a facility in the United States;
consolidation of distribution facilities in Japan; and revised estimates of
future lease costs for facilities in Europe that the segment provided prior to
2003. These charges are net of reversals of $1.0 million, which represents
revised estimates of future lease costs for facilities that the segment
abandoned prior to 2003. In addition, the segment recorded net charges of $3.4
million, primarily to write down the carrying value of fixed assets, primarily
buildings held for sale to estimated disposal value, offset by $0.4 million of
net gains, primarily from the sale of a product line.

Measurement and Control
-----------------------

       The Measurement and Control segment recorded $10.3 million of net
restructuring and other charges in 2003. The segment recorded charges to cost of
revenues of $0.1 million, primarily for the sale of inventories revalued at the
date of acquisition, and $10.2 million of other costs. These other costs
consisted of $10.3 million of cash costs, principally associated with facility
consolidations, including $6.8 million of severance for 164 employees across all
functions; $0.9 million of ongoing lease costs through 2007 for abandoned
facilities described below; $0.3 million of employee-retention costs; and $2.3
million of other cash costs, primarily relocation expenses. The charges for
severance are net of reversals of $1.5 million that the segment had provided
prior to 2003 and were not required, primarily due to a change in the
restructuring plan and employee attrition. The charges for abandoned facilities
included the closure of sales offices in The Netherlands and France, the
activities of which were transferred to other facilities in the region, and the
consolidation of manufacturing facilities in Massachusetts and Wisconsin. These
charges are net of reversals of $0.4 million, which represent revised estimates
of future lease costs for facilities that the segment abandoned prior to 2003.
In addition, the segment recorded a gain of $2.1 million on the sale of a
building in Germany, offset by net charges of $2.0 million, primarily for the
writedown of goodwill related to the segment's test and measurement business to
reduce the carrying value of the business to disposal value. The test and
measurement business was sold in October 2003.

Optical Technologies
--------------------

       The Optical Technologies segment recorded $11.6 million of net
restructuring and other charges in 2003. These charges included $5.8 million of
cash costs principally associated with facility consolidations. The cash costs
included $2.8 million of ongoing lease costs through 2016 for abandoned
facilities described below; $2.1 million of severance for 122 employees across
all functions; $0.6 million of pension costs for terminated employees that was
accrued as a pension liability; $0.2 million of employee-retention costs; and
$0.1 million of other cash costs, primarily relocation expenses. These charges
were offset by a gain of $1.0 million for the reversal of contract cancellation
fees provided in 2001 that were disputed and ultimately not required. The
charges for severance are net of reversals of $0.4 million, primarily for the
favorable resolution of accrued amounts that were in dispute. The charges for
abandoned facilities included costs of $3.1 million, primarily for the closure
of a manufacturing facility in the United Kingdom relating to the sale of a
product line discussed below, and the consolidation of manufacturing facilities
in California and Massachusetts, and are net of reversals of $0.3 million,

<
                                      F-47
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 15.   Restructuring and Other Costs, Net (continued)

primarily for the favorable settlement of lease obligations on abandoned
equipment. In addition, the segment recorded a charge of $4.8 million, primarily
for the writedown of the segment's molecular beam epitaxy product line that was
sold in October 2003. The writedown was to reduce the carrying value of the
product line assets to disposal value and primarily consisted of fixed assets.
The segment also recorded charges of $2.0 million, including the writedown of a
facility held for sale to estimated disposal value and abandoned assets, net of
recoveries.

Corporate
---------

       The company recorded $5.1 million of restructuring and other charges at
its corporate offices in 2003, all of which were cash costs. These cash costs
included $2.6 million for third-party advisory fees; $1.0 million of ongoing
lease costs through 2006 for abandoned facilities described below; $0.9 million
of severance for 16 employees in administrative functions; and $0.6 million of
relocation expenses. While the company no longer has any public subsidiaries, it
has numerous non-U.S. subsidiaries through which the formerly public
subsidiaries conducted business. The third-party advisory fees are being
incurred to simplify this legal structure. The charges for abandoned facilities
and relocation expenses are for the consolidation of three administrative
offices in Europe.

2002

       In response to a continued downturn in markets served by the company,
restructuring actions were initiated in 2002 in a number of business units to
reduce costs and shed unproductive assets. The restructuring and related actions
primarily consisted of headcount reductions, writedowns of production equipment
for telecommunications products at Spectra-Physics, discontinuation of three
mature or unprofitable product lines, and consolidation of facilities to
streamline operations and reduce costs. During 2002, the company recorded $61.3
million of restructuring and other charges primarily associated with these
actions, including $9.1 million of charges to cost of revenues. These charges
are detailed by segment below.

       The company recorded net restructuring and other costs by segment for
2002 as follows:

<TABLE>
<CAPTION>
       <S>                                      <C>              <C>             <C>                  <C>                <C>

                                                  Life and
                                                Laboratory       Measurement          Optical
                                                  Sciences       and Control     Technologies         Corporate            Total
                                                ----------       -----------     ------------         ---------          -------
                                                                                 (In thousands)

       Cost of Revenues                            $ 1,251           $ 1,384          $ 6,491           $     -          $ 9,126
       Restructuring and Other Costs, Net           17,968            12,226           19,390             2,562           52,146
                                                   -------           -------          -------           -------          -------

                                                   $19,219           $13,610          $25,881           $ 2,562          $61,272
                                                   =======           =======          =======           =======          =======

</TABLE>

       The components of net restructuring and other costs by segment are as
follows:

Life and Laboratory Sciences
----------------------------

       The Life and Laboratory Sciences segment recorded $19.2 million of net
restructuring and other charges in 2002. The segment recorded charges to cost of
revenues of $1.3 million, which consisted of $1.1 million for the sale of
inventories revalued at the date of acquisition and $0.2 million for a
discontinued product line, and $17.9 million of other costs. These other costs
consisted of $12.2 million of cash costs, including $5.7 million of severance
for 254 employees across all functions; $1.8 million of ongoing lease costs
through 2005 for abandoned facilities described below; $1.7 million of employee-

<
                                      F-48
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 15.   Restructuring and Other Costs, Net (continued)

retention costs; $0.7 million of pension costs for terminated employees that was
accrued as a pension liability; $0.5 million for the termination of a
distributor agreement; and $1.8 million of other cash costs, primarily
relocation expenses. In addition, the segment realized a net loss of $4.3
million on the sale of assets and small business units, principally its Dynex
automated diagnostics product line, and wrote down $1.4 million of fixed assets
at abandoned facilities. The abandoned-facility costs included $1.6 million of
additional expense related to a facility in Finland that was abandoned in 2001,
at which time the segment recorded estimated abandonment cost. The segment has
been unable to sublease the space and has reserved the remaining obligation
through the expiration of the lease in 2005. Other facility consolidations in
2002 included closure of three sales and services offices in The Netherlands,
the United Kingdom, and California, and a manufacturing facility in Texas. The
activities of these facilities were transferred to other locations. In addition,
certain other office and manufacturing space in Massachusetts that was abandoned
and reserved for in 2001 has been occupied by the company's Measurement and
Control segment, and consequently, the remaining reserve for abandonment of $1.5
million has been reversed.

Measurement and Control
-----------------------

       The Measurement and Control segment recorded $13.6 million of net
restructuring and other charges in 2002. The segment recorded charges to cost of
revenues of $1.4 million for the sale of inventories revalued at the date of
acquisition, and $12.2 million of other costs, net. These other costs consisted
of $20.4 million of cash costs, including $11.0 million of severance for 388
employees across all functions; $4.9 million of ongoing lease costs through 2007
for abandoned facilities described below; $2.0 million of employee-retention
costs; and $2.5 million of other cash costs, primarily relocation expenses. The
charge also included $0.5 million of asset writedowns, and was offset by $8.7
million of net gains, primarily on the sale of businesses, principally the
segment's Thermo BLH and Thermo Nobel subsidiaries. The charges for severance,
abandoned facilities, and other items are net of reversals of $2.4 million, $2.3
million, and $0.4 million, respectively, that the segment had provided in 2000
and 2001. Of the total amount reversed, $2.1 million had been initially provided
in 2001 to downsize the segment's operations in Maryland. During 2002, following
a change in that operation's management, the 2001 plan to restructure the
Maryland operation was substantially revised to include closure of the plant.
The amounts provided in 2001 were reversed and all of the actions contemplated
in the 2001 plan are components of the expanded 2002 plan, recorded in 2002. The
remainder of the 2000 and 2001 plan reserves that were reversed were not
required primarily due to employee attrition and favorable settlement of lease
obligations. The facility consolidations in the 2002 plan included closure of
six manufacturing facilities in the United States and one sales and service
facility in Australia, and the transfer of their activities to other locations.

Optical Technologies
--------------------

       The Optical Technologies segment recorded $25.9 million of net
restructuring and other charges in 2002. The segment recorded charges to cost of
revenues of $6.5 million, primarily for two discontinued product lines, and
$19.4 million of other costs. These other costs consisted of $9.7 million of
cash costs, including $5.6 million of severance for 261 employees across all
functions; $1.8 million of ongoing lease costs, primarily for abandoned
equipment; $0.1 million of employee-retention costs; $0.7 million for the
settlement of litigation; $1.1 million of cancellation fees for fixed asset
purchases; and $0.4 million of other cash costs, primarily relocation expenses.
The charges for severance and abandoned facilities are net of reversals of $1.2
million and $3.0 million, respectively, that the segment had provided in 2001
and 2002. The severance reserves that were reversed were no longer required,
primarily due to employee attrition. The reversal of the abandoned facility
reserves was primarily due to the favorable settlement of lease obligations. In
addition, this segment wrote off assets totaling $8.8 million, primarily for
abandoned telecommunication and other manufacturing equipment. The segment also
recorded a charge of $0.8 million as a result of the options to purchase shares
of Spectra-Physics becoming options to purchase shares of Thermo Electron
following the acquisition of the minority interest in this business in February
2002 (Note 16), and a charge of $0.1 million for the loss on sale of a small
business unit. Following these actions in 2002, the company suspended
initiatives for products that address telecom markets based on the continuing
economic downturn in these markets.

<
                                      F-49
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 15.   Restructuring and Other Costs, Net (continued)

Corporate
---------

       The company recorded $2.6 million of restructuring and other charges at
its corporate office in 2002, which were primarily cash costs, principally for
third-party advisory fees to simplify the legal structure of the company's
non-U.S. subsidiaries.

2001

       In response to a downturn in telecommunications, semiconductor, and other
markets served by the company's businesses and in an effort to further integrate
business units, the company initiated restructuring actions in the second
quarter of 2001 in a number of business units to reduce costs and shed
unproductive assets. Further actions were initiated in the fourth quarter of
2001. The restructuring and related actions primarily consisted of headcount
reductions, writedowns of telecommunication equipment and excess
telecommunication inventories at Spectra-Physics, discontinuation of a number of
mature or unprofitable product lines, and consolidation of facilities to
streamline operations and reduce costs. During 2001, the company recorded $158.8
million of restructuring and other charges primarily associated with these
actions, including $26.1 million of charges to cost of revenues. In addition,
the company recorded $2.8 million of other nonoperating charges during 2001.
These charges are detailed by segment below.

       The company recorded net restructuring and other costs by segment for
2001 as follows:

<TABLE>
<CAPTION>
       <S>                                      <C>              <C>             <C>                  <C>               <C>

                                                  Life and
                                                Laboratory       Measurement          Optical
                                                  Sciences       and Control     Technologies         Corporate            Total
                                                ----------       -----------     ------------         ---------         --------
                                                                               (In thousands)

       Cost of Revenues                           $  6,898          $  9,252         $  9,945          $      -         $ 26,095
       Restructuring and Other Costs, Net           40,997            36,793           43,394            11,518          132,702
       Loss on Investments                               -             1,983              801                 -            2,784
                                                  --------          --------         --------          --------         --------

                                                  $ 47,895          $ 48,028         $ 54,140          $ 11,518         $161,581
                                                  ========          ========         ========          ========         ========

</TABLE>

       The components of net restructuring and other costs by segment are as
follows:

Life and Laboratory Sciences
----------------------------

       The Life and Laboratory Sciences segment recorded $47.9 million of net
restructuring and other charges in 2001. The segment recorded charges to cost of
revenues of $6.9 million, primarily for discontinued product lines, and $41.0
million of other costs, net. These other costs consisted of $29.9 million of
cash costs, including $18.7 million of severance for 619 employees across all
functions; $9.3 million of ongoing lease costs through 2012 for facilities
described below; and $1.9 million of other costs. The charge also included a
$3.4 million writeoff of in-process research and development costs at an
acquired business, $8.0 million of asset writedowns, and $0.7 million of noncash
severance costs, offset by $1.0 million of gains for the sale of a small
business unit and a product line. The writeoff of in-process research and
development was determined through established valuation techniques and was
charged to expense upon acquisition because technological feasibility had not
been established and no future alternative uses existed. The asset writedowns
principally included $5.1 million of goodwill for business units that were
closed, $2.3 million of fixed assets at facilities being consolidated, and $0.6
million of other assets. The facility consolidations included closure of 20
sales and service offices, including 18 in Europe and two in the United States,
and the closure of nine factories, including five in Europe and four in the
United States. The activities of these facilities were transferred to other
locations in those regions.

<
                                      F-50
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 15.   Restructuring and Other Costs, Net (continued)

Measurement and Control
-----------------------

       The Measurement and Control segment recorded $46.0 million of net
restructuring and other charges in 2001. The segment recorded charges to cost of
revenues of $9.2 million, primarily for discontinued product lines, and $36.8
million of other costs, net. These other costs consisted of $21.2 million of
cash costs, including $15.8 million of severance for 806 employees across all
functions; $4.0 million of ongoing lease costs through 2009 for facilities
described below; $0.3 million of employee-retention costs; and $1.1 million of
other cash costs. The charge also included losses of $12.0 million on the sale
of businesses and writedowns of goodwill for businesses subsequently sold, $4.5
million of asset writedowns, and $0.2 million of other costs, offset in part by
a gain of $1.1 million on the sale of a building. The principal businesses that
were sold that resulted in losses were noncore businesses and included Pharos
Marine, a marine navigation unit, in August 2001, and ThermoMicroscopes, a
manufacturer of scanning probe microscopes, in July 2001. The asset writedowns
included $3.5 million of fixed assets at facilities being closed and $1.0
million for impairment of a note receivable that was a preacquisition asset of a
business acquired in 1999. The facility consolidations included closure of 12
sales and service offices, including 11 in Europe and one in the United States,
and the closure of 14 factories, including eight in the United States, five in
Europe, and one in Canada. The activities of these sales and service offices and
factories were transferred to other facilities in those regions.

       This segment also recorded $2.0 million of other nonoperating charges in
2001 to write down to market value an available-for-sale investment that was a
preacquisition asset of a business acquired in 1999, due to an impairment that
the company deemed other than temporary.

Optical Technologies
--------------------

       The Optical Technologies segment recorded $53.3 million of net
restructuring and other charges in 2001. The segment recorded charges to cost of
revenues of $9.9 million, primarily for excess telecommunication inventories at
Spectra-Physics and discontinued product lines, and $43.4 million of other
costs. The excess telecommunication inventories resulted from a severe slowdown
in this market and the writedown reduced the carrying value of these and other
inventories to estimated net realizable value. The $43.4 million of other costs
consisted of $19.1 million of cash costs, including $3.6 million of severance
for 284 employees, primarily in manufacturing positions; $7.0 million for leases
on abandoned equipment; $5.9 million of loss on litigation; $0.6 million of
ongoing lease costs through 2004 for facilities described below; and $2.0
million of other cash costs. The other cash costs primarily represented
cancellation fees for fixed-asset purchases and termination of distributor
agreements. The segment also recorded $24.2 million of asset writedowns,
including $21.5 million of fixed assets, principally equipment used in
telecommunication manufacturing for which estimated future cash flows were not
sufficient to recover the carrying value. The asset writedowns also included
$2.3 million of goodwill to reduce the carrying value of two small business
units held for sale to their estimated disposal value, and $0.4 million of costs
associated with an abandoned financing at Spectra-Physics. In addition, the
segment recorded a charge of $0.1 million, net, for the sale of a small business
unit and a facility. The facility consolidations included the closure of three
factories in the United States and the closure of two distribution facilities in
Europe. The activities of these sites were transferred to other facilities in
those regions.

       This segment also recorded $0.8 million of other nonoperating charges in
2001 to write down an investment to its market value due to an impairment that
the company deemed other than temporary.

<
                                      F-51
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 15.   Restructuring and Other Costs, Net (continued)

Corporate
---------

       The company recorded $11.5 million of restructuring and other charges at
its corporate office in 2001. This amount included $11.3 million of cash costs,
including $5.9 million of investment banking, consulting, and legal fees
associated with the company's reorganization plan; $3.5 million of
employee-retention costs that was accrued ratably through 2001, the period
through which the employees had to work to qualify for a payment; and $1.9
million for severance for 21 employees. The charge also included $0.2 million of
noncash severance costs.

       The following table summarizes the severance actions of the company in
2001, 2002, and 2003.

<TABLE>
<CAPTION>
       <S>                                                                                                            <C>

                                                                                                                       Number of
                                                                                                                       Employees
                                                                                                                       ---------

       Pre-2001 Restructuring Plans
       Remaining Terminations at December 30, 2000                                                                            80

       Additional Terminations Announced in 2001                                                                              16
       Terminations Occurring in 2001                                                                                        (91)
       Adjustment to Plan                                                                                                     (1)
                                                                                                                          ------

       Remaining Terminations at December 29, 2001                                                                             4
       Terminations Occurring in 2002                                                                                         (4)
                                                                                                                          ------

       Remaining Terminations at December 28, 2002 and December 31, 2003                                                       -
                                                                                                                          ======

       2001 Restructuring Plans
       Terminations Announced in 2001                                                                                      1,714
       Terminations Occurring in 2001                                                                                     (1,001)
                                                                                                                          ------

       Remaining Terminations at December 29, 2001                                                                           713

       Additional Terminations Announced in 2002                                                                             247
       Terminations Occurring in 2002                                                                                       (877)
       Adjustment to Plan                                                                                                    (53)
                                                                                                                          ------

       Remaining Terminations at December 28, 2002                                                                            30
       Terminations Occurring in 2003                                                                                        (28)
       Adjustment to Plan                                                                                                     (2)
                                                                                                                          ------

       Remaining Terminations at December 31, 2003                                                                             -
                                                                                                                          ======


<
                                      F-52
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 15.   Restructuring and Other Costs, Net (continued)

                                                                                                                       Number of
                                                                                                                       Employees
                                                                                                                       ---------

       2002 Restructuring Plans
       Terminations Announced in 2002                                                                                        665
       Terminations Occurring in 2002                                                                                       (354)
                                                                                                                          ------

       Remaining Terminations at December 28, 2002                                                                           311

       Terminations Occurring in 2003                                                                                       (301)
       Adjustment to Plan                                                                                                    (10)
                                                                                                                          ------

       Remaining Terminations at December 31, 2003                                                                             -
                                                                                                                          ======

       2003 Restructuring Plans
       Terminations Announced in 2003                                                                                        717
       Terminations Occurring in 2003                                                                                       (550)
                                                                                                                          ------

       Remaining Terminations at December 31, 2003                                                                           167
                                                                                                                          ======

</TABLE>

       The following table summarizes the cash components of the company's
restructuring plans. The noncash components and other amounts reported as
restructuring and other costs, net, in the accompanying statement of operations
have been summarized in the notes to the tables.

<TABLE>
<CAPTION>
       <S>                                      <C>           <C>                  <C>                 <C>               <C>

                                                                                   Abandonment
                                                                   Employee          of Excess
                                                Severance     Retention (a)         Facilities            Other             Total
                                                ---------     -------------        -----------         --------          --------
                                                                                (In thousands)

       Pre-2001 Restructuring Plans
        Balance at December 30, 2000             $  4,807          $  3,283           $  2,820         $ 10,114          $ 21,024
        Costs incurred in 2001                        328             3,472                 21            5,963             9,784
        Reserves reversed                            (105)                -                (21)               -              (126)
        Payments                                   (2,820)             (468)              (909)         (14,277)          (18,474)
        Currency translation                          (51)                -                (45)             (94)             (190)
                                                 --------          --------           --------         --------          --------

        Balance at December 29, 2001                2,159             6,287              1,866            1,706            12,018
        Reserves reversed (b)                         (85)                -               (990)             (36)           (1,111)
        Payments                                   (1,521)           (6,054)              (925)          (1,088)           (9,588)
        Transfer to accrued pension costs (c)           -                 -                  -             (534)             (534)
        Currency translation                          137                 -                114               32               283
                                                 --------          --------           --------         --------          --------

        Balance at December 28, 2002                  690               233                 65               80             1,068
        Reserves reversed (b)                         (93)                -                (68)             (75)             (236)
        Payments                                     (340)             (174)                 -               (5)             (519)
        Transfer to accrued pension costs (d)        (290)                -                  -                -              (290)
        Currency translation                           33                 -                  3                -                36
                                                 --------          --------           --------         --------          --------

        Balance at December 31, 2003             $      -          $     59           $      -         $      -          $     59
                                                 ========          ========           ========         ========          ========


<
                                      F-53
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 15.   Restructuring and Other Costs, Net (continued)

                                                                                   Abandonment
                                                                   Employee          of Excess
                                                Severance     Retention (a)         Facilities            Other             Total
                                                ---------     -------------        -----------         --------          --------
                                                                                (In thousands)
       2001 Restructuring Plans
        Costs incurred in 2001 (e)               $ 40,076          $    297           $ 21,058         $  5,099          $ 66,530
        Reserves reversed (b)                        (385)                -               (182)             (90)             (657)
        Payments                                  (13,585)             (155)            (1,180)          (2,353)          (17,273)
        Currency translation                          (14)                1                 69               11                67
                                                 --------          --------           --------         --------          --------

        Balance at December 29, 2001               26,092               143             19,765            2,667            48,667
        Costs incurred in 2002 (f)                  9,539             2,812              8,013            4,406            24,770
        Reserves reversed (b)                      (4,900)               (4)            (6,831)            (562)          (12,297)
        Payments                                  (27,176)           (2,558)           (10,190)          (4,961)          (44,885)
        Currency translation                        2,050                24                744              115             2,933
                                                 --------          --------           --------         --------          --------

        Balance at December 28, 2002                5,605               417             11,501            1,665            19,188
        Costs incurred in 2003                        100               115              1,904              208             2,327
        Reserves reversed (b)                      (2,656)             (103)            (1,027)          (1,109)           (4,895)
        Payments                                   (2,393)             (413)            (7,135)            (654)          (10,595)
        Currency translation                          598                 -                831               28             1,457
                                                 --------          --------           --------         --------          --------

        Balance at December 31, 2003             $  1,254          $     16           $  6,074         $    138          $  7,482
                                                 ========          ========           ========         ========          ========

       2002 Restructuring Plans
        Costs incurred in 2002 (g)               $ 18,021          $  1,015           $  8,326         $  4,496          $ 31,858
        Reserves reversed (b)                         (77)                -                  -                -               (77)
        Payments                                   (6,305)              (50)              (579)          (3,850)          (10,784)
        Currency translation                          229                 2                 53               42               326
                                                 --------          --------           --------         --------          --------

        Balance at December 28, 2002               11,868               967              7,800              688            21,323
        Costs incurred in 2003                      2,224             1,334                587            2,368             6,513
        Reserves reversed (b)                        (792)             (106)              (556)            (111)           (1,565)
        Payments                                  (12,388)           (2,180)            (4,952)          (3,130)          (22,650)
        Currency translation                        1,181                39                385              204             1,809
                                                 --------          --------           --------         --------          --------

        Balance at December 31, 2003             $  2,093          $     54           $  3,264         $     19          $  5,430
                                                 ========          ========           ========         ========          ========

       2003 Restructuring Plans
        Costs incurred in 2003 (h)               $ 21,647          $    770           $  8,876         $  6,908          $ 38,201
        Reserves reversed (b)                        (810)                -               (819)            (267)           (1,896)
        Payments                                  (14,970)             (706)            (3,083)          (6,749)          (25,508)
        Currency translation                          861                 4                346              219             1,430
                                                 --------          --------           --------         --------          --------

        Balance at December 31, 2003             $  6,728          $     68           $  5,320         $    111          $ 12,227
                                                 ========          ========           ========         ========          ========

</TABLE>

<
                                      F-54
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 15.   Restructuring and Other Costs, Net (continued)

       (a) Employee-retention costs are accrued ratably over the period through
           which employees must work to qualify for a payment. The pre-2001
           awards were based on specified percentages of employees' salaries and
           were generally awarded to help ensure continued employment at least
           through completion of the company's reorganization plan.
       (b) Represents reductions in cost of plans as described in the discussion
           of restructuring actions by segment.
       (c) Balance of accrued restructuring costs from 1998 plans related to
           pension liability associated with employees terminated in 1998, which
           was transferred to accrued pension costs in 2002.
       (d) Balance of accrued restructuring costs for severance from 2000 plans
           related to pension liability associated with employees terminated in
           2000, which was transferred to accrued pension costs in 2003.
       (e) Excludes noncash charges, net, of $11.1 million, $15.6 million, $24.3
           million, and $0.2 million in the Life and Laboratory Sciences,
           Measurement and Control, and Optical Technologies segments, and at
           the company's corporate office, respectively, and loss on litigation
           of $5.9 million in the Optical Technologies sector.
       (f) Excludes net gains from the sale of businesses and other assets of
           $0.9 million and $2.4 million in the Life and Laboratory Sciences and
           Measurement and Control segments, respectively; noncash charges of
           $7.0 million in the Optical Technologies segment; a cash charge of
           $0.7 million recorded in accrued pension costs in the Life and
           Laboratory Sciences segment; and loss on litigation of $0.7 million
           in the Optical Technologies segment.
       (g) Excludes noncash charges of $6.7 million, $2.7 million, and $0.2
           million in the Life and Laboratory Sciences and Optical Technologies
           segments and at the company's corporate office, respectively, and net
           gains from the sale of businesses and other assets of $5.8 million in
           the Measurement and Control segment.
       (h) Excludes noncash charges, net, of $3.0 million and $6.8 million in
           the Life and Laboratory Sciences and Optical Technologies segments,
           respectively; net gains of $0.1 million, primarily from the sale of a
           building, offset by a writedown to disposal value of a business sold
           in October 2003, in the Measurement and Control segment; and a cash
           charge of $0.6 million recorded in accrued pension costs in the
           Optical Technologies segment.

       The company expects to pay accrued restructuring costs as follows:
severance, employee-retention obligations, and other costs, which principally
consist of cancellation/termination fees, primarily through 2004; and
abandoned-facility payments, over lease terms expiring through 2016.

Note 16.   Reorganization and Discontinued Operations

Reorganization

       During 2000 and 2001, the company completed the principal aspects of a
major corporate reorganization. The reorganization split the company into three
independent public entities and resulted in the divestiture of a number of
businesses. In addition, the company took private all of its majority-owned
subsidiaries in its continuing operations, including Spectra-Physics, which is
discussed below. The company spun off as a dividend to its shareholders Kadant
Inc. and Viasys Healthcare Inc. in August and November 2001, respectively. The
company's continuing operations are comprised solely of its instrument
businesses.

       In 2001, the company increased its ownership in Spectra-Physics to 93.6%
through a cash tender offer of $17.50 per share. In connection with this offer,
and an earlier repurchase of Spectra-Physics shares in 2001, the company
expended $69.5 million in 2001 and recorded an increase in goodwill of $45.8
million. In February 2002, the company acquired the shares of Spectra-Physics it
did not previously own through a short-form merger at the same price as the
tender offer and Spectra-Physics ceased to be publicly traded. The company
expended $23.2 million of cash to complete the purchase of the minority interest

<
                                      F-55
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 16.   Reorganization and Discontinued Operations (continued)

and recorded an increase in goodwill of $15.8 million. Options to purchase
shares of Spectra-Physics became options to purchase 2,242,000 shares of Thermo
Electron common stock, which was accounted for in accordance with the
methodology set forth in FIN No. 44, "Accounting for Certain Transactions
Involving Stock Compensation" (Note 5).

Discontinued Operations

       In January 2000, the company announced its intention to sell several of
its businesses. These businesses, together with the businesses spun off,
constituted the company's former Biomedical and Emerging Technologies and
Recycling and Resource Recovery segments, as well as the company's environmental
businesses and its Thermo Power subsidiary. In addition, in June and July 2001,
the company sold its power-generation business. In accordance with the
provisions of APB No. 30 concerning reporting the effects of disposal of a
segment of a business, the company classified the results of these businesses,
as well as the results of the businesses spun off as dividends (collectively,
"the discontinued businesses"), as discontinued operations in the accompanying
statement of operations. Net liabilities of discontinued operations principally
represents remaining obligations of the discontinued businesses including
litigation, severance, and lease obligations, and, in 2002, the net assets of
the last remaining operating unit held for sale. In 2003, the remaining
operating unit was sold as discussed below.

       During 2003, the company's discontinued operations did not have material
revenues or operating results. During 2002, the company's discontinued
operations had revenues and operating income of $82.7 million and $7.4 million,
respectively. During 2001, the company's discontinued operations had revenues
and operating income of $658.3 million and $50.4 million, respectively. The
company received proceeds from the sale of discontinued businesses of $5.2
million, $42.7 million, and $347.8 million in 2003, 2002, and 2001,
respectively.

Spinoffs
--------

       On July 9, 2001, the company's Board of Directors approved the spinoff of
the company's 91%-owned Kadant subsidiary as a dividend to the company's
shareholders. On August 8, 2001, the company distributed all of its shares of
Kadant to Thermo Electron shareholders of record as of July 30, 2001.
Immediately after the distribution, the company no longer owned shares of
Kadant. The company received a ruling from the Internal Revenue Service (IRS)
that the dividend of Kadant shares qualified in large part as a tax-free
distribution for U.S. federal income tax purposes. Approximately 8% of the
shares distributed to each shareholder were taxable because the company
purchased them during the past five years. Cash distributed in lieu of
fractional shares was also taxable. The stock dividend resulted in a reduction
of net assets of discontinued operations and retained earnings of $197 million.

       In connection with the spinoff, the company and Kadant entered into a
plan and agreement of distribution. The agreement provided for, among other
things, the company to continue to guarantee Kadant's $153.0 million principal
amount subordinated convertible debentures due 2004. The agreement required
Kadant to maintain certain financial ratios during the time that the company
guaranteed these obligations. In December 2002, Kadant redeemed all of its
outstanding subordinated convertible debentures.

       On October 11, 2001, the company's Board of Directors approved the
spinoff of the company's wholly owned Viasys Healthcare subsidiary as a dividend
to the company's shareholders. On November 15, 2001, the company distributed all
of its shares of Viasys Healthcare to Thermo Electron shareholders of record as
of November 7, 2001. Immediately after the planned distribution, the company no
longer owned shares of Viasys Healthcare. The company received a ruling from the
IRS that the dividend of Viasys Healthcare shares qualified as a tax-free
distribution for U.S. federal income tax purposes, except that the cash received
in lieu of fractional shares was taxable. The stock dividend resulted in a
reduction of net assets of discontinued operations and retained earnings of $298
million.


<
                                      F-56
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 16.   Reorganization and Discontinued Operations (continued)

       The ruling from the IRS required that the spinoffs raise additional
equity capital in public offerings within one year of their spinoffs. Kadant
completed an offering in 2002 and Viasys Healthcare completed an offering in
2003 after obtaining an extension from the IRS.

Thermo Cardiosystems
--------------------

       In February 2001, the company sold its interest in Thermo Cardiosystems
to Thoratec in exchange for 19.3 million shares of Thoratec common stock, which
represented a 34% interest that had a market value of $11.56 per share on the
date of the transaction. Certain restrictions, which lapsed in August 2002,
limited the timing of the company's ability to sell these shares. The company
accounted for the sale of Thermo Cardiosystems and the ownership of the Thoratec
shares as discontinued operations. The company recorded an after-tax charge of
$66.0 million in the first quarter of 2001 for a decline in market value of
Thoratec common stock as a loss on disposal of discontinued operations, and
thereafter, carried the shares at a new cost basis of $6.50 per share. Following
a sale of shares in February 2002 for net proceeds of $104 million and an
after-tax gain of $38.4 million, the company owned less than 20% of Thoratec's
outstanding shares. Accordingly, pursuant to SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," the company began accounting
for its investment as an available-for-sale security in continuing operations in
the first quarter of 2002. As such, the investment is recorded as quoted market
value in current assets, and unrealized gains or losses are recorded as a part
of accumulated other comprehensive items in the accompanying balance sheet.
During 2003, the company sold 2,000,000 shares of Thoratec common stock and
realized a gain of $16.3 million. As of December 31, 2003, the company held 5.7
million shares of Thoratec with a market value of $74 million.

Power-Generation Business
-------------------------

       In March 2002, the company sold the last remaining component of its
former power-generation business and realized a gain from the disposition
totaling $13.0 million, principally for previously unrecognized tax benefits
that were realized upon the sale.

       In June and July 2001, the company sold the chief components of the
power-generation business for proceeds of $249 million, net of cash divested.
The company realized a gain on disposition of $15.6 million, net of tax.

Other
-----

       The company had after-tax gains of $27.3 million in 2003 and $115.4
million in 2002 from the disposal of discontinued operations. The 2003 gain
consists of two pre-tax components and two tax components. In 2003, the company
resolved several disputes and related claims that it had retained following the
sale of businesses in its discontinued operations. In connection with the
resolution of these matters on favorable terms relative to the damages estimated
and amount of established reserves as well as the settlement of lease
obligations, the company's pre-tax gain recorded in prior years on disposal of
the related businesses increased by $27.1 million. In 2003, the company also
sold the last remaining business in discontinued operations, Peter Brotherhood
Ltd., and received additional proceeds associated with businesses sold prior to
2003, including post-closing purchase price adjustments. The company recorded
pre-tax gains from the disposal of discontinued operations of $8.3 million,
substantially as a result of these transactions. The company recorded a tax
provision of $13.2 million on the above gains and realized $5.1 million of
additional tax benefits from the disposal of businesses sold prior to 2003,
principally foreign tax credits.

       During 2002, primarily as a result of new tax regulations concerning
deductible losses from divested businesses, the company revised its estimate of
the tax consequences of business disposals in discontinued operations and
recorded a tax benefit of $46.6 million. Also in 2002, the company sold its
Trophy Radiologie business for approximately $51 million in cash and,
principally as a result of this transaction, recorded an after-tax gain of $17.4
million. This business is engaged in the production and sale of dental X-ray
imaging systems and related software.

<
                                      F-57
<PAGE>
>

                           THERMO ELECTRON CORPORATION

Note 17.   Unaudited Quarterly Information

<TABLE>
<CAPTION>
       <S>                                                                 <C>           <C>             <C>           <C>

                                                                                                    2003
                                                                           ------------------------------------------------------
                                                                           First (a)     Second (b)      Third (c)     Fourth (d)
                                                                           ---------     ----------      ---------     ----------
                                                                                  (In thousands except per share amounts)

       Revenues                                                             $500,205       $516,405       $497,116       $583,409
       Gross Profit                                                          223,838        233,145        225,903        265,129
       Income from Continuing Operations                                      31,391         53,139         38,997         49,170
       Net Income                                                             36,427         53,139         48,515         61,928
       Earnings per Share from Continuing Operations:
        Basic                                                                    .19            .33            .24            .30
        Diluted                                                                  .19            .32            .24            .30
       Earnings per Share:
        Basic                                                                    .22            .33            .30            .38
        Diluted                                                                  .22            .32            .29            .37

       Amounts reflect aggregate restructuring and other items, net, and nonoperating items, net, as follows:

       (a) Costs of $8.1 million, gains of $3.7 million from the sale of shares of FLIR, and an after-tax gain of $5.0 million
           related to the company's discontinued operations.
       (b) Costs of $4.9 million, gains of $10.0 million from the sale of shares of FLIR, and a $9.0 million tax benefit from the
           reversal of a valuation allowance.
       (c) Costs of $14.3 million, gains of $10.3 million from the sale of shares of Thoratec, a loss of $1.0 million on the early
           retirement of debt, and an after-tax gain of $9.5 million related to the company's discontinued operations.
       (d) Costs of $21.5 million, gains of $6.0 million from the sale of shares of Thoratec, and an after-tax gain of $12.8 million
           related to the company's discontinued operations.

</TABLE>
<TABLE>
<CAPTION>
       <S>                                                                 <C>           <C>             <C>           <C>

                                                                                                    2002
                                                                           ------------------------------------------------------
                                                                           First (e)     Second (f)      Third (g)     Fourth (h)
                                                                           ---------     ----------      ---------     ----------
                                                                                  (In thousands except per share amounts)

       Revenues                                                             $491,326       $509,113       $517,171       $568,745
       Gross Profit                                                          223,656        229,788        228,657        245,275
       Income from Continuing Operations                                      63,674         49,517         39,017         42,152
       Net Income                                                            115,044         68,517         39,017         87,152
       Earnings per Share from Continuing Operations:
        Basic                                                                    .37            .29            .24            .26
        Diluted                                                                  .34            .28            .23            .25
       Earnings per Share:
        Basic                                                                    .66            .40            .24            .53
        Diluted                                                                  .59            .38            .23            .51

       Amounts reflect aggregate restructuring and other items, net, and nonoperating items, net, as follows:

       (e) Costs of $8.4 million, gains of $56.3 million from the sale of shares of FLIR, losses of $1.1 million on the early
           retirement of debt, and an after-tax gain of $51.4 million related to the company's discontinued operations.
       (f) Costs of $17.0 million, gains of $31.6 million from the sale of shares of FLIR, and a tax benefit of $19.0 million
           related to the company's discontinued operations.
       (g) Costs of $8.6 million, gains of $6.6 million from the sale of shares of FLIR, and gains of $0.1 million on the early
           retirement of debt.
       (h) Costs of $27.2 million, gains of $16.9 million from the sale of shares of FLIR, losses of $0.5 million on the early
           retirement of debt, and an after-tax gain of $45.0 million related to the company's discontinued operations.

</TABLE>
<
                                      F-58
<PAGE>
>


                           THERMO ELECTRON CORPORATION

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 (In thousands)

<TABLE>
<CAPTION>
<S>                                           <C>            <C>            <C>            <C>           <C>             <C>

                                              Balance at      Provision                    Accounts                       Balance
                                               Beginning     Charged to      Accounts       Written                        at End
                                                 of Year        Expense     Recovered           Off      Other (a)        of Year
                                              ----------     ----------     ---------      --------      ---------       --------

Allowance for Doubtful Accounts

Year Ended December 31, 2003                    $ 25,576       $  2,123      $    221      $ (5,615)      $  3,797       $ 26,102

Year Ended December 28, 2002                    $ 26,525       $  4,114      $    165      $ (7,444)      $  2,216       $ 25,576

Year Ended December 29, 2001                    $ 30,593       $  6,316      $     23      $ (8,147)      $ (2,260)      $ 26,525


</TABLE>
<TABLE>
<CAPTION>
<S>                                                          <C>         <C>             <C>             <C>             <C>

                                                             Balance at   Established      Activity                       Balance
                                                              Beginning    as Cost of    Charged to                        at End
                                                                of Year  Acquisitions       Reserve      Other (c)        of Year
                                                             ----------  ------------    ----------      ---------       --------

Accrued Acquisition Expenses (b)

Year Ended December 31, 2003                                   $  8,828      $  9,096      $ (1,857)      $   (251)      $ 15,816

Year Ended December 28, 2002                                   $  7,104      $  2,723      $ (1,357)      $    358       $  8,828

Year Ended December 29, 2001                                   $ 10,070      $    144      $ (1,920)      $ (1,190)      $  7,104


                                                             Balance at     Provision      Activity                       Balance
                                                              Beginning    Charged to    Charged to                        at End
                                                                of Year   Expense (e)       Reserve      Other (f)        of Year
                                                             ----------   -----------    ----------      ---------       --------

Accrued Restructuring Costs (d)

Year Ended December 31, 2003                                   $ 41,579      $ 38,449      $(59,272)      $  4,442       $ 25,198

Year Ended December 28, 2002                                   $ 60,685      $ 43,143      $(65,257)      $  3,008       $ 41,579

Year Ended December 29, 2001                                   $ 21,024      $ 76,314      $(35,747)      $   (906)      $ 60,685

(a) Includes allowance of businesses acquired and sold during the year as described in Note 2 and the effect of currency
    translation.
(b) The nature of activity in this account is described in Note 2.
(c) Represents reversal of accrued acquisition expenses and corresponding reduction of goodwill or other intangible assets
    resulting from finalization of restructuring plans, the effect of currency translation and, in 2001, the reserves of businesses
    sold.
(d) The nature of activity in this account is described in Note 15.
(e) In 2003, excludes $9.7 million of noncash costs, net, primarily for asset writedowns, and excludes a cash charge of $0.6 million
    recorded in accrued pension costs. In 2002, excludes $7.5 million of noncash costs, net, primarily for asset writedowns, and
    excludes a cash charge of $0.7 million recorded in accrued pension costs, and loss on litigation of $0.7 million. In 2001,
    excludes $51.1 million of noncash costs, net, primarily for asset writedowns, and excludes a $5.9 million loss on litigation.
(f) Represents the effect of currency translation and, in 2003 and 2002, transfers to accrued pension costs of $0.3 million and
    $0.5 million, respectively.

</TABLE>

<
                                      F-59
<PAGE>
>


                           THERMO ELECTRON CORPORATION

                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
of Thermo Electron Corporation:

Our audits of the consolidated financial statements referred to in our report
dated February 24, 2004, which appears in this Annual Report on Form 10-K of
Thermo Electron Corporation, also included an audit of the financial statement
schedule for the years ended December 31, 2003 and December 28, 2002 listed in
Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement
schedule presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements. The financial statement schedule for the year ended December 29,
2001, was audited by other independent accountants who have ceased operations.
Those independent accountants expressed an unqualified opinion on the financial
statement schedule in their report dated February 7, 2002.


PricewaterhouseCoopers LLP
Boston, Massachusetts
February 24, 2004


<
                                      F-60
<PAGE>
>


                           THERMO ELECTRON CORPORATION

                        REPORT OF INDEPENDENT ACCOUNTANTS

THE FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN
LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP. THIS REPORT APPLIES TO
SUPPLEMENTAL SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR THE YEAR ENDED
DECEMBER 29, 2001.

To the Shareholders and Board of Directors of Thermo Electron Corporation:

       We have audited in accordance with auditing standards generally accepted
in the United States, the consolidated financial statements included in Thermo
Electron Corporation's Annual Report to Shareholders incorporated by reference
in this Form 10-K, and have issued our report thereon dated February 7, 2002
(except with respect to the matters discussed in Note 19*, as to which the date
is February 25, 2002). Our audits were made for the purpose of forming an
opinion on those statements taken as a whole. The schedule listed in Item 14 on
page 13** is the responsibility of the company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic consolidated financial statements. This schedule has been
subjected to the auditing procedures applied in the audits of the basic
consolidated financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.


                                                       Arthur Andersen LLP

Boston, Massachusetts
February 7, 2002


*The discussion of the subsequent events discussed in Note 19 in 2001, is now
 included in Note 1 and Note 10.

**The schedule is now listed in Item 15.



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