<PAGE>   1
 
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 27, 1998 
                                                        REGISTRATION NO. 333-
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------
 
                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                            ------------------------
 
                               ONIX SYSTEMS INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                            ------------------------
 
           DELAWARE                        3823                   76-0546330
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL  (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)  CLASSIFICATION CODE NUMBER)  IDENTIFICATION NO.)
        
                            ------------------------
 
                             22001 NORTH PARK DRIVE
                               KINGWOOD, TX 77339
                                 (281) 348-1111
         (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
            AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

                            ------------------------
 
                          SANDRA L. LAMBERT, SECRETARY
                               ONIX SYSTEMS INC.
                        C/O THERMO ELECTRON CORPORATION
                                81 WYMAN STREET
                                 P. O. BOX 9046
                             WALTHAM, MA 02454-9046
                                 (781) 622-1000
           (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)
 
                                   Copies to:
                            SETH H. HOOGASIAN, ESQ.
                                GENERAL COUNSEL
                               ONIX SYSTEMS INC.
                        C/O THERMO ELECTRON CORPORATION
                                81 WYMAN STREET
                       WALTHAM, MASSACHUSETTS 02454-9046
                                 (781) 622-1000

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

        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
 As soon as practicable after the Registration Statement has become effective.

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

    If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  [X]

    If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  [ ]

    If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ]

    If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ]

    If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box.  [ ]

                            ------------------------
                        CALCULATION OF REGISTRATION FEE
 
<TABLE>
<CAPTION>
======================================================================================================================
                                       AMOUNT           PROPOSED MAXIMUM      PROPOSED MAXIMUM
    TITLE OF EACH CLASS OF              TO BE            OFFERING PRICE           AGGREGATE             AMOUNT OF
  SECURITIES TO BE REGISTERED        REGISTERED           PER SHARE(1)        OFFERING PRICE(1)     REGISTRATION FEE
----------------------------------------------------------------------------------------------------------------------
<S>                              <C>                   <C>                   <C>                   <C>
Common Stock, $.01 par value...   1,639,640 shares          $11.53125            $18,907,099             $5,578
======================================================================================================================
</TABLE>
 
 
(1) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457(c) under the Securities Act of 1933 based upon the
    average of the high and low sales prices of the Common Stock reported in the
    consolidated transaction reporting system on July 22, 1998.

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

     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE>   2
 
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
 
                      SUBJECT TO COMPLETION JULY 27, 1998
 
PROSPECTUS
               , 1998
 
                                1,639,640 SHARES
 
                             ONIX SYSTEMS INC. LOGO
 
                                  COMMON STOCK
 
     This Prospectus relates to the resale of 1,639,640 shares (the "Shares") of
Common Stock, par value $.01 per share (the "Common Stock"), of ONIX Systems
Inc. ("ONIX" or the "Company") by certain shareholders of the Company (the
"Selling Shareholders"). The Shares may be offered from time to time in
transactions on the American Stock Exchange, Inc. (the "AMEX"), in negotiated
transactions, through the writing of options on the Shares, or a combination of
such methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. Such transactions may be effected by the sale of
the Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
sellers and/or the purchasers of the Shares for whom such broker-dealers may act
as agent or to whom they sell as principal, or both (which compensation to a
particular broker-dealer might be in excess of customary commissions). The
Selling Shareholders and any broker-dealer who acts in connection with the sale
of Shares hereunder may be deemed to be "underwriters" as that term is defined
in the Securities Act of 1933, as amended (the "Securities Act"), and any
commission received by them and profit on any resale of the Shares as principal
might be deemed to be underwriting discounts and commissions under the
Securities Act. The Shares were originally sold by the Company in private
placements pursuant to certain Stock Purchase Agreements with the Company dated
September 24, 1997 and October 22, 1997 (the "Purchase Agreements"). See
"Selling Shareholders."
 
     SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY PROSPECTIVE INVESTORS.
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
  EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
    SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
     PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
       ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
     None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed to bear all
expenses (other than underwriting discounts and selling commissions, and fees
and expenses of counsel or other advisors to the Selling Shareholders) in
connection with the registration and sale of the Shares being registered hereby.
The Company has agreed to indemnify the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act as underwriter or
otherwise.
 
                            ------------------------
 
     The Company is a majority-owned subsidiary of Thermo Instrument Systems
Inc. ("Thermo Instrument"), which is a majority-owned subsidiary of Thermo
Electron Corporation ("Thermo Electron"). The Common Stock is traded on the AMEX
under the symbol "ONX." On July 24, 1998, the reported closing price of the
Common Stock on the AMEX was $12.00 per share.
<PAGE>   3
 
                                  THE COMPANY
 
     ONIX Systems Inc. ("ONIX" or the "Company") designs, develops, markets and
services sophisticated field measurement instruments and on-line sensors. The
Company utilizes its proprietary knowledge and significant experience regarding
application-specific technologies to develop products that address the needs of
process industry participants within targeted markets. The Company's products
gather information regarding the flow, level, density or composition of a
particular material and, using advanced communications techniques, communicate
this information to a customer's centralized control location.
 
     The Company manufactures field measurement instruments and on-line sensors
in four general product areas: flow instruments, level and density instruments,
composition analysis instruments and industry-specific instruments. The
Company's flow measurement instruments measure and locally control the flow of
liquids and gases. The Company's level and density measurement instruments
incorporate sophisticated measurement technologies that measure and locally
control the level and density of liquid and solid materials and the density of
gaseous materials. The Company's composition analysis instruments include field
and on-line analysis instruments that are used to analyze the chemical
composition of solids, liquids and gases. The Company also offers
technologically advanced microprocessor-based sensors and recording instruments
that are utilized in specific industries for customized applications. The
Company incorporates a range of advanced measurement technologies into its
instruments, including gamma ray, radar, infrared, ultraviolet, ultrasonic and
vibrational measurement techniques. Additionally, the Company's international
presence and experience enable it to provide rapid, expert preventive
maintenance and aftermarket support services to its customers.
 
     The Company's products are sold primarily to participants in process
industries, including oil and gas producers, processors and distributors and
chemical companies, as well as water/wastewater, iron, steel, electric utility,
minerals and mining and pulp and paper companies. The Company's customers use
its products for increased efficiency, process and quality control, regulatory
compliance and increased employee safety. In 1997, customers in the oil and gas
industries accounted for approximately 61% of the Company's total revenues, with
such revenues derived from both the production segment and the refining and
petrochemical segments of the industry. The Company has a broad customer base,
selling products to more than 2,000 customers worldwide, including affiliates or
operations of The Dow Chemical Company, Shell Oil Company, E.I. duPont De
Nemours & Co., BASF AG, Petroleos Mexicanos ("Pemex") and Duke Energy
Corporation. In 1997, approximately 33% of the Company's sales were to customers
outside of North America.
 
     Industry sources estimate that worldwide revenues for the field measurement
instruments and sensors segment of the process control market were approximately
$10.4 billion in 1995 and will grow to approximately $20.0 billion by the year
2000, which represents a compound annual growth rate of 14%. Factors
contributing to this growth include competitive pressures to increase
efficiencies and reduce costs; technological advances, which have increased the
availability of higher quality microprocessor-based sensors; the increased use
of sensor-intensive, model-based controls of process functions; deregulation and
privatization; developments in communications protocols and computer systems;
and concerns over regulatory compliance and employee safety. The Company's
current products address approximately $3.3 billion of the field measurement
instruments and sensors segment of the process control market.
 
     The Company's strategy is to be a leading provider of field measurement
instruments and on-line sensors used in targeted industries within the process
control market where the Company's expertise and technologies are best suited.
The Company seeks to implement this strategy by broadening its technologies and
product offerings, including expanding the scope of its addressed markets,
through internal development, acquisitions and strategic partnerships and by
continuing to focus on customers in targeted markets. In addition, the Company
intends to expand the geographic scope of its addressed markets to areas with
significant growth opportunities, including Latin America, Eastern Europe and
the Pacific Rim, and to expand its service and support organization to establish
a comprehensive international presence.
 
     The Company's predecessor business was formed as a separate business unit
of Thermo Instrument in 1994 with the acquisition of the EnviroTech Measurement
and Controls division of Baker Hughes Incorporated ("Baker Hughes"), comprised
of Westronics Inc. ("Westronics"), CAC Inc. and CAC UK Limited
                                        3
<PAGE>   4
 
(collectively, "CAC"), Houston Atlas Inc. ("Houston Atlas") and TN Technologies
Inc. ("TN Technologies"). In 1995, Thermo Instrument, through CAC, acquired the
business of Flow Automation Inc. and Flow Automation (UK) Limited (collectively,
"Flow Automation") from Galveston-Houston Company. In 1996, Thermo Instrument,
through TN Technologies, acquired Kay-Ray/Sensall, Inc. ("Kay-Ray/Sensall") from
Rosemount Inc., and through CAC, acquired the business of VG Gas Analysis
Systems Inc. and VG Gas Analysis Limited (collectively, "VG Gas") from
Rhone-Poulenc Rorer, Inc. in connection with Thermo Instrument's acquisition of
a substantial portion of the businesses constituting the Scientific Instruments
division of Fisons plc. In 1997, Thermo Instrument, through Westronics, acquired
the Angus Electronics division ("Angus") of Esterline Technologies Corporation.
 
     The Company was incorporated in August 1997. In connection with the
Company's incorporation, Thermo Instrument transferred to the Company all of the
stock of certain of its subsidiaries relating to the CAC, Flow Automation, VG
Gas, Westronics, Houston Atlas, TN Technologies and Kay-Ray/Sensall businesses
in exchange for 10,666,667 shares of the Company's Common Stock. Since August
1997, the Company acquired the Peek Measurement Business from Thermo Power
Corporation ("Thermo Power"), the Rustrak Ranger Logger product line ("Ranger")
from a subsidiary of Danaher Corporation, the business of Fluid Data, Inc.
("Fluid Data") from Elsag-Bailey, Inc. and certain businesses of the Mid-South
Companies, a group of related privately held companies. See "Business -- Recent
Acquisitions."
 
     Unless the context otherwise requires, references in this Prospectus to the
Company or ONIX refer to ONIX Systems Inc. and its subsidiaries and the
predecessor businesses that constitute the Company. The Company's principal
executive offices are located at 22001 North Park Drive, Kingwood, Texas 77339,
and its telephone number is (281) 348-1111.
 
                                        4
<PAGE>   5
 
                                  RISK FACTORS
 
     In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company wishes to caution readers that the
following important factors, among others, in some cases have affected, and in
the future could affect, the Company's actual results and could cause its actual
results in 1998 and beyond to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company.
Forward-looking statements, within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are made throughout this
Prospectus. For this purpose, any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects," "seeks," "estimates" and similar expressions are intended to identify
forward-looking statements. There are a number of important factors that could
cause the results of the Company to differ materially from those indicated by
such forward-looking statements, including those discussed below, as well as
those discussed elsewhere in this Prospectus.
 
     Dependence on Oil and Gas Industry.  Historically, a substantial portion of
the Company's total revenues has been attributable to the sale of products and
related services to customers in the oil and gas industry. In 1997, customers in
the oil and gas industry accounted for approximately 61% of the Company's total
revenues. Demand for the Company's products and services within the oil and gas
industry is dependent upon the level of capital spending by oil and gas
companies for exploration, production and distribution. These activities depend
in part on oil and gas prices, expectations about future prices, the cost of
exploring for, producing and delivering oil and gas, the discovery rate of new
oil and gas reserves, local and international political, regulatory and economic
conditions and the ability of oil and gas companies to obtain capital. There can
be no assurance that current levels of oil and gas activities will be maintained
or that demand for the Company's products and related services will reflect the
level of such activities. Decreases in oil and gas activities could have a
significant adverse effect upon the demand for the Company's products and
related services, which would materially adversely affect the Company's
business, financial condition and results of operations. See
"Business -- Customers."
 
     Market Acceptance of New Products.  The Company develops products that
represent alternatives to traditional instruments and methods, and as a result,
its products may be slow to achieve, or may not achieve, market acceptance since
customers may seek further validation of the efficiency and efficacy of the
Company's technology before making an investment. This is particularly true
where the purchase of the product requires a significant capital commitment.
Further, because on-line process measurement instruments are incorporated into a
customer's production line, a decision to invest in these instruments involves
significant operating risks if the instrument fails or shuts down. In addition,
the Company believes that, to a significant extent, its growth prospects depend
on its ability to gain acceptance of its technologies and product applications
by a broader group of customers and broader industry segments. There can be no
assurance that the Company will be successful in obtaining broad acceptance of
its products.
 
     Dependence on Capital Spending Policies of Customers.  The Company's
customers include oil and gas production, processing and distribution
facilities, electric utilities and chemical companies. The capital spending
policies of these companies can have a significant effect on the demand for the
Company's products. Such policies are based on a wide variety of factors,
including the resources available to make such purchases, the spending
priorities among various types of process control equipment or techniques and
policies regarding capital expenditures during recessions. Any decrease in
capital spending by these customers could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Customers."
 
     No Assurance of a Successful Acquisition Strategy.  An element of the
Company's strategy includes the acquisition of businesses and technologies that
complement or augment the Company's existing product lines. Attractive
acquisitions are difficult to identify and complete for a number of reasons,
including competition among prospective buyers and the need for regulatory
approvals, including antitrust approvals. Acquisitions completed by the Company
may be made at substantial premiums over the fair value of the net assets of the
acquired companies. For example, the Company's acquisitions completed in 1997
resulted in an aggregate cost
 
                                        5
<PAGE>   6
 
in excess of net assets acquired of $18,925,000. Establishment of this
intangible asset will result in charges to operating income of approximately
$473,000 per year for amortization. There can be no assurance that the Company
will be able to complete future acquisitions or that the Company will be able to
successfully integrate any acquired business, including the recently acquired
businesses, into its existing business or that the Company will be able to
retain key personnel and customers, or adequately improve the financial
performance, of any acquired business, including the recently acquired
businesses. In order to finance such acquisitions, it may be necessary for the
Company to raise additional funds through public or private financings. Any
equity or debt financing, if available at all, may be on terms that are not
favorable to the Company and, in the case of an equity financing, may result in
dilution to the Company's stockholders. See "Business -- Strategy,"
"Business -- Recent Acquisitions" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
 
     Risks Associated with International Sales.  Sales outside North America
accounted for approximately 33% of the Company's total revenues in 1997. The
Company intends to continue to expand its presence in markets outside of North
America. International revenues are subject to a number of risks, however,
including the following: agreements may be difficult to enforce and receivables
difficult to collect through a foreign country's legal system; foreign customers
may have longer payment cycles; foreign countries may impose additional
withholding taxes or otherwise tax the Company's foreign income, impose tariffs
or adopt other restrictions on foreign trade; fluctuations in exchange rates may
affect product demand and adversely affect the profitability in U.S. dollars of
products and services provided by the Company in foreign markets where payment
for the Company's products and services is made in the local currency; U.S.
export licenses may be difficult to obtain or enforce; and intellectual property
rights in foreign countries may be more difficult to enforce. Further, a
significant portion of the Company's business is conducted in foreign countries,
including Canada, the United Kingdom, Mexico, Oman and the United Arab Emirates.
Foreign operations are also subject to various risks, including potentially
unstable economic conditions, unexpected changes in regulatory requirements,
compliance with a variety of foreign laws and regulations and the existence of
different tax structures. Tax rates in certain foreign countries exceed those in
the United States, and foreign earnings may be subject to withholding
requirements or the imposition of tariffs, exchange controls or other
restrictions. There can be no assurance that any of these or other factors will
not have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Strategy" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
 
     Technological Change and New Products.  The markets for the Company's
products are characterized by changing technology, evolving industry standards
and new product introductions and enhancements. The Company's future success
will depend in part upon its ability to enhance its existing products, to
develop and introduce new products and technologies and to successfully expand
its aftermarket support services for such new or enhanced products in order to
meet changing customer requirements and serve broader industry segments. The
Company is currently devoting significant resources toward the enhancement of
its existing products, the development of new products and technologies and the
expansion of its preventive maintenance and aftermarket support activities.
There can be no assurance, however, that the Company will successfully complete
the enhancement and development of these products and the expansion of its
services in a timely fashion or that the Company's current or future products
and services will satisfy the process measurement needs of participants in the
Company's targeted markets. See "Business -- Strategy" and "Business -- Research
and Development."
 
     Intense Competition.  The Company encounters and expects to continue to
encounter intense competition in the sale of its products. The Company believes
that its ability to compete successfully in the market for field measurement
instruments and sensors depends upon a number of factors both within and beyond
its control, including quality and reliability; technical features; accuracy;
ease of use; product pricing; reputation for aftermarket service; timing of new
product releases and enhancements by the Company and its competitors; name
recognition; the establishment of strategic alliances; and industry and general
economic trends. In addition, the Company competes with companies utilizing
competing technologies that may be viewed as cost-effective alternatives to the
technologies incorporated into the Company's products. Certain of the Company's
current and potential competitors have significantly greater financial,
marketing, technical and
 
                                        6
<PAGE>   7
 
other competitive resources, as well as greater name recognition, than the
Company. As a result, the Company's competitors may be able to adapt more
quickly to new or emerging technologies and changes in customer requirements,
and may be able to devote greater resources to the promotion and sale of their
products. There can be no assurance that the Company will be able to compete
successfully with existing or new competitors. An increase in competition could
result in price reductions and loss of market share, which could have a material
adverse effect on the Company's business, financial condition or results of
operations. See "Business -- Competition."
 
     Risks of Gamma Technology.  Certain of the Company's level and density
measurement instruments incorporate gamma technologies that are subject to
health and safety risks in connection with the use, handling and possible
radioactive emissions associated with gamma materials. The Company believes that
it conducts its operations prudently and the Company maintains both general
liability insurance and nuclear liability insurance in amounts it believes to be
commercially reasonable. However, there can be no assurance that this insurance
will be sufficient to protect the Company from liability claims, or that
liability insurance will continue to be available to the Company at a reasonable
cost, or at all. In addition, the manufacture and sale of products that utilize
gamma technology may subject the Company to extensive federal, state, local and
foreign regulations that could increase the costs of producing the Company's
products, or otherwise materially adversely affect the demand for the Company's
gamma measurement instruments. See " -- Government Regulations and Approvals."
 
     Limited Sources of Supply.  The Company currently contracts with local
subcontractors for the manufacture of certain major components incorporated into
its products. The Company has experienced no significant disruption or delay in
obtaining required components for its products, and believes that it could
develop other sources of supply or qualify other suppliers for such components.
However, a prolonged inability to obtain adequate deliveries could require the
Company to pay more for inventory, parts and other supplies or to seek
alternative sources of supply, could delay the Company's ability to ship its
products and could damage its relationships with current and prospective
customers. Any such delay or damage could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Manufacturing and Suppliers."
 
     Dependence on Key Personnel.  The Company's success depends to a
significant extent upon a number of key employees, including members of senior
management. The loss of the services of one or more of these key employees could
have a material adverse effect on the Company. The Company does not have
employment contracts with any of its key employees and it has not obtained, and
does not intend to obtain, key-man life insurance policies for any key employee.
The Company believes that its future success will depend in part on its ability
to attract, motivate and retain highly skilled technical, managerial and
marketing personnel. Competition for such personnel is intense and there can be
no assurance that the Company will be successful in attracting, motivating and
retaining key personnel.
 
     Uncertain Protection of Proprietary Rights.  Proprietary rights relating to
the Company's products are protected from unauthorized use by third parties only
to the extent that they are covered by valid and enforceable patents or are
maintained in confidence as trade secrets. The Company has several issued U.S.
patents and patent applications pending. The Company also owns corresponding
foreign patents in a number of jurisdictions throughout the world. There can be
no assurance that any patents now or hereafter owned by the Company will afford
protection against competitors. Proceedings initiated by the Company to protect
its proprietary rights could result in substantial costs to the Company. There
can be no assurance that competitors of the Company, some of whom have
substantially greater resources than those of the Company, will not initiate
litigation to challenge the validity of the Company's patents, or that they will
not use their resources to design comparable products that do not infringe the
Company's patents. The Company could incur substantial costs and diversion of
management resources with respect to the defense of any such claims, which could
have a material adverse effect on the Company's business, financial condition
and results of operations. Furthermore, parties making such claims could secure
a judgment awarding substantial damages, as well as injunctive or other
equitable relief, that could effectively block the Company's ability to make,
use, sell, distribute or market its products and services in the U.S. and
abroad. There may also be pending or issued patents of which the Company is not
aware held by parties not affiliated with the Company that relate to the
Company's
                                        7
<PAGE>   8
 
products or technologies. In the event that a claim relating to proprietary
technology or information is asserted against the Company, the Company may need
to acquire licenses to, or contest the validity of, any such competitor's
proprietary technology. It is likely that significant funds would be required to
contest the validity of any such competitor's proprietary technology. There can
be no assurance that any license required under any such competitor's
proprietary technology would be made available on acceptable terms or that the
Company would prevail in any such contest. There can be no assurance that the
steps taken by the Company to protect its proprietary rights will be adequate to
prevent misappropriation of its technology or independent development by others
of similar technology. In addition, the laws of some jurisdictions do not
protect the Company's proprietary rights to the same extent as the laws of the
U.S. and there can be no assurance that the available protections will be
adequate.
 
     The Company also relies on trade secrets and proprietary know-how that it
seeks to protect, in part, by confidentiality agreements with its employees and
consultants. There can be no assurance that these agreements will not be
breached, that the Company will have adequate remedies for any breach or that
the Company's trade secrets will not otherwise become known or independently
developed by competitors. See "Business -- Intellectual Property."
 
     Government Regulations and Approvals.  The demand for certain of the
Company's products, both in the United States and abroad, is subject to or
influenced by various domestic and foreign environmental and consumer protection
laws. The Company designs, develops and markets these products, in part, to meet
customer needs created by existing and anticipated regulations, and any changes
in these regulations may adversely affect consumer demand for the Company's
products. See "Business -- Industry Background." In addition, the manufacture
and sale of products that utilize gamma technology is subject to certain
federal, state, local and foreign regulations including licensing and other
regulatory approvals. In particular, the Company is required, and has obtained,
licenses from the Nuclear Regulatory Commission ("NRC") and the State of Texas
for the storage and handling of the nuclear sources used in its gamma
measurement instruments at its Round Rock, Texas facility. These licenses are
subject to periodic review and renewal and the facility is subject to periodic
inspection. Failure of the Company to maintain such licenses or to comply with
applicable regulations could have a material adverse effect on the Company's
business, financial condition and results of operations. Further, new or more
stringent regulations may be adopted or imposed by the NRC or other applicable
regulatory authorities and there can be no assurance that the Company will be
able to comply with such changes, the result of which could have a material
adverse effect on the Company's business, financial condition and results of
operation.
 
     Shares Eligible for Sale After this Offering.  The 10,666,667 shares of
Common Stock owned by Thermo Instrument will become eligible for sale under Rule
144 promulgated under the Securities Act commencing in August 1998. In addition,
as long as Thermo Instrument is able to elect a majority of the Company's Board
of Directors, it will have the ability to cause the Company at any time to
register for resale all or a portion of the Common Stock owned by Thermo
Instrument. Additional shares of Common Stock issuable upon exercise of options
granted under the Company's stock-based compensation plans will become available
for future sale in the public market at prescribed times. Sales of a significant
number of shares of Common Stock in the public market following this offering
could adversely affect the market price of the Common Stock. See "Relationship
with Thermo Electron and Thermo Instrument" and "Shares Eligible for Future
Sale."
 
     Potential Conflict of Interest.  For financial reporting purposes the
Company's financial results are included in the consolidated financial
statements of Thermo Instrument and Thermo Electron. Certain officers of the
Company, including John N. Hatsopoulos, Paul F. Kelleher and Earl R. Lewis are
also officers and Directors of Thermo Instrument, Thermo Electron and/or other
subsidiaries of Thermo Electron. These officers will devote only a small portion
of their working time (anticipated to be less than 5% in the case of Messrs.
Hatsopoulos and Kelleher and less than 10% in the case of Mr. Lewis) to the
affairs of the Company. All other members of management of the Company are
full-time employees of the Company. Further, it is an essential element of
Thermo Electron's career development program that successful executives and
managers be considered for positions of increased responsibility anywhere within
the Thermo Electron family of companies. Certain of the Company's executives and
managers were promoted to their present positions under this policy. There can
be no assurance that the Company's present executives and managers will not
assume other positions within the Thermo Electron family of companies, causing
them to be unavailable to serve the Company or to
                                        8
<PAGE>   9
 
reduce the amount of time that they devote to the affairs of the Company. Since
the members of the Board of Directors of the Company who are also affiliated
with Thermo Electron or Thermo Instrument have fiduciary duties to the
stockholders of the Company and to the stockholders of Thermo Electron and/or
Thermo Instrument, as applicable, such individuals will consider both the
short-term and the long-term impact of operating decisions on the Company as
well as the impact of such decisions on the consolidated financial results of
Thermo Instrument and Thermo Electron. The interest of Thermo Electron and
Thermo Instrument on the one hand and the Company on the other hand may differ
and in some cases, the impact of such decisions could be disadvantageous to the
Company while advantageous to Thermo Instrument or Thermo Electron, or vice
versa. For example, conflicts may arise with respect to possible future
acquisitions by the Company of assets or businesses of Thermo Instrument or
another Thermo Electron affiliated company in which the purchase price to be
paid by the Company is subject to negotiation between the Company and Thermo
Instrument or such other Thermo Electron affiliated company. These negotiations
will be subject to the potential conflicts associated with related-party
transactions. The Company is an indirect subsidiary of Thermo Electron and is a
party to various agreements with Thermo Electron. These agreements may limit the
Company's operating flexibility. There can be no assurance that these factors
will not have a material adverse effect on the Company's business, financial
condition or results of operations. See "Relationship with Thermo Electron and
Thermo Instrument."
 
     Control by Thermo Instrument.  The Company's shareholders do not have the
right to cumulate votes for the election of directors. Thermo Instrument, which
owns approximately 68.3% of the voting stock of the Company, has the power to
elect the entire Board of Directors of the Company and to approve or disapprove
any corporate actions submitted to a vote of the Company's stockholders. See
"Relationship with Thermo Electron and Thermo Instrument" and "Security
Ownership of Certain Beneficial Owners and Management."
 
     Lack of Dividends.  The Company anticipates that for the foreseeable
future, the Company's earnings, if any, will be retained for use in the business
and that no cash dividends will be paid on the Common Stock. Declaration of
dividends on the Common Stock will depend upon, among other things, future
earnings, the operating and financial condition of the Company, its capital
requirements and general business conditions. See "Dividend Policy."
 
                                        9
<PAGE>   10
 
                          PRICE RANGE OF COMMON STOCK
 
     The Company's Common Stock has been publicly traded on the AMEX (symbol:
ONX) since its initial public offering on March 25, 1998. The following table
sets forth, for the periods indicated, the high and low sales prices of the
Company's Common Stock as reported in the consolidated transaction reporting
system since that date.
 
<TABLE>
<CAPTION>
                                                              HIGH       LOW
                                                              ----       ---
1998
----
<S>                                                         <C>        <C>

First Quarter (March 25, 1998 through April 4, 1998)........$14 11/16  $14 1/2
Second Quarter.............................................. 15 3/4     12 3/8
Third Quarter (through July 24, 1998)....................... 12 3/8     11 3/8

</TABLE>
 
     On July 24, 1998, the closing price of the Common Stock on the AMEX was
$12.00 per share. As of July 24, 1998, the Company had 105 holders of record of
its Common Stock, not including holdings in street or nominee names.
 
                                DIVIDEND POLICY
 
     The Company anticipates that for the foreseeable future the Company's
earnings, if any, will be retained for use in the business and that no cash
dividends will be paid on the Common Stock.
 
                 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
 
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                1998
                                               -------
                                                FIRST
                                               -------
<S>                                            <C>      
Revenues.....................................  $37,144
Gross Profit.................................   15,520
Net Income...................................    2,217
Basic and Diluted Earnings per Share.........      .18
                                         
<CAPTION>                                
                                                               1997
                                               -------------------------------------
                                                FIRST    SECOND     THIRD    FOURTH
                                               -------   -------   -------   -------
<S>                                            <C>       <C>       <C>       <C>
Revenues.....................................  $26,429   $28,962   $29,240   $36,894
Gross Profit.................................   10,426    11,883    11,955    15,255
Net Income...................................    1,606     2,135     2,031     3,027
Basic and Diluted Earnings per Share.........      .15       .20       .19       .25

<CAPTION>                                
                                                               1996
                                               -------------------------------------
                                                FIRST    SECOND     THIRD    FOURTH
                                               -------   -------   -------   -------
<S>                                            <C>       <C>       <C>       <C>
Revenues.....................................  $18,907   $22,951   $24,471   $28,987
Gross Profit.................................    6,836     8,411     9,162    11,192
Net Income...................................      619       959     1,454     1,826
Basic and Diluted Earnings per Share.........      .06       .09       .14       .17

</TABLE>                                 


 
                                       10
<PAGE>   11
 
                                 CAPITALIZATION
 
     The following table sets forth the short-term debt and capitalization of
the Company as of April 4, 1998.
 
<TABLE>
<CAPTION>
                                                                    APRIL 4, 1998
                                                                ---------------------
                                                                (IN THOUSANDS, EXCEPT
                                                                   SHARE AMOUNTS)
<S>                                                             <C>
Note Payable to Parent Company..............................          $ 12,000
                                                                      ========
Shareholders' Investment:
  Common stock, $.01 par value, 50,000,000 shares
     authorized; 15,606,307 shares issued and
     outstanding(1).........................................          $    156
  Capital in excess of par value............................           144,121
  Retained earnings.........................................             5,367
  Cumulative translation adjustment.........................               942
                                                                      --------
     Total Shareholders' Investment.........................          $150,586
                                                                      ========
</TABLE>
 
---------------
(1) Does not include 1,091,667 shares of Common Stock reserved for issuance
    under the Company's stock-based compensation plans. As of April 4, 1998,
    options to purchase 581,895 shares of Common Stock had been granted under
    these plans. See "Management -- Compensation of Directors" and
    "-- Compensation of Executive Officers" and Notes 3 and 10 of Notes to
    Consolidated Financial Statements.
 
                                       11
<PAGE>   12
 
                           SELECTED FINANCIAL INFORMATION
 
     The selected financial information below as of and for the fiscal years
ended December 30, 1995, December 28, 1996 and January 3, 1998 has been derived
from the Company's Consolidated Financial Statements, which have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report included elsewhere in this Prospectus. This information should be read in
conjunction with the Company's Consolidated Financial Statements and related
notes included elsewhere in this Prospectus. The selected financial information
as of and for the fiscal years ended December 31, 1993 and December 31, 1994 and
for the periods from January 1, 1994 through March 15, 1994 and from March 16,
1994 through December 31, 1994 and for the three-month periods ended March 29,
1997 and April 4, 1998, has not been audited but, in the opinion of the Company,
includes all adjustments (consisting only of normal, recurring adjustments)
necessary to present fairly such information in accordance with generally
accepted accounting principles applied on a consistent basis. The results of
operations for the three-month period ended April 4, 1998 are not necessarily
indicative of results for the entire year.
<TABLE>
<CAPTION>
                                                                  THE
                                    PREDECESSOR(1)            COMPANY(1)         TOTAL               THE COMPANY(1)
                             -----------------------------   -------------   -------------   -------------------------------
                             FISCAL YEAR   JANUARY 1, 1994   MAR. 16, 1994   JAN. 1, 1994            FISCAL YEAR(2)
                             -----------       THROUGH          THROUGH         THROUGH      -------------------------------
                                1993       MARCH 15, 1994    DEC. 31, 1994   DEC. 31, 1994   1995(3)   1996(4)(5)   1997(7)
                             -----------   ---------------   -------------   -------------   -------   ----------   --------
                                                        (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                          <C>           <C>               <C>             <C>             <C>       <C>          <C>
STATEMENT OF OPERATIONS
  DATA:
Revenues...................    $82,885         $11,468          $50,591         $62,059      $72,105    $ 95,316    $121,525
                               -------         -------          -------         -------      -------    --------    --------
Costs and Operating
  Expenses:
    Cost of revenues.......     59,239           8,971           31,504          40,475       43,636      59,715      72,006
    Selling, general and
      administrative
      expenses.............     22,443           3,310           12,245          15,555       17,310      21,935      28,201
    Research and
      development
      expenses.............      3,284             835            3,182           4,017        5,042       5,568       6,830
                               -------         -------          -------         -------      -------    --------    --------
                                84,966          13,116           46,931          60,047       65,988      87,218     107,037
                               -------         -------          -------         -------      -------    --------    --------
Operating Income (Loss)....     (2,081)         (1,648)           3,660           2,012        6,117       8,098      14,488
Interest Income............         --              --               --              --           --          --         344
Interest Expense...........         --              --               --              --           --          --        (113)
                               -------         -------          -------         -------      -------    --------    --------
Income (Loss) Before
  Provision for Income
  Taxes....................     (2,081)         (1,648)           3,660           2,012        6,117       8,098      14,719
Provision for (Benefit
  from) Income Taxes.......       (526)           (672)           1,420             748        2,490       3,240       5,920
                               -------         -------          -------         -------      -------    --------    --------
Net Income (Loss)..........    $(1,555)        $  (976)         $ 2,240         $ 1,264      $ 3,627    $  4,858    $  8,799
                               =======         =======          =======         =======      =======    ========    ========
Basic and Diluted Earnings
  per Share(6).............                                     $   .21                      $   .34    $    .46    $    .79
                                                                =======                      =======    ========    ========
Weighted Average Shares(6):
    Basic..................                                      10,667                       10,667      10,667      11,083
                                                                =======                      =======    ========    ========
    Diluted................                                      10,667                       10,667      10,667      11,083
                                                                =======                      =======    ========    ========
BALANCE SHEET DATA (AT END
  OF PERIOD):
Working Capital............    $27,977                          $13,327         $13,327      $26,199    $ 29,873    $ 41,947
Total Assets...............     65,015                           71,710          71,710       76,221      97,010     159,709
Shareholders' Investment...     18,394                           50,795          50,795       59,791      73,110     104,938
 
<CAPTION>
 
                              THREE MONTHS ENDED
                             --------------------
                             MARCH 29,   APRIL 4,
                               1997        1998
                             ---------   --------
 
<S>                          <C>         <C>
STATEMENT OF OPERATIONS
  DATA:
Revenues...................   $26,429    $ 37,144
                              -------    --------
Costs and Operating
  Expenses:
    Cost of revenues.......    16,003      21,624
    Selling, general and
      administrative
      expenses.............     6,292       9,633
    Research and
      development
      expenses.............     1,449       2,177
                              -------    --------
                               23,744      33,434
                              -------    --------
Operating Income (Loss)....     2,685       3,710
Interest Income............        --         259
Interest Expense...........        --        (261)
                              -------    --------
Income (Loss) Before
  Provision for Income
  Taxes....................     2,685       3,708
Provision for (Benefit
  from) Income Taxes.......     1,079       1,491
                              -------    --------
Net Income (Loss)..........   $ 1,606    $  2,217
                              =======    ========
Basic and Diluted Earnings
  per Share(6).............   $   .15    $    .18
                              =======    ========
Weighted Average Shares(6):
    Basic..................    10,667      12,524
                              =======    ========
    Diluted................    10,667      12,530
                              =======    ========
BALANCE SHEET DATA (AT END
  OF PERIOD):
Working Capital............   $32,228    $ 87,615
Total Assets...............    95,717     198,512
Shareholders' Investment...    76,107     150,586
</TABLE>
 
---------------
 
(1) On March 16, 1994, Thermo Instrument acquired the Predecessor from Baker
    Hughes. The periods prior to March 16, 1994 represent the results of TN
    Technologies, CAC, Westronics and Houston Atlas as included in Baker Hughes'
    financial statements. Periods subsequent to March 15, 1994 represent the
    results of TN Technologies, CAC, Westronics and Houston Atlas as included in
    Thermo Instrument's consolidated financial statements. The principal
    difference in the basis of accounting between the Predecessor and the
    Company relates to the cost in excess of net assets of acquired companies
    (goodwill), the amortization of which approximates $730,000 per year.
 
                                       12
<PAGE>   13
 
(2) The Company's 1995, 1996 and 1997 fiscal years set forth in this table and
    referred to elsewhere in this Prospectus ended on December 30, 1995,
    December 28, 1996 and January 3, 1998, respectively.
 
(3) Includes the results of Flow Automation since its acquisition by Thermo
    Instrument on July 20, 1995.
 
(4) Includes the results of VG Gas since its acquisition by Thermo Instrument on
    March 29, 1996.
 
(5) Includes the results of Kay-Ray/Sensall since its acquisition by Thermo
    Instrument on October 22, 1996.
 
(6) Pursuant to Securities and Exchange Commission requirements, earnings per
    share for the Company have been presented for all periods subsequent to
    March 15, 1994. Weighted average shares for such periods include 10,666,667
    shares issued to Thermo Instrument in connection with the initial
    capitalization of the Company and, in fiscal 1997, the effect of shares sold
    through the Company's private placements.
 
(7) Includes the results of Angus since its acquisition by Thermo Instrument on
    May 8, 1997 and the results of the Peek Measurement Business, the Ranger
    product line and Fluid Data since their acquisitions by the Company on
    November 6, 1997, November 24, 1997 and December 2, 1997, respectively.
 
                                       13
<PAGE>   14
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
OVERVIEW
 
     The Company designs, develops, markets and services sophisticated field
measurement instruments and on-line sensors. These products incorporate a range
of advanced measurement technologies to provide real-time data collection,
analysis and local control functions to enhance production efficiency, improve
process and quality control, ensure regulatory compliance and increase employee
safety. The Company manufactures field measurement instruments and on-line
sensors in four general product areas: flow instruments, level and density
instruments, composition analysis instruments and industry-specific sensors and
recording instruments.
 
     The Company's products are sold primarily to participants in process
industries, including oil and gas producers, processors and distributors and
chemical companies, as well as water/wastewater, iron, steel, electric utility,
minerals and mining and pulp and paper companies. In 1997, customers in the oil
and gas industries accounted for approximately 61% of the Company's total
revenues, with such revenues derived from both the production segment and the
refining and petrochemical segments of the industry. Demand for the Company's
products and services within the oil and gas industry is dependent upon the
level of capital spending by oil and gas companies for exploration, production
and distribution, which in turn is affected by current and anticipated oil and
gas prices, the discovery rate of new oil and gas reserves, political,
regulatory and economic conditions and the ability of oil and gas companies to
obtain capital. Decreases in oil and gas activities could have a significant
adverse effect upon the demand for the Company's products and related services,
which would materially adversely affect the Company's business, financial
condition and results of operations. See "Risk Factors -- Dependence on Oil and
Gas Industry."
 
     An element of the Company's strategy is to supplement its internal growth
with the acquisition of complementary products and technologies. The Company has
successfully completed several such acquisitions, having purchased the
businesses of Flow Automation in July 1995, VG Gas in March 1996, Kay-
Ray/Sensall in October 1996, Angus in May 1997, the Peek Measurement Business
effective November 1997, the Ranger product line in November 1997 and Fluid Data
in December 1997.
 
     Sales to customers outside of the United States and export revenues from
the United States accounted for approximately 25% and 18%, respectively, of
total revenues in 1997. Export sales in 1997 were made primarily to the United
Kingdom, Japan and South Korea. During 1997, the Company had exports from the
Company's U.S. and foreign operations to the Far East of approximately 8% of
total revenues. The Far East is experiencing a severe economic crisis, which has
been characterized by sharply reduced economic activity and liquidity, highly
volatile foreign-currency-exchange and interest rates, and unstable stock
markets. The Company's export sales to the Far East could be adversely affected
by the unstable economic conditions there. Although the Company seeks to charge
its customers in the same currency as its operating costs, the Company's
financial performance and competitive position can be affected by currency
exchange rate fluctuations affecting the relationship between the U.S. dollar
and foreign currencies.
 
RESULTS OF OPERATIONS
 
  First Quarter 1998 Compared With First Quarter 1997
 
     Revenues increased 41% to $37.1 million in the first quarter of 1998 from
$26.4 million in the first quarter of 1997. Revenues increased $9.0 million due
to the inclusion of revenues from acquired businesses. This consisted primarily
of $4.9 million from the Peek Measurement Business and $2.8 million from Fluid
Data. Revenues from existing businesses grew 6%, primarily due to an increase in
sales of industry-specific instruments as a result of an increase in spending by
the production segment of the oil and gas industry and, to a lesser extent,
increased sales of level and density instruments.
 
     The gross profit margin increased to 42% in the first quarter of 1998 from
39% in the first quarter of 1997, primarily due to the inclusion of
higher-margin revenues from acquired businesses and, to a lesser extent, an
increase in higher-margin revenues from industry-specific instruments.
 
                                       14
<PAGE>   15
 
     Selling, general and administrative expenses as a percentage of revenues
increased to 26% in the first quarter of 1998 from 24% in the first quarter of
1997, primarily due to higher selling, general, and administrative expenses as a
percentage of revenues at acquired businesses. Research and development expenses
increased to $2.2 million during first quarter of 1998 from $1.4 million in the
first quarter of 1997. This increase was primarily due to acquisitions and, to a
lesser extent, an increase in spending at certain industry-specific instrument
and composition analysis businesses.
 
     Interest income in the first quarter of 1998 primarily represents interest
earned on the invested proceeds from the Company's third quarter 1997 private
placement of common stock. Interest expense in the first quarter of 1998
represents interest on indebtedness relating to the November 1997 acquisition of
the Peek Measurement Business. In January 1998, the Company paid the $19.1
million purchase price for the Peek Measurement Business. The Company borrowed
$12.0 million from Thermo Instrument to partially fund the payment. The $12.0
million was repaid in April 1998.
 
     The effective tax rate was 40.2% in the first quarters of 1998 and 1997.
The effective tax rates exceeded the statutory federal income tax rate primarily
due to the impact of state income taxes and nondeductible amortization of cost
in excess of net assets of acquired companies.
 
     The Company is currently assessing the potential impact of the year 2000 on
the processing of date-sensitive information by the Company's computerized
information systems and on products purchased as well as products sold by the
Company. While there can be no assurance that all problems arising from the year
2000 will be identified and resolved satisfactorily prior to the end of 1999,
the Company presently believes that the year 2000 problem will not pose
significant operational problems for the Company or have a material effect on
future results of operations.
 
  1997 Compared With 1996
 
     Revenues increased 27% to $121.5 million in 1997 from $95.3 million in
1996. Revenues increased $19.7 million due to acquisitions. This consisted
primarily of $8.1 million from Kay-Ray/Sensall, $4.2 million from the Peek
Measurement Business, $3.3 million from VG Gas, $3.1 million from Angus and $1.0
million from other acquisitions. Revenues from existing businesses grew 6.8%,
primarily due to an increase in sales of industry-specific instruments as a
result of an increase in spending by the production segment of the oil and gas
industry. This increase was offset in part by a decrease in revenues from
composition analysis instruments. The decrease in sales of composition analysis
instruments primarily relates to lower spending by the refining and
petrochemical segments of the oil and gas industry and, to a lesser extent, the
chemicals industry.
 
     The gross profit margin increased to 41% in 1997 from 37% in 1996,
primarily due to an increase in higher-margin revenues from industry-specific
instruments. The inclusion of higher-margin revenues at Kay-Ray/Sensall,
acquired in October 1996, also contributed to the improved overall margin. In
addition, the gross profit margin from sales of flow instruments increased as a
result of the introduction of certain new, higher-margin products.
 
     Selling, general and administrative expenses as a percentage of revenues
remained consistent at 23% in both 1997 and 1996.
 
     Research and development expenses increased to $6.8 million in 1997 from
$5.6 million in 1996. This increase was primarily due to acquisitions and, to a
lesser extent, an increase in spending at certain industry-specific instrument
and composition analysis businesses.
 
     Interest income in 1997 primarily represents interest earned on the
invested proceeds from the third quarter 1997 private placement of the Company's
common stock. Interest expense in 1997 represents interest on the indebtedness
relating to the acquisition of the Peek Measurement Business.
 
     The effective tax rate was 40.2% in 1997 and 40.0% in 1996. The effective
tax rates exceed the statutory federal income tax rate primarily due to the
impact of state income taxes and nondeductible amortization of cost in excess of
net assets of acquired companies.
 
                                       15
<PAGE>   16
 
  1996 Compared With 1995
 
     Revenues increased 32% to $95.3 million in 1996 from $72.1 million in 1995.
Revenues increased $19.5 million due to acquisitions. The increase consisted
primarily of $9.7 million from VG Gas, $7.5 million from Flow Automation and
$2.3 million from Kay-Ray/Sensall. Revenues from existing businesses grew 5.1%,
primarily due to an increase in sales of industry-specific instruments as a
result of an increase in spending by the production segment of the oil and gas
industry. This increase was offset in part by a decrease in revenues from
composition analysis instruments and level density sensors for the reasons
discussed in the results of operations for 1997 compared with 1996.
 
     The gross profit margin decreased to 37% in 1996 from 39% in 1995,
primarily due to the Company's 1996 initiation of an outsourcing program for
mechanical assemblies and electronic components in its industry-specific
instrument product lines. In addition to these set-up costs, the Company
introduced three new industry-specific products in 1996, initially resulting in
higher cost of goods sold.
 
     Selling, general and administrative expenses as a percentage of revenues
decreased to 23% in 1996 from 24% in 1995, primarily due to lower costs as a
percentage of revenues at VG Gas. Research and development expenses increased to
$5.6 million in 1996 from $5.0 million in 1995. An increase in costs of $1.5
million related to acquired businesses was offset in part by a decrease in
spending at certain industry-specific instrument and composition analysis
instrument businesses due to the completion of several research and development
projects at those businesses.
 
     The effective tax rate was 40.0% in 1996 and 40.7% in 1995. The effective
tax rates exceed the statutory federal income tax rate primarily due to the
impact of state income taxes and nondeductible amortization of cost in excess of
net assets of acquired companies.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     Consolidated working capital was $87.6 million as of April 4, 1998,
compared with $41.9 million as of January 3, 1998. Included in working capital
are cash and cash equivalents of $61.1 million as of April 4, 1998, compared
with $25.0 million as of January 3, 1998.
 
     During the first quarter of 1998, the Company's operating activities had
substantially no impact on cash. Cash flow from the Company's operations was
offset by cash of $2.4 million used to fund an increase in inventories primarily
due to a buildup in the inventories in the Company's industry-specific and
composition analysis businesses as result of long lead-time orders.
 
     The Company used $19.1 million of cash for investing activities during the
first quarter of 1998. In January 1998, the Company paid Thermo Power the
purchase price of $19.1 million for the Peek Measurement Business, acquired
effective November 1997. The Company used $0.4 million for purchases of
property, plant and equipment during the first quarter of 1998. The Company
expects to expend approximately $1.5 million for property, plant and equipment
during the remainder of 1998.
 
     The Company's financing activities provided $55.2 million of cash during
the first quarter of 1998. The Company raised $43.2 million of cash from the
March 1998 initial public offering of common stock (Note 2). In addition, the
Company borrowed $12.0 million from Thermo Instrument to partially fund the
payment for the Peek Measurement Business. The note to Thermo Instrument bore
interest at the 90-day Commercial Paper Composite Rate plus 25 basis points, set
at the beginning of each quarter, and was repaid on April 10, 1998, with a
portion of the funds received from the Company's initial public offering.
 
     On July 7, 1998, the Company acquired the capital stock of certain
businesses of the Mid-South Companies for $12.7 million in cash. The businesses
acquired include Mid-South Controls and Services Inc. and Mid-South Power
Systems Inc. Mid-South Controls and Services Inc. specializes in the assembly
and service of wellhead measurement, control and safety shutdown systems that
are required by oil and gas companies operating offshore platforms. Mid-South
Power Systems Inc. provides electrical generators, switchgear and motor control
units that are used in a wide variety of industrial applications.
 
                                       16
<PAGE>   17
 
     Although the Company expects to have positive cash flow from its existing
operations, the Company anticipates it will require significant amounts of cash
for the possible acquisition of complementary businesses and technologies. The
Company expects that it will finance these acquisitions through a combination of
internal funds, additional debt or equity financing from the capital markets, or
short-term borrowings from Thermo Instrument or Thermo Electron, although there
is no agreement with these companies to ensure that funds will be available on
acceptable terms or at all. The Company believes that its existing resources are
sufficient to meet the capital requirements of its existing businesses for the
foreseeable future.
 
                                       17
<PAGE>   18
 
                                    BUSINESS
 
OVERVIEW
 
     The Company designs, develops, markets and services sophisticated field
measurement instruments and on-line sensors. The Company utilizes its
proprietary knowledge and significant experience regarding application-specific
technologies to develop products that address the needs of process industry
participants within targeted markets. The Company's products gather information
regarding the flow, level, density or composition of a particular material and,
using advanced communications techniques, communicate this information to a
customer's centralized control location.
 
     The Company manufactures field measurement instruments and on-line sensors
in the following four general product areas:
 
     - Flow Instruments.  The Company offers a range of instruments designed to
        measure and locally control the flow of liquids and gases. These
        instruments include microprocessor-based gas flow computers,
        non-contacting ultrasonic flow meters, impeller flow meters, turbine
        flow meters and air flow measurement systems.
 
     - Level and Density Instruments.  The Company's level and density
        instruments incorporate sophisticated measurement technologies that
        measure and locally control the level and density of liquid and solid
        materials and the density of gaseous materials. These instruments
        include intelligent point level and continuous level measurement
        instruments.
 
     - Composition Analysis Instruments.  The Company's composition analysis
        instruments are used for on-line analysis of the chemical composition of
        solids, liquids and gases. The Company's instruments include sulfur
        analyzers, gas chromatographs, portable elemental analysis instruments,
        infrared and ultraviolet spectrometers and on-line mass spectrometers.
 
     - Industry-Specific Instruments.  The Company offers sophisticated sensor
        systems that are used in specific industries to provide real-time
        measurement, data collection, recording, analysis and local control of
        process functions. These special purpose instruments and sensors include
        rod pump controllers, strip chart recorders, process alarm monitors and
        other data acquisition systems.
 
INDUSTRY BACKGROUND
 
     Industry sources estimate that worldwide revenues for the field measurement
instruments and sensors market segment of the process control market were
approximately $10.4 billion in 1995 and will grow to approximately $20.0 billion
by the year 2000, which represents a compound annual growth rate of
approximately 14%. Factors contributing to this growth include competitive
pressures to increase efficiencies and reduce costs; technological advances,
which have increased the availability of higher quality microprocessor-based
sensors; the increased use of sensor-intensive, model-based controls of process
functions; deregulation and privatization; developments in communications
protocol and computer systems; and concerns over regulatory compliance and
employee safety. The Company's current products address approximately $3.3
billion of the field measurement instruments and sensors segment of the process
control market.
 
     Participants in process industries need to monitor, analyze and control
their operations more efficiently in order to optimize production and
distribution and to remain competitive. In order to increase the output and
quality of products while reducing costs, these participants must consistently,
accurately and reliably measure, analyze and control the flow, level, density,
composition, pressure and temperature of the materials that are used in their
industrial processes, including those materials that they are producing and
distributing. The field measurement instruments and sensors market generally can
be divided into two categories: traditional mechanical sensors and advanced
intelligent sensors, which incorporate microprocessor-based technologies to
provide real-time data collection, analysis and local control functions.
Traditional analog and mechanical sensors cannot provide the levels of accuracy
and reliability that process industry participants need in today's increasingly
competitive global marketplace. Participants in the natural gas industry, for
example, can no longer compete effectively using traditional flow measurement
instruments for natural gas transfer because
 
                                       18
<PAGE>   19
 
such instruments are slow, labor intensive and often produce inaccurate results,
translating into lost profits and wasted product. As a result, process industry
participants are seeking more advanced measurement technologies that they can
economically utilize at multiple points throughout their operations.
 
     Developments in communications protocols and computer systems, the trend
away from analog to digital technology and advances in technologies, such as
sophisticated electronic, ultrasonic and radar techniques, have facilitated the
development of advanced intelligent sensors. These sensors provide faster, more
reliable, efficient and accurate measurement instruments that allow considerably
more information to be collected, analyzed and communicated through the process
control system. By utilizing advanced, microprocessor-based sensor technologies
to measure, analyze and control their operations, process industry participants
are able to operate in environments that were previously considered unsafe or
not cost-effective and gain a competitive advantage over those who obtain and
monitor data utilizing traditional mechanical and analog devices. In addition,
as technological advances have allowed manufacturers to incorporate more
cost-effective, sophisticated microprocessor-based technologies into their
sensors and other measurement instruments, participants in complex industries
have increasingly sought to utilize multiple sensors to collect, record and
analyze data and locally control operations using model-based formulas.
 
     Deregulation and privatization in certain process industries, such as in
the natural gas and electric utility industries, make it even more critical for
participants in such industries to utilize accurate and reliable process
measurement technologies. For example, natural gas pipelines are now considered
"common carriers" and are therefore utilized by many different parties. As a
result, participants in the natural gas industry need highly sophisticated
sensors that are capable of quickly and accurately measuring the flow of natural
gas at the multiple custody transfer points within each system. This enables
them to accurately and automatically account and bill for gas flow in real time.
 
     At the same time, government regulations, increased record-keeping
requirements and worker safety concerns mandate tighter controls with advanced
diagnostics to monitor specific aspects of the industrial process and to avoid
releases and costly environmental clean-ups. In order to comply with government
regulations, participants in process industries are using more sophisticated
measurement instruments that are capable of accurately monitoring pollutant
levels, quickly detecting leaks, performing self diagnostics and storing and
monitoring data for periodic reports to government agencies. These advanced
sensors also enable participants to improve record-keeping and maintain a safer
workplace. For example, companies engaged in offshore oil production can monitor
and control their operations remotely in adverse weather conditions without
jeopardizing the safety of their employees.
 
STRATEGY
 
     The Company's objectives are to be a leading provider of field measurement
instruments and on-line sensors used in targeted industries within the process
control market and to expand the scope of its addressed markets within the field
measurement instruments and sensors market segment, while continuing to improve
its financial performance. The Company intends to achieve these objectives
through the implementation of the following key strategies:
 
     Broaden Technological Leadership and Product Offerings.  The Company
intends to continue to broaden its technologies and product offerings in order
to provide more comprehensive process measurement solutions for its customers.
The Company intends to utilize its experience and application-specific knowledge
to develop new applications for its existing technologies while expanding its
technological base. The Company also intends to develop or acquire technologies
for field measurement instruments and sensors not currently offered by the
Company.
 
     Maintain Market Focus.  The Company believes there are significant
opportunities to market and sell process measurement instruments to participants
within targeted markets that can best be served by companies with
industry-specific and application-specific technologies and knowledge. The
Company focuses on customers primarily in the oil and gas, chemical,
petrochemical, electric utility, pulp and paper manufacturing, semiconductor and
water/wastewater industries. The Company's sophisticated instrumenta-
 
                                       19
<PAGE>   20
 
tion and applications expertise are well-suited to the needs of these
industries, which are capital-intensive and have difficult measurement
applications.
 
     Pursue Acquisitions and Strategic Relationships.  The Company intends to
pursue acquisitions of, and strategic relationships with, companies that have
products, technologies and/or market presence that complement or augment its
existing technological base and current market presence. In addition, the
Company seeks to make acquisitions where it can add value through its financial,
operating, technological, marketing and management expertise. The field
measurement instruments and sensors segment of the process control industry is
highly fragmented, providing significant opportunities for industry
consolidation. The Company, with its successful acquisition track record and
strong financial resources, is well-positioned to be an active participant in
the consolidation of this market.
 
     Expand into New Geographic Markets.  The Company intends to expand
internationally through opening new sales and support offices and through
strategic acquisitions in geographic areas with significant growth
opportunities, including Latin America, Eastern Europe and the Pacific Rim.
 
     Expand Experienced Service and Support Organization.  The Company is
seeking to expand its preventive maintenance and aftermarket support activities,
which it sees as critical to sustaining relationships with customers as well as
being an important factor in generating new product sales in the industrial
process markets.
 
PRODUCTS
 
     The Company utilizes its proprietary knowledge and application-specific
expertise to offer instruments to participants in targeted industries within the
field measurement instruments and sensors segment of the process control market.
The Company's customers use its products to monitor, analyze and locally control
the flow, level, density and composition of gaseous, liquid and solid materials.
 
     The Company's flow measurement instruments measure and locally control the
flow of liquids and gases. The Company's level and density measurement
instruments incorporate sophisticated measurement technologies that measure and
locally control the level and density of liquid and solid materials and the
density of gaseous materials. The Company's composition analysis instruments
include field and on-line analysis instruments that are used to analyze the
chemical composition of solids, liquids and gases. The Company also offers
technologically advanced microprocessor-based sensors and recording instruments
that are utilized in specific industries for customized applications. The
Company incorporates a range of sophisticated measurement technologies into its
instruments, including gamma ray, radar, infrared, ultraviolet, ultrasonic and
vibrational measurement techniques.
 
  Flow Instruments
 
     The Company designs, develops, markets and services a broad product line of
mechanical and electronic flow measurement instruments that measure and locally
control the flow of liquids and gases. The Company's flow measurement
instruments include intelligent microprocessor-controlled flow computers, which
are remotely installed electronic flow metering instruments, often solar
powered, that are connected to the primary flow meters installed directly in the
customer's pipeline; non-contacting flow meters that use ultrasonic technology
mounted outside a customer's pipe; in-line turbine meters, which are designed to
function in a wide variety of operating conditions, including corrosive fluids,
high pressure gases, extreme temperatures and sanitary and hazardous
environments; and insertion turbine meters for use where in-line monitoring is
not economically or operationally viable, such as in large pipelines or where
pressure drop is critical. Suggested U.S. retail prices for the Company's flow
measurement instruments range from approximately $1,200 to $6,500 per unit.
Sales and related service of the Company's flow instruments accounted for
approximately 17% of the Company's total revenues for 1997.
 
     The Company's field flow computers are primarily utilized by customers in
the natural gas industry to monitor and locally control the flow of natural gas
at custody transfer points in the natural gas distribution chain. The Company's
ultrasonic flow meters, utilizing both Transit Time and Doppler technologies,
are sold primarily to customers in the water/wastewater industry for a variety
of applications. The Company believes
                                       20
<PAGE>   21
 
that it is the world leader in Doppler ultrasonic flow meters. The Company sells
its turbine and impeller meters to customers throughout the world in a diverse
range of industries, including the oil and gas, chemical processing,
petrochemical, pharmaceutical, semiconductor, pulp and paper, aerospace,
automotive, food and beverage, power generation and water/wastewater industries.
The Company's air flow measurement systems are used for a variety of air flow
applications, including drying, paint spraying, combustion and clean room
pressurization. Representative customers for the Company's flow measurement
instruments include affiliates or operations of Texaco Inc., Duke Energy
Corporation and Coastal Energy.
 
  Level and Density Instruments
 
     The Company designs, develops, markets and services intelligent point
level, continuous level and density measurement instruments that use a variety
of sophisticated technologies, including gamma, radar, ultrasonic and
vibrational measurement techniques, to meet the cost and application-specific
needs of process industry participants within targeted markets. The Company
believes that it is the world leader in level measurement instruments
incorporating gamma measuring technology and point level measurement instruments
incorporating ultrasonic measuring technology and that it is the only U.S.
manufacturer of continuous level instruments incorporating radar measuring
technology. The Company's level and density measurement instruments are
microprocessor-based and are designed to ensure increased accuracy and
reliability despite harsh process environments. In addition, they are primarily
non-contacting and therefore well-suited for use in industrial processes that
utilize harmful or toxic materials that cause maintenance problems for
traditional contacting techniques. The Company's point level instruments measure
the presence or absence of a substance, while its continuous level instruments
measure the changing level of a substance on an ongoing basis. Suggested U.S.
retail prices for the Company's level and density measurement instruments range
from approximately $1,000 to $8,500 per unit. Sales and related service of the
Company's level and density instruments accounted for approximately 29% of the
Company's total revenues for 1997.
 
     The Company's level measurement instruments are utilized within several
targeted industries, including the oil and gas, chemical, mineral and mining,
iron and steel, pharmaceutical, water/wastewater and pulp and paper industries.
Customers in these industries store large quantities of materials in tanks or
other storage vessels and use the Company's instruments to either continuously
measure and monitor levels of the stored materials or to ensure the presence of
either a minimum or maximum amount of the material. The Company's density
measurement products are used primarily in the paper industry to measure pulp
consistency and by pipeline companies responsible for transporting refined
petroleum products. Representative customers for the Company's level and density
measurement instruments include affiliates or operations of E.I. duPont De
Nemours & Co., The Dow Chemical Company and Mobil Oil Corporation.
 
  Composition Analysis Instruments
 
     The Company designs, develops, markets and services a variety of
instruments designed to analyze the chemical composition of solids, liquids and
gases. These products include lead acetate-based and chemiluminescent sulfur
analyzers, which utilize fiber optics and precision colorimetry for field and
on-line measurement of the sulfur content in liquid and gaseous materials; a
UV/Vis photodiode spectrometer used for sulfur recovery plant optimization;
on-line gas chromatographs, which are utilized in content and purity analysis of
natural gas and light hydrocarbon liquids, including butane and propane;
portable XRF-elemental analysis instruments that utilize proprietary sensors to
provide accurate, real-time analysis of the presence of metals and the
composition of alloys; and on-line mass spectrometers that provide highly
accurate, real-time analysis of the type and content of a variety of gases at
multiple points within a customer's operations. The Company believes that it is
a leader in the market for portable elemental analysis instruments, process
sulfur monitors and on-line mass spectrometers. Suggested U.S. retail prices for
the Company's composition analysis instruments range from approximately $35,000
to $225,000 per unit. Sales and related service of the Company's composition
analysis instruments accounted for approximately 16% of the Company's total
revenues for 1997.
 
     Customers use the Company's portable elemental analysis instruments for
field composition analysis of alloys, analysis of the presence of lead within
paint and composition analysis of the metallic content of soil,
 
                                       21
<PAGE>   22
 
particularly at Superfund sites. The Company's mass spectrometers are used in a
variety of process industries, including the petrochemical, pharmaceutical, iron
and steel and semiconductor industries for real-time, ultrasensitive measurement
of gases. Representative customers for the Company's composition analysis
instruments include affiliates or operations of Eastman Kodak Company, LSI Logic
Corp., Saudi ARAMCO and BASF AG.
 
  Industry-Specific Instruments
 
     The Company's industry-specific instruments include rod pump controllers,
remote data collection and communication devices known as Remote Terminal Units
("RTUs") and other specialized products utilized in oil and gas production,
processing and distribution, data acquisition systems, chart recorders, process
alarm monitors, current-to-pressure and pressure-to-current transducers and
AC-power monitoring instruments. Sales and related service of the Company's
industry-specific instruments accounted for approximately 38% of the Company's
total revenues for 1997.
 
     The Company specializes in the development, installation and service of
scalable and redundant rod pump controllers and RTUs that are utilized to
automate the measurement, control, safety and environmental protection needs in
onshore and offshore oil and gas production and pipeline transmission. These
products incorporate microprocessor-based, smart technologies to provide
customers with a variety of functions, including leak detection, gas flow
measurement, custody transfer data and on-line gas composition analysis.
Suggested U.S. retail prices for these specialized products range from
approximately $1,200 to $100,000 per unit.
 
     In addition, the Company offers a range of wellhead safety and control
products that monitor, control and provide failsafe shutdown of oil and gas
production wells. To complement these products, the Company developed a subsea
control module to assist in oil production from reserves below the ocean floor.
The control module rests on the ocean floor to monitor, analyze and locally
control the level and flow of oil in up to four oil wells and is connected to
operations located on the ocean surface by a tube through which the oil is
transported. This product is designed to offer a more efficient and
cost-effective alternative to traditional offshore drilling, which requires
substantial time and expense in building and later disassembling surface
drilling platforms. The control module also allows oil companies to access oil
reserves that would otherwise be inaccessible either because of their location
or cost. The control module was first presented and exhibited in late 1997 at an
offshore engineering conference in Aberdeen, Scotland. Based on feedback
received from other conference participants, the Company made improvements to
the control module and it has since been hydrostatically certified by the
National Hyperbaric Centre in Aberdeen, Scotland to operate at a maximum depth
of 1,000 meters beneath the ocean surface. The Company is currently responding
to requests for quotations and actively soliciting an opportunity for its
initial commercial application. The Company anticipates that the subsea control
module will sell for approximately $1 million per unit. See "-- Research and
Development."
 
     The Company also offers data acquisition systems, paper and paperless strip
chart recorders, process alarm monitors, current-to-pressure and
pressure-to-current transducers and AC-power monitoring instruments to customers
in the power generation and transmission, petrochemical, chemical, pulp and
paper, water/wastewater and pharmaceutical industries. The Company's strip chart
recorders are designed to continuously and accurately measure, display and
record critical variables within an industrial or manufacturing process and
provide plant managers with valuable information regarding flow, level, density,
temperature and pressure. Suggested U.S. retail prices for the Company's strip
chart recorders range from approximately $1,300 to $10,000 per unit. The Company
has sold its strip chart recorders to approximately 90% of the nuclear power
plants in the United States. The Company's alarm monitoring systems provide an
interface for sensors measuring pressure, temperature, vibration or gas
detection, which in turn allow critical alarm conditions to be displayed or
communicated to a centralized control system. The Company's current-to-pressure
and pressure-to-current transducers are used for valve positioning in processing
plants for the chemical, petrochemical, power generation, pulp and paper and
pharmaceutical industries. Representative customers for the Company's
industry-specific instruments include operations or affiliates of Shell Oil
Company, Chevron Corporation, Pemex, Duke Energy Corporation and Houston
Lighting & Power Company.
 
                                       22
<PAGE>   23
 
RECENT ACQUISITIONS
 
     An element of the Company's strategy is to supplement its internal growth
with the acquisition of complementary products and technologies. See " --
Strategy." The Company has recently completed the acquisition of a number of
businesses, including those described below:
 
     Mid-South.  In July 1998, the Company, through CAC, acquired the stock of
certain businesses of the Mid-South Companies, a group of related, privately
held companies, for $12.7 million in cash, subject to a post-closing adjustment.
The businesses acquired include Mid-South Controls and Services Inc. and Mid-
South Power Systems Inc. Mid-South Controls and Services Inc. specializes in the
assembly and service of wellhead measurement, control and safety shutdown
systems that are required by oil and gas companies operating offshore platforms.
Mid-South Power Systems Inc. provides electrical generators, switchgear and
motor control centers that are used in a wide variety of industrial
applications. The acquisition of the Mid-South Companies broadens the Company's
overall product offerings and expands its presence in the offshore Gulf of
Mexico market.
 
     Fluid Data.  In December 1997, the Company, through Houston Atlas, acquired
from Elsag-Bailey, Inc. substantially all the assets of Fluid Data, a
Texas-based manufacturer and distributor of pyrolysis gas sampling systems,
on-line process gas chromatographs, chemiluminescent sulfur chromatography
systems and high speed calorimeters, for $8.5 million and the assumption of
certain liabilities. Fluid Data's on-line gas chromatograph technology, combined
with the Houston Atlas gas chromatograph business, gives the Company a strong
presence in the hydrocarbon processing industry, the largest market segment
existing in the on-line analytical marketplace. The acquisition of the Fluid
Data business complements the Company's existing product lines, adds several new
products to its current offerings and substantially contributes to the Company's
strategy to provide its customers with an integrated, comprehensive parts and
service business.
 
     Peek Measurement.  In November 1997, Thermo Power, a majority-owned
subsidiary of Thermo Electron, completed a tender offer for all of the
outstanding ordinary shares of Peek plc, a UK-based manufacturer and supplier of
electronic traffic control instrumentation, as well as density and flow meters.
The Company acquired from Thermo Power all of the outstanding capital stock of
Peek Measurement Limited, Brandt Instruments, Inc. and Peek Measurement, Inc.,
collectively representing the process instrumentation business of Peek plc (the
"Peek Measurement Business"), for approximately $19.1 million, effective
November 1997.
 
     The product lines of the Peek Measurement Business include non-invasive
ultrasonic flow meters, impeller flow meters, air flow measurement systems,
process alarm monitors, gas and liquid density meters and current-to-pressure
and pressure-to-current transducers. The acquisition of the Peek Measurement
Business augments the Company's current technologies and provides it with
significant presence in the water/wastewater market.
 
     Ranger.  In November 1997, the Company, through Westronics, acquired from a
subsidiary of Danaher Corporation, the assets comprising the Ranger product
line, a New York-based manufacturer and distributor of power-monitoring and
data-acquisition equipment, for $1.8 million and the assumption of certain
liabilities. Since the acquisition, the Company has integrated the Ranger
product line with the Angus Electronics division of Westronics in Indianapolis,
Indiana. The market for Ranger's products is evenly divided between industrial
and utility customers. The combination of Ranger's products with those of
Westronics allows for a broader range of products to be marketed to a much
larger and geographically diverse customer base, especially internationally
where Westronics has an established presence. Additionally, Ranger's presence in
the utility industry is increasingly important to the Company as the electric
industry continues towards domestic deregulation.
 
     Angus.  In May 1997, the Company, through Westronics, acquired from
Esterline Technologies Corporation the assets of its Angus Electronics division,
an Indiana-based manufacturer and distributor of analog and digital data
acquisition and recorder products and power measurement instruments, for $1.9
million and the assumption of certain liabilities. Angus manufactures and sells
a full line of paperless recorders, which is the fastest growing segment of the
recorder market. Angus's customer base consists of both process control system
manufacturers and end-users in the petroleum, chemical, pharmaceutical, food
manufacturing
 
                                       23
<PAGE>   24
 
and electric and gas utility industries. Additionally, Angus brings to
Westronics a substantial parts, service and accessories business.
 
CUSTOMER SERVICE, MAINTENANCE AND SUPPORT
 
     Customers typically utilize the Company's instruments throughout their
operations and thus demand preventive maintenance, reliable aftermarket support
and quick response and repair service. The Company provides high-quality
customer service, preventive maintenance and aftermarket support, which it
believes are critical to success in process industries where downtime translates
to lost profits. The Company enters into multi-year contracts for the provision
of preventive maintenance services. The Company currently provides preventive
maintenance services and aftermarket support through its own employees and
independent representatives in the United States, Canada, Mexico, the United
Kingdom, the Netherlands, Oman and the United Arab Emirates, and in other areas
solely through independent representatives. The Company believes that its
experienced staff of chemical, electrical, mechanical and software engineers, as
well as its international customer service and support organization, provide it
with a significant competitive advantage.
 
CUSTOMERS
 
     In 1997, the Company sold its products to more than 2,000 customers
worldwide, including affiliates or operations of The Dow Chemical Company, Shell
Oil Company, E.I. duPont De Nemours & Co., BASF AG, Pemex and Duke Energy
Corporation. These customers represent an illustrative cross-section by industry
of the Company's broad customer base. The Company targets customers in markets
with application-specific needs. In particular, the Company's flow measurement
instruments are used primarily by customers in the natural gas and
water/wastewater industries; its continuous and point level and density
measurement instruments are used primarily by customers in the oil and gas,
minerals and mining, iron and steel and pulp and paper industries; its chemical
composition analysis instruments are used primarily by participants in the oil
and gas industries; and its strip chart recorders are sold primarily to
customers in the electric utility industry, as well as to customers in the
petrochemical, chemical, pulp and paper, water/wastewater and pharmaceutical
industries. In 1997, customers in the oil and gas industry represented
approximately 61% of the Company's total revenues, with such revenues derived
from both the production segment and the refining and petrochemical segments of
the industry. In 1997, no single customer accounted for more than 3% of the
Company's total revenues.
 
SALES AND MARKETING
 
     The Company markets, sells and distributes its products through a
combination of a direct sales force and a network of independent sales
representatives and distributors. The method of distribution is determined by
product line and market size and potential, as well as by local business
convention, industry mix and the availability of technically qualified
representatives. The Company's flow and industry-specific products for the oil
and gas industry are primarily sold through a direct sales force with
industry-specific expertise. The Company's flow instruments for other industries
and its level and density measurement and composition analysis instruments are
primarily sold through independent sales representatives or distributors
supported by local sales managers and application specialists. See Note 8 to the
consolidated financial statements for financial information relating to foreign
and domestic operations and export sales.
 
     Direct Sales Force.  The Company has direct sales operations in the United
States, Canada, the United Kingdom, Mexico, the United Arab Emirates, Oman and
the Netherlands.
 
     Independent Sales Representatives.  The Company has relationships with
approximately 175 independent sales representatives in the United States and
approximately 145 independent sales representatives internationally. The
Company's sales representatives generally operate on an exclusive basis, and are
paid a commission on products sold or shipped into their territory. The
Company's agreements with its sales representatives typically provide either
party with the right to terminate with up to 60 days' notice. The Company
believes that independent sales representatives offer the advantages of being
close to the local market, seeing customers on a regular basis and having
compatible products to sell to the same customer base.
 
     Distributors.  The Company has relationships with approximately 320
distributors. The Company's distribution agreements are generally exclusive in
an identified country or territory and typically provide either
 
                                       24
<PAGE>   25
 
party with the right to terminate on 90 days' notice. The Company's distributors
generally provide service and support for customers located in their territory.
 
COMPETITION
 
     The Company believes that its ability to compete successfully in the market
for field measurement instruments and sensors depends upon a number of factors
both within and beyond its control, including quality and reliability; technical
features; accuracy; ease of use; product pricing; reputation for aftermarket
service; timing of new product releases and enhancements by the Company and its
competitors; name recognition; the establishment of strategic alliances; and
industry and general economic trends. In addition, the Company competes with
companies utilizing competing technologies that may be viewed as cost-effective
alternatives to the technologies incorporated into the Company's products.
 
     The field measurement instruments and sensors market segment of the process
control market is highly fragmented and intensely competitive, and the Company
expects competition to continue to increase. The Company competes with a few
large competitors, including Fisher-Rosemount, a division of Emerson Electric
Co., Inc., Elsag-Bailey Process Automation N.V., affiliates of ABB Asea Brown
Boveri (Holding) Ltd. and Yokokawa Electric Corporation, in each of its product
areas and with many companies within specific industries. As the technologies
utilized within the process measurement industry continue to develop, the
Company expects to face increasing competition in the future from emerging
competitors.
 
     Certain of the Company's current and potential competitors have
significantly greater financial, marketing, technical and other competitive
resources, as well as greater name recognition, than the Company. As a result,
the Company's competitors may be able to adapt more quickly to new or emerging
technologies and changes in customer requirements, and may be able to devote
greater resources to the promotion and sale of their products. There can be no
assurance that the Company will be able to compete successfully with existing or
new competitors. An increase in competition could result in price reductions and
loss of market share, which could have a material adverse effect on the
Company's business, financial condition or results of operations. See "Risk
Factors -- Intense Competition."
 
MANUFACTURING AND SUPPLIERS
 
     The Company manufactures its instruments on an as-needed basis to meet its
customers' specific delivery requirements. The Company currently contracts with
local subcontractors for the manufacture of certain major components
incorporated into its products. Final product assembly, inspection and testing
takes place at the Company's facilities. The Company believes that by
subcontracting certain assembly processes it can focus its efforts on adding
greater value to the design and development of process measurement instruments
for its customers. Although the Company has not experienced any significant
difficulty in its relationships with subcontractors, the Company's ability to
expand its capacity and rate of growth will depend on its ability to obtain
increased production from its existing subcontractors and to identify additional
qualified subcontractors.
 
     The Company believes that there is more than one source for the major
components of its products. If, however, the Company were to experience any
shortage in any of the major components of its products due to supply shortages
or other reasons, including reasons beyond its control, the Company's business,
financial condition and results of operations would be materially adversely
affected. See "Risk Factors -- Limited Sources of Supply."
 
RESEARCH AND DEVELOPMENT
 
     The Company maintains an active research and development program for the
introduction of new products and improvements to existing products. The Company
also seeks to develop new applications for its existing products and
technologies. During 1995, 1996 and 1997 and the three months ended April 4,
1998, research and development expenses were approximately $5.0 million, $5.6
million, $6.8 million and $2.2 million, respectively. As of April 4, 1998, the
Company had 106 full-time employees engaged in research and development.
 
     The Company is currently engaged in research and development programs
designed to enhance the measurement, analysis and control capabilities of its
products. Products and enhancements under development include: a subsea control
module, which is designed to assist oil companies in producing oil from the
ocean
 
                                       25
<PAGE>   26
 
floor; the use of radar technologies as a cost-effective alternative to
ultrasonic technologies in level measurements of liquids and solids; an advanced
microprocessor-based RTU and windows interface; a scintillator for gamma level
applications requiring lower levels of radiation; and a point level radio
frequency ("RF") capacitance gauge to complement the Company's point level
product offering.
 
BACKLOG
 
     At March 29, 1997 and April 4, 1998, the Company's backlog of unfilled
orders was approximately $21.1 million and $32.5 million, respectively. The
Company includes in backlog only those orders for which it has received a
completed purchase order and for which delivery has been specified within 12
months. Such orders are generally subject to cancellation by the customer with
payment of a specified charge. Because of the possibility of customer changes in
delivery schedules, cancellation of orders and potential delays in product
shipments, the Company's backlog as of any particular date may not be
representative of actual sales for any succeeding period.
 
INTELLECTUAL PROPERTY
 
     The Company's success depends in part on the strength and protection of its
proprietary methodologies and designs and other proprietary intellectual rights.
The Company relies upon a combination of patent, trade secret, nondisclosure and
other contractual arrangements, and copyright and trademark laws, to protect its
proprietary rights. The Company seeks to limit access to and distribution of its
proprietary information. There can be no assurance that the steps taken by the
Company in this regard will be adequate to deter the misappropriation of its
proprietary information, that the Company will be able to detect unauthorized
use and take appropriate steps to enforce its intellectual property rights or
that competitors will not be able to develop similar technology independently.
See "Risk Factors --Uncertain Protection of Proprietary Rights."
 
EMPLOYEES
 
     As of April 4, 1998, the Company had a total of 832 full-time employees.
None of the Company's employees is represented by a labor union. The Company
believes that its employee relations are good.
 
PROPERTIES
 
     The Company operates its various businesses primarily from leased
facilities in the United States, Europe and the Middle East, including an
approximately 147,000 square foot facility in Kingwood, Texas pursuant to a
lease, on a month-to-month basis, with Thermo Instrument (see "Relationship with
Thermo Electron and Thermo Instrument -- Related Party Transactions") and an
approximately 100,000 square foot facility in Round Rock, Texas pursuant to a
lease that expires in 2005. The Company leases office space throughout the world
for its sales and service operations. The Company believes that these facilities
are adequate for its current requirements and that suitable additional space
will be available as needed in the future.
 
LEGAL PROCEEDINGS
 
     On December 11, 1996, five former employees of Thermo Instrument's Epsilon
subsidiary commenced an arbitration proceeding with the American Arbitration
Association naming as joint defendants Epsilon, Thermo Electron, Thermo
Instrument and certain affiliates of Thermo Instrument, including TN
Technologies, a wholly owned subsidiary of the Company. The arbitration
proceeding was conducted in Austin, Texas before an arbitration panel of three
individuals. The employees alleged that the joint defendants breached the terms
of certain agreements entered into with such employees at the time that a
predecessor of Epsilon acquired the assets and business of a company formerly
owned by such employees. The employees claimed actual damages of between $27
million and $46 million, punitive damages of twice the actual damages,
attorneys' fees and expenses, and pre-judgment and post-judgment interest,
resulting from the alleged failure of the joint defendants to, among other
things, use their best efforts to develop and promote certain products at the
time. The joint defendants, including the Company, contested this matter
vigorously. In June 1998, the arbitration panel rendered its decision, which
decision resulted in no liability for damages on the part of the Company.
 
     The Company is not currently a party to any litigation that it believes
could reasonably be expected to have a material adverse effect on the Company or
its business.
 
                                       26
<PAGE>   27
 
                       RELATIONSHIP WITH THERMO ELECTRON
                             AND THERMO INSTRUMENT
 
     The Company was organized in August 1997 as a wholly owned subsidiary of
Thermo Instrument. At that time, Thermo Instrument contributed all of the assets
or stock of certain of its subsidiaries relating to the CAC, Flow Automation, TN
Technologies, Kay-Ray/Sensall, Houston Atlas, Westronics and VG Gas businesses
to the Company in exchange for 10,666,667 shares of Common Stock of the Company.
 
     Thermo Electron has adopted a strategy of selling a minority interest in
subsidiary companies to outside investors as an important tool in its future
development. As part of this strategy, Thermo Instrument created the Company as
a privately held subsidiary, and Thermo Instrument and Thermo Electron, and
certain of their subsidiaries, have created several other privately and publicly
held majority-owned subsidiaries. From time to time, Thermo Electron and its
subsidiaries will create other majority-owned subsidiaries as part of its
spin-out strategy. (The Company and the other Thermo Electron subsidiaries are
hereinafter referred to as the "Thermo Subsidiaries.")
 
     Thermo Instrument develops, manufactures and markets analytical instruments
used to detect and monitor air pollution, radioactivity, complex chemical
compounds and toxic metals and other elements in a broad range of liquids, gases
and solids. For its fiscal years ended December 28, 1996 and January 3, 1998,
and for the three months ended April 4, 1998, Thermo Instrument had consolidated
revenues of $1,209,362,000, $1,592,314,000 and $407,943,000, respectively, and
consolidated net income of $132,751,000, $147,258,000 and $37,855,000,
respectively.
 
     Thermo Electron and its subsidiaries develop, manufacture and market
environmental monitoring and analysis instruments and manufacture biomedical
products including heart-assist devices and mammography systems, papermaking and
recycling equipment, alternative-energy systems and other specialized products
and technologies. Thermo Electron and its subsidiaries also provide
environmental and metallurgical services and conduct advanced technology
research and development. For its fiscal years ended December 28, 1996 and
January 3, 1998, and for the three months ended April 4, 1998, Thermo Electron
had consolidated revenues of $2,932,558,000, $3,558,320,000 and $944,263,000,
respectively, and consolidated net income of $190,816,000, $239,328,000 and
$65,493,000, respectively.
 
     See "Risk Factors -- Potential Conflict of Interest."
 
THE THERMO ELECTRON CORPORATE CHARTER
 
     Thermo Electron and the Thermo Subsidiaries recognize that the benefits and
support they derive from their affiliation are essential elements of their
individual performance. Accordingly, Thermo Electron and each of the Thermo
Subsidiaries adopted the Thermo Electron Corporate Charter (the "Charter") to
define the relationships and delineate the nature of such cooperation among
themselves. The purpose of the Charter is to ensure that (i) all of the
companies and their stockholders are treated consistently and fairly, (ii) the
scope and nature of the cooperation among the companies, and each company's
responsibilities, are adequately defined, (iii) each company has access to the
combined resources and financial, managerial and technological strengths of the
others and (iv) Thermo Electron and the Thermo Subsidiaries, in the aggregate,
are able to obtain the most favorable terms from outside parties.
 
     To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")
to external financing sources, ensuring compliance with external financial
covenants and internal financial policies, assisting in the formulation of
long-range planning and providing other banking and credit services. Pursuant to
the Charter, Thermo Electron may also provide guarantees of debt obligations of
the Thermo Subsidiaries or may obtain external financing at the parent level for
the benefit of the Thermo Subsidiaries. In certain instances, the Thermo
Subsidiaries may provide credit support to, or on behalf of, the
 
                                       27
<PAGE>   28
 
consolidated entity or may obtain financing directly from external financing
sources. Under the Charter, Thermo Electron is responsible for determining that
the Thermo Group remains in compliance with all covenants imposed by external
financing sources, including covenants related to borrowings of Thermo Electron
or other members of the Thermo Group, and for apportioning such constraints
within the Thermo Group. In addition, Thermo Electron is also responsible for
ensuring that members comply with internal policies and procedures. The cost of
the services provided by Thermo Electron to the Thermo Subsidiaries is covered
under existing corporate services agreements between Thermo Electron and each of
the Thermo Subsidiaries.
 
     The Charter presently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participates. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Company, can withdraw from participation in the Charter upon 30
days' prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement in effect between the
withdrawing company and Thermo Electron. The withdrawal from participation does
not terminate outstanding commitments to third parties made by the withdrawing
company, or by Thermo Electron or other members of the Thermo Group, prior to
the withdrawal. However, a withdrawing company is required to continue to comply
with all policies and procedures applicable to the Thermo Group and to provide
certain administrative functions mandated by Thermo Electron so long as the
withdrawing company is controlled by or affiliated with Thermo Electron.
 
CORPORATE SERVICES AGREEMENT
 
     As provided in the Charter, the Company and Thermo Electron have entered
into a Corporate Services Agreement (the "Services Agreement") under which
Thermo Electron's corporate staff provides certain administrative services,
including certain legal advice and services, risk management, certain employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and certain financial and other services to the Company. The
annual fee for these services was equal to 1% of the Company's revenues for
1997. Beginning in 1998, the fee was reduced to 0.8% of the Company's revenues.
The fee is reviewed annually and may be changed by mutual agreement of the
Company and Thermo Electron.
 
     Management believes that the service fees charged under the Services
Agreement are reasonable and that the terms of the Services Agreement are fair
to the Company. For items such as employee benefit plans, insurance coverage and
other identifiable costs, Thermo Electron charges the Company based on charges
directly attributable to the Company. The Services Agreement automatically
renews for successive one-year terms, unless canceled by the Company upon 30
days' prior written notice. In addition, the Services Agreement terminates
automatically in the event the Company ceases to be a member of the Thermo Group
or ceases to be a participant in the Charter. In the event of a termination of
the Services Agreement, the Company will be required to pay a termination fee
equal to the fee that was paid by the Company for services under the Services
Agreement for the nine-month period prior to termination. Following termination,
Thermo Electron may provide certain administrative services on an as-requested
basis by the Company or as required in order to meet the Company's obligations
under Thermo Electron's policies and procedures. Thermo Electron will charge the
Company a fee equal to the market rate for comparable services if such services
are provided following termination.
 
MASTER GUARANTEE REIMBURSEMENT AND LOAN AGREEMENTS
 
     The Company has entered into a Master Guarantee Reimbursement and Loan
Agreement with Thermo Electron which provides that the Company will reimburse
Thermo Electron for any costs it incurs in the event it is required to pay third
parties pursuant to any guarantees it issues on the Company's behalf. Thermo
Instrument has entered into a similar agreement with Thermo Electron with regard
to the Company's obligations which are guaranteed by Thermo Electron. The
Company has also entered into a Master Guarantee Reimbursement and Loan
Agreement with Thermo Instrument which provides that the Company will reimburse
Thermo Instrument for any costs it incurs in the event that Thermo Instrument is
required to pay Thermo Electron or any other party pursuant to any guarantees it
issues on the Company's behalf.
                                       28
<PAGE>   29
 
RELATED PARTY TRANSACTIONS
 
     Commencing October 1997, the Company leases on a month-to-month basis
approximately 147,000 square feet of space from Thermo Instrument in Kingwood,
Texas. The Company pays Thermo Instrument an annual rent of approximately
$186,000 in the aggregate. In addition, the Company is responsible for its pro
rata share of certain occupancy costs including utilities and taxes.
 
     The Company acquired the Peek Measurement Business from Thermo Power for
approximately $19.1 million, effective November 1997. The purchase price
represents the sum of (i) the net tangible book value of the Peek Measurement
Business as of the date of the acquisition by Thermo Power, plus (ii) the total
goodwill associated with Thermo Power's acquisition of Peek plc equal to the
total fiscal 1997 revenue of the Peek Measurement Business relative to the total
revenues of Peek plc for such period, plus (iii) $1.0 million, which represents
an estimate of the amount of tax that will be incurred by Thermo Power as a
result of the transfer of the Peek Measurement Business to the Company. In
addition, the Company paid $256,000 in interest, representing interest on the
purchase price, from November 6, 1997 through January 29, 1998 at an interest
rate equal to the 90-day Commercial Paper Composite Rate plus 25 basis points,
set at the beginning of each quarter.
 
     In January 1998, the Company borrowed $12.0 million from Thermo Instrument
to partially fund the Company's acquisition of the Peek Measurement Business
from Thermo Power. This loan, which had an interest rate equal to the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter, was repaid in April 1998.
 
     Commencing January 1998, the Company leases approximately 24,000 square
feet of a 60,000 square foot facility in Winchester, England on a month-to-month
basis from Thermo Power. The Company pays Thermo Power rent in an amount that is
approximately equal to the pro rata share of Thermo Power's occupancy costs
including utilities and taxes, which payments in 1998 are estimated to be
approximately 139,000 British pounds sterling (approximately $229,000) in the
aggregate. For the three months ended April 4, 1998, the Company paid Thermo
Power $57,500 under this arrangement.
 
     Each of Thermo Instrument, Thermo Sentron Inc. ("Thermo Sentron"), an
indirect majority-owned subsidiary of Thermo Electron, and Thermo BioAnalysis
Corporation ("Thermo BioAnalysis"), Thermo Optek Corporation ("Thermo Optek")
and ThermoQuest Corporation ("ThermoQuest"), majority-owned subsidiaries of
Thermo Instrument, act as a distributor of certain of the Company's products in
countries where such entities maintain a sales force. In consideration of such
arrangements, the Company sells such products to such entities at discounted
rates negotiated by the parties. For the year ended January 3, 1998, the Company
sold $333,000, $583,000, $632,000, $776,000 and $184,000 of products to each of
Thermo Instrument, Thermo Sentron, Thermo BioAnalysis, Thermo Optek and
ThermoQuest, respectively. For the three months ended April 4, 1998, the Company
sold $218,000, $149,000 and $256,000 of products to each of Thermo Instrument,
Thermo Sentron and Thermo Optek, respectively.
 
     The Company, along with certain other Thermo Subsidiaries, participates in
a notional pool arrangement with ABN AMRO, which includes a $50 million credit
facility. Only European-based Thermo Subsidiaries participate in this
arrangement. Under this arrangement, the Bank notionally combines the positive
and negative cash balances held by the participants to calculate the net
interest yield/expense for the group. The benefit derived from this arrangement
is then allocated based on balances attributable to the respective participants.
Thermo Electron guarantees all of the obligations of each participant in this
arrangement. In addition, funds on deposit under this arrangement provide credit
support for overdraft obligations of other participants. As of April 4, 1998,
the Corporation had a positive cash balance of approximately $396,000, based on
an exchange rate of $0.4797/NLG 1.00 as of April 4, 1998. For 1997, the average
annual interest rate earned on NLG deposits by participants in this credit
arrangement was approximately 4.8% and the average annual interest rate paid on
NLG overdrafts was approximately 4.8%.
 
     The Company, along with certain other Thermo Subsidiaries, also
participates in a notional pool arrangement with Barclays Bank, which includes a
$150 million credit facility. Only European-based Thermo Subsidiaries
participate in this arrangement. Under this arrangement, the Bank notionally
combines the positive and negative cash balances held by the participants to
calculate the net interest yield/expense for the group. The benefit derived from
this arrangement is then allocated based on balances attributable to the
 
                                       29
<PAGE>   30
 
respective participants. Thermo Electron guarantees all of the obligations of
each participant in this arrangement. In addition, funds on deposit under this
arrangement provide credit support for overdraft obligations of other
participants. As of April 4, 1998, the Company had a positive cash balance of
approximately $212,000, based on an exchange rate of $1.67/L1.00 as of April 4,
1998. For 1997, the average annual interest rate earned on deposits by
participants in this credit arrangement was approximately 6.5% and the average
annual interest rate paid on overdrafts was approximately 7.2%
 
     As of December 28, 1996, Thermo Electron and its other subsidiaries owed
the Company $342,000 for products, services and miscellaneous items, net of
amounts due to Thermo Electron and its other subsidiaries under the Services
Agreement and related administrative charges and for other products, services
and miscellaneous items. As of January 3, 1998 and April 4, 1998, the Company
owed Thermo Electron and its other subsidiaries $391,000 and $1,024,000,
respectively, for amounts due under the Services Agreement and related
administrative charges, and for other products, services and miscellaneous
items, net of amounts owed to the Company by Thermo Electron and its other
subsidiaries for products, services and miscellaneous items. The largest amount
of net indebtedness owed by Thermo Electron and its other subsidiaries to the
Company during fiscal 1997 was $2,082,000. These amounts do not bear interest
and were or are expected to be paid in the normal course of business.
 
     As of April 4, 1998, $57.0 million of the Company's cash equivalents were
invested in a repurchase agreement with Thermo Electron. Under this agreement,
the Company in effect lends excess cash to Thermo Electron that Thermo Electron
collateralizes with investments principally consisting of U.S. government-
agency securities, corporate notes, commercial paper, money market funds and
other marketable securities, in the amount of at least 103% of such obligation.
The Company's funds subject to the repurchase agreement will be readily
convertible into cash by the Company. The repurchase agreement earns a rate
based on the 90-day Commercial Paper Composite Rate plus 25 basis points, set at
the beginning of each quarter.
 
     From time to time, the Company may transact business in the ordinary course
with other companies in the Thermo Group. All such transactions are on terms
comparable to those the Company would receive from unaffiliated parties.
 
                                       30
<PAGE>   31
 
                                   MANAGEMENT
 
     The Directors and executive officers of the Company are as follows:
 
<TABLE>
<CAPTION>
                    NAME                       AGE                  POSITION
<S>                                            <C>  <C>
Earl R. Lewis................................   53  Chairman of the Board and Director
William J. Zolner............................   54  President, Chief Executive Officer and
                                                    Director
C.R. (Neil) Duarte...........................   54  Vice President
B.C. Holstead................................   62  Vice President
Mark Whitman.................................   43  Vice President
John N. Hatsopoulos..........................   62  Senior Vice President and Chief Financial
                                                      Officer
Paul F. Kelleher.............................   54  Chief Accounting Officer
David J. Beaubien............................   63  Director
Frank Jungers................................   71  Director
Arvin H. Smith...............................   68  Director
</TABLE>
 
     All of the Company's Directors are elected annually by the stockholders and
hold office until their respective successors are duly elected and qualified.
Executive officers are elected annually by the Board of Directors and serve at
its discretion.
 
     Earl R. Lewis has been Chairman of the Board and a Director of the Company
since its inception. Mr. Lewis has been a Director and Chief Executive Officer
of Thermo Optek since August 1995 and President of Thermo Optek from August 1995
to March 1997. Mr. Lewis served as President of Thermo Jarrell Ash through
January 1996, and for more than five years prior to that date. Mr. Lewis has
also been Chief Executive Officer and a Director of Thermo Instrument since
January 1998 and President since March 1997, was Chief Operating Officer from
January 1996 to January 1998, and was Executive Vice President from January 1996
to March 1997, Senior Vice President from January 1994 to January 1996 and Vice
President from March 1992 to January 1994. Mr. Lewis is also Director of Metrika
Systems Corporation, Thermo BioAnalysis, ThermoQuest, ThermoSpectra Corporation
and Thermo Vision Corporation and he is Chairman of the Board of Thermo
BioAnalysis, Thermo Optek, ThermoQuest, ThermoSpectra Corporation and Thermo
Vision Corporation.
 
     William J. Zolner, has been President, Chief Executive Officer and a
Director of the Company since its inception. From March 1995 to October 1997,
Dr. Zolner served as President of CAC, formerly known as Thermo Instrument
Controls, a wholly owned subsidiary of Thermo Instrument and a predecessor to
the business comprising the Company. From 1993 to 1995 Dr. Zolner worked for
Thermo Instrument analyzing acquisition opportunities and serving as a
technology assistant to Mr. Arvin H. Smith, then Chief Executive Officer of
Thermo Instrument. Dr. Zolner previously worked for Thermo Electron from 1971 to
1977 in the environmental instruments division. From 1978 to 1993, he held key
management positions with divisions of Bendix Corporation, Combustion
Engineering, JWP Inc., KEM Associates and Lear Seigler Measurement Controls. Dr.
Zolner has over 26 years of experience in the process control instrumentation
marketplace, where he has led organizations in engineering, marketing and sales
operations and as divisional president.
 
     C.R. (Neil) Duarte has served as Vice President of the Company since its
inception, as Vice President of CAC since 1995 and as President of Flow
Automation since 1992. Prior to that, Mr. Duarte served in a variety of general,
financial and engineering management positions with Input/Output, Hydril, Solar
Turbines, Creole Production and Shell.
 
     B.C. Holstead has served as Vice President of the Company since its
inception and has served as President of CAC since October 1997. Prior to
becoming President, Mr. Holstead served in various positions with CAC since
1991, including Manager, Western Hemisphere Sales and Manager, Automation
Systems. Mr. Holstead has over 35 years of experience in the automation and
electrical industry. In 1966, Mr. Holstead founded and served as Chief Executive
Officer of Control Systematologist, Inc.
 
     Mark Whitman has served as Vice President of the Company since its
inception, as President of Kay-Ray/Sensall since 1996 and as President of TN
Technologies since 1992. Prior to joining the Company, he held various positions
at Baker Hughes. He served as Vice President of Finance for Baker Hughes Process
Equipment from 1990 to 1992, Controller and Chief Financial Officer for Baker
Hughes Production Tools
 
                                       31
<PAGE>   32
 
from 1988 to 1990, Controller and Chief Financial Officer for Texas Nuclear from
1981 to 1988 and Audit Senior for Baker International Inc. in 1981. He was an
Audit Senior with Ernst & Whinney from 1975 to 1981.
 
     John N. Hatsopoulos has served as Vice President and Chief Financial
Officer of the Company since its inception and as Senior Vice President since
January 1998. Mr. Hatsopoulos also served as a Director of the Company from its
inception to June 1998. Mr. Hatsopoulos has been a Vice President and Chief
Financial Officer of Thermo Instrument since 1988. Mr. Hatsopoulos has been
President of Thermo Electron since January 1997, Chief Financial Officer of
Thermo Electron since 1988 and was an Executive Vice President of Thermo
Electron from 1986 to January 1997. He is also a Director of LOIS/USA, Inc.,
Thermo Electron, Thermedics Inc., Thermedics Detection Inc., Thermo Ecotek
Corporation, Thermo Fibertek Inc., Thermo Instrument, Thermo Power, Thermo
TerraTech Inc. and Thermo Vision Corporation.
 
     Paul F. Kelleher has been the Chief Accounting Officer of the Company since
its inception. Mr. Kelleher has served as Senior Vice President, Finance and
Administration, of Thermo Electron since June 1997, as Vice President, Finance,
from 1987 to June 1997 and as its Controller from 1982 to January 1996. He is
also a Director of ThermoLase Corporation.
 
     David J. Beaubien has been a Director of the Company since June 1998. Mr.
Beaubien was employed by EG&G, Inc., a manufacturer of scientific instruments,
as Senior Vice President from 1967 until his retirement in 1991. Mr. Beaubien is
also a director of IEC Electronics, Inc., Belfort Instruments, Inc. and the
Paine Webber/Mitchell Hutchins PACE Funds, and he is the Chairman of the Board
of Yankee Environmental Systems, Inc.
 
     Frank Jungers has been a Director of the Company since June 1998. Mr.
Jungers has been a self-employed consultant on business and energy matters since
1977. Mr. Jungers was employed by the Arabian American Oil Company from 1974
through 1977 as Chairman and Chief Executive Officer. Mr. Jungers is also a
director of The AES Corporation, Donaldson, Lufkin & Jenrette Securities
Corporation, Georgia-Pacific Corporation, Thermo Electron, Thermo Ecotek
Corporation and ThermoQuest.
 
     Arvin H. Smith has been a Director of the Company since its inception. Mr.
Smith has been a Director of Thermo Instrument since 1986. He has also been
Chairman of the Board of Thermo Instrument since March 1997, was Chief Executive
Officer from 1986 to January 1998, was President from 1986 to March 1997 and has
been an Executive Vice President of Thermo Electron since 1991. Mr. Smith is
currently Chairman of the Board of Thermo Power, a position he has held since
December 1996. Mr. Smith is also a Director of Metrika Systems Corporation,
Thermo BioAnalysis, Thermo Optek, Thermo Power, ThermoQuest, ThermoSpectra
Corporation and Thermo Vision Corporation.
 
COMPENSATION OF DIRECTORS
 
     All Directors who are not employees of the Company, Thermo Instrument or
Thermo Electron receive an annual retainer of $2,000 and a fee of $1,000 per day
for attending meetings of the Board of Directors and $500 per day for
participating in meetings of the Board of Directors held by means of conference
telephone and for participating in certain meetings of committees of the Board
of Directors. Payment of Directors fees is made quarterly. Messrs. Zolner, Lewis
and Smith are all employees of Thermo Electron companies and do not receive any
cash compensation from the Company for their services as Directors. Directors
are also reimbursed for reasonable out-of-pocket expenses incurred in attending
such meetings.
 
     Directors Deferred Compensation Plan.  Under the Company's Deferred
Compensation Plan for Directors (the "Deferred Compensation Plan"), a Director
has the right to defer receipt of his fees until he ceases to serve as a
Director, dies or retires from his principal occupation. In the event of a
change in control or proposed change in control of the Company that is not
approved by the Board of Directors, deferred amounts become payable immediately.
Either of the following is deemed to be a change of control: (a) the occurrence,
without the prior approval of the Board of Directors, of the acquisition,
directly or indirectly, by any person of 50% or more of the outstanding Common
Stock or the outstanding common stock of Thermo Instrument or 25% or more of the
outstanding common stock of Thermo Electron; or (b) the failure of the
 
                                       32
<PAGE>   33
 
persons serving on the Board of Directors immediately prior to any contested
election of directors or any exchange offer or tender offer for the Common Stock
or the common stock of Thermo Instrument or Thermo Electron to constitute a
majority of the Board of Directors at any time within two years following any
such event. Amounts deferred pursuant to the Deferred Compensation Plan are
valued at the end of each quarter as units of Common Stock. When payable,
amounts deferred may be disbursed solely in shares of Common Stock accumulated
under the Deferred Compensation Plan. As of March 3, 1998, the Company had
reserved 25,000 shares under this plan and no stock options had been granted
under this plan.
 
COMPENSATION OF EXECUTIVE OFFICERS
 
                           SUMMARY COMPENSATION TABLE
 
     The following table summarizes compensation for services to the Company in
all capacities awarded to, earned by or paid to the Company's chief executive
officer and three other executive officers for the fiscal year ended January 3,
1998. No other executive officer of the Company who held office at the end of
fiscal 1997 met the definition of "highly compensated" within the meaning of the
Securities and Exchange Commission's executive compensation disclosure rules for
this period. The Company is required to appoint certain executive officers and
full-time employees of Thermo Electron as executive officers of the Company, in
accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Company's affairs is
provided to the Company under the Services Agreement between the Company and
Thermo Electron. Accordingly, the compensation for these individuals is not
reported in the following table. See "Relationship with Thermo Electron and
Thermo Instrument."
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                   LONG-TERM
                                                                  COMPENSATION
                                                               ------------------
                                                                   SECURITIES
                                        ANNUAL COMPENSATION    UNDERLYING OPTIONS
                                        -------------------    (NO. OF SHARES AND       ALL OTHER
 NAME AND PRINCIPAL POSITION     FY      SALARY      BONUS        COMPANY)(1)        COMPENSATION(2)
<S>                             <C>     <C>         <C>        <C>                   <C>

William J. Zolner.............  1997    $150,000    $95,000          50,000(ONX)         $7,200
  President and Chief                                                10,000(TMO)
  Executive Officer                                                  

Mark Whitman..................  1997    $141,600    $40,160          13,333(ONX)         $7,200
  Vice President

C.R. (Neil) Duarte............  1997    $112,791    $25,000          10,000(ONX)         $5,344
  Vice President

B.C. Holstead.................  1997    $ 97,213    $30,000          13,333(ONX)         $4,802
  Vice President

</TABLE>
 
---------------
(1) All options to purchase shares of the Company's Common Stock shown in the
    table were granted after the end of fiscal 1997 but are included in the
    table for clarity of presentation. In addition to grants of options to
    purchase Common Stock of the Corporation (designated in the table as "ONX"),
    the named executive officers of the Company have been granted options to
    purchase common stock of Thermo Electron and certain of its other
    subsidiaries as part of Thermo Electron's stock option program. Options have
    been granted during the last fiscal year to the named executive officer in
    Thermo Electron (designated in the table as "TMO").
 
(2) Represents the amount of matching contributions made by the individual's
    employer on behalf of the named executive officer participating in the
    Thermo Electron 401(k) plan.


 
                                       33
<PAGE>   34
 
     Stock Options Granted During Fiscal 1997
 
     The following table sets forth information concerning individual grants of
stock options made during fiscal 1997 to the Company's chief executive officer
and the other named executive officers. It has not been the Company's policy in
the past to grant stock appreciation rights, and no rights were granted during
fiscal 1997.
 
                          OPTION GRANTS IN FISCAL 1997
 
<TABLE>
<CAPTION>
                                                                                                   POTENTIAL REALIZABLE
                                                                                                     VALUE AT ASSUMED
                                                                                                     ANNUAL RATES OF
                       NUMBER OF SHARES      % OF TOTAL                                          STOCK PRICE APPRECIATION
                          UNDERLYING       OPTIONS GRANTED                                          FOR OPTION TERM(2)
                           OPTIONS         TO EMPLOYEES IN    EXERCISE PRICE                     ------------------------
        NAME              GRANTED(1)         FISCAL YEAR        PER SHARE      EXPIRATION DATE      5%            10%
<S>                    <C>                 <C>                <C>              <C>               <C>          <C>
William J. Zolner....      50,000(ONX)           11.3%            $14.25          01/21/10       $567,150     $1,523,500
                           10,000(TMO)            0.7%(3)          39.39          09/24/09       $313,500     $  842,300
Mark Whitman.........      13,333(ONX)            3.0%             14.25          01/21/10       $151,196     $  406,257
C.R. (Neil) Duarte...      10,000(ONX)            2.3%             14.25          01/21/10       $113,400     $  304,700
B.C. Holstead........      13,333(ONX)            3.0%             14.25          01/21/05       $ 77,331     $  180,262
</TABLE>
 
---------------
(1) All options to purchase shares of the Common Stock of the Company
    (designated in the table as "ONX") were granted after the end of fiscal 1997
    but are included in the table for clarity of presentation. As part of Thermo
    Electron's stock option program, options have been granted during fiscal
    1997 to the named executive officer to purchase the common stock of Thermo
    Electron (designated in the table as "TMO"). All of the options granted
    during the fiscal year are currently immediately exercisable. The shares
    acquired upon exercise are subject to repurchase by the granting corporation
    at the exercise price if the optionee ceases to be employed by such
    corporation or another Thermo Electron company. The granting corporation may
    exercise its repurchase rights within six months after the termination of
    the optionee's employment. For publicly traded companies, the repurchase
    rights generally lapse ratably over a five- to ten-year period, depending on
    the option term which may vary from seven to twelve years, provided that the
    optionee continues to be employed by the granting corporation or another
    Thermo Electron company. The granting corporation may permit the holders of
    all such options to exercise options and satisfy tax withholding obligations
    by surrendering shares equal in fair market value to the exercise price or
    withholding obligation.
 
(2) The amounts shown in this table represent hypothetical gains that could be
    achieved for the respective options if exercised at the end of the option
    term. These gains are based on assumed rates of stock appreciation of 5% and
    10%, compounded annually from the date the respective options were granted
    to their expiration date. The gains shown are net of the option exercise
    price, but do not include deductions for taxes or other expenses associated
    with the exercise. Actual gains, if any, on stock option exercises will
    depend on the future performance of the Common Stock, the option holders'
    continued employment through the option period and the date on which the
    options are exercised.
 
(3) These options were granted under stock option plans maintained by Thermo
    Electron and, accordingly, are reported as a percentage of total options
    granted to employees of Thermo Electron and its subsidiaries.
 
                                       34
<PAGE>   35
 
     Stock Options Exercised During Fiscal 1997 and Fiscal Year-End Option
Values
 
     The following table reports certain information regarding stock option
exercises during fiscal 1997 and outstanding stock options to purchase shares of
Thermo Electron, the Company and other Thermo Subsidiaries held at the end of
fiscal 1997 by the Company's chief executive and the other named executive
officers. No stock appreciation rights were exercised or were outstanding during
fiscal 1997.
 
              AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                         FISCAL YEAR-END OPTION VALUES
 
<TABLE>
<CAPTION>
                                                                               NUMBER OF                VALUE OF
                                                                         SECURITIES UNDERLYING        UNEXERCISED
                                                    SHARES                UNEXERCISED OPTIONS     IN-THE-MONEY OPTIONS
                                                   ACQUIRED                AT FISCAL YEAR-END      AT FISCAL YEAR-END
                                                      ON       VALUE         (EXERCISABLE/           (EXERCISABLE/
            NAME                    COMPANY        EXERCISE   REALIZED     UNEXERCISABLE)(1)         UNEXERCISABLE)
<S>                            <C>                 <C>        <C>        <C>                      <C>
William J. Zolner............  ONIX                   --         --             50,000/0                     --/0(2)
                               Thermo Electron        --         --             28,375/0               $280,494/0
                               Thermo BioAnalysis     --         --              2,000/0                $19,000/0
                               Thermo Instrument      --         --             61,718/0               $563,094/0
                               Thermo Optek           --         --             15,000/0                $71,700/0
                               ThermoQuest            --         --             10,000/0                $50,000/0
                               ThermoSpectra          --         --              2,500/0                   $158/0
 
Mark Whitman.................  ONIX                   --         --             13,333/0                     --/0(2)
                               Thermo Instrument      --         --             28,750/0               $468,825/0
                               Thermo Optek           --         --              7,500/0                $35,850/0
                               ThermoQuest            --         --              5,000/0                $25,000/0
                               ThermoSpectra          --         --                800/0                    $50/0
 
C.R. (Neil) Duarte...........  ONIX                   --         --             10,000/0                     --/0(2)
                               Thermo Instrument      --         --             10,000/0                $64,200/0
                               Thermo Optek           --         --              6,000/0                $28,680/0
                               ThermoQuest            --         --              4,000/0                $20,000/0
 
B.C. Holstead................  ONIX                   --         --             13,333/0                     --/0(2)
                               Thermo Instrument      --         --              7,265/0                $99,929/0
</TABLE>
 
---------------
(1) All options to purchase shares of the Common Stock of the Company were
    granted after the end of fiscal 1997 but are included in the table for
    clarity of presentation. All of the options reported outstanding at the end
    of the fiscal year are currently immediately exercisable. The shares
    acquired upon exercise of the options reported in the table are subject to
    repurchase by the granting corporation at the exercise price if the optionee
    ceases to be employed by such corporation or another Thermo Electron
    company. The granting corporation may exercise its repurchase rights within
    six months after the termination of the optionee's employment. For publicly
    traded companies, the repurchase rights generally lapse ratably over a five-
    to ten-year period, depending on the option term, which may vary from seven
    to twelve years, provided that the optionee continues to be employed by the
    granting corporation or another Thermo Electron company. For companies whose
    shares are not publicly traded, the repurchase rights lapse in their
    entirety on the ninth anniversary of the grant date.
 
(2) Reflects option value at June 30, 1998.
 
                                       35
<PAGE>   36
 
         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
PRINCIPAL STOCKHOLDER
 
     The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of April 4, 1998 with respect to each person who
was known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock.
 
<TABLE>
<CAPTION>

NAME AND ADDRESS                        NUMBER OF SHARES     PERCENTAGE OF OUTSTANDING
OF BENEFICIAL OWNER                    BENEFICIALLY OWNED    SHARES BENEFICIALLY OWNED
<S>                                       <C>                         <C>

Thermo Electron Corporation(1)........    10,666,667                  68.3%
  81 Wyman Street
  Waltham, MA 02454-9046

</TABLE>
 
---------------
 
(1) Thermo Electron beneficially owned 68.3% of the Common Stock outstanding as
    of April 4, 1998 through its ownership of Thermo Instrument. Thermo
    Electron, through Thermo Instrument, has the power to elect all of the
    members of the Company's Board of Directors.
 
MANAGEMENT
 
     The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of June 30, 1998 as well as information
regarding the beneficial ownership of the common stock of Thermo Instrument and
Thermo Electron, as of June 30, 1998, with respect to (i) each Director, (ii)
each executive officer named in the summary compensation table above and (iii)
all Directors and current executive officers as a group.
 
     While certain Directors or executive officers of the Company are also
directors and executive officers of Thermo Instrument or its subsidiaries other
than the Company, all such persons disclaim beneficial ownership of the
10,666,667 shares of Common Stock owned by Thermo Instrument.
 
<TABLE>
<CAPTION>
                                        ONIX SYSTEMS        THERMO INSTRUMENT    THERMO ELECTRON
                 NAME(1)                  INC.(2)            SYSTEMS INC.(3)     CORPORATION(4)
<S>                                      <C>                     <C>                  <C>

David J. Beaubien....................      30,000                    600                   --
C.R. (Neil) Duarte...................      10,000                 10,328                  584
B.C. Holstead........................      13,333                  7,356                   92
Frank Jungers........................      30,000                 15,695              246,380
Earl R. Lewis........................      35,666                179,250               83,678
Arvin H. Smith.......................      24,000                539,583              515,578
Mark Whitman.........................      13,333                 29,582                  719
William J. Zolner....................      50,000                 62,114               28,639
All Directors and executive          
  officers as a group (10 persons)...     229,665                952,099            1,777,275

</TABLE>
 
---------------
 
(1) Except as reflected in the footnotes to this table, shares of Common Stock
    and common stock of Thermo Instrument and Thermo Electron beneficially owned
    include shares owned by the indicated person and by that person for the
    benefit of minor children, and all share ownership involves sole voting and
    investment power.
 
(2) Shares of Common Stock beneficially owned by Mr. Beaubien, Mr. Duarte, Mr.
    Holstead, Mr. Jungers, Mr. Lewis, Mr. Smith, Mr. Whitman, Dr. Zolner and all
    Directors and executive officers as a group include 30,000; 10,000; 13,333;
    30,000; 33,333; 20,000; 13,333; 50,000 and 223,332 shares, respectively,
    that such person or group has the right to acquire within 60 days after June
    30, 1998, through the exercise of stock options. Shares beneficially owned
    by Mr. Lewis include 333 shares held by his son. Shares beneficially owned
    by Mr. Smith include 4,000 shares held by his spouse. As of June 30, 1998,
    no
 


                                       36
<PAGE>   37
 
    Director or executive officer beneficially owned more than 1% of the Common
    Stock outstanding as of such date; all Directors and executive officers as a
    group beneficially owned 1.47% of the Common Stock outstanding as of such
    date.
 
(3) Shares of the common stock of Thermo Instrument beneficially owned by Mr.
    Duarte, Mr. Holstead, Mr. Jungers, Mr. Lewis, Mr. Smith, Mr. Whitman, Dr.
    Zolner and all Directors and executive officers as a group include 10,000;
    7,265; 15,695; 172,085; 292,968; 28,750; 61,718; and 677,543 shares,
    respectively that such person or group has the right to acquire within 60
    days after June 30, 1998, through the exercise of stock options. Shares of
    the common stock of Thermo Instrument beneficially owned by Mr. Smith and
    all Directors and executive officers as a group include 663 and 1,819 full
    shares, respectively, allocated through June 30, 1998, to their respective
    accounts maintained pursuant to Thermo Electron's employee stock ownership
    plan (the "ESOP"), of which the trustees, who have investment power over its
    assets are executive officers of Thermo Electron. Shares beneficially owned
    by Mr. Lewis include 2,987 shares held by Mr. Lewis' spouse. No Director or
    executive officer beneficially owned more than 1% of the common stock of
    Thermo Instrument outstanding as of June 30, 1998; all Directors and
    executive officers as a group beneficially owned less than 1% of such common
    stock outstanding as of such date.
 
(4) Shares of the common stock of Thermo Electron beneficially owned by Mr.
    Jungers, Mr. Lewis, Mr. Smith, Dr. Zolner and all Directors and executive
    officers as a group include 9,125; 82,350; 212,249; 28,375; and 1,137,771
    shares that such person or group has the right to acquire within 60 days
    after June 30, 1998, through the exercise of stock options. Shares of the
    common stock of Thermo Electron beneficially owned by Mr. Smith and all
    Directors and executive officers as a group include 1,717 and 5,179 full
    shares, respectively, allocated to accounts maintained pursuant to the ESOP.
    Shares of the common stock of Thermo Electron beneficially owned by Mr.
    Jungers and all Directors and executive officers as a group include 80,427
    full shares allocated through June 30, 1998, to Mr. Jungers account
    maintained pursuant to Thermo Electron's deferred compensation plan for
    Directors. Shares beneficially owned by Mr. Jungers include 4,500 shares
    held by Mr. Jungers' spouse. No Director or executive officer beneficially
    owned more than 1% of the common stock of Thermo Electron outstanding as of
    June 30, 1998; all Directors and executive officers as a group beneficially
    owned 1.06% of such common stock outstanding as of such date.


 
                                       37
<PAGE>   38
 
                                SELLING SHAREHOLDERS
 
     The following table sets forth the names of the Selling Shareholders, the
number of shares of Common Stock owned by each Selling Shareholder, the number
of Shares that may be offered by each Selling Shareholder pursuant to this
Prospectus and the number of Shares each Selling Shareholder will own after
completion of the offering, assuming all of the Shares being offered hereby are
sold.
 
<TABLE>
<CAPTION>
                                                             SHARES OF
                                                              COMMON                        SHARES
                                                               STOCK                      OWNED AFTER
                                                            OWNED PRIOR                   COMPLETION
                                                              TO THE       SHARES BEING     OF THE
                   SELLING SHAREHOLDER                      OFFERING(1)      OFFERED       OFFERING
                   -------------------                      -----------    ------------   -----------
<S>                                                         <C>            <C>            <C>
W. Paul Ruben.............................................      3,508          3,508              0
Gregory D. Lewis (2)......................................        333            333              0
Earl R. Lewis IV (2)......................................        333            333              0
The Lincoln Fund Tax Advantage L.P........................     12,280         12,280              0
The Gordon Fund, L.P......................................     12,280         12,280              0
Steven Braverman Trust....................................      7,018          7,018              0
Nutraco Nominees Limited..................................     70,333         70,333              0
Advance Capital Offshore Partners, L.P....................     80,553         26,836         53,717
Catherine S. Dawson.......................................      3,508          3,508              0
Richard J. Naegele........................................      7,018          7,018              0
Lucky Star Shipping S.A...................................     40,350         40,350              0
Pictet & Cie..............................................     17,544         17,544              0
Nancy S. DeMoss...........................................      3,508          3,508              0
Roger T. Servison.........................................      7,017          7,017              0
Joseph C. Sindelar Trust..................................      8,140          8,140              0
Stephenson Ventures.......................................      8,772          8,772              0
H. Virgil Sherrill........................................      8,772          8,772              0
Arthur S. DeMoss Foundation...............................      8,771          8,771              0
Edward Darman Co..........................................     10,526         10,526              0
Wynona L. Smith (3).......................................      4,000          4,000              0
Roy F. Weston.............................................      3,508          3,508              0
Lazard Freres & Co. LLC...................................     20,000         20,000              0
Coutts (Jersey) Limited a/c AIM Values....................     15,333         15,333              0
Coutts (Jersey) Limited a/c Client........................     18,000         18,000              0
The Royal Bank of Scotland International..................     32,666         32,666              0
Coutts (Jersey) Limited a/c AIM Americas..................        666            666              0
Nutraco Nominees Limited..................................     43,000         43,000              0
Homeowners Friendly Society Ltd. A/C GCF..................     16,666         16,666              0
Egger and Co..............................................     20,000         20,000              0
MSS Nominees Ltd..........................................      6,666          6,666              0
MGQ Nominees Limited a/c GGIGT............................     16,666         16,666              0
C.O. Nominees.............................................     23,333         23,333              0
Gerlach & Co..............................................     33,333         33,333              0
MSS Nominees Limited A/C 810015...........................     33,333         33,333              0
Wifleur Inc...............................................      3,508          3,508              0
Triangle Bridge Group, L.P................................      3,508          3,508              0
Scot Holdings, Inc........................................      3,508          3,508              0
Marc H. Morgenstern.......................................      3,508          3,508              0
Bennett Yanowitz..........................................      5,508          3,508          2,000
Barbara Gisel.............................................      3,508          3,508              0
William C. Parrish........................................      3,508          3,508              0
Vassilios and Lynne Sirpolaiois...........................      3,508          3,508              0
Robert E. Yancey, Jr......................................      3,508          3,508              0
Joseph E. Valenti Jr. Trust dated December 21, 1993.......      3,508          3,508              0
Jose Spiwak/ ttee and Sara Spiwak/ttee....................      3,508          3,508              0
John Stafford.............................................      3,508          3,508              0
</TABLE>
 
                                       38
<PAGE>   39
 
<TABLE>
<CAPTION>
                                                             SHARES OF
                                                              COMMON                        SHARES
                                                               STOCK                      OWNED AFTER
                                                            OWNED PRIOR                   COMPLETION
                                                              TO THE       SHARES BEING     OF THE
                   SELLING SHAREHOLDER                      OFFERING(1)      OFFERED       OFFERING
                   -------------------                      -----------    ------------   -----------
<S>                                                         <C>            <C>            <C>
John A. Miller............................................      3,508          3,508              0
Gordon A. Hughes and Elizabeth Hughes TEN ENT.............      8,508          3,508          5,000
Edwin R. Bindseil.........................................      3,508          3,508              0
Edward W. Rabin...........................................      3,508          3,508              0
Fay E. Schefer............................................      3,508          3,508              0
Francis Cook..............................................      3,508          3,508              0
Douglas A. Pertz..........................................      3,508          3,508              0
Richard Bertero...........................................      3,508          3,508              0
Mary A. Froelich..........................................      3,508          3,508              0
Bruce D. Cowen............................................      3,508          3,508              0
Talisman Capital Ltd......................................     13,333         13,333              0
Robert E. Kilkenny........................................     13,333         13,333              0
The McCloskey Trust.......................................     14,035         14,035              0
Charles A. Smithgall, Jr..................................     21,535         14,035          7,500
Jacobs Family Co. LLC.....................................     14,035         14,035              0
David Braverman Trust.....................................      7,017          7,017              0
Venture Capital Holdings, L.P.............................     17,544         17,544              0
Charles K. Stewart........................................     17,543         17,543              0
James L. Brooks, Trustee, Brooks Family Trust.............     17,543         17,543              0
William Broder, Trustee, James L. Brooks Retained Income
  Trust...................................................      3,508          3,508              0
W.H. Kilkenny Co..........................................     29,824         29,824              0
Link & Co.................................................     33,333         33,333              0
Paul A. Sakmar Trust, Paul A. Sakmar Trustee..............     28,421         28,421              0
Employee's Profit Sharing Plan and Trust of Steel
  Industries, Inc.........................................     11,166          6,666          4,500
Akkad & Co................................................     49,122         49,122              0
ASTO OS, L.L.C............................................    159,336         94,736         64,600
Advance Capital Partners, L.P.............................    256,727         85,444        171,283
Jackson National Life Insurance Company...................    157,894        157,894              0
Nap & Co..................................................    140,350        140,350              0
Northman & Co.............................................     42,104         42,104              0
Fuelship & Co.............................................     28,070         28,070              0
Martin E. Messinger.......................................     24,561         24,561              0
LaSalle National Bank as Custodian for W.H.I. Growth Fund,
  L.P.....................................................     70,000         70,000              0
Irving B. Harris Revocable Trust dtd 7/31/87..............     18,500         18,500              0
William W. Harris Trust...................................      6,666          6,666              0
Roxanne H. Frank Trust....................................     13,333         13,333              0
Harris Foundation.........................................     10,000         10,000              0
Irving Harris Foundation A................................      4,000          4,000              0
Irving Harris Foundation B................................      3,333          3,333              0
Jerome Kahn, Jr. Revocable Trust..........................      2,000          2,000              0
David Rosenbaum & Margot Kahn JTWROS......................        333            333              0
James J. Pelts............................................      2,000          2,000              0
Fred Holubow..............................................      2,333          2,333              0
Michael S. Resnick........................................        500            500              0
Peter E. Martin & Nancy K. Martin JTWROS..................        666            666              0
Alae, LP..................................................      8,333          8,333              0
Crescent International Holdings Limited (4)...............     16,666         16,666              0
Pilot Trading Trust (5)...................................      7,333          7,333              0
</TABLE>
 
                                       39
<PAGE>   40
 
---------------
 
(1) Except as otherwise reflected in the footnotes to this table, all share
    ownership includes Shares owned by the Selling Shareholders and shares that
    the Selling Shareholders have the right to acquire within 60 days of April
    4, 1998, through the exercise of stock options.
 
(2) Gregory D. Lewis and Earl R. Lewis IV are sons of Earl R. Lewis, a Director
    of the Company and Thermo Instrument. See "Management" and "Security
    Ownership of Certain Beneficial Owners and Management."
 
(3) Wynona L. Smith is the spouse of Arvin H. Smith, a Director of the Company
    and Thermo Instrument. See "Management" and "Security Ownership of Certain
    Beneficial Owners and Management."
 
(4) Crescent International Holdings Limited, a member of the Olayan Group, is
    indirectly controlled by Suliman S. Olayan, the father of Hutham S. Olayan,
    a Director of Thermo Electron.
 
(5) Pilot Trading Trust is controlled by Robert A. McCabe, a Director of Thermo
    Electron, and members of his family.
 
     The Shares are being registered to permit public secondary trading of the
Shares from time to time by the Selling Shareholders. All of the Shares being
offered by the Selling Shareholders were sold by the Company in private
placement transactions pursuant to Stock Purchase Agreements with the Company
dated September 24, 1997 and October 22, 1997 (the "Purchase Agreements") for
cash.
 
     In the Purchase Agreements, the Company agreed, among other things, to bear
all expenses (other than underwriting discounts, selling commissions, and fees
and expenses of counsel and other advisors to the Selling Shareholders) in
connection with the registration and sale of the Shares being offered by the
Selling Shareholders. See "Sale of Shares." The Company intends to prepare and
file such amendments and supplements to the Registration Statement of which this
Prospectus forms a part as may be necessary to keep the Registration Statement
effective until all the Shares registered thereunder have been sold pursuant
thereto or until, by reason of Rule 144(k) of the Commission under the
Securities Act or any other rule of similar effect, the Shares are no longer
required to be registered for the sale thereof by the Selling Shareholders.
 
                                 SALE OF SHARES
 
     The Company will not receive any of the proceeds from this offering. The
Shares offered hereby may be sold from time to time by or for the account of any
of the Selling Shareholders or by their pledgees, donees, distributees or
transferees or other successors in interest to the Selling Shareholders. The
Shares may be sold hereunder directly to purchasers by the Selling Shareholders
in negotiated transactions; by or through brokers or dealers in ordinary
brokerage transactions or transactions in which the broker solicits purchases;
block trades in which the broker or dealer will attempt to sell Shares as agent
but may position and resell a portion of the block as principal; transactions in
which a broker or dealer purchases as principal for resale for its own account;
or through underwriters or agents. The Shares may be sold at a fixed offering
price, which may be changed, at the prevailing market price at the time of sale,
at prices related to such prevailing market price or at negotiated prices. Any
brokers, dealers, underwriters or agents may arrange for others to participate
in any such transaction and may receive compensation in the form of discounts,
commissions or concessions from the Selling Shareholders and/or the purchasers
of the Shares. Each Selling Shareholder will be responsible for payment of any
and all commissions to brokers.
 
     The aggregate proceeds to any Selling Shareholder from the sale of the
Shares offered hereby will be the purchase price of such Shares less any
broker's commission.
 
     In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
 
     Any Selling Shareholder and or any broker-dealer, agent or underwriter who
acts in connection with the sale of Shares hereunder may be deemed to be an
"underwriter" as that term is defined in the Securities Act, and any commissions
received by them and profit on any resale of the Shares as principal might be
deemed to be underwriting discounts and commissions under the Securities Act.
The Company has agreed to indemnify the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act as underwriters or
otherwise.
 
                                       40
<PAGE>   41
 
                          DESCRIPTION OF CAPITAL STOCK
 
     As of April 4, 1998, the Company had 50,000,000 shares of Common Stock
authorized for issuance, of which 15,606,307 were issued and outstanding. Each
share of Common Stock is entitled to pro rata participation in distributions
upon liquidation and to one vote on all matters submitted to a vote of
stockholders. Dividends may be paid to the holders of Common Stock when and if
declared by the Board of Directors out of funds legally available therefor.
Holders of Common Stock have no preemptive or similar rights. The outstanding
shares of Common Stock are, and the shares offered hereby when issued will be,
legally issued, fully paid and nonassessable.
 
     The shares of Common Stock have noncumulative voting rights, which means
that the holders of more than 50% of the shares voting can elect all the
Directors if they so choose, and in such event, the holders of the remaining
shares cannot elect any Directors. Thermo Instrument (and Thermo Electron
through its majority ownership of Thermo Instrument) intends to continue to own
at least a majority of the outstanding Common Stock, and will have the power to
elect all of the members of the Company's Board of Directors.
 
     The Company's Certificate of Incorporation contains certain provisions
permitted under the General Corporation Law of Delaware relating to the
liability of Directors. The provisions eliminate a Director's liability for
monetary damages for a breach of fiduciary duty, except in certain circumstances
involving wrongful acts or omissions that involve intentional misconduct or a
knowing violation of law. The Company's Certificate of Incorporation also
contains provisions to indemnify the Directors and officers of the Company to
the fullest extent permitted by the General Corporation Law of Delaware. The
Company believes that these provisions will assist the Company in attracting and
retaining qualified individuals to serve as Directors and officers.
 
     The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     There are currently 15,606,307 shares of Common Stock of the Company
outstanding, of which 4,939,640 shares are freely tradable without restriction
or further registration under the Securities Act, except that any shares
purchased by affiliates of the Company, as that term is defined in Rule 144
under the Securities Act, may generally only be resold in compliance with
applicable provisions of Rule 144.
 
     Of such 15,606,307 outstanding shares, 10,666,667 are owned by Thermo
Instrument. In connection with the Company's initial public offering, which was
completed March 30, 1998, the Company, Thermo Instrument and Thermo Electron
have agreed not to, without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation, offer, sell, grant any option to purchase or
otherwise dispose of any shares of the Common Stock prior to September 20, 1998,
other than (i) the issuance of options and sales of shares of Common Stock
pursuant to existing stock-based compensation plans and (ii) shares of Common
Stock issuable upon the conversion of securities outstanding as of March 24,
1998. Upon expiration of this lock-up agreement, Thermo Instrument may sell its
shares of Common Stock in an offering registered under the Securities Act or
pursuant to an exemption from such registration. So long as Thermo Instrument is
able to elect a majority of the Board of Directors it will be able to cause the
Company at any time to register under the Securities Act all or a portion of the
Common Stock owned by Thermo Instrument or its affiliates, in which case it
would be able to sell such shares without restriction upon effectiveness of the
registration statement. In general, under Rule 144 as currently in effect, a
person (or persons whose shares are aggregated) who has beneficially owned
restricted shares for at least one year is entitled to sell, within any
three-month period, a number of such shares that does not exceed the greater of
(i) 1% of the then outstanding shares of Common Stock or (ii) the average weekly
trading volume in the Common Stock during the four calendar weeks preceding the
date of the notice filed pursuant to Rule 144. Sales under Rule 144 are also
subject to certain manner of sale restrictions and notice requirements and to
the availability of current public information about the Company. In addition, a
person who is deemed an "affiliate" of the Company must comply with Rule 144 in
any sale of shares of Common Stock not covered by a registration statement
(except, in the case of registered shares acquired by the affiliate on the open
market, for the holding period requirement). A person
 
                                       41
<PAGE>   42
 
(or person whose shares are aggregated) who is not deemed an "affiliate" of the
Company and who has beneficially owned restricted shares for at least two years
is entitled to sell such shares under Rule 144(k) without regard to the volume,
notice and other limitations of Rule 144. In meeting the one and two year
holding periods described above, a holder of restricted shares can include the
holding periods of a prior owner who was not an affiliate.
 
     The Company has reserved 1,091,667 shares for grants under its existing
stock-based compensation plans. As of April 4, 1998, the Company had options
outstanding to purchase up to 581,895 shares of Common Stock to its employees
and Directors at an exercise price of $14.25 per share. All of such options are
currently exercisable, subject to repurchase at the exercise price if the
optionee ceases to be employed by the Company. This repurchase right lapses
ratably (on an annual basis) over a five- to ten-year period depending upon the
term of the option. The Company intends to file registration statements under
the Securities Act to register all shares of Common Stock issuable under such
plans. Shares covered by these registration statements will be eligible for sale
in the public market after the effective date of such registration statements.
 
                                 LEGAL OPINIONS
 
     The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Seth H. Hoogasian, Esq., General Counsel of
Thermo Electron, Thermo Instrument and the Company. Mr. Hoogasian owns or has
the right to acquire 3,333 shares of Common Stock of the Company, 20,986 shares
of common stock of Thermo Instrument and 103,028 shares of common stock of
Thermo Electron.
 
                                    EXPERTS
 
     The financial statements of the Company included in this Prospectus and the
financial statement schedule included in the Registration Statement of which
this Prospectus forms a part have been audited by Arthur Andersen LLP,
independent public accountants, to the extent and for the periods as indicated
in their reports with respect thereto, and are included herein in reliance upon
the authority of said firm as experts in giving said reports.
 
                             ADDITIONAL INFORMATION
 
     The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; and at the Commission's regional offices
at 7 World Trade Center, New York, New York 10048 and at 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material can be obtained by mail
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, DC 20549, at prescribed rates. The Commission also maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission,
including the Company. The address of such Web site is http://www.sec.gov. The
Common Stock is listed on the AMEX, and such material that relates to the
Company may also be inspected at the offices of the AMEX, 86 Trinity Place, New
York, New York 10006.
 
     The Company has filed with the Commission a registration statement on Form
S-1 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act, with respect to the securities offered
hereby, and of which this Prospectus constitutes a part. This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information, reference is made to the
Registration Statement.
 
                                       42
<PAGE>   43
 
                               ONIX SYSTEMS INC.
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Public Accountants....................  F-2
Consolidated Statement of Income for the years ended
  December 30, 1995, December 28, 1996 and January 3, 1998
  and the three months ended March 29, 1997 and April 4,
  1998......................................................  F-3
Consolidated Balance Sheet as of December 28, 1996, January
  3, 1998 and April 4, 1998.................................  F-4
Consolidated Statement of Cash Flows for the years ended
  December 30, 1995, December 28, 1996 and January 3, 1998
  and the three months ended March 29, 1997 and April 4,
  1998......................................................  F-5
Consolidated Statement of Shareholders' Investment for the
  years ended December 30, 1995, December 28, 1996 and
  January 3, 1998 and the three months ended April 4,
  1998......................................................  F-6
Notes to Consolidated Financial Statements..................  F-7
</TABLE>
 
                                       F-1
<PAGE>   44
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To the Shareholders and Board of Directors of ONIX Systems Inc.:
 
     We have audited the accompanying consolidated balance sheet of ONIX Systems
Inc. (a Delaware corporation and 87%-owned subsidiary of Thermo Instrument
Systems Inc.) and subsidiaries as of December 28, 1996 and January 3, 1998, and
the related consolidated statements of income, cash flows and shareholders'
investment for each of the three years in the period ended January 3, 1998.
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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated 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 ONIX Systems
Inc. and subsidiaries as of December 28, 1996 and January 3, 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended January 3, 1998, in conformity with generally accepted
accounting principles.
 
                                            ARTHUR ANDERSEN LLP
 
Boston, Massachusetts
January 28, 1998 (except with respect to
certain matters discussed in Notes 5 and 10,
as to which the date is July 7, 1998)
 
                                       F-2
<PAGE>   45
 
                               ONIX SYSTEMS INC.
 
                        CONSOLIDATED STATEMENT OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                             THREE MONTHS ENDED
                                                                            ---------------------
                                                                            MARCH 29,    APRIL 4,
                                           1995       1996        1997        1997         1998
                                          -------    -------    --------    ---------    --------
                                                                                 (UNAUDITED)
<S>                                       <C>        <C>        <C>         <C>          <C>
Revenues (Notes 6 and 8)................  $72,105    $95,316    $121,525     $26,429     $37,144
                                          -------    -------    --------     -------     -------
Costs and Operating Expenses:
     Cost of revenues...................   43,636     59,715      72,006      16,003      21,624
     Selling, general and administrative
       expenses (Note 6)................   17,310     21,935      28,201       6,292       9,633
     Research and development
       expenses.........................    5,042      5,568       6,830       1,449       2,177
                                          -------    -------    --------     -------     -------
                                           65,988     87,218     107,037      23,744      33,434
                                          -------    -------    --------     -------     -------
Operating Income........................    6,117      8,098      14,488       2,685       3,710
Interest Income.........................       --         --         344          --         259
Interest Expense........................       --         --        (113)         --        (261)
                                          -------    -------    --------     -------     -------
Income Before Provision for Income
  Taxes.................................    6,117      8,098      14,719       2,685       3,708
Provision for Income Taxes (Note 4).....    2,490      3,240       5,920       1,079       1,491
                                          -------    -------    --------     -------     -------
Net Income..............................  $ 3,627    $ 4,858    $  8,799     $ 1,606     $ 2,217
                                          =======    =======    ========     =======     =======
Basic and Diluted Earnings per Share
  (Note 9)..............................  $   .34    $   .46    $    .79     $   .15     $   .18
                                          =======    =======    ========     =======     =======
Weighted Average Shares (Note 9):
     Basic..............................   10,667     10,667      11,083      10,667      12,524
                                          =======    =======    ========     =======     =======
     Diluted............................   10,667     10,667      11,083      10,667      12,530
                                          =======    =======    ========     =======     =======
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-3
<PAGE>   46
 
                               ONIX SYSTEMS INC.
 
                           CONSOLIDATED BALANCE SHEET
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                                     APRIL 4,
                                                               1996        1997        1998
                                                               ----        ----      --------
                                                                                     (UNAUDITED)
<S>                                                           <C>        <C>         <C>
ASSETS
Current Assets:
     Cash and cash equivalents (includes $19,618 and $57,045
       under repurchase agreement with affiliated company in
       1997 and 1998).......................................  $ 2,386    $ 24,960    $ 61,091
     Accounts receivable, less allowances of $1,347, $2,155
       and $1,897...........................................   26,862      32,583      32,640
     Inventories............................................   20,130      32,932      34,910
     Prepaid expenses.......................................      778       1,032       1,649
     Deferred tax asset (Note 4)............................    2,047       3,531       3,571
     Due from affiliated companies..........................      342          --          --
                                                              -------    --------    --------
                                                               52,545      95,038     133,861
                                                              -------    --------    --------
Property, Plant and Equipment, at Cost, Net.................    6,425       9,145       8,908
                                                              -------    --------    --------
Other Assets................................................      185          87         329
                                                              -------    --------    --------
Cost in Excess of Net Assets of Acquired Companies (Note
  2)........................................................   37,855      55,439      55,414
                                                              -------    --------    --------
                                                              $97,010    $159,709    $198,512
                                                              =======    ========    ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
     Note payable to parent company (Note 10)...............  $    --    $     --    $ 12,000
     Payable to affiliated companies (Note 2)...............       --      19,508       1,024
     Accounts payable.......................................    9,497      12,775      11,897
     Accrued payroll and employee benefits..................    3,861       3,811       3,874
     Accrued income taxes...................................      800       3,455       4,256
     Accrued installation and warranty expenses.............    1,093       1,583       1,469
     Deferred revenue.......................................      597       3,624       4,171
     Other accrued expenses.................................    6,824       8,335       7,555
                                                              -------    --------    --------
                                                               22,672      53,091      46,246
                                                              -------    --------    --------
Deferred Income Taxes (Note 4)..............................    1,228       1,680       1,680
                                                              -------    --------    --------
Commitments and Contingency (Notes 5 and 6)
Shareholders' Investment (Notes 7 and 10):
     Common stock, $.01 par value, 50,000,000 shares
       authorized; 12,306,307 and 15,606,307 shares issued
       and outstanding in 1997 and 1998.....................       --         123         156
     Capital in excess of par value.........................       --     100,966     144,121
     Retained earnings......................................       --       3,150       5,367
     Net parent company investment..........................   72,437          --          --
     Cumulative translation adjustment......................      673         699         942
                                                              -------    --------    --------
                                                               73,110     104,938     150,586
                                                              -------    --------    --------
                                                              $97,010    $159,709    $198,512
                                                              =======    ========    ========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-4
<PAGE>   47
 
                               ONIX SYSTEMS INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                      THREE MONTHS ENDED
                                                                                     --------------------
                                                                                     MARCH 29,   APRIL 4,
                                                       1995      1996       1997       1997        1998
                                                      -------   -------   --------   ---------   --------
                                                                                         (UNAUDITED)
<S>                                                   <C>       <C>       <C>        <C>         <C>
OPERATING ACTIVITIES:
    Net income......................................  $ 3,627   $ 4,858   $  8,799    $ 1,606    $ 2,217
    Adjustments to reconcile net income to net cash
       provided by (used in) operating activities:
         Provision for losses on accounts
           receivable...............................      779       283        674         --         65
         Depreciation and amortization..............    1,909     2,530      3,172        831      1,036
         Increase in deferred income taxes..........      700       312        450         --         --
         Other noncash items........................      (18)       --         (7)        --         --
         Changes in current accounts, excluding the
           effects of acquisitions:
              Accounts receivable...................   (3,343)   (2,857)     1,746      1,971         (7)
              Inventories...........................     (413)   (1,517)    (4,991)       924     (2,404)
              Other current assets..................    2,937     2,674       (600)    (2,547)      (665)
              Accounts payable......................      362     2,824       (227)    (2,114)      (924)
              Other current liabilities.............   (3,304)   (1,244)     3,980     (2,601)       717
         Other......................................      127      (155)       328          7         (7)
                                                      -------   -------   --------    -------    -------
           Net cash provided by (used in) operating
              activities............................    3,363     7,708     13,324     (1,923)        28
                                                      -------   -------   --------    -------    -------
INVESTING ACTIVITIES:
    Payments to affiliated company for acquired
       business.....................................       --        --         --         --    (19,117)
    Refund of acquisition purchase price............       --        --         --        614        424
    Acquisitions, net of cash acquired (Note 2).....       --        --     (9,660)        --         --
    Purchases of property, plant and equipment......   (1,093)   (1,505)    (1,868)      (316)      (406)
    Proceeds from sale of property, plant and
       equipment....................................      595        --        240         11         13
                                                      -------   -------   --------    -------    -------
           Net cash provided by (used in) investing
              activities............................     (498)   (1,505)   (11,288)       309    (19,086)
                                                      -------   -------   --------    -------    -------
FINANCING ACTIVITIES:
    Net proceeds from issuance of Company common
       stock (Notes 5, 7 and 10)....................       --        --     21,955         --     43,189
    Net transfers (to) from parent company prior to
       capitalization of the Company................   (2,346)   (4,662)      (865)     1,303         --
    Net proceeds from issuance of note payable to
       parent company...............................       --        --         --         --     12,000
                                                      -------   -------   --------    -------    -------
           Net cash provided by (used in) financing
              activities............................   (2,346)   (4,662)    21,090      1,303     55,189
                                                      -------   -------   --------    -------    -------
Exchange Rate Effect on Cash........................     (123)      182       (552)      (107)        --
                                                      -------   -------   --------    -------    -------
Increase (Decrease) in Cash and Cash Equivalents....      396     1,723     22,574       (418)    36,131
Cash and Cash Equivalents at Beginning of Period....      267       663      2,386      2,386     24,960
                                                      -------   -------   --------    -------    -------
Cash and Cash Equivalents at End of Period..........  $   663   $ 2,386   $ 24,960    $ 1,968    $61,091
                                                      =======   =======   ========    =======    =======
CASH PAID FOR:
    Income taxes....................................  $ 1,740   $ 1,938   $  6,341    $     3    $   711
                                                      =======   =======   ========    =======    =======
NONCASH ACTIVITIES (NOTE 2):
    Transfer of acquired businesses from parent
       company......................................  $ 7,772   $12,345   $  1,913    $    --    $    --
                                                      =======   =======   ========    =======    =======
    Fair value of assets of acquired companies......  $    --   $    --   $ 34,989    $    --    $    --
    Cash paid for acquired companies................       --        --     (9,889)        --         --
    Payable to affiliated company...................       --        --    (19,117)        --         --
                                                      -------   -------   --------    -------    -------
       Liabilities assumed of acquired companies....  $    --   $    --   $  5,983    $    --    $    --
                                                      =======   =======   ========    =======    =======
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-5
<PAGE>   48
 
                               ONIX SYSTEMS INC.
               CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                     APRIL 4,
                                                   1995       1996        1997         1998
                                                   ----       ----        ----       --------
                                                                                    (UNAUDITED)
<S>                                               <C>        <C>        <C>         <C>
COMMON STOCK, $.01 PAR VALUE
     Balance at beginning of year..............   $    --    $    --    $     --     $    123
     Capitalization of the Company.............        --         --         107           --
     Net proceeds from issuance of Company
       common stock (Notes 7 and 10)...........        --         --          16           33
                                                  -------    -------    --------     --------
     Balance at end of period..................        --         --         123          156
                                                  -------    -------    --------     --------
CAPITAL IN EXCESS OF PAR VALUE
     Balance at beginning of year..............        --         --          --      100,966
     Capitalization of the Company.............        --         --      79,027           --
     Net proceeds from issuance of Company
       common stock (Notes 7 and 10)...........        --         --      21,939       43,155
                                                  -------    -------    --------     --------
     Balance at end of period..................        --         --     100,966      144,121
                                                  -------    -------    --------     --------
RETAINED EARNINGS
     Balance at beginning of year..............        --         --          --        3,150
     Net income after capitalization of the
       Company.................................        --         --       3,150        2,217
                                                  -------    -------    --------     --------
     Balance at end of period..................        --         --       3,150        5,367
                                                  -------    -------    --------     --------
NET PARENT COMPANY INVESTMENT
     Balance at beginning of year..............    50,843     59,896      72,437           --
     Net income prior to capitalization of the
       Company.................................     3,627      4,858       5,649           --
     Transfer of acquired businesses from
       parent company (Note 2).................     7,772     12,345       1,913           --
     Net transfers to parent company prior to
       capitalization of the Company...........    (2,346)    (4,662)       (865)          --
     Capitalization of the Company.............        --         --     (79,134)          --
                                                  -------    -------    --------     --------
     Balance at end of period..................    59,896     72,437          --           --
                                                  -------    -------    --------     --------
CUMULATIVE TRANSLATION ADJUSTMENT
     Balance at beginning of year..............        49       (105)        673          699
     Translation adjustment....................      (154)       778          26          243
                                                  -------    -------    --------     --------
     Balance at end of period..................      (105)       673         699          942
                                                  -------    -------    --------     --------
TOTAL SHAREHOLDERS' INVESTMENT.................   $59,791    $73,110    $104,938     $150,586
                                                  =======    =======    ========     ========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-6
<PAGE>   49
 
                               ONIX SYSTEMS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1.  NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
NATURE OF OPERATIONS
 
     ONIX Systems Inc. ("ONIX" or the "Company") designs, develops, markets and
services sophisticated field measurement instruments and on-line sensors. These
products incorporate a range of advanced measurement technologies to provide
real-time data collection, analysis and local control functions to enhance
production efficiency, improve process and quality control, ensure regulatory
compliance and increase employee safety. The Company manufactures field
measurement instruments and on-line sensors in four general product areas: flow
instruments, level and density instruments, composition analysis instruments and
industry-specific instruments.
 
RELATIONSHIP WITH THERMO INSTRUMENT SYSTEMS INC. AND THERMO ELECTRON CORPORATION
 
     The Company operated as a division of Thermo Instrument Systems Inc.
(Thermo Instrument) until its incorporation as a Delaware corporation in August
1997 as a wholly owned subsidiary of Thermo Instrument. At that time, Thermo
Instrument contributed all of the assets or stock of certain of its subsidiaries
relating to the CAC, Flow Automation, TN Technologies, Kay-Ray/Sensall, Houston
Atlas, Westronics and VG Gas businesses to the Company in exchange for
10,666,667 shares of the Company's common stock. The transfer of assets from
Thermo Instrument was recorded at historical cost. As of January 3, 1998, Thermo
Instrument owned 87% of the Company's outstanding common stock. As of January 3,
1998, Thermo Instrument was an 82%-owned subsidiary of Thermo Electron
Corporation (Thermo Electron).
 
     The accompanying financial statements include the assets, liabilities,
income and expenses of the Company as included in Thermo Instrument's
consolidated financial statements. The accompanying financial statements do not
include Thermo Instrument's general corporate debt, which is used to finance
operations of all of its respective business segments, or an allocation of
Thermo Instrument's interest expense. The Company had positive cash flow from
operations for all periods presented.
 
PRINCIPLES OF CONSOLIDATION
 
     The accompanying financial statements include the accounts of the Company
and its wholly owned subsidiaries. All material intercompany accounts and
transactions have been eliminated.
 
FISCAL YEAR
 
     The Company has adopted a fiscal year ending the Saturday nearest December
31. References to 1995, 1996 and 1997 are for the fiscal years ended December
30, 1995, December 28, 1996 and January 3, 1998, respectively. Fiscal years 1995
and 1996 each included 52 weeks; 1997 included 53 weeks.
 
REVENUE RECOGNITION
 
     The Company recognizes product revenues upon shipment of its products and
recognizes service contract revenues ratably over the term of the contract. The
Company provides a reserve for its estimate of warranty and installation costs
at the time of shipment. Deferred revenue in the accompanying 1997 balance sheet
includes $3.1 million for products that were shipped pending customer
acceptance. Customer acceptance was not received as of year end; therefore, as
of January 3, 1998, the Company has deferred recognition of such revenue and the
associated costs are included in inventories as of January 3, 1998.
 
STOCK-BASED COMPENSATION PLANS
 
     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 3). 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 equity.
 
                                       F-7
<PAGE>   50
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
INCOME TAXES
 
     The Company and Thermo Electron have a tax allocation agreement under which
the Company is included in Thermo Electron's consolidated federal and certain
state income tax returns. The agreement provides that in years in which the
Company has taxable income, it will pay to Thermo Electron amounts comparable to
the taxes the Company would have paid if it had filed separate tax returns. Upon
completion of the proposed initial public offering, Thermo Instrument's
ownership of the Company will drop below 80% and the Company will be required to
file its own corporate tax returns.
 
     In accordance with Statement of Financial Accounting Standards (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 PER SHARE
 
     Pursuant to Securities and Exchange Commission requirements, earnings per
share have been presented for all periods. Earnings per share have been computed
in accordance with SFAS No. 128 "Earnings per Share" (Note 9). Basic and diluted
earnings per share are the same as one another for each of the years presented
and have been computed by dividing net income by the weighted average number of
shares outstanding during the year. Weighted average shares for all periods
include 10,666,667 shares issued to Thermo Instrument in connection with the
initial capitalization of the Company and, in 1997, the effect of shares sold
through the Company's private placement.
 
CASH AND CASH EQUIVALENTS INCLUDING REPURCHASE AGREEMENT
 
     Prior to its incorporation, the cash receipts and disbursements of the
Company's domestic operations were combined with other Thermo Instrument
corporate cash transactions and balances. Therefore, cash of the Company's
domestic operations through August 1997 is not included in the accompanying
balance sheet.
 
     As of January 3, 1998, $19,618,000 of the Company's cash equivalents were
invested in a repurchase agreement with Thermo Electron. Under this agreement,
the Company in effect lends excess cash to Thermo Electron, which Thermo
Electron collateralizes with investments principally consisting of U.S.
government-agency securities, corporate notes, commercial paper, money market
funds and other marketable securities, in the amount of at least 103% of such
obligation. Thermo Electron maintains possession of the underlying securities
and has the right of substitution at its discretion. The Company's funds subject
to the repurchase agreement are readily convertible on demand into cash by the
Company. The repurchase agreement earns a rate based on the 90-day Commercial
Paper Composite Rate plus 25 basis points, set at the beginning of each quarter.
As of January 3, 1998, the Company's cash equivalents also include investments
in short-term certificates of deposit of the Company's foreign subsidiaries,
which have an original maturity of three months or less. Cash equivalents are
carried at cost, which approximates market value.
 
INVENTORIES
 
     Inventories are stated at the lower of cost (on a first-in, first-out or
weighted average basis) or market value and include materials, labor and
manufacturing overhead. The components of inventories are as follows:
 
<TABLE>
<CAPTION>
                                                        1996       1997
                                                       -------    -------
                                                         (IN THOUSANDS)
<S>                                                    <C>        <C>
Raw materials and supplies...........................  $ 9,526    $18,095
Work in process......................................    7,195      8,033
Finished goods.......................................    3,409      6,804
                                                       -------    -------
                                                       $20,130    $32,932
                                                       =======    =======
</TABLE>
 
                                       F-8
<PAGE>   51
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
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, 30 to 40 years; machinery
and equipment, 3 to 10 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:
 
<TABLE>
<CAPTION>
                                                        1996       1997
                                                       -------    -------
                                                         (IN THOUSANDS)
<S>                                                    <C>        <C>
Buildings............................................  $   907    $ 1,485
Machinery, equipment and leasehold improvements......    8,906     12,928
                                                       -------    -------
                                                         9,813     14,413
Less: Accumulated depreciation and amortization......    3,388      5,268
                                                       -------    -------
                                                       $ 6,425    $ 9,145
                                                       =======    =======
</TABLE>
 
COST IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES
 
     The excess of cost over the fair value of net assets of acquired companies
is amortized using the straight-line method over 40 years. Accumulated
amortization was $2,287,000 and $3,488,000 at year-end 1996 and 1997,
respectively. The Company assesses the future useful life of this asset whenever
events or changes in circumstances indicate that the current useful life has
diminished. The Company considers the future undiscounted cash flows of the
acquired companies in assessing the recoverability of this asset. If impairment
has occurred, any excess of carrying value over fair value is recorded as a
loss.
 
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The Company's financial instruments consist primarily of cash and cash
equivalents, accounts receivable, due from/payable to affiliated companies and
accounts payable. The carrying amounts of these financial instruments
approximate fair value due to their short-term nature.
 
FOREIGN CURRENCY
 
     All assets and liabilities of the Company's foreign 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 as a
separate component of shareholders' investment titled "Cumulative translation
adjustment." Foreign currency transaction gains and losses are included in the
accompanying statement of income and are not material for the three years
presented.
 
RECENTLY RELEASED ACCOUNTING PRONOUNCEMENTS
 
     SFAS No. 130 "Reporting Comprehensive Income" and SFAS No. 131 "Disclosures
about Segments of an Enterprise and Related Information" both require adoption
in 1998. The Company has not completed the analysis to assess the effect of the
new pronouncements on its financial statements, although the Company expects
that the effect, if any, would represent additional disclosure requirements from
those that exist currently.
 
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. Actual results could differ from those estimates.
 
                                       F-9
<PAGE>   52
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
INTERIM FINANCIAL STATEMENTS
 
     The financial statements as of April 4, 1998 and for the three-month
periods ended March 29, 1997 and April 4, 1998, are unaudited, but, in the
opinion of management, reflect all adjustments of a normal recurring nature
necessary for a fair presentation of results for these interim periods. The
results of operations for the three-month period ended April 4, 1998 are not
necessarily indicative of the results to be expected for the entire year.
 
2.  ACQUISITIONS
 
     On November 6, 1997, Thermo Power Corporation (Thermo Power), a majority
owned subsidiary of Thermo Electron, acquired Peek plc. Thereafter, the Company
acquired from Thermo Power the Peek Measurement Business for $19,117,000. The
purchase price was determined based on the net book value of the Peek
Measurement Business at November 6, 1997, a pro rata allocation of Thermo
Power's total cost in excess of net assets of acquired companies recorded in
connection with its acquisition of Peek plc based on 1997 revenues of Peek
Measurement relative to Peek plc's total revenues, plus an estimate of Thermo
Power's tax liability that arises from the sale of the business to the Company.
Peek Measurement manufactures flow and density measurement systems for use in
the water/wastewater and oil and gas industries. The purchase price is included
in payable to affiliated companies in the accompanying 1997 balance sheet.
 
     On March 29, 1996, Thermo Instrument acquired a substantial portion of the
businesses constituting the Scientific Instruments Division of Fisons plc
(Fisons), a wholly owned subsidiary of Rhone-Poulenc Rorer, Inc. Thereafter,
Thermo Instrument contributed the business of VG Gas Analysis (VG Gas), the
on-line process analysis division of Fisons, to the Company. The amount of net
assets transferred, $6,345,000, was determined based on the net book value of VG
Gas at March 29, 1996, and a pro rata allocation of Thermo Instrument's total
cost in excess of net assets of acquired companies recorded in connection with
its acquisition of the Fisons businesses, based on the revenues of VG Gas
relative to the total revenues of all of the Fisons businesses purchased by
Thermo Instrument.
 
     The methodology used to determine the purchase price for Peek Measurement
and VG Gas and the accounting used, which includes the results of operations
from the date the respective businesses became owned by Thermo Electron
subsidiaries, is consistent with the methodology used to account for the
transfer of other operating units of newly acquired businesses among
majority-owned subsidiaries of Thermo Electron.
 
     Because the Company, Peek Measurement and VG Gas were deemed for accounting
purposes to be under control of their common majority owner, Thermo Electron,
the transactions have been accounted for in a manner similar to a pooling of
interests. Accordingly, the Company's financial statements include the results
of Peek Measurement and VG Gas from November 6, 1997 and March 29, 1996, the
respective dates Peek Measurement and VG Gas were acquired by Thermo Electron's
majority-owned subsidiaries.
 
     In May 1997, Thermo Instrument acquired the Angus Electronics division of
Esterline Technologies Corporation for $1,913,000 in cash and the assumption of
certain liabilities totaling $823,000, primarily consisting of trade payables
and other accrued expenses. Angus manufactures and distributes analog and
digital data acquisition and recorder products and power measurement
instruments. In December 1997, the Company acquired the assets comprising the
Rustrak Ranger Logger product line (Ranger) for $1,803,000 and the assumption of
certain liabilities totaling $91,000, primarily consisting of trade payables and
other accrued expenses. Also, in December 1997, the Company acquired
substantially all of the assets of Fluid Data, Inc. (Fluid Data) for $8,500,000
in cash and the assumption of certain liabilities totaling $2,661,000, primarily
consisting of trade payables and other accrued expenses. Fluid Data is a
manufacturer and distributor of pyrolysis gas sampling systems, on-line process
gas chromatographs, chemiluminescent sulfur chromatography systems and high
speed calorimeters.
 
                                      F-10
<PAGE>   53
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     In October 1996, Thermo Instrument acquired Kay-Ray/Sensall from Rosemount
Inc., a division of Emerson Electric Co., Inc., for $6,000,000 in cash.
Kay-Ray/Sensall is a manufacturer and distributor of nuclear gauges and
ultrasonic point level and continuous level switches.
 
     In July 1995, Thermo Instrument acquired the Flow Automation division of
Galveston-Houston Company for $7,800,000 in cash and the assumption of certain
liabilities totaling $2,423,000, primarily consisting of trade payables and
other accrued expenses. Flow Automation is a supplier of fluid flow measurement
and control devices and offers a full range of electronic products to the
gas/pipeline automation market.
 
     These acquisitions, except for Peek Measurement and VG Gas, have been
accounted for using the purchase method of accounting and their results of
operations have been included in the accompanying financial statements from
their respective dates of acquisition. The aggregate cost of these acquisitions
exceeded the estimated fair value of the acquired net assets by $30,848,000,
which is being amortized over 40 years. Allocation of the purchase price for
these acquisitions was based on estimates of the fair value of the net assets
acquired and, for the businesses acquired in 1997, is subject to adjustment upon
finalization of the purchase price allocation. The Company has gathered no
information that indicates that the final allocation will differ materially from
the preliminary estimates although the Company expects to undertake an analysis
to determine whether any intangible assets other than cost in excess of net
assets acquired exist for its recent acquisitions of Fluid Data and Peek
Measurement. Existence of such intangibles would result in a change in the
preliminary estimate of the purchase price allocation to an increase in assets
with shorter economic lives than cost in excess of net assets acquired and
higher annual amortization expense. Based upon a preliminary review, the Company
does not expect that any such adjustment will materially affect its future
results of operations.
 
     The assets and liabilities were recorded at their estimated fair values as
follows:
 
<TABLE>
<CAPTION>
                          PEEK                                    KAY-RAY/        FLOW
                       MEASUREMENT     VG GAS      FLUID DATA      SENSALL     AUTOMATION      OTHER
                       -----------   -----------   -----------   -----------   -----------   ----------
<S>                    <C>           <C>           <C>           <C>           <C>           <C>
Purchase price.......  $19,117,000   $ 6,345,000   $ 8,500,000   $ 6,000,000   $ 7,800,000   $3,716,000
                       -----------   -----------   -----------   -----------   -----------   ----------
Allocation to:
  Current assets.....    7,080,000     4,072,000     7,570,000     3,393,000     6,129,000    1,913,000
  Property, plant and
     equipment.......    1,100,000       404,000       627,000       589,000       703,000    1,356,000
  Current
     liabilities.....   (3,460,000)   (2,222,000)   (2,661,000)   (2,626,000)   (2,423,000)    (914,000)
  Cost in excess of
     net assets
     acquired........   14,397,000     4,091,000     2,964,000     4,644,000     3,391,000    1,361,000
</TABLE>
 
     Based on unaudited data, the following table presents selected financial
information for the Company, Peek Measurement, Fluid Data, VG Gas and
Kay-Ray/Sensall on a pro forma basis, assuming that the Company, Peek
Measurement and Fluid Data had been combined since the beginning of 1996 and the
Company, VG Gas and Kay-Ray/Sensall had been combined since the beginning of
1995. The effect of the acquisitions not included in the pro forma data was not
material to the Company's results of operations.
 
<TABLE>
<CAPTION>
                                            1995           1996            1997
                                         ----------     -----------     -----------
                                          (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                      <C>            <C>             <C>
Revenues..............................    $95,899        $142,206        $153,877
Net income............................      2,988           3,679           6,087
Basic and diluted earnings per
  share...............................        .28             .34             .55
</TABLE>
 
     The pro forma results are not necessarily indicative of future operations
or the actual results that would have occurred had the acquisitions of Peek
Measurement and Fluid Data been made at the beginning of 1996, or the
acquisitions of VG Gas and Kay-Ray/Sensall been made at the beginning of 1995.
 
                                      F-11
<PAGE>   54
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
3.  EMPLOYEE BENEFIT PLANS
 
STOCK-BASED COMPENSATION PLANS
 
  Stock Option Plans
 
     In December 1997, the Company adopted a stock-based compensation plan for
its key employees, directors and others, which permits the grant of stock and
stock-based awards as determined by the human resources committee of the
Company's Board of Directors (the Board Committee), including restricted stock,
stock options, stock bonus shares or performance-based shares. The option
recipients and the terms of options granted under this plan are determined by
the Board Committee. Options granted generally vest and become immediately
exercisable on the ninth anniversary of the grant date, unless the Company's
stock becomes publicly traded prior to such date. Options granted became
exercisable in June 1998 and are subject to certain transfer restrictions and
the right of the Company to repurchase shares issued upon exercise of the
options at the exercise price, upon certain events. The restrictions and
repurchase rights generally will be deemed to have lapsed ratably over periods
ranging from five to ten years after the first anniversary of the grant date,
depending on the term of the option, which generally ranges from seven to twelve
years. Nonqualified stock options may be granted at any price determined by the
Board Committee, although incentive stock options must be granted at not less
than the fair market value of the Company's stock on the date of grant. As of
January 3, 1998, no options had been granted under this plan (Note 10). In
addition to the Company's stock-based compensation plan, certain officers and
key employees may also participate in the stock-based compensation plans of
Thermo Instrument and Thermo Electron. Participation in these plans is accounted
for in accordance with APB No. 25.
 
  Employee Stock Purchase Program
 
     Substantially all of the Company's full-time U.S. employees are eligible to
participate in an employee stock purchase program sponsored by Thermo Instrument
and Thermo Electron. Under this program, shares of Thermo Instrument's and
Thermo Electron's common stock can be purchased at the end of a 12-month period
at 95% of the fair market value at the beginning of the period and the shares
purchased are subject to a six-month resale restriction. Prior to November 1,
1995, the applicable shares of common stock could be purchased at 85% of the
fair market value at the beginning of the period, and the shares purchased were
subject to a one-year resale restriction. Shares are purchased through payroll
deductions of up to 10% of each participating employee's gross wages.
 
                                      F-12
<PAGE>   55
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Pro Forma Stock-based Compensation Expense
 
     In October 1995, the Financial Accounting Standards Board issued 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 stock-based compensation plans. Had compensation cost for awards in 1997,
1996 and 1995 under 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 the Company's net income and earnings per share would
have been as follows:
 
<TABLE>
<CAPTION>
                                                               1995      1996      1997
                                                              -------   -------   -------
                                                               (IN THOUSANDS, EXCEPT PER
                                                                    SHARE AMOUNTS)
<S>                                                           <C>       <C>       <C>
Net income:
  As reported...............................................  $3,627    $4,858    $8,799
  Pro forma.................................................   3,623     4,721     8,484
Basic and diluted earnings per share:
  As reported...............................................     .34       .46       .79
  Pro forma.................................................     .34       .44       .77
</TABLE>
 
     Because the method prescribed by SFAS No. 123 has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
expense may not be representative of the amount to be expected in future years.
Compensation expense for options granted is reflected over the vesting period;
therefore, future pro forma compensation expense may be greater as additional
options are granted.
 
     The fair value of each option grant was estimated on the grant date using
the Black-Scholes option-pricing model. 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 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.
 
401(K) SAVINGS PLAN
 
     The majority of the Company's full-time U.S. employees are eligible to
participate in Thermo Electron's 401(k) savings plan. Contributions to the
401(k) savings plans are made by both the employee and the Company. Company
contributions are based upon the level of employee contributions. For these
plans, the Company contributed and charged to expense $810,000, $829,000 and
$727,000 in 1995, 1996 and 1997, respectively.
 
4.  INCOME TAXES
 
     The components of income before provision for income taxes are as follows:
 
<TABLE>
<CAPTION>
                                             1995         1996         1997
                                             ----         ----         ----
                                                     (IN THOUSANDS)
<S>                                         <C>          <C>          <C>
Domestic..................................  $ 5,640      $ 5,587      $10,239
Foreign...................................      477        2,511        4,480
                                            -------      -------      -------
                                            $ 6,117      $ 8,098      $14,719
                                            =======      =======      =======
</TABLE>
 
                                      F-13
<PAGE>   56
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The components of the provision for income taxes are as follows:
 
<TABLE>
<CAPTION>
                                             1995         1996         1997
                                             ----         ----         ----
                                                     (IN THOUSANDS)
<S>                                         <C>          <C>          <C>
Currently payable:
     Federal..............................  $ 1,424      $ 1,373      $ 4,372
     State................................      316          272          909
     Foreign..............................      170          775        1,457
                                            -------      -------      -------
                                              1,910        2,420        6,738
                                            -------      -------      -------
Net deferred (prepaid):
     Federal..............................      504          633         (740)
     State................................       76          108         (112)
     Foreign..............................       --           79           34
                                            -------      -------      -------
                                                580          820         (818)
                                            -------      -------      -------
                                            $ 2,490      $ 3,240      $ 5,920
                                            =======      =======      =======
</TABLE>
 
     The provision for income taxes in the accompanying statement of income
differs from the provision calculated by applying the statutory federal income
tax rate of 35% to income before provision for income taxes due to the
following:
 
<TABLE>
<CAPTION>
                                             1995         1996         1997
                                             ----         ----         ----
                                                     (IN THOUSANDS)
<S>                                         <C>          <C>          <C>
Provision for income taxes at statutory
  rate....................................  $ 2,141      $ 2,834      $ 5,152
Increases (decreases) resulting from:
     State income taxes, net of federal
       tax................................      255          247          518
     Amortization of cost in excess of net
       assets of acquired companies.......      100          100          128
     Net foreign losses not benefited and
       tax rate differential..............        3          (24)         (77)
     Tax benefit of foreign sales
       corporation........................     (114)        (131)        (114)
     Other, net...........................      105          214          313
                                            -------      -------      -------
                                            $ 2,490      $ 3,240      $ 5,920
                                            =======      =======      =======
</TABLE>
 
     Deferred tax asset and deferred income taxes in the accompanying balance
sheet consist of the following:
 
<TABLE>
<CAPTION>
                                                            1996        1997
                                                            ----        ----
                                                             (IN THOUSANDS)
<S>                                                        <C>         <C>
Deferred tax asset:
     Reserves and accruals...............................  $  577      $1,035
     Inventory basis difference..........................   1,053       1,993
     Accrued compensation................................     390         564
     Other, net..........................................      27         (61)
                                                           ------      ------
                                                           $2,047      $3,531
                                                           ======      ======
Deferred income taxes:
     Depreciation........................................  $   61      $   63
     Intangible assets...................................   1,167       1,617
                                                           ------      ------
                                                           $1,228      $1,680
                                                           ======      ======
</TABLE>
 
     A provision has not been made for U.S. or additional foreign taxes on
$7,200,000 of undistributed earnings of foreign subsidiaries that could be
subject to taxation if remitted to the U.S. because the Company currently plans
to keep these amounts permanently reinvested overseas. The Company believes that
any additional U.S. tax liability due upon remittance of such earnings would be
immaterial.
 
                                      F-14
<PAGE>   57
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
5.  COMMITMENTS AND CONTINGENCY
 
OPERATING LEASES
 
     The Company leases portions of its office and operating facilities under
various operating lease arrangements. The accompanying statement of income
includes expenses from operating leases of $1,443,000, $1,559,000 and $2,230,000
in 1995, 1996 and 1997, respectively. Future minimum payments due under
noncancellable operating leases at January 3, 1998, are: $2,216,000 in 1998;
$2,262,000 in 1999; $2,071,000 in 2000; $1,856,000 in 2001; $1,414,000 in 2002
and $2,898,000 in 2003 and thereafter. Total future minimum lease payments are
$12,717,000. See Note 6 for space leased from a related party.
 
CONTINGENCY
 
     In December 1996, five former employees of Thermo Instrument's Epsilon
Industrial, Inc. (Epsilon) subsidiary commenced an arbitration proceeding naming
as joint defendants Epsilon, Thermo Electron, Thermo Instrument and certain
affiliates of Thermo Instrument, including TN Technologies, a wholly owned
subsidiary of the Company, alleging that these entities breached the terms of
certain agreements entered into with such employees at the time that a
predecessor of Epsilon acquired the assets and business of a company formerly
owned by such employees. The employees claimed actual damages of between $27
million and $46 million, punitive damages of twice the actual damages,
attorneys' fees and expenses, and pre-judgement and post-judgement interest,
resulting from the alleged failure of Thermo Instrument and such affiliates,
including TN Technologies, to, among other things, use their best efforts to
develop and promote certain products acquired at that time. The defendants,
including the Company, contested this matter vigorously. In June 1998, the
arbitration panel rendered its decision, which decision resulted in no liability
for damages on the part of the Company.
 
6.  RELATED PARTY TRANSACTIONS
 
CORPORATE SERVICES AGREEMENT
 
     The Company and Thermo Electron have a corporate services agreement under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management, certain
employee benefit administration, tax advice and preparation of tax returns,
centralized cash management, and certain financial and other services, for which
the Company paid Thermo Electron annually an amount equal to 1.20% of the
Company's revenues in 1995 and 1.0% of the Company's revenues in 1996 and 1997.
For these services, the Company was charged $865,000, $953,000 and $1,215,000 in
1995, 1996 and 1997, respectively. Beginning in 1998, the Company will pay an
annual fee equal to 0.8% of the Company's revenues. The annual fee is reviewed
and adjusted annually by mutual agreement of the parties. Management believes
that the service fee charged by Thermo Electron is reasonable and that such fees
are representative of the expenses the Company would have incurred on a
stand-alone basis. The corporate services agreement is renewed annually but can
be terminated upon 30 days' prior notice by the Company or upon the Company's
withdrawal from the Thermo Electron Corporate Charter (the Thermo Electron
Corporate Charter defines the relationship among Thermo Electron and its
majority-owned subsidiaries). For additional items such as employee benefit
plans, insurance coverage, and other identifiable costs, Thermo Electron charges
the Company based upon costs attributable to the Company.
 
OPERATING LEASES
 
     Commencing in January 1998, the Company leases approximately 24,000 square
feet of a 60,000 square foot facility in Winchester, England, from Thermo Power.
The Company pays Thermo Power rent in an amount that is approximately equal to
its pro rata share of Thermo Power's occupancy costs. The Company's estimated
share of Thermo Power's occupancy costs for 1998 is approximately 139,000
British pounds sterling (approximately $229,000).
 
                                      F-15
<PAGE>   58
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Commencing in October 1997, the Company leases office and manufacturing
facilities from Thermo Instrument and is charged its share of occupancy costs.
The Company's rent for this facility in 1997 totaled $45,000. The Company's
expected commitment for rent in 1998 is approximately $186,000.
 
OTHER RELATED PARTY TRANSACTIONS
 
     The Company sells products in the ordinary course of business to other
subsidiaries of Thermo Electron. Sales of such products to affiliated companies
totaled $435,000, $4,126,000 and $2,550,000 in 1995, 1996 and 1997,
respectively.
 
REPURCHASE AGREEMENT
 
     The Company invests excess cash in a repurchase agreement with Thermo
Electron as discussed in Note 1.
 
7.  COMMON STOCK
 
     In September and October 1997, the Company sold 1,639,640 shares of its
common stock in a private placement at $14.25 per share, for net proceeds of
$21,955,000.
 
                                      F-16
<PAGE>   59
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
8.  GEOGRAPHICAL INFORMATION AND CONCENTRATION OF RISK
 
     The following table shows data for the Company by geographical area:
 
<TABLE>
<CAPTION>
                                                               1995        1996        1997
                                                              -------    --------    --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>         <C>
Revenues:
     United States..........................................  $61,688    $ 70,569    $ 99,144
     United Kingdom.........................................   10,097      22,413      23,941
     Other..................................................    2,617       4,708       6,696
     Transfers among geographical areas (a).................   (2,297)     (2,374)     (8,256)
                                                              -------    --------    --------
                                                              $72,105    $ 95,316    $121,525
                                                              =======    ========    ========
Income before provision for income taxes:
     United States..........................................  $ 5,920    $  5,805    $ 11,223
     United Kingdom.........................................    1,105       2,751       2,711
     Other..................................................      452         953       1,769
     Corporate and eliminations (b).........................   (1,360)     (1,411)     (1,215)
                                                              -------    --------    --------
     Total operating income.................................    6,117       8,098      14,488
     Interest income, net...................................       --          --         231
                                                              -------    --------    --------
     Income before provision for income taxes...............  $ 6,117    $  8,098    $ 14,719
                                                              =======    ========    ========
Total assets:
     United States..........................................  $71,823    $ 76,387    $108,275
     United Kingdom.........................................    3,574      18,634      21,341
     Other..................................................      824       1,989       7,053
     Corporate (c)..........................................       --          --      23,040
                                                              -------    --------    --------
                                                              $76,221    $ 97,010    $159,709
                                                              =======    ========    ========
Export revenues included in United States revenues above
  (d):
     Asia...................................................  $ 8,273    $  5,754    $  7,721
     Europe.................................................    4,017       3,789       4,226
     South America..........................................    2,747       2,936       2,689
     Other..................................................    5,548       6,024       6,951
                                                              -------    --------    --------
                                                              $20,585    $ 18,503    $ 21,587
                                                              =======    ========    ========
</TABLE>
 
(a) Transfers among geographical areas are accounted for at prices that are
    representative of transactions with unaffiliated parties.
 
(b) Primarily general and administrative expenses.
 
(c) Primarily cash and cash equivalents.
 
(d) In general, export sales are denominated in U.S. dollars.
 
     The Company sells a majority of its products to customers in the oil and
gas industries. The Company does not normally require collateral or other
security to support its accounts receivable. Management does not believe that
this concentration of credit risk has or will have a significant negative effect
on the Company.
 
                                      F-17
<PAGE>   60
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
9.  EARNINGS PER SHARE
 
     Basic and diluted earnings per share were calculated as follows (In
thousands, except per share amounts):
 
<TABLE>
<CAPTION>
                                                                             THREE MONTHS ENDED
                                                                            ---------------------
                                                                            MARCH 29,    APRIL 4,
                                            1995       1996       1997        1997         1998
                                           -------    -------    -------    ---------    --------
                                                                                 (UNAUDITED)
<S>                                        <C>        <C>        <C>        <C>          <C>
BASIC
Net income...............................  $ 3,627    $ 4,858    $ 8,799     $ 1,606     $ 2,217
                                           -------    -------    -------     -------     -------
Weighted average shares..................   10,667     10,667     11,083      10,667      12,524
                                           -------    -------    -------     -------     -------
Basic earnings per share.................  $   .34    $   .46    $   .79     $   .15     $   .18
                                           =======    =======    =======     =======     =======
DILUTED
Net income...............................  $ 3,627    $ 4,858    $ 8,799     $ 1,606     $ 2,217
                                           -------    -------    -------     -------     -------
Weighted average shares..................   10,667     10,667     11,083      10,667      12,524
Effect of stock options..................       --         --         --          --           6
                                           -------    -------    -------     -------     -------
Weighted average shares, as adjusted.....   10,667     10,667     11,083      10,667      12,530
                                           -------    -------    -------     -------     -------
Diluted earnings per share...............  $   .34    $   .46    $   .79     $   .15     $   .18
                                           =======    =======    =======     =======     =======
</TABLE>
 
10.  SUBSEQUENT EVENTS
 
STOCK OPTIONS
 
     In January 1998, the Board Committee granted options to purchase 531,891
shares of the Company's common stock at $14.25 per share, which was the fair
market value on the date of the grant. As of January 29, 1998, the Company had
reserved 1,091,667 unissued shares of its common stock for possible issuance
under its stock-based compensation plans.
 
STOCK SPLIT
 
     In January 1998, the Company declared and effected a two-for-three reverse
stock split. All share and per share information has been restated to reflect
the stock split.
 
NOTE PAYABLE TO PARENT COMPANY
 
     In January 1998, the Company paid Thermo Power $19,117,000, representing
the purchase price for the Peek Measurement Business. The Company borrowed
$12,000,000 from Thermo Instrument to partially fund this payment. The note to
Thermo Instrument bore interest at the 90-day Commercial Paper Composite Rate
plus 25 basis points, set at the beginning of each quarter, and was repaid on
April 10, 1998 with a portion of the net proceeds from the Company's March 1998
initial public offering.
 
INITIAL PUBLIC OFFERING
 
     On March 30, 1998, the Company sold 3,300,000 shares of its common stock in
an initial public offering at $14.50 per share for net proceeds of $43,189,000.
Following the initial public offering, Thermo Instrument owned approximately 68%
of the Company's outstanding common stock.
 
ACQUISITION
 
     On July 7, 1998, the Company acquired the capital stock of certain
businesses of the Mid-South Companies for $12.7 million in cash. This
acquisition will be accounted for using the purchase method of accounting. The
businesses acquired include Mid-South Controls and Services Inc. and Mid-South
Power Systems Inc. Mid-South Controls and Services Inc. specializes in the
assembly and service of wellhead measurement, control and safety shutdown
systems that are required by oil and gas companies operating offshore platforms.
Mid-South Power Systems Inc. provides electrical generators, switchgear and
motor control units that are used in a wide variety of industrial applications.
 
                                      F-18
<PAGE>   61
 
------------------------------------------------------
                          ------------------------------------------------------
------------------------------------------------------
                          ------------------------------------------------------
 
     NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
 
                            ------------------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                        PAGE
<S>                                     <C>
The Company...........................    3
Risk Factors..........................    5
Price Range of Common Stock...........   10
Dividend Policy.......................   10
Selected Quarterly Financial Data.....   10
Capitalization........................   11
Selected Financial Information........   12
Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations.......................   14
Business..............................   18
Relationship with Thermo Electron and
  Thermo Instrument...................   27
Management............................   31
Security Ownership of Certain
  Beneficial Owners and Management....   36
Selling Shareholders..................   38
Sale of Shares........................   40
Description of Capital Stock..........   41
Shares Eligible for Future Sale.......   41
Legal Opinions........................   42
Experts...............................   42
Additional Information................   42
Index to Consolidated Financial
  Statements..........................  F-1
</TABLE>
 
                                1,639,640 SHARES
 
                             ONIX SYSTEMS INC. LOGO
 
                                  COMMON STOCK
                             ----------------------
                                   PROSPECTUS
                             ----------------------
 
                                             , 1998
 
------------------------------------------------------
                          ------------------------------------------------------
------------------------------------------------------
                          ------------------------------------------------------
<PAGE>   62
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
     The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered. All amounts shown are
estimates except for the Securities and Exchange Commission registration fee.
 
<TABLE>
<S>                                                           <C>
Securities and Exchange Commission registration fee.........  $ 5,578
Legal fees and expenses.....................................    5,000
Accounting fees and expenses................................    5,000
Printing and engraving expenses.............................   15,000
Miscellaneous...............................................    2,422
                                                              -------
          Total.............................................  $33,000
                                                              =======
</TABLE>
 
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
     The Delaware General Corporation Law and the Registrant's Certificate of
Incorporation and By-Laws limit the monetary liability of directors to the
Registrant and to its stockholders and provide for indemnification of the
Registrant's officers and directors for liabilities and expenses that they may
incur in such capacities. In general, officers and directors are indemnified
with respect to actions taken in good faith in a manner reasonably believed to
be in, or not opposed to, the best interests of the Registrant, and with respect
to any criminal action or proceeding, actions that the indemnitee had no
reasonable cause to believe were unlawful. The Registrant also has
indemnification agreements with its directors and officers that provide for the
maximum indemnification allowed by law. Reference is made to the Registrant's
Certificate of Incorporation, By-Laws and form of Indemnification Agreement for
Officers and Directors incorporated by reference as Exhibits 3.1, 3.2 and 10.10
hereto, respectively.
 
     Thermo Electron has an insurance policy which insures the directors and
officers of Thermo Electron and its subsidiaries, including the Registrant,
against certain liabilities which might be incurred in connection with the
performance of their duties.
 
     Under the Purchase Agreements, the Selling Shareholders are obligated,
under certain circumstances, to indemnify directors and officers of the
Registrant against certain liabilities, including liabilities under the
Securities Act.
 
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES
 
     On August 21, 1997, the Registrant issued 10,666,667 shares of Common Stock
(adjusted to reflect a two-for-three reverse stock split effected in January
1998) to Thermo Instrument in exchange for the assets or stock of certain of its
subsidiaries relating to the CAC, Flow Automation, TN Technologies, Kay-
Ray/Sensall, Houston Atlas, Westronics and VG Gas businesses. Exemption from
registration of this transaction is claimed under Section 4(2) of the Securities
Act.
 
     On September 24, 1997, the Registrant sold an aggregate of 1,473,644 shares
of Common Stock to accredited investors for an aggregate purchase price of
$20,999,949.50, pursuant to Regulation D of the Commission promulgated under the
Securities Act.
 
     On October 22, 1997, the Registrant sold an aggregate of 165,996 shares of
Common Stock to accredited investors for an aggregate purchase price of
$2,365,500, pursuant to Regulation D of the Commission promulgated under the
Securities Act.
 
                                      II-1
<PAGE>   63
 
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
     (A) EXHIBITS
 
     See the Exhibit Index included immediately preceding the exhibits to this
Registration Statement.
 
     (B) FINANCIAL STATEMENT SCHEDULES
 
     Financial Statement Schedules as of January 3, 1998 and the Report of
Independent Accountants on such schedules are included in this Registration
Statement. All other schedules are omitted because they are not applicable or
are not required under Regulation S-X.
 
ITEM 17.  UNDERTAKINGS
 
     (a) The undersigned Registrant hereby undertakes:
 
          (1) To file, during any period in which offers or sales are being
     made, a post-effective amendment to this registration statement:
 
             (i) To include any prospectus required by Section 10(a)(3) of the
        Securities Act of 1933;
 
             (ii) To reflect in the prospectus any facts or events arising after
        the effective date of the registration statement (or the most recent
        post-effective amendment thereof) which, individually or in the
        aggregate, represent a fundamental change in the information set forth
        in the registration statement. Notwithstanding the foregoing, any
        increase or decrease in volume of securities offered (if the total
        dollar value of securities offered would not exceed that which was
        registered) and any deviation from the low or high end of the estimated
        maximum offering range may be reflected in the form of prospectus filed
        with the Commission pursuant to Rule 424(b) if, in the aggregate, the
        changes in volume and price represent no more than 20 percent change in
        the maximum aggregate offering price set forth in the "Calculation of
        Registration Fee" table in the effective registration statement;
 
             (iii) To include any material information with respect to the plan
        of distribution not previously disclosed in the registration statement
        or any material change to such information in the registration
        statement.
 
          (2) That, for the purpose of determining any liability under the
     Securities Act of 1933, each such post-effective amendment shall be deemed
     to be a new registration statement relating to the securities offered
     therein, and the offering of such securities at that time shall be deemed
     to be the initial bona fide offering thereof.
 
          (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.
 
     (b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions contained in the Certificate of
Incorporation and By-Laws of the Registrant and the laws of the State of
Delaware, or otherwise, the Registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
 
                                      II-2
<PAGE>   64
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Waltham, Commonwealth of
Massachusetts, on this 27th day of July, 1998.
 
                                          ONIX SYSTEMS INC.
 
                                          By:    /s/ WILLIAM J. ZOLNER
 
                                          --------------------------------------
                                                      William J. Zolner
                                                President and Chief Executive
                                                         Officer
 
                        POWER OF ATTORNEY AND SIGNATURES
 
     We, the undersigned officers and directors of ONIX Systems Inc., hereby
constitute and appoint John N. Hatsopoulos, Paul F. Kelleher, Seth H. Hoogasian
and Sandra L. Lambert, and each of them singly, our true and lawful attorneys
with full power to them, and each of them singly, to sign for us and in our
names in the capacities indicated below, the Registration Statement on Form S-1
filed herewith and any and all amendments to said Registration Statement
(including any subsequent Registration Statement for the same offering which may
be filed under Rule 462(b) of the Securities Act), and generally to do all such
things in our names and in our capacities as officers and directors to enable
ONIX Systems Inc. to comply with the provisions of the Securities Act and all
requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorneys, or any of
them, to said Registration Statement and any and all amendments thereto.
 
     Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
 
<TABLE>
<CAPTION>
                      SIGNATURE                                    TITLE                     DATE
                      ---------                                    -----                     ----
<C>                                                      <S>                           <C>
 
                  /s/ EARL R. LEWIS                      Chairman of the Board and      July 27, 1998
-----------------------------------------------------      Director
                    Earl R. Lewis
 
                /s/ WILLIAM J. ZOLNER                    President, Chief Executive     July 27, 1998
-----------------------------------------------------      Officer & Director
                  William J. Zolner
 
               /s/ JOHN N. HATSOPOULOS                   Senior Vice President and      July 27, 1998
-----------------------------------------------------      Chief Financial Officer
                 John N. Hatsopoulos
 
                /s/ PAUL F. KELLEHER                     Chief Accounting Officer       July 27, 1998
-----------------------------------------------------
                  Paul F. Kelleher
 
                /s/ DAVID J. BEAUBIEN                    Director                       July 27, 1998
-----------------------------------------------------
                  David J. Beaubien
 
                  /s/ FRANK JUNGERS                      Director                       July 27, 1998
-----------------------------------------------------
                    Frank Jungers
 
                 /s/ ARVIN H. SMITH                      Director                       July 27, 1998
-----------------------------------------------------
                   Arvin H. Smith
</TABLE>
 
                                      II-3
<PAGE>   65
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To ONIX Systems Inc.:
 
     We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of ONIX Systems Inc. included in ONIX
Systems Inc.'s Form S-1 and have issued our report thereon dated January 28,
1998 (except with respect to certain matters discussed in Notes 5 and 10, as to
which the date is July 7, 1998). Our audits were made for the purpose of forming
an opinion on the basic consolidated financial statements taken as a whole. ONIX
Systems Inc.'s Schedule of Valuation and Qualifying Accounts, included in
Schedule II on page S-2, 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
January 28, 1998
 
                                       S-1
<PAGE>   66
 
                                                                     SCHEDULE II
 
                               ONIX SYSTEMS INC.
 
                       VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                       BALANCE AT   PROVISION                                          BALANCE
                                       BEGINNING    CHARGED TO              ACCOUNTS     ACCOUNTS      AT END
             DESCRIPTION                OF YEAR      EXPENSE     OTHER(A)   RECOVERED   WRITTEN OFF    OF YEAR
             -----------               ----------   ----------   --------   ---------   -----------   ---------
<S>                                    <C>          <C>          <C>        <C>         <C>           <C>
YEAR ENDED DECEMBER 30, 1995
  Allowance for Doubtful Accounts....    $1,940        $779       $(432)      $111        $(1,038)     $1,360
YEAR ENDED DECEMBER 28, 1996
  Allowance for Doubtful Accounts....    $1,360        $283       $ 364       $  7        $  (667)     $1,347
YEAR ENDED JANUARY 3, 1998
  Allowance for Doubtful Accounts....    $1,347        $674       $ 613       $  9        $  (488)     $2,155
</TABLE>
 
---------------
(a) Includes allowance of businesses acquired during the year as described in
    Note 2 to Consolidated Financial Statements included elsewhere in this
    Prospectus and foreign currency translation adjustment.
 
                                       S-2
<PAGE>   67
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                       DESCRIPTION OF EXHIBIT
-------                      ----------------------
<S>       <C>                                                           <C>
 2*       Share Purchase Agreement dated January 29, 1998 between
          Thermo Power and the Registrant relating to the acquisition
          of the Peek Measurement Business
 3.1*     Certificate of Incorporation of the Registrant
 3.2*     By-Laws of the Registrant
 4*       Specimen Common Stock Certificate
 5        Opinion of Seth H. Hoogasian, Esq. with respect to the
          validity of the securities being offered
10.1*     Corporate Services Agreement dated as of August 21, 1997
          between Thermo Electron and the Registrant
10.2      Thermo Electron Corporate Charter, as amended and restated
          effective January 3, 1993 (filed as exhibit 10.1 to Thermo
          Electron's Annual Report on Form 10-K for the fiscal year
          ended January 3, 1993 [File No. 1-8002] and incorporated
          herein by reference)
10.3*     Tax Allocation Agreement dated as of August 21, 1997 between
          Thermo Electron and the Registrant
10.4*     Master Repurchase Agreement dated as of August 21, 1997
          between Thermo Electron and the Registrant
10.5*     Amended and Restated Master Guarantee Reimbursement and Loan
          Agreement dated as of January 5, 1998 between Thermo
          Electron and the Registrant
10.6*     Amended and Restated Master Guarantee Reimbursement and Loan
          Agreement dated as of January 5, 1998 between Thermo
          Instrument and the Registrant
10.7*     Stock Transfer Agreement dated August 21, 1997 between
          Thermo Instrument and the Registrant
10.8*     Indemnification Agreement dated as of August 21, 1997
          between Thermo Instrument and the Registrant
10.9*     Form of Deferred Compensation Plan for Directors of the
          Registrant
10.10*    Form of Indemnification Agreement for Officers and Directors
          of the Registrant
10.11*    Promissory Note dated January 29, 1998 in the principal
          amount of $12,000,000 issued by the Registrant to Thermo
          Instrument
10.12*    Lease Agreement dated June 4, 1990 between
          Crow-Gottesman-Hill #43, as landlord and TN Technologies, as
          tenant for property located in the City of Round Rock,
          Williamson County, Texas
10.13*    Equity Incentive Plan of the Registrant
10.14     Incentive Stock Option Plan of Thermo Electron (filed as
          Exhibit 4(d) to Thermo Electron's Registration Statement on
          Form S-8 [Reg. No. 33-8993] and incorporated herein by
          reference)
10.15     Nonqualified Stock Option Plan of Thermo Electron (filed as
          Exhibit 4(e) to Thermo Electron's Registration Statement on
          Form S-8 [Reg. No. 33-8993] and incorporated herein by
          reference)
10.16     Equity Incentive Plan of Thermo Electron (filed as Exhibit
          10.1 to Thermo Electron's Quarterly Report on Form 10-Q for
          the quarter ended July 2, 1994 [File No. 1-8002] and
          incorporated herein by reference)
10.17     Incentive Stock Option Plan of Thermo Instrument (filed as
          Exhibit 10(c) to Thermo Instrument's Registration Statement
          on Form S-1 [Reg. No. 33-6762] and incorporated herein by
          reference)
10.18     Nonqualified Stock Option Plan of Thermo Instrument (filed
          as Exhibit 10(d) to Thermo Instrument's Registration
          Statement on Form S-1 [Reg. No. 33-6762] and incorporated
          herein by reference)
10.19     Equity Incentive Plan of Thermo Instrument (filed as
          Appendix A to the Proxy Statement dated April 27, 1993, of
          Thermo Instrument [File No. 1-9786] and incorporated herein
          by reference)
10.20     Thermo Instrument Systems Inc. -- ThermoSpectra Corporation
          Nonqualified Stock Option Plan (filed as Exhibit 10.51 to
          Thermo Instrument's Annual Report on
          Form 10-K for the fiscal year ended December 31, 1994 [File
          No. 1-9786] and incorporated herein by reference)
</TABLE>
<PAGE>   68
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                       DESCRIPTION OF EXHIBIT
-------                      ----------------------
<S>       <C>                                                           <C>
10.21     Thermo Instrument Systems Inc. -- Thermo BioAnalysis
          Corporation Nonqualified Stock Option Plan (filed as Exhibit
          10.64 to Thermo Cardiosystems' Annual Report on
          Form 10-K for the fiscal year ended December 30, 1995 [File
          No. 1-10114] and incorporated herein by reference)
10.22     Thermo Instrument Systems Inc. -- Thermo Optek Corporation
          Nonqualified Stock Option Plan (filed as Exhibit 10.27 to
          Thermo Instrument's Annual Report on
          Form 10-K for the fiscal year ended December 28, 1996 [File
          No. 1-9786] and incorporated herein by reference)
10.23     Thermo Instrument Systems Inc. -- ThermoQuest Corporation
          Nonqualified Stock Option Plan (filed as Exhibit 10.65 to
          Thermo Cardiosystems' Annual Report on Form 10-K for the
          fiscal year ended December 30, 1995 [File No. 1-10114] and
          incorporated herein by reference)
10.24*    Lease Agreement dated as of November 1, 1997 between Thermo
          Instrument Systems Inc., as landlord, and CAC Inc., as
          tenant.
10.25*    Lease Agreement dated as of January 1, 1998 between Peek
          Traffic Ltd., as landlord, and Peek Measurement Ltd., as
          tenant.
21*       Subsidiaries of the Registrant
23.1      Consent of Arthur Andersen LLP
23.2      Consent of Seth H. Hoogasian, Esq. (included in Exhibit 5)
24        Power of Attorney (contained on the Signature Page to this
          Registration Statement)
27        Financial Data Schedule
</TABLE>
 
---------------
 
* Each exhibit listed above that is marked by an asterisk (*) is incorporated by
reference to the correspondingly numbered exhibit to the Company's Registration
Statement on Form S-1 (File No. 333-45333).
[{"type": "S-1", "sequence": "1", "description": "ONIX SYSTEMS", "secsgml_size_bytes": 280460}]
{"company-data": {"conformed-name": "ONIX SYSTEMS INC", "cik": "0001047747", "assigned-sic": "3829", "irs-number": "760546330", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-59973", "film-number": "98672011"}, "business-address": {"street1": "81 WYMAN ST", "street2": "P O BOX 9046", "city": "WALTHAM", "state": "MA", "zip": "02254", "phone": "7816221000"}}
1
 
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 27, 1998 
                                                        REGISTRATION NO. 333-
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------
 
                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                            ------------------------
 
                               ONIX SYSTEMS INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                            ------------------------
 
           DELAWARE                        3823                   76-0546330
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL  (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)  CLASSIFICATION CODE NUMBER)  IDENTIFICATION NO.)
        
                            ------------------------
 
                             22001 NORTH PARK DRIVE
                               KINGWOOD, TX 77339
                                 (281) 348-1111
         (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
            AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

                            ------------------------
 
                          SANDRA L. LAMBERT, SECRETARY
                               ONIX SYSTEMS INC.
                        C/O THERMO ELECTRON CORPORATION
                                81 WYMAN STREET
                                 P. O. BOX 9046
                             WALTHAM, MA 02454-9046
                                 (781) 622-1000
           (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)
 
                                   Copies to:
                            SETH H. HOOGASIAN, ESQ.
                                GENERAL COUNSEL
                               ONIX SYSTEMS INC.
                        C/O THERMO ELECTRON CORPORATION
                                81 WYMAN STREET
                       WALTHAM, MASSACHUSETTS 02454-9046
                                 (781) 622-1000

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

        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
 As soon as practicable after the Registration Statement has become effective.

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

    If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  [X]

    If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  [ ]

    If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ]

    If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ]

    If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box.  [ ]

                            ------------------------
                        CALCULATION OF REGISTRATION FEE
======================================================================================================================
                                       AMOUNT           PROPOSED MAXIMUM      PROPOSED MAXIMUM
    TITLE OF EACH CLASS OF              TO BE            OFFERING PRICE           AGGREGATE             AMOUNT OF
  SECURITIES TO BE REGISTERED        REGISTERED           PER SHARE(1)        OFFERING PRICE(1)     REGISTRATION FEE
----------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value...   1,639,640 shares          $11.53125            $18,907,099             $5,578
======================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457(c) under the Securities Act of 1933 based upon the
    average of the high and low sales prices of the Common Stock reported in the
    consolidated transaction reporting system on July 22, 1998.

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

     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
2
 
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
 
                      SUBJECT TO COMPLETION JULY 27, 1998
 
PROSPECTUS
               , 1998
 
                                1,639,640 SHARES
 
                             ONIX SYSTEMS INC. LOGO
 
                                  COMMON STOCK
 
     This Prospectus relates to the resale of 1,639,640 shares (the "Shares") of
Common Stock, par value $.01 per share (the "Common Stock"), of ONIX Systems
Inc. ("ONIX" or the "Company") by certain shareholders of the Company (the
"Selling Shareholders"). The Shares may be offered from time to time in
transactions on the American Stock Exchange, Inc. (the "AMEX"), in negotiated
transactions, through the writing of options on the Shares, or a combination of
such methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. Such transactions may be effected by the sale of
the Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
sellers and/or the purchasers of the Shares for whom such broker-dealers may act
as agent or to whom they sell as principal, or both (which compensation to a
particular broker-dealer might be in excess of customary commissions). The
Selling Shareholders and any broker-dealer who acts in connection with the sale
of Shares hereunder may be deemed to be "underwriters" as that term is defined
in the Securities Act of 1933, as amended (the "Securities Act"), and any
commission received by them and profit on any resale of the Shares as principal
might be deemed to be underwriting discounts and commissions under the
Securities Act. The Shares were originally sold by the Company in private
placements pursuant to certain Stock Purchase Agreements with the Company dated
September 24, 1997 and October 22, 1997 (the "Purchase Agreements"). See
"Selling Shareholders."
 
     SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY PROSPECTIVE INVESTORS.
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
  EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
    SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
     PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
       ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
     None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed to bear all
expenses (other than underwriting discounts and selling commissions, and fees
and expenses of counsel or other advisors to the Selling Shareholders) in
connection with the registration and sale of the Shares being registered hereby.
The Company has agreed to indemnify the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act as underwriter or
otherwise.
 
                            ------------------------
 
     The Company is a majority-owned subsidiary of Thermo Instrument Systems
Inc. ("Thermo Instrument"), which is a majority-owned subsidiary of Thermo
Electron Corporation ("Thermo Electron"). The Common Stock is traded on the AMEX
under the symbol "ONX." On July 24, 1998, the reported closing price of the
Common Stock on the AMEX was $12.00 per share.
3
 
                                  THE COMPANY
 
     ONIX Systems Inc. ("ONIX" or the "Company") designs, develops, markets and
services sophisticated field measurement instruments and on-line sensors. The
Company utilizes its proprietary knowledge and significant experience regarding
application-specific technologies to develop products that address the needs of
process industry participants within targeted markets. The Company's products
gather information regarding the flow, level, density or composition of a
particular material and, using advanced communications techniques, communicate
this information to a customer's centralized control location.
 
     The Company manufactures field measurement instruments and on-line sensors
in four general product areas: flow instruments, level and density instruments,
composition analysis instruments and industry-specific instruments. The
Company's flow measurement instruments measure and locally control the flow of
liquids and gases. The Company's level and density measurement instruments
incorporate sophisticated measurement technologies that measure and locally
control the level and density of liquid and solid materials and the density of
gaseous materials. The Company's composition analysis instruments include field
and on-line analysis instruments that are used to analyze the chemical
composition of solids, liquids and gases. The Company also offers
technologically advanced microprocessor-based sensors and recording instruments
that are utilized in specific industries for customized applications. The
Company incorporates a range of advanced measurement technologies into its
instruments, including gamma ray, radar, infrared, ultraviolet, ultrasonic and
vibrational measurement techniques. Additionally, the Company's international
presence and experience enable it to provide rapid, expert preventive
maintenance and aftermarket support services to its customers.
 
     The Company's products are sold primarily to participants in process
industries, including oil and gas producers, processors and distributors and
chemical companies, as well as water/wastewater, iron, steel, electric utility,
minerals and mining and pulp and paper companies. The Company's customers use
its products for increased efficiency, process and quality control, regulatory
compliance and increased employee safety. In 1997, customers in the oil and gas
industries accounted for approximately 61% of the Company's total revenues, with
such revenues derived from both the production segment and the refining and
petrochemical segments of the industry. The Company has a broad customer base,
selling products to more than 2,000 customers worldwide, including affiliates or
operations of The Dow Chemical Company, Shell Oil Company, E.I. duPont De
Nemours & Co., BASF AG, Petroleos Mexicanos ("Pemex") and Duke Energy
Corporation. In 1997, approximately 33% of the Company's sales were to customers
outside of North America.
 
     Industry sources estimate that worldwide revenues for the field measurement
instruments and sensors segment of the process control market were approximately
$10.4 billion in 1995 and will grow to approximately $20.0 billion by the year
2000, which represents a compound annual growth rate of 14%. Factors
contributing to this growth include competitive pressures to increase
efficiencies and reduce costs; technological advances, which have increased the
availability of higher quality microprocessor-based sensors; the increased use
of sensor-intensive, model-based controls of process functions; deregulation and
privatization; developments in communications protocols and computer systems;
and concerns over regulatory compliance and employee safety. The Company's
current products address approximately $3.3 billion of the field measurement
instruments and sensors segment of the process control market.
 
     The Company's strategy is to be a leading provider of field measurement
instruments and on-line sensors used in targeted industries within the process
control market where the Company's expertise and technologies are best suited.
The Company seeks to implement this strategy by broadening its technologies and
product offerings, including expanding the scope of its addressed markets,
through internal development, acquisitions and strategic partnerships and by
continuing to focus on customers in targeted markets. In addition, the Company
intends to expand the geographic scope of its addressed markets to areas with
significant growth opportunities, including Latin America, Eastern Europe and
the Pacific Rim, and to expand its service and support organization to establish
a comprehensive international presence.
 
     The Company's predecessor business was formed as a separate business unit
of Thermo Instrument in 1994 with the acquisition of the EnviroTech Measurement
and Controls division of Baker Hughes Incorporated ("Baker Hughes"), comprised
of Westronics Inc. ("Westronics"), CAC Inc. and CAC UK Limited
                                        3
4
 
(collectively, "CAC"), Houston Atlas Inc. ("Houston Atlas") and TN Technologies
Inc. ("TN Technologies"). In 1995, Thermo Instrument, through CAC, acquired the
business of Flow Automation Inc. and Flow Automation (UK) Limited (collectively,
"Flow Automation") from Galveston-Houston Company. In 1996, Thermo Instrument,
through TN Technologies, acquired Kay-Ray/Sensall, Inc. ("Kay-Ray/Sensall") from
Rosemount Inc., and through CAC, acquired the business of VG Gas Analysis
Systems Inc. and VG Gas Analysis Limited (collectively, "VG Gas") from
Rhone-Poulenc Rorer, Inc. in connection with Thermo Instrument's acquisition of
a substantial portion of the businesses constituting the Scientific Instruments
division of Fisons plc. In 1997, Thermo Instrument, through Westronics, acquired
the Angus Electronics division ("Angus") of Esterline Technologies Corporation.
 
     The Company was incorporated in August 1997. In connection with the
Company's incorporation, Thermo Instrument transferred to the Company all of the
stock of certain of its subsidiaries relating to the CAC, Flow Automation, VG
Gas, Westronics, Houston Atlas, TN Technologies and Kay-Ray/Sensall businesses
in exchange for 10,666,667 shares of the Company's Common Stock. Since August
1997, the Company acquired the Peek Measurement Business from Thermo Power
Corporation ("Thermo Power"), the Rustrak Ranger Logger product line ("Ranger")
from a subsidiary of Danaher Corporation, the business of Fluid Data, Inc.
("Fluid Data") from Elsag-Bailey, Inc. and certain businesses of the Mid-South
Companies, a group of related privately held companies. See "Business -- Recent
Acquisitions."
 
     Unless the context otherwise requires, references in this Prospectus to the
Company or ONIX refer to ONIX Systems Inc. and its subsidiaries and the
predecessor businesses that constitute the Company. The Company's principal
executive offices are located at 22001 North Park Drive, Kingwood, Texas 77339,
and its telephone number is (281) 348-1111.
 
                                        4
5
 
                                  RISK FACTORS
 
     In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company wishes to caution readers that the
following important factors, among others, in some cases have affected, and in
the future could affect, the Company's actual results and could cause its actual
results in 1998 and beyond to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company.
Forward-looking statements, within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are made throughout this
Prospectus. For this purpose, any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects," "seeks," "estimates" and similar expressions are intended to identify
forward-looking statements. There are a number of important factors that could
cause the results of the Company to differ materially from those indicated by
such forward-looking statements, including those discussed below, as well as
those discussed elsewhere in this Prospectus.
 
     Dependence on Oil and Gas Industry.  Historically, a substantial portion of
the Company's total revenues has been attributable to the sale of products and
related services to customers in the oil and gas industry. In 1997, customers in
the oil and gas industry accounted for approximately 61% of the Company's total
revenues. Demand for the Company's products and services within the oil and gas
industry is dependent upon the level of capital spending by oil and gas
companies for exploration, production and distribution. These activities depend
in part on oil and gas prices, expectations about future prices, the cost of
exploring for, producing and delivering oil and gas, the discovery rate of new
oil and gas reserves, local and international political, regulatory and economic
conditions and the ability of oil and gas companies to obtain capital. There can
be no assurance that current levels of oil and gas activities will be maintained
or that demand for the Company's products and related services will reflect the
level of such activities. Decreases in oil and gas activities could have a
significant adverse effect upon the demand for the Company's products and
related services, which would materially adversely affect the Company's
business, financial condition and results of operations. See
"Business -- Customers."
 
     Market Acceptance of New Products.  The Company develops products that
represent alternatives to traditional instruments and methods, and as a result,
its products may be slow to achieve, or may not achieve, market acceptance since
customers may seek further validation of the efficiency and efficacy of the
Company's technology before making an investment. This is particularly true
where the purchase of the product requires a significant capital commitment.
Further, because on-line process measurement instruments are incorporated into a
customer's production line, a decision to invest in these instruments involves
significant operating risks if the instrument fails or shuts down. In addition,
the Company believes that, to a significant extent, its growth prospects depend
on its ability to gain acceptance of its technologies and product applications
by a broader group of customers and broader industry segments. There can be no
assurance that the Company will be successful in obtaining broad acceptance of
its products.
 
     Dependence on Capital Spending Policies of Customers.  The Company's
customers include oil and gas production, processing and distribution
facilities, electric utilities and chemical companies. The capital spending
policies of these companies can have a significant effect on the demand for the
Company's products. Such policies are based on a wide variety of factors,
including the resources available to make such purchases, the spending
priorities among various types of process control equipment or techniques and
policies regarding capital expenditures during recessions. Any decrease in
capital spending by these customers could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Customers."
 
     No Assurance of a Successful Acquisition Strategy.  An element of the
Company's strategy includes the acquisition of businesses and technologies that
complement or augment the Company's existing product lines. Attractive
acquisitions are difficult to identify and complete for a number of reasons,
including competition among prospective buyers and the need for regulatory
approvals, including antitrust approvals. Acquisitions completed by the Company
may be made at substantial premiums over the fair value of the net assets of the
acquired companies. For example, the Company's acquisitions completed in 1997
resulted in an aggregate cost
 
                                        5
6
 
in excess of net assets acquired of $18,925,000. Establishment of this
intangible asset will result in charges to operating income of approximately
$473,000 per year for amortization. There can be no assurance that the Company
will be able to complete future acquisitions or that the Company will be able to
successfully integrate any acquired business, including the recently acquired
businesses, into its existing business or that the Company will be able to
retain key personnel and customers, or adequately improve the financial
performance, of any acquired business, including the recently acquired
businesses. In order to finance such acquisitions, it may be necessary for the
Company to raise additional funds through public or private financings. Any
equity or debt financing, if available at all, may be on terms that are not
favorable to the Company and, in the case of an equity financing, may result in
dilution to the Company's stockholders. See "Business -- Strategy,"
"Business -- Recent Acquisitions" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
 
     Risks Associated with International Sales.  Sales outside North America
accounted for approximately 33% of the Company's total revenues in 1997. The
Company intends to continue to expand its presence in markets outside of North
America. International revenues are subject to a number of risks, however,
including the following: agreements may be difficult to enforce and receivables
difficult to collect through a foreign country's legal system; foreign customers
may have longer payment cycles; foreign countries may impose additional
withholding taxes or otherwise tax the Company's foreign income, impose tariffs
or adopt other restrictions on foreign trade; fluctuations in exchange rates may
affect product demand and adversely affect the profitability in U.S. dollars of
products and services provided by the Company in foreign markets where payment
for the Company's products and services is made in the local currency; U.S.
export licenses may be difficult to obtain or enforce; and intellectual property
rights in foreign countries may be more difficult to enforce. Further, a
significant portion of the Company's business is conducted in foreign countries,
including Canada, the United Kingdom, Mexico, Oman and the United Arab Emirates.
Foreign operations are also subject to various risks, including potentially
unstable economic conditions, unexpected changes in regulatory requirements,
compliance with a variety of foreign laws and regulations and the existence of
different tax structures. Tax rates in certain foreign countries exceed those in
the United States, and foreign earnings may be subject to withholding
requirements or the imposition of tariffs, exchange controls or other
restrictions. There can be no assurance that any of these or other factors will
not have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Strategy" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
 
     Technological Change and New Products.  The markets for the Company's
products are characterized by changing technology, evolving industry standards
and new product introductions and enhancements. The Company's future success
will depend in part upon its ability to enhance its existing products, to
develop and introduce new products and technologies and to successfully expand
its aftermarket support services for such new or enhanced products in order to
meet changing customer requirements and serve broader industry segments. The
Company is currently devoting significant resources toward the enhancement of
its existing products, the development of new products and technologies and the
expansion of its preventive maintenance and aftermarket support activities.
There can be no assurance, however, that the Company will successfully complete
the enhancement and development of these products and the expansion of its
services in a timely fashion or that the Company's current or future products
and services will satisfy the process measurement needs of participants in the
Company's targeted markets. See "Business -- Strategy" and "Business -- Research
and Development."
 
     Intense Competition.  The Company encounters and expects to continue to
encounter intense competition in the sale of its products. The Company believes
that its ability to compete successfully in the market for field measurement
instruments and sensors depends upon a number of factors both within and beyond
its control, including quality and reliability; technical features; accuracy;
ease of use; product pricing; reputation for aftermarket service; timing of new
product releases and enhancements by the Company and its competitors; name
recognition; the establishment of strategic alliances; and industry and general
economic trends. In addition, the Company competes with companies utilizing
competing technologies that may be viewed as cost-effective alternatives to the
technologies incorporated into the Company's products. Certain of the Company's
current and potential competitors have significantly greater financial,
marketing, technical and
 
                                        6
7
 
other competitive resources, as well as greater name recognition, than the
Company. As a result, the Company's competitors may be able to adapt more
quickly to new or emerging technologies and changes in customer requirements,
and may be able to devote greater resources to the promotion and sale of their
products. There can be no assurance that the Company will be able to compete
successfully with existing or new competitors. An increase in competition could
result in price reductions and loss of market share, which could have a material
adverse effect on the Company's business, financial condition or results of
operations. See "Business -- Competition."
 
     Risks of Gamma Technology.  Certain of the Company's level and density
measurement instruments incorporate gamma technologies that are subject to
health and safety risks in connection with the use, handling and possible
radioactive emissions associated with gamma materials. The Company believes that
it conducts its operations prudently and the Company maintains both general
liability insurance and nuclear liability insurance in amounts it believes to be
commercially reasonable. However, there can be no assurance that this insurance
will be sufficient to protect the Company from liability claims, or that
liability insurance will continue to be available to the Company at a reasonable
cost, or at all. In addition, the manufacture and sale of products that utilize
gamma technology may subject the Company to extensive federal, state, local and
foreign regulations that could increase the costs of producing the Company's
products, or otherwise materially adversely affect the demand for the Company's
gamma measurement instruments. See " -- Government Regulations and Approvals."
 
     Limited Sources of Supply.  The Company currently contracts with local
subcontractors for the manufacture of certain major components incorporated into
its products. The Company has experienced no significant disruption or delay in
obtaining required components for its products, and believes that it could
develop other sources of supply or qualify other suppliers for such components.
However, a prolonged inability to obtain adequate deliveries could require the
Company to pay more for inventory, parts and other supplies or to seek
alternative sources of supply, could delay the Company's ability to ship its
products and could damage its relationships with current and prospective
customers. Any such delay or damage could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Manufacturing and Suppliers."
 
     Dependence on Key Personnel.  The Company's success depends to a
significant extent upon a number of key employees, including members of senior
management. The loss of the services of one or more of these key employees could
have a material adverse effect on the Company. The Company does not have
employment contracts with any of its key employees and it has not obtained, and
does not intend to obtain, key-man life insurance policies for any key employee.
The Company believes that its future success will depend in part on its ability
to attract, motivate and retain highly skilled technical, managerial and
marketing personnel. Competition for such personnel is intense and there can be
no assurance that the Company will be successful in attracting, motivating and
retaining key personnel.
 
     Uncertain Protection of Proprietary Rights.  Proprietary rights relating to
the Company's products are protected from unauthorized use by third parties only
to the extent that they are covered by valid and enforceable patents or are
maintained in confidence as trade secrets. The Company has several issued U.S.
patents and patent applications pending. The Company also owns corresponding
foreign patents in a number of jurisdictions throughout the world. There can be
no assurance that any patents now or hereafter owned by the Company will afford
protection against competitors. Proceedings initiated by the Company to protect
its proprietary rights could result in substantial costs to the Company. There
can be no assurance that competitors of the Company, some of whom have
substantially greater resources than those of the Company, will not initiate
litigation to challenge the validity of the Company's patents, or that they will
not use their resources to design comparable products that do not infringe the
Company's patents. The Company could incur substantial costs and diversion of
management resources with respect to the defense of any such claims, which could
have a material adverse effect on the Company's business, financial condition
and results of operations. Furthermore, parties making such claims could secure
a judgment awarding substantial damages, as well as injunctive or other
equitable relief, that could effectively block the Company's ability to make,
use, sell, distribute or market its products and services in the U.S. and
abroad. There may also be pending or issued patents of which the Company is not
aware held by parties not affiliated with the Company that relate to the
Company's
                                        7
8
 
products or technologies. In the event that a claim relating to proprietary
technology or information is asserted against the Company, the Company may need
to acquire licenses to, or contest the validity of, any such competitor's
proprietary technology. It is likely that significant funds would be required to
contest the validity of any such competitor's proprietary technology. There can
be no assurance that any license required under any such competitor's
proprietary technology would be made available on acceptable terms or that the
Company would prevail in any such contest. There can be no assurance that the
steps taken by the Company to protect its proprietary rights will be adequate to
prevent misappropriation of its technology or independent development by others
of similar technology. In addition, the laws of some jurisdictions do not
protect the Company's proprietary rights to the same extent as the laws of the
U.S. and there can be no assurance that the available protections will be
adequate.
 
     The Company also relies on trade secrets and proprietary know-how that it
seeks to protect, in part, by confidentiality agreements with its employees and
consultants. There can be no assurance that these agreements will not be
breached, that the Company will have adequate remedies for any breach or that
the Company's trade secrets will not otherwise become known or independently
developed by competitors. See "Business -- Intellectual Property."
 
     Government Regulations and Approvals.  The demand for certain of the
Company's products, both in the United States and abroad, is subject to or
influenced by various domestic and foreign environmental and consumer protection
laws. The Company designs, develops and markets these products, in part, to meet
customer needs created by existing and anticipated regulations, and any changes
in these regulations may adversely affect consumer demand for the Company's
products. See "Business -- Industry Background." In addition, the manufacture
and sale of products that utilize gamma technology is subject to certain
federal, state, local and foreign regulations including licensing and other
regulatory approvals. In particular, the Company is required, and has obtained,
licenses from the Nuclear Regulatory Commission ("NRC") and the State of Texas
for the storage and handling of the nuclear sources used in its gamma
measurement instruments at its Round Rock, Texas facility. These licenses are
subject to periodic review and renewal and the facility is subject to periodic
inspection. Failure of the Company to maintain such licenses or to comply with
applicable regulations could have a material adverse effect on the Company's
business, financial condition and results of operations. Further, new or more
stringent regulations may be adopted or imposed by the NRC or other applicable
regulatory authorities and there can be no assurance that the Company will be
able to comply with such changes, the result of which could have a material
adverse effect on the Company's business, financial condition and results of
operation.
 
     Shares Eligible for Sale After this Offering.  The 10,666,667 shares of
Common Stock owned by Thermo Instrument will become eligible for sale under Rule
144 promulgated under the Securities Act commencing in August 1998. In addition,
as long as Thermo Instrument is able to elect a majority of the Company's Board
of Directors, it will have the ability to cause the Company at any time to
register for resale all or a portion of the Common Stock owned by Thermo
Instrument. Additional shares of Common Stock issuable upon exercise of options
granted under the Company's stock-based compensation plans will become available
for future sale in the public market at prescribed times. Sales of a significant
number of shares of Common Stock in the public market following this offering
could adversely affect the market price of the Common Stock. See "Relationship
with Thermo Electron and Thermo Instrument" and "Shares Eligible for Future
Sale."
 
     Potential Conflict of Interest.  For financial reporting purposes the
Company's financial results are included in the consolidated financial
statements of Thermo Instrument and Thermo Electron. Certain officers of the
Company, including John N. Hatsopoulos, Paul F. Kelleher and Earl R. Lewis are
also officers and Directors of Thermo Instrument, Thermo Electron and/or other
subsidiaries of Thermo Electron. These officers will devote only a small portion
of their working time (anticipated to be less than 5% in the case of Messrs.
Hatsopoulos and Kelleher and less than 10% in the case of Mr. Lewis) to the
affairs of the Company. All other members of management of the Company are
full-time employees of the Company. Further, it is an essential element of
Thermo Electron's career development program that successful executives and
managers be considered for positions of increased responsibility anywhere within
the Thermo Electron family of companies. Certain of the Company's executives and
managers were promoted to their present positions under this policy. There can
be no assurance that the Company's present executives and managers will not
assume other positions within the Thermo Electron family of companies, causing
them to be unavailable to serve the Company or to
                                        8
9
 
reduce the amount of time that they devote to the affairs of the Company. Since
the members of the Board of Directors of the Company who are also affiliated
with Thermo Electron or Thermo Instrument have fiduciary duties to the
stockholders of the Company and to the stockholders of Thermo Electron and/or
Thermo Instrument, as applicable, such individuals will consider both the
short-term and the long-term impact of operating decisions on the Company as
well as the impact of such decisions on the consolidated financial results of
Thermo Instrument and Thermo Electron. The interest of Thermo Electron and
Thermo Instrument on the one hand and the Company on the other hand may differ
and in some cases, the impact of such decisions could be disadvantageous to the
Company while advantageous to Thermo Instrument or Thermo Electron, or vice
versa. For example, conflicts may arise with respect to possible future
acquisitions by the Company of assets or businesses of Thermo Instrument or
another Thermo Electron affiliated company in which the purchase price to be
paid by the Company is subject to negotiation between the Company and Thermo
Instrument or such other Thermo Electron affiliated company. These negotiations
will be subject to the potential conflicts associated with related-party
transactions. The Company is an indirect subsidiary of Thermo Electron and is a
party to various agreements with Thermo Electron. These agreements may limit the
Company's operating flexibility. There can be no assurance that these factors
will not have a material adverse effect on the Company's business, financial
condition or results of operations. See "Relationship with Thermo Electron and
Thermo Instrument."
 
     Control by Thermo Instrument.  The Company's shareholders do not have the
right to cumulate votes for the election of directors. Thermo Instrument, which
owns approximately 68.3% of the voting stock of the Company, has the power to
elect the entire Board of Directors of the Company and to approve or disapprove
any corporate actions submitted to a vote of the Company's stockholders. See
"Relationship with Thermo Electron and Thermo Instrument" and "Security
Ownership of Certain Beneficial Owners and Management."
 
     Lack of Dividends.  The Company anticipates that for the foreseeable
future, the Company's earnings, if any, will be retained for use in the business
and that no cash dividends will be paid on the Common Stock. Declaration of
dividends on the Common Stock will depend upon, among other things, future
earnings, the operating and financial condition of the Company, its capital
requirements and general business conditions. See "Dividend Policy."
 
                                        9
10
 
                          PRICE RANGE OF COMMON STOCK
 
     The Company's Common Stock has been publicly traded on the AMEX (symbol:
ONX) since its initial public offering on March 25, 1998. The following table
sets forth, for the periods indicated, the high and low sales prices of the
Company's Common Stock as reported in the consolidated transaction reporting
system since that date.
HIGH       LOW
                                                              ----       ---
1998
----
First Quarter (March 25, 1998 through April 4, 1998)........$14 11/16  $14 1/2
Second Quarter.............................................. 15 3/4     12 3/8
Third Quarter (through July 24, 1998)....................... 12 3/8     11 3/8
On July 24, 1998, the closing price of the Common Stock on the AMEX was
$12.00 per share. As of July 24, 1998, the Company had 105 holders of record of
its Common Stock, not including holdings in street or nominee names.
 
                                DIVIDEND POLICY
 
     The Company anticipates that for the foreseeable future the Company's
earnings, if any, will be retained for use in the business and that no cash
dividends will be paid on the Common Stock.
 
                 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
 
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1998
                                               -------
                                                FIRST
                                               -------
Revenues.....................................  $37,144
Gross Profit.................................   15,520
Net Income...................................    2,217
Basic and Diluted Earnings per Share.........      .18
1997
                                               -------------------------------------
                                                FIRST    SECOND     THIRD    FOURTH
                                               -------   -------   -------   -------
Revenues.....................................  $26,429   $28,962   $29,240   $36,894
Gross Profit.................................   10,426    11,883    11,955    15,255
Net Income...................................    1,606     2,135     2,031     3,027
Basic and Diluted Earnings per Share.........      .15       .20       .19       .25
1996
                                               -------------------------------------
                                                FIRST    SECOND     THIRD    FOURTH
                                               -------   -------   -------   -------
Revenues.....................................  $18,907   $22,951   $24,471   $28,987
Gross Profit.................................    6,836     8,411     9,162    11,192
Net Income...................................      619       959     1,454     1,826
Basic and Diluted Earnings per Share.........      .06       .09       .14       .17
10
11
 
                                 CAPITALIZATION
 
     The following table sets forth the short-term debt and capitalization of
the Company as of April 4, 1998.
APRIL 4, 1998
                                                                ---------------------
                                                                (IN THOUSANDS, EXCEPT
                                                                   SHARE AMOUNTS)
Note Payable to Parent Company..............................          $ 12,000
                                                                      ========
Shareholders' Investment:
  Common stock, $.01 par value, 50,000,000 shares
     authorized; 15,606,307 shares issued and
     outstanding(1).........................................          $    156
  Capital in excess of par value............................           144,121
  Retained earnings.........................................             5,367
  Cumulative translation adjustment.........................               942
                                                                      --------
     Total Shareholders' Investment.........................          $150,586
                                                                      ========
---------------
(1) Does not include 1,091,667 shares of Common Stock reserved for issuance
    under the Company's stock-based compensation plans. As of April 4, 1998,
    options to purchase 581,895 shares of Common Stock had been granted under
    these plans. See "Management -- Compensation of Directors" and
    "-- Compensation of Executive Officers" and Notes 3 and 10 of Notes to
    Consolidated Financial Statements.
 
                                       11
12
 
                           SELECTED FINANCIAL INFORMATION
 
     The selected financial information below as of and for the fiscal years
ended December 30, 1995, December 28, 1996 and January 3, 1998 has been derived
from the Company's Consolidated Financial Statements, which have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report included elsewhere in this Prospectus. This information should be read in
conjunction with the Company's Consolidated Financial Statements and related
notes included elsewhere in this Prospectus. The selected financial information
as of and for the fiscal years ended December 31, 1993 and December 31, 1994 and
for the periods from January 1, 1994 through March 15, 1994 and from March 16,
1994 through December 31, 1994 and for the three-month periods ended March 29,
1997 and April 4, 1998, has not been audited but, in the opinion of the Company,
includes all adjustments (consisting only of normal, recurring adjustments)
necessary to present fairly such information in accordance with generally
accepted accounting principles applied on a consistent basis. The results of
operations for the three-month period ended April 4, 1998 are not necessarily
indicative of results for the entire year.
THE
                                    PREDECESSOR(1)            COMPANY(1)         TOTAL               THE COMPANY(1)
                             -----------------------------   -------------   -------------   -------------------------------
                             FISCAL YEAR   JANUARY 1, 1994   MAR. 16, 1994   JAN. 1, 1994            FISCAL YEAR(2)
                             -----------       THROUGH          THROUGH         THROUGH      -------------------------------
                                1993       MARCH 15, 1994    DEC. 31, 1994   DEC. 31, 1994   1995(3)   1996(4)(5)   1997(7)
                             -----------   ---------------   -------------   -------------   -------   ----------   --------
                                                        (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS
  DATA:
Revenues...................    $82,885         $11,468          $50,591         $62,059      $72,105    $ 95,316    $121,525
                               -------         -------          -------         -------      -------    --------    --------
Costs and Operating
  Expenses:
    Cost of revenues.......     59,239           8,971           31,504          40,475       43,636      59,715      72,006
    Selling, general and
      administrative
      expenses.............     22,443           3,310           12,245          15,555       17,310      21,935      28,201
    Research and
      development
      expenses.............      3,284             835            3,182           4,017        5,042       5,568       6,830
                               -------         -------          -------         -------      -------    --------    --------
                                84,966          13,116           46,931          60,047       65,988      87,218     107,037
                               -------         -------          -------         -------      -------    --------    --------
Operating Income (Loss)....     (2,081)         (1,648)           3,660           2,012        6,117       8,098      14,488
Interest Income............         --              --               --              --           --          --         344
Interest Expense...........         --              --               --              --           --          --        (113)
                               -------         -------          -------         -------      -------    --------    --------
Income (Loss) Before
  Provision for Income
  Taxes....................     (2,081)         (1,648)           3,660           2,012        6,117       8,098      14,719
Provision for (Benefit
  from) Income Taxes.......       (526)           (672)           1,420             748        2,490       3,240       5,920
                               -------         -------          -------         -------      -------    --------    --------
Net Income (Loss)..........    $(1,555)        $  (976)         $ 2,240         $ 1,264      $ 3,627    $  4,858    $  8,799
                               =======         =======          =======         =======      =======    ========    ========
Basic and Diluted Earnings
  per Share(6).............                                     $   .21                      $   .34    $    .46    $    .79
                                                                =======                      =======    ========    ========
Weighted Average Shares(6):
    Basic..................                                      10,667                       10,667      10,667      11,083
                                                                =======                      =======    ========    ========
    Diluted................                                      10,667                       10,667      10,667      11,083
                                                                =======                      =======    ========    ========
BALANCE SHEET DATA (AT END
  OF PERIOD):
Working Capital............    $27,977                          $13,327         $13,327      $26,199    $ 29,873    $ 41,947
Total Assets...............     65,015                           71,710          71,710       76,221      97,010     159,709
Shareholders' Investment...     18,394                           50,795          50,795       59,791      73,110     104,938
THREE MONTHS ENDED
                             --------------------
                             MARCH 29,   APRIL 4,
                               1997        1998
                             ---------   --------
STATEMENT OF OPERATIONS
  DATA:
Revenues...................   $26,429    $ 37,144
                              -------    --------
Costs and Operating
  Expenses:
    Cost of revenues.......    16,003      21,624
    Selling, general and
      administrative
      expenses.............     6,292       9,633
    Research and
      development
      expenses.............     1,449       2,177
                              -------    --------
                               23,744      33,434
                              -------    --------
Operating Income (Loss)....     2,685       3,710
Interest Income............        --         259
Interest Expense...........        --        (261)
                              -------    --------
Income (Loss) Before
  Provision for Income
  Taxes....................     2,685       3,708
Provision for (Benefit
  from) Income Taxes.......     1,079       1,491
                              -------    --------
Net Income (Loss)..........   $ 1,606    $  2,217
                              =======    ========
Basic and Diluted Earnings
  per Share(6).............   $   .15    $    .18
                              =======    ========
Weighted Average Shares(6):
    Basic..................    10,667      12,524
                              =======    ========
    Diluted................    10,667      12,530
                              =======    ========
BALANCE SHEET DATA (AT END
  OF PERIOD):
Working Capital............   $32,228    $ 87,615
Total Assets...............    95,717     198,512
Shareholders' Investment...    76,107     150,586
---------------
 
(1) On March 16, 1994, Thermo Instrument acquired the Predecessor from Baker
    Hughes. The periods prior to March 16, 1994 represent the results of TN
    Technologies, CAC, Westronics and Houston Atlas as included in Baker Hughes'
    financial statements. Periods subsequent to March 15, 1994 represent the
    results of TN Technologies, CAC, Westronics and Houston Atlas as included in
    Thermo Instrument's consolidated financial statements. The principal
    difference in the basis of accounting between the Predecessor and the
    Company relates to the cost in excess of net assets of acquired companies
    (goodwill), the amortization of which approximates $730,000 per year.
 
                                       12
13
 
(2) The Company's 1995, 1996 and 1997 fiscal years set forth in this table and
    referred to elsewhere in this Prospectus ended on December 30, 1995,
    December 28, 1996 and January 3, 1998, respectively.
 
(3) Includes the results of Flow Automation since its acquisition by Thermo
    Instrument on July 20, 1995.
 
(4) Includes the results of VG Gas since its acquisition by Thermo Instrument on
    March 29, 1996.
 
(5) Includes the results of Kay-Ray/Sensall since its acquisition by Thermo
    Instrument on October 22, 1996.
 
(6) Pursuant to Securities and Exchange Commission requirements, earnings per
    share for the Company have been presented for all periods subsequent to
    March 15, 1994. Weighted average shares for such periods include 10,666,667
    shares issued to Thermo Instrument in connection with the initial
    capitalization of the Company and, in fiscal 1997, the effect of shares sold
    through the Company's private placements.
 
(7) Includes the results of Angus since its acquisition by Thermo Instrument on
    May 8, 1997 and the results of the Peek Measurement Business, the Ranger
    product line and Fluid Data since their acquisitions by the Company on
    November 6, 1997, November 24, 1997 and December 2, 1997, respectively.
 
                                       13
14
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
OVERVIEW
 
     The Company designs, develops, markets and services sophisticated field
measurement instruments and on-line sensors. These products incorporate a range
of advanced measurement technologies to provide real-time data collection,
analysis and local control functions to enhance production efficiency, improve
process and quality control, ensure regulatory compliance and increase employee
safety. The Company manufactures field measurement instruments and on-line
sensors in four general product areas: flow instruments, level and density
instruments, composition analysis instruments and industry-specific sensors and
recording instruments.
 
     The Company's products are sold primarily to participants in process
industries, including oil and gas producers, processors and distributors and
chemical companies, as well as water/wastewater, iron, steel, electric utility,
minerals and mining and pulp and paper companies. In 1997, customers in the oil
and gas industries accounted for approximately 61% of the Company's total
revenues, with such revenues derived from both the production segment and the
refining and petrochemical segments of the industry. Demand for the Company's
products and services within the oil and gas industry is dependent upon the
level of capital spending by oil and gas companies for exploration, production
and distribution, which in turn is affected by current and anticipated oil and
gas prices, the discovery rate of new oil and gas reserves, political,
regulatory and economic conditions and the ability of oil and gas companies to
obtain capital. Decreases in oil and gas activities could have a significant
adverse effect upon the demand for the Company's products and related services,
which would materially adversely affect the Company's business, financial
condition and results of operations. See "Risk Factors -- Dependence on Oil and
Gas Industry."
 
     An element of the Company's strategy is to supplement its internal growth
with the acquisition of complementary products and technologies. The Company has
successfully completed several such acquisitions, having purchased the
businesses of Flow Automation in July 1995, VG Gas in March 1996, Kay-
Ray/Sensall in October 1996, Angus in May 1997, the Peek Measurement Business
effective November 1997, the Ranger product line in November 1997 and Fluid Data
in December 1997.
 
     Sales to customers outside of the United States and export revenues from
the United States accounted for approximately 25% and 18%, respectively, of
total revenues in 1997. Export sales in 1997 were made primarily to the United
Kingdom, Japan and South Korea. During 1997, the Company had exports from the
Company's U.S. and foreign operations to the Far East of approximately 8% of
total revenues. The Far East is experiencing a severe economic crisis, which has
been characterized by sharply reduced economic activity and liquidity, highly
volatile foreign-currency-exchange and interest rates, and unstable stock
markets. The Company's export sales to the Far East could be adversely affected
by the unstable economic conditions there. Although the Company seeks to charge
its customers in the same currency as its operating costs, the Company's
financial performance and competitive position can be affected by currency
exchange rate fluctuations affecting the relationship between the U.S. dollar
and foreign currencies.
 
RESULTS OF OPERATIONS
 
  First Quarter 1998 Compared With First Quarter 1997
 
     Revenues increased 41% to $37.1 million in the first quarter of 1998 from
$26.4 million in the first quarter of 1997. Revenues increased $9.0 million due
to the inclusion of revenues from acquired businesses. This consisted primarily
of $4.9 million from the Peek Measurement Business and $2.8 million from Fluid
Data. Revenues from existing businesses grew 6%, primarily due to an increase in
sales of industry-specific instruments as a result of an increase in spending by
the production segment of the oil and gas industry and, to a lesser extent,
increased sales of level and density instruments.
 
     The gross profit margin increased to 42% in the first quarter of 1998 from
39% in the first quarter of 1997, primarily due to the inclusion of
higher-margin revenues from acquired businesses and, to a lesser extent, an
increase in higher-margin revenues from industry-specific instruments.
 
                                       14
15
 
     Selling, general and administrative expenses as a percentage of revenues
increased to 26% in the first quarter of 1998 from 24% in the first quarter of
1997, primarily due to higher selling, general, and administrative expenses as a
percentage of revenues at acquired businesses. Research and development expenses
increased to $2.2 million during first quarter of 1998 from $1.4 million in the
first quarter of 1997. This increase was primarily due to acquisitions and, to a
lesser extent, an increase in spending at certain industry-specific instrument
and composition analysis businesses.
 
     Interest income in the first quarter of 1998 primarily represents interest
earned on the invested proceeds from the Company's third quarter 1997 private
placement of common stock. Interest expense in the first quarter of 1998
represents interest on indebtedness relating to the November 1997 acquisition of
the Peek Measurement Business. In January 1998, the Company paid the $19.1
million purchase price for the Peek Measurement Business. The Company borrowed
$12.0 million from Thermo Instrument to partially fund the payment. The $12.0
million was repaid in April 1998.
 
     The effective tax rate was 40.2% in the first quarters of 1998 and 1997.
The effective tax rates exceeded the statutory federal income tax rate primarily
due to the impact of state income taxes and nondeductible amortization of cost
in excess of net assets of acquired companies.
 
     The Company is currently assessing the potential impact of the year 2000 on
the processing of date-sensitive information by the Company's computerized
information systems and on products purchased as well as products sold by the
Company. While there can be no assurance that all problems arising from the year
2000 will be identified and resolved satisfactorily prior to the end of 1999,
the Company presently believes that the year 2000 problem will not pose
significant operational problems for the Company or have a material effect on
future results of operations.
 
  1997 Compared With 1996
 
     Revenues increased 27% to $121.5 million in 1997 from $95.3 million in
1996. Revenues increased $19.7 million due to acquisitions. This consisted
primarily of $8.1 million from Kay-Ray/Sensall, $4.2 million from the Peek
Measurement Business, $3.3 million from VG Gas, $3.1 million from Angus and $1.0
million from other acquisitions. Revenues from existing businesses grew 6.8%,
primarily due to an increase in sales of industry-specific instruments as a
result of an increase in spending by the production segment of the oil and gas
industry. This increase was offset in part by a decrease in revenues from
composition analysis instruments. The decrease in sales of composition analysis
instruments primarily relates to lower spending by the refining and
petrochemical segments of the oil and gas industry and, to a lesser extent, the
chemicals industry.
 
     The gross profit margin increased to 41% in 1997 from 37% in 1996,
primarily due to an increase in higher-margin revenues from industry-specific
instruments. The inclusion of higher-margin revenues at Kay-Ray/Sensall,
acquired in October 1996, also contributed to the improved overall margin. In
addition, the gross profit margin from sales of flow instruments increased as a
result of the introduction of certain new, higher-margin products.
 
     Selling, general and administrative expenses as a percentage of revenues
remained consistent at 23% in both 1997 and 1996.
 
     Research and development expenses increased to $6.8 million in 1997 from
$5.6 million in 1996. This increase was primarily due to acquisitions and, to a
lesser extent, an increase in spending at certain industry-specific instrument
and composition analysis businesses.
 
     Interest income in 1997 primarily represents interest earned on the
invested proceeds from the third quarter 1997 private placement of the Company's
common stock. Interest expense in 1997 represents interest on the indebtedness
relating to the acquisition of the Peek Measurement Business.
 
     The effective tax rate was 40.2% in 1997 and 40.0% in 1996. The effective
tax rates exceed the statutory federal income tax rate primarily due to the
impact of state income taxes and nondeductible amortization of cost in excess of
net assets of acquired companies.
 
                                       15
16
 
  1996 Compared With 1995
 
     Revenues increased 32% to $95.3 million in 1996 from $72.1 million in 1995.
Revenues increased $19.5 million due to acquisitions. The increase consisted
primarily of $9.7 million from VG Gas, $7.5 million from Flow Automation and
$2.3 million from Kay-Ray/Sensall. Revenues from existing businesses grew 5.1%,
primarily due to an increase in sales of industry-specific instruments as a
result of an increase in spending by the production segment of the oil and gas
industry. This increase was offset in part by a decrease in revenues from
composition analysis instruments and level density sensors for the reasons
discussed in the results of operations for 1997 compared with 1996.
 
     The gross profit margin decreased to 37% in 1996 from 39% in 1995,
primarily due to the Company's 1996 initiation of an outsourcing program for
mechanical assemblies and electronic components in its industry-specific
instrument product lines. In addition to these set-up costs, the Company
introduced three new industry-specific products in 1996, initially resulting in
higher cost of goods sold.
 
     Selling, general and administrative expenses as a percentage of revenues
decreased to 23% in 1996 from 24% in 1995, primarily due to lower costs as a
percentage of revenues at VG Gas. Research and development expenses increased to
$5.6 million in 1996 from $5.0 million in 1995. An increase in costs of $1.5
million related to acquired businesses was offset in part by a decrease in
spending at certain industry-specific instrument and composition analysis
instrument businesses due to the completion of several research and development
projects at those businesses.
 
     The effective tax rate was 40.0% in 1996 and 40.7% in 1995. The effective
tax rates exceed the statutory federal income tax rate primarily due to the
impact of state income taxes and nondeductible amortization of cost in excess of
net assets of acquired companies.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     Consolidated working capital was $87.6 million as of April 4, 1998,
compared with $41.9 million as of January 3, 1998. Included in working capital
are cash and cash equivalents of $61.1 million as of April 4, 1998, compared
with $25.0 million as of January 3, 1998.
 
     During the first quarter of 1998, the Company's operating activities had
substantially no impact on cash. Cash flow from the Company's operations was
offset by cash of $2.4 million used to fund an increase in inventories primarily
due to a buildup in the inventories in the Company's industry-specific and
composition analysis businesses as result of long lead-time orders.
 
     The Company used $19.1 million of cash for investing activities during the
first quarter of 1998. In January 1998, the Company paid Thermo Power the
purchase price of $19.1 million for the Peek Measurement Business, acquired
effective November 1997. The Company used $0.4 million for purchases of
property, plant and equipment during the first quarter of 1998. The Company
expects to expend approximately $1.5 million for property, plant and equipment
during the remainder of 1998.
 
     The Company's financing activities provided $55.2 million of cash during
the first quarter of 1998. The Company raised $43.2 million of cash from the
March 1998 initial public offering of common stock (Note 2). In addition, the
Company borrowed $12.0 million from Thermo Instrument to partially fund the
payment for the Peek Measurement Business. The note to Thermo Instrument bore
interest at the 90-day Commercial Paper Composite Rate plus 25 basis points, set
at the beginning of each quarter, and was repaid on April 10, 1998, with a
portion of the funds received from the Company's initial public offering.
 
     On July 7, 1998, the Company acquired the capital stock of certain
businesses of the Mid-South Companies for $12.7 million in cash. The businesses
acquired include Mid-South Controls and Services Inc. and Mid-South Power
Systems Inc. Mid-South Controls and Services Inc. specializes in the assembly
and service of wellhead measurement, control and safety shutdown systems that
are required by oil and gas companies operating offshore platforms. Mid-South
Power Systems Inc. provides electrical generators, switchgear and motor control
units that are used in a wide variety of industrial applications.
 
                                       16
17
 
     Although the Company expects to have positive cash flow from its existing
operations, the Company anticipates it will require significant amounts of cash
for the possible acquisition of complementary businesses and technologies. The
Company expects that it will finance these acquisitions through a combination of
internal funds, additional debt or equity financing from the capital markets, or
short-term borrowings from Thermo Instrument or Thermo Electron, although there
is no agreement with these companies to ensure that funds will be available on
acceptable terms or at all. The Company believes that its existing resources are
sufficient to meet the capital requirements of its existing businesses for the
foreseeable future.
 
                                       17
18
 
                                    BUSINESS
 
OVERVIEW
 
     The Company designs, develops, markets and services sophisticated field
measurement instruments and on-line sensors. The Company utilizes its
proprietary knowledge and significant experience regarding application-specific
technologies to develop products that address the needs of process industry
participants within targeted markets. The Company's products gather information
regarding the flow, level, density or composition of a particular material and,
using advanced communications techniques, communicate this information to a
customer's centralized control location.
 
     The Company manufactures field measurement instruments and on-line sensors
in the following four general product areas:
 
     - Flow Instruments.  The Company offers a range of instruments designed to
        measure and locally control the flow of liquids and gases. These
        instruments include microprocessor-based gas flow computers,
        non-contacting ultrasonic flow meters, impeller flow meters, turbine
        flow meters and air flow measurement systems.
 
     - Level and Density Instruments.  The Company's level and density
        instruments incorporate sophisticated measurement technologies that
        measure and locally control the level and density of liquid and solid
        materials and the density of gaseous materials. These instruments
        include intelligent point level and continuous level measurement
        instruments.
 
     - Composition Analysis Instruments.  The Company's composition analysis
        instruments are used for on-line analysis of the chemical composition of
        solids, liquids and gases. The Company's instruments include sulfur
        analyzers, gas chromatographs, portable elemental analysis instruments,
        infrared and ultraviolet spectrometers and on-line mass spectrometers.
 
     - Industry-Specific Instruments.  The Company offers sophisticated sensor
        systems that are used in specific industries to provide real-time
        measurement, data collection, recording, analysis and local control of
        process functions. These special purpose instruments and sensors include
        rod pump controllers, strip chart recorders, process alarm monitors and
        other data acquisition systems.
 
INDUSTRY BACKGROUND
 
     Industry sources estimate that worldwide revenues for the field measurement
instruments and sensors market segment of the process control market were
approximately $10.4 billion in 1995 and will grow to approximately $20.0 billion
by the year 2000, which represents a compound annual growth rate of
approximately 14%. Factors contributing to this growth include competitive
pressures to increase efficiencies and reduce costs; technological advances,
which have increased the availability of higher quality microprocessor-based
sensors; the increased use of sensor-intensive, model-based controls of process
functions; deregulation and privatization; developments in communications
protocol and computer systems; and concerns over regulatory compliance and
employee safety. The Company's current products address approximately $3.3
billion of the field measurement instruments and sensors segment of the process
control market.
 
     Participants in process industries need to monitor, analyze and control
their operations more efficiently in order to optimize production and
distribution and to remain competitive. In order to increase the output and
quality of products while reducing costs, these participants must consistently,
accurately and reliably measure, analyze and control the flow, level, density,
composition, pressure and temperature of the materials that are used in their
industrial processes, including those materials that they are producing and
distributing. The field measurement instruments and sensors market generally can
be divided into two categories: traditional mechanical sensors and advanced
intelligent sensors, which incorporate microprocessor-based technologies to
provide real-time data collection, analysis and local control functions.
Traditional analog and mechanical sensors cannot provide the levels of accuracy
and reliability that process industry participants need in today's increasingly
competitive global marketplace. Participants in the natural gas industry, for
example, can no longer compete effectively using traditional flow measurement
instruments for natural gas transfer because
 
                                       18
19
 
such instruments are slow, labor intensive and often produce inaccurate results,
translating into lost profits and wasted product. As a result, process industry
participants are seeking more advanced measurement technologies that they can
economically utilize at multiple points throughout their operations.
 
     Developments in communications protocols and computer systems, the trend
away from analog to digital technology and advances in technologies, such as
sophisticated electronic, ultrasonic and radar techniques, have facilitated the
development of advanced intelligent sensors. These sensors provide faster, more
reliable, efficient and accurate measurement instruments that allow considerably
more information to be collected, analyzed and communicated through the process
control system. By utilizing advanced, microprocessor-based sensor technologies
to measure, analyze and control their operations, process industry participants
are able to operate in environments that were previously considered unsafe or
not cost-effective and gain a competitive advantage over those who obtain and
monitor data utilizing traditional mechanical and analog devices. In addition,
as technological advances have allowed manufacturers to incorporate more
cost-effective, sophisticated microprocessor-based technologies into their
sensors and other measurement instruments, participants in complex industries
have increasingly sought to utilize multiple sensors to collect, record and
analyze data and locally control operations using model-based formulas.
 
     Deregulation and privatization in certain process industries, such as in
the natural gas and electric utility industries, make it even more critical for
participants in such industries to utilize accurate and reliable process
measurement technologies. For example, natural gas pipelines are now considered
"common carriers" and are therefore utilized by many different parties. As a
result, participants in the natural gas industry need highly sophisticated
sensors that are capable of quickly and accurately measuring the flow of natural
gas at the multiple custody transfer points within each system. This enables
them to accurately and automatically account and bill for gas flow in real time.
 
     At the same time, government regulations, increased record-keeping
requirements and worker safety concerns mandate tighter controls with advanced
diagnostics to monitor specific aspects of the industrial process and to avoid
releases and costly environmental clean-ups. In order to comply with government
regulations, participants in process industries are using more sophisticated
measurement instruments that are capable of accurately monitoring pollutant
levels, quickly detecting leaks, performing self diagnostics and storing and
monitoring data for periodic reports to government agencies. These advanced
sensors also enable participants to improve record-keeping and maintain a safer
workplace. For example, companies engaged in offshore oil production can monitor
and control their operations remotely in adverse weather conditions without
jeopardizing the safety of their employees.
 
STRATEGY
 
     The Company's objectives are to be a leading provider of field measurement
instruments and on-line sensors used in targeted industries within the process
control market and to expand the scope of its addressed markets within the field
measurement instruments and sensors market segment, while continuing to improve
its financial performance. The Company intends to achieve these objectives
through the implementation of the following key strategies:
 
     Broaden Technological Leadership and Product Offerings.  The Company
intends to continue to broaden its technologies and product offerings in order
to provide more comprehensive process measurement solutions for its customers.
The Company intends to utilize its experience and application-specific knowledge
to develop new applications for its existing technologies while expanding its
technological base. The Company also intends to develop or acquire technologies
for field measurement instruments and sensors not currently offered by the
Company.
 
     Maintain Market Focus.  The Company believes there are significant
opportunities to market and sell process measurement instruments to participants
within targeted markets that can best be served by companies with
industry-specific and application-specific technologies and knowledge. The
Company focuses on customers primarily in the oil and gas, chemical,
petrochemical, electric utility, pulp and paper manufacturing, semiconductor and
water/wastewater industries. The Company's sophisticated instrumenta-
 
                                       19
20
 
tion and applications expertise are well-suited to the needs of these
industries, which are capital-intensive and have difficult measurement
applications.
 
     Pursue Acquisitions and Strategic Relationships.  The Company intends to
pursue acquisitions of, and strategic relationships with, companies that have
products, technologies and/or market presence that complement or augment its
existing technological base and current market presence. In addition, the
Company seeks to make acquisitions where it can add value through its financial,
operating, technological, marketing and management expertise. The field
measurement instruments and sensors segment of the process control industry is
highly fragmented, providing significant opportunities for industry
consolidation. The Company, with its successful acquisition track record and
strong financial resources, is well-positioned to be an active participant in
the consolidation of this market.
 
     Expand into New Geographic Markets.  The Company intends to expand
internationally through opening new sales and support offices and through
strategic acquisitions in geographic areas with significant growth
opportunities, including Latin America, Eastern Europe and the Pacific Rim.
 
     Expand Experienced Service and Support Organization.  The Company is
seeking to expand its preventive maintenance and aftermarket support activities,
which it sees as critical to sustaining relationships with customers as well as
being an important factor in generating new product sales in the industrial
process markets.
 
PRODUCTS
 
     The Company utilizes its proprietary knowledge and application-specific
expertise to offer instruments to participants in targeted industries within the
field measurement instruments and sensors segment of the process control market.
The Company's customers use its products to monitor, analyze and locally control
the flow, level, density and composition of gaseous, liquid and solid materials.
 
     The Company's flow measurement instruments measure and locally control the
flow of liquids and gases. The Company's level and density measurement
instruments incorporate sophisticated measurement technologies that measure and
locally control the level and density of liquid and solid materials and the
density of gaseous materials. The Company's composition analysis instruments
include field and on-line analysis instruments that are used to analyze the
chemical composition of solids, liquids and gases. The Company also offers
technologically advanced microprocessor-based sensors and recording instruments
that are utilized in specific industries for customized applications. The
Company incorporates a range of sophisticated measurement technologies into its
instruments, including gamma ray, radar, infrared, ultraviolet, ultrasonic and
vibrational measurement techniques.
 
  Flow Instruments
 
     The Company designs, develops, markets and services a broad product line of
mechanical and electronic flow measurement instruments that measure and locally
control the flow of liquids and gases. The Company's flow measurement
instruments include intelligent microprocessor-controlled flow computers, which
are remotely installed electronic flow metering instruments, often solar
powered, that are connected to the primary flow meters installed directly in the
customer's pipeline; non-contacting flow meters that use ultrasonic technology
mounted outside a customer's pipe; in-line turbine meters, which are designed to
function in a wide variety of operating conditions, including corrosive fluids,
high pressure gases, extreme temperatures and sanitary and hazardous
environments; and insertion turbine meters for use where in-line monitoring is
not economically or operationally viable, such as in large pipelines or where
pressure drop is critical. Suggested U.S. retail prices for the Company's flow
measurement instruments range from approximately $1,200 to $6,500 per unit.
Sales and related service of the Company's flow instruments accounted for
approximately 17% of the Company's total revenues for 1997.
 
     The Company's field flow computers are primarily utilized by customers in
the natural gas industry to monitor and locally control the flow of natural gas
at custody transfer points in the natural gas distribution chain. The Company's
ultrasonic flow meters, utilizing both Transit Time and Doppler technologies,
are sold primarily to customers in the water/wastewater industry for a variety
of applications. The Company believes
                                       20
21
 
that it is the world leader in Doppler ultrasonic flow meters. The Company sells
its turbine and impeller meters to customers throughout the world in a diverse
range of industries, including the oil and gas, chemical processing,
petrochemical, pharmaceutical, semiconductor, pulp and paper, aerospace,
automotive, food and beverage, power generation and water/wastewater industries.
The Company's air flow measurement systems are used for a variety of air flow
applications, including drying, paint spraying, combustion and clean room
pressurization. Representative customers for the Company's flow measurement
instruments include affiliates or operations of Texaco Inc., Duke Energy
Corporation and Coastal Energy.
 
  Level and Density Instruments
 
     The Company designs, develops, markets and services intelligent point
level, continuous level and density measurement instruments that use a variety
of sophisticated technologies, including gamma, radar, ultrasonic and
vibrational measurement techniques, to meet the cost and application-specific
needs of process industry participants within targeted markets. The Company
believes that it is the world leader in level measurement instruments
incorporating gamma measuring technology and point level measurement instruments
incorporating ultrasonic measuring technology and that it is the only U.S.
manufacturer of continuous level instruments incorporating radar measuring
technology. The Company's level and density measurement instruments are
microprocessor-based and are designed to ensure increased accuracy and
reliability despite harsh process environments. In addition, they are primarily
non-contacting and therefore well-suited for use in industrial processes that
utilize harmful or toxic materials that cause maintenance problems for
traditional contacting techniques. The Company's point level instruments measure
the presence or absence of a substance, while its continuous level instruments
measure the changing level of a substance on an ongoing basis. Suggested U.S.
retail prices for the Company's level and density measurement instruments range
from approximately $1,000 to $8,500 per unit. Sales and related service of the
Company's level and density instruments accounted for approximately 29% of the
Company's total revenues for 1997.
 
     The Company's level measurement instruments are utilized within several
targeted industries, including the oil and gas, chemical, mineral and mining,
iron and steel, pharmaceutical, water/wastewater and pulp and paper industries.
Customers in these industries store large quantities of materials in tanks or
other storage vessels and use the Company's instruments to either continuously
measure and monitor levels of the stored materials or to ensure the presence of
either a minimum or maximum amount of the material. The Company's density
measurement products are used primarily in the paper industry to measure pulp
consistency and by pipeline companies responsible for transporting refined
petroleum products. Representative customers for the Company's level and density
measurement instruments include affiliates or operations of E.I. duPont De
Nemours & Co., The Dow Chemical Company and Mobil Oil Corporation.
 
  Composition Analysis Instruments
 
     The Company designs, develops, markets and services a variety of
instruments designed to analyze the chemical composition of solids, liquids and
gases. These products include lead acetate-based and chemiluminescent sulfur
analyzers, which utilize fiber optics and precision colorimetry for field and
on-line measurement of the sulfur content in liquid and gaseous materials; a
UV/Vis photodiode spectrometer used for sulfur recovery plant optimization;
on-line gas chromatographs, which are utilized in content and purity analysis of
natural gas and light hydrocarbon liquids, including butane and propane;
portable XRF-elemental analysis instruments that utilize proprietary sensors to
provide accurate, real-time analysis of the presence of metals and the
composition of alloys; and on-line mass spectrometers that provide highly
accurate, real-time analysis of the type and content of a variety of gases at
multiple points within a customer's operations. The Company believes that it is
a leader in the market for portable elemental analysis instruments, process
sulfur monitors and on-line mass spectrometers. Suggested U.S. retail prices for
the Company's composition analysis instruments range from approximately $35,000
to $225,000 per unit. Sales and related service of the Company's composition
analysis instruments accounted for approximately 16% of the Company's total
revenues for 1997.
 
     Customers use the Company's portable elemental analysis instruments for
field composition analysis of alloys, analysis of the presence of lead within
paint and composition analysis of the metallic content of soil,
 
                                       21
22
 
particularly at Superfund sites. The Company's mass spectrometers are used in a
variety of process industries, including the petrochemical, pharmaceutical, iron
and steel and semiconductor industries for real-time, ultrasensitive measurement
of gases. Representative customers for the Company's composition analysis
instruments include affiliates or operations of Eastman Kodak Company, LSI Logic
Corp., Saudi ARAMCO and BASF AG.
 
  Industry-Specific Instruments
 
     The Company's industry-specific instruments include rod pump controllers,
remote data collection and communication devices known as Remote Terminal Units
("RTUs") and other specialized products utilized in oil and gas production,
processing and distribution, data acquisition systems, chart recorders, process
alarm monitors, current-to-pressure and pressure-to-current transducers and
AC-power monitoring instruments. Sales and related service of the Company's
industry-specific instruments accounted for approximately 38% of the Company's
total revenues for 1997.
 
     The Company specializes in the development, installation and service of
scalable and redundant rod pump controllers and RTUs that are utilized to
automate the measurement, control, safety and environmental protection needs in
onshore and offshore oil and gas production and pipeline transmission. These
products incorporate microprocessor-based, smart technologies to provide
customers with a variety of functions, including leak detection, gas flow
measurement, custody transfer data and on-line gas composition analysis.
Suggested U.S. retail prices for these specialized products range from
approximately $1,200 to $100,000 per unit.
 
     In addition, the Company offers a range of wellhead safety and control
products that monitor, control and provide failsafe shutdown of oil and gas
production wells. To complement these products, the Company developed a subsea
control module to assist in oil production from reserves below the ocean floor.
The control module rests on the ocean floor to monitor, analyze and locally
control the level and flow of oil in up to four oil wells and is connected to
operations located on the ocean surface by a tube through which the oil is
transported. This product is designed to offer a more efficient and
cost-effective alternative to traditional offshore drilling, which requires
substantial time and expense in building and later disassembling surface
drilling platforms. The control module also allows oil companies to access oil
reserves that would otherwise be inaccessible either because of their location
or cost. The control module was first presented and exhibited in late 1997 at an
offshore engineering conference in Aberdeen, Scotland. Based on feedback
received from other conference participants, the Company made improvements to
the control module and it has since been hydrostatically certified by the
National Hyperbaric Centre in Aberdeen, Scotland to operate at a maximum depth
of 1,000 meters beneath the ocean surface. The Company is currently responding
to requests for quotations and actively soliciting an opportunity for its
initial commercial application. The Company anticipates that the subsea control
module will sell for approximately $1 million per unit. See "-- Research and
Development."
 
     The Company also offers data acquisition systems, paper and paperless strip
chart recorders, process alarm monitors, current-to-pressure and
pressure-to-current transducers and AC-power monitoring instruments to customers
in the power generation and transmission, petrochemical, chemical, pulp and
paper, water/wastewater and pharmaceutical industries. The Company's strip chart
recorders are designed to continuously and accurately measure, display and
record critical variables within an industrial or manufacturing process and
provide plant managers with valuable information regarding flow, level, density,
temperature and pressure. Suggested U.S. retail prices for the Company's strip
chart recorders range from approximately $1,300 to $10,000 per unit. The Company
has sold its strip chart recorders to approximately 90% of the nuclear power
plants in the United States. The Company's alarm monitoring systems provide an
interface for sensors measuring pressure, temperature, vibration or gas
detection, which in turn allow critical alarm conditions to be displayed or
communicated to a centralized control system. The Company's current-to-pressure
and pressure-to-current transducers are used for valve positioning in processing
plants for the chemical, petrochemical, power generation, pulp and paper and
pharmaceutical industries. Representative customers for the Company's
industry-specific instruments include operations or affiliates of Shell Oil
Company, Chevron Corporation, Pemex, Duke Energy Corporation and Houston
Lighting & Power Company.
 
                                       22
23
 
RECENT ACQUISITIONS
 
     An element of the Company's strategy is to supplement its internal growth
with the acquisition of complementary products and technologies. See " --
Strategy." The Company has recently completed the acquisition of a number of
businesses, including those described below:
 
     Mid-South.  In July 1998, the Company, through CAC, acquired the stock of
certain businesses of the Mid-South Companies, a group of related, privately
held companies, for $12.7 million in cash, subject to a post-closing adjustment.
The businesses acquired include Mid-South Controls and Services Inc. and Mid-
South Power Systems Inc. Mid-South Controls and Services Inc. specializes in the
assembly and service of wellhead measurement, control and safety shutdown
systems that are required by oil and gas companies operating offshore platforms.
Mid-South Power Systems Inc. provides electrical generators, switchgear and
motor control centers that are used in a wide variety of industrial
applications. The acquisition of the Mid-South Companies broadens the Company's
overall product offerings and expands its presence in the offshore Gulf of
Mexico market.
 
     Fluid Data.  In December 1997, the Company, through Houston Atlas, acquired
from Elsag-Bailey, Inc. substantially all the assets of Fluid Data, a
Texas-based manufacturer and distributor of pyrolysis gas sampling systems,
on-line process gas chromatographs, chemiluminescent sulfur chromatography
systems and high speed calorimeters, for $8.5 million and the assumption of
certain liabilities. Fluid Data's on-line gas chromatograph technology, combined
with the Houston Atlas gas chromatograph business, gives the Company a strong
presence in the hydrocarbon processing industry, the largest market segment
existing in the on-line analytical marketplace. The acquisition of the Fluid
Data business complements the Company's existing product lines, adds several new
products to its current offerings and substantially contributes to the Company's
strategy to provide its customers with an integrated, comprehensive parts and
service business.
 
     Peek Measurement.  In November 1997, Thermo Power, a majority-owned
subsidiary of Thermo Electron, completed a tender offer for all of the
outstanding ordinary shares of Peek plc, a UK-based manufacturer and supplier of
electronic traffic control instrumentation, as well as density and flow meters.
The Company acquired from Thermo Power all of the outstanding capital stock of
Peek Measurement Limited, Brandt Instruments, Inc. and Peek Measurement, Inc.,
collectively representing the process instrumentation business of Peek plc (the
"Peek Measurement Business"), for approximately $19.1 million, effective
November 1997.
 
     The product lines of the Peek Measurement Business include non-invasive
ultrasonic flow meters, impeller flow meters, air flow measurement systems,
process alarm monitors, gas and liquid density meters and current-to-pressure
and pressure-to-current transducers. The acquisition of the Peek Measurement
Business augments the Company's current technologies and provides it with
significant presence in the water/wastewater market.
 
     Ranger.  In November 1997, the Company, through Westronics, acquired from a
subsidiary of Danaher Corporation, the assets comprising the Ranger product
line, a New York-based manufacturer and distributor of power-monitoring and
data-acquisition equipment, for $1.8 million and the assumption of certain
liabilities. Since the acquisition, the Company has integrated the Ranger
product line with the Angus Electronics division of Westronics in Indianapolis,
Indiana. The market for Ranger's products is evenly divided between industrial
and utility customers. The combination of Ranger's products with those of
Westronics allows for a broader range of products to be marketed to a much
larger and geographically diverse customer base, especially internationally
where Westronics has an established presence. Additionally, Ranger's presence in
the utility industry is increasingly important to the Company as the electric
industry continues towards domestic deregulation.
 
     Angus.  In May 1997, the Company, through Westronics, acquired from
Esterline Technologies Corporation the assets of its Angus Electronics division,
an Indiana-based manufacturer and distributor of analog and digital data
acquisition and recorder products and power measurement instruments, for $1.9
million and the assumption of certain liabilities. Angus manufactures and sells
a full line of paperless recorders, which is the fastest growing segment of the
recorder market. Angus's customer base consists of both process control system
manufacturers and end-users in the petroleum, chemical, pharmaceutical, food
manufacturing
 
                                       23
24
 
and electric and gas utility industries. Additionally, Angus brings to
Westronics a substantial parts, service and accessories business.
 
CUSTOMER SERVICE, MAINTENANCE AND SUPPORT
 
     Customers typically utilize the Company's instruments throughout their
operations and thus demand preventive maintenance, reliable aftermarket support
and quick response and repair service. The Company provides high-quality
customer service, preventive maintenance and aftermarket support, which it
believes are critical to success in process industries where downtime translates
to lost profits. The Company enters into multi-year contracts for the provision
of preventive maintenance services. The Company currently provides preventive
maintenance services and aftermarket support through its own employees and
independent representatives in the United States, Canada, Mexico, the United
Kingdom, the Netherlands, Oman and the United Arab Emirates, and in other areas
solely through independent representatives. The Company believes that its
experienced staff of chemical, electrical, mechanical and software engineers, as
well as its international customer service and support organization, provide it
with a significant competitive advantage.
 
CUSTOMERS
 
     In 1997, the Company sold its products to more than 2,000 customers
worldwide, including affiliates or operations of The Dow Chemical Company, Shell
Oil Company, E.I. duPont De Nemours & Co., BASF AG, Pemex and Duke Energy
Corporation. These customers represent an illustrative cross-section by industry
of the Company's broad customer base. The Company targets customers in markets
with application-specific needs. In particular, the Company's flow measurement
instruments are used primarily by customers in the natural gas and
water/wastewater industries; its continuous and point level and density
measurement instruments are used primarily by customers in the oil and gas,
minerals and mining, iron and steel and pulp and paper industries; its chemical
composition analysis instruments are used primarily by participants in the oil
and gas industries; and its strip chart recorders are sold primarily to
customers in the electric utility industry, as well as to customers in the
petrochemical, chemical, pulp and paper, water/wastewater and pharmaceutical
industries. In 1997, customers in the oil and gas industry represented
approximately 61% of the Company's total revenues, with such revenues derived
from both the production segment and the refining and petrochemical segments of
the industry. In 1997, no single customer accounted for more than 3% of the
Company's total revenues.
 
SALES AND MARKETING
 
     The Company markets, sells and distributes its products through a
combination of a direct sales force and a network of independent sales
representatives and distributors. The method of distribution is determined by
product line and market size and potential, as well as by local business
convention, industry mix and the availability of technically qualified
representatives. The Company's flow and industry-specific products for the oil
and gas industry are primarily sold through a direct sales force with
industry-specific expertise. The Company's flow instruments for other industries
and its level and density measurement and composition analysis instruments are
primarily sold through independent sales representatives or distributors
supported by local sales managers and application specialists. See Note 8 to the
consolidated financial statements for financial information relating to foreign
and domestic operations and export sales.
 
     Direct Sales Force.  The Company has direct sales operations in the United
States, Canada, the United Kingdom, Mexico, the United Arab Emirates, Oman and
the Netherlands.
 
     Independent Sales Representatives.  The Company has relationships with
approximately 175 independent sales representatives in the United States and
approximately 145 independent sales representatives internationally. The
Company's sales representatives generally operate on an exclusive basis, and are
paid a commission on products sold or shipped into their territory. The
Company's agreements with its sales representatives typically provide either
party with the right to terminate with up to 60 days' notice. The Company
believes that independent sales representatives offer the advantages of being
close to the local market, seeing customers on a regular basis and having
compatible products to sell to the same customer base.
 
     Distributors.  The Company has relationships with approximately 320
distributors. The Company's distribution agreements are generally exclusive in
an identified country or territory and typically provide either
 
                                       24
25
 
party with the right to terminate on 90 days' notice. The Company's distributors
generally provide service and support for customers located in their territory.
 
COMPETITION
 
     The Company believes that its ability to compete successfully in the market
for field measurement instruments and sensors depends upon a number of factors
both within and beyond its control, including quality and reliability; technical
features; accuracy; ease of use; product pricing; reputation for aftermarket
service; timing of new product releases and enhancements by the Company and its
competitors; name recognition; the establishment of strategic alliances; and
industry and general economic trends. In addition, the Company competes with
companies utilizing competing technologies that may be viewed as cost-effective
alternatives to the technologies incorporated into the Company's products.
 
     The field measurement instruments and sensors market segment of the process
control market is highly fragmented and intensely competitive, and the Company
expects competition to continue to increase. The Company competes with a few
large competitors, including Fisher-Rosemount, a division of Emerson Electric
Co., Inc., Elsag-Bailey Process Automation N.V., affiliates of ABB Asea Brown
Boveri (Holding) Ltd. and Yokokawa Electric Corporation, in each of its product
areas and with many companies within specific industries. As the technologies
utilized within the process measurement industry continue to develop, the
Company expects to face increasing competition in the future from emerging
competitors.
 
     Certain of the Company's current and potential competitors have
significantly greater financial, marketing, technical and other competitive
resources, as well as greater name recognition, than the Company. As a result,
the Company's competitors may be able to adapt more quickly to new or emerging
technologies and changes in customer requirements, and may be able to devote
greater resources to the promotion and sale of their products. There can be no
assurance that the Company will be able to compete successfully with existing or
new competitors. An increase in competition could result in price reductions and
loss of market share, which could have a material adverse effect on the
Company's business, financial condition or results of operations. See "Risk
Factors -- Intense Competition."
 
MANUFACTURING AND SUPPLIERS
 
     The Company manufactures its instruments on an as-needed basis to meet its
customers' specific delivery requirements. The Company currently contracts with
local subcontractors for the manufacture of certain major components
incorporated into its products. Final product assembly, inspection and testing
takes place at the Company's facilities. The Company believes that by
subcontracting certain assembly processes it can focus its efforts on adding
greater value to the design and development of process measurement instruments
for its customers. Although the Company has not experienced any significant
difficulty in its relationships with subcontractors, the Company's ability to
expand its capacity and rate of growth will depend on its ability to obtain
increased production from its existing subcontractors and to identify additional
qualified subcontractors.
 
     The Company believes that there is more than one source for the major
components of its products. If, however, the Company were to experience any
shortage in any of the major components of its products due to supply shortages
or other reasons, including reasons beyond its control, the Company's business,
financial condition and results of operations would be materially adversely
affected. See "Risk Factors -- Limited Sources of Supply."
 
RESEARCH AND DEVELOPMENT
 
     The Company maintains an active research and development program for the
introduction of new products and improvements to existing products. The Company
also seeks to develop new applications for its existing products and
technologies. During 1995, 1996 and 1997 and the three months ended April 4,
1998, research and development expenses were approximately $5.0 million, $5.6
million, $6.8 million and $2.2 million, respectively. As of April 4, 1998, the
Company had 106 full-time employees engaged in research and development.
 
     The Company is currently engaged in research and development programs
designed to enhance the measurement, analysis and control capabilities of its
products. Products and enhancements under development include: a subsea control
module, which is designed to assist oil companies in producing oil from the
ocean
 
                                       25
26
 
floor; the use of radar technologies as a cost-effective alternative to
ultrasonic technologies in level measurements of liquids and solids; an advanced
microprocessor-based RTU and windows interface; a scintillator for gamma level
applications requiring lower levels of radiation; and a point level radio
frequency ("RF") capacitance gauge to complement the Company's point level
product offering.
 
BACKLOG
 
     At March 29, 1997 and April 4, 1998, the Company's backlog of unfilled
orders was approximately $21.1 million and $32.5 million, respectively. The
Company includes in backlog only those orders for which it has received a
completed purchase order and for which delivery has been specified within 12
months. Such orders are generally subject to cancellation by the customer with
payment of a specified charge. Because of the possibility of customer changes in
delivery schedules, cancellation of orders and potential delays in product
shipments, the Company's backlog as of any particular date may not be
representative of actual sales for any succeeding period.
 
INTELLECTUAL PROPERTY
 
     The Company's success depends in part on the strength and protection of its
proprietary methodologies and designs and other proprietary intellectual rights.
The Company relies upon a combination of patent, trade secret, nondisclosure and
other contractual arrangements, and copyright and trademark laws, to protect its
proprietary rights. The Company seeks to limit access to and distribution of its
proprietary information. There can be no assurance that the steps taken by the
Company in this regard will be adequate to deter the misappropriation of its
proprietary information, that the Company will be able to detect unauthorized
use and take appropriate steps to enforce its intellectual property rights or
that competitors will not be able to develop similar technology independently.
See "Risk Factors --Uncertain Protection of Proprietary Rights."
 
EMPLOYEES
 
     As of April 4, 1998, the Company had a total of 832 full-time employees.
None of the Company's employees is represented by a labor union. The Company
believes that its employee relations are good.
 
PROPERTIES
 
     The Company operates its various businesses primarily from leased
facilities in the United States, Europe and the Middle East, including an
approximately 147,000 square foot facility in Kingwood, Texas pursuant to a
lease, on a month-to-month basis, with Thermo Instrument (see "Relationship with
Thermo Electron and Thermo Instrument -- Related Party Transactions") and an
approximately 100,000 square foot facility in Round Rock, Texas pursuant to a
lease that expires in 2005. The Company leases office space throughout the world
for its sales and service operations. The Company believes that these facilities
are adequate for its current requirements and that suitable additional space
will be available as needed in the future.
 
LEGAL PROCEEDINGS
 
     On December 11, 1996, five former employees of Thermo Instrument's Epsilon
subsidiary commenced an arbitration proceeding with the American Arbitration
Association naming as joint defendants Epsilon, Thermo Electron, Thermo
Instrument and certain affiliates of Thermo Instrument, including TN
Technologies, a wholly owned subsidiary of the Company. The arbitration
proceeding was conducted in Austin, Texas before an arbitration panel of three
individuals. The employees alleged that the joint defendants breached the terms
of certain agreements entered into with such employees at the time that a
predecessor of Epsilon acquired the assets and business of a company formerly
owned by such employees. The employees claimed actual damages of between $27
million and $46 million, punitive damages of twice the actual damages,
attorneys' fees and expenses, and pre-judgment and post-judgment interest,
resulting from the alleged failure of the joint defendants to, among other
things, use their best efforts to develop and promote certain products at the
time. The joint defendants, including the Company, contested this matter
vigorously. In June 1998, the arbitration panel rendered its decision, which
decision resulted in no liability for damages on the part of the Company.
 
     The Company is not currently a party to any litigation that it believes
could reasonably be expected to have a material adverse effect on the Company or
its business.
 
                                       26
27
 
                       RELATIONSHIP WITH THERMO ELECTRON
                             AND THERMO INSTRUMENT
 
     The Company was organized in August 1997 as a wholly owned subsidiary of
Thermo Instrument. At that time, Thermo Instrument contributed all of the assets
or stock of certain of its subsidiaries relating to the CAC, Flow Automation, TN
Technologies, Kay-Ray/Sensall, Houston Atlas, Westronics and VG Gas businesses
to the Company in exchange for 10,666,667 shares of Common Stock of the Company.
 
     Thermo Electron has adopted a strategy of selling a minority interest in
subsidiary companies to outside investors as an important tool in its future
development. As part of this strategy, Thermo Instrument created the Company as
a privately held subsidiary, and Thermo Instrument and Thermo Electron, and
certain of their subsidiaries, have created several other privately and publicly
held majority-owned subsidiaries. From time to time, Thermo Electron and its
subsidiaries will create other majority-owned subsidiaries as part of its
spin-out strategy. (The Company and the other Thermo Electron subsidiaries are
hereinafter referred to as the "Thermo Subsidiaries.")
 
     Thermo Instrument develops, manufactures and markets analytical instruments
used to detect and monitor air pollution, radioactivity, complex chemical
compounds and toxic metals and other elements in a broad range of liquids, gases
and solids. For its fiscal years ended December 28, 1996 and January 3, 1998,
and for the three months ended April 4, 1998, Thermo Instrument had consolidated
revenues of $1,209,362,000, $1,592,314,000 and $407,943,000, respectively, and
consolidated net income of $132,751,000, $147,258,000 and $37,855,000,
respectively.
 
     Thermo Electron and its subsidiaries develop, manufacture and market
environmental monitoring and analysis instruments and manufacture biomedical
products including heart-assist devices and mammography systems, papermaking and
recycling equipment, alternative-energy systems and other specialized products
and technologies. Thermo Electron and its subsidiaries also provide
environmental and metallurgical services and conduct advanced technology
research and development. For its fiscal years ended December 28, 1996 and
January 3, 1998, and for the three months ended April 4, 1998, Thermo Electron
had consolidated revenues of $2,932,558,000, $3,558,320,000 and $944,263,000,
respectively, and consolidated net income of $190,816,000, $239,328,000 and
$65,493,000, respectively.
 
     See "Risk Factors -- Potential Conflict of Interest."
 
THE THERMO ELECTRON CORPORATE CHARTER
 
     Thermo Electron and the Thermo Subsidiaries recognize that the benefits and
support they derive from their affiliation are essential elements of their
individual performance. Accordingly, Thermo Electron and each of the Thermo
Subsidiaries adopted the Thermo Electron Corporate Charter (the "Charter") to
define the relationships and delineate the nature of such cooperation among
themselves. The purpose of the Charter is to ensure that (i) all of the
companies and their stockholders are treated consistently and fairly, (ii) the
scope and nature of the cooperation among the companies, and each company's
responsibilities, are adequately defined, (iii) each company has access to the
combined resources and financial, managerial and technological strengths of the
others and (iv) Thermo Electron and the Thermo Subsidiaries, in the aggregate,
are able to obtain the most favorable terms from outside parties.
 
     To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")
to external financing sources, ensuring compliance with external financial
covenants and internal financial policies, assisting in the formulation of
long-range planning and providing other banking and credit services. Pursuant to
the Charter, Thermo Electron may also provide guarantees of debt obligations of
the Thermo Subsidiaries or may obtain external financing at the parent level for
the benefit of the Thermo Subsidiaries. In certain instances, the Thermo
Subsidiaries may provide credit support to, or on behalf of, the
 
                                       27
28
 
consolidated entity or may obtain financing directly from external financing
sources. Under the Charter, Thermo Electron is responsible for determining that
the Thermo Group remains in compliance with all covenants imposed by external
financing sources, including covenants related to borrowings of Thermo Electron
or other members of the Thermo Group, and for apportioning such constraints
within the Thermo Group. In addition, Thermo Electron is also responsible for
ensuring that members comply with internal policies and procedures. The cost of
the services provided by Thermo Electron to the Thermo Subsidiaries is covered
under existing corporate services agreements between Thermo Electron and each of
the Thermo Subsidiaries.
 
     The Charter presently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participates. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Company, can withdraw from participation in the Charter upon 30
days' prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement in effect between the
withdrawing company and Thermo Electron. The withdrawal from participation does
not terminate outstanding commitments to third parties made by the withdrawing
company, or by Thermo Electron or other members of the Thermo Group, prior to
the withdrawal. However, a withdrawing company is required to continue to comply
with all policies and procedures applicable to the Thermo Group and to provide
certain administrative functions mandated by Thermo Electron so long as the
withdrawing company is controlled by or affiliated with Thermo Electron.
 
CORPORATE SERVICES AGREEMENT
 
     As provided in the Charter, the Company and Thermo Electron have entered
into a Corporate Services Agreement (the "Services Agreement") under which
Thermo Electron's corporate staff provides certain administrative services,
including certain legal advice and services, risk management, certain employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and certain financial and other services to the Company. The
annual fee for these services was equal to 1% of the Company's revenues for
1997. Beginning in 1998, the fee was reduced to 0.8% of the Company's revenues.
The fee is reviewed annually and may be changed by mutual agreement of the
Company and Thermo Electron.
 
     Management believes that the service fees charged under the Services
Agreement are reasonable and that the terms of the Services Agreement are fair
to the Company. For items such as employee benefit plans, insurance coverage and
other identifiable costs, Thermo Electron charges the Company based on charges
directly attributable to the Company. The Services Agreement automatically
renews for successive one-year terms, unless canceled by the Company upon 30
days' prior written notice. In addition, the Services Agreement terminates
automatically in the event the Company ceases to be a member of the Thermo Group
or ceases to be a participant in the Charter. In the event of a termination of
the Services Agreement, the Company will be required to pay a termination fee
equal to the fee that was paid by the Company for services under the Services
Agreement for the nine-month period prior to termination. Following termination,
Thermo Electron may provide certain administrative services on an as-requested
basis by the Company or as required in order to meet the Company's obligations
under Thermo Electron's policies and procedures. Thermo Electron will charge the
Company a fee equal to the market rate for comparable services if such services
are provided following termination.
 
MASTER GUARANTEE REIMBURSEMENT AND LOAN AGREEMENTS
 
     The Company has entered into a Master Guarantee Reimbursement and Loan
Agreement with Thermo Electron which provides that the Company will reimburse
Thermo Electron for any costs it incurs in the event it is required to pay third
parties pursuant to any guarantees it issues on the Company's behalf. Thermo
Instrument has entered into a similar agreement with Thermo Electron with regard
to the Company's obligations which are guaranteed by Thermo Electron. The
Company has also entered into a Master Guarantee Reimbursement and Loan
Agreement with Thermo Instrument which provides that the Company will reimburse
Thermo Instrument for any costs it incurs in the event that Thermo Instrument is
required to pay Thermo Electron or any other party pursuant to any guarantees it
issues on the Company's behalf.
                                       28
29
 
RELATED PARTY TRANSACTIONS
 
     Commencing October 1997, the Company leases on a month-to-month basis
approximately 147,000 square feet of space from Thermo Instrument in Kingwood,
Texas. The Company pays Thermo Instrument an annual rent of approximately
$186,000 in the aggregate. In addition, the Company is responsible for its pro
rata share of certain occupancy costs including utilities and taxes.
 
     The Company acquired the Peek Measurement Business from Thermo Power for
approximately $19.1 million, effective November 1997. The purchase price
represents the sum of (i) the net tangible book value of the Peek Measurement
Business as of the date of the acquisition by Thermo Power, plus (ii) the total
goodwill associated with Thermo Power's acquisition of Peek plc equal to the
total fiscal 1997 revenue of the Peek Measurement Business relative to the total
revenues of Peek plc for such period, plus (iii) $1.0 million, which represents
an estimate of the amount of tax that will be incurred by Thermo Power as a
result of the transfer of the Peek Measurement Business to the Company. In
addition, the Company paid $256,000 in interest, representing interest on the
purchase price, from November 6, 1997 through January 29, 1998 at an interest
rate equal to the 90-day Commercial Paper Composite Rate plus 25 basis points,
set at the beginning of each quarter.
 
     In January 1998, the Company borrowed $12.0 million from Thermo Instrument
to partially fund the Company's acquisition of the Peek Measurement Business
from Thermo Power. This loan, which had an interest rate equal to the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter, was repaid in April 1998.
 
     Commencing January 1998, the Company leases approximately 24,000 square
feet of a 60,000 square foot facility in Winchester, England on a month-to-month
basis from Thermo Power. The Company pays Thermo Power rent in an amount that is
approximately equal to the pro rata share of Thermo Power's occupancy costs
including utilities and taxes, which payments in 1998 are estimated to be
approximately 139,000 British pounds sterling (approximately $229,000) in the
aggregate. For the three months ended April 4, 1998, the Company paid Thermo
Power $57,500 under this arrangement.
 
     Each of Thermo Instrument, Thermo Sentron Inc. ("Thermo Sentron"), an
indirect majority-owned subsidiary of Thermo Electron, and Thermo BioAnalysis
Corporation ("Thermo BioAnalysis"), Thermo Optek Corporation ("Thermo Optek")
and ThermoQuest Corporation ("ThermoQuest"), majority-owned subsidiaries of
Thermo Instrument, act as a distributor of certain of the Company's products in
countries where such entities maintain a sales force. In consideration of such
arrangements, the Company sells such products to such entities at discounted
rates negotiated by the parties. For the year ended January 3, 1998, the Company
sold $333,000, $583,000, $632,000, $776,000 and $184,000 of products to each of
Thermo Instrument, Thermo Sentron, Thermo BioAnalysis, Thermo Optek and
ThermoQuest, respectively. For the three months ended April 4, 1998, the Company
sold $218,000, $149,000 and $256,000 of products to each of Thermo Instrument,
Thermo Sentron and Thermo Optek, respectively.
 
     The Company, along with certain other Thermo Subsidiaries, participates in
a notional pool arrangement with ABN AMRO, which includes a $50 million credit
facility. Only European-based Thermo Subsidiaries participate in this
arrangement. Under this arrangement, the Bank notionally combines the positive
and negative cash balances held by the participants to calculate the net
interest yield/expense for the group. The benefit derived from this arrangement
is then allocated based on balances attributable to the respective participants.
Thermo Electron guarantees all of the obligations of each participant in this
arrangement. In addition, funds on deposit under this arrangement provide credit
support for overdraft obligations of other participants. As of April 4, 1998,
the Corporation had a positive cash balance of approximately $396,000, based on
an exchange rate of $0.4797/NLG 1.00 as of April 4, 1998. For 1997, the average
annual interest rate earned on NLG deposits by participants in this credit
arrangement was approximately 4.8% and the average annual interest rate paid on
NLG overdrafts was approximately 4.8%.
 
     The Company, along with certain other Thermo Subsidiaries, also
participates in a notional pool arrangement with Barclays Bank, which includes a
$150 million credit facility. Only European-based Thermo Subsidiaries
participate in this arrangement. Under this arrangement, the Bank notionally
combines the positive and negative cash balances held by the participants to
calculate the net interest yield/expense for the group. The benefit derived from
this arrangement is then allocated based on balances attributable to the
 
                                       29
30
 
respective participants. Thermo Electron guarantees all of the obligations of
each participant in this arrangement. In addition, funds on deposit under this
arrangement provide credit support for overdraft obligations of other
participants. As of April 4, 1998, the Company had a positive cash balance of
approximately $212,000, based on an exchange rate of $1.67/L1.00 as of April 4,
1998. For 1997, the average annual interest rate earned on deposits by
participants in this credit arrangement was approximately 6.5% and the average
annual interest rate paid on overdrafts was approximately 7.2%
 
     As of December 28, 1996, Thermo Electron and its other subsidiaries owed
the Company $342,000 for products, services and miscellaneous items, net of
amounts due to Thermo Electron and its other subsidiaries under the Services
Agreement and related administrative charges and for other products, services
and miscellaneous items. As of January 3, 1998 and April 4, 1998, the Company
owed Thermo Electron and its other subsidiaries $391,000 and $1,024,000,
respectively, for amounts due under the Services Agreement and related
administrative charges, and for other products, services and miscellaneous
items, net of amounts owed to the Company by Thermo Electron and its other
subsidiaries for products, services and miscellaneous items. The largest amount
of net indebtedness owed by Thermo Electron and its other subsidiaries to the
Company during fiscal 1997 was $2,082,000. These amounts do not bear interest
and were or are expected to be paid in the normal course of business.
 
     As of April 4, 1998, $57.0 million of the Company's cash equivalents were
invested in a repurchase agreement with Thermo Electron. Under this agreement,
the Company in effect lends excess cash to Thermo Electron that Thermo Electron
collateralizes with investments principally consisting of U.S. government-
agency securities, corporate notes, commercial paper, money market funds and
other marketable securities, in the amount of at least 103% of such obligation.
The Company's funds subject to the repurchase agreement will be readily
convertible into cash by the Company. The repurchase agreement earns a rate
based on the 90-day Commercial Paper Composite Rate plus 25 basis points, set at
the beginning of each quarter.
 
     From time to time, the Company may transact business in the ordinary course
with other companies in the Thermo Group. All such transactions are on terms
comparable to those the Company would receive from unaffiliated parties.
 
                                       30
31
 
                                   MANAGEMENT
 
     The Directors and executive officers of the Company are as follows:
NAME                       AGE                  POSITION
Earl R. Lewis................................   53  Chairman of the Board and Director
William J. Zolner............................   54  President, Chief Executive Officer and
                                                    Director
C.R. (Neil) Duarte...........................   54  Vice President
B.C. Holstead................................   62  Vice President
Mark Whitman.................................   43  Vice President
John N. Hatsopoulos..........................   62  Senior Vice President and Chief Financial
                                                      Officer
Paul F. Kelleher.............................   54  Chief Accounting Officer
David J. Beaubien............................   63  Director
Frank Jungers................................   71  Director
Arvin H. Smith...............................   68  Director
All of the Company's Directors are elected annually by the stockholders and
hold office until their respective successors are duly elected and qualified.
Executive officers are elected annually by the Board of Directors and serve at
its discretion.
 
     Earl R. Lewis has been Chairman of the Board and a Director of the Company
since its inception. Mr. Lewis has been a Director and Chief Executive Officer
of Thermo Optek since August 1995 and President of Thermo Optek from August 1995
to March 1997. Mr. Lewis served as President of Thermo Jarrell Ash through
January 1996, and for more than five years prior to that date. Mr. Lewis has
also been Chief Executive Officer and a Director of Thermo Instrument since
January 1998 and President since March 1997, was Chief Operating Officer from
January 1996 to January 1998, and was Executive Vice President from January 1996
to March 1997, Senior Vice President from January 1994 to January 1996 and Vice
President from March 1992 to January 1994. Mr. Lewis is also Director of Metrika
Systems Corporation, Thermo BioAnalysis, ThermoQuest, ThermoSpectra Corporation
and Thermo Vision Corporation and he is Chairman of the Board of Thermo
BioAnalysis, Thermo Optek, ThermoQuest, ThermoSpectra Corporation and Thermo
Vision Corporation.
 
     William J. Zolner, has been President, Chief Executive Officer and a
Director of the Company since its inception. From March 1995 to October 1997,
Dr. Zolner served as President of CAC, formerly known as Thermo Instrument
Controls, a wholly owned subsidiary of Thermo Instrument and a predecessor to
the business comprising the Company. From 1993 to 1995 Dr. Zolner worked for
Thermo Instrument analyzing acquisition opportunities and serving as a
technology assistant to Mr. Arvin H. Smith, then Chief Executive Officer of
Thermo Instrument. Dr. Zolner previously worked for Thermo Electron from 1971 to
1977 in the environmental instruments division. From 1978 to 1993, he held key
management positions with divisions of Bendix Corporation, Combustion
Engineering, JWP Inc., KEM Associates and Lear Seigler Measurement Controls. Dr.
Zolner has over 26 years of experience in the process control instrumentation
marketplace, where he has led organizations in engineering, marketing and sales
operations and as divisional president.
 
     C.R. (Neil) Duarte has served as Vice President of the Company since its
inception, as Vice President of CAC since 1995 and as President of Flow
Automation since 1992. Prior to that, Mr. Duarte served in a variety of general,
financial and engineering management positions with Input/Output, Hydril, Solar
Turbines, Creole Production and Shell.
 
     B.C. Holstead has served as Vice President of the Company since its
inception and has served as President of CAC since October 1997. Prior to
becoming President, Mr. Holstead served in various positions with CAC since
1991, including Manager, Western Hemisphere Sales and Manager, Automation
Systems. Mr. Holstead has over 35 years of experience in the automation and
electrical industry. In 1966, Mr. Holstead founded and served as Chief Executive
Officer of Control Systematologist, Inc.
 
     Mark Whitman has served as Vice President of the Company since its
inception, as President of Kay-Ray/Sensall since 1996 and as President of TN
Technologies since 1992. Prior to joining the Company, he held various positions
at Baker Hughes. He served as Vice President of Finance for Baker Hughes Process
Equipment from 1990 to 1992, Controller and Chief Financial Officer for Baker
Hughes Production Tools
 
                                       31
32
 
from 1988 to 1990, Controller and Chief Financial Officer for Texas Nuclear from
1981 to 1988 and Audit Senior for Baker International Inc. in 1981. He was an
Audit Senior with Ernst & Whinney from 1975 to 1981.
 
     John N. Hatsopoulos has served as Vice President and Chief Financial
Officer of the Company since its inception and as Senior Vice President since
January 1998. Mr. Hatsopoulos also served as a Director of the Company from its
inception to June 1998. Mr. Hatsopoulos has been a Vice President and Chief
Financial Officer of Thermo Instrument since 1988. Mr. Hatsopoulos has been
President of Thermo Electron since January 1997, Chief Financial Officer of
Thermo Electron since 1988 and was an Executive Vice President of Thermo
Electron from 1986 to January 1997. He is also a Director of LOIS/USA, Inc.,
Thermo Electron, Thermedics Inc., Thermedics Detection Inc., Thermo Ecotek
Corporation, Thermo Fibertek Inc., Thermo Instrument, Thermo Power, Thermo
TerraTech Inc. and Thermo Vision Corporation.
 
     Paul F. Kelleher has been the Chief Accounting Officer of the Company since
its inception. Mr. Kelleher has served as Senior Vice President, Finance and
Administration, of Thermo Electron since June 1997, as Vice President, Finance,
from 1987 to June 1997 and as its Controller from 1982 to January 1996. He is
also a Director of ThermoLase Corporation.
 
     David J. Beaubien has been a Director of the Company since June 1998. Mr.
Beaubien was employed by EG&G, Inc., a manufacturer of scientific instruments,
as Senior Vice President from 1967 until his retirement in 1991. Mr. Beaubien is
also a director of IEC Electronics, Inc., Belfort Instruments, Inc. and the
Paine Webber/Mitchell Hutchins PACE Funds, and he is the Chairman of the Board
of Yankee Environmental Systems, Inc.
 
     Frank Jungers has been a Director of the Company since June 1998. Mr.
Jungers has been a self-employed consultant on business and energy matters since
1977. Mr. Jungers was employed by the Arabian American Oil Company from 1974
through 1977 as Chairman and Chief Executive Officer. Mr. Jungers is also a
director of The AES Corporation, Donaldson, Lufkin & Jenrette Securities
Corporation, Georgia-Pacific Corporation, Thermo Electron, Thermo Ecotek
Corporation and ThermoQuest.
 
     Arvin H. Smith has been a Director of the Company since its inception. Mr.
Smith has been a Director of Thermo Instrument since 1986. He has also been
Chairman of the Board of Thermo Instrument since March 1997, was Chief Executive
Officer from 1986 to January 1998, was President from 1986 to March 1997 and has
been an Executive Vice President of Thermo Electron since 1991. Mr. Smith is
currently Chairman of the Board of Thermo Power, a position he has held since
December 1996. Mr. Smith is also a Director of Metrika Systems Corporation,
Thermo BioAnalysis, Thermo Optek, Thermo Power, ThermoQuest, ThermoSpectra
Corporation and Thermo Vision Corporation.
 
COMPENSATION OF DIRECTORS
 
     All Directors who are not employees of the Company, Thermo Instrument or
Thermo Electron receive an annual retainer of $2,000 and a fee of $1,000 per day
for attending meetings of the Board of Directors and $500 per day for
participating in meetings of the Board of Directors held by means of conference
telephone and for participating in certain meetings of committees of the Board
of Directors. Payment of Directors fees is made quarterly. Messrs. Zolner, Lewis
and Smith are all employees of Thermo Electron companies and do not receive any
cash compensation from the Company for their services as Directors. Directors
are also reimbursed for reasonable out-of-pocket expenses incurred in attending
such meetings.
 
     Directors Deferred Compensation Plan.  Under the Company's Deferred
Compensation Plan for Directors (the "Deferred Compensation Plan"), a Director
has the right to defer receipt of his fees until he ceases to serve as a
Director, dies or retires from his principal occupation. In the event of a
change in control or proposed change in control of the Company that is not
approved by the Board of Directors, deferred amounts become payable immediately.
Either of the following is deemed to be a change of control: (a) the occurrence,
without the prior approval of the Board of Directors, of the acquisition,
directly or indirectly, by any person of 50% or more of the outstanding Common
Stock or the outstanding common stock of Thermo Instrument or 25% or more of the
outstanding common stock of Thermo Electron; or (b) the failure of the
 
                                       32
33
 
persons serving on the Board of Directors immediately prior to any contested
election of directors or any exchange offer or tender offer for the Common Stock
or the common stock of Thermo Instrument or Thermo Electron to constitute a
majority of the Board of Directors at any time within two years following any
such event. Amounts deferred pursuant to the Deferred Compensation Plan are
valued at the end of each quarter as units of Common Stock. When payable,
amounts deferred may be disbursed solely in shares of Common Stock accumulated
under the Deferred Compensation Plan. As of March 3, 1998, the Company had
reserved 25,000 shares under this plan and no stock options had been granted
under this plan.
 
COMPENSATION OF EXECUTIVE OFFICERS
 
                           SUMMARY COMPENSATION TABLE
 
     The following table summarizes compensation for services to the Company in
all capacities awarded to, earned by or paid to the Company's chief executive
officer and three other executive officers for the fiscal year ended January 3,
1998. No other executive officer of the Company who held office at the end of
fiscal 1997 met the definition of "highly compensated" within the meaning of the
Securities and Exchange Commission's executive compensation disclosure rules for
this period. The Company is required to appoint certain executive officers and
full-time employees of Thermo Electron as executive officers of the Company, in
accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Company's affairs is
provided to the Company under the Services Agreement between the Company and
Thermo Electron. Accordingly, the compensation for these individuals is not
reported in the following table. See "Relationship with Thermo Electron and
Thermo Instrument."
 
                           SUMMARY COMPENSATION TABLE
LONG-TERM
                                                                  COMPENSATION
                                                               ------------------
                                                                   SECURITIES
                                        ANNUAL COMPENSATION    UNDERLYING OPTIONS
                                        -------------------    (NO. OF SHARES AND       ALL OTHER
 NAME AND PRINCIPAL POSITION     FY      SALARY      BONUS        COMPANY)(1)        COMPENSATION(2)
William J. Zolner.............  1997    $150,000    $95,000          50,000(ONX)         $7,200
  President and Chief                                                10,000(TMO)
  Executive Officer                                                  

Mark Whitman..................  1997    $141,600    $40,160          13,333(ONX)         $7,200
  Vice President

C.R. (Neil) Duarte............  1997    $112,791    $25,000          10,000(ONX)         $5,344
  Vice President

B.C. Holstead.................  1997    $ 97,213    $30,000          13,333(ONX)         $4,802
  Vice President
---------------
(1) All options to purchase shares of the Company's Common Stock shown in the
    table were granted after the end of fiscal 1997 but are included in the
    table for clarity of presentation. In addition to grants of options to
    purchase Common Stock of the Corporation (designated in the table as "ONX"),
    the named executive officers of the Company have been granted options to
    purchase common stock of Thermo Electron and certain of its other
    subsidiaries as part of Thermo Electron's stock option program. Options have
    been granted during the last fiscal year to the named executive officer in
    Thermo Electron (designated in the table as "TMO").
 
(2) Represents the amount of matching contributions made by the individual's
    employer on behalf of the named executive officer participating in the
    Thermo Electron 401(k) plan.

 
                                       33
34
 
     Stock Options Granted During Fiscal 1997
 
     The following table sets forth information concerning individual grants of
stock options made during fiscal 1997 to the Company's chief executive officer
and the other named executive officers. It has not been the Company's policy in
the past to grant stock appreciation rights, and no rights were granted during
fiscal 1997.
 
                          OPTION GRANTS IN FISCAL 1997
POTENTIAL REALIZABLE
                                                                                                     VALUE AT ASSUMED
                                                                                                     ANNUAL RATES OF
                       NUMBER OF SHARES      % OF TOTAL                                          STOCK PRICE APPRECIATION
                          UNDERLYING       OPTIONS GRANTED                                          FOR OPTION TERM(2)
                           OPTIONS         TO EMPLOYEES IN    EXERCISE PRICE                     ------------------------
        NAME              GRANTED(1)         FISCAL YEAR        PER SHARE      EXPIRATION DATE      5%            10%
William J. Zolner....      50,000(ONX)           11.3%            $14.25          01/21/10       $567,150     $1,523,500
                           10,000(TMO)            0.7%(3)          39.39          09/24/09       $313,500     $  842,300
Mark Whitman.........      13,333(ONX)            3.0%             14.25          01/21/10       $151,196     $  406,257
C.R. (Neil) Duarte...      10,000(ONX)            2.3%             14.25          01/21/10       $113,400     $  304,700
B.C. Holstead........      13,333(ONX)            3.0%             14.25          01/21/05       $ 77,331     $  180,262
---------------
(1) All options to purchase shares of the Common Stock of the Company
    (designated in the table as "ONX") were granted after the end of fiscal 1997
    but are included in the table for clarity of presentation. As part of Thermo
    Electron's stock option program, options have been granted during fiscal
    1997 to the named executive officer to purchase the common stock of Thermo
    Electron (designated in the table as "TMO"). All of the options granted
    during the fiscal year are currently immediately exercisable. The shares
    acquired upon exercise are subject to repurchase by the granting corporation
    at the exercise price if the optionee ceases to be employed by such
    corporation or another Thermo Electron company. The granting corporation may
    exercise its repurchase rights within six months after the termination of
    the optionee's employment. For publicly traded companies, the repurchase
    rights generally lapse ratably over a five- to ten-year period, depending on
    the option term which may vary from seven to twelve years, provided that the
    optionee continues to be employed by the granting corporation or another
    Thermo Electron company. The granting corporation may permit the holders of
    all such options to exercise options and satisfy tax withholding obligations
    by surrendering shares equal in fair market value to the exercise price or
    withholding obligation.
 
(2) The amounts shown in this table represent hypothetical gains that could be
    achieved for the respective options if exercised at the end of the option
    term. These gains are based on assumed rates of stock appreciation of 5% and
    10%, compounded annually from the date the respective options were granted
    to their expiration date. The gains shown are net of the option exercise
    price, but do not include deductions for taxes or other expenses associated
    with the exercise. Actual gains, if any, on stock option exercises will
    depend on the future performance of the Common Stock, the option holders'
    continued employment through the option period and the date on which the
    options are exercised.
 
(3) These options were granted under stock option plans maintained by Thermo
    Electron and, accordingly, are reported as a percentage of total options
    granted to employees of Thermo Electron and its subsidiaries.
 
                                       34
35
 
     Stock Options Exercised During Fiscal 1997 and Fiscal Year-End Option
Values
 
     The following table reports certain information regarding stock option
exercises during fiscal 1997 and outstanding stock options to purchase shares of
Thermo Electron, the Company and other Thermo Subsidiaries held at the end of
fiscal 1997 by the Company's chief executive and the other named executive
officers. No stock appreciation rights were exercised or were outstanding during
fiscal 1997.
 
              AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                         FISCAL YEAR-END OPTION VALUES
NUMBER OF                VALUE OF
                                                                         SECURITIES UNDERLYING        UNEXERCISED
                                                    SHARES                UNEXERCISED OPTIONS     IN-THE-MONEY OPTIONS
                                                   ACQUIRED                AT FISCAL YEAR-END      AT FISCAL YEAR-END
                                                      ON       VALUE         (EXERCISABLE/           (EXERCISABLE/
            NAME                    COMPANY        EXERCISE   REALIZED     UNEXERCISABLE)(1)         UNEXERCISABLE)
William J. Zolner............  ONIX                   --         --             50,000/0                     --/0(2)
                               Thermo Electron        --         --             28,375/0               $280,494/0
                               Thermo BioAnalysis     --         --              2,000/0                $19,000/0
                               Thermo Instrument      --         --             61,718/0               $563,094/0
                               Thermo Optek           --         --             15,000/0                $71,700/0
                               ThermoQuest            --         --             10,000/0                $50,000/0
                               ThermoSpectra          --         --              2,500/0                   $158/0
 
Mark Whitman.................  ONIX                   --         --             13,333/0                     --/0(2)
                               Thermo Instrument      --         --             28,750/0               $468,825/0
                               Thermo Optek           --         --              7,500/0                $35,850/0
                               ThermoQuest            --         --              5,000/0                $25,000/0
                               ThermoSpectra          --         --                800/0                    $50/0
 
C.R. (Neil) Duarte...........  ONIX                   --         --             10,000/0                     --/0(2)
                               Thermo Instrument      --         --             10,000/0                $64,200/0
                               Thermo Optek           --         --              6,000/0                $28,680/0
                               ThermoQuest            --         --              4,000/0                $20,000/0
 
B.C. Holstead................  ONIX                   --         --             13,333/0                     --/0(2)
                               Thermo Instrument      --         --              7,265/0                $99,929/0
---------------
(1) All options to purchase shares of the Common Stock of the Company were
    granted after the end of fiscal 1997 but are included in the table for
    clarity of presentation. All of the options reported outstanding at the end
    of the fiscal year are currently immediately exercisable. The shares
    acquired upon exercise of the options reported in the table are subject to
    repurchase by the granting corporation at the exercise price if the optionee
    ceases to be employed by such corporation or another Thermo Electron
    company. The granting corporation may exercise its repurchase rights within
    six months after the termination of the optionee's employment. For publicly
    traded companies, the repurchase rights generally lapse ratably over a five-
    to ten-year period, depending on the option term, which may vary from seven
    to twelve years, provided that the optionee continues to be employed by the
    granting corporation or another Thermo Electron company. For companies whose
    shares are not publicly traded, the repurchase rights lapse in their
    entirety on the ninth anniversary of the grant date.
 
(2) Reflects option value at June 30, 1998.
 
                                       35
36
 
         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
PRINCIPAL STOCKHOLDER
 
     The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of April 4, 1998 with respect to each person who
was known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock.
NAME AND ADDRESS                        NUMBER OF SHARES     PERCENTAGE OF OUTSTANDING
OF BENEFICIAL OWNER                    BENEFICIALLY OWNED    SHARES BENEFICIALLY OWNED
Thermo Electron Corporation(1)........    10,666,667                  68.3%
  81 Wyman Street
  Waltham, MA 02454-9046
---------------
 
(1) Thermo Electron beneficially owned 68.3% of the Common Stock outstanding as
    of April 4, 1998 through its ownership of Thermo Instrument. Thermo
    Electron, through Thermo Instrument, has the power to elect all of the
    members of the Company's Board of Directors.
 
MANAGEMENT
 
     The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of June 30, 1998 as well as information
regarding the beneficial ownership of the common stock of Thermo Instrument and
Thermo Electron, as of June 30, 1998, with respect to (i) each Director, (ii)
each executive officer named in the summary compensation table above and (iii)
all Directors and current executive officers as a group.
 
     While certain Directors or executive officers of the Company are also
directors and executive officers of Thermo Instrument or its subsidiaries other
than the Company, all such persons disclaim beneficial ownership of the
10,666,667 shares of Common Stock owned by Thermo Instrument.
ONIX SYSTEMS        THERMO INSTRUMENT    THERMO ELECTRON
                 NAME(1)                  INC.(2)            SYSTEMS INC.(3)     CORPORATION(4)
David J. Beaubien....................      30,000                    600                   --
C.R. (Neil) Duarte...................      10,000                 10,328                  584
B.C. Holstead........................      13,333                  7,356                   92
Frank Jungers........................      30,000                 15,695              246,380
Earl R. Lewis........................      35,666                179,250               83,678
Arvin H. Smith.......................      24,000                539,583              515,578
Mark Whitman.........................      13,333                 29,582                  719
William J. Zolner....................      50,000                 62,114               28,639
All Directors and executive          
  officers as a group (10 persons)...     229,665                952,099            1,777,275
---------------
 
(1) Except as reflected in the footnotes to this table, shares of Common Stock
    and common stock of Thermo Instrument and Thermo Electron beneficially owned
    include shares owned by the indicated person and by that person for the
    benefit of minor children, and all share ownership involves sole voting and
    investment power.
 
(2) Shares of Common Stock beneficially owned by Mr. Beaubien, Mr. Duarte, Mr.
    Holstead, Mr. Jungers, Mr. Lewis, Mr. Smith, Mr. Whitman, Dr. Zolner and all
    Directors and executive officers as a group include 30,000; 10,000; 13,333;
    30,000; 33,333; 20,000; 13,333; 50,000 and 223,332 shares, respectively,
    that such person or group has the right to acquire within 60 days after June
    30, 1998, through the exercise of stock options. Shares beneficially owned
    by Mr. Lewis include 333 shares held by his son. Shares beneficially owned
    by Mr. Smith include 4,000 shares held by his spouse. As of June 30, 1998,
    no
 

                                       36
37
 
    Director or executive officer beneficially owned more than 1% of the Common
    Stock outstanding as of such date; all Directors and executive officers as a
    group beneficially owned 1.47% of the Common Stock outstanding as of such
    date.
 
(3) Shares of the common stock of Thermo Instrument beneficially owned by Mr.
    Duarte, Mr. Holstead, Mr. Jungers, Mr. Lewis, Mr. Smith, Mr. Whitman, Dr.
    Zolner and all Directors and executive officers as a group include 10,000;
    7,265; 15,695; 172,085; 292,968; 28,750; 61,718; and 677,543 shares,
    respectively that such person or group has the right to acquire within 60
    days after June 30, 1998, through the exercise of stock options. Shares of
    the common stock of Thermo Instrument beneficially owned by Mr. Smith and
    all Directors and executive officers as a group include 663 and 1,819 full
    shares, respectively, allocated through June 30, 1998, to their respective
    accounts maintained pursuant to Thermo Electron's employee stock ownership
    plan (the "ESOP"), of which the trustees, who have investment power over its
    assets are executive officers of Thermo Electron. Shares beneficially owned
    by Mr. Lewis include 2,987 shares held by Mr. Lewis' spouse. No Director or
    executive officer beneficially owned more than 1% of the common stock of
    Thermo Instrument outstanding as of June 30, 1998; all Directors and
    executive officers as a group beneficially owned less than 1% of such common
    stock outstanding as of such date.
 
(4) Shares of the common stock of Thermo Electron beneficially owned by Mr.
    Jungers, Mr. Lewis, Mr. Smith, Dr. Zolner and all Directors and executive
    officers as a group include 9,125; 82,350; 212,249; 28,375; and 1,137,771
    shares that such person or group has the right to acquire within 60 days
    after June 30, 1998, through the exercise of stock options. Shares of the
    common stock of Thermo Electron beneficially owned by Mr. Smith and all
    Directors and executive officers as a group include 1,717 and 5,179 full
    shares, respectively, allocated to accounts maintained pursuant to the ESOP.
    Shares of the common stock of Thermo Electron beneficially owned by Mr.
    Jungers and all Directors and executive officers as a group include 80,427
    full shares allocated through June 30, 1998, to Mr. Jungers account
    maintained pursuant to Thermo Electron's deferred compensation plan for
    Directors. Shares beneficially owned by Mr. Jungers include 4,500 shares
    held by Mr. Jungers' spouse. No Director or executive officer beneficially
    owned more than 1% of the common stock of Thermo Electron outstanding as of
    June 30, 1998; all Directors and executive officers as a group beneficially
    owned 1.06% of such common stock outstanding as of such date.

 
                                       37
38
 
                                SELLING SHAREHOLDERS
 
     The following table sets forth the names of the Selling Shareholders, the
number of shares of Common Stock owned by each Selling Shareholder, the number
of Shares that may be offered by each Selling Shareholder pursuant to this
Prospectus and the number of Shares each Selling Shareholder will own after
completion of the offering, assuming all of the Shares being offered hereby are
sold.
SHARES OF
                                                              COMMON                        SHARES
                                                               STOCK                      OWNED AFTER
                                                            OWNED PRIOR                   COMPLETION
                                                              TO THE       SHARES BEING     OF THE
                   SELLING SHAREHOLDER                      OFFERING(1)      OFFERED       OFFERING
                   -------------------                      -----------    ------------   -----------
W. Paul Ruben.............................................      3,508          3,508              0
Gregory D. Lewis (2)......................................        333            333              0
Earl R. Lewis IV (2)......................................        333            333              0
The Lincoln Fund Tax Advantage L.P........................     12,280         12,280              0
The Gordon Fund, L.P......................................     12,280         12,280              0
Steven Braverman Trust....................................      7,018          7,018              0
Nutraco Nominees Limited..................................     70,333         70,333              0
Advance Capital Offshore Partners, L.P....................     80,553         26,836         53,717
Catherine S. Dawson.......................................      3,508          3,508              0
Richard J. Naegele........................................      7,018          7,018              0
Lucky Star Shipping S.A...................................     40,350         40,350              0
Pictet & Cie..............................................     17,544         17,544              0
Nancy S. DeMoss...........................................      3,508          3,508              0
Roger T. Servison.........................................      7,017          7,017              0
Joseph C. Sindelar Trust..................................      8,140          8,140              0
Stephenson Ventures.......................................      8,772          8,772              0
H. Virgil Sherrill........................................      8,772          8,772              0
Arthur S. DeMoss Foundation...............................      8,771          8,771              0
Edward Darman Co..........................................     10,526         10,526              0
Wynona L. Smith (3).......................................      4,000          4,000              0
Roy F. Weston.............................................      3,508          3,508              0
Lazard Freres & Co. LLC...................................     20,000         20,000              0
Coutts (Jersey) Limited a/c AIM Values....................     15,333         15,333              0
Coutts (Jersey) Limited a/c Client........................     18,000         18,000              0
The Royal Bank of Scotland International..................     32,666         32,666              0
Coutts (Jersey) Limited a/c AIM Americas..................        666            666              0
Nutraco Nominees Limited..................................     43,000         43,000              0
Homeowners Friendly Society Ltd. A/C GCF..................     16,666         16,666              0
Egger and Co..............................................     20,000         20,000              0
MSS Nominees Ltd..........................................      6,666          6,666              0
MGQ Nominees Limited a/c GGIGT............................     16,666         16,666              0
C.O. Nominees.............................................     23,333         23,333              0
Gerlach & Co..............................................     33,333         33,333              0
MSS Nominees Limited A/C 810015...........................     33,333         33,333              0
Wifleur Inc...............................................      3,508          3,508              0
Triangle Bridge Group, L.P................................      3,508          3,508              0
Scot Holdings, Inc........................................      3,508          3,508              0
Marc H. Morgenstern.......................................      3,508          3,508              0
Bennett Yanowitz..........................................      5,508          3,508          2,000
Barbara Gisel.............................................      3,508          3,508              0
William C. Parrish........................................      3,508          3,508              0
Vassilios and Lynne Sirpolaiois...........................      3,508          3,508              0
Robert E. Yancey, Jr......................................      3,508          3,508              0
Joseph E. Valenti Jr. Trust dated December 21, 1993.......      3,508          3,508              0
Jose Spiwak/ ttee and Sara Spiwak/ttee....................      3,508          3,508              0
John Stafford.............................................      3,508          3,508              0
38
39
SHARES OF
                                                              COMMON                        SHARES
                                                               STOCK                      OWNED AFTER
                                                            OWNED PRIOR                   COMPLETION
                                                              TO THE       SHARES BEING     OF THE
                   SELLING SHAREHOLDER                      OFFERING(1)      OFFERED       OFFERING
                   -------------------                      -----------    ------------   -----------
John A. Miller............................................      3,508          3,508              0
Gordon A. Hughes and Elizabeth Hughes TEN ENT.............      8,508          3,508          5,000
Edwin R. Bindseil.........................................      3,508          3,508              0
Edward W. Rabin...........................................      3,508          3,508              0
Fay E. Schefer............................................      3,508          3,508              0
Francis Cook..............................................      3,508          3,508              0
Douglas A. Pertz..........................................      3,508          3,508              0
Richard Bertero...........................................      3,508          3,508              0
Mary A. Froelich..........................................      3,508          3,508              0
Bruce D. Cowen............................................      3,508          3,508              0
Talisman Capital Ltd......................................     13,333         13,333              0
Robert E. Kilkenny........................................     13,333         13,333              0
The McCloskey Trust.......................................     14,035         14,035              0
Charles A. Smithgall, Jr..................................     21,535         14,035          7,500
Jacobs Family Co. LLC.....................................     14,035         14,035              0
David Braverman Trust.....................................      7,017          7,017              0
Venture Capital Holdings, L.P.............................     17,544         17,544              0
Charles K. Stewart........................................     17,543         17,543              0
James L. Brooks, Trustee, Brooks Family Trust.............     17,543         17,543              0
William Broder, Trustee, James L. Brooks Retained Income
  Trust...................................................      3,508          3,508              0
W.H. Kilkenny Co..........................................     29,824         29,824              0
Link & Co.................................................     33,333         33,333              0
Paul A. Sakmar Trust, Paul A. Sakmar Trustee..............     28,421         28,421              0
Employee's Profit Sharing Plan and Trust of Steel
  Industries, Inc.........................................     11,166          6,666          4,500
Akkad & Co................................................     49,122         49,122              0
ASTO OS, L.L.C............................................    159,336         94,736         64,600
Advance Capital Partners, L.P.............................    256,727         85,444        171,283
Jackson National Life Insurance Company...................    157,894        157,894              0
Nap & Co..................................................    140,350        140,350              0
Northman & Co.............................................     42,104         42,104              0
Fuelship & Co.............................................     28,070         28,070              0
Martin E. Messinger.......................................     24,561         24,561              0
LaSalle National Bank as Custodian for W.H.I. Growth Fund,
  L.P.....................................................     70,000         70,000              0
Irving B. Harris Revocable Trust dtd 7/31/87..............     18,500         18,500              0
William W. Harris Trust...................................      6,666          6,666              0
Roxanne H. Frank Trust....................................     13,333         13,333              0
Harris Foundation.........................................     10,000         10,000              0
Irving Harris Foundation A................................      4,000          4,000              0
Irving Harris Foundation B................................      3,333          3,333              0
Jerome Kahn, Jr. Revocable Trust..........................      2,000          2,000              0
David Rosenbaum & Margot Kahn JTWROS......................        333            333              0
James J. Pelts............................................      2,000          2,000              0
Fred Holubow..............................................      2,333          2,333              0
Michael S. Resnick........................................        500            500              0
Peter E. Martin & Nancy K. Martin JTWROS..................        666            666              0
Alae, LP..................................................      8,333          8,333              0
Crescent International Holdings Limited (4)...............     16,666         16,666              0
Pilot Trading Trust (5)...................................      7,333          7,333              0
39
40
 
---------------
 
(1) Except as otherwise reflected in the footnotes to this table, all share
    ownership includes Shares owned by the Selling Shareholders and shares that
    the Selling Shareholders have the right to acquire within 60 days of April
    4, 1998, through the exercise of stock options.
 
(2) Gregory D. Lewis and Earl R. Lewis IV are sons of Earl R. Lewis, a Director
    of the Company and Thermo Instrument. See "Management" and "Security
    Ownership of Certain Beneficial Owners and Management."
 
(3) Wynona L. Smith is the spouse of Arvin H. Smith, a Director of the Company
    and Thermo Instrument. See "Management" and "Security Ownership of Certain
    Beneficial Owners and Management."
 
(4) Crescent International Holdings Limited, a member of the Olayan Group, is
    indirectly controlled by Suliman S. Olayan, the father of Hutham S. Olayan,
    a Director of Thermo Electron.
 
(5) Pilot Trading Trust is controlled by Robert A. McCabe, a Director of Thermo
    Electron, and members of his family.
 
     The Shares are being registered to permit public secondary trading of the
Shares from time to time by the Selling Shareholders. All of the Shares being
offered by the Selling Shareholders were sold by the Company in private
placement transactions pursuant to Stock Purchase Agreements with the Company
dated September 24, 1997 and October 22, 1997 (the "Purchase Agreements") for
cash.
 
     In the Purchase Agreements, the Company agreed, among other things, to bear
all expenses (other than underwriting discounts, selling commissions, and fees
and expenses of counsel and other advisors to the Selling Shareholders) in
connection with the registration and sale of the Shares being offered by the
Selling Shareholders. See "Sale of Shares." The Company intends to prepare and
file such amendments and supplements to the Registration Statement of which this
Prospectus forms a part as may be necessary to keep the Registration Statement
effective until all the Shares registered thereunder have been sold pursuant
thereto or until, by reason of Rule 144(k) of the Commission under the
Securities Act or any other rule of similar effect, the Shares are no longer
required to be registered for the sale thereof by the Selling Shareholders.
 
                                 SALE OF SHARES
 
     The Company will not receive any of the proceeds from this offering. The
Shares offered hereby may be sold from time to time by or for the account of any
of the Selling Shareholders or by their pledgees, donees, distributees or
transferees or other successors in interest to the Selling Shareholders. The
Shares may be sold hereunder directly to purchasers by the Selling Shareholders
in negotiated transactions; by or through brokers or dealers in ordinary
brokerage transactions or transactions in which the broker solicits purchases;
block trades in which the broker or dealer will attempt to sell Shares as agent
but may position and resell a portion of the block as principal; transactions in
which a broker or dealer purchases as principal for resale for its own account;
or through underwriters or agents. The Shares may be sold at a fixed offering
price, which may be changed, at the prevailing market price at the time of sale,
at prices related to such prevailing market price or at negotiated prices. Any
brokers, dealers, underwriters or agents may arrange for others to participate
in any such transaction and may receive compensation in the form of discounts,
commissions or concessions from the Selling Shareholders and/or the purchasers
of the Shares. Each Selling Shareholder will be responsible for payment of any
and all commissions to brokers.
 
     The aggregate proceeds to any Selling Shareholder from the sale of the
Shares offered hereby will be the purchase price of such Shares less any
broker's commission.
 
     In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
 
     Any Selling Shareholder and or any broker-dealer, agent or underwriter who
acts in connection with the sale of Shares hereunder may be deemed to be an
"underwriter" as that term is defined in the Securities Act, and any commissions
received by them and profit on any resale of the Shares as principal might be
deemed to be underwriting discounts and commissions under the Securities Act.
The Company has agreed to indemnify the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act as underwriters or
otherwise.
 
                                       40
41
 
                          DESCRIPTION OF CAPITAL STOCK
 
     As of April 4, 1998, the Company had 50,000,000 shares of Common Stock
authorized for issuance, of which 15,606,307 were issued and outstanding. Each
share of Common Stock is entitled to pro rata participation in distributions
upon liquidation and to one vote on all matters submitted to a vote of
stockholders. Dividends may be paid to the holders of Common Stock when and if
declared by the Board of Directors out of funds legally available therefor.
Holders of Common Stock have no preemptive or similar rights. The outstanding
shares of Common Stock are, and the shares offered hereby when issued will be,
legally issued, fully paid and nonassessable.
 
     The shares of Common Stock have noncumulative voting rights, which means
that the holders of more than 50% of the shares voting can elect all the
Directors if they so choose, and in such event, the holders of the remaining
shares cannot elect any Directors. Thermo Instrument (and Thermo Electron
through its majority ownership of Thermo Instrument) intends to continue to own
at least a majority of the outstanding Common Stock, and will have the power to
elect all of the members of the Company's Board of Directors.
 
     The Company's Certificate of Incorporation contains certain provisions
permitted under the General Corporation Law of Delaware relating to the
liability of Directors. The provisions eliminate a Director's liability for
monetary damages for a breach of fiduciary duty, except in certain circumstances
involving wrongful acts or omissions that involve intentional misconduct or a
knowing violation of law. The Company's Certificate of Incorporation also
contains provisions to indemnify the Directors and officers of the Company to
the fullest extent permitted by the General Corporation Law of Delaware. The
Company believes that these provisions will assist the Company in attracting and
retaining qualified individuals to serve as Directors and officers.
 
     The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     There are currently 15,606,307 shares of Common Stock of the Company
outstanding, of which 4,939,640 shares are freely tradable without restriction
or further registration under the Securities Act, except that any shares
purchased by affiliates of the Company, as that term is defined in Rule 144
under the Securities Act, may generally only be resold in compliance with
applicable provisions of Rule 144.
 
     Of such 15,606,307 outstanding shares, 10,666,667 are owned by Thermo
Instrument. In connection with the Company's initial public offering, which was
completed March 30, 1998, the Company, Thermo Instrument and Thermo Electron
have agreed not to, without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation, offer, sell, grant any option to purchase or
otherwise dispose of any shares of the Common Stock prior to September 20, 1998,
other than (i) the issuance of options and sales of shares of Common Stock
pursuant to existing stock-based compensation plans and (ii) shares of Common
Stock issuable upon the conversion of securities outstanding as of March 24,
1998. Upon expiration of this lock-up agreement, Thermo Instrument may sell its
shares of Common Stock in an offering registered under the Securities Act or
pursuant to an exemption from such registration. So long as Thermo Instrument is
able to elect a majority of the Board of Directors it will be able to cause the
Company at any time to register under the Securities Act all or a portion of the
Common Stock owned by Thermo Instrument or its affiliates, in which case it
would be able to sell such shares without restriction upon effectiveness of the
registration statement. In general, under Rule 144 as currently in effect, a
person (or persons whose shares are aggregated) who has beneficially owned
restricted shares for at least one year is entitled to sell, within any
three-month period, a number of such shares that does not exceed the greater of
(i) 1% of the then outstanding shares of Common Stock or (ii) the average weekly
trading volume in the Common Stock during the four calendar weeks preceding the
date of the notice filed pursuant to Rule 144. Sales under Rule 144 are also
subject to certain manner of sale restrictions and notice requirements and to
the availability of current public information about the Company. In addition, a
person who is deemed an "affiliate" of the Company must comply with Rule 144 in
any sale of shares of Common Stock not covered by a registration statement
(except, in the case of registered shares acquired by the affiliate on the open
market, for the holding period requirement). A person
 
                                       41
42
 
(or person whose shares are aggregated) who is not deemed an "affiliate" of the
Company and who has beneficially owned restricted shares for at least two years
is entitled to sell such shares under Rule 144(k) without regard to the volume,
notice and other limitations of Rule 144. In meeting the one and two year
holding periods described above, a holder of restricted shares can include the
holding periods of a prior owner who was not an affiliate.
 
     The Company has reserved 1,091,667 shares for grants under its existing
stock-based compensation plans. As of April 4, 1998, the Company had options
outstanding to purchase up to 581,895 shares of Common Stock to its employees
and Directors at an exercise price of $14.25 per share. All of such options are
currently exercisable, subject to repurchase at the exercise price if the
optionee ceases to be employed by the Company. This repurchase right lapses
ratably (on an annual basis) over a five- to ten-year period depending upon the
term of the option. The Company intends to file registration statements under
the Securities Act to register all shares of Common Stock issuable under such
plans. Shares covered by these registration statements will be eligible for sale
in the public market after the effective date of such registration statements.
 
                                 LEGAL OPINIONS
 
     The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Seth H. Hoogasian, Esq., General Counsel of
Thermo Electron, Thermo Instrument and the Company. Mr. Hoogasian owns or has
the right to acquire 3,333 shares of Common Stock of the Company, 20,986 shares
of common stock of Thermo Instrument and 103,028 shares of common stock of
Thermo Electron.
 
                                    EXPERTS
 
     The financial statements of the Company included in this Prospectus and the
financial statement schedule included in the Registration Statement of which
this Prospectus forms a part have been audited by Arthur Andersen LLP,
independent public accountants, to the extent and for the periods as indicated
in their reports with respect thereto, and are included herein in reliance upon
the authority of said firm as experts in giving said reports.
 
                             ADDITIONAL INFORMATION
 
     The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; and at the Commission's regional offices
at 7 World Trade Center, New York, New York 10048 and at 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material can be obtained by mail
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, DC 20549, at prescribed rates. The Commission also maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission,
including the Company. The address of such Web site is http://www.sec.gov. The
Common Stock is listed on the AMEX, and such material that relates to the
Company may also be inspected at the offices of the AMEX, 86 Trinity Place, New
York, New York 10006.
 
     The Company has filed with the Commission a registration statement on Form
S-1 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act, with respect to the securities offered
hereby, and of which this Prospectus constitutes a part. This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information, reference is made to the
Registration Statement.
 
                                       42
43
 
                               ONIX SYSTEMS INC.
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
                                                              ----
Report of Independent Public Accountants....................  F-2
Consolidated Statement of Income for the years ended
  December 30, 1995, December 28, 1996 and January 3, 1998
  and the three months ended March 29, 1997 and April 4,
  1998......................................................  F-3
Consolidated Balance Sheet as of December 28, 1996, January
  3, 1998 and April 4, 1998.................................  F-4
Consolidated Statement of Cash Flows for the years ended
  December 30, 1995, December 28, 1996 and January 3, 1998
  and the three months ended March 29, 1997 and April 4,
  1998......................................................  F-5
Consolidated Statement of Shareholders' Investment for the
  years ended December 30, 1995, December 28, 1996 and
  January 3, 1998 and the three months ended April 4,
  1998......................................................  F-6
Notes to Consolidated Financial Statements..................  F-7
F-1
44
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To the Shareholders and Board of Directors of ONIX Systems Inc.:
 
     We have audited the accompanying consolidated balance sheet of ONIX Systems
Inc. (a Delaware corporation and 87%-owned subsidiary of Thermo Instrument
Systems Inc.) and subsidiaries as of December 28, 1996 and January 3, 1998, and
the related consolidated statements of income, cash flows and shareholders'
investment for each of the three years in the period ended January 3, 1998.
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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated 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 ONIX Systems
Inc. and subsidiaries as of December 28, 1996 and January 3, 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended January 3, 1998, in conformity with generally accepted
accounting principles.
 
                                            ARTHUR ANDERSEN LLP
 
Boston, Massachusetts
January 28, 1998 (except with respect to
certain matters discussed in Notes 5 and 10,
as to which the date is July 7, 1998)
 
                                       F-2
45
 
                               ONIX SYSTEMS INC.
 
                        CONSOLIDATED STATEMENT OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
                                                                            ---------------------
                                                                            MARCH 29,    APRIL 4,
                                           1995       1996        1997        1997         1998
                                          -------    -------    --------    ---------    --------
                                                                                 (UNAUDITED)
Revenues (Notes 6 and 8)................  $72,105    $95,316    $121,525     $26,429     $37,144
                                          -------    -------    --------     -------     -------
Costs and Operating Expenses:
     Cost of revenues...................   43,636     59,715      72,006      16,003      21,624
     Selling, general and administrative
       expenses (Note 6)................   17,310     21,935      28,201       6,292       9,633
     Research and development
       expenses.........................    5,042      5,568       6,830       1,449       2,177
                                          -------    -------    --------     -------     -------
                                           65,988     87,218     107,037      23,744      33,434
                                          -------    -------    --------     -------     -------
Operating Income........................    6,117      8,098      14,488       2,685       3,710
Interest Income.........................       --         --         344          --         259
Interest Expense........................       --         --        (113)         --        (261)
                                          -------    -------    --------     -------     -------
Income Before Provision for Income
  Taxes.................................    6,117      8,098      14,719       2,685       3,708
Provision for Income Taxes (Note 4).....    2,490      3,240       5,920       1,079       1,491
                                          -------    -------    --------     -------     -------
Net Income..............................  $ 3,627    $ 4,858    $  8,799     $ 1,606     $ 2,217
                                          =======    =======    ========     =======     =======
Basic and Diluted Earnings per Share
  (Note 9)..............................  $   .34    $   .46    $    .79     $   .15     $   .18
                                          =======    =======    ========     =======     =======
Weighted Average Shares (Note 9):
     Basic..............................   10,667     10,667      11,083      10,667      12,524
                                          =======    =======    ========     =======     =======
     Diluted............................   10,667     10,667      11,083      10,667      12,530
                                          =======    =======    ========     =======     =======
The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-3
46
 
                               ONIX SYSTEMS INC.
 
                           CONSOLIDATED BALANCE SHEET
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
APRIL 4,
                                                               1996        1997        1998
                                                               ----        ----      --------
                                                                                     (UNAUDITED)
ASSETS
Current Assets:
     Cash and cash equivalents (includes $19,618 and $57,045
       under repurchase agreement with affiliated company in
       1997 and 1998).......................................  $ 2,386    $ 24,960    $ 61,091
     Accounts receivable, less allowances of $1,347, $2,155
       and $1,897...........................................   26,862      32,583      32,640
     Inventories............................................   20,130      32,932      34,910
     Prepaid expenses.......................................      778       1,032       1,649
     Deferred tax asset (Note 4)............................    2,047       3,531       3,571
     Due from affiliated companies..........................      342          --          --
                                                              -------    --------    --------
                                                               52,545      95,038     133,861
                                                              -------    --------    --------
Property, Plant and Equipment, at Cost, Net.................    6,425       9,145       8,908
                                                              -------    --------    --------
Other Assets................................................      185          87         329
                                                              -------    --------    --------
Cost in Excess of Net Assets of Acquired Companies (Note
  2)........................................................   37,855      55,439      55,414
                                                              -------    --------    --------
                                                              $97,010    $159,709    $198,512
                                                              =======    ========    ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
     Note payable to parent company (Note 10)...............  $    --    $     --    $ 12,000
     Payable to affiliated companies (Note 2)...............       --      19,508       1,024
     Accounts payable.......................................    9,497      12,775      11,897
     Accrued payroll and employee benefits..................    3,861       3,811       3,874
     Accrued income taxes...................................      800       3,455       4,256
     Accrued installation and warranty expenses.............    1,093       1,583       1,469
     Deferred revenue.......................................      597       3,624       4,171
     Other accrued expenses.................................    6,824       8,335       7,555
                                                              -------    --------    --------
                                                               22,672      53,091      46,246
                                                              -------    --------    --------
Deferred Income Taxes (Note 4)..............................    1,228       1,680       1,680
                                                              -------    --------    --------
Commitments and Contingency (Notes 5 and 6)
Shareholders' Investment (Notes 7 and 10):
     Common stock, $.01 par value, 50,000,000 shares
       authorized; 12,306,307 and 15,606,307 shares issued
       and outstanding in 1997 and 1998.....................       --         123         156
     Capital in excess of par value.........................       --     100,966     144,121
     Retained earnings......................................       --       3,150       5,367
     Net parent company investment..........................   72,437          --          --
     Cumulative translation adjustment......................      673         699         942
                                                              -------    --------    --------
                                                               73,110     104,938     150,586
                                                              -------    --------    --------
                                                              $97,010    $159,709    $198,512
                                                              =======    ========    ========
The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-4
47
 
                               ONIX SYSTEMS INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)
THREE MONTHS ENDED
                                                                                     --------------------
                                                                                     MARCH 29,   APRIL 4,
                                                       1995      1996       1997       1997        1998
                                                      -------   -------   --------   ---------   --------
                                                                                         (UNAUDITED)
OPERATING ACTIVITIES:
    Net income......................................  $ 3,627   $ 4,858   $  8,799    $ 1,606    $ 2,217
    Adjustments to reconcile net income to net cash
       provided by (used in) operating activities:
         Provision for losses on accounts
           receivable...............................      779       283        674         --         65
         Depreciation and amortization..............    1,909     2,530      3,172        831      1,036
         Increase in deferred income taxes..........      700       312        450         --         --
         Other noncash items........................      (18)       --         (7)        --         --
         Changes in current accounts, excluding the
           effects of acquisitions:
              Accounts receivable...................   (3,343)   (2,857)     1,746      1,971         (7)
              Inventories...........................     (413)   (1,517)    (4,991)       924     (2,404)
              Other current assets..................    2,937     2,674       (600)    (2,547)      (665)
              Accounts payable......................      362     2,824       (227)    (2,114)      (924)
              Other current liabilities.............   (3,304)   (1,244)     3,980     (2,601)       717
         Other......................................      127      (155)       328          7         (7)
                                                      -------   -------   --------    -------    -------
           Net cash provided by (used in) operating
              activities............................    3,363     7,708     13,324     (1,923)        28
                                                      -------   -------   --------    -------    -------
INVESTING ACTIVITIES:
    Payments to affiliated company for acquired
       business.....................................       --        --         --         --    (19,117)
    Refund of acquisition purchase price............       --        --         --        614        424
    Acquisitions, net of cash acquired (Note 2).....       --        --     (9,660)        --         --
    Purchases of property, plant and equipment......   (1,093)   (1,505)    (1,868)      (316)      (406)
    Proceeds from sale of property, plant and
       equipment....................................      595        --        240         11         13
                                                      -------   -------   --------    -------    -------
           Net cash provided by (used in) investing
              activities............................     (498)   (1,505)   (11,288)       309    (19,086)
                                                      -------   -------   --------    -------    -------
FINANCING ACTIVITIES:
    Net proceeds from issuance of Company common
       stock (Notes 5, 7 and 10)....................       --        --     21,955         --     43,189
    Net transfers (to) from parent company prior to
       capitalization of the Company................   (2,346)   (4,662)      (865)     1,303         --
    Net proceeds from issuance of note payable to
       parent company...............................       --        --         --         --     12,000
                                                      -------   -------   --------    -------    -------
           Net cash provided by (used in) financing
              activities............................   (2,346)   (4,662)    21,090      1,303     55,189
                                                      -------   -------   --------    -------    -------
Exchange Rate Effect on Cash........................     (123)      182       (552)      (107)        --
                                                      -------   -------   --------    -------    -------
Increase (Decrease) in Cash and Cash Equivalents....      396     1,723     22,574       (418)    36,131
Cash and Cash Equivalents at Beginning of Period....      267       663      2,386      2,386     24,960
                                                      -------   -------   --------    -------    -------
Cash and Cash Equivalents at End of Period..........  $   663   $ 2,386   $ 24,960    $ 1,968    $61,091
                                                      =======   =======   ========    =======    =======
CASH PAID FOR:
    Income taxes....................................  $ 1,740   $ 1,938   $  6,341    $     3    $   711
                                                      =======   =======   ========    =======    =======
NONCASH ACTIVITIES (NOTE 2):
    Transfer of acquired businesses from parent
       company......................................  $ 7,772   $12,345   $  1,913    $    --    $    --
                                                      =======   =======   ========    =======    =======
    Fair value of assets of acquired companies......  $    --   $    --   $ 34,989    $    --    $    --
    Cash paid for acquired companies................       --        --     (9,889)        --         --
    Payable to affiliated company...................       --        --    (19,117)        --         --
                                                      -------   -------   --------    -------    -------
       Liabilities assumed of acquired companies....  $    --   $    --   $  5,983    $    --    $    --
                                                      =======   =======   ========    =======    =======
The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-5
48
 
                               ONIX SYSTEMS INC.
               CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
                                 (IN THOUSANDS)
APRIL 4,
                                                   1995       1996        1997         1998
                                                   ----       ----        ----       --------
                                                                                    (UNAUDITED)
COMMON STOCK, $.01 PAR VALUE
     Balance at beginning of year..............   $    --    $    --    $     --     $    123
     Capitalization of the Company.............        --         --         107           --
     Net proceeds from issuance of Company
       common stock (Notes 7 and 10)...........        --         --          16           33
                                                  -------    -------    --------     --------
     Balance at end of period..................        --         --         123          156
                                                  -------    -------    --------     --------
CAPITAL IN EXCESS OF PAR VALUE
     Balance at beginning of year..............        --         --          --      100,966
     Capitalization of the Company.............        --         --      79,027           --
     Net proceeds from issuance of Company
       common stock (Notes 7 and 10)...........        --         --      21,939       43,155
                                                  -------    -------    --------     --------
     Balance at end of period..................        --         --     100,966      144,121
                                                  -------    -------    --------     --------
RETAINED EARNINGS
     Balance at beginning of year..............        --         --          --        3,150
     Net income after capitalization of the
       Company.................................        --         --       3,150        2,217
                                                  -------    -------    --------     --------
     Balance at end of period..................        --         --       3,150        5,367
                                                  -------    -------    --------     --------
NET PARENT COMPANY INVESTMENT
     Balance at beginning of year..............    50,843     59,896      72,437           --
     Net income prior to capitalization of the
       Company.................................     3,627      4,858       5,649           --
     Transfer of acquired businesses from
       parent company (Note 2).................     7,772     12,345       1,913           --
     Net transfers to parent company prior to
       capitalization of the Company...........    (2,346)    (4,662)       (865)          --
     Capitalization of the Company.............        --         --     (79,134)          --
                                                  -------    -------    --------     --------
     Balance at end of period..................    59,896     72,437          --           --
                                                  -------    -------    --------     --------
CUMULATIVE TRANSLATION ADJUSTMENT
     Balance at beginning of year..............        49       (105)        673          699
     Translation adjustment....................      (154)       778          26          243
                                                  -------    -------    --------     --------
     Balance at end of period..................      (105)       673         699          942
                                                  -------    -------    --------     --------
TOTAL SHAREHOLDERS' INVESTMENT.................   $59,791    $73,110    $104,938     $150,586
                                                  =======    =======    ========     ========
The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-6
49
 
                               ONIX SYSTEMS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1.  NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
NATURE OF OPERATIONS
 
     ONIX Systems Inc. ("ONIX" or the "Company") designs, develops, markets and
services sophisticated field measurement instruments and on-line sensors. These
products incorporate a range of advanced measurement technologies to provide
real-time data collection, analysis and local control functions to enhance
production efficiency, improve process and quality control, ensure regulatory
compliance and increase employee safety. The Company manufactures field
measurement instruments and on-line sensors in four general product areas: flow
instruments, level and density instruments, composition analysis instruments and
industry-specific instruments.
 
RELATIONSHIP WITH THERMO INSTRUMENT SYSTEMS INC. AND THERMO ELECTRON CORPORATION
 
     The Company operated as a division of Thermo Instrument Systems Inc.
(Thermo Instrument) until its incorporation as a Delaware corporation in August
1997 as a wholly owned subsidiary of Thermo Instrument. At that time, Thermo
Instrument contributed all of the assets or stock of certain of its subsidiaries
relating to the CAC, Flow Automation, TN Technologies, Kay-Ray/Sensall, Houston
Atlas, Westronics and VG Gas businesses to the Company in exchange for
10,666,667 shares of the Company's common stock. The transfer of assets from
Thermo Instrument was recorded at historical cost. As of January 3, 1998, Thermo
Instrument owned 87% of the Company's outstanding common stock. As of January 3,
1998, Thermo Instrument was an 82%-owned subsidiary of Thermo Electron
Corporation (Thermo Electron).
 
     The accompanying financial statements include the assets, liabilities,
income and expenses of the Company as included in Thermo Instrument's
consolidated financial statements. The accompanying financial statements do not
include Thermo Instrument's general corporate debt, which is used to finance
operations of all of its respective business segments, or an allocation of
Thermo Instrument's interest expense. The Company had positive cash flow from
operations for all periods presented.
 
PRINCIPLES OF CONSOLIDATION
 
     The accompanying financial statements include the accounts of the Company
and its wholly owned subsidiaries. All material intercompany accounts and
transactions have been eliminated.
 
FISCAL YEAR
 
     The Company has adopted a fiscal year ending the Saturday nearest December
31. References to 1995, 1996 and 1997 are for the fiscal years ended December
30, 1995, December 28, 1996 and January 3, 1998, respectively. Fiscal years 1995
and 1996 each included 52 weeks; 1997 included 53 weeks.
 
REVENUE RECOGNITION
 
     The Company recognizes product revenues upon shipment of its products and
recognizes service contract revenues ratably over the term of the contract. The
Company provides a reserve for its estimate of warranty and installation costs
at the time of shipment. Deferred revenue in the accompanying 1997 balance sheet
includes $3.1 million for products that were shipped pending customer
acceptance. Customer acceptance was not received as of year end; therefore, as
of January 3, 1998, the Company has deferred recognition of such revenue and the
associated costs are included in inventories as of January 3, 1998.
 
STOCK-BASED COMPENSATION PLANS
 
     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 3). 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 equity.
 
                                       F-7
50
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
INCOME TAXES
 
     The Company and Thermo Electron have a tax allocation agreement under which
the Company is included in Thermo Electron's consolidated federal and certain
state income tax returns. The agreement provides that in years in which the
Company has taxable income, it will pay to Thermo Electron amounts comparable to
the taxes the Company would have paid if it had filed separate tax returns. Upon
completion of the proposed initial public offering, Thermo Instrument's
ownership of the Company will drop below 80% and the Company will be required to
file its own corporate tax returns.
 
     In accordance with Statement of Financial Accounting Standards (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 PER SHARE
 
     Pursuant to Securities and Exchange Commission requirements, earnings per
share have been presented for all periods. Earnings per share have been computed
in accordance with SFAS No. 128 "Earnings per Share" (Note 9). Basic and diluted
earnings per share are the same as one another for each of the years presented
and have been computed by dividing net income by the weighted average number of
shares outstanding during the year. Weighted average shares for all periods
include 10,666,667 shares issued to Thermo Instrument in connection with the
initial capitalization of the Company and, in 1997, the effect of shares sold
through the Company's private placement.
 
CASH AND CASH EQUIVALENTS INCLUDING REPURCHASE AGREEMENT
 
     Prior to its incorporation, the cash receipts and disbursements of the
Company's domestic operations were combined with other Thermo Instrument
corporate cash transactions and balances. Therefore, cash of the Company's
domestic operations through August 1997 is not included in the accompanying
balance sheet.
 
     As of January 3, 1998, $19,618,000 of the Company's cash equivalents were
invested in a repurchase agreement with Thermo Electron. Under this agreement,
the Company in effect lends excess cash to Thermo Electron, which Thermo
Electron collateralizes with investments principally consisting of U.S.
government-agency securities, corporate notes, commercial paper, money market
funds and other marketable securities, in the amount of at least 103% of such
obligation. Thermo Electron maintains possession of the underlying securities
and has the right of substitution at its discretion. The Company's funds subject
to the repurchase agreement are readily convertible on demand into cash by the
Company. The repurchase agreement earns a rate based on the 90-day Commercial
Paper Composite Rate plus 25 basis points, set at the beginning of each quarter.
As of January 3, 1998, the Company's cash equivalents also include investments
in short-term certificates of deposit of the Company's foreign subsidiaries,
which have an original maturity of three months or less. Cash equivalents are
carried at cost, which approximates market value.
 
INVENTORIES
 
     Inventories are stated at the lower of cost (on a first-in, first-out or
weighted average basis) or market value and include materials, labor and
manufacturing overhead. The components of inventories are as follows:
1996       1997
                                                       -------    -------
                                                         (IN THOUSANDS)
Raw materials and supplies...........................  $ 9,526    $18,095
Work in process......................................    7,195      8,033
Finished goods.......................................    3,409      6,804
                                                       -------    -------
                                                       $20,130    $32,932
                                                       =======    =======
F-8
51
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
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, 30 to 40 years; machinery
and equipment, 3 to 10 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:
1996       1997
                                                       -------    -------
                                                         (IN THOUSANDS)
Buildings............................................  $   907    $ 1,485
Machinery, equipment and leasehold improvements......    8,906     12,928
                                                       -------    -------
                                                         9,813     14,413
Less: Accumulated depreciation and amortization......    3,388      5,268
                                                       -------    -------
                                                       $ 6,425    $ 9,145
                                                       =======    =======
COST IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES
 
     The excess of cost over the fair value of net assets of acquired companies
is amortized using the straight-line method over 40 years. Accumulated
amortization was $2,287,000 and $3,488,000 at year-end 1996 and 1997,
respectively. The Company assesses the future useful life of this asset whenever
events or changes in circumstances indicate that the current useful life has
diminished. The Company considers the future undiscounted cash flows of the
acquired companies in assessing the recoverability of this asset. If impairment
has occurred, any excess of carrying value over fair value is recorded as a
loss.
 
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The Company's financial instruments consist primarily of cash and cash
equivalents, accounts receivable, due from/payable to affiliated companies and
accounts payable. The carrying amounts of these financial instruments
approximate fair value due to their short-term nature.
 
FOREIGN CURRENCY
 
     All assets and liabilities of the Company's foreign 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 as a
separate component of shareholders' investment titled "Cumulative translation
adjustment." Foreign currency transaction gains and losses are included in the
accompanying statement of income and are not material for the three years
presented.
 
RECENTLY RELEASED ACCOUNTING PRONOUNCEMENTS
 
     SFAS No. 130 "Reporting Comprehensive Income" and SFAS No. 131 "Disclosures
about Segments of an Enterprise and Related Information" both require adoption
in 1998. The Company has not completed the analysis to assess the effect of the
new pronouncements on its financial statements, although the Company expects
that the effect, if any, would represent additional disclosure requirements from
those that exist currently.
 
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. Actual results could differ from those estimates.
 
                                       F-9
52
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
INTERIM FINANCIAL STATEMENTS
 
     The financial statements as of April 4, 1998 and for the three-month
periods ended March 29, 1997 and April 4, 1998, are unaudited, but, in the
opinion of management, reflect all adjustments of a normal recurring nature
necessary for a fair presentation of results for these interim periods. The
results of operations for the three-month period ended April 4, 1998 are not
necessarily indicative of the results to be expected for the entire year.
 
2.  ACQUISITIONS
 
     On November 6, 1997, Thermo Power Corporation (Thermo Power), a majority
owned subsidiary of Thermo Electron, acquired Peek plc. Thereafter, the Company
acquired from Thermo Power the Peek Measurement Business for $19,117,000. The
purchase price was determined based on the net book value of the Peek
Measurement Business at November 6, 1997, a pro rata allocation of Thermo
Power's total cost in excess of net assets of acquired companies recorded in
connection with its acquisition of Peek plc based on 1997 revenues of Peek
Measurement relative to Peek plc's total revenues, plus an estimate of Thermo
Power's tax liability that arises from the sale of the business to the Company.
Peek Measurement manufactures flow and density measurement systems for use in
the water/wastewater and oil and gas industries. The purchase price is included
in payable to affiliated companies in the accompanying 1997 balance sheet.
 
     On March 29, 1996, Thermo Instrument acquired a substantial portion of the
businesses constituting the Scientific Instruments Division of Fisons plc
(Fisons), a wholly owned subsidiary of Rhone-Poulenc Rorer, Inc. Thereafter,
Thermo Instrument contributed the business of VG Gas Analysis (VG Gas), the
on-line process analysis division of Fisons, to the Company. The amount of net
assets transferred, $6,345,000, was determined based on the net book value of VG
Gas at March 29, 1996, and a pro rata allocation of Thermo Instrument's total
cost in excess of net assets of acquired companies recorded in connection with
its acquisition of the Fisons businesses, based on the revenues of VG Gas
relative to the total revenues of all of the Fisons businesses purchased by
Thermo Instrument.
 
     The methodology used to determine the purchase price for Peek Measurement
and VG Gas and the accounting used, which includes the results of operations
from the date the respective businesses became owned by Thermo Electron
subsidiaries, is consistent with the methodology used to account for the
transfer of other operating units of newly acquired businesses among
majority-owned subsidiaries of Thermo Electron.
 
     Because the Company, Peek Measurement and VG Gas were deemed for accounting
purposes to be under control of their common majority owner, Thermo Electron,
the transactions have been accounted for in a manner similar to a pooling of
interests. Accordingly, the Company's financial statements include the results
of Peek Measurement and VG Gas from November 6, 1997 and March 29, 1996, the
respective dates Peek Measurement and VG Gas were acquired by Thermo Electron's
majority-owned subsidiaries.
 
     In May 1997, Thermo Instrument acquired the Angus Electronics division of
Esterline Technologies Corporation for $1,913,000 in cash and the assumption of
certain liabilities totaling $823,000, primarily consisting of trade payables
and other accrued expenses. Angus manufactures and distributes analog and
digital data acquisition and recorder products and power measurement
instruments. In December 1997, the Company acquired the assets comprising the
Rustrak Ranger Logger product line (Ranger) for $1,803,000 and the assumption of
certain liabilities totaling $91,000, primarily consisting of trade payables and
other accrued expenses. Also, in December 1997, the Company acquired
substantially all of the assets of Fluid Data, Inc. (Fluid Data) for $8,500,000
in cash and the assumption of certain liabilities totaling $2,661,000, primarily
consisting of trade payables and other accrued expenses. Fluid Data is a
manufacturer and distributor of pyrolysis gas sampling systems, on-line process
gas chromatographs, chemiluminescent sulfur chromatography systems and high
speed calorimeters.
 
                                      F-10
53
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     In October 1996, Thermo Instrument acquired Kay-Ray/Sensall from Rosemount
Inc., a division of Emerson Electric Co., Inc., for $6,000,000 in cash.
Kay-Ray/Sensall is a manufacturer and distributor of nuclear gauges and
ultrasonic point level and continuous level switches.
 
     In July 1995, Thermo Instrument acquired the Flow Automation division of
Galveston-Houston Company for $7,800,000 in cash and the assumption of certain
liabilities totaling $2,423,000, primarily consisting of trade payables and
other accrued expenses. Flow Automation is a supplier of fluid flow measurement
and control devices and offers a full range of electronic products to the
gas/pipeline automation market.
 
     These acquisitions, except for Peek Measurement and VG Gas, have been
accounted for using the purchase method of accounting and their results of
operations have been included in the accompanying financial statements from
their respective dates of acquisition. The aggregate cost of these acquisitions
exceeded the estimated fair value of the acquired net assets by $30,848,000,
which is being amortized over 40 years. Allocation of the purchase price for
these acquisitions was based on estimates of the fair value of the net assets
acquired and, for the businesses acquired in 1997, is subject to adjustment upon
finalization of the purchase price allocation. The Company has gathered no
information that indicates that the final allocation will differ materially from
the preliminary estimates although the Company expects to undertake an analysis
to determine whether any intangible assets other than cost in excess of net
assets acquired exist for its recent acquisitions of Fluid Data and Peek
Measurement. Existence of such intangibles would result in a change in the
preliminary estimate of the purchase price allocation to an increase in assets
with shorter economic lives than cost in excess of net assets acquired and
higher annual amortization expense. Based upon a preliminary review, the Company
does not expect that any such adjustment will materially affect its future
results of operations.
 
     The assets and liabilities were recorded at their estimated fair values as
follows:
PEEK                                    KAY-RAY/        FLOW
                       MEASUREMENT     VG GAS      FLUID DATA      SENSALL     AUTOMATION      OTHER
                       -----------   -----------   -----------   -----------   -----------   ----------
Purchase price.......  $19,117,000   $ 6,345,000   $ 8,500,000   $ 6,000,000   $ 7,800,000   $3,716,000
                       -----------   -----------   -----------   -----------   -----------   ----------
Allocation to:
  Current assets.....    7,080,000     4,072,000     7,570,000     3,393,000     6,129,000    1,913,000
  Property, plant and
     equipment.......    1,100,000       404,000       627,000       589,000       703,000    1,356,000
  Current
     liabilities.....   (3,460,000)   (2,222,000)   (2,661,000)   (2,626,000)   (2,423,000)    (914,000)
  Cost in excess of
     net assets
     acquired........   14,397,000     4,091,000     2,964,000     4,644,000     3,391,000    1,361,000
Based on unaudited data, the following table presents selected financial
information for the Company, Peek Measurement, Fluid Data, VG Gas and
Kay-Ray/Sensall on a pro forma basis, assuming that the Company, Peek
Measurement and Fluid Data had been combined since the beginning of 1996 and the
Company, VG Gas and Kay-Ray/Sensall had been combined since the beginning of
1995. The effect of the acquisitions not included in the pro forma data was not
material to the Company's results of operations.
1995           1996            1997
                                         ----------     -----------     -----------
                                          (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues..............................    $95,899        $142,206        $153,877
Net income............................      2,988           3,679           6,087
Basic and diluted earnings per
  share...............................        .28             .34             .55
The pro forma results are not necessarily indicative of future operations
or the actual results that would have occurred had the acquisitions of Peek
Measurement and Fluid Data been made at the beginning of 1996, or the
acquisitions of VG Gas and Kay-Ray/Sensall been made at the beginning of 1995.
 
                                      F-11
54
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
3.  EMPLOYEE BENEFIT PLANS
 
STOCK-BASED COMPENSATION PLANS
 
  Stock Option Plans
 
     In December 1997, the Company adopted a stock-based compensation plan for
its key employees, directors and others, which permits the grant of stock and
stock-based awards as determined by the human resources committee of the
Company's Board of Directors (the Board Committee), including restricted stock,
stock options, stock bonus shares or performance-based shares. The option
recipients and the terms of options granted under this plan are determined by
the Board Committee. Options granted generally vest and become immediately
exercisable on the ninth anniversary of the grant date, unless the Company's
stock becomes publicly traded prior to such date. Options granted became
exercisable in June 1998 and are subject to certain transfer restrictions and
the right of the Company to repurchase shares issued upon exercise of the
options at the exercise price, upon certain events. The restrictions and
repurchase rights generally will be deemed to have lapsed ratably over periods
ranging from five to ten years after the first anniversary of the grant date,
depending on the term of the option, which generally ranges from seven to twelve
years. Nonqualified stock options may be granted at any price determined by the
Board Committee, although incentive stock options must be granted at not less
than the fair market value of the Company's stock on the date of grant. As of
January 3, 1998, no options had been granted under this plan (Note 10). In
addition to the Company's stock-based compensation plan, certain officers and
key employees may also participate in the stock-based compensation plans of
Thermo Instrument and Thermo Electron. Participation in these plans is accounted
for in accordance with APB No. 25.
 
  Employee Stock Purchase Program
 
     Substantially all of the Company's full-time U.S. employees are eligible to
participate in an employee stock purchase program sponsored by Thermo Instrument
and Thermo Electron. Under this program, shares of Thermo Instrument's and
Thermo Electron's common stock can be purchased at the end of a 12-month period
at 95% of the fair market value at the beginning of the period and the shares
purchased are subject to a six-month resale restriction. Prior to November 1,
1995, the applicable shares of common stock could be purchased at 85% of the
fair market value at the beginning of the period, and the shares purchased were
subject to a one-year resale restriction. Shares are purchased through payroll
deductions of up to 10% of each participating employee's gross wages.
 
                                      F-12
55
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Pro Forma Stock-based Compensation Expense
 
     In October 1995, the Financial Accounting Standards Board issued 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 stock-based compensation plans. Had compensation cost for awards in 1997,
1996 and 1995 under 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 the Company's net income and earnings per share would
have been as follows:
1995      1996      1997
                                                              -------   -------   -------
                                                               (IN THOUSANDS, EXCEPT PER
                                                                    SHARE AMOUNTS)
Net income:
  As reported...............................................  $3,627    $4,858    $8,799
  Pro forma.................................................   3,623     4,721     8,484
Basic and diluted earnings per share:
  As reported...............................................     .34       .46       .79
  Pro forma.................................................     .34       .44       .77
Because the method prescribed by SFAS No. 123 has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
expense may not be representative of the amount to be expected in future years.
Compensation expense for options granted is reflected over the vesting period;
therefore, future pro forma compensation expense may be greater as additional
options are granted.
 
     The fair value of each option grant was estimated on the grant date using
the Black-Scholes option-pricing model. 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 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.
 
401(K) SAVINGS PLAN
 
     The majority of the Company's full-time U.S. employees are eligible to
participate in Thermo Electron's 401(k) savings plan. Contributions to the
401(k) savings plans are made by both the employee and the Company. Company
contributions are based upon the level of employee contributions. For these
plans, the Company contributed and charged to expense $810,000, $829,000 and
$727,000 in 1995, 1996 and 1997, respectively.
 
4.  INCOME TAXES
 
     The components of income before provision for income taxes are as follows:
1995         1996         1997
                                             ----         ----         ----
                                                     (IN THOUSANDS)
Domestic..................................  $ 5,640      $ 5,587      $10,239
Foreign...................................      477        2,511        4,480
                                            -------      -------      -------
                                            $ 6,117      $ 8,098      $14,719
                                            =======      =======      =======
F-13
56
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The components of the provision for income taxes are as follows:
1995         1996         1997
                                             ----         ----         ----
                                                     (IN THOUSANDS)
Currently payable:
     Federal..............................  $ 1,424      $ 1,373      $ 4,372
     State................................      316          272          909
     Foreign..............................      170          775        1,457
                                            -------      -------      -------
                                              1,910        2,420        6,738
                                            -------      -------      -------
Net deferred (prepaid):
     Federal..............................      504          633         (740)
     State................................       76          108         (112)
     Foreign..............................       --           79           34
                                            -------      -------      -------
                                                580          820         (818)
                                            -------      -------      -------
                                            $ 2,490      $ 3,240      $ 5,920
                                            =======      =======      =======
The provision for income taxes in the accompanying statement of income
differs from the provision calculated by applying the statutory federal income
tax rate of 35% to income before provision for income taxes due to the
following:
1995         1996         1997
                                             ----         ----         ----
                                                     (IN THOUSANDS)
Provision for income taxes at statutory
  rate....................................  $ 2,141      $ 2,834      $ 5,152
Increases (decreases) resulting from:
     State income taxes, net of federal
       tax................................      255          247          518
     Amortization of cost in excess of net
       assets of acquired companies.......      100          100          128
     Net foreign losses not benefited and
       tax rate differential..............        3          (24)         (77)
     Tax benefit of foreign sales
       corporation........................     (114)        (131)        (114)
     Other, net...........................      105          214          313
                                            -------      -------      -------
                                            $ 2,490      $ 3,240      $ 5,920
                                            =======      =======      =======
Deferred tax asset and deferred income taxes in the accompanying balance
sheet consist of the following:
1996        1997
                                                            ----        ----
                                                             (IN THOUSANDS)
Deferred tax asset:
     Reserves and accruals...............................  $  577      $1,035
     Inventory basis difference..........................   1,053       1,993
     Accrued compensation................................     390         564
     Other, net..........................................      27         (61)
                                                           ------      ------
                                                           $2,047      $3,531
                                                           ======      ======
Deferred income taxes:
     Depreciation........................................  $   61      $   63
     Intangible assets...................................   1,167       1,617
                                                           ------      ------
                                                           $1,228      $1,680
                                                           ======      ======
A provision has not been made for U.S. or additional foreign taxes on
$7,200,000 of undistributed earnings of foreign subsidiaries that could be
subject to taxation if remitted to the U.S. because the Company currently plans
to keep these amounts permanently reinvested overseas. The Company believes that
any additional U.S. tax liability due upon remittance of such earnings would be
immaterial.
 
                                      F-14
57
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
5.  COMMITMENTS AND CONTINGENCY
 
OPERATING LEASES
 
     The Company leases portions of its office and operating facilities under
various operating lease arrangements. The accompanying statement of income
includes expenses from operating leases of $1,443,000, $1,559,000 and $2,230,000
in 1995, 1996 and 1997, respectively. Future minimum payments due under
noncancellable operating leases at January 3, 1998, are: $2,216,000 in 1998;
$2,262,000 in 1999; $2,071,000 in 2000; $1,856,000 in 2001; $1,414,000 in 2002
and $2,898,000 in 2003 and thereafter. Total future minimum lease payments are
$12,717,000. See Note 6 for space leased from a related party.
 
CONTINGENCY
 
     In December 1996, five former employees of Thermo Instrument's Epsilon
Industrial, Inc. (Epsilon) subsidiary commenced an arbitration proceeding naming
as joint defendants Epsilon, Thermo Electron, Thermo Instrument and certain
affiliates of Thermo Instrument, including TN Technologies, a wholly owned
subsidiary of the Company, alleging that these entities breached the terms of
certain agreements entered into with such employees at the time that a
predecessor of Epsilon acquired the assets and business of a company formerly
owned by such employees. The employees claimed actual damages of between $27
million and $46 million, punitive damages of twice the actual damages,
attorneys' fees and expenses, and pre-judgement and post-judgement interest,
resulting from the alleged failure of Thermo Instrument and such affiliates,
including TN Technologies, to, among other things, use their best efforts to
develop and promote certain products acquired at that time. The defendants,
including the Company, contested this matter vigorously. In June 1998, the
arbitration panel rendered its decision, which decision resulted in no liability
for damages on the part of the Company.
 
6.  RELATED PARTY TRANSACTIONS
 
CORPORATE SERVICES AGREEMENT
 
     The Company and Thermo Electron have a corporate services agreement under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management, certain
employee benefit administration, tax advice and preparation of tax returns,
centralized cash management, and certain financial and other services, for which
the Company paid Thermo Electron annually an amount equal to 1.20% of the
Company's revenues in 1995 and 1.0% of the Company's revenues in 1996 and 1997.
For these services, the Company was charged $865,000, $953,000 and $1,215,000 in
1995, 1996 and 1997, respectively. Beginning in 1998, the Company will pay an
annual fee equal to 0.8% of the Company's revenues. The annual fee is reviewed
and adjusted annually by mutual agreement of the parties. Management believes
that the service fee charged by Thermo Electron is reasonable and that such fees
are representative of the expenses the Company would have incurred on a
stand-alone basis. The corporate services agreement is renewed annually but can
be terminated upon 30 days' prior notice by the Company or upon the Company's
withdrawal from the Thermo Electron Corporate Charter (the Thermo Electron
Corporate Charter defines the relationship among Thermo Electron and its
majority-owned subsidiaries). For additional items such as employee benefit
plans, insurance coverage, and other identifiable costs, Thermo Electron charges
the Company based upon costs attributable to the Company.
 
OPERATING LEASES
 
     Commencing in January 1998, the Company leases approximately 24,000 square
feet of a 60,000 square foot facility in Winchester, England, from Thermo Power.
The Company pays Thermo Power rent in an amount that is approximately equal to
its pro rata share of Thermo Power's occupancy costs. The Company's estimated
share of Thermo Power's occupancy costs for 1998 is approximately 139,000
British pounds sterling (approximately $229,000).
 
                                      F-15
58
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Commencing in October 1997, the Company leases office and manufacturing
facilities from Thermo Instrument and is charged its share of occupancy costs.
The Company's rent for this facility in 1997 totaled $45,000. The Company's
expected commitment for rent in 1998 is approximately $186,000.
 
OTHER RELATED PARTY TRANSACTIONS
 
     The Company sells products in the ordinary course of business to other
subsidiaries of Thermo Electron. Sales of such products to affiliated companies
totaled $435,000, $4,126,000 and $2,550,000 in 1995, 1996 and 1997,
respectively.
 
REPURCHASE AGREEMENT
 
     The Company invests excess cash in a repurchase agreement with Thermo
Electron as discussed in Note 1.
 
7.  COMMON STOCK
 
     In September and October 1997, the Company sold 1,639,640 shares of its
common stock in a private placement at $14.25 per share, for net proceeds of
$21,955,000.
 
                                      F-16
59
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
8.  GEOGRAPHICAL INFORMATION AND CONCENTRATION OF RISK
 
     The following table shows data for the Company by geographical area:
1995        1996        1997
                                                              -------    --------    --------
                                                                      (IN THOUSANDS)
Revenues:
     United States..........................................  $61,688    $ 70,569    $ 99,144
     United Kingdom.........................................   10,097      22,413      23,941
     Other..................................................    2,617       4,708       6,696
     Transfers among geographical areas (a).................   (2,297)     (2,374)     (8,256)
                                                              -------    --------    --------
                                                              $72,105    $ 95,316    $121,525
                                                              =======    ========    ========
Income before provision for income taxes:
     United States..........................................  $ 5,920    $  5,805    $ 11,223
     United Kingdom.........................................    1,105       2,751       2,711
     Other..................................................      452         953       1,769
     Corporate and eliminations (b).........................   (1,360)     (1,411)     (1,215)
                                                              -------    --------    --------
     Total operating income.................................    6,117       8,098      14,488
     Interest income, net...................................       --          --         231
                                                              -------    --------    --------
     Income before provision for income taxes...............  $ 6,117    $  8,098    $ 14,719
                                                              =======    ========    ========
Total assets:
     United States..........................................  $71,823    $ 76,387    $108,275
     United Kingdom.........................................    3,574      18,634      21,341
     Other..................................................      824       1,989       7,053
     Corporate (c)..........................................       --          --      23,040
                                                              -------    --------    --------
                                                              $76,221    $ 97,010    $159,709
                                                              =======    ========    ========
Export revenues included in United States revenues above
  (d):
     Asia...................................................  $ 8,273    $  5,754    $  7,721
     Europe.................................................    4,017       3,789       4,226
     South America..........................................    2,747       2,936       2,689
     Other..................................................    5,548       6,024       6,951
                                                              -------    --------    --------
                                                              $20,585    $ 18,503    $ 21,587
                                                              =======    ========    ========
(a) Transfers among geographical areas are accounted for at prices that are
    representative of transactions with unaffiliated parties.
 
(b) Primarily general and administrative expenses.
 
(c) Primarily cash and cash equivalents.
 
(d) In general, export sales are denominated in U.S. dollars.
 
     The Company sells a majority of its products to customers in the oil and
gas industries. The Company does not normally require collateral or other
security to support its accounts receivable. Management does not believe that
this concentration of credit risk has or will have a significant negative effect
on the Company.
 
                                      F-17
60
                               ONIX SYSTEMS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
9.  EARNINGS PER SHARE
 
     Basic and diluted earnings per share were calculated as follows (In
thousands, except per share amounts):
THREE MONTHS ENDED
                                                                            ---------------------
                                                                            MARCH 29,    APRIL 4,
                                            1995       1996       1997        1997         1998
                                           -------    -------    -------    ---------    --------
                                                                                 (UNAUDITED)
BASIC
Net income...............................  $ 3,627    $ 4,858    $ 8,799     $ 1,606     $ 2,217
                                           -------    -------    -------     -------     -------
Weighted average shares..................   10,667     10,667     11,083      10,667      12,524
                                           -------    -------    -------     -------     -------
Basic earnings per share.................  $   .34    $   .46    $   .79     $   .15     $   .18
                                           =======    =======    =======     =======     =======
DILUTED
Net income...............................  $ 3,627    $ 4,858    $ 8,799     $ 1,606     $ 2,217
                                           -------    -------    -------     -------     -------
Weighted average shares..................   10,667     10,667     11,083      10,667      12,524
Effect of stock options..................       --         --         --          --           6
                                           -------    -------    -------     -------     -------
Weighted average shares, as adjusted.....   10,667     10,667     11,083      10,667      12,530
                                           -------    -------    -------     -------     -------
Diluted earnings per share...............  $   .34    $   .46    $   .79     $   .15     $   .18
                                           =======    =======    =======     =======     =======
10.  SUBSEQUENT EVENTS
 
STOCK OPTIONS
 
     In January 1998, the Board Committee granted options to purchase 531,891
shares of the Company's common stock at $14.25 per share, which was the fair
market value on the date of the grant. As of January 29, 1998, the Company had
reserved 1,091,667 unissued shares of its common stock for possible issuance
under its stock-based compensation plans.
 
STOCK SPLIT
 
     In January 1998, the Company declared and effected a two-for-three reverse
stock split. All share and per share information has been restated to reflect
the stock split.
 
NOTE PAYABLE TO PARENT COMPANY
 
     In January 1998, the Company paid Thermo Power $19,117,000, representing
the purchase price for the Peek Measurement Business. The Company borrowed
$12,000,000 from Thermo Instrument to partially fund this payment. The note to
Thermo Instrument bore interest at the 90-day Commercial Paper Composite Rate
plus 25 basis points, set at the beginning of each quarter, and was repaid on
April 10, 1998 with a portion of the net proceeds from the Company's March 1998
initial public offering.
 
INITIAL PUBLIC OFFERING
 
     On March 30, 1998, the Company sold 3,300,000 shares of its common stock in
an initial public offering at $14.50 per share for net proceeds of $43,189,000.
Following the initial public offering, Thermo Instrument owned approximately 68%
of the Company's outstanding common stock.
 
ACQUISITION
 
     On July 7, 1998, the Company acquired the capital stock of certain
businesses of the Mid-South Companies for $12.7 million in cash. This
acquisition will be accounted for using the purchase method of accounting. The
businesses acquired include Mid-South Controls and Services Inc. and Mid-South
Power Systems Inc. Mid-South Controls and Services Inc. specializes in the
assembly and service of wellhead measurement, control and safety shutdown
systems that are required by oil and gas companies operating offshore platforms.
Mid-South Power Systems Inc. provides electrical generators, switchgear and
motor control units that are used in a wide variety of industrial applications.
 
                                      F-18
61
 
------------------------------------------------------
                          ------------------------------------------------------
------------------------------------------------------
                          ------------------------------------------------------
 
     NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
 
                            ------------------------
 
                               TABLE OF CONTENTS
PAGE
The Company...........................    3
Risk Factors..........................    5
Price Range of Common Stock...........   10
Dividend Policy.......................   10
Selected Quarterly Financial Data.....   10
Capitalization........................   11
Selected Financial Information........   12
Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations.......................   14
Business..............................   18
Relationship with Thermo Electron and
  Thermo Instrument...................   27
Management............................   31
Security Ownership of Certain
  Beneficial Owners and Management....   36
Selling Shareholders..................   38
Sale of Shares........................   40
Description of Capital Stock..........   41
Shares Eligible for Future Sale.......   41
Legal Opinions........................   42
Experts...............................   42
Additional Information................   42
Index to Consolidated Financial
  Statements..........................  F-1
1,639,640 SHARES
 
                             ONIX SYSTEMS INC. LOGO
 
                                  COMMON STOCK
                             ----------------------
                                   PROSPECTUS
                             ----------------------
 
                                             , 1998
 
------------------------------------------------------
                          ------------------------------------------------------
------------------------------------------------------
                          ------------------------------------------------------
62
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
     The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered. All amounts shown are
estimates except for the Securities and Exchange Commission registration fee.
Securities and Exchange Commission registration fee.........  $ 5,578
Legal fees and expenses.....................................    5,000
Accounting fees and expenses................................    5,000
Printing and engraving expenses.............................   15,000
Miscellaneous...............................................    2,422
                                                              -------
          Total.............................................  $33,000
                                                              =======
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
     The Delaware General Corporation Law and the Registrant's Certificate of
Incorporation and By-Laws limit the monetary liability of directors to the
Registrant and to its stockholders and provide for indemnification of the
Registrant's officers and directors for liabilities and expenses that they may
incur in such capacities. In general, officers and directors are indemnified
with respect to actions taken in good faith in a manner reasonably believed to
be in, or not opposed to, the best interests of the Registrant, and with respect
to any criminal action or proceeding, actions that the indemnitee had no
reasonable cause to believe were unlawful. The Registrant also has
indemnification agreements with its directors and officers that provide for the
maximum indemnification allowed by law. Reference is made to the Registrant's
Certificate of Incorporation, By-Laws and form of Indemnification Agreement for
Officers and Directors incorporated by reference as Exhibits 3.1, 3.2 and 10.10
hereto, respectively.
 
     Thermo Electron has an insurance policy which insures the directors and
officers of Thermo Electron and its subsidiaries, including the Registrant,
against certain liabilities which might be incurred in connection with the
performance of their duties.
 
     Under the Purchase Agreements, the Selling Shareholders are obligated,
under certain circumstances, to indemnify directors and officers of the
Registrant against certain liabilities, including liabilities under the
Securities Act.
 
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES
 
     On August 21, 1997, the Registrant issued 10,666,667 shares of Common Stock
(adjusted to reflect a two-for-three reverse stock split effected in January
1998) to Thermo Instrument in exchange for the assets or stock of certain of its
subsidiaries relating to the CAC, Flow Automation, TN Technologies, Kay-
Ray/Sensall, Houston Atlas, Westronics and VG Gas businesses. Exemption from
registration of this transaction is claimed under Section 4(2) of the Securities
Act.
 
     On September 24, 1997, the Registrant sold an aggregate of 1,473,644 shares
of Common Stock to accredited investors for an aggregate purchase price of
$20,999,949.50, pursuant to Regulation D of the Commission promulgated under the
Securities Act.
 
     On October 22, 1997, the Registrant sold an aggregate of 165,996 shares of
Common Stock to accredited investors for an aggregate purchase price of
$2,365,500, pursuant to Regulation D of the Commission promulgated under the
Securities Act.
 
                                      II-1
63
 
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
     (A) EXHIBITS
 
     See the Exhibit Index included immediately preceding the exhibits to this
Registration Statement.
 
     (B) FINANCIAL STATEMENT SCHEDULES
 
     Financial Statement Schedules as of January 3, 1998 and the Report of
Independent Accountants on such schedules are included in this Registration
Statement. All other schedules are omitted because they are not applicable or
are not required under Regulation S-X.
 
ITEM 17.  UNDERTAKINGS
 
     (a) The undersigned Registrant hereby undertakes:
 
          (1) To file, during any period in which offers or sales are being
     made, a post-effective amendment to this registration statement:
 
             (i) To include any prospectus required by Section 10(a)(3) of the
        Securities Act of 1933;
 
             (ii) To reflect in the prospectus any facts or events arising after
        the effective date of the registration statement (or the most recent
        post-effective amendment thereof) which, individually or in the
        aggregate, represent a fundamental change in the information set forth
        in the registration statement. Notwithstanding the foregoing, any
        increase or decrease in volume of securities offered (if the total
        dollar value of securities offered would not exceed that which was
        registered) and any deviation from the low or high end of the estimated
        maximum offering range may be reflected in the form of prospectus filed
        with the Commission pursuant to Rule 424(b) if, in the aggregate, the
        changes in volume and price represent no more than 20 percent change in
        the maximum aggregate offering price set forth in the "Calculation of
        Registration Fee" table in the effective registration statement;
 
             (iii) To include any material information with respect to the plan
        of distribution not previously disclosed in the registration statement
        or any material change to such information in the registration
        statement.
 
          (2) That, for the purpose of determining any liability under the
     Securities Act of 1933, each such post-effective amendment shall be deemed
     to be a new registration statement relating to the securities offered
     therein, and the offering of such securities at that time shall be deemed
     to be the initial bona fide offering thereof.
 
          (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.
 
     (b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions contained in the Certificate of
Incorporation and By-Laws of the Registrant and the laws of the State of
Delaware, or otherwise, the Registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
 
                                      II-2
64
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Waltham, Commonwealth of
Massachusetts, on this 27th day of July, 1998.
 
                                          ONIX SYSTEMS INC.
 
                                          By:    /s/ WILLIAM J. ZOLNER
 
                                          --------------------------------------
                                                      William J. Zolner
                                                President and Chief Executive
                                                         Officer
 
                        POWER OF ATTORNEY AND SIGNATURES
 
     We, the undersigned officers and directors of ONIX Systems Inc., hereby
constitute and appoint John N. Hatsopoulos, Paul F. Kelleher, Seth H. Hoogasian
and Sandra L. Lambert, and each of them singly, our true and lawful attorneys
with full power to them, and each of them singly, to sign for us and in our
names in the capacities indicated below, the Registration Statement on Form S-1
filed herewith and any and all amendments to said Registration Statement
(including any subsequent Registration Statement for the same offering which may
be filed under Rule 462(b) of the Securities Act), and generally to do all such
things in our names and in our capacities as officers and directors to enable
ONIX Systems Inc. to comply with the provisions of the Securities Act and all
requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorneys, or any of
them, to said Registration Statement and any and all amendments thereto.
 
     Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE                                    TITLE                     DATE
                      ---------                                    -----                     ----
/s/ EARL R. LEWIS                      Chairman of the Board and      July 27, 1998
-----------------------------------------------------      Director
                    Earl R. Lewis
 
                /s/ WILLIAM J. ZOLNER                    President, Chief Executive     July 27, 1998
-----------------------------------------------------      Officer & Director
                  William J. Zolner
 
               /s/ JOHN N. HATSOPOULOS                   Senior Vice President and      July 27, 1998
-----------------------------------------------------      Chief Financial Officer
                 John N. Hatsopoulos
 
                /s/ PAUL F. KELLEHER                     Chief Accounting Officer       July 27, 1998
-----------------------------------------------------
                  Paul F. Kelleher
 
                /s/ DAVID J. BEAUBIEN                    Director                       July 27, 1998
-----------------------------------------------------
                  David J. Beaubien
 
                  /s/ FRANK JUNGERS                      Director                       July 27, 1998
-----------------------------------------------------
                    Frank Jungers
 
                 /s/ ARVIN H. SMITH                      Director                       July 27, 1998
-----------------------------------------------------
                   Arvin H. Smith
II-3
65
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To ONIX Systems Inc.:
 
     We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of ONIX Systems Inc. included in ONIX
Systems Inc.'s Form S-1 and have issued our report thereon dated January 28,
1998 (except with respect to certain matters discussed in Notes 5 and 10, as to
which the date is July 7, 1998). Our audits were made for the purpose of forming
an opinion on the basic consolidated financial statements taken as a whole. ONIX
Systems Inc.'s Schedule of Valuation and Qualifying Accounts, included in
Schedule II on page S-2, 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
January 28, 1998
 
                                       S-1
66
 
                                                                     SCHEDULE II
 
                               ONIX SYSTEMS INC.
 
                       VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)
BALANCE AT   PROVISION                                          BALANCE
                                       BEGINNING    CHARGED TO              ACCOUNTS     ACCOUNTS      AT END
             DESCRIPTION                OF YEAR      EXPENSE     OTHER(A)   RECOVERED   WRITTEN OFF    OF YEAR
             -----------               ----------   ----------   --------   ---------   -----------   ---------
YEAR ENDED DECEMBER 30, 1995
  Allowance for Doubtful Accounts....    $1,940        $779       $(432)      $111        $(1,038)     $1,360
YEAR ENDED DECEMBER 28, 1996
  Allowance for Doubtful Accounts....    $1,360        $283       $ 364       $  7        $  (667)     $1,347
YEAR ENDED JANUARY 3, 1998
  Allowance for Doubtful Accounts....    $1,347        $674       $ 613       $  9        $  (488)     $2,155
---------------
(a) Includes allowance of businesses acquired during the year as described in
    Note 2 to Consolidated Financial Statements included elsewhere in this
    Prospectus and foreign currency translation adjustment.
 
                                       S-2
67
 
                                 EXHIBIT INDEX
EXHIBIT
NUMBER                       DESCRIPTION OF EXHIBIT
-------                      ----------------------
2*       Share Purchase Agreement dated January 29, 1998 between
          Thermo Power and the Registrant relating to the acquisition
          of the Peek Measurement Business
 3.1*     Certificate of Incorporation of the Registrant
 3.2*     By-Laws of the Registrant
 4*       Specimen Common Stock Certificate
 5        Opinion of Seth H. Hoogasian, Esq. with respect to the
          validity of the securities being offered
10.1*     Corporate Services Agreement dated as of August 21, 1997
          between Thermo Electron and the Registrant
10.2      Thermo Electron Corporate Charter, as amended and restated
          effective January 3, 1993 (filed as exhibit 10.1 to Thermo
          Electron's Annual Report on Form 10-K for the fiscal year
          ended January 3, 1993 [File No. 1-8002] and incorporated
          herein by reference)
10.3*     Tax Allocation Agreement dated as of August 21, 1997 between
          Thermo Electron and the Registrant
10.4*     Master Repurchase Agreement dated as of August 21, 1997
          between Thermo Electron and the Registrant
10.5*     Amended and Restated Master Guarantee Reimbursement and Loan
          Agreement dated as of January 5, 1998 between Thermo
          Electron and the Registrant
10.6*     Amended and Restated Master Guarantee Reimbursement and Loan
          Agreement dated as of January 5, 1998 between Thermo
          Instrument and the Registrant
10.7*     Stock Transfer Agreement dated August 21, 1997 between
          Thermo Instrument and the Registrant
10.8*     Indemnification Agreement dated as of August 21, 1997
          between Thermo Instrument and the Registrant
10.9*     Form of Deferred Compensation Plan for Directors of the
          Registrant
10.10*    Form of Indemnification Agreement for Officers and Directors
          of the Registrant
10.11*    Promissory Note dated January 29, 1998 in the principal
          amount of $12,000,000 issued by the Registrant to Thermo
          Instrument
10.12*    Lease Agreement dated June 4, 1990 between
          Crow-Gottesman-Hill #43, as landlord and TN Technologies, as
          tenant for property located in the City of Round Rock,
          Williamson County, Texas
10.13*    Equity Incentive Plan of the Registrant
10.14     Incentive Stock Option Plan of Thermo Electron (filed as
          Exhibit 4(d) to Thermo Electron's Registration Statement on
          Form S-8 [Reg. No. 33-8993] and incorporated herein by
          reference)
10.15     Nonqualified Stock Option Plan of Thermo Electron (filed as
          Exhibit 4(e) to Thermo Electron's Registration Statement on
          Form S-8 [Reg. No. 33-8993] and incorporated herein by
          reference)
10.16     Equity Incentive Plan of Thermo Electron (filed as Exhibit
          10.1 to Thermo Electron's Quarterly Report on Form 10-Q for
          the quarter ended July 2, 1994 [File No. 1-8002] and
          incorporated herein by reference)
10.17     Incentive Stock Option Plan of Thermo Instrument (filed as
          Exhibit 10(c) to Thermo Instrument's Registration Statement
          on Form S-1 [Reg. No. 33-6762] and incorporated herein by
          reference)
10.18     Nonqualified Stock Option Plan of Thermo Instrument (filed
          as Exhibit 10(d) to Thermo Instrument's Registration
          Statement on Form S-1 [Reg. No. 33-6762] and incorporated
          herein by reference)
10.19     Equity Incentive Plan of Thermo Instrument (filed as
          Appendix A to the Proxy Statement dated April 27, 1993, of
          Thermo Instrument [File No. 1-9786] and incorporated herein
          by reference)
10.20     Thermo Instrument Systems Inc. -- ThermoSpectra Corporation
          Nonqualified Stock Option Plan (filed as Exhibit 10.51 to
          Thermo Instrument's Annual Report on
          Form 10-K for the fiscal year ended December 31, 1994 [File
          No. 1-9786] and incorporated herein by reference)
68
EXHIBIT
NUMBER                       DESCRIPTION OF EXHIBIT
-------                      ----------------------
10.21     Thermo Instrument Systems Inc. -- Thermo BioAnalysis
          Corporation Nonqualified Stock Option Plan (filed as Exhibit
          10.64 to Thermo Cardiosystems' Annual Report on
          Form 10-K for the fiscal year ended December 30, 1995 [File
          No. 1-10114] and incorporated herein by reference)
10.22     Thermo Instrument Systems Inc. -- Thermo Optek Corporation
          Nonqualified Stock Option Plan (filed as Exhibit 10.27 to
          Thermo Instrument's Annual Report on
          Form 10-K for the fiscal year ended December 28, 1996 [File
          No. 1-9786] and incorporated herein by reference)
10.23     Thermo Instrument Systems Inc. -- ThermoQuest Corporation
          Nonqualified Stock Option Plan (filed as Exhibit 10.65 to
          Thermo Cardiosystems' Annual Report on Form 10-K for the
          fiscal year ended December 30, 1995 [File No. 1-10114] and
          incorporated herein by reference)
10.24*    Lease Agreement dated as of November 1, 1997 between Thermo
          Instrument Systems Inc., as landlord, and CAC Inc., as
          tenant.
10.25*    Lease Agreement dated as of January 1, 1998 between Peek
          Traffic Ltd., as landlord, and Peek Measurement Ltd., as
          tenant.
21*       Subsidiaries of the Registrant
23.1      Consent of Arthur Andersen LLP
23.2      Consent of Seth H. Hoogasian, Esq. (included in Exhibit 5)
24        Power of Attorney (contained on the Signature Page to this
          Registration Statement)
27        Financial Data Schedule
---------------
 
* Each exhibit listed above that is marked by an asterisk (*) is incorporated by
reference to the correspondingly numbered exhibit to the Company's Registration
Statement on Form S-1 (File No. 333-45333).