<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549
                 __________________________________________  

                        AMENDMENT NO. 2 ON FORM 10-K/A
                                 TO FORM 10-K
(mark one)

 X
___     Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
        Act of 1934 for the fiscal year ended September 28, 1996
   
___     Transition Report Pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934

                        Commission file number 1-13104

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

Delaware                                                              06-1360302
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                               Identification No.)

10455 Pacific Center Court
San Diego, California                                                 92121-4339
(Address of principal executive offices)                              (Zip Code)

      Registrant's telephone number, including area code: (619) 646-5700

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

              Title of each class       Name of Exchange on which registered
         ----------------------------   -------------------------------------
         Common Stock, $.01 par value          American Stock Exchange

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

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

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

The aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of January 30, 1997, was approximately $183,396,045.

As of January 30, 1997, the Registrant had 40,700,310 shares of Common Stock
outstanding.
<PAGE>
 
ThermoLase Corporation Amendment No. 2
on Form 10K/A to Annual Report on Form 10-K 
for the fiscal year ended September 28, 1996



                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Fiscal 1996 Annual Report to Shareholders for the
year ended September 28, 1996, are incorporated by reference into Parts I and
II.

        Part III, Item 10.              Directors and Executive 
                                        Officers of the Registrant.
                                        --------------------------

        Part III, Item 11.              Executive Compensation.
                                        ----------------------
        Part III, Item 12.              Security Ownership of Certain 
                                        Beneficial Owners and Management.
                                        --------------------------------

        Part III, Item 13.              Certain Relationships and Transactions.
                                        --------------------------------------

        Items 10, 11, 12 and 13 of Part III of the Registrant's Annual Report on
Form 10-K for the fiscal year ended September 28, 1996 are hereby amended and
restated in their entirety as contained in the following Attachment A, which is
included herein and made a part of this Annual Report on Form 10-K.


                                  SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 2 on
Form 10-K/A to be signed by the undersigned, duly authorized.


                                                THERMOLASE CORPORATION


                                                By: /s/ Jonathan W. Painter  
                                                   ---------------------------
                                                        Jonathan W. Painter
                                                        Treasurer
<PAGE>
 
                                                                    ATTACHMENT A
DIRECTORS AND DIRECTOR COMPENSATION

     Set forth below are the names of the persons nominated as Directors, their
ages, their offices in the Corporation, if any, their principal occupation or
employment for the past five years, the length of their tenure as Directors and
the names of other public companies in which such persons hold directorships.
Information regarding their beneficial ownership of the Corporation's Common
Stock and of the common stock of its parent corporation, ThermoTrex Corporation
("ThermoTrex") and ThermoTrex's parent corporation, Thermo Electron Corporation
("Thermo Electron"), is reported under the caption "Stock Ownership." All of the
nominees are currently Directors of the Corporation.

--------------------------------------------------------------------------------
CARLISS Y. BALDWIN           Dr. Baldwin, 46, has been a Director of the
                             Corporation since June 1994.  Dr. Baldwin has been
                             the William L. White Professor of Business
                             Administration, Harvard Business School, since
                             1988.  She is also a director of the Federal Home
                             Loan Bank of Boston.
--------------------------------------------------------------------------------
ELIAS P. GYFTOPOULOS         Dr. Gyftopoulos, 69, has been a Director of the
                             Corporation since September 1994. Dr. Gyftopoulos
                             is Professor Emeritus of the Massachusetts
                             Institute of Technology, where he was the Ford
                             Professor of Mechanical Engineering and of Nuclear
                             Engineering for more than 20 years until his
                             retirement in September 1996.  Dr. Gyftopoulos is
                             also a director of Thermo BioAnalysis Corporation,
                             Thermo Cardiosystems Inc., Thermo Electron, Thermo
                             Remediation Inc., ThermoSpectra Corporation,
                             Thermo Voltek Corp. and Trex Medical Corporation.
--------------------------------------------------------------------------------
JOHN C. HANSEN               Mr. Hansen, 37, has been a Director of the
                             Corporation since February 1996 and its President
                             and Chief Executive Officer since May 1995.  From
                             1990 until joining the Corporation, Mr. Hansen was
                             President of Dolphin Acquisition Corp., a
                             skin-care products retailer operating under the
                             name Bare Escentuals, and from 1988 until 1990 he
                             was Vice President, Retail, of Performance, Inc.,
                             a direct marketer and retailer of cycling products.
--------------------------------------------------------------------------------
ROBERT C. HOWARD             Mr. Howard, 66, has been a Director of the
                             Corporation since its inception in December 1992.
                             Mr. Howard was an Executive Vice President of
                             Thermo Electron from 1986 until his retirement in
                             January 1997.  He is also a director of Thermedics
                             Inc., Thermo Cardiosystems Inc., Thermo Power
                             Corporation, ThermoTrex Corporation and Trex
                             Medical Corporation.
--------------------------------------------------------------------------------
PAUL F. KELLEHER             Mr. Kelleher, 54, has been Chief Accounting
                             Officer of the Corporation since its inception in
                             December 1992 and a Director since March 1994.
                             Mr. Kelleher has been Vice President, Finance, of
                             Thermo Electron since 1987 and served as its
                             Controller from 1982 to January 1996.
--------------------------------------------------------------------------------
ANTHONY J. PELLEGRINO        Mr. Pellegrino, 56, has been a Director of the
                             Company since its inception in  December 1992.
                             Mr. Pellegrino has been a Senior Vice President of
                             ThermoTrex since July 1995 and was chairman of
                             LORAD Corporation, a manufacturer of mammography
                             equipment that was acquired by ThermoTrex in
                             November 1992, for more than five years prior to
                             that time.  Mr. Pellegrino is also a director of
                             ThermoQuest Corporation and Trex Medical
                             Corporation.
--------------------------------------------------------------------------------

                                      A-1

<PAGE>
 
--------------------------------------------------------------------------------
FIROOZ RUFEH                 Mr. Rufeh, 59, has been a Director of the
                             Corporation since its inception in December 1992.
                             He was also Vice Chairman of the Board of
                             Directors from February 1996 until February 1997.
                             From December 1992 until May 1995, he was Chief
                             Executive Officer of the Corporation, and from May
                             1995 to February 1996, he was also its Chairman of
                             the Board.   Mr. Rufeh was also President of
                             ThermoTrex Corporation from 1988 and a Vice
                             President of Thermo Electron from January 1986,
                             positions he held until February 1997.  Beginning
                             February 15, 1997, Mr. Rufeh will be a consultant
                             to Thermo Electron.  He is also a director  of
                             ThermoTrex Corporation and Trex Medical
                             Corporation.
--------------------------------------------------------------------------------
KENNETH Y. TANG              Dr. Tang, 49, has been a Director of the
                             Corporation since June 1995.  Dr. Tang has been
                             Senior Vice President of ThermoTrex Corporation
                             for more than five years.  He is also a director
                             of Trex Medical Corporation.
--------------------------------------------------------------------------------
GARY S. WEINSTEIN            Mr. Weinstein, 39, has been  a Director and the
                             Chairman of the Board of the Corporation since
                             February 1996.  Since February 1996, Mr. Weinstein
                             has also been Chairman and Chief Executive Officer
                             of ThermoTrex and a Vice President of Thermo
                             Electron.  Mr. Weinstein was a Managing Director
                             of Lehman Brothers Inc. from 1992 until February
                             1996, serving from March 1995 until leaving the
                             firm as Managing Director, head of Global
                             Syndicate and Equity Capital Markets. Mr.
                             Weinstein joined Lehman Brothers in 1988 and
                             served in various positions, including head of
                             Equities in Europe, head of Equity New Issues in
                             North and South America and head of Global
                             Convertible Securities.  Mr. Weinstein is also a
                             director of ThermoTrex Corporation and Trex
                             Medical Corporation.
--------------------------------------------------------------------------------
DR. NICHOLAS T. ZERVAS       Dr. Zervas, 67, has been a Director of the
                             Corporation since its inception in December 1992,
                             and has been Chief of Neurological Service,
                             Massachusetts General Hospital, since 1977.  Dr.
                             Zervas is also a director of Thermedics Inc.,
                             Thermo Cardiosystems Inc., and ThermoTrex
                             Corporation.
--------------------------------------------------------------------------------

COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS


     The Board of Directors has established an Audit Committee and a Human
Resources Committee, each consisting solely of outside Directors. The present
members of the Audit Committee are Dr. Baldwin (Chairman) and Dr. Zervas.  The
Audit Committee reviews the scope of the audit with the Corporation's
independent public accountants and meets with them for the purpose of reviewing
the results of the audit subsequent to its completion. The present members of
the Human Resources Committee are Dr. Zervas (Chairman), Dr. Baldwin and Dr.
Gyftopoulos.  The Human Resources Committee reviews the performance of senior
members of management, recommends executive compensation and administers the
Corporation's stock-based compensation plans. The Corporation does not have a
nominating committee of the Board of Directors. The Board of Directors met seven
times, the Audit Committee met three times and the Human Resources Committee met
seven times during fiscal 1996. Each Director attended at least 75% of all
meetings of the Board of Directors and Committees on which he or she served held
during fiscal 1996.

COMPENSATION OF DIRECTORS

     CASH COMPENSATION

     Directors who are not employees of the Corporation, of Thermo Electron or
any other companies affiliated with Thermo Electron (also referred to as
"outside Directors") receive an annual retainer of $2,000 and a fee of $1,000
per day for attending regular 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 outside Directors' fees is made quarterly.
Mr. Hansen, Mr. Kelleher, Mr. Pellegrino, Mr. Rufeh and Mr. Weinstein are all
employees of Thermo Electron and its subsidiaries 

                                      A-2

<PAGE>
 
and do not receive any cash compensation from the Corporation for their services
as Directors. Directors are also reimbursed for out-of-pocket expenses incurred
in attending such meetings.

     DEFERRED COMPENSATION PLAN FOR DIRECTORS

     Under the Deferred Compensation Plan for Directors (the "Deferred
Compensation Plan"), a Director has the right to defer receipt of his cash fees
until he or she 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 Corporation 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
ThermoTrex or Thermo Electron; or (b) the failure of the 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
ThermoTrex 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 on the date of deferral as
units of the Corporation's Common Stock. When payable, amounts deferred may be
disbursed solely in shares of Common Stock accumulated under the Deferred
Compensation Plan. A total of 100,000 shares of Common Stock have been reserved
for issuance under the Deferred Compensation Plan. As of December 28, 1996,
796.01 deferred units had been accumulated under the Deferred Compensation Plan.

     DIRECTORS STOCK OPTION PLAN

     The Corporation has adopted a directors stock option plan (the "Directors
Plan") providing for the grant of stock options to purchase shares of the Common
Stock to outside Directors as additional compensation for their service as
Directors, which was amended in 1995.  The Directors Plan provides for the grant
of stock options upon a Director's initial appointment and, beginning in 1999,
awards options to purchase 1,000 shares annually to outside Directors.


     Under the Directors Plan, outside Directors appointed prior to 1995 were
awarded an option to purchase 30,000 shares of Common Stock upon the Director's
appointment or election.  The size of the award to new Directors initially
joining the Board of Directors after 1995 is reduced by 6,000 shares in each
subsequent year.  Directors initially joining the Board of Directors after 1999
would not receive an option grant upon their appointment or election to the
Board of Directors, but would be eligible to participate in the annual option
awards described below.  All options evidencing initial grants are exercisable
six months after the grant, subject to restrictions on transfer and the right of
the Corporation to repurchase such shares at the exercise price in the event the
Director ceases to serve as a Director of the Corporation or any other Thermo
Electron company.  In such event, the restrictions and repurchase rights lapse
in equal annual installments of 6,000 shares per year, starting with the first
anniversary of the grant date, provided the Director has continuously served as
a Director of the Corporation or any other Thermo Electron company since the
grant date.  These options expire on the seventh anniversary of the grant date
if granted before the end of 1995 and on the fifth anniversary of the grant date
if granted after 1995, unless the Director dies or otherwise ceases to serve as
a Director of the Corporation or any other Thermo Electron company prior to that
date.


     In addition, under the Directors Plan, outside Directors will also receive
an annual grant of options to purchase 1,000 shares of Common Stock, commencing
in 1999. The annual grant is made at the close of business on the date of Annual
Meeting of the Stockholders to each outside Director then holding office,
commencing with the Annual Meeting of Stockholders in 1999.  Options evidencing
annual grants may be exercised at any time from and after the six-month
anniversary of the grant date of the option and prior to the expiration of the
option on the third anniversary of the grant date.  Shares acquired upon
exercise of the options would be subject to repurchase by the Corporation at the
exercise price if the recipient ceases to serve as a Director of the Corporation
or any other Thermo Electron company prior to the first anniversary of the grant
date.


     The exercise price for options that have been granted under the Directors
Plan is the average of the closing prices of the Common Stock as reported on the
American Stock Exchange for the five trading days preceding and including the
date of grant. An aggregate of 400,000 shares of Common Stock has been reserved
for issuance under the Directors Plan.

                                      A-3

<PAGE>
 
STOCK OWNERSHIP POLICIES FOR DIRECTORS

     During fiscal 1996, the Human Resources Committee of the Board of Directors
(the "Committee") established a stock holding policy for Directors.  The stock
holding policy requires each Director to hold a minimum of 1,000 shares of
Common Stock.  Directors are requested to achieve this ownership level by the
1998 Annual Meeting of Stockholders.  Directors who are also executive officers
of the Corporation are required to comply with a separate stock holding policy
established by the Committee in fiscal 1996.  The stock holding policy specifies
an appropriate level of ownership of the Corporation's Common Stock as a 
multiple of the officer's compensation.  For the chief executive officer, the 
multiple is one times his base salary and reference bonus for the calendar year.
For all other executive officers, the multiple is one times the officer's base 
salary.  The Committee deemed it appropriate to permit officers to achieve 
these ownership levels over a three-year period.

     In addition, the Committee adopted a policy requiring Directors to hold a
certain number of shares of the Corporation's Common Stock acquired upon the
exercise of stock options.  Under this policy, Directors are required to hold
shares of Common Stock equal to one-half of their net option exercises over a
period of five years.  The net option exercise is determined by calculating the
number of shares acquired upon exercise of a stock option, after deducting the
number of shares that could have been traded to exercise the option and the
number of shares that could have been surrendered to satisfy tax withholding
obligations attributable to the exercise of the option.  This policy is also
applicable to executive officers.  Under this policy, the executive officers are
required to hold shares of Common Stock equal to one-half of their net option 
exercises over a period of five years.  The net option exercise is determined by
calculating the number of shares acquired upon exercise of a stock option, after
deducting the number of shares that could have been traded to exercise the 
option and the number of shares that could have been surrendered to satisfy tax 
withholding obligations attributable to the exercise of the option.

                                STOCK OWNERSHIP

     The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of ThermoTrex and Thermo Electron, as of December 28,
1996, with respect to (i) each person who was known by the Corporation to own
beneficially more than 5% of the outstanding shares of common stock, (ii) each
Director and nominee for Director, (iii) each executive officer named in the
summary compensation table under the heading "Executive Compensation" and (iv)
all Directors and executive officers as a group.


     While certain Directors and executive officers of the Corporation are also
directors and executive officers of ThermoTrex or its subsidiaries other than
the Corporation, all such persons disclaim beneficial ownership of the shares of
Common Stock owned by ThermoTrex.

<TABLE>
<CAPTION>
                                            THERMOLASE       THERMOTREX     THERMO ELECTRON
                NAME (1)                  CORPORATION (2)  CORPORATION (3)  CORPORATION (4)
                --------                  ---------------  --------------   ---------------
<S>                                       <C>              <C>              <C>
ThermoTrex Corporation (5)...............     25,960,996              N/A               N/A
Carliss Y. Baldwin.......................         61,400                0             1,000   
Paul E. Cain.............................        357,400              753               898   
Elias P. Gyftopoulos.....................         61,400            4,500            71,070   
John C. Hansen...........................        504,831          100,353            22,913   
Robert C. Howard.........................         70,181           35,554           194,493   
Paul F. Kelleher.........................         83,300           10,400           144,998   
Anthony J. Pellegrino....................        408,582          807,021           115,875   
Firooz Rufeh.............................        260,694          100,541           133,286   
Raymond D. Sphire........................         50,000               86               100   
Kenneth Y. Tang..........................        354,318           79,516            26,033   
Gary S. Weinstein........................        168,044          110,000           160,412   
Charles K. Wittenberg....................         68,000                0            24,750   
Mark H. Wurth............................        150,000           22,620             7,780   
Nicholas T. Zervas.......................         87,020           28,261                 0   
All Directors and current executive 
officers as a group (16 persons).........      2,773,390        1,324,244         1,476,435     
</TABLE>

(1)  Except as reflected in the footnotes to this table, shares of Common Stock
     of the Corporation and of the common stock of ThermoTrex and Thermo
     Electron beneficially owned consist of shares owned by the indicated
     person, and all share ownership includes sole voting and investment power.

                                      A-4


                               
<PAGE>
 
(2)  Shares of the Common Stock beneficially owned by each Director and
     executive officer and by all Directors and executive officers as a group
     exclude 25,960,996 shares beneficially owned by ThermoTrex, as to which
     shares each Director and executive officer and all members of such group
     disclaim ownership.  Shares of Common Stock beneficially owned by Dr.
     Baldwin, Dr. Cain, Dr. Gyftopoulos, Mr. Hansen, Mr. Howard, Mr. Kelleher,
     Mr. Pellegrino, Mr. Rufeh, Mr. Sphire,  Dr. Tang, Mr. Weinstein, Mr.
     Wittenberg, Mr. Wurth, Dr. Zervas and all Directors and executive officers
     as a group include 61,400, 350,000, 61,400, 480,000, 43,200, 77,000,
     72,000, 44,240, 50,000, 304,000, 100,000, 68,000, 150,000, 67,068 and
     2,007,108 shares, respectively, that such person or group has the right to
     acquire within 60 days of December 28, 1996 through the exercise of stock
     options.  Shares beneficially owned by Dr. Zervas and all Directors and
     executive officers as a group include 796 shares allocated through December
     28, 1996 to Dr. Zervas' account maintained pursuant to the Corporation's
     Deferred Compensation Plan for Directors.  Shares beneficially owned by Mr.
     Pellegrino include 2,082 shares held in a trust of which Mr. Pellegrino's
     spouse is the trustee for the benefit of Mr. Pellegrino's minor child.
     Shares beneficially owned by Dr. Tang include 3,878 shares held by Dr.
     Tang's daughter. As of December 28, 1996, no Director or executive officer
     beneficially owned 1% or more of the Common Stock, other than Mr. Hansen,
     who beneficially owned 1.2%, and Mr. Pellegrino, who beneficially owned
     1.0% of the Common Stock; all Directors and executive officers as a group
     beneficially owned 6.5% of Common Stock outstanding as of such date.


(3)  Shares of ThermoTrex common stock beneficially owned by Dr. Gyftopoulos,
     Mr. Hansen, Mr. Howard, Mr. Kelleher, Mr. Pellegrino, Mr. Rufeh, Dr. Tang,
     Mr. Weinstein, Mr. Wurth, Dr. Zervas and all Directors and executive
     officers as a group include 4,500, 100,000, 31,320, 10,400, 134,500,
     66,000, 63,318, 100,000, 22,500, 26,200 and 580,638 shares, respectively,
     that such person or group has the right to acquire within 60 days of
     December 28, 1996 through the exercise of stock options. Shares
     beneficially owned by Dr. Zervas and all Directors and executive officers
     as a group include 2,061 shares allocated through December 28, 1996 to
     Dr.Zervas' account maintained pursuant to ThermoTrex's deferred
     compensation plan for directors. Shares beneficially owned by Mr.
     Pellegrino include 10,408 shares held in a trust of which Mr. Pellegrino's
     spouse is the trustee for the benefit of Mr. Pellegrino's minor child.
     Shares beneficially owned by Mr. Tang include 2,025 shares held by Dr.
     Tang's daughter. As of December 28, 1996, no director or executive officer
     beneficially owned more than 1% of the ThermoTrex common stock outstanding
     as of such date, other than Mr. Pellegrino, who beneficially owned 4.1% of
     such common stock; all directors and executive officers as a group
     beneficially owned approximately 6.7% of the ThermoTrex common stock
     outstanding as of December 28, 1996.


(4)  The shares of common stock of Thermo Electron shown in the table reflect a
     three-for-two split of such stock distributed in June 1996 in the form of a
     50% stock dividend.  Shares of Thermo Electron common stock beneficially
     owned by Dr. Gyftopoulos, Mr. Hansen, Mr. Howard, Mr. Kelleher, Mr.
     Pellegrino, Mr. Rufeh,  Dr. Tang, Mr. Weinstein, Mr. Wittenberg, Mr. Wurth
     and all Directors and executive officers as a group include 9,375, 22,500,
     47,361, 97,574, 115,875, 90,560, 23,850, 160,075, 24,750, 7,500 and
     1,041,892 shares, respectively, that such person or member of the group
     have the right to acquire within 60 days of December 28, 1996 through the
     exercise of stock options.  Shares beneficially owned by Mr. Howard, Mr.
     Kelleher and all Directors and executive officers as a group include 3,040,
     1,324 and 6,298  full shares, respectively, allocated through December 28,
     1996 to their respective accounts maintained pursuant to Thermo Electron's
     employee stock ownership plan.  No Director or executive officer
     beneficially owned more than 1% of Thermo Electron's common stock
     outstanding as of such date; all Directors and executive officers as a
     group beneficially owned 1.0% of the common stock of Thermo Electron
     outstanding as of such date.


(5)  ThermoTrex owned 63.9% of the Common Stock outstanding as of December 28,
     1996. ThermoTrex's address is 10455 Pacific Center Court, San Diego,
     California 92121.  As of December 28, 1996, ThermoTrex had the power to
     elect all of the members of the Corporation's Board of Directors.
     ThermoTrex is a majority owned subsidiary of Thermo Electron and therefore,
     Thermo Electron may be deemed a beneficial owner of the shares of Common
     Stock beneficially owned by ThermoTrex.  Thermo Electron disclaims
     beneficial ownership of these shares.

                                      A-5

<PAGE>
 
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's Directors and executive officers, and beneficial owners of more
than 10% of the Common Stock, such as Thermo Electron, to file with the
Securities and Exchange Commission initial reports of ownership and periodic
reports of change in ownership of  the Corporation's securities.  Based upon a
review of such filings, all Section 16(a) filing requirements applicable to such
persons were complied with during fiscal 1996, except in the following
instances.  ThermoTrex, the Corporation's parent company, had one late Form 4
reporting one transaction.  Thermo Electron, the parent company of ThermoTrex
had two late Forms 4 reporting four transactions, which included the transaction
reported late by ThermoTrex.

                            EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

     The following table summarizes compensation for services to the Corporation
in all capacities awarded to, earned by or paid to the Corporation's chief
executive officer and four other most highly compensated executive officer (the
"named executive officers") for the last full fiscal year from October 1, 1995
to September 28, 1996 ("fiscal 1996"), for the nine-month period from January 1,
1995 to September 30, 1995 ("fiscal 1995"), reflecting a change in the
Corporation's fiscal year-end to the 52 or 53 week period ending on the Saturday
closest to September 30, and for the preceding full fiscal year from January 2,
1994 to December 31, 1994 ("fiscal 1994").


     The Corporation is required to appoint certain executive officers and full-
time employees of Thermo Electron as executive officers of the Corporation, 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 Corporation's affairs is
provided to the Corporation under the Corporate Services Agreement between the
Corporation and Thermo Electron. Accordingly, the compensation for these
individuals is not reported in the following table.

<TABLE> 
<CAPTION> 
                                                    SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------------------------------------------------- 
                                                                           LONG TERM
                                                                         COMPENSATION
                                                                         ------------
                                                                          SECURITIES
                                      ANNUAL COMPENSATION             UNDERLYING  OPTIONS
    NAME AND PRINCIPAL       FISCAL   -------------------             (NO. OF SHARES AND             ALL OTHER
         POSITION             YEAR    SALARY        BONUS                COMPANY) (3)           COMPENSATION (4)
         --------             ----    ------        -----               ------------            ----------------
<S>                          <C>      <C>           <C>               <C>                         <C>      
John C. Hansen (5)           1996     $225,000      $115,000 (2)       22,500   (TMO)                 $2,674
  Chief Executive Officer                                               2,000   (TBA)
  and President                                                         2,000   (TFG)
                                                                        2,000   (TLT)
                                                                        6,000   (TOC)
                                                                        6,000   (TMQ)
                                                                        2,000   (TSR)
                                                                        4,000   (TXM)
                             1995     $168,750 (1)   $48,000 (5)      600,000   (TLZ)                     --
                                                                      100,000   (TKN)
--------------------------------------------------------------------------------------------------------------------------- 
Mark H. Wurth (6)            1996     $160,000       $60,000 (2)        7,500   (TMO)                 $4,359 (7)
  Vice President, Operations 1995     $ 53,333 (1)   $30,000 (6)      150,000   (TLZ)                     --
                                                                       25,000   (TKN)
---------------------------------------------------------------------------------------------------------------------------
Dr. Paul E. Cain (8)         1996     $150,000       $10,000 (2)           --                         $5,888
  Vice President             1995     $112,500 (1)   $18,000               --                         $6,840
                             1994     $150,000       $98,000               --                             --
---------------------------------------------------------------------------------------------------------------------------
</TABLE> 

                                      A-6

<PAGE>
 
<TABLE> 
--------------------------------------------------------------------------------------------------------------------------
<S>                          <C>      <C>             <C>              <C>                            <C>  
Raymond D. Sphire (9)        1996     $100,000        $36,000 (2)      30,000   (TLZ)                     --
   Vice President                                                     
--------------------------------------------------------------------------------------------------------------------------
Charles K. Wittenberg (10)   1996     $ 67,500        $45,000 (2)      68,000   (TLZ)                 $5,321
   Vice President                                                     
-------------------------------------------------------------------------------------------------------------------------- 
 </TABLE>

(1)  Annual compensation for executive officers is reviewed and determined on a
     calendar year basis, even though the Corporation's fiscal year ends in
     September.  The Corporation changed its fiscal year-end to September from
     December in 1995, and as a consequence, the salary data for fiscal 1995
     reflects salary paid during the nine-month period from January 1, 1995 to
     September 30, 1995.  Salary data for subsequent fiscal years  represents
     salary paid during the Corporation's full fiscal year.

(2)  The bonus amount presented for fiscal 1995 represents the bonus paid for
     performance during calendar 1995.  Bonuses have not yet been determined for
     calendar 1996; therefore, the bonus amounts shown for fiscal 1996 are
     estimates.

(3)  In addition to receiving options to purchase Common Stock (designated in
     the table as "TLZ"), executive officers of the Corporation 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 period covered by the table to the
     named executive officers in the following Thermo Electron companies:
     Thermo Electron (designated in the table as TMO), Thermo BioAnalysis
     Corporation (designated in the table as TBA), Thermo Fibergen Inc.
     (designated in the table as TFG), ThermoLyte Corporation (designated in the
     table as TLT), Thermo Optek Corporation (designated in the table as TOC),
     ThermoQuest Corporation (designated in the table as TMQ), Thermo Sentron
     Inc. (designated in the table as TSR), and Trex Medical Corporation
     (designated in the table as TXM).

(4)  Represents the amount of matching contributions made on behalf of the named
     executive officer participating in the Thermo Electron 401(k) Plan.

(5)  Mr. Hansen was appointed Chief Executive Officer and President of the
     Corporation on May 1, 1995.  The bonus reported for Mr. Hansen for fiscal
     1995 represents the bonus paid for the eight-month period from the
     commencement of his employment through December 1995.

(6)  Mr. Wurth was appointed Vice President, Operations of the Corporation in
     June 1995.  The bonus reported for Mr. Wurth for fiscal 1995 represents the
     bonus paid for the seven-month period from the commencement of his
     employment through December 1995.

(7)  In addition  to $1,661, which represents the amount of matching
     contributions made on behalf of the named executive officer participating
     in the Thermo Electron 401(k) Plan, the amount reported includes $2,698,
     which represents the amount of compensation attributable to an interest-
     free loan provided to Mr. Wurth in connection with his relocation to San
     Diego, California.  See "Relationship with Affiliates".

(8)  Dr. Cain was appointed a Vice President of the Corporation in March 1995.
     Dr. Cain also serves as a Director of ThermoLyte Corporation, a majority
     owned subsidiary of Thermo Electron.  Options granted to Dr. Cain in his
     capacity as a director of ThermoLyte are not included in the table as they
     were granted as compensation for service in a capacity other than in his
     capacity as an officer of the Corporation.

(9)  Mr. Sphire was appointed a Vice President of the Corporation on June 11,
     1996.  The bonus reported for Mr. Sphire for fiscal 1995 represents the
     bonus attributable to calendar 1995 performance.

(10) Mr. Wittenberg was appointed a Vice President of the Corporation on January
     9, 1996.

STOCK OPTIONS GRANTED DURING FISCAL 1996

                                      A-7

<PAGE>
 
     The following table sets forth information concerning individual grants of
stock options by the Corporation and other Thermo Electron companies made during
fiscal 1996 to the named executive officers in their capacities as officers of
the Corporation.  It has not been the Corporation's policy in the past to grant
stock appreciation rights, and no such rights were granted during fiscal 1996.

<TABLE> 
<CAPTION> 
                                              OPTION GRANTS IN FISCAL 1996
-------------------------------------------------------------------------------------------------------------
                                              PERCENT OF                                 POTENTIAL REALIZABLE 
                                                 TOTAL                                     VALUE AT ASSUMED  
                                                OPTIONS                                 ANNUAL RATES OF STOCK
                              NUMBER OF       GRANTED TO        EXERCISE                PRICE APPRECIATION FOR
                             SECURITIES        EMPLOYEES         PRICE                     OPTION TERM (2)   
                         UNDERLYING OPTIONS    IN FISCAL          PER     EXPIRATION       ---------------   
         NAME                GRANTED (1)         YEAR            SHARE       DATE           5%          10% 
         ----                -----------         ----            -----       ----           --          ---  
<S>                      <C>                  <C>               <C>       <C>          <C>         <C>
John C. Hansen              22,500  (TMO)            1.4%  (3)    $32.60    11/28/07    $583,650   $1,568,475
                             2,000  (TBA)            0.2%  (3)    $10.00     3/11/08     $15,920      $42,760
                             2,000  (TFG)            0.4%  (3)    $10.00     9/12/08     $15,920      $42,760
                             2,000  (TLT)            0.6%  (3)    $10.00     3/11/08     $15,920      $42,760
                             6,000  (TOC)            0.2%  (3)    $12.00      4/9/08     $57,300     $153,960
                             6,000  (TMQ)            0.2%  (3)    $13.00     3/11/08     $62,100     $166,800
                             2,000  (TSR)            0.4%  (3)    $14.00     3/11/08     $22,280      $59,880
                             4,000  (TXM)            0.2%  (3)    $11.00     3/11/08     $35,000      $94,080
-------------------------------------------------------------------------------------------------------------
Mark H. Wurth.....           7,500  (TMO)            0.5%  (3)    $32.60    11/28/07    $194,550     $522,825
-------------------------------------------------------------------------------------------------------------
Paul E. Cain......              --                    --              --          --          --           --
-------------------------------------------------------------------------------------------------------------
Raymond D.                  30,000  (TLZ)           16.3%         $23.55     9/12/08    $562,200   $1,510,800  
Sphire ...........          
-------------------------------------------------------------------------------------------------------------
Charles K.                  40,000  (TLZ)           21.7%         $23.48      1/9/08    $747,600   $2,008,400
Wittenberg........          28,000  (TLZ)           15.2%         $23.55     9/12/08    $524,720   $1,410,080
-------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  The shares of common stock of Thermo Electron shown in the table reflect a
     three-for-two stock split distributed in June 1996 in the form of a 50%
     stock dividend. All of the options granted during the fiscal year are
     immediately exercisable at the date of grant, except options to purchase
     ThermoLyte Corporation (designated in the table as TLT), which are not
     exercisable until the earlier of (i) 90 days after the effective date of
     the registration of that company's common stock under Section 12 of the
     Securities Exchange Act of 1934 (the "Exchange Act") and (ii) nine years
     after the grant date. In all cases, 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 the 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 Corporation or another Thermo Electron
     company. For companies that are not publicly traded, the repurchase rights
     lapse in their entirety on the ninth anniversary of the grant date. The
     granting corporation may permit the holders of such options to exercise
     options and to satisfy tax withholding obligations by surrendering shares
     equal in fair market value to the exercise price or withholding obligation.

(2)  The amounts shown on 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 

                                      A-8

<PAGE>
 
     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 of the granting
     corporation, the optionee's 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 to total options
     granted to employees of Thermo Electron and its public subsidiaries.

STOCK OPTIONS EXERCISED DURING FISCAL 1996

     The following table reports certain information regarding stock option
exercises during fiscal 1996 and outstanding stock options to purchase shares of
Thermo Electron companies held at the end of fiscal 1996 by the named executive
officers. No stock appreciation rights were exercised or were outstanding during
fiscal 1996.

             AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND FISCAL
--------------------------------------------------------------------------------
                          1996 YEAR-END OPTION VALUES
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                        NO. OF UNEXERCISED
                                                  SHARES               OPTIONS AT FISCAL        VALUE OF
                                                 ACQUIRED                   YEAR-END           UNEXERCISED
                                                    ON       VALUE       (EXERCISABLE/        IN-THE-MONEY
           NAME              COMPANY             EXERCISE   REALIZED   UNEXERCISABLE) (1)        OPTIONS
           ----              -------             --------   --------   ------------------        ---------     
<S>                          <C>                 <C>       <C>         <C>                 <C>            
John C. Hansen.............. ThermoLase           120,000  $2,041,200    480,000  /0       $5,584,800  /--
                             ThermoTrex              -           -       100,000  /0       $1,487,500  /--
                             Thermo Electron         -           -        22,500  /0         $174,938  /--
                             Thermo BioAnalysis      -           -         2,000  /0           $7,750  /--
                             Thermo Fibergen         -           -         2,000  /0           $5,250  /--
                             ThermoLyte              -           -             0  /2,000           --  / $0 (2)
                             Thermo Optek            -           -         6,000  /0          $18,000  /--
                             ThermoQuest             -           -         6,000  /0           $3,000  /--
                             Thermo Sentron          -           -         2,000  /0               $0  /--
                             Trex Medical            -           -         4,000  /0          $37,000  /--
-----------------------------------------------------------------------------------------------------------------
Mark H. Wurth................ThermoLase              -           -       150,000  /0       $1,286,250  /--
                             ThermoTrex             2,500     $63,063     22,500  /0         $291,938  /--
                             Thermo Electron         -           -         7,500  /0          $58,313  /--
-----------------------------------------------------------------------------------------------------------------
Paul E. Cain.................ThermoLase            50,000  $1,012,500    350,000  /0       $7,306,250  /--
-----------------------------------------------------------------------------------------------------------------
Raymond D. Sphire............ThermoLase              --         --        50,000  /0          $56,900  /--
-----------------------------------------------------------------------------------------------------------------
Charles K.                                                                               
Wittenberg (3)...............ThermoLase              --         --        68,000  /0               $0  /--
-----------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  The shares of common stock of Thermo Electron shown in the table reflect a
     three-for-two stock split distributed in June 1996 in the form of a 50%
     stock dividend. All of the options reported outstanding at the end of the
     fiscal year were immediately exercisable as of fiscal year-end, except the
     options to purchase shares of ThermoLyte Corporation (designated in the
     table as TLT), which are not exercisable until the earlier of (i) 90 days
     after the effective date of the registration of that company's common stock
     under Section 12 of the Exchange Act and (ii) nine years from the grant
     date. In all cases, 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 the granting
     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 Corporation or another
     Thermo

                                      A-9

<PAGE>
 
     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)  No public market existed for the shares as of December 28, 1996.
     Accordingly, no value in excess of the exercise price has been attributed
     to these options.


(3)  Prior to his appointment as a Vice President of the Corporation in January
     1996, Mr. Wittenberg was  an associate general counsel of Thermo Electron.
     Mr. Wittenburg holds unexercised options to purchase common stock of Thermo
     Electron and its subsidiaries other than the Corporation, which were
     granted to him as compensation for his service as an associate general
     counsel.  Those options are not reported in the table as they were granted
     as compensation for service in a capacity other than in his capacity as an
     officer of the Corporation.

EMPLOYMENT AGREEMENT

     In connection with the acquisition by the Corporation of CBI Laboratories,
Inc. ("CBI") in 1993, Dr. Cain entered into a four-year employment agreement
with CBI.  Pursuant to the terms of this agreement, Dr. Cain will be paid a base
salary of $150,000 per year and an annual bonus which in no event will exceed
$100,000.  In the event Dr. Cain ceases to be an employee of CBI, CBI is only
obligated to continue paying salary to Dr. Cain under the terms of his
employment agreement if CBI terminated Dr. Cain's employment without cause.

                                     A-10

<PAGE>
 
                         RELATIONSHIP WITH AFFILIATES

     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 Electron and certain of its
subsidiaries have created several privately and publicly held, majority owned
subsidiaries, including the Corporation which was created by ThermoTrex.  From
time to time, Thermo Electron and its subsidiaries will create other majority
owned subsidiaries as part of its spinout strategy.  (The Corporation and the
other Thermo Electron subsidiaries are referred to hereinafter as the "Thermo
Subsidiaries".)


     Thermo Electron and each of the Thermo Subsidiaries recognize that the
benefits and support that derive from their affiliation are essential elements
of their individual performance.  Accordingly, Thermo Electron and each of the
Thermo Subsidiaries have 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 (1)
all of the companies and their stockholders are treated consistently and fairly,
(2) the scope and nature of the cooperation among the companies, and each
company's responsibilities, are adequately defined, (3) each company has access
to the combined resources and financial, managerial and technological strengths
of the others, and (4) 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 or other
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
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 establishes certain
internal policies and procedures applicable to members of the Thermo Group. 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 participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Corporation, can withdraw from participation in the Charter upon
30 days' prior 

                                     A-11

<PAGE>
 
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 and tax allocation agreement (if
any) 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.

     As provided in the Charter, the Corporation 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 financial and other services to the Corporation.
Thermo Electron assessed the Corporation an annual fee equal to 1.2% and 1.25%
of the Corporation's revenues for these services for calendar 1995 and for the
periods prior to calendar 1995, respectively. Effective January 1, 1996, the fee
was reduced to 1.0% of the Corporation's revenues. The fee may be changed by
mutual agreement of the Corporation and Thermo Electron.  During fiscal 1996,
Thermo Electron assessed the Corporation $293,000 in fees under the Services
Agreement.  Management believes that these charges are reasonable and that the
terms of the Services Agreement are representative of the expenses the
Corporation would have incurred on a stand-alone basis. For additional items
such as employee benefit plans, insurance coverage and other identifiable costs,
Thermo Electron charges the Corporation based on costs attributable to the
Corporation. The Services Agreement automatically renews for successive one-year
terms, unless canceled by the Corporation upon 30 days' prior notice.  In
addition, the Services Agreement terminates automatically in the event the
Corporation 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 Corporation will be required to pay a termination fee equal to
the fee that was paid by the Corporation 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 Corporation or as required in order to meet the Corporation's
obligations under Thermo Electron's policies and procedures.  Thermo Electron
will charge the Corporation a fee equal to the market rate for comparable
services if such services are provided to the Corporation following termination.


     From time to time, the Corporation may transact business with other
companies in the Thermo Group.   In fiscal 1996, such transactions included the
following:  


     ThermoTrex provides certain services to the Corporation, including
personnel administration, accounting, data processing, and general
administrative management.  The Corporation was charged $327,000 for these
services in fiscal 1996.


     During fiscal 1996, the Corporation engaged the LORAD division of Trex
Medical Corporation, a majority-owned subsidiary of ThermoTrex, to manufacture
143 laser systems at various prices for an aggregate cost of $8,549,000.  As of
September 28, 1996, the Corporation had committed to purchase 132 additional
laser systems at an aggregate cost of $6,402,000.


     The Corporation subleases office and research facilities from ThermoTrex
and is charged for the actual square footage occupied at approximately the same
cost-per-square-foot paid by ThermoTrex under it prime lease.  During fiscal
1996, the Corporation paid an aggregate of $125,000 under this arrangement.
Currently, the cost of the area occupied by the Corporation is $342,000 per
year.


     In August 1996, the Corporation loaned $125,000 to Mark H. Wurth, a Vice
President and executive officer of the Corporation, in connection with Mr.
Wurth's relocation to San Diego, California.  The loan is non-interest bearing
and is payable one year from the date of issue.


     As of September 28, 1996, $6,001,000 of the Corporation's cash equivalents
were invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Corporation in effect lends excess cash to Thermo Electron, which
Thermo Electron collateralizes with investments principally consisting of
corporate notes, U.S. government agency securities, money market funds,
commercial paper and other marketable securities, in the 

                                     A-12

<PAGE>
 
amount of at least 103% of such obligation. The Corporation's funds subject to
the repurchase agreement are readily convertible into cash by the Corporation.
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.

STOCK HOLDING ASSISTANCE PLAN

     In 1996, the Corporation adopted a stock holding policy which requires its
executive officers to acquire and hold a minimum number of shares of Common
Stock.  In order to assist the executive officers in complying with the policy,
the Corporation also adopted a Stock Holding Assistance Plan under which it may
make interest-free loans to certain key employees, including its executive
officers, to enable such employees to purchase the Common Stock in the open
market.  No such loans are currently outstanding under the plan.

                                     A-13