UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
(Date of earliest event
reported):
April 27, 2005
----------------------------------------
THERMO ELECTRON CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 1-8002 04-2209186
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification
incorporation or organization) Number)
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02454-9046
(Address of principal executive offices) (Zip Code)
(781) 622-1000
(Registrant's telephone number including area code)
This Current Report on Form 8-K contains forward-looking statements
that involve a number of risks and uncertainties. Important factors that could
cause actual results to differ materially from those indicated by such
forward-looking statements are set forth under the heading "Forward Looking
Statements" in the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 2004. These include risks and uncertainties relating to the
need to develop new products and adapt to significant technological change,
dependence on customers that operate in cyclical industries, general worldwide
economic conditions and related uncertainties, the effect of changes in
governmental regulations, dependence on customers' capital spending policies and
government funding policies, use and protection of intellectual property,
exposure to product liability claims in excess of insurance coverage, retention
of contingent liabilities from businesses we sold, realization of potential
future savings from new productivity initiatives, implementation of our branding
strategy, implementation of strategies for improving internal growth, the effect
of exchange rate fluctuations on international operations, identification,
completion and integration of new acquisitions and potential impairment of
goodwill from previous acquisitions. While we may elect to update
forward-looking statements at some point in the future, we specifically disclaim
any obligation to do so, even if our estimates change and, therefore, you should
not rely on these forward-looking statements as representing our views as of any
date subsequent to today.
Item 2.02 Results of Operations and Financial Condition.
On April 27, 2005, the Registrant announced its financial results for
the fiscal quarter ended April 2, 2005. The full text of the press release
issued in connection with the announcement is attached as Exhibit 99.1 to this
Form 8-K and incorporated herein by reference.
The information contained in this Form 8-K (including Exhibit 99.1)
shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by reference in
any filing under the Securities Act of 1933 or the Exchange Act, except as
expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
The following Exhibit relating to Item 2.02 shall be deemed "furnished", and not
"filed":
99.1 Press Release dated April 27, 2005.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on this 27th day of April, 2005.
THERMO ELECTRON CORPORATION
By: /s/ Peter E. Hornstra
--------------------------------------
Peter E. Hornstra
Corporate Controller and Chief
Accounting Officer
Exhibit 99.1
[THERMO LOGO]
NEWS
FOR IMMEDIATE RELEASE
Media Contact Information: Investor Contact Information:
Lori Gorski J. Timothy Corcoran
Phone: 781-622-1242 Phone: 781-622-1111
E-mail: lori.gorski@thermo.com E-mail: tim.corcoran@thermo.com
---------------------- -----------------------
Website: www.thermo.com
Thermo Electron Reports 15% Growth in Earnings per Share
in First Quarter 2005 and Raises Guidance for Full Year
WALTHAM, Mass., April 27, 2005 - Thermo Electron Corporation (NYSE:TMO) today
reported revenues of $559 million for the first quarter of 2005, a 7 percent
increase from $525 million in 2004. The revenue increase results from the effect
of acquisitions (5%) and currency translation (2%). GAAP diluted earnings per
share (EPS) grew 15 percent in the 2005 quarter to $.30, compared with $.26 in
the year-ago period. GAAP operating income rose 13 percent in 2005, and GAAP
operating margin increased to 10.7 percent from 10.1 percent in 2004.
Adjusted EPS also grew 15 percent, to $.31 in the first quarter of 2005,
compared with $.27 in the 2004 quarter. Adjusted operating income increased 7
percent to record first quarter levels since the company's reorganization in
2000. Adjusted operating margin was 11.9 percent in both periods.
Adjusted EPS, adjusted operating income and adjusted operating margin are
non-GAAP measures that exclude certain items detailed at the end of this press
release under the heading, "Use of Non-GAAP Financial Measures."
First Quarter Highlights
o EPS grew 15 percent
o More than 20 new products introduced at Pittcon
o Signed agreement to acquire Kendro Laboratory Products
o Acquired Niton, a provider of portable industrial X-ray analyzers, at
quarter end
o Acquired R&P, a supplier of air-quality monitoring instruments, after
quarter end
"We are pleased to report another quarter of solid bottom-line growth, with a 15
percent increase in EPS," said Marijn E. Dekkers, president and chief executive
officer of Thermo Electron. "We are consistently growing earnings despite the
weaker conditions we've recently faced in some of our end markets, most notably
pharmaceutical, offset by strength in industrial segments.
"To drive top-line growth, we continue to expand our portfolio of products and
services, with a focus on creating integrated instrument solutions that allow
our customers to make their processes more efficient. Our new LeadStream
Solution(TM) featured at Pittcon, for example, is a suite of integrated
instruments, robotics and software that eases a major bottleneck in drug
discovery by improving the speed and accuracy of ADME/Tox screening. Our own
innovations are enhanced by strategic acquisitions such as Kendro, which will
greatly extend our laboratory offerings after its expected closing in the second
quarter. The recent additions of Niton and R&P (Rupprecht and Patashnick)
further strengthen our position in industrial and environmental markets as well.
"We expect our positive earnings momentum to continue in the second quarter of
2005, resulting in adjusted EPS guidance of $.32 to $.34 - a 10 to 17 percent
increase over $.29 in the 2004 quarter. For the full year, we are raising our
previous estimate of $1.40 to $1.45 to our new guidance of $1.42 to $1.47, which
is 14 to 18 percent higher than last year's $1.25." (This guidance excludes
approximately $.04 of expense per quarter from the amortization of
acquisition-related intangible assets; it also excludes results from the pending
Kendro acquisition and the other items described in this press release under the
heading, "Use of Non-GAAP Financial Measures.")
Life and Laboratory Sciences
The Life and Laboratory Sciences segment reported an 8 percent revenue increase
in the first quarter of 2005 to $393 million, versus $365 million in the 2004
quarter. GAAP operating income for the segment grew 11 percent in the 2005
quarter, with GAAP operating margin increasing to 13.2 percent from 12.8 percent
a year ago. Adjusted operating income increased 6 percent in the 2005 period,
and adjusted operating margin was 14.4 percent, compared with 14.7 percent in
2004.
Measurement and Control
First quarter revenues in the Measurement and Control segment grew 4 percent to
$166 million in the first quarter of 2005, compared with $160 million a year
ago. GAAP operating income for the segment increased 29 percent in the 2005
quarter, and GAAP operating margin rose to 11.1 percent from 8.9 percent last
year. Adjusted operating income grew 25 percent in the 2005 period, and adjusted
operating margin increased to 12.2 percent, versus 10.1 percent in 2004.
Use of Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with generally
accepted accounting principles (GAAP), we use certain non-GAAP financial
measures, including adjusted EPS, adjusted operating income and adjusted
operating margin, which exclude restructuring and other costs/income and
amortization of acquisition-related intangible assets. Adjusted EPS and adjusted
operating income also exclude certain other gains and losses, tax
provisions/benefits related to the previous items, benefits from tax credit
carryforwards and the impact of the resolution of significant tax audits. In
addition, our adjusted EPS guidance excludes results of pending acquisitions and
the impact of accounting principles not yet adopted. We exclude these
items because they are outside of our normal operations and/or, in certain
cases, are difficult to forecast accurately for future periods. We believe that
the inclusion of such measures helps investors to gain a better understanding of
our core operating results and future prospects, consistent with how management
measures and forecasts the company's performance, especially when comparing such
results to previous periods or forecasts.
Specifically:
We exclude costs and tax effects associated with restructuring activities, such
as reducing overhead and consolidating facilities, in connection with the final
phase of our overall reorganization, which we substantially completed in 2004.
We believe that the costs related to these restructuring activities are not
indicative of our normal operating costs.
We exclude charges relating to the sale of inventories revalued at the date of
acquisition, as we believe these charges are not indicative of our normal
operating costs.
We exclude the expense and tax effects associated with the amortization of
acquisition-related intangible assets because a significant portion of the
purchase price for acquisitions may be allocated to intangible assets that have
lives of 5 to 10 years. Exclusion of the amortization expense allows comparisons
of operating results that are consistent over time for both our newly acquired
and long-held businesses and with both acquisitive and non-acquisitive peer
companies.
We also exclude certain gains/losses and related tax effects, benefits from tax
credit carryforwards and the impact of the resolution of significant tax audits,
which are either isolated or cannot be expected to occur again with any
regularity or predictability and that we believe are not indicative of our
normal operating gains and losses. We exclude gains/losses from the sale of our
equity interests in Newport Corporation and Thoratec Corporation, as well as
other items such as the sale of a business or real estate and the early
retirement of debt.
Thermo's management uses these non-GAAP measures, in addition to GAAP financial
measures, as the basis for measuring the company's core operating performance
and comparing such performance to that of prior periods and to the performance
of our competitors. Such measures are also used by management in their financial
and operating decision-making and for compensation purposes.
The non-GAAP financial measures of Thermo's results of operations included in
this press release are not meant to be considered superior to or a substitute
for Thermo's results of operations prepared in accordance with GAAP.
Reconciliations of such non-GAAP financial measures to the most directly
comparable GAAP financial measures are set forth in the accompanying tables.
Thermo's earnings guidance, however, is only provided on an adjusted basis. It
is not feasible to provide GAAP EPS guidance because the items excluded, other
than the amortization expense, are difficult to predict and estimate and are
primarily dependent on future events, such as the timing of completion of and
results from pending acquisitions, the impact of accounting principles not yet
adopted, decisions concerning the location and timing of facility consolidations
and the timing of and proceeds from the sale of our equity interests in Newport
and Thoratec. We no longer own any shares of FLIR Systems.
Conference Call
Thermo Electron will hold its earnings conference call today, April 27, at 9:00
a.m. Eastern time. To listen, dial 888-872-9028 within the U.S., or 973-633-6740
outside the U.S. You may also listen to the call live on the Web by visiting
http://www.thermo.com. Click on "About Thermo," then "Investors." An audio
archive of the call will be available in that section of our Web site until
Friday, May 27, 2005. You will also find this press release, including the
accompanying reconciliation of non-GAAP financial measures, under the heading
"Press Releases," and related information under the heading "Financial Reports,"
in the Investors section of our Web site.
About Thermo Electron
Thermo Electron Corporation is the world leader in analytical instruments. Our
instrument solutions enable our customers to make the world a healthier, cleaner
and safer place. Thermo's Life and Laboratory Sciences segment provides
analytical instruments, scientific equipment, services and software solutions
for life science, drug discovery, clinical, environmental and industrial
laboratories. Thermo's Measurement and Control segment is dedicated to providing
analytical instruments used in a variety of manufacturing processes and
in-the-field applications, including those associated with safety and homeland
security. Based near Boston, Massachusetts, Thermo has revenues of more than $2
billion, and employs approximately 10,000 people in 30 countries. For more
information, visit http://www.thermo.com.
The following constitutes a "Safe Harbor" statement under the Private Securities
Litigation Reform Act of 1995: This press release contains forward-looking
statements that involve a number of risks and uncertainties. Important factors
that could cause actual results to differ materially from those indicated by
such forward-looking statements are set forth under the heading "Forward-Looking
Statements" in the company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2004. These include risks and uncertainties relating to: the
need to develop new products and adapt to significant technological change,
dependence on customers that operate in cyclical industries, general worldwide
economic conditions and related uncertainties, the effect of changes in
governmental regulations, dependence on customers' capital spending policies and
government funding policies, use and protection of intellectual property,
exposure to product liability claims in excess of insurance coverage, retention
of contingent liabilities from businesses we sold, realization of potential
future savings from new productivity initiatives, implementation of our branding
strategy, implementation of strategies for improving internal growth, the effect
of exchange rate fluctuations on international operations, identification,
completion and integration of new acquisitions and potential impairment of
goodwill from previous acquisitions. We undertake no obligation to publicly
update any forward-looking statement, whether as a result of new information,
future events or otherwise.
###
Consolidated Statement of Income (unaudited)
Three Months Ended
---------------------------------------------------------------
April 2, 2005 April 3, 2004
------------------------------ ------------------------------
(In thousands except per share amounts) Reported (a) Adjusted (b) Reported (a) Adjusted (b)
------------------------------------------------------------------------------------------------------------------------------
Revenues $ 559,208 $ 559,208 $ 525,032 $ 525,032
-------------- ------------- -------------- -------------
Costs and Operating Expenses:
Cost of revenues (c) 299,974 299,974 284,172 281,764
Selling, general and administrative expenses 156,087 156,087 146,753 146,753
Amortization of acquisition-related intangible assets 7,414 - 3,806 -
Research and development expenses 36,328 36,328 34,269 34,269
Restructuring and other costs (income), net (d) (271) - 3,158 -
-------------- ------------- -------------- -------------
499,532 492,389 472,158 462,786
-------------- ------------- -------------- -------------
Operating Income 59,676 66,819 52,874 62,246
Interest Income 3,336 3,336 1,920 1,920
Interest Expense (3,155) (3,155) (2,729) (2,729)
Other Income, Net (e) 3,123 3,123 3,411 1,790
-------------- ------------- -------------- -------------
Income from Continuing Operations Before Income Taxes 62,980 70,123 55,476 63,227
Provision for Income Taxes (f) (17,397) (19,651) (15,811) (18,064)
-------------- ------------- -------------- -------------
Income from Continuing Operations 45,583 50,472 39,665 45,163
Income from Discontinued Operations (net of income tax
provision of $1,147 in 2004) - - 3,457 -
Gain on Disposal of Discontinued Operations (net of income tax
provision of $2,238 in 2005) 3,273 - - -
-------------- ------------- -------------- -------------
Net Income $ 48,856 $ 50,472 $ 43,122 $ 45,163
============== ============= ============== =============
Earnings per Share from Continuing Operations:
Basic $ .28 $ .24
============== ==============
Diluted $ .28 $ .24
============== ==============
Earnings per Share:
Basic $ .30 $ .26
============== ==============
Diluted $ .30 $ .31 $ .26 $ .27
============== ============= ============== =============
Weighted Average Shares:
Basic 160,957 165,206
============== ==============
Diluted 164,730 164,730 169,996 169,996
============== ============= ============== =============
(a) Reported results were determined in accordance with U.S. generally accepted
accounting principles (GAAP). Prior period amounts have been adjusted to
reflect the treatment of Spectra-Physics as a discontinued operation.
(b) Adjusted results are non-GAAP measures and exclude charges to cost of
revenues (note c), amortization of acquisition-related intangible assets,
restructuring and other costs/income (note d), certain other income/expense
(note e), the tax consequences of these items (note f) and results of
discontinued operations.
(c) Reported results in 2004 include $2,408,000 of charges primarily for the
sale of inventories revalued at the date of acquisition.
(d) Reported results in 2005 include restructuring and other items consisting
principally of severance, abandoned facility and other expenses of real
estate consolidation and net gains on the sale of buildings. Reported
results in 2004 include restructuring and other items consisting
principally of severance, abandoned facility and other expenses of real
estate consolidation, gain on the sale of a business and legal/advisory
fees associated with a reorganization of the company's non-U.S. subsidiary
structure.
(e) Reported results include $1,621,000 of gains from the sale of shares of
Thoratec Corporation in 2004.
(f) Adjusted provision for income taxes excludes $2,254,000 and $2,253,000 of
incremental tax benefit in 2005 and 2004, respectively, for the items in
(b) through (e).
Segment Data (g)(h)(i)(l) Three Months Ended
------------------------------
(In thousands except percentage amounts) April 2, 2005 April 3, 2004
------------------------------------------------------------------------------------------------------------------------------
Life and Laboratory Sciences
Revenues $ 393,305 $ 365,466
-------------- -------------
GAAP Operating Income 51,830 46,817
Cost of Revenue Charges (j) - 2,346
Restructuring and Other Items (k) (1,734) 1,421
Amortization of Acquisition-related Intangible Assets 6,614 3,143
-------------- -------------
Adjusted Operating Income $ 56,710 $ 53,727
-------------- -------------
GAAP Operating Margin 13.2% 12.8%
Adjusted Operating Margin 14.4% 14.7%
Measurement and Control
Revenues $ 165,903 $ 159,566
-------------- -------------
GAAP Operating Income 18,360 14,183
Cost of Revenue Charges (j) - 62
Restructuring and Other Items (k) 1,034 1,222
Amortization of Acquisition-related Intangible Assets 799 662
-------------- -------------
Adjusted Operating Income $ 20,193 $ 16,129
-------------- -------------
GAAP Operating Margin 11.1% 8.9%
Adjusted Operating Margin 12.2% 10.1%
Consolidated (including Corporate Costs)
Revenues $ 559,208 $ 525,032
-------------- -------------
GAAP Operating Income 59,676 52,874
Cost of Revenue Charges (j) - 2,408
Restructuring and Other Items (k) (271) 3,158
Amortization of Acquisition-related Intangible Assets 7,414 3,806
-------------- -------------
Adjusted Operating Income $ 66,819 $ 62,246
-------------- -------------
GAAP Operating Margin 10.7% 10.1%
Adjusted Operating Margin 11.9% 11.9%
(g) GAAP operating income and GAAP operating margin were determined in
accordance with U.S. generally accepted accounting principles.
(h) Adjusted operating income and adjusted operating margin are non-GAAP
measures and exclude the items in notes (c) and (d) and amortization of
acquisition-related intangible assets.
(i) Depreciation expense in 2005 was $6,779,000 at Life and Laboratory
Sciences, $2,416,000 at Measurement and Control and $10,152,000
Consolidated. Depreciation expense in 2004 was $7,535,000 at Life and
Laboratory Sciences, $2,457,000 at Measurement and Control and $10,878,000
Consolidated.
(j) Includes items described in note (c).
(k) Includes items described in note (d).
(l) Book-to-bill ratio was 1.01 in the first quarter of 2005.
Condensed Consolidated Balance Sheet (unaudited)
(In thousands) April 2, 2005 Dec. 31, 2004
------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 351,560 $ 326,886
Short-term available-for-sale investments 177,043 185,369
Accounts receivable, net 458,558 469,553
Inventories 345,605 336,711
Other current assets 152,852 151,135
-------------- --------------
1,485,618 1,469,654
-------------- --------------
Property, Plant and Equipment, Net 238,030 261,041
-------------- --------------
Acquisition-related Intangible Assets 166,305 158,577
-------------- --------------
Other Assets 159,171 174,428
-------------- --------------
Goodwill 1,505,339 1,513,025
-------------- --------------
$ 3,554,463 $ 3,576,725
============== ==============
Current Liabilities:
Short-term obligations and current maturities of long-term obligations $ 15,500 $ 15,017
Other current liabilities 491,846 521,159
Current liabilities of discontinued operations 41,173 42,552
-------------- --------------
548,519 578,728
-------------- --------------
Long-term Deferred Income Taxes and Other Long-term Liabilities 105,524 106,377
-------------- --------------
Long-term Obligations:
Senior notes 133,681 135,232
Subordinated convertible obligations 77,234 77,234
Other 12,812 13,604
-------------- --------------
223,727 226,070
-------------- --------------
Total Shareholders' Equity 2,676,693 2,665,550
-------------- --------------
$ 3,554,463 $ 3,576,725
============== ==============