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):
February 2, 2006
----------------------------------------
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)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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 Quarterly Report on Form 10-Q for the fiscal quarter ended October
1, 2005. 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 that the Registrant sold; realization of
future savings from new productivity initiatives; implementation of the
Registrant's 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 the
Registrant may elect to update forward-looking statements at some point in the
future, it specifically disclaims any obligation to do so, and, therefore, these
forward-looking statements should not be relied upon as representing the
Registrant's views as of any date subsequent to the date of this Current Report
on Form 8-K.
Item 2.02 Results of Operations and Financial Condition.
On February 2, 2006, the Registrant announced its financial results for the
fiscal quarter ended December 31, 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 February 2, 2006.
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 2nd day of February, 2006.
THERMO ELECTRON CORPORATION
By: /s/ Peter E. Hornstra
-----------------------------------------
Peter E. Hornstra
Corporate Controller and Chief Accounting
Officer
[THERMO LOGO]
Exhibit 99.1
News
FOR IMMEDIATE RELEASE
Media Contact Information: Investor Contact Information:
Lori Gorski Kenneth J. Apicerno
Phone: 781-622-1242 Phone: 781-622-1111
E-mail: lori.gorski@thermo.com E-mail: ken.apicerno@thermo.com
Website: www.thermo.com
Thermo Electron Reports Strong Revenue Growth and
Significant Margin Expansion in Fourth Quarter 2005
WALTHAM, Mass., February 2, 2006 - Thermo Electron Corporation (NYSE: TMO) today
reported revenue growth of 21% to $741 million in the fourth quarter of 2005,
compared with $613 million in the 2004 quarter. Acquisitions contributed 19% of
the growth (net of divestitures) and currency translation reduced revenues by
4%. GAAP diluted earnings per share (EPS) were $.34 in the 2005 quarter,
compared with $.74 in the year-ago period (which included tax benefits related
to divested businesses). GAAP operating income in the fourth quarter of 2005
rose 34%, and GAAP operating margin for the period was 11.9%, versus 10.8% in
the 2004 quarter.
Adjusted EPS grew 29% to $.49 in the fourth quarter of 2005, compared with $.38
in the 2004 quarter. Adjusted operating income increased 48% in the 2005
quarter, and adjusted operating margin rose 290 basis points to 16.0%, versus
13.1% in the period last year.
For the full year 2005, Thermo Electron reported 19% revenue growth to $2.63
billion, compared with $2.21 billion in 2004. Acquisitions contributed 15% of
the growth (net of divestitures) and currency translation did not have a
material impact. GAAP diluted EPS was $1.36 in 2005, versus $2.17 in 2004 (which
included tax benefits and large gains from the sale of discontinued operations).
GAAP operating income in 2005 grew 11%, and GAAP operating margin was 10.0% in
2005, versus 10.8% in 2004.
Full-year adjusted EPS grew 24% to $1.55 in 2005, compared with $1.25 in 2004.
Adjusted operating income increased 33% in 2005, and adjusted operating margin
rose 140 basis points year over year, to 14.1% from 12.7% in 2004.
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."
Fourth Quarter Highlights
o Revenues grew 21%
o Adjusted EPS increased 29%
o Adjusted operating margin expanded 290 basis points
o Cash flow from continuing operations rose 42%
o Customer demonstration centers opened in China and India
o Measurement and Control results boosted by strong industrial demand
"We were able to cap 2005 with a terrific fourth quarter that furthered our
trend of improving revenues, adjusted EPS and cash flow," said Marijn E.
Dekkers, Thermo Electron president and chief executive officer. "We experienced
very strong growth from our industrial markets, especially in commodity
materials and environmental monitoring. In addition, growth from our life
sciences customers continued at a good pace. We are also very pleased that we
significantly expanded our adjusted operating margin, which is being driven by
new products, pricing initiatives, productivity programs and acquisition
synergies.
"Our aggressive growth investments were key contributors to our excellent
performance in 2005. We introduced a number of important new products for a
range of applications - most notably in mass spectrometry. We spent nearly $1
billion on strategic acquisitions that are now well-integrated and contributing
to growth. We also continued to extend our global reach with the recent opening
of customer demonstration centers in China and India. All of this led to
Thermo's success in 2005, and gives us great momentum going into 2006.
"Our outlook for the year is excellent, as we recently announced. To reiterate,
our goal is to achieve adjusted EPS of $1.75 to $1.80 in 2006 (excluding $.10
per share of stock option expensing that will take effect during the year),
leading to a 13 to 16% increase over our strong 2005 results. We expect to
generate revenues in the range of $2.78 to $2.83 billion in 2006, for a 6 to 8%
increase over last year."
Life and Laboratory Sciences
The Life and Laboratory Sciences segment reported that revenues grew 24% in the
fourth quarter of 2005 to $563 million, compared with $455 million in 2004. GAAP
operating income for the segment increased 16% in the quarter, and GAAP
operating margin was 14.3%, versus 15.3% in the year-ago period. Adjusted
operating income grew 30% in the 2005 quarter, and adjusted operating margin
increased to 18.7%, compared with 17.8% in 2004.
Measurement and Control
Revenues in the Measurement and Control segment increased 12% to $177 million in
the fourth quarter of 2005, compared with $158 million in the 2004 quarter. GAAP
operating income for the segment rose 57% in the 2005 period, and GAAP operating
margin was 10.8%, compared with 7.7% a year ago. Adjusted operating income rose
64% in the 2005 quarter, and adjusted operating margin increased to 13.6%, from
9.3% 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 significant tax audits or events. We exclude the
above 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.
For example:
We exclude costs and tax effects associated with restructuring activities, such
as reducing overhead and consolidating facilities in connection with our Kendro
acquisition. We believe that the costs related to these restructuring activities
are not indicative of our normal operating costs.
We exclude charges and tax effects related 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. Our adjusted EPS estimate for 2006 excludes
approximately $.40 of expense for the amortization of acquisition-related
intangible assets for acquisitions completed to date. 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 significant tax audits or events, 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, the early retirement of debt and
discontinued operations. (We sold our remaining shares of Newport and Thoratec
during the second quarter of 2005.)
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 impact of accounting
principles not yet adopted and decisions concerning the location and timing of
facility consolidations.
Conference Call
Thermo Electron will hold its earnings conference call today, February 2, 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., and use passcode 6449364. You may also listen to
the call live on the Web by visiting www.thermo.com. Click on "About Thermo,"
then "Investors." An audio archive of the call will be available in that section
of our Website until Monday, March 6, 2006. 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 Website.
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. For more information, visit 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 Quarterly Report on Form 10-Q for the fiscal
quarter ended October 1, 2005. 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) (a)
Three Months Ended
---------------------------------------------------------
December 31, % of December 31, %of
(In thousands except per share amounts) 2005 Revenues 2004 Revenues
--------------------------------------------------------------------------------------------------------------------------------
Revenues $ 740,787 $ 613,339
------------ ------------
Costs and Operating Expenses:
Cost of revenues (c) 398,227 53.8% 329,560 53.7%
Selling, general and administrative expenses 185,821 25.1% 168,664 27.5%
Amortization of acquisition-related intangible assets 25,548 3.5% 7,302 1.2%
Research and development expenses 38,231 5.2% 34,945 5.7%
Restructuring and other costs, net (d) 4,473 0.6% 6,821 1.1%
------------ -------- ------------ --------
652,300 88.1% 547,292 89.2%
------------ -------- ------------ --------
Operating Income 88,487 11.9% 66,047 10.8%
Interest Income 3,444 2,976
Interest Expense (7,966) (2,879)
Other Income, Net 876 5,870
------------ ------------
Income from Continuing Operations Before Income Taxes 84,841 72,014
(Provision for) Benefit from Income Taxes (29,480) 13,468
------------ ------------
Income from Continuing Operations 55,361 85,482
Gain on Disposal of Discontinued Operations (net of income tax
provision of $613 in 2005; includes income tax benefit of
$32,406 in 2004) 1,044 35,617
------------ ------------
Net Income $ 56,405 7.6% $ 121,099 19.7%
============ ======== ============ ========
Earnings per Share from Continuing Operations:
Basic $ .34 $ .53
============ ============
Diluted $ .34 $ .52
============ ============
Earnings per Share:
Basic $ .35 $ .76
============ ============
Diluted $ .34 $ .74
============ ============
Weighted Average Shares:
Basic 162,341 160,239
============ ============
Diluted 166,312 164,477
============ ============
Reconciliation of Adjusted Operating Income and Adjusted Operating
Margin
GAAP Operating Income (a) $ 88,487 11.9% $ 66,047 10.8%
Cost of Revenues Charges (c) 166 0.0% 280 0.0%
Restructuring and Other Costs, Net (d) 4,473 0.6% 6,821 1.1%
Amortization of Acquisition-related Intangible Assets 25,548 3.5% 7,302 1.2%
------------ -------- ------------ --------
Adjusted Operating Income (b) $ 118,674 16.0% $ 80,450 13.1%
============ ======== ============ ========
Reconciliation of Adjusted Net Income
GAAP Net Income (a) 56,405 7.6% 121,099 19.7%
Cost of Revenues Charges (c) 166 0.0% 280 0.0%
Restructuring and Other Costs, Net (d) 4,473 0.6% 6,821 1.1%
Amortization of Acquisition-related Intangible Assets 25,548 3.5% 7,302 1.2%
Provision for Income Taxes (e) (5,056) -0.7% (37,665) -6.1%
Discontinued Operations, Net of Tax (1,044) -0.1% (35,617) -5.8%
------------ -------- ------------ --------
Adjusted Net Income (b) 80,492 10.9% 62,220 10.1%
============ ======== ============ ========
Reconciliation of Adjusted Earnings per Share
GAAP EPS (a) $ 0.34 $ 0.74
Cost of Revenues Charges, Net of Tax (c) - -
Restructuring and Other Costs, Net of Tax (d) 0.02 0.03
Amortization of Acquisition-related Intangible Assets, Net of Tax 0.11 0.03
Provision for Income Taxes (e) 0.03 (0.20)
Discontinued Operations, Net of Tax (0.01) (0.22)
------------ ------------
Adjusted EPS (b) $ 0.49 $ 0.38
============ ============
(a) "GAAP" (reported) results were determined in accordance with U.S. generally
accepted accounting principles (GAAP).
(b) Adjusted results are non-GAAP measures and exclude certain charges to cost
of revenues (see note c for details); amortization of acquisition-related
intangible assets; restructuring and other costs, net (see note d for
details); the tax consequences of the preceding items (see note e for
details); and results of discontinued operations.
(c) Reported results in 2005 and 2004 include $166 and $280 of charges for
accelerated depreciation on manufacturing equipment being abandoned due to
facility consolidations.
(d) Reported results in 2005 and 2004 include restructuring and other costs,
net consisting principally of severance, abandoned facility and other
expenses of real estate consolidation, net of net gains on the sale of
abandoned facilities.
(e) Reported provision for income taxes includes $9,215 and 3,883 of
incremental tax benefit in 2005 and 2004, respectively, for the items in
(b) through (d); $4,159 in 2005 of tax provision for the estimated effect
of tax audits of prior years in a non-U.S. country and $33,782 in 2004 of
tax benefits that the company determined were realizable upon completion of
tax audits.
Segment Data (f)(g)(h) Three Months Ended
---------------------------------------------------------
December 31, % of December 31, % of
(In thousands except percentage amounts) 2005 Revenues 2004 Revenues
--------------------------------------------------------------------------------------------------------------------------------
Life and Laboratory Sciences
Revenues $ 563,339 $ 454,994
------------ ------------
Reconciliation of Adjusted Operating Income and Adjusted Operating
Margin
GAAP Operating Income 80,605 14.3% 69,757 15.3%
Cost of Revenues Charges (i) - 0.0% 280 0.1%
Restructuring and Other Costs, Net (j) 595 0.1% 4,285 1.0%
Amortization of Acquisition-related Intangible Assets 24,045 4.3% 6,541 1.4%
------------ -------- ------------ --------
Adjusted Operating Income $ 105,245 18.7% $ 80,863 17.8%
------------ -------- ------------ --------
Measurement and Control
Revenues $ 177,448 $ 158,345
------------ ------------
Reconciliation of Adjusted Operating Income and Adjusted Operating
Margin
GAAP Operating Income 19,182 10.8% 12,245 7.7%
Cost of Revenues Charges (i) 166 0.1% - 0.0%
Restructuring and Other Costs, Net (j) 3,223 1.8% 1,714 1.1%
Amortization of Acquisition-related Intangible Assets 1,501 0.9% 760 0.5%
------------ -------- ------------ --------
Adjusted Operating Income $ 24,072 13.6% $ 14,719 9.3%
------------ -------- ------------ --------
(f) GAAP operating income and GAAP operating margin were determined in
accordance with U.S. generally accepted accounting principles.
(g) 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.
(h) Depreciation expense in 2005 was $8,136 at Life and Laboratory Sciences,
$2,546 at Measurement and Control and $12,380 Consolidated. Depreciation
expense in 2004 was $7,642 at Life and Laboratory Sciences, $2,972 at
Measurement and Control and $11,446 Consolidated.
(i) Includes items described in note (c).
(j) Includes items described in note (d).
Consolidated Statement of Income (a)
Year Ended
---------------------------------------------------------
December 31, % of December 31, % of
(In thousands except per share amounts) 2005 Revenues 2004 Revenues
---------------------------------------------------------------------------------------------------------------------------------
Revenues $ 2,633,027 $ 2,205,995
------------ ------------
Costs and Operating Expenses:
Cost of revenues (c) 1,438,079 54.6% 1,191,516 54.0%
Selling, general and administrative expenses 684,146 26.0% 603,627 27.4%
Amortization of acquisition-related intangible assets 77,640 3.0% 22,831 1.0%
Research and development expenses 152,775 5.8% 134,680 6.1%
Restructuring and other costs, net (d) 16,900 0.6% 15,829 0.7%
------------ -------- ------------
2,369,540 90.0% 1,968,483 89.2%
------------ -------- ------------ --------
Operating Income 263,487 10.0% 237,512 10.8%
Interest Income 11,569 9,021
Interest Expense (26,715) (10,979)
Other Income, Net (e) 37,557 23,665
------------ ------------
Income from Continuing Operations Before Income Taxes 285,898 259,219
Provision for Income Taxes (87,597) (40,852)
------------ ------------
Income from Continuing Operations 198,301 218,367
Income from Discontinued Operations (includes income tax
benefit of $36,321 in 2004) - 43,018
Gain on Disposal of Discontinued Operations (net of income tax
provision of $16,341 in 2005; includes income tax benefit of 24,917 100,452
$36,728 in 2004) ------------ ------------
Net Income $ 223,218 8.5% $ 361,837 16.4%
============ ======== ============ ========
Earnings per Share from Continuing Operations:
Basic $ 1.23 $ 1.34
============ ============
Diluted $ 1.21 $ 1.31
============ ============
Earnings per Share:
Basic $ 1.38 $ 2.22
============ ============
Diluted $ 1.36 $ 2.17
============ ============
Weighted Average Shares:
Basic 161,587 163,133
============ ============
Diluted 165,334 167,641
============ ============
Reconciliation of Adjusted Operating Income and Adjusted Operating
Margin
GAAP Operating Income (a) $ 263,487 10.0% $ 237,512 10.8%
Cost of Revenues Charges (c) 13,387 0.5% 3,361 0.2%
Restructuring and Other Costs, Net (d) 16,900 0.6% 15,829 0.7%
Amortization of Acquisition-related Intangible Assets 77,640 3.0% 22,831 1.0%
------------ -------- ------------ --------
Adjusted Operating Income (b) $ 371,414 14.1% $ 279,533 12.7%
============ ======== ============ ========
Reconciliation of Adjusted Net Income
GAAP Net Income (a) 223,218 8.5% 361,837 16.4%
Cost of Revenues Charges (c) 13,387 0.5% 3,361 0.2%
Restructuring and Other Costs, Net (d) 16,900 0.6% 15,829 0.7%
Amortization of Acquisition-related Intangible Assets 77,640 3.0% 22,831 1.0%
Other Income, Net (e) (27,594) -1.1% (9,614) -0.5%
Provision for Income Taxes (f) (23,546) -0.9% (42,377) -1.9%
Discontinued Operations, Net of Tax (24,917) -0.9% (143,470) -6.5%
------------ -------- ------------ --------
Adjusted Net Income (b) 255,088 9.7% 208,397 9.4%
============ ======== ============ ========
Reconciliation of Adjusted Earnings per Share
GAAP EPS (a) $ 1.36 $ 2.17
Cost of Revenues Charges, Net of Tax (c) 0.05 0.02
Restructuring and Other Costs, Net of Tax (d) 0.07 0.07
Amortization of Acquisition-related Intangible Assets, Net of Tax 0.30 0.10
Other Income, Net of Tax (e) (0.11) (0.04)
Provision for Income Taxes (f) 0.03 (0.21)
Discontinued Operations, Net of Tax (0.15) (0.86)
------------ ------------
Adjusted EPS (b) $ 1.55 $ 1.25
============ ============
(a) "GAAP" (reported) results were determined in accordance with U.S. generally
accepted accounting principles (GAAP).
(b) Adjusted results are non-GAAP measures and exclude certain charges to cost
of revenues (see note c for details); amortization of acquisition-related
intangible assets; restructuring and other costs, net (see note d for
details); certain other income/expense (see note e for details); the tax
consequences of the preceding items (see note f for details); and results
of discontinued operations.
(c) Reported results in 2005 and 2004 include $13,387 and $3,361, respectively,
of charges primarily for the sale of inventories revalued at the date of
acquisition and accelerated depreciation on manufacturing equipment being
abandoned due to facility consolidations.
(d) Reported results in 2005 include restructuring and other costs, net
consisting principally of severance, abandoned facility and other expenses
of real estate consolidation and net gains on the sale of abandoned
buildings. Reported results in 2004 include restructuring and other costs,
net 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 $27,594 and $9,614 of net gains from the sale of
shares of Newport Corporation and Thoratec Corporation in 2005 and Thoratec
Corporation in 2004, respectively.
(f) Reported provision for income taxes includes $27,705 and 7,695 of
incremental tax benefit in 2005 and 2004, respectively, for the items in
(b) through (d); $4,159 in 2005 of tax provision for the estimated effect
of tax audits of prior years in a non-U.S. country and $33,782 in 2004 of
tax benefits that the company determined were realizable upon completion of
tax audits; and $900 in 2004 of tax benefit resulting from a reorganization
of the company's subsidiary structure in Europe.
Segment Data (g)(h)(i) Year Ended
---------------------------------------------------------
December 31, % of December 31, % of
(In thousands except percentage amounts) 2005 Revenues 2004 Revenues
--------------------------------------------------------------------------------------------------------------------------------
Life and Laboratory Sciences
Revenues $ 1,960,153 $ 1,573,445
------------ ------------
Reconciliation of Adjusted Operating Income and Adjusted
Operating Margin
GAAP Operating Income 237,710 12.1% 224,393 14.3%
Cost of Revenues Charges (j) 12,374 0.6% 3,177 0.2%
Restructuring and Other Costs, Net (k) 5,524 0.3% 7,054 0.4%
Amortization of Acquisition-related Intangible Assets 72,530 3.7% 19,830 1.3%
------------ -------- ------------ --------
Adjusted Operating Income $ 328,138 16.7% $ 254,454 16.2%
------------ -------- ------------ --------
Measurement and Control
Revenues $ 672,874 $ 632,550
------------ ------------
Reconciliation of Adjusted Operating Income and Adjusted
Operating Margin
GAAP Operating Income 64,190 9.5% 53,376 8.4%
Cost of Revenues Charges (j) 1,013 0.1% 184 0.0%
Restructuring and Other Costs, Net (k) 9,870 1.5% 6,337 1.0%
Amortization of Acquisition-related Intangible Assets 5,105 0.8% 2,998 0.5%
------------ -------- ------------ --------
Adjusted Operating Income $ 80,178 11.9% $ 62,895 9.9%
------------ -------- ------------ --------
(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 $30,869 at Life and Laboratory Sciences,
$9,810 at Measurement and Control and $45,632 Consolidated. Depreciation
expense in 2004 was $29,811 at Life and Laboratory Sciences, $10,245 at
Measurement and Control and $43,310 Consolidated.
(j) Includes items described in note (c).
(k) Includes items described in note (d).
Condensed Consolidated Balance Sheet
(In thousands) Dec. 31, 2005 Dec. 31, 2004
---------------------------------------------------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $ 214,326 $ 326,886
Short-term available-for-sale investments 80,661 185,369
Accounts receivable, net 565,564 469,553
Inventories 359,392 336,711
Other current assets 133,957 151,135
------------ -------------
1,353,900 1,469,654
------------ -------------
Property, Plant and Equipment, Net 280,654 261,041
------------ -------------
Acquisition-related Intangible Assets 450,740 158,577
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Other Assets 200,080 174,428
------------ -------------
Goodwill 1,966,195 1,513,025
------------ -------------
$ 4,251,569 $ 3,576,725
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Liabilities and Shareholders' Equity
Current Liabilities:
Short-term obligations and current maturities of long-term obligations $ 130,137 $ 15,017
Other current liabilities 626,334 521,159
Current liabilities of discontinued operations 35,191 42,552
------------ -------------
791,662 578,728
------------ -------------
Long-term Deferred Income Taxes and Other Long-term Liabilities 197,965 106,377
------------ -------------
Long-term Obligations:
Senior notes 380,542 135,232
Subordinated convertible obligations 77,234 77,234
Other 10,854 13,604
------------ -------------
468,630 226,070
------------ -------------
Total Shareholders' Equity 2,793,312 2,665,550
------------ -------------
$ 4,251,569 $ 3,576,725
============ =============