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, 2004
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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,
2003. 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, retention of contingent
liabilities from businesses we sold, realization of potential future savings
from new sourcing initiatives, implementation of new branding strategy,
implementation of strategies for improving internal growth, the effect of
exchange rate fluctuations on international operations, and potential impairment
of goodwill. 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 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired: Not applicable.
(b) ProForma Financial Information: Not applicable.
(c) Exhibits
99 Press Release dated April 27, 2004.
Item 9. Regulation FD Disclosure (Information furnished pursuant to Item 12,
"Disclosure of Results of Operations and Financial Condition").
On April 27, 2004, the Registrant announced its financial results for the
fiscal quarter ended April 3, 2004. The full text of the press release issued in
connection with the announcement is attached as Exhibit 99 to this Form 8-K and
incorporated herein by reference.
In accordance with the procedural guidance in SEC Release No. 33-8216, the
information in this Form 8-K and Exhibit 99 attached hereto is being furnished
under "Item 9. Regulation FD Disclosure" rather than under "Item 12. Disclosure
of Results of Operations and Financial Condition." The information 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.
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 28th day of April 2004.
THERMO ELECTRON CORPORATION
By: /s/ Kenneth J. Apicerno
------------------------------------------
Kenneth J. Apicerno
Treasurer
Exhibit 99
[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 Corporation Reports Strong First Quarter
with 16% Revenue Growth
WALTHAM, Mass. (April 27, 2004) - Thermo Electron Corporation (NYSE: TMO) today
reported GAAP diluted earnings per share (EPS) of $.26 for the first quarter of
2004, compared with $.22 in the year-ago period. First-quarter revenues were
$582.0 million, up 16 percent from $500.2 million a year ago. GAAP operating
margin rose to 9.9 percent in the 2004 quarter, versus 7.9 percent in 2003.
Adjusted EPS increased 32 percent for the first quarter of 2004 to $.29,
compared with $.22 in 2003. Adjusted operating margin rose 160 basis points to
11.6 percent, compared with 10.0 percent a year ago. Adjusted EPS 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."
Revenues for the quarter increased 16 percent. Organic revenue growth was 5
percent. The effects of currency translation increased revenues by 7 percent,
and the net effect of acquisitions/ divestitures increased revenues by 4
percent. Organic revenue growth excludes the effects of currency translation and
acquisitions/divestitures.
First-Quarter Highlights
o Organic revenue growth of 5 percent
o Overall revenue increase of 16 percent
o Adjusted EPS up 32 percent
o Adjusted operating margin up 160 basis points
o Acquisition of US Consulting Services after quarter close
Marijn E. Dekkers, president and chief executive officer of Thermo Electron
Corporation, said, "I am very pleased that we have completed the first quarter
with a solid 5 percent gain in organic revenues, which fueled significantly
improved operating profitability and strong gains in EPS. As we have noted
before, we continue to drive operational productivity improvements. In addition,
Thermo is now seeing the benefits of improved market conditions across all three
segments, and the results of the growth initiatives we launched over the last
few years. This combination has gotten us off to a great start for 2004."
Dekkers continued, "For the second quarter of 2004, our goal is to report
adjusted EPS of $.29 to $.31, and for full-year 2004, our guidance is $1.23 to
$1.28."
This guidance excludes approximately $.02 of expense per quarter from the
amortization of acquisition-related intangible assets, 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 a significant increase in 2004
first-quarter revenues, up 22 percent to $365 million, compared with $299
million in 2003. Organic revenues rose 5 percent. The effect of currency
translation increased revenues by 8 percent, and the net effect of
acquisitions/divestitures increased revenues by 9 percent. The organic revenue
growth was primarily a result of strong sales of our mass spectrometry and
spectroscopy instruments, as well as laboratory informatics and services. In
March at PITTCON 2004, Thermo launched 20 new products for customer applications
in proteomics, drug discovery, compliance, lab productivity, and trace chemical
analysis, including the new Nicolet(TM) Continuum(TM) XL FT-IR imaging system
and Finnigan(TM) vMALDI(TM) ion source. GAAP operating margin was 12.8 percent
in the 2004 quarter, versus 13.0 percent a year ago. Adjusted operating margin
was 14.7 percent in 2004, versus 14.4 percent in 2003. The 2004 first-quarter
operating margin was impacted negatively by the inclusion of Jouan SA, which was
acquired in December 2003.
After the first quarter ended, we acquired US Counseling Services, Inc. (USCS)
to expand our laboratory informatics and services business. With the addition of
USCS, Thermo now provides critical asset management services, including
instrument and equipment maintenance management, physical inventory tracking,
and cost-of-ownership analysis to help customers improve the efficiency of their
laboratories.
Measurement and Control
First-quarter revenues in the Measurement and Control segment were up 5 percent
to $161 million in 2004, versus $154 million in 2003. Organic revenues increased
1 percent, compared with the 2003 period. Revenues were positively impacted by
general improvement in most markets served by this segment. The effect of
currency translation increased revenues by 6 percent, while the net effect of
acquisitions/divestitures decreased revenues by 2 percent. GAAP operating margin
increased to 8.8 percent in 2004, versus 7.0 percent a year ago. Adjusted
operating margin was 10.0 percent, up from 9.7 percent in 2003.
Optical Technologies
In the Optical Technologies segment, revenues were up 18 percent to $59 million
for the first quarter of 2004, versus $50 million in 2003; organic revenues
increased 19 percent. The effect of currency translation increased revenues by 5
percent, and the impact of a divestiture reduced revenues by 6 percent. GAAP
operating margin was positive 8.1 percent for the 2004 period, versus negative
7.3 percent in 2003. The segment reported a significant rise in adjusted
operating margin to 8.4 percent in the 2004 quarter, compared with negative 4.2
percent last year. This improvement is primarily the result of a strong rebound
in microelectronics and other industrial markets, as well as the impact of our
operational improvement initiatives.
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 and adjusted operating margin, which exclude
restructuring and other costs/income and amortization of acquisition-related
intangible assets. Adjusted EPS also excludes certain other gains and losses,
tax provisions/benefits related to the previous items, and benefit from tax
credit carryforwards. We exclude these items because they are outside of our
normal operations and, in certain cases, are difficult to forecast accurately
for future periods. We also use the concept of organic revenue growth, which
excludes the effects of currency translation and acquisitions/divestitures. 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:
o 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 expect will be substantially complete
in 2004. We believe that the costs related to these restructuring
activities are not indicative of our normal operating costs.
o 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.
o 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.
o We also exclude certain gains/losses and related tax effects, as well
as benefit from tax credit carryforwards, that are either isolated or
cannot be expected to occur again with any regularity or
predictability, such as those arising from the sale of a business or
real estate, the sale of our remaining equity interests in Thoratec
and FLIR Systems, and the early retirement of debt, which we believe
are not indicative of our normal operating gains and losses.
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
and/or the text of this press release. 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 decisions concerning the location and timing of facility consolidations,
and the timing of and proceeds from the sale of our remaining equity interest in
Thoratec. We no longer own any shares of FLIR Systems.
Conference Call
Thermo Electron will hold its earnings conference call on Wednesday, April 28,
at 11 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 www.thermo.com. Click on "About Us," then "Investors." An audio archive
of the call will be available in that section of our Website until Friday, May
28, 2004. 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
A world leader in high-tech instruments, Thermo Electron Corporation helps life
science, laboratory, and industrial customers advance scientific knowledge,
enable drug discovery, improve manufacturing processes, and protect people and
the environment with instruments, scientific equipment, services, and software
solutions. Based in Waltham, Massachusetts, Thermo Electron has revenues of more
than $2 billion, and employs approximately 11,000 people in 30 countries
worldwide. 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
Annual Report on Form 10-K for the fiscal year ended December 31, 2003. 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, retention of contingent
liabilities from businesses we sold, realization of potential future savings
from new productivity initiatives, implementation of new branding strategy,
implementation of strategies for improving internal growth, the effect of
exchange rate fluctuations on international operations, and potential impairment
of goodwill. 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
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April 3, 2004 March 29, 2003
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(In thousands except per share amounts) Reported (a) Adjusted (b) Reported (a) Adjusted (b)
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Revenues $ 582,002 582,002 500,205 500,205
----------- ------------- ------------- ------------
Costs and Operating Expenses:
Cost of revenues (c) 317,418 315,010 276,367 276,367
Selling, general, and administrative expenses 159,734 159,734 136,727 136,727
Amortization of acquisition-related intangible assets 3,977 - 2,392 -
Research and development expenses 39,822 39,822 37,321 37,321
Restructuring and other costs, net (d) 3,166 - 8,102 -
----------- ------------- ------------- ------------
524,117 514,566 460,909 450,415
----------- ------------- ------------- -----------
Operating Income 57,885 67,436 39,296 49,790
Interest Income 1,922 1,922 7,685 7,685
Interest Expense (2,862) (2,862) (6,904) (6,904)
Other Income, Net (e) 3,135 1,515 5,120 1,418
----------- ------------- ------------- ------------
Income from Continuing Operations Before Income Taxes 60,080 68,011 45,197 51,989
Provision for Income Taxes (f) (16,958) (19,383) (13,806) (15,597)
----------- ------------- ------------- ------------
Income from Continuing Operations 43,122 48,628 31,391 36,392
Gain on Disposal of Discontinued Operations (net of income tax
provision of $3,564) - - 5,036 -
----------- ------------- ------------- ------------
Net Income $ 43,122 $ 48,628 $ 36,427 $ 36,392
=========== ============= ============= ============
Earnings per Share from Continuing Operations:
Basic $ .26 $ .19
=========== =============
Diluted $ .26 $ .19
=========== =============
Earnings per Share (g):
Basic $ .26 $ .22
=========== =============
Diluted $ .26 $ .29 $ .22 $ .22
=========== ============= ============= ============
Weighted Average Shares:
Basic 165,206 162,844
=========== =============
Diluted (h) 169,996 169,996 165,614 167,480
=========== ============= ============= ============
(a) Reported results were determined in accordance with U.S. generally accepted
accounting principles (GAAP).
(b) Adjusted results are non-GAAP measures and exclude inventory charges (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 gain on disposal 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 2004 include restructuring and other items consisting
principally of severance; abandoned facility and other expenses of real
estate consolidation; and legal/advisory fees associated with a
reorganization of the company's non-U.S. subsidiary structure. Reported
results in 2003 include restructuring and other items consisting
principally of severance; abandoned facility and other expenses of real
estate consolidation; a writedown of a business held for sale to estimated
disposal value; net gains on the sale of a product line and property; and
legal/advisory fees associated with a reorganization of the company's
non-U.S. subsidiary structure.
(e) Reported results include $1,620,000 of gains from the sale of shares of
Thoratec Corporation in 2004, and $3,702,000 of gains from the sale of
shares of FLIR Systems, Inc. in 2003.
(f) Adjusted provision for income taxes excludes $2,425,000 and $1,791,000 of
incremental tax benefit in 2004 and 2003, respectively, for the items in
(b) through (e).
(g) Reported earnings per share and adjusted earnings per share exclude
interest expense on convertible debentures of $413,000 and $450,000, net of
tax, in 2004 and 2003, respectively, for the assumed conversion of such
convertible debentures.
(h) Adjusted weighted average diluted shares reflect the dilutive effect on the
convertible debentures of the adjustments to net income as described in
notes (b) through (g).
Segment Data (i)(j)(k) Three Months Ended
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(In thousands except percentage amounts) April 3, 2004 March 29, 2003
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Life and Laboratory Sciences
Revenues $ 365,058 $ 299,465
-------------- --------------
GAAP Operating Income 46,649 39,022
Cost of Revenue Charges (l) 2,346 -
Restructuring and Other Items (m) 1,421 2,573
Amortization of Acquisition-related Intangible Assets 3,143 1,588
-------------- --------------
Adjusted Operating Income $ 53,559 $ 43,183
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GAAP Operating Margin 12.8% 13.0%
Adjusted Operating Margin 14.7% 14.4%
Measurement and Control
Revenues $ 161,093 $ 153,920
-------------- --------------
GAAP Operating Income 14,173 10,819
Cost of Revenue Charges (l) 62 -
Restructuring and Other Items (m) 1,222 3,630
Amortization of Acquisition-related Intangible Assets 662 523
-------------- --------------
Adjusted Operating Income $ 16,119 $ 14,972
-------------- --------------
GAAP Operating Margin 8.8% 7.0%
Adjusted Operating Margin 10.0% 9.7%
Optical Technologies
Revenues $ 59,368 $ 50,202
-------------- --------------
GAAP Operating Income (Loss) 4,780 (3,677)
Restructuring and Other Items (m) 56 1,294
Amortization of Acquisition-related Intangible Assets 171 281
-------------- --------------
Adjusted Operating Income (Loss) $ 5,007 $ (2,102)
-------------- --------------
GAAP Operating Margin 8.1% (7.3%)
Adjusted Operating Margin 8.4% (4.2%)
Consolidated (including Corporate Costs)
Revenues $ 582,002 $ 500,205
-------------- --------------
GAAP Operating Income 57,885 39,296
Cost of Revenue Charges (l) 2,408 -
Restructuring and Other Items (m) 3,166 8,102
Amortization of Acquisition-related Intangible Assets 3,977 2,392
-------------- --------------
Adjusted Operating Income $ 67,436 $ 49,790
-------------- --------------
GAAP Operating Margin 9.9% 7.9%
Adjusted Operating Margin 11.6% 10.0%
(i) GAAP operating income (loss) and GAAP operating margin were determined in
accordance with U.S. generally accepted accounting principles.
(j) Adjusted operating income (loss) and adjusted operating margin are non-GAAP
measures and exclude the items in notes (c) and (d) and amortization of
acquisition-related intangible assets.
(k) Depreciation expense in 2004 was $7,466,000 at Life and Laboratory
Sciences, $2,457,000 at Measurement and Control, $2,711,000 at Optical
Technologies, and $13,536,000 Consolidated. Depreciation expense in 2003
was $5,363,000 at Life and Laboratory Sciences, $2,579,000 at Measurement
and Control, $2,963,000 at Optical Technologies, and $11,642,000
Consolidated.
(l) Includes items described in note (c).
(m) Includes items described in note (d).
Condensed Consolidated Balance Sheet (unaudited)
(In thousands) April 3, 2004 Dec. 31, 2003
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Current Assets:
Cash and cash equivalents $ 352,994 $ 303,912
Short-term available-for-sale investments 91,063 114,326
Accounts receivable, net 458,128 460,926
Inventories 364,238 343,758
Other current assets 185,254 172,334
-------------- --------------
1,451,677 1,395,256
-------------- --------------
Property, Plant, and Equipment, Net 291,592 300,702
-------------- --------------
Acquisition-Related Intangible Assets 102,319 70,903
-------------- --------------
Other Assets 69,289 64,931
-------------- --------------
Goodwill 1,538,630 1,557,177
-------------- --------------
$ 3,453,507 $ 3,388,969
============== ==============
Current Liabilities:
Short-term obligations and current maturities of long-term
obligations $ 40,189 $ 45,981
Other current liabilities 646,184 638,812
-------------- --------------
686,373 684,793
-------------- --------------
Long-term Deferred Income Taxes and Other Long-term Liabilities 108,472 91,861
-------------- --------------
Long-term Obligations:
Senior notes 141,756 137,874
Subordinated convertible obligations 77,234 77,234
Other 13,809 14,401
-------------- --------------
232,799 229,509
-------------- --------------
Total Shareholders' Equity 2,425,863 2,382,806
-------------- --------------
$ 3,453,507 $ 3,388,969
============== ==============