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 23, 2003
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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 (Commission File Number) (I.R.S. Employer
of incorporation or organization) Identification 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 28,
2002. 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 slow down 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, integration and consolidation of our
instrument businesses, 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.
In addition, any forward-looking statements represent our views only as of today
and should not be relied upon as representing our views as of any subsequent
date. 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) Pro Forma Financial Information: Not applicable.
(c) Exhibits
99 Press Release dated April 23, 2003.
Item 9. Regulation FD Disclosure (Information furnished pursuant to Item 12,
"Disclosure of Results of Operations and Financial Condition").
On April 23, 2003, the Registrant announced its financial results for the
fiscal quarter ended March 29, 2003. The full text of the press release issued
in connection with the announcement is attached hereto 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.
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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 24th day of April 2003.
THERMO ELECTRON CORPORATION
By: /s/ Kenneth J. Apicerno
-------------------------
Kenneth J. Apicerno
Treasurer
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Exhibit 99
[THERMO LOGO]
NEWS
FOR IMMEDIATE RELEASE
Contact Information:
J. Timothy Corcoran
Phone: 781-622-1111
E-mail: tim.corcoran@thermo.com
Website: www.thermo.com
Thermo Electron Reports First Quarter 2003 Results
WALTHAM, Mass., April 23, 2003 - Thermo Electron Corporation (NYSE: TMO) today
reported GAAP diluted earnings per share (EPS) of $.22 for the first quarter of
2003, compared with $.59 in the year-ago period. EPS results in 2002 included
significant gains from the sale of securities and divestitures. First quarter
revenues increased 2 percent to $500.2 million in 2003, compared with $491.3
million for the same period in 2002. Eliminating favorable currency effects (6
percent) and the impact of acquisitions and divestitures, organic revenues
declined 5 percent. GAAP operating margin for the quarter was 7.9 percent in
2003, versus 7.5 percent a year ago.
For investors to gain a better understanding of our operating results, we
believe it useful to present our financial results on both a GAAP and adjusted
basis, consistent with how we measure our operating performance. In this regard,
adjusted EPS increased to $.22 in the first quarter of 2003, versus $.20 for the
same period in 2002. The 2003 results reflect the adoption of new accounting
rules for revenue recognition under EITF Issue No. 00-21, which increased
earnings by $.01; results for the 2002 quarter have not been restated. First
quarter adjusted operating margin was 10.0 percent in 2003, versus 9.5 percent a
year ago.
Adjusted EPS and adjusted operating margin (detailed in the accompanying
schedules) exclude restructuring and other costs/income; amortization of
acquisition-related intangible assets; income from the sale of shares of FLIR
Systems and Thoratec; gain/loss on the early retirement of debt; and gain/loss
on disposal of discontinued operations.
Marijn E. Dekkers, president and chief executive officer of Thermo Electron,
said, "We are pleased to report a 10 percent improvement in adjusted EPS and
higher operating margins even though our top-line growth has been hampered by
ongoing difficult economic conditions. This performance is largely a result of
our efforts to drive continuous productivity throughout our operations. The
structural changes we've made position Thermo for faster EPS growth when our end
markets begin to recover.
"Critical to our growth strategy is our continued investment in product
development. We launched nearly 30 new products in March at Pittcon, one of the
world's largest laboratory instrumentation exhibitions. Our customers now know
us as a single instrumentation powerhouse, and we are providing them exceptional
value by offering the broad combination of instruments, consumables, and
software they need to accomplish their objectives."
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Mr. Dekkers added, "While the economy will affect our performance in the near
term, we believe that our productivity improvements will allow us to deliver EPS
growth for the full year. Our goal is to report $.22 to $.24 in adjusted EPS for
the second quarter of 2003, and $1.07 to $1.12 for all of 2003." This guidance
excludes $.01 of expense per quarter from the amortization of
acquisition-related intangible assets, and also excludes the other items
detailed in the description of adjusted EPS as well as other unusual items we
may have in the future. 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 interests in
Thoratec and FLIR Systems.
Sector Results
Please note: In the first quarter of 2003, we realigned several businesses among
the sectors and began to allocate to the sectors some costs previously reported
as corporate expenses. Results for 2002 have been restated to reflect the sector
realignment and cost reallocation (detailed in the accompanying Segment Data
chart). Organic revenue growth figures exclude the effects of acquisitions,
divestitures, and currency translation.
Life and Laboratory Sciences
First quarter 2003 revenues for the Life and Laboratory Sciences sector were
$299 million, versus $281 million in 2002; organic revenues were flat. These
results included strong sales of our anatomical pathology products, optical
immunoassay rapid diagnostic tests, and mass spectrometry instruments, offset by
continued weakness in sales of laboratory equipment such as concentrators,
freezers, and incubators. On a GAAP basis, operating margin was 13.0 percent in
the first quarter of 2003, versus 15.0 percent a year ago. Adjusted operating
margin was 14.4 percent for the quarter, compared with 15.2 percent in 2002.
Operating margins in the quarter were negatively affected by the timing of
aggressive investments in several key commercial initiatives.
We continue to increase our presence as a leading provider of advanced
analytical technologies for the life sciences industry. During the quarter, we
formed a key alliance with Amersham Biosciences for the co-marketing of mass
spectrometers to the proteomics marketplace. Among the many products we launched
at Pittcon was our new Finnigan LTQ-FT - the first hybrid ion trap/Fourier
transform mass spectrometer. The LTQ-FT, which received the Pittcon Editors'
Silver Award, combines two powerful technologies to greatly accelerate analysis
in pharmaceutical research, drug discovery, and metabolic studies. We also
recently announced that our collaboration with Quest Diagnostics has resulted in
the first automated gene-based medical test using a biochip to screen
prospective parents for cystic fibrosis genes.
Measurement and Control
First quarter 2003 revenues for the Measurement and Control sector were $154
million, versus $152 million in 2002; organic revenues declined 7 percent. While
sector results continue to reflect difficult conditions in many industrial
process markets, sales of our environmental products
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remained strong, primarily those driven by new federal mandates governing
homeland security. GAAP operating margin declined to 7.0 percent in the 2003
quarter, versus 9.1 percent in 2002, due to charges for facility consolidations
and the planned sale of a business. Adjusted operating margin increased to 9.7
percent in 2003, from 9.1 percent a year ago, a result of ongoing productivity
and integration initiatives.
Optical Technologies
As a result of sector realignment during the quarter, Optical Technologies now
consists only of lasers and photonics businesses branded as Spectra-Physics.
First quarter 2003 revenues for this sector were $50 million, versus $62 million
in 2002. Organic revenues declined 18 percent, reflecting weak economic
conditions in industrial and semiconductor markets served by this sector. GAAP
operating margin was negative 7.3 percent for the first quarter of 2003, versus
negative 19.3 percent in the 2002 period, when the sector incurred significant
restructuring charges. Adjusted operating margin for the sector was negative 4.2
percent in 2003, compared with negative 5.5 percent last year.
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Consolidated Statement of Income (unaudited)
Three Months Ended
--------------------------------------------------------------
March 29, 2003 March 30, 2002
-------------------------- ---------------------------------
(In thousands except per share amounts) Reported (a) Adjusted (b) Reported (a) Adjusted (b)
-----------------------------------------------------------------------------------------------------------------------
Revenues $500,205 $500,205 $491,326 $491,326
-------- --------- -------- --------
Costs and Operating Expenses:
Cost of revenues 276,367 276,367 267,670 267,670
Selling, general, and administrative expenses 136,727 136,727 137,346 137,346
Amortization of acquisition-related intangible assets 2,392 - 1,567 -
Research and development expenses 37,321 37,321 39,626 39,626
Restructuring and other costs, net (c) 8,102 - 8,383 -
-------- --------- -------- --------
460,909 450,415 454,592 444,642
-------- --------- -------- --------
Operating Income 39,296 49,790 36,734 46,684
Interest Income 7,685 7,685 14,358 14,358
Interest Expense (6,904) (6,904) (13,479) (13,479)
Other Income, Net (d) 5,120 1,418 59,042 3,820
-------- --------- -------- --------
Income from Continuing Operations Before Income Taxes and
Minority Interest 45,197 51,989 96,655 51,383
Provision for Income Taxes (13,806) (15,597) (33,312) (16,698)
Minority Interest Income - - 331 324
-------- --------- -------- --------
Income from Continuing Operations 31,391 36,392 63,674 35,009
Gain on Disposal of Discontinued Operations (net of
income tax provision of $3,564 and $5,593) 5,036 - 51,370 -
-------- --------- -------- --------
Net Income $ 36,427 $ 36,392 $115,044 $ 35,009
======== ========= ======== ========
Earnings per Share from Continuing Operations:
Basic $ .19 $ .37
======== ========
Diluted $ .19 $ .34
======== ========
Earnings per Share (e):
Basic $ .22 $ .66
======== ========
Diluted $ .22 $ .22 $ .59 $ .20
======== ========= ======== ========
Weighted Average Shares:
Basic 162,844 174,250
======== ========
Diluted 165,614 167,480 204,189 178,144
======== ========= ======== ========
(a) Reported results were determined in accordance with U.S. generally accepted
accounting principles (GAAP).
(b) Adjusted results exclude amortization of acquisition-related intangible
assets, restructuring and other costs/income (note c), certain other
income/expense (note d), and gain on disposal of discontinued operations.
(c) 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. Reported results in 2002 include
restructuring and other items consisting principally of charges for
abandoned equipment at Spectra-Physics; severance; abandoned facility
costs; other expenses of real estate consolidation; and impairment of
abandoned assets. These items are net of gains on the sale of businesses.
(d) Reported results include $3,702,000 and $56,309,000 of gains from the sale
of shares of FLIR Systems, Inc. in 2003 and 2002, respectively. Reported
results also include losses of $1,087,000 in 2002 on the early retirement
of debt. These items have been excluded from adjusted results.
(e) Adjusted earnings per share excludes interest expense on convertible
debentures of $450,000 and $53,000, net of tax, in 2003 and 2002,
respectively, for the assumed conversion of such convertible debentures.
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Segment Data (f)(g)(h)
Three Months Ended
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(In thousands except percentage amounts) March 29, 2003 March 30, 2002
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Life and Laboratory Sciences
Revenues $299,465 $281,314
-------- --------
GAAP Operating Income 39,022 42,119
Restructuring and Other Items (i) 2,573 (317)
Amortization of Acquisition-Related Intangible Assets 1,588 1,016
-------- --------
Adjusted Operating Income $ 43,183 $ 42,818
-------- --------
GAAP Operating Margin 13.0% 15.0%
Adjusted Operating Margin 14.4% 15.2%
Measurement and Control
Revenues $153,920 $151,689
-------- --------
GAAP Operating Income 10,819 13,831
Restructuring and Other Items (i) 3,630 (249)
Amortization of Acquisition-Related Intangible Assets 523 284
-------- --------
Adjusted Operating Income $ 14,972 $ 13,866
-------- --------
GAAP Operating Margin 7.0% 9.1%
Adjusted Operating Margin 9.7% 9.1%
Optical Technologies
Revenues $ 50,202 $ 61,553
-------- --------
GAAP Operating Loss (3,677) (11,898)
Restructuring and Other Items (i) 1,294 8,258
Amortization of Acquisition-Related Intangible Assets 281 267
-------- --------
Adjusted Operating Loss $ (2,102) $ (3,373)
-------- --------
GAAP Operating Margin (7.3%) (19.3%)
Adjusted Operating Margin (4.2%) (5.5%)
Consolidated (including Corporate Costs)
Revenues $500,205 $491,326
-------- --------
GAAP Operating Income 39,296 36,734
Restructuring and Other Items (i) 8,102 8,383
Amortization of Acquisition-Related Intangible Assets 2,392 1,567
-------- --------
Adjusted Operating Income $ 49,790 $ 46,684
-------- --------
GAAP Operating Margin 7.9% 7.5%
Adjusted Operating Margin 10.0% 9.5%
(f) GAAP operating income (loss) and GAAP operating margin were determined in
accordance with U.S. generally accepted accounting principles.
(g) Adjusted operating income (loss) and adjusted operating margin exclude the
items in note (c) and amortization of acquisition-related intangible
assets.
(h) Segment data for 2002 has been revised, consistent with the presentation in
2003, to reflect an allocation to the segments of some costs previously
reported as corporate costs, including marketing, global sourcing, and
e-commerce as well as a portion of legal, human resources, and information
systems costs. In addition, segment data for 2002 has been revised to
reflect the transfer of management responsibility in 2003 for several
businesses between segments as follows: (1) the compositional-metrology
business was moved to the Life and Laboratory Sciences segment from the
Optical Technologies segment; (2) the ultra-high vacuum systems and
semiconductor testing businesses were moved to the Measurement and Control
segment from the Optical Technologies segment; and (3) Thermo Euroglas was
moved to the Life and Laboratory Sciences segment from the Measurement and
Control segment.
(i) Includes items described in note (c).
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Thermo Electron will hold its earnings conference call on Thursday, April 24,
2003, at 11 a.m. Eastern time. To listen, dial 888-872-9028 within the U.S., or
973-633-6740 outside the U.S. The conference call will also be Webcast at
www.thermo.com. Click on "Investors." An audio archive of the call will be
available on our Website until May 8, 2003.
About Thermo Electron
Leading the world 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, and
sample-in/knowledge-out 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 our Annual Report on Form 10-K for the fiscal year ended December
28, 2002. 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
slowdown 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, integration and consolidation of
our instrument businesses, realization of potential future savings from new
sourcing initiatives, implementation of our 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.
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