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):
October 24, 2001
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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 (I.R.S. Employer
incorporation or organization) Number) 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 "Risk Factors" in the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 30, 2000. These
include risks and uncertainties relating to: integration of the company's
instrument businesses, the ability to improve internal growth, liquidity and
prospective performance of a subsidiary to be spun off, the company's guarantee
of obligations of a subsidiary that was spun off, the effect of exchange rate
fluctuations on international operations, potential impairment of goodwill, the
need to develop new products and adapt to significant technological change,
dependence on customers that operate in cyclical industries, the effect of
changes in governmental regulations, and dependence on customers' capital
spending policies and government funding policies.
Item 5. Other Events
On October 24, 2001, the Registrant issued a press release, attached hereto
as Exhibit 99, regarding its financial results for the quarter ended September
29, 2001.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(a) Financial Statements of Business Acquired: Not applicable.
(b) Pro Forma Financial Information: Not applicable.
(c) Exhibits
99 Press Release October 24, 2001.
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 November, 2001.
THERMO ELECTRON CORPORATION
By: /s/ Theo Melas-Kyriazi
-------------------------------------
Theo Melas-Kyriazi
Vice President and Chief Financial
Officer
Thermo Electron Reports Cash Operating EPS up 10 Percent
WALTHAM, Mass., October 24, 2001 - Thermo Electron Corporation (NYSE:TMO) today
reported that diluted cash operating EPS rose 10 percent to $.22 for the third
quarter of 2001, compared with $.20 in the year-ago period. Organic revenue
declined 1 percent, excluding unfavorable foreign currency effects of 1 percent.
Third quarter cash operating margin was 9.8 percent in 2001, compared with 12.2
percent in 2000.* Revenues for the quarter were $513 million, versus $547
million in 2000. Approximately $32 million of the quarter-to-quarter change in
revenues is due to the inclusion in 2000 of businesses subsequently sold, and
currency effects.
"We delivered solid cash operating EPS growth this quarter in an
increasingly challenging economic climate," said Richard F. Syron, chairman and
chief executive officer of Thermo Electron. "Revenues declined in Optical
Technologies, and, to a lesser extent, in Measurement and Control, due to
significant softness in the markets these sectors serve. However, our Life
Sciences sector - less affected by the economy - achieved 6 percent organic
revenue growth, with increased demand for its products and services across the
board. We did have some disruptions at the end of the quarter due to the
September 11 events, and we estimate that this reduced third quarter revenues by
approximately 1 percent - about a penny per share in earnings. We fully expect
to record these revenues in the fourth quarter."
Mr. Syron continued, "Our margins this quarter were disappointing. A number
of factors contributed to the decline, including extremely poor financial
results in our Optical Technologies sector and a sharp decline in revenues in
some of our Measurement and Control businesses that have been hurt by the
economic slowdown. Also affecting margins were our continued investments in
developing next-generation products - critical to our long-term success. We
continued implementing the significant restructuring activities we announced in
the second quarter, reducing our number of employees by more than 600. We have
also eliminated 21 facilities, as well as 15 more through the sale of
businesses. However, we have not yet realized the full benefit of these actions,
and expect our cash operating margin to rebound to above 11 percent in the
fourth quarter.
"Beyond that, we plan to take additional restructuring measures during the
fourth quarter, including eliminating another 300 to 500 positions. We also plan
to further reduce the number of facilities by 40 in 2002. These actions will
help us improve margins. They are also consistent with our pursuit of
integrating the company so we can work more efficiently and serve our customers
better."
Commenting on the company's future prospects, Mr. Syron said, "The economic
conditions are certainly challenging. But we believe our technological strength
in diverse markets and our continued drive toward efficiency will serve us well.
We expect to deliver cash operating EPS of $.23 to $.26 for the fourth quarter,
which would bring us to the low end of our previous guidance of $.91 to $.95 for
the year."
------------------------------------
* Cash operating EPS and cash operating
margin, except where otherwise noted, exclude amortization of goodwill and
intangibles, restructuring and unusual items, and the results of discontinued
operations. Internal revenue growth figures exclude the effects of foreign
currency translation.
-more-
Life Sciences
Internal revenue growth for the Life Sciences sector was 6 percent, with
revenues of $201 million. The sector saw double-digit growth in sales of
clinical diagnostic products, including rapid point-of-care tests and
consumables - and of laboratory information management systems to the
pharmaceutical and biotech industries. Also contributing to organic growth were
strong sales of magnetic sector mass spectrometers used for dioxin analysis and
research applications, as well as tools for drug discovery, including the new
TSQ(R) Quantum triple quadrupole mass spectrometer. During the 2001 quarter,
cash operating income margin for the sector was 15.0 percent, compared with 15.8
percent in 2000. Margin improvement in clinical diagnostics and informatics
businesses was more than offset by continued investments in proteomics.
Optical Technologies
Organic revenue for the Optical Technologies sector declined 8 percent for the
third quarter, to $119 million. Revenues increased at Spectra-Physics, primarily
due to increased demand for lasers used in biomedical applications. However,
this increase was more than offset by a steep revenue decline in other
businesses across the sector serving the semiconductor and telecommunications
markets. Cash operating income margin for the sector was 3.4 percent for the
2001 quarter, compared with 9.1 percent in 2000. The decline was due to a $3
million increase in operating losses at Spectra-Physics primarily from its
telecom initiatives, and to lower revenues in most Optical Technologies
businesses.
At the end of the quarter, Thermo launched in Japan the ThetaProbe
spectrometer under the Thermo VG Scientific brand. The system is used in new
materials R&D applications in various industries to nondestructively determine
the depth and chemical composition of ultra-thin layers. Thermo has already
received three orders for the systems, which sell for more than $500,000 each.
Measurement and Control
Organic revenue for the Measurement and Control sector declined 4 percent for
the 2001 quarter, to $196 million. While sales of environmental instruments rose
6 percent during the quarter, and sales of natural gas-flow monitoring products
continued to be strong, the sector was negatively affected overall by the
slowing economy. Cash operating income margin for the sector was 12.8 percent
for the 2001 quarter, compared with 13.8 percent in 2000. The decline was due to
lower sales of process instruments for the steel, cement, and chemical
industries, offset in part by cost reductions across the sector.
During the quarter, R&D Magazine honored the Antaris(TM) FT-Near-Infrared
analyzer with an R&D 100 Award, citing the innovative design of this quality
control instrument marketed under the Thermo Nicolet brand. Thermo also recently
launched under the Thermo Elemental brand two groundbreaking products - the X
Series ICP-MS and the SOLAAR S Series AA spectrometer. These products set a new
standard for elemental analysis in quality control/quality assurance
applications and demonstrate Thermo's leadership in turning the most
sophisticated and powerful analytical instruments into easy-to-use tools for
operators with varying levels of training and experience.
Effective October 26, 2001, Thermo Electron will change its transfer agent
from EquiServe to American Stock Transfer & Trust Company. The new transfer
agent can be reached by telephone at 877-777-0800, or by mail at 59 Maiden Lane,
New York, New York 10038.
Thermo Electron will hold its earnings conference call on Thursday, October
25, 2001, at 11 a.m. EDT. To listen, dial 888-872-9028 within the U.S., or
973-633-6740 outside the U.S. A recording of this call will be available until
Thursday, November 1, 2001. To listen to the recording, please call 877-519-4471
within the U.S., or 973-341-3080 outside the U.S., and enter code 2876465. At
the close of business on Thursday, an audio archive will also be available on
www.thermo.com under "Investors."
-more-
Thermo Electron Corporation is a global leader in providing
technology-based instruments, components, and systems that offer total solutions
for markets ranging from life sciences to telecommunications to food, drug, and
beverage production. The company's powerful technologies help researchers sift
through data to make discoveries that will fight disease or prolong life. They
allow manufacturers to fabricate critical components required to increase the
speed and quality of communications. And they automatically monitor and control
online production to ensure that quality standards are met safely and
efficiently. Thermo Electron, based in Waltham, Massachusetts, reported $2.3
billion in revenues in 2000 and employs approximately 12,000 people worldwide.
For more information on Thermo Electron, 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 "Risk Factors" in the company's Annual Report on Form 10-K for the
fiscal year ended December 30, 2000. These include risks and uncertainties
relating to: integration of the company's instrument businesses, the ability to
improve internal growth, liquidity and prospective performance of a subsidiary
to be spun off, the company's guarantee of obligations of a subsidiary that was
spun off, the effect of exchange rate fluctuations on international operations,
potential impairment of goodwill, the need to develop new products and adapt to
significant technological change, dependence on customers that operate in
cyclical industries, the effect of changes in governmental regulations, and
dependence on customers' capital spending policies and government funding
policies.
-more-
Consolidated Statement of Income (Unaudited)
Three Months Ended
--------------------------------------------------------
Sept. 29, 2001 Sept. 30, 2000
----------------------- --------------------------
(In thousands except per share amounts) Reported Adjusted Reported Adjusted (a)
---------------------------------------------------------------------------------------------------------------------
Revenues $ 512,941 $ 512,941 $ 546,949 $ 542,131
Costs and Operating Expenses:
Cost of revenues 284,455 284,455 320,601 298,247
Selling, general, and administrative expenses 136,475 136,475 140,876 138,072
Amortization of goodwill and other intangibles 11,843 11,843 12,111 12,102
Research and development expenses 41,962 41,962 40,611 39,931
Restructuring and other unusual costs (inconme), net 9,571 - (76,781) -
--------- --------- --------- ---------
484,306 474,735 437,418 488,352
--------- --------- --------- ---------
Operating Income 28,635 38,206 109,531 53,779
Interest Income 19,331 19,331 9,970 9,970
Interest Expense (18,353) (18,353) (20,493) (20,493)
Other Income (Expense), Net 10,627 6,142 (25,854) (285)
--------- --------- --------- ---------
Income from Continuing Operations Before Provision for
Income Taxes, Minority Interest, and Extraordinary Item 40,240 45,326 73,154 42,971
Provision for Income Taxes (15,090) (16,997) (66,043) (16,717)
Minority Interest (Expense) Income 527 493 170 (30)
--------- --------- --------- ---------
Income from Continuing Operations Before Extraordinary Item 25,677 28,822 7,281 26,224
Income from Discontinued Operations (net of income tax provision
and minority interest of $4,090) - - 4,998 -
--------- --------- --------- ---------
Income Before Extraordinary Item 25,677 28,822 12,279 26,224
Extraordinary Item (net of income tax provision of $362) 602 - - -
--------- --------- --------- ---------
Net Income $ 26,279 $ 28,822 $ 12,279 $ 26,224
--------- --------- --------- ---------
Earnings per Share from Continuing Operations Before
Extraordinary Item:
Basic $ .14 $ .16 $ .04 $ .15
========= ========= ========= =========
Diluted $ .14 $ .16 $ .04 $ .15
========= ========= ========= =========
Earnings per Share:
Basic $ .15 $ .16 $ .07 $ .15
========= ========= ========= =========
Diluted $ .14 $ .16 $ .07 $ .15
========= ========= ========= =========
Diluted Cash Operating Earnings per Share (b) $ .22 $ .20
========= =========
Weighted Average Shares:
Basic 180,280 180,280 175,978 175,978
======== ========= ========= =========
Diluted 182,823 183,313 180,440 180,918
========= ========= ========= =========
(a) Excludes restructuring and unusual items, results of discontinued
operations, extraordinary item and, in 2000, the third quarter operating results
of a business sold on July 14, 2000.
(b) Excludes items from (a) and amortization of goodwill and other
intangibles, net of tax and minority interest, of $10,669,000 and $10,731,000 in
the three months ended September 29, 2001, and September 30, 2000, respectively.
Segment Data (Unaudited) (c) Three Months Ended
(In thousands except percentage amounts) Sept. 29, 2001 Sept. 30, 2000
--------------------------------------------------------------------------------
Life Sciences
Revenues $ 200,619 $ 189,911
Operating Income 24,410 24,584
Operating Income Margin 12.2% 12.9%
Cash Operating Income Margin 15.0% 15.8%
Optical Technologies
Revenues $ 119,373 $ 129,605
Operating Income 2,086 9,983
Operating Income Margin 1.7% 7.7%
Cash Operating Income Margin 3.4% 9.1%
Measurement and Control
Revenues $ 196,050 $ 227,199
Operating Income 20,996 26,510
Operating Income Margin 10.7% 11.7%
Cash Operating Income Margin 12.8% 13.8%
Consolidated (including corporate costs)
Revenues $ 512,941 $ 542,131
Operating Income 38,206 53,779
Operating Income Margin 7.4% 9.9%
Cash Operating Income Margin 9.8% 12.2%
(c ) Operating income and operating income margins as stated exclude
restructuring and unusual items and, in 2000, the third quarter operating
results of a business sold on July 14, 2000.
Cash operating income margins as stated exclude these items, and
amortization of goodwill and other intangibles.
Consolidated Statement of Income (Unaudited)
Nine Months Ended
--------------------------------------------------------------
Sept. 29, 2001 Sept. 30, 2000
(In thousands except per share amounts) Reported Adjusted (a) Reported Adjusted (a)
------------------------------------------------------------------------------------------------------------------------------------
Revenues $ 1,628,502 $ 1,628,502 $ 1,703,503 $ 1,698,685
Costs and Operating Expenses:
Cost of revenues 906,700 893,423 942,311 919,957
Selling, general, and administrative expenses 428,518 428,518 456,668 453,864
Amortization of goodwill and other intangibles 35,465 35,465 32,973 32,964
Research and development expenses 131,033 131,033 135,157 134,477
Restructuring and other unusual costs (income), net 44,146 - (85,763) -
---------- ------------ ------------ -----------
1,545,862 1,488,439 1,481,346 1,541,262
---------- ------------ ------------ -----------
Operating Income 82,640 140,063 222,157 157,423
Interest Income 54,189 54,189 27,574 27,574
Interest Expense (57,737) (57,737) (65,145) (65,145)
Other Income (Expense), Net 11,259 8,757 (31,109) 6,221
---------- ------------ ------------ -----------
Income from Continuing Operations Before Provision for
Income Taxes, Minority Interest, Extraordinary Item, and
Cumulative Effect of Change in Accounting Principle 90,351 145,272 153,477 126,073
Provision for Income Taxes (34,758) (56,017) (99,968) (49,855)
Minority Interest Expense (Income) 1,326 464 (10,051) (10,452)
---------- ------------ ------------ -----------
Income from Continuing Operations Before Extraordinary Item and
Cumulative Effect of Change in Accounting Principle 56,919 89,719 43,458 65,766
Income from Discontinued Operations (net of income tax provision
and minority interest of $8,287) - - 9,016 -
Provision for Loss on Disposal of Discontinued Operations, Net
(net of income tax benefit of $22,741) (50,440) - - -
Income Before Extraordinary Item and Cumulative Effect of
Change in Accounting Principle 6,479 89,719 52,474 65,766
Extraordinary Item (net of income tax provision of $362 and $333) 602 - 532 -
---------- ------------ ------------ -----------
Income Before Cumulative Effect of Change in Accounting
Principle 7,081 89,719 53,006 65,766
Cumulative Effect of Change in Accounting Principle (net of income
tax benefit and minority interest of $663 and $8,986) (994) - (12,918) -
---------- ------------ ------------ -----------
Net Income $ 6,087 $ 89,719 $ 40,088 $ 65,766
========== ========= ========== =========
Earnings per Share from Continuing Operations Before Extraordinary Item
and Cumulative Effect of Change in Accounting Principle:
Basic $ .31 $ .49 $ .27 $ .40
========== ========= ========== =========
Diluted $ .31 $ .48 $ .25 $ .39
========== ========= ========== =========
Earnings per Share:
Basic $ .03 $ .49 $ .25 $ .40
========== ========= ========== =========
Diluted $ .03 $ .48 $ .23 $ .39
========== ========= ========== =========
Diluted Cash Operating Earnings per Share (b) $ .66 $ .55
========= =========
Weighted Average Shares:
Basic 181,588 181,588 162,937 162,937
========== ========= ========== =========
Diluted 185,019 185,500 165,224 165,224
========== ========= ========== =========
(a) Excludes restructuring and unusual items, the cumulative effect of
change in accounting principle, results of discontinued operations,
extraordinary item and, in 2000, the third quarter operating results of a
business sold on July 14, 2000.
(b) Excludes items from (a) and amortization of goodwill and other
intangibles, net of tax and minority interest, of $31,598,000 and $26,468,000 in
the nine months ended September 29, 2001, and September 30, 2000, respectively.
-more-
Segment Data (Unaudited) (c) Nine Months Ended
(In thousands except percentage amounts) Sept. 29, 2001 Sept. 30, 2000
--------------------------------------------------------------------------------
Life Sciences
Revenues $ 612,349 $ 571,240
Operating Income 77,432 77,082
Operating Income Margin 12.6% 13.5%
Cash Operating Income Margin 15.5% 15.9%
Optical Technologies
Revenues $ 398,298 $ 352,528
Operating Income 25,924 26,911
Operating Income Margin 6.5% 7.6%
Cash Operating Income Margin 7.9% 8.9%
Measurement and Control
Revenues $ 629,775 $ 788,415
Operating Income 66,145 76,849
Operating Income Margin 10.5% 9.7%
Cash Operating Income Margin 12.5% 11.5%
Consolidated (including corporate costs)
Revenues $ 1,628,502 $ 1,698,685
Operating Income 140,063 157,423
Operating Income Margin 8.6% 9.3%
Cash Operating Income Margin 10.8% 11.2%
(c ) Operating income and operating income margins as stated exclude
restructuring and unusual items and, in 2000, the third quarter operating
results of a business sold on July 14, 2000. Cash operating income margins as
stated exclude these items, and amortization of goodwill and other intangibles.
###