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):
October 26, 2004
----------------------------------------
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 Quarterly Report on Form 10-Q for the fiscal quarter ended October
2, 2004. These include risks and uncertainties relating to the need to develop
new products and adapt to significant technological change, dependence on
customers that operate in cyclical industries, general worldwide economic
conditions and related uncertainties, the effect of changes in governmental
regulations, dependence on customers' capital spending policies and government
funding policies, use and protection of intellectual property, exposure to
product liability claims in excess of insurance coverage, retention of
contingent liabilities from businesses we sold, realization of potential future
savings from new productivity initiatives, implementation of new branding
strategy, implementation of strategies for improving internal growth, the effect
of exchange rate fluctuations on international operations, identification,
completion and integration of new acquisitions and potential impairment of
goodwill from previous acquisitions. While we may elect to update
forward-looking statements at some point in the future, we specifically disclaim
any obligation to do so, even if our estimates change and, therefore, you should
not rely on these forward-looking statements as representing our views as of any
date subsequent to today.
Item 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 October 26, 2004.
Item 9. Regulation FD Disclosure (Information furnished pursuant to Item 12,
"Disclosure of Results of Operations and Financial Condition").
On October 26, 2004, the Registrant announced its financial results for the
fiscal quarter ended October 2, 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 26th day of October, 2004.
THERMO ELECTRON CORPORATION
By: /s/ Peter E. Hornstra
----------------------------------------
Peter E. Hornstra
Corporate Controller and Chief Accounting
Officer
[THERMO LOGO]
Exhibit 99
FOR IMMEDIATE RELEASE
Media Contact Information: Investor Contact Information:
Lori Gorski J. Timothy Corcoran
Phone: 781-622-1242 Phone: 781-622-1111
E-mail: lori.gorski@thermo.com E-mail: tim.corcoran@thermo.com
Website: www.thermo.com
Thermo Electron Reports 21% Revenue Growth
and Record Operating Income in the Third Quarter
WALTHAM, Mass. (October 26, 2004) - Thermo Electron Corporation (NYSE:TMO) today
reported revenues of $542 million for the third quarter of 2004, a 21 percent
increase over $449 million in the 2003 quarter. GAAP diluted earnings per share
(EPS) were $.65 in 2004, compared with $.29 a year ago. The 2004 quarter
includes a gain of $.39 per share from discontinued operations, primarily due to
the sale of Spectra-Physics and tax benefits related to a previously divested
business. GAAP operating income increased 42 percent from 2003, largely a result
of lower restructuring costs in 2004. GAAP operating margin for the 2004 quarter
rose to 11.0 percent from 9.3 percent in 2003.
Adjusted EPS grew 23 percent to $.32 in the third quarter of 2004, compared with
$.26 in 2003. Adjusted operating income also rose 23 percent to record third
quarter levels since the company's reorganization in 2000. Adjusted operating
margin was 13.1 percent, up from 12.9 percent in 2003. Adjusted operating margin
improved by 50 basis points in 2004 before the effect of acquisitions, which
lowered the margin by 30 basis points. Organic revenues, which exclude the
effects of currency translation and acquisitions/divestitures, grew 9 percent.
Currency translation increased revenues by 5 percent, and the net effect of
acquisitions/divestitures led to a 7 percent increase.
Adjusted EPS, adjusted operating income, adjusted operating margin and organic
revenues 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."
Third Quarter Highlights
- Reported revenues grew 21 percent
- Adjusted EPS rose 23 percent
- Organic revenues increased 9 percent
- InnaPhase LIMS business acquired for $65 million
- Industrial process segment showing robust growth
Marijn E. Dekkers, president and chief executive officer of Thermo Electron,
said, "We are very pleased to have delivered strong top- and bottom-line growth
for the quarter. Importantly, our revenue performance contributed to solid
earnings growth, with adjusted EPS exceeding the high end of our guidance by
$.02. In addition, we generated strong cash flow of $66 million from continuing
operations.
"These results indicate that our growth strategy is working. We've made
significant internal investments to develop new products, expand our services
and create the commercial framework necessary to differentiate Thermo in the
marketplace. We also have the resources to continue to make strategic
acquisitions that extend our offerings and market coverage.
"In the Life and Laboratory Sciences segment, our leading analytical
technologies are setting new standards for scientific research, enhanced by a
growing family of informatics and services solutions following our recent
acquisition of InnaPhase Corporation, a leader in data management systems for
the pharmaceutical industry. In Measurement and Control, we are driving
improvement by pursuing opportunities in growth markets, such as China, and
applying our laboratory-grade analytical instruments to on-line processes. In
addition to these initiatives, we are benefiting from recovery in many of our
industrial markets."
Mr. Dekkers added, "For the fourth quarter of 2004, we expect to report adjusted
EPS of $.36 to $.38. As a result, we are narrowing our previous adjusted EPS
guidance of $1.20 to $1.25 for the full year to $1.23 to $1.25." (This guidance
excludes approximately $.03 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 revenue increase of 27
percent in the third quarter to $383 million, versus $302 million last year.
Organic revenues increased 8 percent. The effects of currency translation and
acquisitions increased revenues by 5 percent and 14 percent, respectively. New
products continue to drive stronger sales of our mass spectrometry systems. Our
Finnigan(TM) LTQ FT(TM) hybrid system, which has become a valuable research tool
for proteomics since its introduction in 2003, has been selected by R&D Magazine
as one of this year's top 100 innovative products. In our molecular spectroscopy
product line, we are seeing increased demand for our recently launched
Nicolet(TM) infrared spectrometry systems and our new Continuum(TM) series
microscope. In addition, growth in consumable products has led to general
strengthening across our clinical diagnostics portfolio. The recent InnaPhase
acquisition allows us to further leverage sales of systems and hardware by
extending our informatics offerings to include laboratory information management
systems for specialized pharmaceutical applications.
GAAP operating income for the segment grew 24 percent in the 2004 quarter, with
GAAP operating margin of 14.2 percent, versus 14.5 percent in 2003. Adjusted
operating income for the segment increased 23 percent in 2004, and adjusted
operating margin was 16.2 percent, compared with 16.7 percent in the 2003
quarter. Adjusted operating margin improved by 20 basis points in 2004 before
the effect of acquisitions, which lowered the margin by 70 basis points. As we
integrate these operations, we expect margins to improve in ensuing quarters.
Measurement and Control
Third quarter revenues in the Measurement and Control segment increased 9
percent to $159 million, versus $146 million last year. Organic revenues also
rose 9 percent. The effect of currency translation increased revenues by 4
percent, while the net effect of acquisitions/divestitures decreased revenues by
4 percent. Revenue growth was fueled by strong demand for our process
instruments used by the materials industry; the metals market continues to grow
in China, and minerals markets are gaining strength due to favorable pricing of
base materials. Our temperature control and materials characterization product
lines are benefiting from an upturn in industrial markets. We are also seeing
higher sales of gas flow systems used in petroleum processing, and increased
demand for our SOLA on-line sulfur analyzers resulting from stricter clean-fuel
regulations.
GAAP operating income for the segment increased 34 percent from the 2003 period,
and GAAP operating margin rose to 9.1 percent, versus 7.5 percent last year.
Adjusted operating income for the segment increased 24 percent over last year,
with adjusted operating margin of 11.1 percent, up from 9.7 percent in 2003.
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 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:
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.
We exclude charges relating to the sale of inventories revalued at the date of
acquisition, as we believe these charges are not indicative of our normal
operating costs.
We exclude the expense and tax effects associated with the amortization of
acquisition-related intangible assets because a significant portion of the
purchase price for acquisitions may be allocated to intangible assets that have
lives of 5 to 10 years. Exclusion of the amortization expense allows comparisons
of operating results that are consistent over time for both our newly acquired
and long-held businesses and with both acquisitive and non-acquisitive peer
companies.
We also exclude certain gains/losses and related tax effects, 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 equity interests in
Newport Corporation, Thoratec Corporation and FLIR Systems, Inc., 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 equity interests in Newport
and Thoratec. We no longer own any shares of FLIR Systems.
Conference Call
Thermo Electron will hold its earnings conference call on Wednesday, October 27,
at 8:30 a.m. Eastern time. To listen, dial 888-872-9028 within the U.S., or
973-633-6740 outside the U.S. You may also listen to the call live on the Web by
visiting http://www.thermo.com. Click on "About Us," then "Investors." An audio
archive of the call will be available in that section of our Website until
Friday, November 26, 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
Thermo Electron Corporation is the world leader in analytical instruments. Our
instrument solutions enable our customers to make the world a healthier, cleaner
and safer place. Thermo's Life and Laboratory Sciences segment provides
analytical instruments, scientific equipment, services and software solutions
for life science, drug discovery, clinical, environmental and industrial
laboratories. Thermo's Measurement and Control segment is dedicated to providing
analytical instruments used in a variety of manufacturing processes and
in-the-field applications, including those associated with safety and homeland
security. Based near Boston, Massachusetts, Thermo has revenues of more than $2
billion, and employs approximately 10,000 people in 30 countries. For more
information, visit http://www.thermo.com.
The following constitutes a "Safe Harbor" statement under the Private Securities
Litigation Reform Act of 1995: This press release contains forward-looking
statements that involve a number of risks and uncertainties. Important factors
that could cause actual results to differ materially from those indicated by
such forward-looking statements are set forth under the heading "Forward-Looking
Statements" in the company's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 3, 2004. These include risks and uncertainties relating to:
the need to develop new products and adapt to significant technological change,
dependence on customers that operate in cyclical industries, general worldwide
economic conditions and related uncertainties, the effect of changes in
governmental regulations, dependence on customers' capital spending policies and
government funding policies, use and protection of intellectual property,
exposure to product liability claims in excess of insurance coverage, retention
of contingent liabilities from businesses we sold, realization of potential
future savings from new productivity initiatives, implementation of new branding
strategy, implementation of strategies for improving internal growth, the effect
of exchange rate fluctuations on international operations, identification,
completion and integration of new acquisitions and potential impairment of
goodwill from previous acquisitions. We undertake no obligation to publicly
update any forward-looking statement, whether as a result of new information,
future events or otherwise.
Consolidated Statement of Income (unaudited)
Three Months Ended
----------------------------------------------------------------
----------------------------------------------------------------
October 2, 2004 September 27, 2003
------------------------------ -------------------------------
(In thousands except per share amounts) Reported (a) Adjusted (b) Reported (a) Adjusted (b)
-------------------------------------------------------------------------------------------------------------------------------
Revenues $ 542,315 $ 542,315 $ 448,567 $ 448,567
------------ ------------ ------------ -----------
Costs and Operating Expenses:
Cost of revenues (c) 291,360 291,023 239,824 239,824
Selling, general, and administrative expenses 147,346 147,346 120,371 120,371
Amortization of acquisition-related intangible assets 6,079 - 2,263 -
Research and development expenses 32,874 32,874 30,444 30,444
Restructuring and other costs, net (d) 5,035 - 13,819 -
------------ ------------ ------------ -----------
482,694 471,243 406,721 390,639
------------ ------------ ------------ -----------
Operating Income 59,621 71,072 41,846 57,928
Interest Income 2,459 2,459 2,910 2,910
Interest Expense (2,677) (2,677) (3,458) (3,458)
Other Income, Net (e) 2,689 2,689 11,084 1,731
------------ ------------ ------------ -----------
Income from Continuing Operations Before Income Taxes 62,092 73,543 52,382 59,111
Provision for Income Taxes (f) (19,451) (21,125) (13,387) (15,199)
------------ ------------ ------------ -----------
Income from Continuing Operations 42,641 52,418 38,995 43,912
Income (Loss) from Discontinued Operations (includes income tax
benefit of $541 in 2004) (940) - 2 -
Gain on Disposal of Discontinued Operations (includes income
tax benefit of $4,322 in 2004 and $2,600 in 2003) 64,835 - 9,518 -
------------ ------------ ------------ -----------
Net Income $ 106,536 $ 52,418 $ 48,515 $ 43,912
============ ============ ============ ===========
Earnings per Share from Continuing Operations:
Basic $ .26 $ .24
============ ============
Diluted $ .26 $ .24
============ ============
Earnings per Share:
Basic $ .66 $ .30
============ ============
Diluted $ .65 $ .32 $ .29 $ .26
============ ============= ============ ===========
Weighted Average Shares:
Basic 161,514 162,531
============ ============
Diluted 165,570 165,570 169,155 169,155
============ ============= ============ ===========
(a) Reported results were determined in accordance with U.S. generally accepted
accounting principles (GAAP). Prior period amounts have been adjusted to
reflect the treatment of Spectra-Physics as a discontinued operation. (b)
Adjusted results are non-GAAP measures and exclude charges to cost of
revenues (note c), amortization of acquisition-related intangible assets,
restructuring and other costs/income (note d), certain other income/expense
(note e), the tax consequences of these items (note f), and results of
discontinued operations.
(c) Reported results in 2004 include $276,000 of charges for accelerated
depreciation on manufacturing equipment being abandoned due to facility
consolidations and $61,000 of charges 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 and abandoned facility and other expenses of real
estate consolidation. Reported results in 2003 include restructuring and
other items consisting principally of severance; abandoned facility and
other expenses of real estate consolidation; a writedown to disposal value
of a product line that was sold in October 2003; and legal/advisory fees
associated with a reorganization of the company's non-U.S. subsidiary
structure.
(e) Reported results include $10,329,000 of gains from the sale of shares of
Thoratec Corporation in 2003. Reported results also include losses of
$976,000 in 2003 on the early retirement of debt.
(f) Adjusted provision for income taxes excludes $1,674,000 and $1,812,000 of
incremental tax benefit in 2004 and 2003, respectively, for the items in
(b) through (e).
Segment Data (g)(h)(i) Three Months Ended
(In thousands except percentage amounts) --------------------------------------
October 2, 2004 September 27, 2003
------------------------------------------------------------------------------------------------------------------------------------
Life and Laboratory Sciences
Revenues $ 383,163 $ 301,755
--------------- ---------------
GAAP Operating Income 54,508 43,845
Cost of Revenue Charges (j) 276 -
Restructuring and Other Items (k) 2,127 4,871
Amortization of Acquisition-related Intangible Assets 5,184 1,663
--------------- ----------------
Adjusted Operating Income $ 62,095 $ 50,379
--------------- ---------------
GAAP Operating Margin 14.2% 14.5%
Adjusted Operating Margin 16.2% 16.7%
Measurement and Control
Revenues $ 159,152 $ 145,562
--------------- ---------------
GAAP Operating Income 14,533 10,882
Cost of Revenue Charges (j) 61 -
Restructuring and Other Items (k) 2,102 2,662
Amortization of Acquisition-related Intangible Assets 895 600
--------------- ---------------
Adjusted Operating Income $ 17,591 $ 14,144
--------------- ---------------
GAAP Operating Margin 9.1% 7.5%
Adjusted Operating Margin 11.1% 9.7%
Consolidated (including Corporate Costs)
Revenues $ 542,315 $ 448,567
---------------- ---------------
GAAP Operating Income 59,621 41,846
Cost of Revenue Charges (j) 337 -
Restructuring and Other Items (k) 5,035 13,819
Amortization of Acquisition-related Intangible Assets 6,079 2,263
---------------- ---------------
Adjusted Operating Income $ 71,072 $ 57,928
---------------- ---------------
GAAP Operating Margin 11.0% 9.3%
Adjusted Operating Margin 13.1% 12.9%
(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 2004 was $7,188,000 at Life and Laboratory
Sciences, $2,195,000 at Measurement and Control and $10,204,000
Consolidated. Depreciation expense in 2003 was $5,922,000 at Life and
Laboratory Sciences, $2,382,000 at Measurement and Control and $9,271,000
Consolidated.
(j) Includes items described in note (c).
(k) Includes items described in note (d).
Consolidated Statement of Income (unaudited)
Nine Months Ended
---------------------------------------------------------------
October 2, 2004 September 27, 2003
------------------------------ ------------------------------
(In thousands except per share amounts) Reported (a) Adjusted (b) Reported (a) Adjusted (b)
------------------------------------------------------------------------------------------------------------------------------
Revenues $ 1,592,656 $ 1,592,656 $ 1,370,463 $ 1,370,463
-------------- ------------- -------------- -------------
Costs and Operating Expenses:
Cost of revenues (c) 861,956 858,875 734,032 734,032
Selling, general, and administrative expenses 434,963 434,963 374,011 374,011
Amortization of acquisition-related intangible assets 15,529 - 6,707 -
Research and development expenses 99,735 99,735 95,763 95,763
Restructuring and other costs, net (d) 9,008 - 25,457 -
-------------- ------------- -------------- -------------
1,421,191 1,393,573 1,235,970 1,203,806
-------------- ------------- -------------- -------------
Operating Income 171,465 199,083 134,493 166,657
Interest Income 6,045 6,045 17,656 17,656
Interest Expense (8,100) (8,100) (15,544) (15,544)
Other Income, Net (e) 17,795 8,181 27,044 4,036
-------------- ------------- -------------- -------------
Income from Continuing Operations Before Income Taxes 187,205 205,209 163,649 172,805
Provision for Income Taxes (f) (54,320) (59,032) (35,925) (46,726)
-------------- ------------- -------------- -------------
Income from Continuing Operations 132,885 146,177 127,724 126,079
Income (Loss) from Discontinued Operations (includes income tax
benefit of $36,321 in 2004 and $1,394 in 2003) 43,018 - (4,197) -
Gain on Disposal of Discontinued Operations (includes income tax
benefit of $4,322 in 2004; net of income tax provision of $964
in 2003) 64,835 - 14,554 -
-------------- ------------- -------------- -------------
Net Income $ 240,738 $ 146,177 $ 138,081 $ 126,079
============== ============= ============== =============
Earnings per Share from Continuing Operations:
Basic $ .81 $ .79
============== ==============
Diluted $ .79 $ .77
============== ==============
Earnings per Share:
Basic $ 1.47 $ .85
============== ==============
Diluted $ 1.43 $ .87 $ .83 $ .76
============== ============= ============== =============
Weighted Average Shares:
Basic 164,097 162,474
============== ==============
Diluted 168,696 168,696 171,703 171,703
============== ============= ============== =============
(a) Reported results were determined in accordance with U.S. generally accepted
accounting principles (GAAP). Prior period amounts have been adjusted to
reflect the treatment of Spectra-Physics as a discontinued operation.
(b) Adjusted results are non-GAAP measures and exclude charges to cost of
revenues (note c), amortization of acquisition-related intangible assets,
restructuring and other costs/income (note d), certain other income/expense
(note e), the tax consequences of these items (note f), and results of
discontinued operations.
(c) Reported results in 2004 include $3,081,000 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; gain on the sale of a business; 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 to disposal value of a product
line and a business that were sold in October 2003; 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 $9,614,000 and $10,329,000 of gains from the sale
of shares of Thoratec Corporation in 2004 and 2003, respectively, and
$13,654,000 of gains from the sale of shares of FLIR Systems, Inc. in 2003.
Reported results also include a loss of $976,000 in 2003 on the early
retirement of debt.
(f) Adjusted provision for income taxes excludes $3,812,000 and $1,775,000 of
incremental tax benefit in 2004 and 2003, respectively, for the items in
(b) through (e); $900,000 in 2004 of tax benefit resulting from a
reorganization of the company's subsidiary structure in Europe; and
$9,026,000 in 2003 of tax benefit from the reversal of a valuation
allowance due to expected utilization of foreign tax credit carryforwards.
Segment Data (g)(h)(i) Nine Months Ended
--------------------------------------
(In thousands except percentage amounts) October 2, 2004 September 27, 2003
------------------------------------------------------------------------------------------------------------------------------------
Life and Laboratory Sciences
Revenues $ 1,118,451 $ 915,866
--------------- ---------------
GAAP Operating Income 154,636 127,471
Cost of Revenue Charges (j) 2,897 -
Restructuring and Other Items (k) 2,769 11,351
Amortization of Acquisition-related Intangible Assets 13,289 4,908
--------------- ---------------
Adjusted Operating Income $ 173,591 $ 143,730
--------------- ---------------
GAAP Operating Margin 13.8% 13.9%
Adjusted Operating Margin 15.5% 15.7%
Measurement and Control
Revenues $ 474,205 $ 449,343
--------------- --------------
GAAP Operating Income 41,131 35,076
Cost of Revenue Charges (j) 184 -
Restructuring and Other Items (k) 4,623 6,115
Amortization of Acquisition-related Intangible Assets 2,238 1,799
--------------- --------------
Adjusted Operating Income $ 48,176 $ 42,990
--------------- --------------
GAAP Operating Margin 8.7% 7.8%
Adjusted Operating Margin 10.2% 9.6%
Consolidated (including Corporate Costs)
Revenues $ 1,592,656 $ 1,370,463
--------------- --------------
GAAP Operating Income 171,465 134,493
Cost of Revenue Charges (j) 3,081 -
Restructuring and Other Items (k) 9,008 25,457
Amortization of Acquisition-related Intangible Assets 15,529 6,707
---------------- --------------
Adjusted Operating Income $ 199,083 $ 166,657
---------------- --------------
GAAP Operating Margin 10.8% 9.8%
Adjusted Operating Margin 12.5% 12.2%
(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 2004 was $22,169,000 at Life and Laboratory
Sciences, $7,273,000 at Measurement and Control, and $31,864,000
Consolidated. Depreciation expense in 2003 was $17,588,000 at Life and
Laboratory Sciences, $7,680,000 at Measurement and Control and $28,026,000
Consolidated.
(j) Includes items described in note (c).
(k) Includes items described in note (d).
Condensed Consolidated Balance Sheet (unaudited)
(In thousands) October 2, 2004 Dec. 31, 2003
-------------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 335,664 $ 303,912
Short-term available-for-sale investments 90,233 114,326
Accounts receivable, net 429,388 419,625
Inventories 331,144 302,161
Other current assets 173,511 160,001
Current assets of discontinued operations 5,852 95,231
------------ -------------
1,365,792 1,395,256
------------ -------------
Property, Plant, and Equipment, Net 246,513 252,252
------------ -------------
Acquisition-related Intangible Assets 160,336 65,542
------------ -------------
Other Assets 100,922 47,408
------------ -------------
Long-term Assets of Discontinued Operations - 187,339
------------- -------------
Goodwill 1,493,942 1,441,172
------------- -------------
$ 3,367,505 $ 3,388,969
============= =============
Current Liabilities:
Short-term obligations and current maturities of long-term obligations $ 15,378 $ 45,981
Other current liabilities 543,803 542,994
Current liabilities of discontinued operations 72,652 95,818
------------- -------------
631,833 684,793
------------- -------------
Long-term Deferred Income Taxes and Other Long-term Liabilities 77,886 85,095
------------- -------------
Long-term Liabilities of Discontinued Operations - 6,766
-------------- -------------
Long-term Obligations:
Senior notes 137,859 137,874
Subordinated convertible obligations 77,234 77,234
Other 13,345 14,401
-------------- -------------
228,438 229,509
-------------- -------------
Total Shareholders' Equity 2,429,348 2,382,806
-------------- -------------
$ 3,367,505 $ 3,388,969
============== =============