SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------------------------------------------
FORM 10-Q
(mark one)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarter Ended April 4, 1998.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number 1-9786
THERMO INSTRUMENT SYSTEMS INC.
(Exact name of Registrant as specified in its charter)
Delaware 04-2925809
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
860 West Airport Freeway
Suite 301
Hurst, Texas 76054
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 622-1000
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter
period that the Registrant was required to file such
reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of
the issuer's classes of Common Stock, as of the
latest practicable date.
Class Outstanding at May 1, 1998
---------------------------- --------------------------
Common Stock, $.10 par value 122,161,740
PAGE
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
-----------------------------
THERMO INSTRUMENT SYSTEMS INC.
Consolidated Balance Sheet
(Unaudited)
Assets
April 4, January 3,
(In thousands) 1998 1998
------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents (includes
$538,140 and $283,995 under repurchase
agreement with affiliated company) $ 678,595 $ 468,848
Available-for-sale investments, at quoted
market value (amortized cost of $8,135
and $8,287) 8,496 8,328
Accounts receivable, less allowances
of $22,675 and $22,786 346,773 364,075
Unbilled contract costs and fees 10,012 9,191
Inventories:
Raw materials and supplies 125,573 118,611
Work in process 56,303 52,870
Finished goods 92,721 93,238
Prepaid expenses 23,563 19,292
Prepaid income taxes 55,444 54,915
---------- ----------
1,397,480 1,189,368
---------- ----------
Property, Plant, and Equipment, at Cost 318,302 317,605
Less: Accumulated depreciation and
amortization 104,923 97,666
---------- ----------
213,379 219,939
---------- ----------
Other Assets 51,488 45,477
---------- ----------
Cost in Excess of Net Assets of Acquired
Companies 887,948 896,369
---------- ----------
$2,550,295 $2,351,153
========== ==========
2PAGE
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THERMO INSTRUMENT SYSTEMS INC.
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
April 4, January 3,
(In thousands except share amounts) 1998 1998
----------------------------------------------------------------------
Current Liabilities:
Notes payable and current maturities of
long-term obligations (includes $65,000
and $55,000 due to parent company) $ 121,775 $ 116,226
Accounts payable 97,831 97,516
Accrued payroll and employee benefits 48,396 59,745
Accrued income taxes 71,717 61,409
Accrued installation and warranty expenses 41,995 42,404
Accrued acquisition expenses (Note 6) 26,032 33,789
Deferred revenue 47,814 41,759
Other accrued expenses 98,746 101,827
Due to parent company and affiliated
companies 15,290 22,027
---------- ----------
569,596 576,702
---------- ----------
Deferred Income Taxes 30,483 30,430
---------- ----------
Other Deferred Items 26,961 27,273
---------- ----------
Long-term Obligations:
Senior convertible obligations (includes
$140,000 due to parent company) 327,297 327,824
Subordinated convertible obligations
(Note 2) 410,507 160,547
Other (includes $53,800 and $168,800 due to
parent company) 68,586 184,823
---------- ----------
806,390 673,194
---------- ----------
Minority Interest 214,808 165,996
---------- ----------
Shareholders' Investment:
Common stock, $.10 par value, 250,000,000
shares authorized; 122,771,730 and
122,645,040 shares issued 12,277 12,265
Capital in excess of par value 323,434 333,580
Retained earnings 609,754 571,899
Treasury stock at cost, 634,209 and
670,827 shares (7,031) (6,965)
Accumulated other comprehensive items
(Note 4) (36,377) (33,221)
---------- ----------
902,057 877,558
---------- ----------
$2,550,295 $2,351,153
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
3PAGE
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THERMO INSTRUMENT SYSTEMS INC.
Consolidated Statement of Income
(Unaudited)
Three Months Ended
-----------------------
April 4, March 29,
(In thousands except per share amounts) 1998 1997
----------------------------------------------------------------------
Revenues $407,943 $329,120
-------- --------
Costs and Operating Expenses:
Cost of revenues 214,209 173,448
Selling, general, and administrative
expenses 107,727 89,569
Research and development expenses 28,519 23,407
-------- --------
350,455 286,424
-------- --------
Operating Income 57,488 42,696
Interest Income 8,169 7,224
Interest Expense (includes $3,431 and $1,559
to parent company) (11,493) (8,460)
Gain on Issuance of Stock by Subsidiaries
(Note 5) 9,950 12,035
-------- --------
Income Before Provision for Income Taxes
and Minority Interest Expense 64,114 53,495
Provision for Income Taxes 21,959 17,770
Minority Interest Expense 4,300 2,138
-------- --------
Net Income $ 37,855 $ 33,587
======== ========
Earnings per Share (Note 3):
Basic $ .31 $ .28
======== ========
Diluted $ .28 $ .25
======== ========
Weighted Average Shares (Note 3):
Basic 122,065 121,338
======== ========
Diluted 146,708 139,302
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
4PAGE
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THERMO INSTRUMENT SYSTEMS INC.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
----------------------
April 4, March 29,
(In thousands) 1998 1997
-----------------------------------------------------------------------
Operating Activities:
Net income $ 37,855 $ 33,587
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 16,117 11,662
Provision for losses on accounts
receivable 185 1,084
Gain on issuance of stock by subsidiaries
(Note 5) (9,950) (12,035)
Minority interest expense 4,300 2,138
Other noncash expenses 1,478 1,419
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable 13,700 (12,326)
Inventories (14,028) (10,436)
Other current assets (5,796) (7,745)
Accounts payable 997 2,942
Other current liabilities 7,123 (4,785)
Other (1,074) (28)
--------- ---------
Net cash provided by operating activities 50,907 5,477
--------- ---------
Investing Activities:
Acquisitions, net of cash acquired (1,300) (336,935)
Payment to affiliated company for acquired
business (19,117) -
Purchases of property, plant, and equipment (6,573) (3,989)
Proceeds from sale of property, plant, and
equipment 3,768 -
Other 159 601
--------- ---------
Net cash used in investing activities (23,063) (340,323)
--------- ---------
Financing Activities:
Net proceeds from issuance of Company and
subsidiary common stock (Note 5) 43,701 25,219
Net proceeds from issuance of subordinated
convertible debentures (Note 2) 244,150 -
Proceeds from issuance of long-term
obligations to parent company - 220,000
Repayment of long-term obligation to
parent company (Note 2) (105,000) -
Decrease in short-term borrowings (2,966) -
Repayment of long-term obligations (894) (253)
Other 77 -
--------- ---------
Net cash provided by financing activities $ 179,068 $ 244,966
--------- ---------
5PAGE
<PAGE>
THERMO INSTRUMENT SYSTEMS INC.
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Three Months Ended
---------------------
April 4, March 29,
(In thousands) 1998 1997
----------------------------------------------------------------------
Exchange Rate Effect on Cash $ 2,835 $ (552)
--------- ---------
Increase (Decrease) in Cash and Cash
Equivalents 209,747 (90,432)
Cash and Cash Equivalents at Beginning
of Period 468,848 522,688
--------- ---------
Cash and Cash Equivalents at End of Period $ 678,595 $ 432,256
========= =========
Noncash Activities:
Fair value of assets of acquired companies $ 1,300 $ 607,466
Cash paid for acquired companies (1,300) (383,247)
Cash to be paid for remaining outstanding
shares of tender offer - (21,102)
Issuance of subsidiary stock options
for acquired company - (2,080)
--------- ---------
Liabilities assumed of acquired
companies $ - $ 201,037
========= =========
Conversions of Company and
subsidiary convertible obligations $ 567 $ 3,997
========= =========
The accompanying notes are an integral part of these consolidated
financial statements.
6PAGE
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THERMO INSTRUMENT SYSTEMS INC.
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been
prepared by Thermo Instrument Systems Inc. (the Company) without audit
and, in the opinion of management, reflect all adjustments of a normal
recurring nature necessary for a fair statement of the financial position
at April 4, 1998, and the results of operations and the cash flows for
the three-month periods ended April 4, 1998, and March 29, 1997. Interim
results are not necessarily indicative of results for a full year.
The consolidated balance sheet presented as of January 3, 1998, has
been derived from the consolidated financial statements that have been
audited by the Company's independent public accountants. The consolidated
financial statements and notes are presented as permitted by Form 10-Q
and do not contain certain information included in the annual financial
statements and notes of the Company. The consolidated financial
statements and notes included herein should be read in conjunction with
the financial statements and notes included in the Company's Annual
Report on Form 10-K for the fiscal year ended January 3, 1998, filed with
the Securities and Exchange Commission.
2. Subordinated Convertible Debentures
In January 1998, the Company sold at par value $250.0 million
principal amount of 4% subordinated convertible debentures due 2005 for
net proceeds of $244.2 million. The debentures are convertible into
shares of the Company's common stock at a conversion price of $35.65 per
share and are guaranteed on a subordinated basis by Thermo Electron
Corporation. The Company used a portion of the proceeds to repay a $105.0
million promissory note to Thermo Electron. The $105.0 million promissory
note was classified as long-term in the accompanying 1997 balance sheet,
as its repayment was made using the proceeds of debt with a maturity
beyond one year.
7PAGE
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THERMO INSTRUMENT SYSTEMS INC.
3. Earnings per Share
Basic and diluted earnings per share were calculated as follows:
Three Months Ended
--------------------
April 4, March 29,
(In thousands except per share amounts) 1998 1997
------------------------------------------------------------------------
Basic
Net income $ 37,855 $ 33,587
-------- --------
Weighted average shares 122,065 121,338
-------- --------
Basic earnings per share $ .31 $ .28
======== ========
Diluted
Net income $ 37,855 $ 33,587
Effect of:
Convertible obligations 3,477 2,031
Majority-owned subsidiaries'
dilutive securities (907) (436)
-------- --------
Income available to common
shareholders, as adjusted $ 40,425 $ 35,182
-------- --------
Weighted average shares 122,065 121,338
Effect of:
Convertible obligations 23,456 16,828
Stock options 1,187 1,136
-------- --------
Weighted average shares, as adjusted 146,708 139,302
-------- --------
Diluted earnings per share $ .28 $ .25
======== ========
4. Comprehensive Income
During the first quarter of 1998, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income." This pronouncement sets forth requirements for disclosure of the
Company's comprehensive income and accumulated other comprehensive items.
In general, comprehensive income combines net income and "other
comprehensive items," which represent certain amounts that are reported
as components of shareholders' investment in the accompanying balance
sheet, including foreign currency translation adjustments and unrealized
net of tax gains and losses from available-for-sale investments. During
the first quarter of 1998 and 1997, the Company's comprehensive income
totaled $34.7 million and $23.7 million, respectively.
8PAGE
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THERMO INSTRUMENT SYSTEMS INC.
5. Issuance of Stock by Subsidiary
In March 1998, the Company's ONIX Systems Inc. subsidiary sold
3,300,000 shares of its common stock in an initial public offering at
$14.50 per share for net proceeds of $43.2 million, resulting in a gain
of $10.0 million. Following the initial public offering, the Company
owned 68% of ONIX Systems' outstanding common stock.
6. Accrued Acquisition Expenses
During 1997, the Company had undertaken a restructuring of Life
Sciences International PLC, acquired in March 1997. At January 3, 1998,
the remaining reserve for restructuring activities totaled $10.2 million.
In March 1998, the Company finalized its plan for restructuring the
acquired business. During the first quarter of 1998, the Company expended
$3.0 million for restructuring costs, primarily for severance. At April
4, 1998, the remaining reserve for restructuring the Life Sciences
businesses was $8.7 million, as adjusted for the impact of currency
translation, and primarily represents ongoing severance and
abandoned-facility payments.
During 1996, the Company had undertaken a restructuring of a
substantial portion of the businesses constituting the Scientific
Instruments Division of Fisons plc. In March 1997, the Company finalized
its plan for restructuring the acquired businesses. At January 3, 1998,
the remaining reserve for restructuring activities totaled $11.1 million.
During the first quarter of 1998, the Company expended $0.6 million for
restructuring costs, primarily for severance and abandoned-facility
payments. At April 4, 1998, the remaining reserve for restructuring the
Fisons businesses was $10.5 million, and primarily represents ongoing
severance and abandoned-facility payments.
Item 2 - Management's Discussion and Analysis of Financial Condition and
------------------------------------------------------------------------
Results of Operations
---------------------
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations.
For this purpose, any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," "seeks," "estimates," and similar expressions are
intended to identify forward-looking statements. There are a number of
important factors that could cause the results of the Company to differ
materially from those indicated by such forward-looking statements,
including those detailed under the heading "Forward-looking Statements"
in Exhibit 13 to the Company's Annual Report on Form 10-K for the fiscal
year ended January 3, 1998, filed with the Securities and Exchange
Commission.
9PAGE
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THERMO INSTRUMENT SYSTEMS INC.
Results of Operations
First Quarter 1998 Compared With First Quarter 1997
---------------------------------------------------
Revenues increased $78.8 million, or 24%, to $407.9 million in the
first quarter of 1998 from $329.1 million in the first quarter of 1997,
due primarily to acquisitions, which included Life Sciences in March
1997. Acquisitions added revenues of $81.6 million in the first quarter
of 1998. The increase in revenues was offset in part by a decrease of
$8.5 million in revenues due to the unfavorable effects of currency
translation as a result of the strengthening of the U.S. dollar relative
to foreign currencies in countries in which the Company operates. In
addition, revenues increased in 1998 due to higher sales at Metrika
Systems Corporation as a result of higher demand at its
finished-materials quality control business and, to a lesser extent, at
its on-line raw materials analysis business. Revenues also increased at
ONIX Systems Inc. due to increased sales of industry-specific instruments
to the production segment of the oil and gas industry. At ThermoQuest
Corporation, an increase in revenues from Europe and North America was
offset by a decrease in its revenues from Japan of $7.0 million due to
economic uncertainty in that country. Increased revenues at the majority
of ThermoSpectra Corporation's existing operations were slightly more
than offset by a decline for test and measurement systems at its Gould
Instrument Systems Inc. (GIS) subsidiary and the inclusion in 1997 of a
large shipment at its Kevex Instruments subsidiary.
International sales account for a significant portion of the
Company's total revenues. Although the Company seeks to charge its
customers in the same currency as its operating costs, the Company's
financial performance and competitive position can be affected by
currency exchange rate fluctuations. Where appropriate, the Company uses
forward exchange contracts to reduce its exposure to currency
fluctuations.
The gross profit margin was unchanged at 47% in the first quarter of
1998 and 1997. The impact of a decline in the gross profit margin in 1998
due to the inclusion of lower-margin revenues at certain businesses
acquired in 1997 was offset by the impact in 1997 of an adjustment to
expense of $2.7 million relating to the sale of inventories revalued at
the time of the acquisition of Life Sciences International PLC.
Selling, general, and administrative expenses as a percentage of
revenues decreased slightly to 26% in the first quarter of 1998 from 27%
in the first quarter of 1997, primarily due to efforts to reduce selling
and administrative costs at certain acquired businesses and, to a lesser
extent, lower selling costs associated with certain of the businesses
acquired from Life Sciences. Research and development expenses as a
percentage of revenues were unchanged at 7% in 1998 and 1997.
Interest income increased to $8.2 million in the first quarter of
1998 from $7.2 million in the first quarter of 1997, due to interest
income earned on invested proceeds from the Company's January 1998
issuance of $250.0 million principal amount of 4% subordinated
convertible debentures by the Company, offset in part by the use of a
10PAGE
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THERMO INSTRUMENT SYSTEMS INC.
First Quarter 1998 Compared With First Quarter 1997 (continued)
---------------------------------------------------
portion of the proceeds to repay a $105.0 million promissory note to
Thermo Electron Corporation (Note 2). To a lesser extent, interest income
increased due to higher invested cash balances as a result of the sale of
common stock by the Company's subsidiaries in 1997. Interest expense
increased to $11.5 million in 1998 from $8.5 million in 1997, primarily
due to the issuance of an aggregate $428.8 million of promissory notes to
Thermo Electron in 1997 in connection with acquisitions and the January
1998 issuance of the 4% subordinated convertible debentures.
The Company has adopted a strategy of spinning out certain of its
businesses into separate subsidiaries and having these subsidiaries sell
a minority interest to outside investors. The Company believes that this
strategy provides additional motivation and incentives for the management
of the subsidiaries through the establishment of subsidiary-level stock
option programs, as well as capital to support the subsidiaries' growth.
As a result of the sale of stock by subsidiaries, the Company recorded
gains of $10.0 million and $12.0 million in the first quarter of 1998 and
1997, respectively. The size and timing of these transactions are
dependent on market and other conditions that are beyond the Company's
control. Accordingly, there can be no assurance that the Company will be
able to realize gains from such transactions in the future.
The effective tax rate was 34% in the first quarter of 1998 and 33%
in the first quarter of 1997. Excluding the impact of the nontaxable gain
on issuance of stock by subsidiaries in 1998 and 1997, the effective tax
rates in both periods exceeded the statutory federal income tax rate due
to nondeductible amortization of cost in excess of net assets of acquired
companies, the inability to provide a tax benefit on losses incurred at
certain foreign subsidiaries, and the impact of state income taxes.
Excluding the impact of the nontaxable gains, the effective tax rate
decreased in 1998, primarily due to the lower relative effect of
nondeductible amortization of cost in excess of net assets of acquired
companies and, to a lesser extent, a decrease in foreign tax losses not
benefited.
Minority interest expense increased to $4.3 million in the first
quarter of 1998 from $2.1 million in the first quarter of 1997, primarily
due to the minority interest associated with the Company's newly public
Metrika Systems, ONIX Systems, and Thermo Vision subsidiaries and higher
earnings at the Company's other four public subsidiaries.
Liquidity and Capital Resources
Consolidated working capital was $827.9 million at April 4, 1998,
compared with $612.7 million at January 3, 1998. Included in working
capital are cash, cash equivalents, and available-for-sale investments of
$687.1 million at April 4, 1998, and $477.2 million at January 3, 1998.
Of the $687.1 million balance at April 4, 1998, $396.4 million was held
by the Company's majority-owned subsidiaries and the balance was held by
the Company and its wholly owned subsidiaries. The Company's operating
11PAGE
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THERMO INSTRUMENT SYSTEMS INC.
Liquidity and Capital Resources (continued)
activities provided cash of $50.9 million in the first three months of
1998. The Company used $14.0 million to increase inventories, in part to
replenish year-end levels at ThermoQuest's European sales offices and
certain other subsidiaries and to build up inventories at ONIX Systems'
industry-specific and composition analysis businesses as a result of long
lead-time orders. Cash flow from operations was improved by a decrease in
accounts receivable of $13.7 million, primarily due to the timing of cash
collections at Metrika Systems, management efforts at Thermo Optek to
reduce its investment in accounts receivable, and the effect of lower
sales at ThermoSpectra's GIS subsidiary.
At April 4, 1998, $127.1 million of the Company's cash and cash
equivalents was held by its foreign subsidiaries. While this cash can be
used outside of the United States, including for acquisitions,
repatriation of this cash into the United States would be subject to
foreign withholding taxes and could also be subject to a United States
tax.
The Company's investing activities used $23.0 million of cash in the
first three months of 1998. ONIX Systems used $19.1 million of cash to
pay Thermo Power Corporation for the Peek Measurement Business, acquired
effective November 1997. The Company expended $6.6 million for purchases
of property, plant, and equipment and received proceeds of $3.8 million
from the sale of property, plant, and equipment.
The Company's financing activities provided $179.1 million of cash in
the first three months of 1998. Net proceeds from the issuance of Company
and subsidiary common stock totaled $43.7 million and included $43.2
million of net proceeds from the March 1998 initial public offering of
ONIX Systems' common stock (Note 5). In January 1998, the Company sold at
par value $250.0 million principal amount of 4% subordinated convertible
debentures due 2005 for net proceeds of $244.2 million. The Company used
a portion of the proceeds to repay a $105.0 million promissory note to
Thermo Electron.
In May 1998, Thermo BioAnalysis Corporation filed a registration
statement under the Securities Act of 1933 with the Securities and
Exchange Commission for a public offering by Thermo BioAnalysis of
4,500,000 shares of its common stock. In addition, the underwriters are
expected to be granted a 30-day over-allotment option to purchase an
additional 675,000 shares. There can be no assurance that this offering
will be completed.
During 1998, the Company plans to make expenditures of approximately
$30 million for property, plant, and equipment. As of May 18, 1998, the
Company and its majority-owned subsidiaries had agreements or nonbinding
letters of intent to acquire new businesses totaling approximately $90
million. The Company believes that its existing resources are sufficient
to meet the capital requirements of its existing operations for the
foreseeable future. The Company has historically complemented internal
12PAGE
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THERMO INSTRUMENT SYSTEMS INC.
Liquidity and Capital Resources (continued)
development with acquisitions of businesses or technologies that extend
the Company's presence in current markets or provide opportunities to
enter and compete effectively in new markets. The Company will consider
making acquisitions of such businesses or technologies that are
consistent with its plans for strategic growth. The Company expects that
it will finance these acquisitions through a combination of internal
funds, additional debt or equity financing from the capital markets, or
short-term borrowings from Thermo Electron, although there is no
agreement with Thermo Electron to ensure that funds will be available on
acceptable terms or at all.
Market Risk
The Company's exposure to market risk from changes in foreign
currency exchange rates, interest rates, and equity prices has not
changed materially from its exposure at year-end 1997.
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits
------------
See Exhibit Index on the page immediately preceding exhibits.
(b) Reports on Form 8-K
-----------------------
On January 16, 1998, the Company filed a Current Report on Form 8-K
dated January 15, 1998, with respect to the sale of the Company's 4%
subordinated convertible debentures due 2005 and certain other matters
(Item 5).
13PAGE
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THERMO INSTRUMENT SYSTEMS INC.
SIGNATURES
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 as of the 18th day of May 1998.
THERMO INSTRUMENT SYSTEMS INC.
Paul F. Kelleher
------------------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
------------------------------
John N. Hatsopoulos
Chief Financial Officer and
Senior Vice President
14PAGE
<PAGE>
THERMO INSTRUMENT SYSTEMS INC.
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
27 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
INSTRUMENT SYSTEMS INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED
APRIL 4, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-END> APR-04-1998
<CASH> 678,595
<SECURITIES> 8,496
<RECEIVABLES> 369,448
<ALLOWANCES> 22,675
<INVENTORY> 274,597
<CURRENT-ASSETS> 1,397,480
<PP&E> 318,302
<DEPRECIATION> 104,923
<TOTAL-ASSETS> 2,550,295
<CURRENT-LIABILITIES> 569,596
<BONDS> 612,590
0
0
<COMMON> 12,277
<OTHER-SE> 889,780
<TOTAL-LIABILITY-AND-EQUITY> 2,550,295
<SALES> 407,943
<TOTAL-REVENUES> 407,943
<CGS> 214,209
<TOTAL-COSTS> 214,209
<OTHER-EXPENSES> 28,519
<LOSS-PROVISION> 185
<INTEREST-EXPENSE> 11,493
<INCOME-PRETAX> 64,114
<INCOME-TAX> 21,959
<INCOME-CONTINUING> 37,855
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,855
<EPS-PRIMARY> .31
<EPS-DILUTED> .28
</TABLE>
