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 June 28, 1997.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Commission File Number 1-8002
THERMO ELECTRON CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 04-2209186
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02254-9046
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 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 July 25, 1997
----------------------------- ----------------------------
Common Stock, $1.00 par value 150,231,967
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMO ELECTRON CORPORATION
Consolidated Balance Sheet
(Unaudited)
Assets
June 28, December 28,
(In thousands) 1997 1996
------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 288,738 $ 414,404
Short-term available-for-sale investments
at quoted market value (amortized cost
of $1,001,294 and $1,428,564) 1,004,232 1,431,881
Accounts receivable, less allowances of
$43,647 and $34,321 712,694 616,545
Unbilled contract costs and fees 92,703 77,155
Inventories:
Raw materials and supplies 259,945 236,297
Work in process 107,536 80,614
Finished goods 167,826 116,049
Prepaid income taxes 130,979 129,802
Prepaid expenses 43,496 29,082
---------- ----------
2,808,149 3,131,829
---------- ----------
Property, Plant, and Equipment, at Cost 1,105,121 1,010,189
Less: Accumulated depreciation and
amortization 340,654 305,742
---------- ----------
764,467 704,447
---------- ----------
Long-term Available-for-sale Investments,
at Quoted Market Value (amortized cost
of $60,350 and $58,500) 73,483 68,807
---------- ----------
Long-term Held-to-maturity Investments
(quoted market value of $26,083) - 25,594
---------- ----------
Other Assets 152,490 127,632
---------- ----------
Cost in Excess of Net Assets of Acquired
Companies (Note 5) 1,506,048 1,082,935
---------- ----------
$5,304,637 $5,141,244
========== ==========
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THERMO ELECTRON CORPORATION
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
June 28, December 28,
(In thousands except share amounts) 1997 1996
-----------------------------------------------------------------------
Current Liabilities:
Notes payable and current maturities of
long-term obligations $ 170,332 $ 153,787
Accounts payable 217,697 203,643
Accrued payroll and employee benefits 125,672 122,079
Accrued income taxes 79,393 61,534
Accrued installation and warranty costs 74,482 69,006
Deferred revenue 53,523 45,715
Other accrued expenses 291,115 257,448
---------- ----------
1,012,214 913,212
---------- ----------
Deferred Income Taxes and Other Deferred Items 163,411 162,746
---------- ----------
Long-term Obligations:
Senior convertible obligations 365,970 369,997
Subordinated convertible obligations 1,112,798 1,009,470
Nonrecourse tax-exempt obligations 59,500 77,900
Other 63,031 92,975
---------- ----------
1,601,299 1,550,342
---------- ----------
Minority Interest 670,709 684,050
---------- ----------
Common Stock of Subsidiaries Subject to
Redemption ($119,066 and $81,179 redemption
value) 115,114 76,525
---------- ----------
Shareholders' Investment:
Preferred stock, $100 par value, 50,000
shares authorized; none issued
Common stock, $1 par value, 350,000,000
shares authorized; 150,235,193 and
149,996,979 shares issued 150,235 149,997
Capital in excess of par value 707,619 801,793
Retained earnings 903,528 795,312
Treasury stock at cost, 15,991 and 15,520
shares (550) (570)
Cumulative translation adjustment (28,863) (504)
Deferred compensation (39) (58)
Net unrealized gain on available-for-sale
investments 9,960 8,399
---------- ----------
1,741,890 1,754,369
---------- ----------
$5,304,637 $5,141,244
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO ELECTRON CORPORATION
Consolidated Statement of Income
(Unaudited)
Three Months Ended
----------------------
June 28, June 29,
(In thousands except per share amounts) 1997 1996
------------------------------------------------------------------------
Revenues:
Product and service revenues $834,748 $703,606
Research and development contract revenues 40,268 42,153
-------- --------
875,016 745,759
-------- --------
Costs and Operating Expenses:
Cost of product and service revenues 481,859 427,950
Expenses for research and development and
new lines of business (a) 81,480 76,319
Selling, general, and administrative
expenses 213,167 179,412
Restructuring and other nonrecurring
costs (income) (Note 4) (2,849) 22,480
-------- --------
773,657 706,161
-------- --------
Operating Income 101,359 39,598
Gain on Issuance of Stock by Subsidiaries
(Note 2) 15,214 43,495
Other Expense, Net (Note 3) (3,623) (1,506)
-------- --------
Income Before Income Taxes and Minority Interest 112,950 81,587
Provision for Income Taxes 42,026 19,974
Minority Interest Expense 14,766 16,694
-------- --------
Net Income $ 56,158 $ 44,919
======== ========
Earnings per Share:
Primary $ .37 $ .32
======== ========
Fully diluted $ .35 $ .29
======== ========
Weighted Average Shares:
Primary 150,173 140,134
======== ========
Fully diluted 175,860 175,700
======== ========
(a) Includes costs of:
Research and development contracts $ 34,619 $ 36,112
Internally funded research and development 46,230 39,596
Other expenses for new lines of business 631 611
-------- --------
$ 81,480 $ 76,319
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO ELECTRON CORPORATION
Consolidated Statement of Income
(Unaudited)
Six Months Ended
-----------------------
June 28, June 29,
(In thousands except per share amounts) 1997 1996
------------------------------------------------------------------------
Revenues:
Product and service revenues $1,557,373 $1,313,498
Research and development contract revenues 81,148 84,646
---------- ----------
1,638,521 1,398,144
---------- ----------
Costs and Operating Expenses:
Cost of product and service revenues 912,661 800,095
Expenses for research and development and
new lines of business (a) 160,021 144,641
Selling, general, and administrative
expenses 398,497 334,547
Restructuring and other nonrecurring
costs (Note 4) 4,951 25,980
---------- ----------
1,476,130 1,305,263
---------- ----------
Operating Income 162,391 92,881
Gain on Issuance of Stock by Subsidiaries
(Note 2) 48,880 72,387
Other Expense, Net (Note 3) (726) (7,421)
---------- ----------
Income Before Income Taxes and Minority Interest 210,545 157,847
Provision for Income Taxes 70,423 42,650
Minority Interest Expense 31,906 29,255
---------- ----------
Net Income $ 108,216 $ 85,942
========== ==========
Earnings per Share:
Primary $ .72 $ .63
========== ==========
Fully diluted $ .67 $ .56
========== ==========
Weighted Average Shares:
Primary 150,122 136,884
========== ==========
Fully diluted 175,893 175,583
========== ==========
(a) Includes costs of:
Research and development contracts $ 70,957 $ 71,971
Internally funded research and development 87,834 71,532
Other expenses for new lines of business 1,230 1,138
---------- ----------
$ 160,021 $ 144,641
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO ELECTRON CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
----------------------
June 28, June 29,
(In thousands) 1997 1996
------------------------------------------------------------------------
Net cash provided by operating activities $ 57,140 $ 85,827
--------- ---------
Investing Activities:
Acquisitions, net of cash acquired (Note 5) (602,667) (306,733)
Purchases of available-for-sale investments (411,644) (815,539)
Proceeds from sale and maturities of
available-for-sale investments 860,385 291,446
Purchases of property, plant, and equipment (48,797) (57,421)
Proceeds from sale of property, plant, and
equipment 9,071 2,528
Increase in other assets (4,213) (19,903)
Other 7,754 228
--------- ---------
Net cash used in investing activities (190,111) (905,394)
--------- ---------
Financing Activities:
Increase (decrease) in short-term notes
payable (3,844) 10,178
Net proceeds from issuance of long-term
obligations 116,531 784,682
Repayment and repurchase of long-term
obligations (32,207) (3,492)
Net proceeds from issuance of Company and
subsidiary common stock 101,982 130,713
Purchases of subsidiary common stock (161,221) (26,360)
Other (3,782) 1,903
--------- ---------
Net cash provided by financing activities 17,459 897,624
--------- ---------
Exchange Rate Effect on Cash (10,154) 277
--------- ---------
Increase (Decrease) in Cash and Cash
Equivalents (125,666) 78,334
Cash and Cash Equivalents at Beginning of
Period 414,404 462,861
--------- ---------
Cash and Cash Equivalents at End of Period $ 288,738 $ 541,195
========= =========
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THERMO ELECTRON CORPORATION
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Six Months Ended
----------------------
June 28, June 29,
(In thousands) 1997 1996
------------------------------------------------------------------------
Noncash activities:
Conversions of Company and subsidiary
convertible obligations $ 15,854 $ 236,572
========= =========
Fair value of assets of acquired companies $ 760,665 $ 540,691
Cash paid for acquired companies (647,586) (310,480)
Issuance of Company and subsidiary
common stock and stock options for
acquired companies (2,080) (345)
--------- ---------
Liabilities assumed of acquired companies $ 110,999 $ 229,866
========= =========
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO ELECTRON CORPORATION
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been
prepared by Thermo Electron Corporation (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 June 28, 1997, the results of operations for the three- and six-month
periods ended June 28, 1997, and June 29, 1996, and the cash flows for
the six-month periods ended June 28, 1997, and June 29, 1996. Interim
results are not necessarily indicative of results for a full year.
The consolidated balance sheet presented as of December 28, 1996, 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 December 28, 1996, filed
with the Securities and Exchange Commission.
2. Issuance of Stock by Subsidiaries
Gain on issuance of stock by subsidiaries in the accompanying
statement of income for the six-month period ended June 28, 1997,
resulted primarily from the following:
Initial public offering of 2,671,292 shares of Thermedics
Detection Inc. common stock at $11.50 per share for net
proceeds of $28.1 million resulted in a gain of $17.1
million that was recorded by the Company's Thermedics Inc.
subsidiary.
Sale of 1,768,500 shares of ThermoQuest Corporation common
stock at $15.00 per share for net proceeds of $24.8 million
resulted in a gain of $12.0 million that was recorded by the
Company's Thermo Instrument Systems Inc. subsidiary.
Private placements of 1,212,260 and 94,000 shares of Thermo
Information Solutions Inc. common stock at $9.00 and $10.00
per share, respectively, for aggregate net proceeds of $11.0
million resulted in a gain of $6.6 million.
Initial public offering of 2,300,000 shares of Metrika
Systems Corporation common stock at $15.50 per share for net
proceeds of $32.5 million resulted in a gain of $13.2
million that was recorded by the Company's Thermo Instrument
subsidiary.
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THERMO ELECTRON CORPORATION
3. Other Expense, Net
The components of other expense, net, in the accompanying statement
of income are as follows:
Three Months Ended Six Months Ended
-------------------- --------------------
June 28, June 29, June 28, June 29,
(In thousands) 1997 1996 1997 1996
------------------------------------------------------------------------
Interest income $ 18,167 $ 21,752 $ 43,119 $ 43,740
Interest expense (21,486) (25,600) (42,898) (53,236)
Equity in income (loss)
of unconsolidated
subsidiaries (537) 75 (247) (266)
Gain on sale of
investments 46 2,455 596 2,725
Other income (expense),
net 187 (188) (1,296) (384)
-------- -------- -------- --------
$ (3,623) $ (1,506) $ (726) $ (7,421)
======== ======== ======== ========
4. Restructuring and Other Nonrecurring Costs (Income)
During the second quarter of 1997, the Company settled litigation
with third-party developers of an alternative-energy facility constructed
by the Company and its subcontractors in 1988 and 1989 and leased and
operated by a partnership including the Company's Thermo Ecotek
Corporation subsidiary. The third-party developers had sought $25 million
in damages for alleged misrepresentation, breach of contract, and other
causes of action. The settlement resulted in a payment by the Company of
$1.1 million and relinquishment to the Company by the third-party
developers of their partnership interest in the alternative-energy
facility. In connection with the settlement, the Company reversed $5.0
million of reserves previously established for this and related matters.
In addition, the Company's Peter Brotherhood Ltd. and ThermoSpectra
Corporation subsidiaries recorded nonrecurring costs of $1.3 million and
$0.8 million, respectively, during the second quarter of 1997, primarily
for severance for employees terminated during the second quarter.
During the first quarter of 1997, the Company's Thermo Remediation
Inc. subsidiary recorded $7.8 million of nonrecurring costs to write down
certain capital equipment and intangible assets, including cost in excess
of net assets of acquired companies, in response to a severe downturn in
Thermo Remediation's soil-recycling business that resulted in the closure
of two soil-remediation sites. In addition, the Company's analysis
indicates that the future cash flows from certain other soil-remediation
sites that will remain open will be insufficient to recover Thermo
Remediation's investment in these business units, thus requiring a
write-down of certain assets, which is included in the $7.8 million
charge.
5. Acquisitions
In March 1997, Thermo Instrument acquired 95% of Life Sciences
International PLC (Life Sciences), a London Stock Exchange-listed
company. Subsequently, the Company acquired the remaining shares of Life
9PAGE
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THERMO ELECTRON CORPORATION
5. Acquisitions (continued)
Sciences' capital stock. The aggregate purchase price for Life Sciences
was $447.9 million, net of $41.8 million of cash acquired. The purchase
price includes the repayment of $105.0 million of Life Sciences' bank
debt. Life Sciences manufactures laboratory science equipment,
appliances, instruments, consumables, and reagents for the research,
clinical, and industrial markets. In addition, the Company and its
majority-owned subsidiaries made several other acquisitions during the
first six months of 1997 for $157.9 million in cash and the issuance of
subsidiary stock options valued at $2.1 million, subject to post-closing
adjustments.
These acquisitions have been accounted for using the purchase method
of accounting and their results have been included in the accompanying
financial statements from their respective dates of acquisition. The cost
of these acquisitions exceeded the estimated fair value of the acquired
net assets by $447.5 million, which is being amortized principally over
40 years. Allocation of the purchase price for these acquisitions was
based on estimates of the fair value of the net assets acquired and is
subject to adjustment upon finalization of the purchase price allocation.
Pro forma data is not presented since the acquisitions were not material
to the Company's results of operations.
During 1996, Thermo Instrument had undertaken a restructuring of a
substantial portion of the businesses constituting the Scientific
Instruments division of Fisons plc, acquired in March 1996. During the
first six months of 1997, Thermo Instrument expended $10.5 million for
restructuring costs, primarily for severance and abandoned-facility
payments. During the first quarter of 1997, in connection with finalizing
its restructuring plans for the businesses acquired from Fisons, Thermo
Instrument recorded an additional $8.1 million of acquisition reserves,
primarily for the abandonment of excess facilities, as well as for
severance pay. This amount was recorded as an increase in cost in excess
of net assets of acquired companies. The remaining reserve for
restructuring these businesses was $15.4 million at June 28, 1997, which
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 caption "Forward-looking Statements"
in Exhibit 13 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 28, 1996, filed with the Securities and Exchange
Commission.
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THERMO ELECTRON CORPORATION
Results of Operations
Second Quarter 1997 Compared With Second Quarter 1996
Sales in the second quarter of 1997 were $875.0 million, an increase
of $129.3 million, or 17%, over the second quarter of 1996. Segment
income, excluding nonrecurring income of $2.8 million in 1997 and
restructuring and other nonrecurring costs of $22.5 million in 1996,
described below, increased 52% to $106.9 million from $70.2 million in
1996. (Segment income is income before corporate general and
administrative expenses, other income and expense, minority interest
expense, and income taxes.) Operating income, which includes
restructuring and other nonrecurring costs/income, was $101.4 million in
1997, compared with $39.6 million in 1996.
Instruments
-----------
Sales from the Instruments segment were $405.2 million in 1997, an
increase of $83.7 million, or 26%, over 1996. Sales increased due to
acquisitions made by Thermo Instrument Systems Inc., which added $88.7
million of sales in 1997. Revenues from ThermoQuest Corporation's
existing mass spectrometry business also increased, partly as a result of
the continued success of a new product introduced in the first quarter of
1996. The unfavorable effects of currency translation due to the
strengthening of the U.S. dollar relative to foreign currencies in
countries in which Thermo Instrument operates decreased revenues by $7.7
million in 1997. Segment income margin (segment income margin is segment
income as a percentage of sales), excluding restructuring and other
nonrecurring costs of $0.8 million in 1997, improved to 14.8% in 1997
from 9.2% in 1996, primarily due to margin improvements at certain of the
businesses acquired from Fisons in 1996 and, to a lesser extent,
increased sales of higher-margin mass spectrometry products. In addition,
margins were favorably affected by efforts to reduce selling and
administrative costs at certain acquired businesses, and the integration
of products from businesses acquired into existing distribution channels.
Restructuring and other nonrecurring costs of $0.8 million in 1997
represents severance for employees terminated during the quarter at one
of ThermoSpectra Corporation's business units.
Alternative-energy Systems
--------------------------
Sales from the Alternative-energy Systems segment were $89.0 million
in 1997, compared with $85.5 million in 1996. Within this segment,
revenues from Thermo Ecotek Corporation were $43.5 million in 1997,
compared with $35.3 million in 1996. Revenues increased $5.2 million as a
result of the acquisition of two businesses in 1996 and 1997 by Thermo
Ecotek, as well as higher contractual energy rates at all of Thermo
Ecotek's facilities, except the Hemphill plant in New Hampshire. Pursuant
to Thermo Ecotek's utility contracts for its four plants in California,
there will be no further contractual energy rate increases beginning in
1998. In 1996, the Company recorded sales from its waste-recycling
facility in southern California of $4.2 million. This facility was sold
in July 1996. Sales at Peter Brotherhood Ltd. declined to $11.7 million
from $13.5 million in 1996 as a result of decreased demand for steam
turbines. Sales from Thermo Power Corporation were $33.8 million in 1997,
compared with $32.4 million in 1996. The increase resulted from higher
11PAGE
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THERMO ELECTRON CORPORATION
Second Quarter 1997 Compared With Second Quarter 1996 (continued)
sales of engines due to a large shipment of natural gas engines to one
customer and higher lift-truck engine sales together with improved demand
for industrial refrigeration and commercial cooling equipment. These
increases were offset in part by lower revenues from continuing declines
in sales of gas-fueled cooling systems and sponsored research and
development contracts.
Segment income from the Alternative-energy Systems segment, excluding
nonrecurring income of $3.7 million in 1997, was $12.5 million in 1997,
compared with $10.4 million in 1996. Thermo Ecotek had segment income of
$9.2 million in 1997, compared with $8.1 million in 1996. The increase
resulted primarily from higher contractual energy rates. Segment income
in 1996 from the Company's waste-recycling facility in southern
California, which was sold in July 1996, was $2.3 million. Results from
this facility, net of related interest expense (not included in segment
income), were approximately breakeven in 1996. During the second quarter
of 1997, the Company settled litigation relating to construction of an
alternative-energy facility in 1988 and 1989 (Note 4). As a result of the
settlement, the Company reversed $5.0 million of previously established
reserves during the second quarter, which is included in nonrecurring
income in the accompanying 1997 statement of income. Segment income at
Thermo Power improved to $1.3 million from $0.7 million in 1996,
primarily due to improved margins at the industrial refrigeration and
commercial cooling businesses. Excluding restructuring costs of $1.3
million in 1997, Peter Brotherhood was profitable in 1997, compared with
a segment loss in the 1996 period. The restructuring costs related
primarily to severance for employees terminated during the quarter.
Certain of Thermo Ecotek's plants have power-sales agreements under
which the rates paid for power will convert from fixed rates to "avoided-
cost" rates at specified dates. Avoided-cost rates are currently
substantially less than the fixed rates. The Woodland, California, plant,
which converts to avoided-cost rates in March 2000, has conditions in its
nonrecourse lease agreement that require the funding of a "power reserve"
in years prior to 2000, based on projections of operating cash flow
shortfalls in 2000 and thereafter. The power reserve represents funds
available to make lease payments in the event that revenues are not
sufficient after the plant converts to avoided-cost rates. Without
sufficient increases in avoided-cost rates or reductions in fuel costs
and other operating expenses by the year 2000, Thermo Ecotek expects to
either renegotiate its nonrecourse lease agreement or forfeit its
interest in the Woodland plant. Beginning in the fourth quarter of 1996,
Thermo Ecotek began to expense the funding of reserves required under the
nonrecourse lease agreement. As a result, the Company expects that the
plant will be reduced to approximately breakeven in 1997 and thereafter.
In the full year of 1996, Thermo Ecotek recorded $4.6 million of segment
income from the operation of the Woodland plant.
The resolution of Thermo Ecotek's rate order renegotiations with
Public Service Company of New Hampshire (PSNH) is still pending. In
January 1997, PSNH's parent company, Northeast Utilities, disclosed in a
filing with the Securities and Exchange Commission that if a proposed
deregulation plan for the New Hampshire electric utility industry were
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THERMO ELECTRON CORPORATION
Second Quarter 1997 Compared With Second Quarter 1996 (continued)
adopted, PSNH could default on certain financial obligations and seek
bankruptcy protection. In February 1997, the New Hampshire Public
Utilities Commission (PUC) voted to adopt a deregulation plan, and in
March 1997, PSNH filed suit to block the plan. In March 1997, the federal
district court issued a temporary restraining order, which temporarily
prohibits the PUC from implementing the deregulation plan as it affects
PSNH, pending a determination by the court whether PSNH's claim is ripe
to be heard by the court. In April 1997, the court ruled that the case
was ripe for adjudication and ordered that this restraining order would
continue indefinitely pending the outcome of the suit. In addition, in
March 1997, Thermo Ecotek, along with a group of other biomass power
producers, filed a motion with the PUC seeking clarification of the PUC's
proposed deregulation plan regarding several issues, including purchase
requirements and payment of current rate order prices with respect to
Thermo Ecotek's energy output. The effect of a PSNH bankruptcy or
deregulation of the electric utility industry in New Hampshire on Thermo
Ecotek's rate orders for its two New Hampshire plants is uncertain.
Thermo Ecotek experienced a fire in December 1996 at its coal-
beneficiation facility under construction in Gillette, Wyoming. Damage
was limited to an oil heater and auxiliary oil storage tank and did not
affect the plant's four coal processors. Substantially all repair costs
are expected to be covered by insurance proceeds. The fire has caused
certain delays with respect to commencement of commercial operations of
the facility. In addition, Thermo Ecotek is currently experiencing
certain construction problems, including issues relating to the flow of
materials within the facility and design and operation of certain
pressure-release equipment, which will further delay commercial
operations. Thermo Ecotek is exploring certain legal remedies it may have
against the contractor related to the foregoing matter. Thermo Ecotek
expects to complete repairs and resolve these construction problems in
time to begin commercial operation of the facility by the end of 1997.
However, because the technology being developed at the facility is new
and untested, no assurance can be given that other difficulties will not
arise or that Thermo Ecotek will be able to correct these construction
problems and commence commercial operations prior to the end of 1997, or
at all.
Process Equipment
-----------------
Sales in the Process Equipment segment were $65.3 million in 1997,
compared with $77.3 million in 1996. A wholly owned subsidiary of the
Company recorded revenues from an office wastepaper de-inking contract of
$20.5 million in the second quarter of 1996. This contract was
substantially completed in the second quarter of 1996. Sales from Thermo
Fibertek Inc. increased 12% to $54.5 million. Revenues increased $8.3
million from acquisitions, including Black Clawson's stock-preparation
business in May 1997, and $2.6 million from higher demand at Thermo
Fibertek's accessories business. These increases were offset in part by a
decrease in revenues of $5.5 million at other business units within
Thermo Fibertek, primarily its recycling business, which has been
affected by a severe drop in de-inked pulp prices, and a decrease of $1.2
million from the unfavorable effects of currency translation. Sales of
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THERMO ELECTRON CORPORATION
Second Quarter 1997 Compared With Second Quarter 1996 (continued)
Thermo TerraTech Inc.'s thermal-processing equipment increased $1.7
million due to increased demand, and sales of automated electroplating
equipment by the Company's wholly owned Napco Inc. subsidiary increased
37% to $3.4 million. Segment income was $7.5 million in 1997, compared
with $8.8 million in 1996. This decline was due primarily to lower sales
at certain business units of Thermo Fibertek.
Biomedical Products
-------------------
Sales from the Biomedical Products segment were $144.6 million in
1997, an increase of $42.2 million, or 41%, over 1996. Sales increased
due to the inclusion of $22.9 million in sales from acquired businesses,
increased demand at Trex Medical Corporation, Bird Medical Technologies,
Inc., and SensorMedics Corporation, and the opening of new spas at
ThermoLase Corporation's hair-removal business. Segment income, excluding
restructuring and other nonrecurring costs of $22.5 million in 1996,
increased to $11.9 million in 1997 from $10.0 million in 1996. This
increase results primarily from higher income at Trex Medical, Bird
Medical, and SensorMedics, offset in part by an increased segment loss at
ThermoLase to $5.4 million in 1997 from $1.1 million in 1996, and, to a
lesser extent, lower margins at Thermo Cardiosystems Inc. ThermoLase was
affected by the early operations of its Spa Thira hair-removal business,
which has been operating below maximum capacity as it develops a client
base and continues refining the hair-removal process and its operating
procedures, and by pre-opening costs incurred in connection with new spa
openings. ThermoLase believes that improvements in the efficacy and
duration of its hair-removal process (SoftLight(SM)), including the
implementation of a modified procedure (SoftLight 2.0), are critical
elements in its ability to improve the profitability of its spas. Thermo
Cardiosystems' margins declined due to higher marketing expenses as a
result of an increase in its sales force and a change in sales mix.
Restructuring and other nonrecurring costs of $22.5 million in 1996
consists of $12.7 million recorded by Thermedics' Corpak Inc. subsidiary
and $9.8 million incurred by SensorMedics in connection with its merger
with the Company.
Environmental Services
----------------------
Sales in the Environmental Services segment were $73.2 million in
1997, an increase of $4.1 million over 1996. Revenues from Thermo
TerraTech's remediation and recycling services increased to $30.7 million
in 1997 from $27.9 million in 1996, due to the inclusion of $6.6 million
in sales from acquired businesses, offset in part by a decline in
revenues from Thermo Remediation Inc.'s soil-remediation services of 31%
to $4.1 million, due to lower volumes of soil processed as a result of
overcapacity in the industry and competitive pricing pressures. Sales of
metallurgical services increased to $12.8 million in 1997 from $11.4
million in 1996, due to the inclusion of $1.0 million of sales from an
acquired business and increased demand for existing services. Segment
income margin was 7.9% in 1997, compared with 9.0% in 1996. Segment
income margin decreased due to a decline in margins from soil-remediation
services as a result of lower sales and price competition as discussed
above, offset in part by higher-margin sales from acquired businesses.
14PAGE
<PAGE>
THERMO ELECTRON CORPORATION
Second Quarter 1997 Compared With Second Quarter 1996 (continued)
Advanced Technologies
---------------------
Sales from the Advanced Technologies segment were $100.1 million in
1997, compared with $92.2 million in 1996. Sales at Thermedics Detection
Inc. increased 23% to $12.4 million in 1997, primarily due to sales from
the continued fulfillment of a mandated product-line upgrade from The
Coca-Cola Company, which is expected to continue through the third
quarter of 1997 and, to a lesser extent, increased shipments of
InScan(TM) systems, which were introduced in 1996. In addition, higher
international demand for Thermedics Detection's EGIS(R) systems was
offset by a decrease in international plant expansion and, in turn,
demand for its Alexus(R) line of products to customers other than The
Coca-Cola Company. In May 1997, Thermedics Detection was awarded a $5.8
million contract for its EGIS systems from the Federal Aviation
Administration. No revenues were recognized under this contract during
the second quarter of 1997. Sales at Thermo Sentron Inc. increased to
$18.5 million in 1997 from $17.3 million in 1996, primarily due to higher
demand and, to a lesser extent, $0.4 million of sales from an acquired
business. Sales at Thermo Voltek Corp. remained unchanged at $11.9
million in 1997 and 1996, reflecting $2.4 million of sales from an
acquired business, offset by lower demand for electromagnetic
compatibility (EMC) testing instruments. Sales at Coleman Research
Corporation were $39.0 million in 1997, compared with $37.4 million in
1996. This increase resulted primarily from its Thermo Information
Solutions Inc. subsidiary's contract to supply kiosk units and, to a
lesser extent, sales of $0.6 million from an acquired business. Segment
income margin was 9.3% in 1997, compared with 5.7% in 1996. This
improvement resulted from increased sales and the effect in the 1996
period of $1.2 million of charges for inventory obsolescence and
personnel reductions at Thermedics Detection, offset in part by lower
profitability at Thermo Voltek, including $0.4 million of severance and
related charges in the 1997 period.
Gain on Issuance of Stock by Subsidiaries
-----------------------------------------
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 subsidiary through the establishment of subsidiary-level stock
option incentive programs, as well as capital to support the subsidiary's
growth. As a result of the sale of stock by subsidiaries, the Company
recorded gains of $15.2 million in 1997 and $43.5 million in 1996
(Note 2). Minority interest expense decreased to $14.8 million in 1997
from $16.7 million in 1996. Minority interest expense includes $2.4
million in 1997 and $13.3 million in 1996 related to gains recorded by
the Company's majority-owned subsidiaries as a result of the sale of
stock and the issuance of stock upon conversion of indebtedness by their
subsidiaries.
15PAGE
<PAGE>
THERMO ELECTRON CORPORATION
First Six Months 1997 Compared With First Six Months 1996
Sales in the first six months of 1997 were $1,638.5 million, an
increase of $240.4 million, or 17%, over the first six months of 1996.
Segment income, excluding restructuring and other nonrecurring costs of
$5.0 million in 1997 and $26.0 million in 1996, described below,
increased 37% to $183.9 million from $134.1 million in 1996. Operating
income, which includes restructuring and other nonrecurring costs, was
$162.4 million in 1997, compared with $92.9 million in 1996.
Instruments
-----------
Sales from the Instruments segment were $734.4 million in 1997, an
increase of $187.2 million, or 34%, over 1996. Sales increased due to
acquisitions made by Thermo Instrument, which added $198.3 million of
sales in 1997. An increase in revenues from ThermoQuest's existing mass
spectrometry business, partly as a result of the continued success of a
new product introduced in the first quarter of 1996, was offset in part
by a decrease in revenues at certain of the Company's other existing
businesses, principally at Thermo Optek Corporation. Revenues from Thermo
Optek's existing businesses decreased due to the inclusion in 1996 of
several large nonrecurring sales to the Chinese and Japanese governments
and the elimination of certain unprofitable acquired product lines. The
unfavorable effects of currency translation due to the strengthening of
the U.S. dollar relative to foreign currencies in countries in which
Thermo Instrument operates decreased revenues by $15.4 million in 1997.
Segment income margin, excluding restructuring and other nonrecurring
costs of $0.8 million in 1997 and $3.5 million in 1996, improved to 14.4%
in 1997 from 10.4% in 1996. The improvement was primarily due to
increased sales of higher-margin mass spectrometry products, efforts to
reduce selling and administrative costs at certain acquired businesses,
and the integration of products from businesses acquired into existing
distribution channels. This increase was offset in part by lower gross
profit margins at certain acquired businesses, including Life Sciences,
which recorded an adjustment to expense of $3.2 million relating to the
revaluation of the finished goods inventories acquired by Thermo
Instrument. Restructuring and other nonrecurring costs of $0.8 million in
1997 were discussed in the results of operations for the second quarter,
and $3.5 million in 1996 represents the write-off of acquired technology
relating to the acquisition of a substantial portion of the businesses
constituting the Scientific Instruments Division of Fisons.
Alternative-energy Systems
--------------------------
Sales from the Alternative-energy Systems segment were $167.8 million
in 1997, compared with $167.0 million in 1996. Within this segment,
revenues from Thermo Ecotek were $82.2 million in 1997, compared with
$68.8 million in 1996. Revenues increased $9.8 million as a result of the
acquisition of two businesses in 1996 and 1997 by Thermo Ecotek, as well
as higher contractual energy rates at all of Thermo Ecotek's facilities,
except the Hemphill plant in New Hampshire. Sales in the first half of
1996 at the Company's waste-recycling facility were $9.2 million. This
facility was sold in July 1996. Sales at Peter Brotherhood declined to
$22.9 million from $26.9 million in 1996 as a result of decreased demand
16PAGE
<PAGE>
THERMO ELECTRON CORPORATION
First Six Months 1997 Compared With First Six Months 1996 (continued)
for steam turbines. Sales from Thermo Power were $62.7 million in 1997,
compared with $62.2 million in 1996. This slight increase primarily
resulted from higher demand for gas-fueled engines offset by lower
revenues from sales of gas-fueled cooling systems and sponsored research
and development contracts.
Segment income from the Alternative-energy Systems segment, excluding
nonrecurring income of $3.7 million in 1997, was $17.2 million in 1997,
compared with $16.6 million in 1996. Thermo Ecotek had segment income of
$13.6 million in 1997, compared with $12.6 million in 1996. The increase
resulted from higher contractual energy rates. Segment income in 1996
from the Company's waste-recycling facility in southern California, which
was sold in July 1996, was $4.6 million. Results from this facility, net
of related interest expense (not included in segment income), were
approximately breakeven in 1996. Segment income at Thermo Power improved
to $2.0 million from $0.7 million in 1996, primarily due to improved
margins at the industrial refrigeration and engines businesses. Excluding
restructuring costs of $1.3 million, discussed in the results of
operations for the second quarter, Peter Brotherhood was profitable in
1997, compared with a segment loss in the 1996 period. The results for
the first six months of 1997 include nonrecurring income of $3.7 million
as discussed in the results of operations for the second quarter.
Process Equipment
-----------------
Sales in the Process Equipment segment were $121.3 million in 1997,
compared with $170.7 million in 1996. A wholly owned subsidiary of the
Company recorded revenues from an office wastepaper de-inking contract of
$55.5 million in the first six months of 1996. This contract was
substantially completed in the second quarter of 1996. Sales from Thermo
Fibertek were $99.2 million, compared with $97.6 million in 1996.
Revenues from acquired businesses totaled $9.8 million in the first half
of 1997. Revenues from Thermo Fibertek's recycling business declined $8.3
million due to lower demand resulting from a severe drop in de-inked pulp
prices. In addition, the unfavorable effects of currency translation
reduced Thermo Fibertek's revenues by $2.1 million. Sales of Thermo
TerraTech's thermal-processing equipment increased $3.3 million due to
increased demand, and sales of automated electroplating equipment by the
Company's wholly owned Napco subsidiary increased 23% to $6.8 million.
Segment income was $13.9 million in 1997, compared with $18.5 million in
1996. This decline results primarily from lower sales at certain business
units of Thermo Fibertek.
Biomedical Products
-------------------
Sales from the Biomedical Products segment were $281.5 million in
1997, an increase of $75.5 million, or 37%, over 1996. Sales increased
due to the inclusion of $47.1 million in sales from acquired businesses,
increased demand at Trex Medical and Bird Medical, and the opening of new
spas for ThermoLase's hair-removal business. Segment income, excluding
restructuring and other nonrecurring costs of $22.5 million in 1996,
declined to $20.7 million in 1997 from $21.6 million in 1996. This
decline results primarily from an increased segment loss at ThermoLase to
$10.7 million in 1997 from $1.9 million in 1996 and, to a lesser extent,
17PAGE
<PAGE>
THERMO ELECTRON CORPORATION
First Six Months 1997 Compared With First Six Months 1996 (continued)
lower margins at Thermo Cardiosystems. The reasons for these declines are
discussed in the results of operations for the second quarter. The
results for the first six months of 1996 include restructuring and other
nonrecurring costs of $22.5 million as discussed in the results of
operations for the second quarter.
Environmental Services
----------------------
Sales in the Environmental Services segment were $141.7 million in
1997, an increase of $13.4 million, or 10%, over 1996. Revenues from
Thermo TerraTech's remediation and recycling services increased to $61.2
million in 1997 from $52.7 million in 1996, primarily due to the
inclusion of $13.2 million of sales from acquired businesses, offset in
part by a 26% decline in revenues from Thermo Remediation's
soil-remediation services to $9.0 million, due to lower volumes of soil
processed as a result of more relaxed regulatory standards in several
states and competitive pricing pressures. Sales of metallurgical services
increased to $26.1 million in 1997 from $21.4 million in 1996, due to
increased demand for existing services and the inclusion of $1.9 million
of sales from an acquired business. Segment income margin, excluding
restructuring and other nonrecurring costs of $7.8 million in 1997, was
7.2% in 1997, compared with 7.4% in 1996. Segment income margin decreased
slightly due to a decline in margins from soil-remediation services due
to lower sales and price competition as discussed above, offset in part
by higher-margin sales from acquired businesses. Restructuring and other
nonrecurring costs of $7.8 million in 1997 were recorded in the first
quarter to write down certain capital equipment and intangible assets,
including cost in excess of net assets of acquired companies, in response
to a severe downturn in Thermo Remediation's soil-recycling business that
resulted in the closure of two soil-remediation sites. In addition, the
Company's analysis indicates that the future cash flows from certain
other soil-remediation sites that will remain open will be insufficient
to recover Thermo Remediation's investment in these business units, thus
requiring a write-down of certain assets, which is included in the $7.8
million charge.
Advanced Technologies
---------------------
Sales from the Advanced Technologies segment were $196.4 million in
1997, compared with $183.0 million in 1996. Sales at Thermedics Detection
increased 26% to $24.8 million in 1997, primarily due to sales from the
continued fulfillment of a mandated product-line upgrade from The
Coca-Cola Company, which is expected to continue through the third
quarter of 1997 and, to a lesser extent, increased shipments of InScan
systems. Sales at Thermo Sentron increased to $36.5 million in 1997 from
$34.0 million in 1996, due to the inclusion of $1.4 million of sales at
acquired businesses and increased demand. Sales at Thermo Voltek declined
to $21.6 million in 1997 from $22.5 million in 1996, primarily due to a
decline in sales at its Comtest and Keytek businesses, offset in part by
the inclusion of $4.2 million in sales from acquired businesses. The
decline in sales resulted primarily from a decrease in demand for EMC
test products as many companies have come into compliance with European
directives concerning electromagnetic compatibility and, to a lesser
extent, a decline in the component-reliability market for electrostatic
18PAGE
<PAGE>
THERMO ELECTRON CORPORATION
First Six Months 1997 Compared With First Six Months 1996 (continued)
discharge test equipment caused by a slowdown in spending for capital
equipment by the semiconductor industry. Sales at Coleman Research were
$77.7 million in 1997, compared with $74.6 million in 1996. This increase
resulted primarily from its Thermo Information Solutions subsidiary's
contract to supply kiosk units and, to a lesser extent, sales of $1.1
million from an acquired business. Segment income margin was 8.1% in
1997, compared with 6.0% in 1996. This improvement resulted from
increased sales, a change in sales mix, and the impact in the 1996 period
of charges for inventory obsolescence, personnel reductions, and other
adjustments at Thermedics Detection. The improvement was offset in part
by a small loss at Thermo Voltek.
Gain on Issuance of Stock by Subsidiaries
-----------------------------------------
The Company recorded gains as a result of the sale of stock by
subsidiaries of $48.9 million in 1997 and $72.4 million in 1996 (Note 2).
Minority interest expense increased to $31.9 million in 1997 from $29.3
million in 1996. Minority interest expense includes $11.9 million in 1997
and $18.8 million in 1996 related to gains recorded by the Company's
majority-owned subsidiaries as a result of the sale of stock by their
subsidiaries.
Liquidity and Capital Resources
Consolidated working capital was $1,795.9 million at June 28, 1997,
compared with $2,218.6 million at December 28, 1996. Included in working
capital were cash, cash equivalents, and short-term available-for-sale
investments of $1,293.0 million at June 28, 1997, compared with $1,846.3
million at December 28, 1996. In addition, at June 28, 1997, the Company
had $73.5 million of long-term available-for-sale investments, compared
with $68.8 million of long-term available-for-sale investments and $25.6
million of long-term held-to-maturity investments at December 28, 1996.
Of the total $1,366.5 million of cash, cash equivalents, and short- and
long-term available-for-sale investments at June 28, 1997, $1,081.3
million was held by the Company's majority-owned subsidiaries and the
balance was held by the Company and its wholly owned subsidiaries. During
the first six months of 1997, $57.1 million of cash was provided by the
Company's operating activities.
During the first six months of 1997, the Company's primary investing
activities, excluding available-for-sale investments activity, included
acquisitions and capital expenditures. During the first six months of
1997, the Company expended $602.7 million, net of cash acquired, for
acquisitions and $48.8 million for purchases of property, plant, and
equipment.
The Company's financing activities provided $17.5 million of cash in
the first six months of 1997. Net proceeds from the issuance of Company
and subsidiary common stock totaled $102.0 million, and net proceeds from
the issuance of long-term obligations totaled $116.5 million. In
addition, the Company repaid long-term obligations of $32.2 million.
19PAGE
<PAGE>
THERMO ELECTRON CORPORATION
Liquidity and Capital Resources (continued)
During the first six months of 1997, an aggregate principal amount of
$15.9 million of Company and subsidiary convertible obligations were
converted into shares of Company and subsidiary common stock.
During the first six months of 1997, the Company and its
majority-owned subsidiaries committed $170.6 million to purchase common
stock of certain of the Company's majority-owned subsidiaries. Of this
amount, $161.2 million was paid during the first six months of 1997, and
$9.4 million was payable on June 28, 1997, in settlement of trades
executed prior to that date. These purchases were made pursuant to
authorizations by the Company's and certain of its majority-owned
subsidiaries' Boards of Directors. As of June 28, 1997, $29.9 million and
$27.8 million remained under the Company's and the majority-owned
subsidiaries' authorizations, respectively. In July 1997, an additional
$25.0 million was authorized by the Boards of Directors of certain of the
Company's majority-owned subsidiaries. The amount of purchases in a given
reporting period may vary significantly.
In the remainder of 1997, the Company plans to make capital
expenditures of approximately $90.0 million. Since June 28, 1997, the
Company and its majority-owned subsidiaries have expended $23.0 million
on acquisitions of businesses and as of August 6, 1997, the Company had
agreements or nonbinding letters of intent to acquire new businesses
totaling approximately $10.0 million. Proposed acquisitions of new
businesses are subject to various conditions to closing, and there can be
no assurance that all proposed transactions will be consummated.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
On June 3, 1997, at the Annual Meeting of Shareholders, the
shareholders reelected a class of three incumbent directors to a
three-year term expiring in 2000. The directors reelected at the meeting
were: Dr. John M. Albertine, Mr. Peter O. Crisp, and Mr. Roger D.
Wellington. Dr. Albertine received 125,652,416 shares voted in favor of
election and 865,907 shares withheld; Mr. Crisp received 125,649,228
shares voted in favor of election and 869,095 shares withheld; and Mr.
Wellington received 125,582,769 shares voted in favor of election and
935,554 shares withheld. No abstentions or broker nonvotes were recorded
on the election of directors.
At the Annual Meeting, the shareholders also approved a proposal to
amend the Company's equity incentive plan and reserve an additional
5,000,000 shares of common stock as follows: 107,609,822 shares voted in
favor of the proposal, 18,133,524 shares voted against, and 774,977
shares abstained. No broker nonvotes were recorded on the proposal.
20PAGE
<PAGE>
THERMO ELECTRON CORPORATION
Item 4 - Submission of Matters to a Vote of Security Holders (continued)
A shareholder proposal to endorse the CERES Principles was defeated
by the shareholders at the Annual Meeting as follows: 6,787,755 shares
voted in favor of the proposal, 89,128,632 shares voted against,
4,449,679 shares abstained, and 26,152,257 broker nonvotes were recorded
on the proposal.
Item 6 - Exhibits
See Exhibit Index on page immediately preceding exhibits.
21PAGE
<PAGE>
THERMO ELECTRON CORPORATION
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 6th day of August
1997.
THERMO ELECTRON CORPORATION
Paul F. Kelleher
-------------------------
Paul F. Kelleher
Vice President, Finance and
Administration
John N. Hatsopoulos
-------------------------
John N. Hatsopoulos
President and Chief Financial
Officer
22PAGE
<PAGE>
THERMO ELECTRON CORPORATION
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
11 Statement re: Computation of Earnings per Share.
27 Financial Data Schedule.
Exhibit 11
THERMO ELECTRON CORPORATION
Computation of Earnings per Share
Three Months Ended
----------------------------
June 28, June 29,
1997 1996
------------------------------------------------------------------------
Computation of Fully Diluted Earnings per Share:
Income:
Net income $ 56,158,000 $ 44,919,000
Add: Convertible debenture
interest, net of tax 4,959,000 5,998,000
------------ ------------
Income applicable to common stock
assuming full dilution (a) $ 61,117,000 $ 50,917,000
------------ ------------
Shares:
Weighted average shares outstanding 150,173,267 140,133,601
Add: Shares issuable from assumed
conversion of convertible
debentures 23,819,700 33,050,279
Shares issuable from assumed
exercise of options (as
determined by the application
of the treasury stock method) 1,867,435 2,516,587
------------ ------------
Weighted average shares outstanding,
as adjusted (b) 175,860,402 175,700,467
------------ ------------
Fully Diluted Earnings per Share (a) / (b) $ .35 $ .29
============ ============
PAGE
<PAGE>
Exhibit 11
THERMO ELECTRON CORPORATION
Computation of Earnings per Share
Six Months Ended
----------------------------
June 28, June 29,
1997 1996
------------------------------------------------------------------------
Computation of Fully Diluted Earnings per Share:
Income:
Net income $108,216,000 $ 85,942,000
Add: Convertible debenture
interest, net of tax 9,919,000 12,834,000
------------ ------------
Income applicable to common stock
assuming full dilution (a) $118,135,000 $ 98,776,000
------------ ------------
Shares:
Weighted average shares outstanding 150,121,567 136,884,346
Add: Shares issuable from assumed
conversion of convertible
debentures 23,819,754 36,151,867
Shares issuable from assumed
exercise of options (as
determined by the application
of the treasury stock method) 1,951,233 2,546,829
------------ ------------
Weighted average shares outstanding,
as adjusted (b) 175,892,554 175,583,042
------------ ------------
Fully Diluted Earnings per Share (a) / (b) $ .67 $ .56
============ ============
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ELECTRON CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE
28, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> JUN-28-1997
<CASH> 288,738
<SECURITIES> 1,004,232
<RECEIVABLES> 756,341
<ALLOWANCES> 43,647
<INVENTORY> 535,307
<CURRENT-ASSETS> 2,808,149
<PP&E> 1,105,121
<DEPRECIATION> 340,654
<TOTAL-ASSETS> 5,304,637
<CURRENT-LIABILITIES> 1,012,214
<BONDS> 1,601,299
0
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<COMMON> 150,235
<OTHER-SE> 1,591,655
<TOTAL-LIABILITY-AND-EQUITY> 5,304,637
<SALES> 1,557,373
<TOTAL-REVENUES> 1,638,521
<CGS> 912,661
<TOTAL-COSTS> 983,618<F1>
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<LOSS-PROVISION> 5,221
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<INCOME-PRETAX> 210,545
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<INCOME-CONTINUING> 108,216
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<NET-INCOME> 108,216
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<FN>
<F1>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COST OF
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<F2>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "RESTRUCTURING
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