SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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):
February 22, 2000
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THERMO ELECTRON CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 1-8002 04-2209186
(State or other (Commission (I.R.S. Employer
jurisdiction of incorporation File Number) Identification Number)
or organization)
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)
<PAGE>
This Current Report on Form 8-K contains forward-looking statements that
involve a number of risks and uncertainties. Important factors that could cause
actual results to differ materially from those indicated by such forward-looking
statements are set forth under the heading "Risk Factors" in Thermo Electron
Corporation's Amendment No. 1 to Registration Statement on Form S-4 [Reg. No.
333-35478] filed with the Securities and Exchange Commission on June 14, 2000.
These include risks and uncertainties relating to: the Registrant's ability to
complete its corporate reorganization, divestitures planned as part of the
reorganization, integration of the Registrant's instrument businesses, issuance
of significant amounts of additional shares as part of the reorganization, the
need for a favorable ruling from the Internal Revenue Service regarding planned
spin-offs of subsidiaries of the Registrant, liquidity and prospective
performance of the subsidiaries to be spun off, guarantees of obligations of the
subsidiaries to be spun off, volatility of the Registrant's stock price,
goodwill acquired by the Registrant, uncertainties regarding internal revenue
growth of the Registrant, the effect of exchange rate fluctuations on the
Registrant's significant international operations, the need to develop new
products and adapt to significant technological change, changes in governmental
regulations, and dependence of demand on capital spending and government funding
policies.
Item 5. Other Events
On February 22, 2000, the Registrant issued a press release regarding its
financial results for the quarter and fiscal year ended January 1, 2000.
The press release stated as follows:
Thermo Electron Reports Fourth Quarter and Year-End Earnings
WALTHAM, Mass., February 22, 2000 - Thermo Electron Corporation (NYSE-TMO) today
reported its financial results for the 1999 fourth quarter and fiscal year,
ended January 1, 2000. Results for 1999 and 1998 have been restated to exclude a
number of businesses that have been classified as discontinued operations
following Thermo Electron's recent reorganization announcement, which includes
the divestiture of additional businesses with aggregate revenues of $1.2 billion
and the spinoff of two companies totaling $565 million in revenues.
For the fourth quarter of 1999, revenues from continuing operations were
up 21 percent to $659.0 million, compared with $544.2 million a year ago. Income
from continuing operations, excluding restructuring and nonrecurring charges in
both periods, was $25.3 million for the 1999 quarter, versus $24.8 million in
1998, with diluted earnings per share of $.15 in both quarters. Including the
earnings of the Thermo Fibertek and Medical Products spinoffs, diluted earnings
per share from continuing operations would have increased 15 percent to $.23,
from $.20 a year ago, on a pro forma basis.
For the year, revenues from continuing operations were $2.5 billion in
1999, up 20 percent from $2.1 billion in 1998. Income from continuing operations
in 1999, excluding restructuring and nonrecurring charges, was $96.3 million, or
$.59 per diluted share, versus $115.0 million, or $.67 per diluted share, a year
ago. Earnings for the year were primarily affected by a 24 percent decline in
segment income at Thermo Ecotek. Although it is no longer a core business under
the reorganization plan, Thermo Ecotek will be taken private and remain within
Thermo Electron while the company continues to evaluate how to best exit the
business while maximizing shareholder value.
"While our financial picture for 1999 is complicated by the reorganization
activities, presentation of the results in terms of continuing operations should
provide a clearer view of the company as we move forward," said Richard F.
Syron, chairman, president, and chief executive officer of Thermo Electron.
"Last month, we introduced an aggressive plan to dramatically simplify Thermo
Electron by focusing on our core instrument businesses, spinning off the
Fibertek and Medical Products companies as dividends to Thermo Electron
shareholders, and selling non-core businesses. Our objective is to unlock the
shareholder value that exists within the company, but has been overshadowed in
the past by the complexity of our structure.
<PAGE>
"Our goal is to complete this reorganization by the end of 2000. We
realize that with a plan of this magnitude, it is critically important to keep
shareholders informed of our progress. We invite you to refer to our Web site at
Thermo.com, where we will periodically update our progress with the
reorganization, beginning in March. While the reorganization team works
diligently to execute the plan, my emphasis going forward will be on how we
improve operations.
"By channeling all of our resources toward the instrument markets,
particularly those that offer higher opportunities for growth - such as life
sciences and telecommunications - our goal is to accelerate our internal revenue
growth rate to 10 percent over the next two years, and to further augment that
growth with strategic acquisitions. I am confident that our solid base and
leadership in the instrument industry, and the ability to redeploy more than $1
billion in proceeds from divestitures, will allow Thermo Electron to meet its
goals for the future."
Measurement and Detection Instruments: the new Thermo Electron
Revenues in this segment increased by 22 percent in 1999 due in large measure to
the acquisition of Spectra-Physics AB last February. After a weak first half,
the instrument businesses rebounded in the second half of the year, resulting in
a slight increase in segment income over 1998, excluding restructuring and other
nonrecurring items. Backlog at the end of 1999 rose 37 percent to $424.8
million, compared with year-end 1998. For the fourth quarter of 1999, segment
revenues increased 23 percent and segment income was up 17 percent. Fourth
quarter bookings for the segment increased 13 percent internally, and 38 percent
overall. The book-to-bill ratio for the instrument businesses increased to 1.09
in the fourth quarter of 1999, versus .97 in 1998. Segment income margins for
the quarter were 12.0 percent in 1999, and, excluding Spectra-Physics, were 12.9
percent, compared with 12.6 percent in 1998.
The life sciences, semiconductor, and telecommunications sectors were the
primary drivers of internal growth in the fourth quarter. The company shipped
its first orders for DASH, an automated system used to detect variations in gene
sequences, and reported excellent sales of its rapid test kits for diagnosing
flu. In addition, more than $15 million in orders were received for molecular
beam epitaxy (MBE) systems used in high-volume production of critical components
for cellular telephones and other high-speed wireless communications products.
Thermo Fibertek: future spinoff
While Thermo Fibertek's revenues were relatively flat year to year and operating
income declined (excluding from both periods a business sold in early 1999 and
restructuring and nonrecurring items), the second half of the year resulted in a
17 percent increase in bookings as paper recycling markets in North America and
Asia began to show increased activity. The company recently announced more than
$10 million in orders from four recycled-paper producers in China. Bookings of
recycling systems in the fourth quarter of 1999 increased by 32 percent over
1998. Fourth-quarter results, excluding the items mentioned above, showed a
slight increase in revenues and a 29 percent increase in operating income.
Operating margins in the fourth quarter of 1999, excluding nonrecurring items,
were 13.2 percent, compared with 10.7 percent in 1998. The company's Thermo
Fibergen subsidiary continues to expand its line of consumer products based on
recovered fiber and expects to begin shipping new fiber-based composite products
in the second quarter of this year.
<PAGE>
Medical Products: future spinoff
The businesses that will form the new Medical Products spinoff, Thermo
Electron's and Thermedics' wholly owned medical operations, showed a 19 percent
increase in revenues over last year and a 23 percent increase in operating
income. These results, which are unaudited, include contributions from Erich
Jaeger, GmbH, acquired last July. Jaeger's cardio-respiratory diagnostic and
monitoring systems ideally complement the products provided by the existing
respiratory group of companies. Growth was also fueled by sales of new
intra-operative neurological monitoring systems and long-term epilepsy monitors,
as well as the addition of an auditory products company. Bookings increased by
27 percent year to year. For the fourth quarter, revenues were up 46 percent and
both operating income and net income rose 85 percent. Operating income margins
grew to 13.0 percent in the fourth quarter of 1999, versus 10.3 percent a year
ago.
<PAGE>
Consolidated Statement of
Operations
Three Months Ended Twelve Months Ended
------------------ -------------------
(In thousands except per share Jan. 1, Jan. 2, Jan. 1, Jan. 2,
amounts) 2000 1999 2000 1999
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Revenues (a) $658,985 $544,217 $2,471,193 $2,055,805
-------- -------- ---------- ----------
Costs and Operating Expenses:
Cost of revenues (b) 367,939 301,575 1,378,494 1,127,253
Selling, general, and
administrative expenses 174,574 147,610 673,004 543,226
Research and development
expenses 45,271 33,293 171,100 128,021
-------- -------- ---------- ----------
587,784 482,478 2,222,598 1,798,500
-------- -------- ---------- ----------
Operating Income Before Restructuring
and Other Unusual (Costs)
Income, Net 71,201 61,739 248,595 257,305
Restructuring and Other Unusual
(Costs) Income, Net (5,091) 11 (149,589) (23,583)
-------- -------- ---------- ----------
Operating Income 66,110 61,750 99,006 233,722
Gain on Issuance of Stock by
Subsidiaries - - - 18,583
Interest Income 9,644 17,250 43,915 78,313
Interest Expense (22,883) (23,614) (96,992) (90,329)
Other Income (Expense), Net (c) 3,657 8,969 (8,443) 14,204
-------- -------- ---------- ----------
Income from Continuing Operations
Before Income Taxes, Minority
Interest, and Extraordinary
Items 56,528 64,355 37,486 254,493
Income Tax Provision (d) 26,381 31,973 33,073 104,571
Minority Interest Expense (e) 7,857 7,548 18,993 35,246
-------- -------- ---------- ----------
Income (Loss) from Continuing
Operations Before Extraordinary
Items 22,290 24,834 (14,580) 114,676
Income (Loss) from Discontinued
Operations [net of income taxes
and minority interest of $9,025,
$7,078, $(71,679), and $74,885] 22,228 11,931 (111,462) 66,785
Provision for Loss on Disposal of
Discontinued Operations (net of
income tax provision of $174,000) (50,000) - (50,000) -
-------- -------- ---------- ----------
Income (Loss) Before Extraordinary
Items (5,482) 36,765 (176,042) 181,461
Extraordinary Items (net of income
taxes and minority interest
of $900, $296, $900, and $470) (f) 1,469 276 1,469 440
-------- -------- ---------- ----------
Net Income (Loss) $ (4,013) $ 37,041 $ (174,573) $ 181,901
======== ======== ========== ==========
Earnings (Loss) per Share from
Continuing Operations:
Basic $ .14 $ .16 $ (.09) $ .71
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Diluted $ .13 $ .15 $ (.11) $ .67
======== ======== ========== ==========
Earnings (Loss) per Share:
Basic $ (.03) $ .23 $ (1.10) $ 1.12
======== ======== ========== ==========
Diluted $ (.04) $ .23 $ (1.13) $ 1.08
======== ======== ========== ==========
Weighted Average Shares:
Basic $157,694 $158,801 $ 157,987 $ 161,866
======== ======== ========== ==========
Diluted $157,965 $159,000 $ 157,987 $ 162,973
======== ======== ========== ==========
(a) The amount for the twelve months of 1999 has been reduced by $2.8 million
relating to a dispute with a customer.
(b) Includes inventory and warranty provisions in connection with restructuring
and related actions of $9.4 million and $8.6 million in the twelve months
of 1999 and 1998, respectively.
(c) Includes $19.1 million of unusual charges in the twelve months of 1999.
(d) Includes $1.4 million of unusual charges in the twelve months of 1999.
(e) Includes $3.3 million of expense in 1998, related to gains on issuance of
stock recorded by the company's majority-owned subsidiaries.
(f) Increased basic and diluted earnings per share by $.01 in the fourth
quarter and twelve months of 1999.
<PAGE>
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: Not applicable.
<PAGE>
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 14th day of June, 2000.
THERMO ELECTRON CORPORATION
By: /s/ Theo Melas-Kyriazi
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Name: Theo Melas-Kyriazi
Title: Vice President and
Chief Financial Officer
