WALTHAM, Mass., Dec. 22 /PRNewswire-FirstCall/ -- Thermo Electron Corporation today announced that it expects to report adjusted earnings per share (EPS) of $1.75 to $1.80 in 2006, or $1.65 to $1.70 net of $.10 per share of stock option expensing that will take effect during the year. The company also reaffirmed its 2005 adjusted EPS guidance of $1.51 to $1.54. Based on the midpoints of these ranges, adjusted EPS in 2006 will increase approximately 16% over 2005 (both including and excluding $.08 per share of stock option expense on a pro forma basis, assuming the company had adopted stock option expensing in 2005).
Revenues in 2006 are expected to grow approximately 7% to $2.78 to $2.83 billion, compared with the company’s 2005 estimate of $2.61 to $2.63 billion. This guidance reflects the favorable impact of a full year of results from 2005 acquisitions and expected 4% to 5% organic growth. It also takes into account the unfavorable effects of 2005 divestitures and present currency exchange rates.
This guidance does not factor in any acquisitions or divestitures that may be completed during 2006. In addition, the adjusted EPS estimate excludes approximately $.40 of expense in 2006 and $.30 of expense in 2005 for the amortization of acquisition-related intangible assets, and certain other items detailed at the end of this press release under the heading “Use of Non-GAAP Financial Measures.”
“We are excited about our prospects for 2006, which should lead to another year of strong growth in adjusted EPS and revenues,” said Marijn E. Dekkers, president and chief executive officer of Thermo. “Our growth momentum is also evident in the accelerated expansion of our adjusted operating margins, which we now expect will improve well above 100 basis points for the year.
“Our excellent outlook is the result of an intense focus on serving our customers. We’re reaping the benefits of ongoing investments in technology development, our commercial structure, and strategic acquisitions -- all of which are strengthening Thermo’s leading position in the global analytical instruments industry.”
Adjusted EPS, adjusted operating margin and organic revenue are non-GAAP measures that are described below under the heading “Use of Non-GAAP Financial Measures.”
Use of Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including adjusted EPS, adjusted operating margin and organic revenue, which exclude restructuring and other costs/income and amortization of acquisition-related intangible assets. Adjusted EPS also excludes certain other gains and losses, tax provisions/benefits related to the previous items, benefits from tax credit carryforwards and the impact of the resolution of significant tax audits. We exclude these items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods. In addition, our adjusted EPS guidance excludes the impact of accounting principles not yet adopted. We believe that the inclusion of such measures helps investors to gain a better understanding of our core operating results and future prospects, consistent with how management measures and forecasts the company’s performance, especially when comparing such results to previous periods or forecasts.
Specifically:
We exclude costs and tax effects associated with restructuring activities, such as reducing overhead and consolidating facilities, in connection with our recent Kendro acquisition. We believe that the costs related to these restructuring activities are not indicative of our normal operating costs.
We exclude charges relating to the sale of inventories revalued at the date of acquisition, as we believe these charges are not indicative of our normal operating costs.
We exclude the expense and tax effects associated with the amortization of acquisition-related intangible assets because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives of 5 to 10 years. Exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non- acquisitive peer companies.
We also exclude certain gains/losses and related tax effects, benefits from tax credit carryforwards and the impact of the resolution of significant tax audits, which are either isolated or cannot be expected to occur again with any regularity or predictability and that we believe are not indicative of our normal operating gains and losses.
Thermo’s management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring the company’s core operating performance and comparing such performance to that of prior periods and to the performance of our competitors. Such measures are also used by management in their financial and operating decision-making and for compensation purposes.
The non-GAAP financial measures of Thermo’s results of operations included in this press release are not meant to be considered superior to or a substitute for Thermo’s results of operations prepared in accordance with GAAP. Thermo’s earnings guidance is only provided on an adjusted basis. It is not feasible to provide GAAP EPS guidance because the items excluded, other than the amortization expense, are difficult to predict and estimate and are primarily dependent on future events, such as the impact of accounting principles not yet adopted and decisions concerning the location and timing of facility consolidations.
Conference Call
Thermo Electron will hold a financial guidance conference call today, December 22, at 8:30 a.m. Eastern time. To listen, dial 888-872-9028 within the U.S. or 973-633-6740 outside the U.S. and use passcode 6849681. Please begin dialing at least 10 minutes before the scheduled starting time. You can also listen to the call live on the Web by visiting http://www.thermo.com and clicking on “About Thermo” and then “Investors.” An audio archive of the call will be available in that section of the Website until Saturday, January 21, 2006. You will also find this press release under the heading “Press Releases” in the Investors section of our Website.
About Thermo Electron
Thermo Electron Corporation is the world leader in analytical instruments. Our instrument solutions enable our customers to make the world a healthier, cleaner and safer place. Thermo’s Life and Laboratory Sciences segment provides analytical instruments, scientific equipment, services and software solutions for life science, drug discovery, clinical, environmental and industrial laboratories. Thermo’s Measurement and Control segment is dedicated to providing analytical instruments used in a variety of manufacturing processes and in-the-field applications, including those associated with safety and homeland security. Based near Boston, Massachusetts, Thermo has revenues of more than $2.7 billion, and employs approximately 11,000 people in 30 countries. For more information, visit http://www.thermo.com.
The following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward- looking statements that involve a number of risks and uncertainties. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are set forth under the heading “Forward-Looking Statements” in the company’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 1, 2005. These include risks and uncertainties relating to: the need to develop new products and adapt to significant technological change; dependence on customers that operate in cyclical industries; general worldwide economic conditions and related uncertainties; the effect of changes in governmental regulations; dependence on customers’ capital spending policies and government funding policies; use and protection of intellectual property; exposure to product liability claims in excess of insurance coverage; retention of contingent liabilities from businesses we sold; realization of potential future savings from new productivity initiatives; implementation of our branding strategy; implementation of strategies for improving internal growth; the effect of exchange rate fluctuations on international operations; identification, completion and integration of new acquisitions and potential impairment of goodwill from previous acquisitions. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
Media Contact Information: Investor Contact Information: Lori Gorski Kenneth J. Apicerno Phone: 781-622-1242 Phone: 781-622-1111 E-mail: lori.gorski@thermo.com E-mail: ken.apicerno@thermo.com Website: http://www.thermo.com
Thermo Electron Corporation
CONTACT: Media: Lori Gorski, +1-781-622-1242, lori.gorski@thermo.com, orInvestors: Kenneth J. Apicerno, +1-781-622-1111, ken.apicerno@thermo.com,both of Thermo Electron Corporation
Web site: http://www.thermo.com//
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