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Technology Stocks : Thermo Electron (TMO) -- Ignore unavailable to you. Want to Upgrade?

To: mopgcw who wrote (411)	9/5/2002 8:41:33 PM
From: mopgcw	Read Replies (1) \| Respond to of 450

Fitch Ratings Affirms Thermo Electron Corp.'s Ratings Businesswire, Wednesday, September 04, 2002 at 15:08 CHICAGO, Sep 4, 2002 (BUSINESS WIRE) -- Fitch Ratings has affirmed Thermo Electron's (Thermo) senior unsecured debt rating at 'BBB+', and subordinated convertible debt rating at 'BBB'. The ratings apply to approximately $656 million of outstanding debt. The Rating Outlook is Stable. The ratings reflect the loss in top-line revenues due to declines in demand from many of Thermo's key end markets, most notably, those located in the Optical Technologies and the Measurement and Control sectors. Fitch also recognizes the company's efforts to mitigate the loss in revenues through productivity improvements such as real estate rationalization, census reduction, and supply chain cost containment, which has allowed the company to maintain a credit profile consistent with the current ratings. In the first half of 2002, Thermo redeemed all of its outstanding 4-1/4% convertible subordinated debentures due 2003 (approximately $398 million) and all of its outstanding 4-5/8% convertible subordinated debentures (approximately $58 million) due 2003. Borrowings from a securities-lending agreement and cash were used for the reduction in the debt level. The securities-lending agreement pledges Thermo available-for-sale investments as collateral in exchange for cash borrowings ($337.4 million as of 6/29/02). Fitch expects short-term debt levels to decrease as the collateralized securities mature. Total debt at the end of the second quarter was $1.108 billion and coupled with a cash balance, including marketable securities, of approximately $976 million, placed the company in a net debt position at approximately $132 million. Leverage as indicated by net debt-to-EBITDA (including restructuring charges) was 1.0 times (x) for the last 12 months ending 6/29/02. Thermo continues to release $100 million tranches of cash used for the repurchase of stock and repayment of outstanding debt with two tranches approved by the Board of Directors in 2002. Fitch anticipates that the majority of the tranches will be used for share repurchases in the near term given the low share price. Thermo maintains a minimal amount of off-balance-sheet debt in the form of a guarantee at the privatized entity, Kadant Inc. (formerly Thermo Fibertek). Thermo guarantees approximately $88 million in Kadant subordinated convertible debt due 2004, protected by restrictive bond covenants placed on Kadant by Thermo. Thermo's corporate financial policy is to maintain a ratio of net debt-to-net capital not greater than 30% and to target an EBITA-to-net interest expense of not less than 4.0x. Two challenges facing Thermo is the integration of over 60 divisional and sub-divisional units, that had previously been autonomous, into one instruments company, and secondly, the creation of a centralized brand image across the entire organization, which will allow the company to leverage the sales and marketing presence in diverse end-markets already served.