Sales for the third quarter grew 8 % in local currency revenues. The term local currency revenues means sales adjusted for the effects of foreign currency fluctuations. Including currency effects, reported sales grew 5% over the prior year to $191.5 million.
Operating earnings for the third quarter of 2001 grew 8% to $21.1 million, up from $19.4 million in the prior-year quarter. Third quarter net earnings were $12.7 million, or $0.37 diluted earnings per share, compared to $11.6 million, or $0.34 diluted earnings per share, in the fiscal 2000 quarter. Third quarter cash earnings per share were $0.39 compared to $0.35 in the prior-year quarter. Cash earnings per share is based on net earnings excluding the amortization of goodwill and certain intangibles from acquisitions.
For the first time, products sold into life sciences and health care applications accounted for approximately 40% of Scientific Instruments revenues during the quarter, said Allen J. Lauer, president and chief executive officer. The company is continuing to execute on its strategy of growing revenues from those applications to 50% of the segment’s total to support continued increases in operating profits.
Other highlights for the quarter related to the life sciences include:
The company received two orders for 900 MHz Nuclear Magnetic Resonance (NMR) systems from Japanese research institutions focusing on proteomics and drug discovery. The systems, which the company expects to ship in fiscal 2002, are valued at about $5 million each.
Varian, Inc. unveiled its BioSolutions(TM)initiative designed to deliver more new products for genomics and proteomics applications. Two BioSolutions products for DNA research applications were brought to market in the quarter as well.
Three additional products with life science applications were also introduced in liquid chromatography, nuclear magnetic resonance (NMR), and dissolution testing.
Scientific Instruments revenues grew 15% in local currencies compared to the third quarter of fiscal year 2000. Including currency effects, reported sales increased 11% to a record high of $111.7 million. Sales of new products for both life sciences and chemical analysis contributed to the record revenues. Increased sales of life sciences and health care related products helped to drive operating profits up 23% over the year ago quarter, resulting in operating profit margins for Scientific Instruments reaching a new high of 12.0%.
Vacuum Technologies revenues declined in local currencies by 5% compared to the third quarter of fiscal 2000. Including currency effects, revenues dipped 7% to $32.9 million for the third quarter of fiscal 2001 primarily as a result of the decline in the semiconductor equipment market. Because of the weakened sales, operating profits declined by 9% from the year-ago quarter. However, operating margins were 17.1% for the quarter due to the company’s Operational Excellence initiatives designed to provide significant flexibility in adjusting costs quickly as demand dips and in increasing production when the economy regains momentum.
Electronics Manufacturing revenues grew 2% to a record $46.9 million for the third quarter of fiscal 2001 compared to the prior year’s quarter. During the third quarter of fiscal 2000, the segment shipped delayed backlog that had resulted from an acquisition, making year-over-year comparisons difficult. However, sequentially, segment revenues rose 9% as it ramped up production for new health care equipment customers. With this increased product output, the segment’s operating profit grew 46% sequentially. Its operating margins also rose sequentially to 6.6%, as it reduced new customer start-up costs and the continued costs of integrating an acquisition. As a result of the segment’s strategy to balance its customer base, quarterly revenues from health care equipment customers reached 34% of Electronics Manufacturing revenues for the first time, equal to revenues from communications customers.
Despite the slowness in some of our markets, the company’s balance and diversity, combined with its increased focus on life sciences and health care related equipment, continue to provide it with strength and stability, said Lauer. When a single product line, application, or geography is soft, demand in other areas fuels on-going vitality and growth. At the same time, our cost-effective and efficient manufacturing systems give us the flexibility to quickly adapt to changing economic tides, keeping profitability at respectable levels.
Led by our drive into life science products and buoyed by our breadth in industrial markets, the company should end fiscal year 2001 meeting the guidance of $1.50 diluted earnings per share provided a quarter ago. Our full-year guidance for cash earnings per share is $1.58.
SOURCE: COMPANY PRESS RELEASE
