Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in
serving science, today reported its financial results for the
fourth quarter and full year ended December 31, 2015.
Fourth Quarter and Full Year 2015 Highlights
- Grew fourth quarter adjusted earnings
per share (EPS) by 7% to $2.12 and full year adjusted EPS by 6% to
$7.39.
- Increased fourth quarter revenue by 4%
to $4.65 billion.
- Expanded fourth quarter adjusted
operating margin by 40 basis points to 23.2%.
- Launched significant new products in
2015 for research, clinical and applied markets, highlighted by the
QuantStudio 3 and 5 qPCR systems, Orbitrap Fusion Lumos Tribrid
mass spectrometer and the Ion S5 and S5 XL next-generation
sequencing instruments.
- Leveraged increasing scale in
Asia-Pacific and emerging markets to deliver strong growth, led by
outstanding performance in China and significant contributions from
India and South Korea.
- Successfully integrated the Life
Technologies acquisition, which strengthened our customer value
proposition and accelerated growth.
- In 2015, deployed nearly $700 million
to expand our bioproduction and laboratory chemicals offerings
through acquisitions of Advanced Scientifics, Inc. and Alfa Aesar;
also repurchased $500 million of stock.
- Reduced debt by approximately $2.0
billion in 2015 and achieved target leverage ratio.
- After year end, announced agreement to
acquire Affymetrix for $1.3 billion to strengthen leadership in
biosciences and genetic analysis.
Adjusted EPS, adjusted operating income, adjusted operating
margin and free cash flow are non-GAAP measures that exclude
certain items detailed later in this press release under the
heading “Use of Non-GAAP Financial Measures.”
“I’m pleased to report that every business segment finished the
year strong, which contributed to an outstanding year for Thermo
Fisher in a challenging macro-environment,” said Marc N. Casper,
president and chief executive officer of Thermo Fisher Scientific.
“We executed well to extend our long track record of strong
adjusted EPS growth and delivered increased value to our customers
to achieve excellent top-line results.
“Our strong performance in 2015 demonstrates the success of our
growth strategy, which is based on technology innovation, scale in
Asia-Pacific and emerging markets, and our unique customer value
proposition. During the year, we launched high-impact products
across our technology portfolio that strengthen our leadership
positions and create new avenues for growth. We expanded our
capabilities in high-growth regions, such as Singapore, Southeast
Asia and the Middle East, while delivering outstanding growth in
China. We also successfully integrated Life Technologies,
leveraging our combined portfolios and commercial strengths to
create tremendous value for our customers.
“In terms of capital deployment, we invested about $1.4 billion
during 2015 to expand our customer offerings through strategic
M&A and return capital through stock buybacks and dividends. At
the same time, we de-levered ahead of our original plan and kicked
off 2016 with our agreement to acquire Affymetrix.”
Casper concluded, “Our strong finish in the fourth quarter
contributed to a great year overall, and sets us up to deliver a
successful 2016.”
Fourth Quarter 2015
For the fourth quarter of 2015, adjusted EPS grew 7% to $2.12,
versus $1.99 in the fourth quarter of 2014. Revenue for the quarter
grew 4% to $4.65 billion in 2015, versus $4.49 billion in 2014.
Organic revenue growth was 7%; acquisitions increased revenues by
1% and currency translation reduced revenue by 4%. Adjusted
operating income for the fourth quarter of 2015 increased 5%
compared with the year-ago quarter, and adjusted operating margin
expanded to 23.2%, compared with 22.8% in the fourth quarter of
2014.
GAAP diluted EPS for the fourth quarter of 2015 was $1.50,
versus $1.49 in the same quarter last year. GAAP operating income
for the fourth quarter of 2015 increased 8% to $690 million,
compared with $639 million in 2014. GAAP operating margin increased
to 14.8%, compared with 14.2% in the fourth quarter of 2014.
Full Year 2015
For the full year 2015, adjusted EPS grew 6% to $7.39, versus
$6.96 in 2014. Revenue for 2015 grew to $16.97 billion, compared
with $16.89 billion a year ago. Organic revenue grew 5%;
acquisitions, net of divestitures, increased revenue by 1% and
currency translation reduced revenue by 6%. Adjusted operating
income for 2015 increased 3% compared with 2014, and adjusted
operating margin expanded 60 basis points to 22.5%, compared with
21.9% a year ago.
GAAP diluted EPS for 2015 was $4.92, versus $4.71 in 2014. GAAP
operating income for 2015 decreased to $2.34 billion, compared with
$2.50 billion a year ago. GAAP operating margin decreased to 13.8%,
compared with 14.8% in 2014. GAAP results reflect gains from the
sale of businesses in 2014.
Annual Guidance for 2016
The company will provide 2016 financial guidance on its earnings
conference call this morning at 8:30 a.m. EST.
Segment Results
Management uses adjusted operating results to monitor and
evaluate performance of the company’s four business segments, as
highlighted below. Year-over-year results were negatively affected
by the impact of foreign currency exchange rates.
Life Sciences Solutions Segment
In the fourth quarter of 2015, Life Sciences Solutions Segment
revenue grew to $1.21 billion, compared with revenue of $1.19
billion in the fourth quarter of 2014. Segment adjusted operating
margin increased to 31.6%, versus 30.8% in 2014.
For the full year 2015, Life Sciences Solutions Segment revenue
grew to $4.44 billion, compared with revenue of $4.20 billion in
2014. Segment adjusted operating margin rose to 30.1% in 2015
compared with 29.0% a year ago.
Analytical Instruments Segment
Analytical Instruments Segment revenue increased 3% to $925
million in the fourth quarter of 2015, compared with revenue of
$902 million in the fourth quarter of 2014. Segment adjusted
operating margin grew to 22.1%, versus 20.2% in the 2014
quarter.
For the full year 2015, Analytical Instruments Segment revenue
was $3.21 billion, compared with revenue of $3.25 billion in 2014.
Segment adjusted operating margin rose to 19.1%, versus 17.9% in
2014.
Specialty Diagnostics Segment
Specialty Diagnostics Segment revenue in the fourth quarter
increased to $865 million in 2015, compared with revenue of $863
million in the fourth quarter of 2014. Segment adjusted operating
margin was 26.2%, versus 27.1% in the 2014 quarter.
For the full year 2015, Specialty Diagnostics Segment revenue
was $3.24 billion, compared with revenue of $3.34 billion in 2014.
Segment adjusted operating margin was 26.9%, versus 2014 results of
27.4%.
Laboratory Products and Services Segment
In the fourth quarter of 2015, Laboratory Products and Services
Segment revenue grew 8% to $1.82 billion, compared with revenue of
$1.68 billion in the fourth quarter of 2014. Segment adjusted
operating margin increased to 14.7%, versus 14.5% in the 2014
quarter.
For the full year 2015, Laboratory Products and Services Segment
revenue increased 1% to $6.66 billion, compared with revenue of
$6.60 billion in 2014. Segment adjusted operating margin increased
to 15.0%, versus 14.9% in 2014.
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 income and adjusted operating margin, 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, the
impact of significant tax audits or events and discontinued
operations. We exclude the above items because they are outside of
our normal operations and/or, in certain cases, are difficult to
forecast accurately for future periods. We also use a non-GAAP
measure, free cash flow, which excludes operating cash flows from
discontinued operations and deducts net capital expenditures. We
believe that the use of non-GAAP 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.
For example:
We exclude costs and tax effects associated with restructuring
activities, such as reducing overhead and consolidating facilities.
We believe that the costs related to these restructuring activities
are not indicative of our normal operating costs.
We exclude certain acquisition-related costs, including charges
for the sale of inventories revalued at the date of acquisition and
significant transaction costs. We exclude these costs because we do
not believe they are 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 20 years. In
2016, based on acquisitions closed through the end of 2015, our
adjusted EPS will exclude approximately $2.23 of expense for the
amortization of acquisition-related intangible assets. 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
significant tax audits or events (such as the one-time effect on
deferred tax balances of enacted changes in tax rates), 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. For example, we exclude
gains/losses from items such as the sale of a business or real
estate, gains or losses on significant litigation-related matters,
gains on curtailments of pension plans, the early retirement of
debt and discontinued operations.
We also report free cash flow, which is operating cash flow, net
of capital expenditures, and also excludes operating cash flows
from discontinued operations to provide a view of the continuing
operations’ ability to generate cash for use in acquisitions and
other investing and financing activities.
Thermo Fisher’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 Fisher’s results of
operations and cash flows included in this press release are not
meant to be considered superior to or a substitute for Thermo
Fisher’s results of operations prepared in accordance with GAAP.
Reconciliations of such non-GAAP financial measures to the most
directly comparable GAAP financial measures are set forth in the
accompanying tables. Thermo Fisher’s earnings guidance, however, 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 acquisitions and
decisions concerning the location and timing of facility
consolidations.
Conference Call
Thermo Fisher Scientific will hold its earnings conference call
today, January 28, 2016, at 8:30 a.m. Eastern time. To listen, dial
(877) 201-0168 within the U.S. or (647) 788-4901 outside the U.S.
You may also listen to the call live on our website,
www.thermofisher.com, by clicking on “Investors.” You will find
this press release, including the accompanying reconciliation of
non-GAAP financial measures and related information, in that
section of our website under “Financial Results.” An audio archive
of the call will be available under “Webcasts and Presentations”
through Friday, February 26, 2016.
About Thermo Fisher Scientific
Thermo Fisher Scientific Inc. (NYSE: TMO) is the world
leader in serving science, with revenues of $17
billion and more than 50,000 employees in 50 countries. Our
mission is to enable our customers to make the world healthier,
cleaner and safer. We help our customers accelerate life sciences
research, solve complex analytical challenges, improve patient
diagnostics and increase laboratory productivity. Through our
premier brands – Thermo Scientific, Applied Biosystems, Invitrogen,
Fisher Scientific and Unity Lab Services – we offer an unmatched
combination of innovative technologies, purchasing convenience and
comprehensive support. For more information, please visit
www.thermofisher.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
forward-looking statements include risks and uncertainties relating
to: the need to develop new products and adapt to significant
technological change; implementation of strategies for improving
growth; general economic conditions and related uncertainties;
dependence on customers’ capital spending policies and government
funding policies; the effect of exchange rate fluctuations on
international operations; the effect of healthcare reform
legislation; use and protection of intellectual property; the
effect of changes in governmental regulations; and the effect of
laws and regulations governing government contracts, as well as the
possibility that expected benefits related to recent or pending
acquisitions may not materialize as expected. Additional important
factors that could cause actual results to differ materially from
those indicated by such forward-looking statements are set forth in
our Quarterly Report on Form 10-Q for the quarter ended September
26, 2015, which is on file with the SEC and
available in the “Investors” section of our website under the
heading “SEC Filings.” While we may elect to update forward-looking
statements at some point in the future, we specifically disclaim
any obligation to do so, even if estimates change and, therefore,
you should not rely on these forward-looking statements as
representing our views as of any date subsequent to today.
Consolidated Statement of Income
(a)(b) Three Months Ended December 31, % of December 31, % of
(In millions except per share amounts) 2015 Revenues 2014 Revenues
Revenues $ 4,652.5 $ 4,492.8 Costs and
Operating Expenses: Cost of revenues (c) 2,439.9 52.4 % 2,290.8
51.0 % Selling, general and administrative expenses (d) 968.7 20.8
% 1,007.4 22.4 % Amortization of acquisition-related intangible
assets 326.0 7.0 % 339.3 7.6 % Research and development expenses
180.3 3.9 % 182.5 4.1 % Restructuring and other costs, net (e) 47.4
1.0 % 33.7 0.7 % 3,962.3 85.2 % 3,853.7
85.8 % Operating Income 690.2 14.8 % 639.1 14.2 % Interest
Income 8.7 9.3 Interest Expense (103.0 ) (116.2 ) Other (Expense)
Income, Net (f) (13.2 ) 4.9 Income Before Income
Taxes 582.7 537.1 Benefit from Income Taxes (g) 23.6 66.9
Income from Continuing Operations 606.3 604.0
Loss from Discontinued Operations (3.7 ) (2.8 ) Net Income $
602.6 13.0 % $ 601.2 13.4 % Earnings per Share
from Continuing Operations: Basic $ 1.52 $ 1.51
Diluted $ 1.51 $ 1.49 Earnings per Share:
Basic $ 1.51 $ 1.50 Diluted $ 1.50 $ 1.49
Weighted Average Shares: Basic 399.5 400.4
Diluted 402.4 404.1
Reconciliation of Adjusted Operating Income and Adjusted
Operating Margin GAAP Operating Income (a) $ 690.2 14.8 % $
639.1 14.2 % Cost of Revenues Charges (c) 6.6 0.2 % 0.9 0.0 %
Selling, General and Administrative Charges, Net (d) 10.9 0.2 %
12.7 0.3 % Restructuring and Other Costs, Net (e) 47.4 1.0 % 33.7
0.7 % Amortization of Acquisition-related Intangible Assets 326.0
7.0 % 339.3 7.6 % Adjusted Operating Income
(b) $ 1,081.1 23.2 % $ 1,025.7 22.8 %
Reconciliation of Adjusted Net Income GAAP Net Income (a) $
602.6 13.0 % $ 601.2 13.4 % Cost of Revenues Charges (c) 6.6 0.2 %
0.9 0.0 % Selling, General and Administrative Charges, Net (d) 10.9
0.2 % 12.7 0.3 % Restructuring and Other Costs, Net (e) 47.4 1.0 %
33.7 0.7 % Amortization of Acquisition-related Intangible Assets
326.0 7.0 % 339.3 7.6 % Other Expense, Net (f) 6.3 0.1 % 3.7 0.1 %
Provision for Income Taxes (g) (150.6 ) -3.2 % (189.6 ) -4.2 %
Discontinued Operations, Net of Tax 3.7 0.0 % 2.8 0.0
% Adjusted Net Income (b) $ 852.9 18.3 % $ 804.7
17.9 %
Reconciliation of Adjusted Earnings per
Share GAAP EPS (a) $ 1.50 $ 1.49 Cost of Revenues Charges, Net
of Tax (c) 0.01 (0.03 ) Selling, General and Administrative
Charges, Net of Tax (d) 0.02 0.02 Restructuring and Other Costs,
Net of Tax (e) 0.07 0.02 Amortization of Acquisition-related
Intangible Assets, Net of Tax 0.56 0.47 Other Expense, Net of Tax
(f) 0.01 — Provision for Income Taxes (g) (0.06 ) 0.01 Discontinued
Operations, Net of Tax 0.01 0.01 Adjusted EPS
(b) $ 2.12 $ 1.99
Reconciliation of Free
Cash Flow GAAP Net Cash Provided by Operating Activities (a) $
1,228.1 $ 953.7 Net Cash Used in Discontinued Operations 0.7 0.8
Purchases of Property, Plant and Equipment (129.4 ) (156.7 )
Proceeds from Sale of Property, Plant and Equipment 10.6
29.6 Free Cash Flow $ 1,110.0 $ 827.4
Segment Data Three Months Ended December 31,
% of December 31, % of (In millions) 2015
Revenues 2014 Revenues
Revenues Life Sciences
Solutions $ 1,209.8 26.0 % $ 1,185.2 26.4 % Analytical Instruments
925.3 19.9 % 902.4 20.1 % Specialty Diagnostics 864.7 18.6 % 863.0
19.2 % Laboratory Products and Services 1,816.6 39.0 % 1,682.9 37.5
% Eliminations (163.9 ) -3.5 % (140.7 ) -3.2 % Consolidated
Revenues $ 4,652.5 100.0 % $ 4,492.8 100.0 %
Operating Income and Operating Margin Life Sciences
Solutions $ 382.0 31.6 % $ 364.9 30.8 % Analytical Instruments
205.0 22.1 % 182.0 20.2 % Specialty Diagnostics 226.7 26.2 % 234.3
27.1 % Laboratory Products and Services 267.4 14.7 % 244.5
14.5 % Subtotal Reportable Segments 1,081.1 23.2 %
1,025.7 22.8 % Cost of Revenues Charges (c) (6.6 ) -0.2 %
(0.9 ) 0.0 % Selling, General and Administrative Charges, Net (d)
(10.9 ) -0.2 % (12.7 ) -0.3 % Restructuring and Other Costs, Net
(e) (47.4 ) -1.0 % (33.7 ) -0.7 % Amortization of
Acquisition-related Intangible Assets (326.0 ) -7.0 % (339.3 ) -7.6
% GAAP Operating Income (a) $ 690.2 14.8 % $ 639.1
14.2 %
(a) "GAAP" (reported) results were determined in accordance with
U.S. generally accepted accounting principles (GAAP).(b) Adjusted
results are non-GAAP measures and, for income measures, exclude
certain charges to cost of revenues (see note (c) for details);
certain credits/charges to selling, general and administrative
expenses (see note (d) for details); amortization of
acquisition-related intangible assets; restructuring and other
costs, net (see note (e) for details); certain other gains or
losses that are either isolated or cannot be expected to occur
again with any regularity or predictability (see note (f) for
details); and the tax consequences of the preceding items and
certain other tax items (see note (g) for details).(c) Reported
results in 2015 and 2014 include i) $6.2 and $0.3, respectively, of
charges for the sale of inventories revalued at the date of
acquisition and ii) $0.4 and $0.6, respectively, of accelerated
depreciation on manufacturing assets to be abandoned due to
facility consolidations.(d) Reported results in 2015 and 2014
include i) $4.6 and $11.9, respectively, of third-party
transaction/integration costs related to the acquisitions of Alfa
Aesar in 2015 and Life Technologies in 2014; ii) $(0.3) and $0.2,
respectively, of (gains)/charges for changes in estimates of
contingent consideration for acquisitions; and iii) $6.6 and $0.6,
respectively, of accelerated depreciation on fixed assets to be
abandoned due to integration synergies.(e) Reported results in 2015
and 2014 include restructuring and other costs, net, consisting
principally of severance, abandoned facility and other expenses of
headcount reductions within several businesses and real estate
consolidations. Reported results in 2015 include $16.5 of charges
for litigation at acquired businesses, $14.9 of impairment of
acquired technology in development and $1.7 of gains on the sale of
real estate. Reported results in 2014 include $29.3 of charges for
pension settlements and $14.8 of gains on the sale of real
estate.(f) Reported results in 2015 and 2014 include i) $0.1 and
$(3.1), respectively, of net gains (losses) on investments and ii)
$0.6 and $0.6, respectively, of amortization of acquisition-related
intangible assets of the company's equity-method investments.
Reported results in 2015 also include a loss of $5.8 on the early
extinguishment of debt.(g) Reported provision for income taxes
includes i) $126.6 and $194.8 of incremental tax benefit in 2015
and 2014, respectively, for the pre-tax reconciling items between
GAAP and adjusted net income; and ii) in 2015 and 2014, $24.0 and
$(5.2), respectively, of incremental tax benefit/(provision) from
adjusting the company's deferred tax balances as a result of tax
rate changes.
Notes:Consolidated depreciation expense is $98.5 and $89.4 in
2015 and 2014, respectively.Consolidated equity compensation
expense included in both reported and adjusted results is $33.2 and
$30.5 in 2015 and 2014, respectively.Certain pre-acquisition equity
awards of Life Technologies were converted to rights to receive
future cash payments over the remaining vesting period. In addition
to the equity compensation expense noted above, reported and
adjusted results in 2015 and 2014 include $4.3 and $8.5,
respectively, of expense for such cash payments.
Consolidated Statement of Income
(a)(b) Year Ended December 31, % of December 31, % of (In
millions except per share amounts) 2015 Revenues 2014 Revenues
Revenues $ 16,965.4 $ 16,889.6 Costs and
Operating Expenses: Cost of revenues (c) 8,782.7 51.8 % 8,970.6
53.1 % Selling, general and administrative expenses (d) 3,724.1
22.0 % 3,991.4 23.6 % Amortization of acquisition-related
intangible assets 1,314.8 7.7 % 1,331.7 7.9 % Research and
development expenses 692.3 4.1 % 691.1 4.1 % Restructuring and
other costs (income), net (e) 115.3 0.7 % (598.2 ) -3.5 %
14,629.2 86.2 % 14,386.6 85.2 % Operating
Income 2,336.2 13.8 % 2,503.0 14.8 % Interest Income 30.6 47.7
Interest Expense (414.9 ) (479.9 ) Other (Expense) Income, Net (f)
(15.5 ) 16.4 Income Before Income Taxes 1,936.4
2,087.2 Benefit from (Provision for) Income Taxes (g) 43.9
(191.7 ) Income from Continuing Operations 1,980.3 1,895.5
Loss from Discontinued Operations, Net of Tax (4.9 ) (1.1 )
Net Income $ 1,975.4 11.6 % $ 1,894.4 11.2 %
Earnings per Share from Continuing Operations: Basic $ 4.97
$ 4.76 Diluted $ 4.93 $ 4.71
Earnings per Share: Basic $ 4.96 $ 4.76 Diluted $
4.92 $ 4.71 Weighted Average Shares: Basic
398.7 398.2 Diluted 401.9 402.3
Reconciliation of Adjusted Operating Income and Adjusted
Operating Margin GAAP Operating Income (a) $ 2,336.2 13.8 %
2,503.0 14.8 % Cost of Revenues Charges (c) 9.1 0.0 % 327.6 1.9 %
Selling, General and Administrative Charges, Net (d) 46.3 0.3 %
130.7 0.8 % Restructuring and Other Costs (Income), Net (e) 115.3
0.7 % (598.2 ) -3.5 % Amortization of Acquisition-related
Intangible Assets 1,314.8 7.7 % 1,331.7 7.9 %
Adjusted Operating Income (b) $ 3,821.7 22.5 % 3,694.8
21.9 %
Reconciliation of Adjusted Net Income
GAAP Net Income (a) $ 1,975.4 11.6 % $ 1,894.4 11.2 % Cost of
Revenues Charges (c) 9.1 0.0 % 327.6 1.9 % Selling, General and
Administrative Charges, Net (d) 46.3 0.3 % 130.7 0.8 %
Restructuring and Other Costs (Income), Net (e) 115.3 0.7 % (598.2
) -3.5 % Amortization of Acquisition-related Intangible Assets
1,314.8 7.7 % 1,331.7 7.9 % Other Expense (Income), Net (f) 21.5
0.2 % (3.1 ) 0.0 % Provision for Income Taxes (g) (515.8 ) -3.0 %
(283.3 ) -1.7 % Discontinued Operations, Net of Tax 4.9 0.0
% 1.1 0.0 % Adjusted Net Income (b) $ 2,971.5
17.5 % $ 2,800.9 16.6 %
Reconciliation of Adjusted
Earnings per Share GAAP EPS (a) $ 4.92 $ 4.71 Cost of Revenues
Charges, Net of Tax (c) 0.01 0.55
Selling, General and Administrative
Charges, Net of Tax (d)
0.05 0.24
Restructuring and Other Costs (Income),
Net of Tax (e)
0.19 (0.79 ) Amortization of Acquisition-related Intangible Assets,
Net of Tax 2.27 2.27
Other Expense (Income), Net of Tax (f)
0.03 (0.01 ) Provision for Income Taxes (g) (0.09 ) (0.01 )
Discontinued Operations, Net of Tax
0.01
—
Adjusted EPS (b) $ 7.39 $ 6.96
Reconciliation of Free Cash Flow GAAP Net Cash Provided by
Operating Activities (a) $ 2,816.9 $ 2,619.6 Net Cash Used in
Discontinued Operations 8.7 4.3 Purchases of Property, Plant and
Equipment (422.9 ) (427.6 ) Proceeds from Sale of Property, Plant
and Equipment 18.1 49.3 Free Cash Flow $
2,420.8 $ 2,245.6
Segment Data Year Ended December 31, % of December 31, % of
(In millions) 2015 Revenues 2014 Revenues
Revenues
Life Sciences Solutions $ 4,439.4 26.2 % $ 4,195.7 24.8 %
Analytical Instruments 3,208.2 18.9 % 3,252.2 19.3 % Specialty
Diagnostics 3,243.9 19.1 % 3,343.6 19.8 % Laboratory Products and
Services 6,661.5 39.3 % 6,601.5 39.1 % Eliminations (587.6 ) -3.5 %
(503.4 ) -3.0 % Consolidated Revenues $ 16,965.4
100.0 % $ 16,889.6 100.0 %
Operating Income and
Operating Margin Life Sciences Solutions $ 1,336.9 30.1 % $
1,214.9 29.0 % Analytical Instruments 612.8 19.1 % 581.1 17.9 %
Specialty Diagnostics 872.9 26.9 % 916.0 27.4 % Laboratory Products
and Services 999.1 15.0 % 982.8 14.9 %
Subtotal Reportable Segments 3,821.7 22.5 % 3,694.8 21.9 %
Cost of Revenues Charges (c) (9.1 ) 0.0 % (327.6 ) -1.9 % Selling,
General and Administrative Charges, Net (d) (46.3 ) -0.3 % (130.7 )
-0.8 % Restructuring and Other (Costs) Income, Net (e) (115.3 )
-0.7 % 598.2 3.5 % Amortization of Acquisition-related Intangible
Assets (1,314.8 ) -7.7 % (1,331.7 ) -7.9 % GAAP Operating
Income (a) $ 2,336.2 13.8 % $ 2,503.0 14.8 %
(a) "GAAP" (reported) results were determined in accordance with
U.S. generally accepted accounting principles (GAAP).(b) Adjusted
results are non-GAAP measures and, for income measures, exclude
certain charges to cost of revenues (see note (c) for details);
certain credits/charges to selling, general and administrative
expenses (see note (d) for details); amortization of
acquisition-related intangible assets; restructuring and other
costs, net (see note (e) for details); certain other gains or
losses that are either isolated or cannot be expected to occur
again with any regularity or predictability (see note (f) for
details); and the tax consequences of the preceding items and
certain other tax items (see note (g) for details).(c) Reported
results in 2015 and 2014 include i) $6.9 and $303.4, respectively,
of charges for the sale of inventories revalued at the date of
acquisition and ii) $2.2 and $2.8, respectively, of accelerated
depreciation on manufacturing assets to be abandoned due to
facility consolidations. Reported results in 2014 also include a
charge of $21.4 to conform the accounting policies of Life
Technologies with the company's accounting policies.(d) Reported
results in 2015 and 2014 include i) $12.2 and $100.5, respectively,
of third-party transaction/integration costs primarily related to
the acquisitions of Life Technologies and in 2015, Alfa Aesar; ii)
charges of $19.4 and $5.2, respectively, associated with product
liability litigation; iii) $(2.8) and $8.2, respectively, of
(gains)/charges for changes in estimates of contingent
consideration for acquisitions and iv) $17.5 and $0.6,
respectively, of accelerated depreciation on fixed assets to be
abandoned due to integration synergies. Reported results in 2014
also include a charge of $16.2 to conform the accounting policies
of Life Technologies with the company's accounting policies.(e)
Reported results in 2015 and 2014 include restructuring and other
costs, net, consisting principally of severance, abandoned facility
and other expenses of headcount reductions within several
businesses and real estate consolidations. Reported results in 2015
include gains of $11.2 on the sale of product lines and real
estate, charges of $20.0 for litigation at an acquired business,
$14.9 of impairment of acquired technology in development, and $5.0
of cash compensation contractually due to employees of an acquired
business on the date of acquisition. Reported results in 2014
include gains of $895.4 on the sale of businesses, principally the
sera and media, gene modulation and magnetic beads businesses and
the Cole-Parmer business, and a charge of $91.7 for cash
compensation to monetize certain equity awards held by Life
Technologies employees at the date of acquisition.(f) Reported
results in 2015 and 2014 include i) $0.1 and $6.3, respectively, of
net gains from investments and ii) $2.2 and $2.2, respectively, of
amortization of acquisition-related intangible assets of the
company's equity-method investments. Reported results in 2015 also
include $7.5 of costs associated with entering into interest rate
swap arrangements and losses of $11.9 on the early extinguishment
of debt. Reported results in 2014 also include $1.0 of charges
related to amortization of fees paid to obtain financing
commitments related to the Life Technologies acquisition.(g)
Reported provision for income taxes includes i) $478.3 and $277.8
of incremental tax benefit in 2015 and 2014, respectively, for the
pre-tax reconciling items between GAAP and adjusted net income; and
ii) in 2015 and 2014, $37.5 and $5.5, respectively, of incremental
tax benefit from adjusting the company's deferred tax balances as a
result of tax rate changes.
Notes:Consolidated depreciation expense is $373.4 and $353.1 in
2015 and 2014, respectively.Consolidated equity compensation
expense included in both reported and adjusted results is $125.0
and $117.1 in 2015 and 2014, respectively.Certain pre-acquisition
equity awards of Life Technologies were converted to rights to
receive future cash payments over the remaining vesting period. In
addition to the equity compensation expense noted above, reported
and adjusted results in 2015 and 2014 include $22.4 and $34.8,
respectively, of expense for such cash payments.
Condensed Consolidated Balance Sheet
December 31, December 31, (In millions) 2015 2014
Assets Current Assets: Cash and cash equivalents $ 452.1 $
1,343.5 Accounts receivable, net 2,544.9 2,473.6 Inventories
1,991.7 1,859.5 Other current assets 663.7 863.2
Total current assets 5,652.4 6,539.8 Property, Plant
and Equipment, Net 2,448.8 2,426.5
Acquisition-related Intangible Assets 12,758.3 14,110.1
Other Assets 1,312.0 933.1 Goodwill 18,827.6
18,842.6 Total Assets $ 40,999.1 $ 42,852.1
Liabilities and Shareholders' Equity Current
Liabilities: Short-term obligations and current maturities of
long-term obligations $ 1,052.8 $ 2,212.4 Other current liabilities
3,048.4 3,137.4 Total current liabilities 4,101.2
5,349.8 Other Long-term Liabilities 4,030.0
4,602.6 Long-term Obligations 11,473.9 12,351.6
Total Shareholders' Equity 21,394.0 20,548.1
Total Liabilities and Shareholders' Equity $ 40,999.1 $
42,852.1
Condensed Consolidated Statement
of Cash Flows Year Ended December 31, December 31, (In
millions) 2015 2014
Operating Activities Net income $
1,975.4 $ 1,894.4 Loss from discontinued operations 4.9 1.1
Income from continuing operations 1,980.3 1,895.5
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 1,688.2 1,684.8
Change in deferred income taxes (511.8 ) (621.8 ) Net gains on sale
of businesses (7.6 ) (895.4 ) Other non-cash expenses, net 126.4
392.9 Changes in assets and liabilities, excluding the effects of
acquisitions and dispositions (449.9 ) 167.9 Net cash
provided by continuing operations 2,825.6 2,623.9 Net cash used in
discontinued operations (8.7 ) (4.3 ) Net cash provided by
operating activities 2,816.9 2,619.6
Investing Activities Acquisitions, net of cash acquired
(694.6 ) (13,060.1 ) Purchases of property, plant and equipment
(422.9 ) (427.6 ) Proceeds from sale of property, plant and
equipment 18.1 49.3 Proceeds from sale of businesses, net of cash
divested — 1,521.8 Other investing activities, net 12.0
133.9 Net cash used in investing activities (1,087.4
) (11,782.7 )
Financing Activities Net proceeds from
issuance of debt 1,798.0 6,592.3 Repayment of long-term obligations
(3,780.2 ) (4,429.4 ) Increase (decrease) in commercial paper, net
49.5 (249.9 ) Decrease in short-term notes payable — (36.6 )
Purchases of company common stock (500.0 ) — Dividends paid (240.6
) (234.8 ) Net proceeds from issuance of company common stock —
2,942.0 Net proceeds from issuance of company common stock under
employee stock plans 124.0 155.4 Tax benefits from stock-based
compensation awards 64.1 65.6 Other financing activities, net (6.1
) (8.5 ) Net cash (used in) provided by financing activities
(2,491.3 ) 4,796.1 Exchange Rate Effect on Cash
(129.6 ) (115.5 ) Decrease in Cash and Cash Equivalents
(891.4 ) (4,482.5 ) Cash and Cash Equivalents at Beginning of
Period 1,343.5 5,826.0 Cash and Cash
Equivalents at End of Period $ 452.1 $ 1,343.5
Free Cash Flow (a)(b) $ 2,420.8 $ 2,245.6
(a) Free cash flow is net cash provided by operating activities
of continuing operations less net purchases of property, plant and
equipment.(b) Free cash flow in 2014 was reduced by $325.1 of cash
outlays related to the acquisition of Life Technologies including
monetizing certain equity awards, severance obligations and
third-party transaction/integration costs.
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version on businesswire.com: http://www.businesswire.com/news/home/20160128005181/en/
Thermo Fisher Scientific Inc.Media Contact Information:Karen
Kirkwood,
781-622-1306karen.kirkwood@thermofisher.comwww.thermofisher.comorInvestor
Contact Information:Ken Apicerno,
781-622-1294ken.apicerno@thermofisher.com
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