Raises Full-year Revenue and Earnings
Guidance
Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in
serving science, today reported its financial results for the third
quarter of 2015, ended September 26, 2015.
Third Quarter 2015 Highlights
- Grew adjusted earnings per share (EPS)
by 5% to $1.80.
- Delivered revenue of $4.12
billion.
- Expanded adjusted operating margin by
70 basis points to 22.6%.
- Launched Ion S5 and Ion S5 XL to enable
targeted next-generation sequencing, including gene panels as well
as small genomes, exomes, transcriptomes and custom assays, on a
single platform.
- Strengthened clinical offering by
introducing a range of new Thermo Scientific products at AACC,
including new immunodiagnostic tests and instruments, and a
high-throughput HPLC; obtained CE marks for clinical use of HPLC,
mass spectrometry and related software in Europe.
- Achieved strong revenue growth in
China, driven by customer demand in biopharma, environmental and
food safety markets.
- Completed acquisition of Alfa Aesar for
approximately $400 million just after quarter end, giving research
customers access to a broader offering of laboratory chemicals,
solvents and reagents.
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.”
“We’re pleased to deliver another quarter of solid financial
performance,” said Marc N. Casper, president and chief executive
officer of Thermo Fisher Scientific. “We continued to leverage our
scale in key geographic markets to drive growth, and reported
another strong quarter in China. We also made further progress in
capturing revenue synergies by demonstrating the strength of our
customer value proposition.
“Our strategic R&D investments are creating significant
value for our customers, with a number of innovative new products
introduced across our businesses. For example, in next-generation
sequencing we launched the new Ion S5 and S5 XL benchtop systems,
which provide a cost-effective, flexible platform that supports
multiple applications. For our clinical customers, we introduced a
range of products that help deliver test results faster and more
accurately. Among the highlights were the Phadia 2500E Laboratory
System, several EliA autoimmune assays and the Prelude LX-4 MD for
high-throughput HPLC analysis.
“In terms of capital deployment, we recently completed the
acquisition of Alfa Aesar to strengthen our customer offering. We
also continued to pay down debt and made good progress toward
achieving our target leverage.”
Casper concluded, “With a strong nine months behind us, we’re on
track to achieve our growth goals for the year.”
Third Quarter 2015
For the third quarter of 2015, adjusted EPS grew 5% to $1.80,
versus $1.71 in the third quarter of 2014. Revenue for the quarter
was $4.12 billion versus $4.17 billion in the third quarter of
2014. Organic revenue growth was 4%; currency translation reduced
revenue by 6% and acquisitions, net of divestitures, increased
revenue slightly. Adjusted operating income for the third quarter
of 2015 increased 2% compared with the year-ago quarter, and
adjusted operating margin expanded to 22.6%, compared with 21.9% in
the third quarter of 2014.
GAAP diluted EPS in 2015 was $1.18, versus $1.17 in the same
quarter last year. GAAP operating income for the third quarter of
2015 was $563 million, compared with $640 million in 2014. GAAP
operating margin was 13.7%, compared with 15.3% in the 2014
quarter. The 2014 period included a gain on the sale of the
Cole-Parmer business.
2015 Guidance Update
Thermo Fisher is raising its full-year 2015 revenue and adjusted
EPS guidance primarily to reflect current foreign currency exchange
rates and the addition of Alfa Aesar. The company now expects
revenue for 2015 to be in the range of $16.81 to $16.91 billion,
compared with its previous guidance of $16.72 to $16.86 billion.
Thermo Fisher is also raising adjusted EPS guidance to a new range
of $7.33 to $7.41 from the $7.28 to $7.41 previously announced, for
5% to 6% growth over 2014.
The 2015 guidance does not include any future acquisitions or
divestitures and is based on current foreign exchange rates. In
addition, the adjusted EPS estimate excludes amortization expense
for acquisition-related intangible assets and certain other items
detailed later in this press release under the heading “Use of
Non-GAAP Financial Measures.”
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 third quarter of 2015, Life Sciences Solutions Segment
revenue grew to $1.08 billion, compared with revenue of $1.07
billion in the third quarter of 2014. Segment adjusted operating
margin increased to 30.8%, compared with 28.6% in the 2014
quarter.
Analytical Instruments Segment
Analytical Instruments Segment revenue was $779 million in the
third quarter of 2015, compared with revenue of $786 million in the
third quarter of 2014. Segment adjusted operating margin increased
to 18.8%, versus 17.5% in the 2014 quarter.
Specialty Diagnostics Segment
In the third quarter of 2015, Specialty Diagnostics Segment
revenue was $777 million, compared with revenue of $812 million in
the third quarter of 2014. Segment adjusted operating margin was
26.4%, compared with 27.6% in the year-ago quarter.
Laboratory Products and Services Segment
Laboratory Products and Services Segment revenue grew to $1.64
billion in the third quarter of 2015, compared with revenue of
$1.63 billion in the 2014 quarter. Segment adjusted operating
margin increased to 15.2%, versus 15.1% in the 2014 quarter.
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
2015, based on acquisitions closed through the end of the third
quarter, 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, significant litigation-related matters, 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, October 21, 2015, 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, November 6, 2015.
About Thermo Fisher Scientific
Thermo Fisher Scientific Inc. (NYSE: TMO) is the world
leader in serving science, with revenues of $17
billion and approximately 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 the Life Technologies
acquisition 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 June 27,
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
(unaudited) (a)(b) Three Months Ended September 26, % of
September 27, % of (In millions except per share amounts)
2015 Revenues 2014
Revenues Revenues $ 4,123.2 $ 4,171.4 Costs
and Operating Expenses: Cost of revenues (c) 2,132.2 51.7 % 2,127.0
51.0 % Selling, general and administrative expenses (d) 911.1 22.1
% 976.6 23.4 % Amortization of acquisition-related intangible
assets 329.9 8.0 % 362.9 8.7 % Research and development expenses
171.6 4.2 % 175.2 4.2 % Restructuring and other costs (income), net
(e) 15.5 0.3 % (110.6 ) -2.7 % 3,560.3
86.3 % 3,531.1 84.7 % Operating Income
562.9 13.7 % 640.3 15.3 % Interest Income 7.2 10.5 Interest Expense
(100.6 ) (116.8 ) Other (Expense) Income, Net (f) (1.4 )
5.2 Income Before Income Taxes 468.1 539.2
Benefit from (Provision for) Income Taxes (g) 9.2
(69.3 ) Income from Continuing Operations 477.3 469.9
(Loss) Gain from Discontinued Operations, Net of Tax
(1.2 ) 1.7 Net Income $ 476.1 11.5 % $
471.6 11.3 % Earnings per Share from Continuing
Operations: Basic $ 1.20 $ 1.17 Diluted $ 1.19
$ 1.16 Earnings per Share: Basic $ 1.19
$ 1.18 Diluted $ 1.18 $ 1.17
Weighted Average Shares: Basic 399.0
399.9 Diluted 402.0 403.7
Reconciliation of Adjusted Operating Income and Adjusted
Operating Margin GAAP Operating Income (a) $ 562.9 13.7 % $
640.3 15.3 % Cost of Revenues Charges (c) 0.8 0.0 % 2.1 0.1 %
Selling, General and Administrative Costs, Net (d) 24.6 0.6 % 20.3
0.5 % Restructuring and Other Costs (Income), Net (e) 15.5 0.3 %
(110.6 ) -2.7 % Amortization of Acquisition-related Intangible
Assets 329.9 8.0 % 362.9 8.7 %
Adjusted Operating Income (b) $ 933.7 22.6 % $ 915.0
21.9 %
Reconciliation of Adjusted Net Income GAAP Net
Income (a) $ 476.1 11.5 % $ 471.6 11.3 % Cost of Revenues Charges
(c) 0.8 0.0 % 2.1 0.1 % Selling, General and Administrative Costs,
Net (d) 24.6 0.6 % 20.3 0.5 % Restructuring and Other Costs
(Income), Net (e) 15.5 0.3 % (110.6 ) -2.7 % Amortization of
Acquisition-related Intangible Assets 329.9 8.0 % 362.9 8.7 % Other
Expense (Income), Net (f) 3.6 0.1 % (3.6 ) -0.1 % Provision for
Income Taxes (g) (127.2 ) -3.0 % (50.7 ) -1.2 % Discontinued
Operations, Net of Tax 1.2 0.1 % (1.7 ) -0.1 %
Adjusted Net Income (b) $ 724.5 17.6 % $ 690.3
16.5 %
Reconciliation of Adjusted Earnings per Share
GAAP EPS (a) $ 1.18 $ 1.17 Cost of Revenues Charges, Net of Tax (c)
- (0.04 ) Selling, General and Administrative Costs, Net of Tax (d)
0.02 0.02 Restructuring and Other Costs (Income), Net of Tax (e)
0.03 - Amortization of Acquisition-related Intangible Assets, Net
of Tax 0.56 0.57 Other Expense (Income), Net of Tax (f) 0.01 (0.01
) Discontinued Operations, Net of Tax - -
Adjusted EPS (b) $ 1.80 $ 1.71
Reconciliation of Free Cash Flow GAAP Net Cash Provided by
Operating Activities (a) $ 743.9 $ 676.0 Net Cash Used in
Discontinued Operations 3.7 1.6 Purchases of Property, Plant and
Equipment (101.0 ) (90.7 ) Proceeds from Sale of Property, Plant
and Equipment 1.3 7.0 Free Cash
Flow (h) $ 647.9 $ 593.9
Segment
Data Three Months Ended September 26, % of
September 27, % of (In millions) 2015
Revenues 2014 Revenues
Revenues Life Sciences Solutions $ 1,080.4 26.2 % $ 1,071.9
25.7 % Analytical Instruments 778.5 18.9 % 786.5 18.9 % Specialty
Diagnostics 776.9 18.8 % 811.8 19.5 % Laboratory Products and
Services 1,638.2 39.7 % 1,628.7 39.0 % Eliminations (150.8 )
-3.6 % (127.5 ) -3.1 % Consolidated Revenues $
4,123.2 100.0 % $ 4,171.4 100.0 %
Operating
Income and Operating Margin Life Sciences Solutions $ 332.7
30.8 % $ 306.3 28.6 % Analytical Instruments 146.5 18.8 % 137.8
17.5 % Specialty Diagnostics 204.9 26.4 % 224.3 27.6 % Laboratory
Products and Services 249.6 15.2 % 246.6
15.1 % Subtotal Reportable Segments 933.7 22.6 %
915.0 21.9 % Cost of Revenues Charges (c) (0.8 ) 0.0 % (2.1
) -0.1 % Selling, General and Administrative Costs, Net (d) (24.6 )
-0.6 % (20.3 ) -0.5 % Restructuring and Other (Costs) Income, Net
(e) (15.5 ) -0.3 % 110.6 2.7 % Amortization of Acquisition-related
Intangible Assets (329.9 ) -8.0 % (362.9 ) -8.7 %
GAAP Operating Income (a) $ 562.9 13.7 % $ 640.3
15.3 %
(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 $0.8 and $1.3,
respectively, of accelerated depreciation on manufacturing assets
to be abandoned due to facility consolidations. Reported results in
2014 include $0.8 of charges for the sale of inventories revalued
at the date of acquisition.
(d) Reported results in 2015 and 2014 include i) charges of
$19.4 and $5.2, respectively, associated with product liability
litigation, ii) $0.2 and $10.7, respectively, of third-party
transaction/integration costs related to recent acquisitions and
iii) $(2.1) and $4.4, respectively, of (gains)/charges for changes
in estimates of contingent consideration for acquisitions. Reported
results in 2015 also include $7.1 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 2014
include a net gain of $132.6 on the sale of the Cole-Parmer
business.
(f) Reported results in 2015 and 2014 include $0.5 and $0.5,
respectively, of amortization of acquisition-related intangible
assets of the company's equity-method investments. Reported results
in 2015 also include a loss of $3.1 on the early extinguishment of
debt. Reported results in 2014 include a $4.1 gain on an equity
investment.
(g) Reported provision for income taxes includes i) $128.1 and
$50.6 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, $0.9 and $(0.1), respectively, of
incremental tax provision/(benefit) from adjusting the company's
deferred tax balances as a result of tax rate changes.
Notes:
Consolidated depreciation expense is $97.8 and $92.8 in 2015 and
2014, respectively.
Consolidated equity compensation expense included in both
reported and adjusted results is $32.5 and $30.6 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 $4.2 and $9.2, respectively, of expense for such cash
payments.
Consolidated Statement of Income
(unaudited) (a)(b) Nine Months Ended September 26, % of
September 27, % of (In millions except per share amounts)
2015 Revenues 2014
Revenues Revenues $ 12,312.9 $ 12,396.8 Costs
and Operating Expenses: Cost of revenues (c) 6,342.8 51.5 % 6,679.8
53.9 % Selling, general and administrative expenses (d) 2,755.4
22.4 % 2,984.0 24.1 % Amortization of acquisition-related
intangible assets 988.8 8.0 % 992.4 8.0 % Research and development
expenses 512.0 4.2 % 508.6 4.1 % Restructuring and other costs
(income), net (e) 67.9 0.6 % (631.9 ) -5.1 %
10,666.9 86.6 % 10,532.9 85.0 %
Operating Income 1,646.0 13.4 % 1,863.9 15.0 % Interest Income 21.9
38.4 Interest Expense (311.9 ) (363.7 ) Other (Expense) Income, Net
(f) (2.3 ) 11.5 Income Before Income
Taxes 1,353.7 1,550.1 Benefit from (Provision for) Income Taxes (g)
20.3 (258.6 ) Income from Continuing
Operations 1,374.0 1,291.5 (Loss) Gain from Discontinued
Operations, Net of Tax (1.2 ) 1.7 Net
Income $ 1,372.8 11.1 % $ 1,293.2 10.4 %
Earnings per Share from Continuing Operations: Basic $ 3.45
$ 3.25 Diluted $ 3.42 $ 3.21
Earnings per Share: Basic $ 3.45 $ 3.25
Diluted $ 3.42 $ 3.22 Weighted Average Shares:
Basic 398.4 397.5 Diluted
401.7 401.7
Reconciliation of
Adjusted Operating Income and Adjusted Operating Margin GAAP
Operating Income (a) $ 1,646.0 13.4 % $ 1,863.9 15.0 % Cost of
Revenues Charges (c) 2.5 0.0 % 326.7 2.6 % Selling, General and
Administrative Costs, Net (d) 35.4 0.3 % 118.0 1.0 % Restructuring
and Other Costs (Income), Net (e) 67.9 0.6 % (631.9 ) -5.1 %
Amortization of Acquisition-related Intangible Assets 988.8
8.0 % 992.4 8.0 % Adjusted Operating
Income (b) $ 2,740.6 22.3 % $ 2,669.1 21.5 %
Reconciliation of Adjusted Net Income GAAP Net Income (a) $
1,372.8 11.1 % $ 1,293.2 10.4 % Cost of Revenues Charges (c) 2.5
0.0 % 326.7 2.6 % Selling, General and Administrative Costs, Net
(d) 35.4 0.3 % 118.0 1.0 % Restructuring and Other Costs (Income),
Net (e) 67.9 0.6 % (631.9 ) -5.1 % Amortization of
Acquisition-related Intangible Assets 988.8 8.0 % 992.4 8.0 % Other
Expense (Income), Net (f) 15.2 0.1 % (6.8 ) -0.1 % Provision for
Income Taxes (g) (365.2 ) -2.9 % (93.7 ) -0.7 % Discontinued
Operations, Net of Tax 1.2 0.0 % (1.7 ) 0.0 %
Adjusted Net Income (b) $ 2,118.6 17.2 % $ 1,996.2
16.1 %
Reconciliation of Adjusted Earnings per
Share GAAP EPS (a) $ 3.42 $ 3.22 Cost of Revenues Charges, Net
of Tax (c) - 0.59 Selling, General and Administrative Costs, Net of
Tax (d) 0.04 0.21 Restructuring and Other Costs (Income), Net of
Tax (e) 0.11 (0.81 ) Amortization of Acquisition-related Intangible
Assets, Net of Tax 1.71 1.80 Other Expense (Income), Net of Tax (f)
0.02 (0.01 ) Provision for Income Taxes (g) (0.03 ) (0.03 )
Discontinued Operations, Net of Tax - -
Adjusted EPS (b) $ 5.27 $ 4.97
Reconciliation of Free Cash Flow GAAP Net Cash Provided by
Operating Activities (a) $ 1,588.8 $ 1,665.9 Net Cash Used in
Discontinued Operations 8.0 3.5 Purchases of Property, Plant and
Equipment (293.5 ) (270.9 ) Proceeds from Sale of Property, Plant
and Equipment 7.5 19.7 Free Cash
Flow (h) $ 1,310.8 $ 1,418.2
Segment
Data Nine Months Ended September 26, % of
September 27, % of (In millions) 2015
Revenues 2014 Revenues
Revenues Life Sciences Solutions $ 3,229.6 26.2 % $ 3,010.5
24.3 % Analytical Instruments 2,282.9 18.5 % 2,349.8 19.0 %
Specialty Diagnostics 2,379.2 19.3 % 2,480.6 20.0 % Laboratory
Products and Services 4,844.9 39.3 % 4,918.6 39.7 % Eliminations
(423.7 ) -3.3 % (362.7 ) -3.0 % Consolidated
Revenues $ 12,312.9 100.0 % $ 12,396.8 100.0 %
Operating Income and Operating Margin Life Sciences
Solutions $ 954.9 29.6 % $ 850.0 28.2 % Analytical Instruments
407.8 17.9 % 399.1 17.0 % Specialty Diagnostics 646.2 27.2 % 681.7
27.5 % Laboratory Products and Services 731.7 15.1 %
738.3 15.0 % Subtotal Reportable Segments
2,740.6 22.3 % 2,669.1 21.5 % Cost of Revenues Charges (c)
(2.5 ) 0.0 % (326.7 ) -2.6 % Selling, General and Administrative
Costs, Net (d) (35.4 ) -0.3 % (118.0 ) -1.0 % Restructuring and
Other (Costs) Income, Net (e) (67.9 ) -0.6 % 631.9 5.1 %
Amortization of Acquisition-related Intangible Assets (988.8
) -8.0 % (992.4 ) -8.0 % GAAP Operating Income (a) $
1,646.0 13.4 % $ 1,863.9 15.0 %
(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) $0.7 and
$303.1, respectively, of charges for the sale of inventories
revalued at the date of acquisition and ii) $1.8 and $2.2,
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) $7.7 and $88.6,
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; and iii) $(2.6) and
$8.0, respectively, of (gains)/charges for changes in estimates of
contingent consideration for acquisitions. Reported results in 2015
also include $10.9 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 a gain of $7.6 on the sale of a product line, $5.0 of cash
compensation contractually due to employees of an acquired business
on the date of acquisition, a charge of $3.5 for settlement of
litigation at an acquired business and a $0.9 charge associated
with a previous sale of a business. Reported results in 2014
include gains of $894.4 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 $1.6 and $1.6,
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 $6.1 on the early
extinguishment of debt. Reported results in 2014 also include $9.4
of net gains from investments, offset in part by $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) $351.7 and
$83.0 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, $13.5 and $10.7, respectively, of
incremental tax benefit from adjusting the company's deferred tax
balances as a result of tax rate changes.
(h) Free cash flow in 2014 was reduced by $308.8 of cash outlays
related to the acquisition of Life Technologies including
monetizing certain equity awards, severance obligations and
third-party transaction/integration costs.
Notes:
Consolidated depreciation expense is $274.9 and $263.7 in 2015
and 2014, respectively.
Consolidated equity compensation expense included in both
reported and adjusted results is $91.8 and $86.6 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 $18.1 and $26.3, respectively, of expense for such cash
payments.
Condensed Consolidated Balance Sheet
(unaudited) September 26, December 31, (In millions)
2015 2014
Assets Current
Assets: Cash and cash equivalents $ 503.4 $ 1,343.5 Short-term
investments 2.0 8.5 Accounts receivable, net 2,543.9 2,473.6
Inventories 1,987.2 1,859.5 Other current assets 989.4
854.7 Total current assets 6,025.9
6,539.8 Property, Plant and Equipment, Net 2,392.2
2,426.5 Acquisition-related Intangible Assets
13,015.1 14,110.1 Other Assets 967.6
933.1 Goodwill 18,746.3 18,842.6 Total
Assets $ 41,147.1 $ 42,852.1
Liabilities and
Shareholders' Equity Current Liabilities: Short-term
obligations and current maturities of long-term obligations $
3,034.0 $ 2,212.4 Other current liabilities 2,701.1
3,137.4 Total current liabilities 5,735.1
5,349.8 Other Long-term Liabilities 4,283.9
4,602.6 Long-term Obligations 10,277.9
12,351.6 Total Shareholders' Equity 20,850.2
20,548.1 Total Liabilities and Shareholders' Equity $
41,147.1 $ 42,852.1
Condensed Consolidated
Statement of Cash Flows (unaudited) Nine
Months Ended September 26, September 27, (In millions)
2015 2014
Operating
Activities Net income $ 1,372.8 $ 1,293.2 Loss (gain) from
discontinued operations 1.2 (1.7 ) Income from
continuing operations 1,374.0 1,291.5 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,263.7 1,256.1 Change in deferred
income taxes (285.9 ) (583.8 ) Net gains on sale of businesses (7.6
) (894.4 ) Other non-cash expenses, net 76.4 356.4
Changes in assets and liabilities,
excluding the effects of acquisitions and dispositions
(823.8 ) 243.6 Net cash provided by
continuing operations 1,596.8 1,669.4 Net cash used in discontinued
operations (8.0 ) (3.5 ) Net cash provided by
operating activities 1,588.8 1,665.9
Investing Activities Acquisitions, net of cash
acquired (306.0 ) (13,056.1 ) Purchases of property, plant and
equipment (293.5 ) (270.9 ) Proceeds from sale of property, plant
and equipment 7.5 19.7 Proceeds from sale of businesses, net of
cash divested - 1,520.0 Other investing activities, net 16.0
130.6 Net cash used in investing
activities (576.0 ) (11,656.7 )
Financing
Activities Net proceeds from issuance of debt 542.8 4,999.6
Repayment of long-term obligations (2,481.0 ) (3,430.3 ) Increase
in commercial paper, net 725.5 212.2 Decrease in short-term notes
payable - (28.2 ) Purchases of company common stock (500.0 ) -
Dividends paid (180.7 ) (174.8 ) Net proceeds from issuance of
company common stock - 2,942.0 Net proceeds from issuance of
company common stock under employee stock plans 96.6 132.7 Tax
benefits from stock-based compensation awards 55.6 61.1 Other
financing activities, net (5.9 ) (7.5 ) Net
cash (used in) provided by financing activities (1,747.1 )
4,706.8 Exchange Rate Effect on Cash
(105.8 ) (7.7 ) Decrease in Cash and Cash Equivalents
(840.1 ) (5,291.7 ) Cash and Cash Equivalents at Beginning of
Period 1,343.5 5,826.0 Cash and
Cash Equivalents at End of Period $ 503.4 $ 534.3
Free Cash Flow (a)(b) $ 1,310.8 $ 1,418.2
(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 $308.8 of cash outlays
related to the acquisition of Life Technologies including
monetizing certain equity awards, severance obligations and
third-party transaction/integration costs.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151021005168/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
Thermo Fisher Scientific (NYSE:TMO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Thermo Fisher Scientific (NYSE:TMO)
Historical Stock Chart
From Apr 2023 to Apr 2024