WALTHAM, Mass., April 24 /PRNewswire-FirstCall/ -- Thermo Fisher
Scientific Inc. (NYSE: TMO), the world leader in serving science, reported
that revenues increased 9% to a record $2.55 billion in the first quarter
of 2008, over $2.34 billion in the 2007 quarter. Currency translation
increased revenues by 4%, and acquisitions, net of divestitures, increased
revenues by 1%. GAAP diluted earnings per share (EPS) were $.53 in 2008,
versus $.31 in the year-ago period. GAAP operating income for the 2008
quarter was $290.4 million, compared with $192.4 million in 2007, and GAAP
operating margin was 11.4%, compared with 8.2% a year ago. GAAP results
reflect improved operating performance and, to a lesser extent, charges in
the 2007 period related to the merger with Fisher Scientific.
Adjusted EPS grew 25% to $.74 in the first quarter of 2008, over $.59
in the 2007 quarter. Adjusted operating income for the 2008 quarter
increased 19% versus 2007 results, and adjusted operating margin expanded
140 basis points to 17.5%, compared with adjusted operating margin of 16.1%
in the 2007 period. Adjusted EPS, adjusted operating income and adjusted
operating margin are non-GAAP measures that exclude certain items detailed
later in this press release under the heading "Use of Non-GAAP Financial
Measures."
Highlights
-- Revenues grew 9%
-- Adjusted EPS rose 25%
-- Adjusted operating income increased 19%
-- Adjusted operating margin expanded 140 basis points
-- New products showcased at Pittcon and Analytica broaden applications
for mass spectrometry and molecular and elemental spectroscopy
technologies
-- Breakthrough siRNA platform launched to accelerate life sciences
research
-- Received FDA clearance for new MRSA diagnostic test to protect hospital
patients
-- First Fisher Scientific Chinese-language catalog introduced to serve
those markets
"We delivered excellent financial performance in the quarter, with a
25% increase in adjusted EPS and 140 basis points of adjusted operating
margin expansion even though our growth was somewhat affected by having
fewer days in the quarter," said Marijn E. Dekkers, president and chief
executive officer of Thermo Fisher Scientific. "Recognizing that there is
economic uncertainty in the world today, we remain confident that our
balanced mix of markets, geographies, products and services puts us in a
strong position to deliver on our financial goals for 2008.
"We announced a number of new developments in the quarter that fortify
our position as the world leader in serving science. Under our Thermo
Scientific brand, we launched exciting new instrumentation that simplifies
sophisticated analytical technologies so non-experts can use them for a
broader range of applications. We also introduced a new siRNA platform that
allows life sciences researchers to study more cell types in their quest to
develop better treatments for disease. In addition, our new MRSA diagnostic
test is designed to make it easier for doctors to screen patients for staph
infection when they are admitted to the hospital. Finally, we published our
first Fisher Scientific catalog in Chinese to make our broad portfolio of
laboratory supplies available to more customers in that growing market."
Mr. Dekkers added, "Primarily as a result of more favorable currency
translation, we are raising our revenue guidance for the year and now
expect to report full year 2008 revenues in the range of $10.6 to $10.7
billion, resulting in 9 to 10% growth over 2007. The revenue increase also
leads us to raise our adjusted EPS guidance for 2008 by $0.02, to a range
of $3.07 to $3.17. This would result in 16 to 20% growth in adjusted EPS
over our 2007 results." (The 2008 guidance does not include any future
acquisitions or divestitures, and is based on present currency 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.")
Management uses adjusted operating results to monitor and evaluate
performance of the company's business segments.
Analytical Technologies Segment
Revenues in the Analytical Technologies Segment grew 10% in the first
quarter of 2008 to $1.09 billion, compared with revenues of $988 million in
the 2007 quarter. Adjusted operating income increased 23% in the first
quarter of 2008, and adjusted operating margin rose to 21.0%, versus 18.8%
in the 2007 period.
Laboratory Products and Services Segment
In the Laboratory Products and Services Segment, revenues grew 9% in
the first quarter of 2008 to $1.57 billion, compared with revenues of $1.43
billion in the 2007 quarter. Adjusted operating income increased 15% in the
first quarter of 2008, and adjusted operating margin rose to 13.9%, versus
13.3% in the 2007 period.
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 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 in
connection with the Fisher merger. 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 professional
fees related to the merger with Fisher. 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. Our adjusted EPS estimate for 2008
excludes approximately $.89 of expense for the amortization of
acquisition-related intangible assets for acquisitions completed through
the first quarter of 2008. 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, the early retirement of debt and debt facilities and discontinued
operations.
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 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,
April 24, at 9:00 a.m. Eastern time. To listen, dial (866) 793-1301 within
the U.S. or (703) 639-1307 outside the U.S., and use conference ID 121265.
You may also listen to the call live on our Website, http://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 "Quarterly Results." An
audio archive of the call will be available under "Webcasts and
Presentations" through Friday, May 23, 2008.
About Thermo Fisher Scientific
Thermo Fisher Scientific Inc. (NYSE: TMO) is the world leader in
serving science, enabling our customers to make the world healthier,
cleaner and safer. With annual revenues of $10 billion, we have more than
30,000 employees and serve over 350,000 customers within pharmaceutical and
biotech companies, hospitals and clinical diagnostic labs, universities,
research institutions and government agencies, as well as environmental and
industrial process control settings. Serving customers through two premier
brands, Thermo Scientific and Fisher Scientific, we help solve analytical
challenges from routine testing to complex research and discovery. Thermo
Scientific offers customers a complete range of high-end analytical
instruments as well as laboratory equipment, software, services,
consumables and reagents to enable integrated laboratory workflow
solutions. Fisher Scientific provides a complete portfolio of laboratory
equipment, chemicals, supplies and services used in healthcare, scientific
research, safety and education. Together, we offer the most convenient
purchasing options to customers and continuously advance our technologies
to accelerate the pace of scientific discovery, enhance value for customers
and fuel growth for shareholders and employees alike. Visit
http://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 such forward-looking statements are set
forth in the company's Annual Report on Form 10-K for the year ended
December 31, 2007, under the caption "Risk Factors," which is on file with
the Securities and Exchange Commission (SEC) and available in the
"Investors" section of our Website under the heading "SEC Filings."
Important factors that could cause actual results to differ materially from
those indicated by forward-looking statements include risks and
uncertainties relating to: the risk that the legacy businesses of Thermo
Electron Corporation ("Thermo") and Fisher Scientific International Inc.
("Fisher") will not be integrated successfully; the risk that the cost
savings and any other synergies from the merger of Thermo and Fisher may
not be fully realized or may take longer to realize than expected;
competition and its effect on pricing, spending, third-party relationships
and revenues; the need to develop new products and adapt to significant
technological change; implementation of strategies for improving internal
growth; use and protection of intellectual property; dependence on
customers' capital spending policies and government funding policies;
realization of potential future savings from new productivity initiatives;
general worldwide economic conditions and related uncertainties; the effect
of changes in governmental regulations; the effect of exchange rate
fluctuations on international operations; the effect of laws and
regulations governing government contracts; the effect of competing with
certain of our customers and suppliers; and the effect of rapid changes in
the healthcare industry. 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 our estimates change and, therefore, you
should not rely on these forward-looking statements as representing our
views as of any date subsequent to today.
Media Contact Information:
Lori Gorski
Phone: 781-622-1242
E-mail: lori.gorski@thermofisher.com
Website: http://www.thermofisher.com
Investor Contact Information:
Ken Apicerno
Phone: 781-622-1111
E-mail: ken.apicerno@thermofisher.com
Consolidated Statement of Income (unaudited) (a)(b)
Three Months Ended
March 29, % of March 31, % of
(In millions except per share amounts) 2008 Revenues 2007 Revenues
Revenues $2,554.0 $2,338.2
Costs and Operating Expenses:
Cost of revenues (c) 1,503.9 58.9% 1,428.1 61.1%
Selling, general and administrative
expenses 541.6 21.2% 511.2 21.9%
Amortization of acquisition-related
intangible assets 151.2 5.9% 139.3 6.0%
Research and development expenses 62.0 2.4% 59.8 2.6%
Restructuring and other costs, net (d) 4.9 0.2% 7.4 0.3%
2,263.6 88.6% 2,145.8 91.8%
Operating Income 290.4 11.4% 192.4 8.2%
Interest Income 10.1 8.9
Interest Expense (30.4) (37.2)
Other Income, Net (e) 7.5 1.6
Income from Continuing Operations
Before Income Taxes 277.6 165.7
Provision for Income Taxes (f) (44.2) (26.9)
Income from Continuing Operations 233.4 138.8
Income from Discontinued Operations
(net of income tax provision of $0.1
in 2007) - 0.1
Loss on Disposal of Discontinued
Operations (0.4) -
Net Income $233.0 9.1% $138.9 5.9%
Earnings per Share from Continuing
Operations:
Basic $.56 $.33
Diluted $.54 $.31
Earnings per Share:
Basic $.56 $.33
Diluted $.53 $.31
Weighted Average Shares:
Basic 417.5 420.1
Diluted 436.2 441.1
Reconciliation of Adjusted Operating
Income and Adjusted Operating Margin
GAAP Operating Income (a) $290.4 11.4% $192.4 8.2%
Cost of Revenues Charges (c) 0.6 0.0% 36.4 1.6%
Restructuring and Other Costs, Net (d) 4.9 0.2% 7.4 0.3%
Amortization of Acquisition-related
Intangible Assets 151.2 5.9% 139.3 6.0%
Adjusted Operating Income (b) $447.1 17.5% $375.5 16.1%
Reconciliation of Adjusted Net Income
GAAP Net Income (a) $233.0 9.1% $138.9 5.9%
Cost of Revenues Charges (c) 0.6 0.0% 36.4 1.6%
Restructuring and Other Costs, Net (d) 4.9 0.2% 7.4 0.3%
Amortization of Acquisition-related
Intangible Assets 151.2 5.9% 139.3 6.0%
Amortization of Acquisition-related
Intangible Assets - Equity Investments 0.7 0.0% - 0.0%
Other Income, Net (e) (9.8) -0.3% - 0.0%
Provision for Income Taxes (f) (59.2) -2.3% (60.4) -2.6%
Discontinued Operations, Net of Tax 0.4 0.0% (0.1) 0.0%
Adjusted Net Income (b) $321.8 12.6% $261.5 11.2%
Reconciliation of Adjusted Earnings
per Share
GAAP EPS (a) $0.53 $0.31
Cost of Revenues Charges, Net of Tax (c) - 0.06
Restructuring and Other Costs, Net
of Tax (d) 0.01 0.01
Amortization of Acquisition-related
Intangible Assets, Net of Tax 0.23 0.21
Amortization of Acquisition-related
Intangible Assets, Net of Tax - Equity
Investments - -
Other Income, Net of Tax (e) (0.01) -
Provision for Income Taxes (f) (0.02) -
Discontinued Operations, Net of Tax - -
Adjusted EPS (b) $0.74 $0.59
Segment Data (g) Three Months Ended
March 29, % of March 31, % of
(In millions except percentage amounts) 2008 Revenues 2007 Revenues
Revenues
Analytical Technologies $1,087.4 42.6% $988.3 42.3%
Laboratory Products and Services 1,568.4 61.4% 1,433.5 61.3%
Eliminations (101.8) -4.0% (83.6) -3.6%
Consolidated Revenues $2,554.0 100.0% $2,338.2 100.0%
Operating Income and Operating Margin
Analytical Technologies $228.7 21.0% $185.4 18.8%
Laboratory Products and Services 218.4 13.9% 190.1 13.3%
Subtotal Reportable Segments 447.1 17.5% 375.5 16.1%
Cost of Revenues Charges (c) (0.6) 0.0% (36.4) -1.6%
Restructuring and Other Costs, Net (d) (4.9) -0.2% (7.4) -0.3%
Amortization of Acquisition-related
Intangible Assets (151.2) -5.9% (139.3) -6.0%
GAAP Operating Income (a) $290.4 11.4% $192.4 8.2%
(a) "GAAP" (reported) results were determined in accordance with U.S.
generally accepted accounting principles (GAAP).
(b) Adjusted results are non-GAAP measures and exclude certain charges to
cost of revenues (see note (c) for details); amortization of
acquisition-related intangible assets; restructuring and other costs,
net (see note (d) 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 (e) for details); the tax
consequences of the preceding items (see note (f) for details); and
results of discontinued operations.
(c) Reported results in 2008 include $0.3 for charges for the sale of
inventories revalued at the date of acquisition and $0.3 of
accelerated depreciation on manufacturing assets to be abandoned due
to facility consolidations. Reported results in 2007 include $36.4
primarily for charges for the sale of inventories revalued at the date
of acquisition.
(d) Reported results in 2008 and 2007 include restructuring and other
costs, net, consisting principally of severance, abandoned facility
and other expenses of real estate consolidation.
(e) Reported results in 2008 include a $9.8 currency transaction gain
associated with an intercompany financing transaction.
(f) Reported provision for income taxes includes i) $49.6 and $60.4 of
incremental tax benefit in 2008 and 2007, respectively, for the
pre-tax reconciling items between GAAP and adjusted net income; and
ii) in 2008, $9.6 of incremental tax benefit from adjusting the
company's deferred tax balances as a result of newly enacted tax rates
in Switzerland.
(g) During the first quarter of 2008, the company transferred management
responsibility for several small business units between segments.
Segment information for 2007 has been reclassified to reflect these
transfers.
Notes:
Consolidated depreciation expense in 2008 and 2007 is $47.6 and $46.0,
respectively.
Consolidated equity compensation expense included in both reported and
adjusted results is $11.0 and $13.8 in 2008 and 2007, respectively.
Consolidated net capital expenditures in Q1 2008 totaled $53.3.
Condensed Consolidated Balance Sheet (unaudited)
(In millions) Mar. 29, 2008 Dec. 31, 2007
Assets
Current Assets:
Cash and cash equivalents $734.0 $625.1
Short-term investments 14.1 14.1
Accounts receivable, net 1,585.7 1,450.0
Inventories 1,246.7 1,169.9
Other current assets 408.3 406.2
Total current assets 3,988.8 3,665.3
Property, Plant and Equipment, Net 1,297.5 1,267.4
Acquisition-related Intangible Assets 7,090.6 7,157.8
Other Assets 402.6 403.7
Goodwill 8,718.4 8,713.2
Total Assets $21,497.9 $21,207.4
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term obligations and current
maturities of long-term
obligations $150.8 $149.3
Other current liabilities 1,758.4 1,752.3
Total current liabilities 1,909.2 1,901.6
Other Long-term Liabilities 2,757.0 2,771.6
Long-term Obligations 2,045.9 2,045.9
Total Shareholders' Equity 14,785.8 14,488.3
Total Liabilities and Shareholders' Equity $21,497.9 $21,207.4
SOURCE Thermo Fisher Scientific Inc.
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Related links:
http://www.thermofisher.com/
http://www.prnewswire.com/comp/877850.html/
CONTACT:
Media, Lori Gorski, +1-781-622-1242,
lori.gorski@thermofisher.com, or Investors, Ken Apicerno,
+1-781-622-1111, ken.apicerno@thermofisher.com, both of Thermo
Fisher Scientific Inc.
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