Delaware | 1-8002 | 04-2209186 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
81 Wyman Street | ||||
Waltham, Massachusetts | 02451 | |||
(Address of principal executive offices) | (Zip Code) |
(781) 622-1000 | ||
(Registrant’s telephone number including area code) |
THERMO FISHER SCIENTIFIC INC. | |||
Date: | April 28, 2016 | By: | /s/ Peter E. Hornstra |
Peter E. Hornstra | |||
Vice President and Chief Accounting Officer |
FOR IMMEDIATE RELEASE | |
Media Contact Information: Karen Kirkwood | Investor Contact Information: Ken Apicerno |
Phone: 781-622-1306 | Phone: 781-622-1294 |
E-mail: karen.kirkwood@thermofisher.com | E-mail: ken.apicerno@thermofisher.com |
Website: www.thermofisher.com |
• | Reported adjusted earnings per share (EPS) of $1.80 and GAAP diluted EPS of $1.01. |
• | Reported record revenue of $4.29 billion. |
• | Strengthened our Thermo Scientific analytical instrument offering for applied markets with new product launches at Pittcon, highlighted by the Integrion high-pressure ion chromatography system (HPIC) for environmental, food safety and industrial markets. |
• | Delivered strong performance in emerging markets, led by double-digit growth in China and India. |
• | Completed $1.3 billion acquisition of Affymetrix, enhancing our customer value proposition by strengthening our leadership in biosciences and expanding our opportunities in genetic analysis. |
• | Deployed $1 billion of capital on share buybacks in the quarter. |
Consolidated Statement of Income (unaudited) (a)(b) | ||||||||||||||
Three Months Ended | ||||||||||||||
April 2, | % of | March 28, | % of | |||||||||||
(In millions except per share amounts) | 2016 | Revenues | 2015 | Revenues | ||||||||||
Revenues | $ | 4,294.8 | $ | 3,918.8 | ||||||||||
Costs and Operating Expenses: | ||||||||||||||
Cost of revenues (c) | 2,235.9 | 52.1 | % | 1,988.6 | 50.7 | % | ||||||||
Selling, general and administrative expenses (d) | 991.9 | 23.1 | % | 916.0 | 23.4 | % | ||||||||
Amortization of acquisition-related intangible assets | 322.0 | 7.5 | % | 329.1 | 8.4 | % | ||||||||
Research and development expenses | 176.5 | 4.1 | % | 165.8 | 4.2 | % | ||||||||
Restructuring and other costs, net (e) | 50.6 | 1.2 | % | 32.0 | 0.9 | % | ||||||||
3,776.9 | 87.9 | % | 3,431.5 | 87.6 | % | |||||||||
Operating Income | 517.9 | 12.1 | % | 487.3 | 12.4 | % | ||||||||
Interest Income | 10.8 | 7.0 | ||||||||||||
Interest Expense | (106.2 | ) | (108.4 | ) | ||||||||||
Other Income (Expense), Net (f) | 0.5 | (3.9 | ) | |||||||||||
Income Before Income Taxes | 423.0 | 382.0 | ||||||||||||
(Provision for) Benefit from Income Taxes (g) | (20.7 | ) | 3.1 | |||||||||||
Income from Continuing Operations | 402.3 | 385.1 | ||||||||||||
Loss from Discontinued Operations, Net of Tax | (0.1 | ) | — | |||||||||||
Net Income | $ | 402.2 | 9.4 | % | $ | 385.1 | 9.8 | % | ||||||
Earnings per Share from Continuing Operations: | ||||||||||||||
Basic | $ | 1.02 | $ | 0.97 | ||||||||||
Diluted | $ | 1.01 | $ | 0.96 | ||||||||||
Earnings per Share: | ||||||||||||||
Basic | $ | 1.02 | $ | 0.97 | ||||||||||
Diluted | $ | 1.01 | $ | 0.96 | ||||||||||
Weighted Average Shares: | ||||||||||||||
Basic | 395.8 | 397.8 | ||||||||||||
Diluted | 398.7 | 401.4 | ||||||||||||
Reconciliation of Adjusted Operating Income and Adjusted Operating Margin | ||||||||||||||
GAAP Operating Income (a) | $ | 517.9 | 12.1 | % | $ | 487.3 | 12.4 | % | ||||||
Cost of Revenues Charges (c) | 10.6 | 0.2 | % | 0.6 | 0.0 | % | ||||||||
Selling, General and Administrative Charges, Net (d) | 28.9 | 0.7 | % | 7.6 | 0.2 | % | ||||||||
Restructuring and Other Costs, Net (e) | 50.6 | 1.2 | % | 32.0 | 0.9 | % | ||||||||
Amortization of Acquisition-related Intangible Assets | 322.0 | 7.5 | % | 329.1 | 8.4 | % | ||||||||
Adjusted Operating Income (b) | $ | 930.0 | 21.7 | % | $ | 856.6 | 21.9 | % | ||||||
Reconciliation of Adjusted Net Income | ||||||||||||||
GAAP Net Income (a) | $ | 402.2 | 9.4 | % | $ | 385.1 | 9.8 | % | ||||||
Cost of Revenues Charges (c) | 10.6 | 0.2 | % | 0.6 | 0.0 | % | ||||||||
Selling, General and Administrative Charges, Net (d) | 28.9 | 0.7 | % | 7.6 | 0.2 | % | ||||||||
Restructuring and Other Costs, Net (e) | 50.6 | 1.2 | % | 32.0 | 0.9 | % | ||||||||
Amortization of Acquisition-related Intangible Assets | 322.0 | 7.5 | % | 329.1 | 8.4 | % | ||||||||
Other (Income) Expense, Net (f) | (1.3 | ) | -0.1 | % | 11.0 | 0.2 | % | |||||||
Provision for Income Taxes (g) | (96.0 | ) | -2.2 | % | (109.8 | ) | -2.8 | % | ||||||
Discontinued Operations, Net of Tax | 0.1 | 0.0 | % | — | 0.0 | % | ||||||||
Adjusted Net Income (b) | $ | 717.1 | 16.7 | % | $ | 655.6 | 16.7 | % | ||||||
Reconciliation of Adjusted Earnings per Share | ||||||||||||||
GAAP EPS (a) | $ | 1.01 | $ | 0.96 | ||||||||||
Cost of Revenues Charges, Net of Tax (c) | 0.02 | — | ||||||||||||
Selling, General and Administrative Charges, Net of Tax (d) | 0.06 | 0.01 | ||||||||||||
Restructuring and Other Costs, Net of Tax (e) | 0.09 | 0.05 | ||||||||||||
Amortization of Acquisition-related Intangible Assets, Net of Tax | 0.60 | 0.59 | ||||||||||||
Other (Income) Expense, Net of Tax (f) | — | 0.02 | ||||||||||||
Provision for Income Taxes (g) | 0.02 | — | ||||||||||||
Discontinued Operations, Net of Tax | — | — | ||||||||||||
Adjusted EPS (b) | $ | 1.80 | $ | 1.63 | ||||||||||
Reconciliation of Free Cash Flow | ||||||||||||||
GAAP Net Cash Provided by Operating Activities (a) | $ | 289.1 | $ | 80.0 | ||||||||||
Net Cash Used in Discontinued Operations | 1.5 | 2.1 | ||||||||||||
Purchases of Property, Plant and Equipment | (115.1 | ) | (97.2 | ) | ||||||||||
Proceeds from Sale of Property, Plant and Equipment | 6.0 | 0.6 | ||||||||||||
Free Cash Flow | $ | 181.5 | $ | (14.5 | ) |
Segment Data | Three Months Ended | |||||||||||||
April 2, | % of | March 28, | % of | |||||||||||
(In millions) | 2016 | Revenues | 2015 | Revenues | ||||||||||
Revenues | ||||||||||||||
Life Sciences Solutions | $ | 1,133.0 | 26.4 | % | $ | 1,019.9 | 26.0 | % | ||||||
Analytical Instruments | 759.3 | 17.7 | % | 727.4 | 18.6 | % | ||||||||
Specialty Diagnostics | 854.6 | 19.9 | % | 785.2 | 20.0 | % | ||||||||
Laboratory Products and Services | 1,724.6 | 40.2 | % | 1,513.4 | 38.6 | % | ||||||||
Eliminations | (176.7 | ) | -4.2 | % | (127.1 | ) | -3.2 | % | ||||||
Consolidated Revenues | $ | 4,294.8 | 100.0 | % | $ | 3,918.8 | 100.0 | % | ||||||
Operating Income and Operating Margin | ||||||||||||||
Life Sciences Solutions | $ | 330.0 | 29.1 | % | $ | 298.7 | 29.3 | % | ||||||
Analytical Instruments | 111.7 | 14.7 | % | 121.7 | 16.7 | % | ||||||||
Specialty Diagnostics | 230.1 | 26.9 | % | 214.1 | 27.3 | % | ||||||||
Laboratory Products and Services | 258.2 | 15.0 | % | 222.1 | 14.7 | % | ||||||||
Subtotal Reportable Segments | 930.0 | 21.7 | % | 856.6 | 21.9 | % | ||||||||
Cost of Revenues Charges (c) | (10.6 | ) | -0.2 | % | (0.6 | ) | 0.0 | % | ||||||
Selling, General and Administrative Charges, Net (d) | (28.9 | ) | -0.7 | % | (7.6 | ) | -0.2 | % | ||||||
Restructuring and Other Costs, Net (e) | (50.6 | ) | -1.2 | % | (32.0 | ) | -0.9 | % | ||||||
Amortization of Acquisition-related Intangible Assets | (322.0 | ) | -7.5 | % | (329.1 | ) | -8.4 | % | ||||||
GAAP Operating Income (a) | $ | 517.9 | 12.1 | % | $ | 487.3 | 12.4 | % | ||||||
(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 2016 and 2015 include i) $6.2 and $0.5, respectively, of charges for the sale of inventories revalued at the date of acquisition. Reported results in 2016 include a charge of $4.4 to conform the accounting policies of Affymetrix with the company's accounting policies. Reported results in 2015 include $0.1 of accelerated depreciation on manufacturing assets to be abandoned due to facility consolidations. | ||||||||||||||
(d) Reported results in 2016 and 2015 include i) $23.6 and $6.1, respectively, of third-party transaction/integration costs primarily related to recently completed acquisitions; ii) $5.4 and $2.0, respectively, of accelerated depreciation on fixed assets to be abandoned due to integration synergies; and iii) $0.1 and $0.5, respectively, of gains for changes in estimates of contingent consideration for acquisitions. | ||||||||||||||
(e) Reported results in 2016 and 2015 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 2016 include $13.3 of gains on settlement of litigation and $2.9 of gains on sales of real estate. Reported results in 2015 include $5.0 of cash compensation contractually due to employees of an acquired business on the date of acquisition and a $0.9 charge associated with a previous sale of a business. | ||||||||||||||
(f) Reported results in 2016 and 2015 include $0.5 and $0.5, respectively, of amortization of acquisition-related intangible assets of the company's equity-method investments. Reported results in 2016 include $1.8 of net gains from investments. Reported results in 2015 include $7.5 of costs associated with entering into interest rate swap arrangements and a loss of $3.0 on the early extinguishment of debt. | ||||||||||||||
(g) Reported provision for income taxes includes i) $105.0 and $110.5 of incremental tax benefit in 2016 and 2015, respectively, for the pre-tax reconciling items between GAAP and adjusted net income; and ii) in 2016 and 2015, $9.0 and $0.7, respectively, of incremental tax provision from adjusting the company's deferred tax balances as a result of tax rate changes. | ||||||||||||||
Notes: | ||||||||||||||
Consolidated depreciation expense is $94.1 and $87.2 in 2016 and 2015, respectively. | ||||||||||||||
Consolidated equity compensation expense included in both reported and adjusted results is $33.4 and $28.2 in 2016 and 2015, respectively. | ||||||||||||||
Condensed Consolidated Balance Sheet (unaudited) | ||||||||
April 2, | December 31, | |||||||
(In millions) | 2016 | 2015 | ||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 826.8 | $ | 452.1 | ||||
Accounts receivable, net | 2,668.3 | 2,544.9 | ||||||
Inventories | 2,154.9 | 1,991.7 | ||||||
Other current assets | 889.0 | 752.5 | ||||||
Total current assets | 6,539.0 | 5,741.2 | ||||||
Property, Plant and Equipment, Net | 2,483.1 | 2,448.8 | ||||||
Acquisition-related Intangible Assets | 13,237.8 | 12,758.3 | ||||||
Other Assets | 1,060.3 | 1,058.4 | ||||||
Goodwill | 19,632.5 | 18,827.6 | ||||||
Total Assets | $ | 42,952.7 | $ | 40,834.3 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current Liabilities: | ||||||||
Short-term obligations and current maturities of long-term obligations | $ | 3,383.0 | $ | 1,051.8 | ||||
Other current liabilities | 2,939.8 | 3,094.5 | ||||||
Total current liabilities | 6,322.8 | 4,146.3 | ||||||
Other Long-term Liabilities | 4,052.5 | 3,917.6 | ||||||
Long-term Obligations | 11,653.0 | 11,420.2 | ||||||
Total Shareholders' Equity | 20,924.4 | 21,350.2 | ||||||
Total Liabilities and Shareholders' Equity | $ | 42,952.7 | $ | 40,834.3 |
Condensed Consolidated Statement of Cash Flows (unaudited) | ||||||||
Three Months Ended | ||||||||
April 2, | March 28, | |||||||
(In millions) | 2016 | 2015 | ||||||
Operating Activities | ||||||||
Net income | $ | 402.2 | $ | 385.1 | ||||
Loss from discontinued operations | 0.1 | — | ||||||
Income from continuing operations | 402.3 | 385.1 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 416.1 | 416.3 | ||||||
Change in deferred income taxes | (88.8 | ) | (102.4 | ) | ||||
Other non-cash expenses, net | 26.6 | 5.3 | ||||||
Changes in assets and liabilities, excluding the effects of acquisitions and dispositions | (465.6 | ) | (622.2 | ) | ||||
Net cash provided by continuing operations | 290.6 | 82.1 | ||||||
Net cash used in discontinued operations | (1.5 | ) | (2.1 | ) | ||||
Net cash provided by operating activities | 289.1 | 80.0 | ||||||
Investing Activities | ||||||||
Acquisitions, net of cash acquired | (1,032.4 | ) | (298.6 | ) | ||||
Purchases of property, plant and equipment | (115.1 | ) | (97.2 | ) | ||||
Proceeds from sale of property, plant and equipment | 6.0 | 0.6 | ||||||
Other investing activities, net | 2.2 | 0.9 | ||||||
Net cash used in investing activities | (1,139.3 | ) | (394.3 | ) | ||||
Financing Activities | ||||||||
Net proceeds from issuance of debt | 998.9 | — | ||||||
Repayment of debt | (1.4 | ) | (851.4 | ) | ||||
Increase in commercial paper, net | 1,174.0 | 1,218.9 | ||||||
Purchases of company common stock | (1,000.0 | ) | (500.0 | ) | ||||
Dividends paid | (60.3 | ) | (60.8 | ) | ||||
Net proceeds from issuance of company common stock under employee stock plans | 50.0 | 60.0 | ||||||
Tax benefits from stock-based compensation awards | 27.2 | 39.2 | ||||||
Other financing activities, net | (0.4 | ) | (6.3 | ) | ||||
Net cash provided by (used in) financing activities | 1,188.0 | (100.4 | ) | |||||
Exchange Rate Effect on Cash | 36.9 | (64.2 | ) | |||||
Increase (Decrease) in Cash and Cash Equivalents | 374.7 | (478.9 | ) | |||||
Cash and Cash Equivalents at Beginning of Period | 452.1 | 1,343.5 | ||||||
Cash and Cash Equivalents at End of Period | $ | 826.8 | $ | 864.6 | ||||
Free Cash Flow (a) | $ | 181.5 | $ | (14.5 | ) | |||
(a) Free cash flow is net cash provided by operating activities of continuing operations less net purchases of property, plant and equipment. | ||||||||
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