News Release

WALTHAM, Mass., Apr 25, 2012 (BUSINESS WIRE) --Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, today reported its financial results for the first quarter ended March 31, 2012.

First Quarter Highlights

• Adjusted earnings per share (EPS) grew 27% to a record $1.17.
• Revenues increased 14% to a record $3.10 billion.
• Adjusted operating income rose 20% to $573 million.
• Adjusted operating margin expanded by 90 basis points to 18.5%.
• Free cash flow increased by 25% to $328 million.
• Strengthened innovation leadership by launching new ion chromatography, gas chromatography, mass spectrometry and handheld instruments for life sciences and applied markets.
• Expanded presence in emerging high-growth geographies, and opened a new state-of-the-art customer demonstration and training center in South Korea.
• Deployed $300 million to repurchase 6.0 million shares and initiated a quarterly dividend of $0.13 per share.

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 carried our momentum of strong financial performance into 2012 by delivering 27% growth in adjusted EPS on solid top-line results," said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. "Our revenue growth was fueled largely by demand for analytical instruments across a broad base of customers, as well as ongoing strength in our biopharma services business. In addition, our investments in emerging markets continued to pay off, highlighted by another excellent quarter in China.

"We kicked off the year with an impressive line-up of new Thermo Scientific products that create value for our customers by improving performance and productivity in applications ranging from pharmaceutical QA/QC to environmental and food safety testing. Among our many new products featured at major conferences in the U.S. and Europe were the ICS-4000 and ICS-5000 ion chromatography systems, the Trace(TM) 1300 Series gas chromatograph and the iCAP(TM) Q mass spectrometer. For life sciences researchers, we launched the new automated MYECL(TM) Imager and the PikoReal(TM) PCR System to simplify workflows and improve results."

Casper added, "We continued to create value for our shareholders through effective capital deployment. During the quarter, we bought back $300 million of our shares and initiated our first quarterly dividend, which is testament to our strong financial performance, consistent cash flow generation and excellent opportunities for growth."

For the first quarter of 2012, adjusted EPS grew 27% to a record $1.17, versus $0.92 in the first quarter of 2011. Revenues for the quarter grew 14% to $3.10 billion in 2012, versus $2.72 billion in 2011. On a pro forma basis, as if Dionex and Phadia were owned in the first quarter of 2011, revenues increased 4%. Acquisitions (other than Dionex and Phadia) added 1% to revenues, which was fully offset by a 1% decrease due to currency translation. Adjusted operating income for the first quarter of 2012 increased 20% compared with the year-ago period, and adjusted operating margin expanded 90 basis points to 18.5%, compared with 17.6% in the first quarter of 2011.

GAAP diluted EPS for the first quarter of 2012 was $0.75, versus $0.64 in the same quarter last year. GAAP operating income for the first quarter of 2012 increased 10% to $355 million, compared with $322 million in 2011. GAAP operating margin was 11.4%, compared with 11.8% in the first quarter of 2011, due to acquisition-related charges.

Annual Guidance for 2012

Thermo Fisher is raising its revenue and adjusted EPS guidance for full year 2012 primarily due to improved foreign currency exchange. The company is raising its previous 2012 revenue guidance of $12.15 to $12.35 billion to a new range of $12.27 to $12.43 billion, for 5% to 6% revenue growth year over year. Thermo Fisher is also raising its adjusted EPS guidance of $4.67 to $4.82 to a new range of $4.71 to $4.83, which would result in 13% to 16% adjusted EPS growth over 2011.

The 2012 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 three business segments, as highlighted below.

Analytical Technologies Segment

In the first quarter of 2012, Analytical Technologies Segment revenues increased 21% to $1.01 billion, compared with revenues of $830 million in the first quarter of 2012. Segment adjusted operating income increased 35% in the first quarter of 2012, and adjusted operating margin increased to 18.4%, versus 16.5% in the 2011 quarter.

Specialty Diagnostics Segment

Specialty Diagnostics Segment revenues in the first quarter increased 27% to $729 million in 2012, compared with revenues of $577 million in the first quarter of 2011. Segment adjusted operating income increased 31% in the first quarter of 2012, and adjusted operating margin increased to 25.5%, versus 24.6% in the 2011 quarter.

Laboratory Products and Services Segment

In the first quarter of 2012, Laboratory Products and Services Segment revenues increased 4% to $1.51 billion, compared with revenues of $1.44 billion in the first quarter of 2011. Segment adjusted operating income increased 1% in the first quarter of 2012, and adjusted operating margin was 13.4%, versus 13.8% in the 2011 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. Our adjusted EPS estimate for 2012 excludes approximately $1.33 of expense for the amortization of acquisition-related intangible assets for acquisitions completed through the end of the first quarter of 2012. 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, April 25, at 8:30 a.m. Eastern time. To listen, dial (866) 804-6922 within the U.S. or (857) 350-1668 outside the U.S., and use conference ID 27442368. 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, May 18, 2012.

About Thermo Fisher Scientific

Thermo Fisher Scientific Inc. (NYSE: TMO) is the world leader in serving science. Our mission is to enable our customers to make the world healthier, cleaner and safer. With revenues of $12 billion, we have approximately 39,000 employees and serve customers within pharmaceutical and biotech companies, hospitals and clinical diagnostic labs, universities, research institutions and government agencies, as well as in environmental and process control industries. We create value for our key stakeholders through three premier brands, Thermo Scientific, Fisher Scientific and Unity(TM) Lab Services, which offer a unique combination of innovative technologies, convenient purchasing options and a single solution for laboratory operations management. Our products and services help our customers solve complex analytical challenges, improve patient diagnostics and increase laboratory productivity. 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 such forward-looking statements are set forth in the company's Annual Report on Form 10-K for the year ended December 31, 2011, under the caption "Risk Factors," which is on file with the Securities and Exchange Commission 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 need to develop new products and adapt to significant technological change; implementation of strategies for improving growth; general worldwide 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 acquisitions of Dionex and Phadia may not materialize as expected. 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.

SOURCE: Thermo Fisher Scientific Inc.

Thermo Fisher Scientific Inc.
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