WALTHAM, Mass., Feb. 8 /PRNewswire-FirstCall/ -- Thermo Fisher Scientific
Inc. (NYSE: TMO), the world leader in serving science, reported that revenues
more than doubled to $1.67 billion in the fourth quarter of 2006 (including
$849 million from the merger with Fisher Scientific, completed on November 9,
2006), compared with $741 million in the 2005 quarter. GAAP diluted earnings
per share (EPS) were $.08 in 2006, versus $.34 in the year-ago period. GAAP
operating income for the 2006 quarter was $26.8 million, compared with $88.5
million in 2005, and GAAP operating margin was 1.6%, compared with 11.9% a
year ago. GAAP results in 2006 include $125 million of pre-tax charges related
to the merger with Fisher.
Adjusted EPS grew 21% to $.57 in the fourth quarter of 2006, versus $.47
in the 2005 quarter. Adjusted operating income increased 132% in the 2006
quarter, and adjusted operating margin increased 50 basis points to 15.8%,
compared with 15.3% in the 2005 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," and include results from Fisher since the merger
date.
For a better year-to-year comparison of the company's performance, we are
also presenting adjusted operating results on a pro forma basis, as if Thermo
and Fisher had been combined in both periods. Pro forma revenues grew 11% to
$2.35 billion in the fourth quarter of 2006, versus $2.12 billion in the 2005
quarter. Acquisitions (including those by Fisher prior to the merger)
contributed 3% of the growth, and currency translation increased revenues by
3%. Pro forma adjusted operating income for the 2006 quarter increased 21%
over 2005, and pro forma adjusted operating margin expanded 130 basis points
in the 2006 quarter to 15.2%, compared with 13.9% in the 2005 period.
For full-year 2006, Thermo Fisher reported 44% revenue growth to $3.79
billion (including $849 million of Fisher revenues since the merger date),
compared with $2.63 billion in 2005. GAAP diluted EPS was $.84 in 2006, versus
$1.36 in 2005. GAAP operating income in 2006 decreased 8%, and GAAP operating
margin was 6.4% in 2006, versus 10.0% in 2005. The 2006 results were affected
by costs related to the merger with Fisher, as noted above.
Full-year adjusted EPS grew 30% to $1.91 in 2006, compared with $1.47 in
2005. Adjusted operating income increased 63% in 2006, and adjusted operating
margin rose 180 basis points year over year, to 15.1% from 13.3% in 2005.
Pro forma revenues for the full year, as if the companies had been
combined in both periods, grew 10% to $8.87 billion in 2006, compared with
$8.07 billion in 2005. Acquisitions (including those by Fisher prior to the
merger) contributed 4% of the growth, and currency translation increased
revenues by 1%. Pro forma adjusted operating income in 2006 rose 21% over
2005, and pro forma adjusted operating margin expanded 130 basis points to
14.7% in 2006, versus 13.4% a year ago.
-
Fourth Quarter Highlights
- Completed industry-transforming merger with Fisher Scientific
International; integration on track
- Pro forma revenues grew 11%
- Pro forma adjusted operating income rose 21%
- Pro forma adjusted operating margin expanded 130 basis points
- Strengthened integrated liquid chromatography/mass spectrometry offering
with acquisition of Cohesive Technologies
"Our strong growth momentum throughout 2006, bolstered by our industry-
transforming merger with Fisher in November, led to a banner year," said
Marijn E. Dekkers, president and chief executive officer of Thermo Fisher
Scientific. "Our revenues were in line with our growth targets and our
adjusted operating margin expanded well beyond our goal of 100 basis points.
Most significantly, full-year adjusted EPS topped our expectations at $1.91,
for 30% growth over our strong performance in 2005. It's been a very busy
year, and we've accomplished a lot thanks to the employees throughout this
great new company who made it possible.
"In addition, the integration of Fisher is moving along very well, with
teams throughout the company continuing to make excellent progress. We are
well on our way to achieving the $75 million of synergies we identified for
2007. Therefore, we are reiterating the 2007 adjusted EPS estimate of $2.35 to
$2.45 that we presented at our analyst meeting in December 2006, which would
result in 23 to 28% growth over our strong 2006 results. We expect revenues in
2007 to grow to $9.4 to $9.5 billion, an increase of approximately 6 to 8%
over our pro forma 2006 revenues." (This guidance includes the favorable
impact of a full year of results from 2006 acquisitions and also takes into
account the unfavorable effects of 2006 divestitures. The 2007 guidance does
not factor in any acquisitions or divestitures that may be completed during
the year, 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. Results in the following
segment information are reported on a pro forma adjusted basis, as if Thermo
and Fisher had been combined for both periods.
Analytical Technologies Segment
Pro forma revenues for the Analytical Technologies Segment grew 16% in the
fourth quarter of 2006 to $1.02 billion, compared with $885 million in the
2005 quarter. Pro forma adjusted operating income increased 25% in 2006, and
pro forma adjusted operating margin rose to 17.9%, versus 16.6% in the year-
ago quarter.
For the full year, pro forma segment revenues grew 11% to $3.74 billion in
2006, compared with $3.37 billion in 2005. Pro forma adjusted operating income
for the segment grew 19% in 2006, and pro forma adjusted operating margin
increased to 17.2%, versus 16.1% a year ago.
Laboratory Products and Services Segment
In the Laboratory Products and Services Segment, pro forma revenues grew
7% in the fourth quarter of 2006 to $1.40 billion, compared with $1.31 billion
in the 2005 quarter. Pro forma adjusted operating income increased 17% in
2006, and pro forma adjusted operating margin rose to 12.4%, versus 11.3% in
the year-ago quarter.
For the full year, pro forma segment revenues grew 9% to $5.44 billion in
2006, compared with $4.98 billion in 2005. Pro forma adjusted operating income
for the segment grew 23% in 2006, and pro forma adjusted operating margin
increased to 12.2%, versus 10.8% a year ago.
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. For
purposes of comparison, 2005 consolidated adjusted results reflect the pro
forma effect of stock option expense as if it had been required in that
period. 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 and our Kendro acquisition. 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, accelerated vesting
of our equity-based arrangements resulting from the change in control
occurring at the date of the Fisher merger ($36.7 million) and Fisher merger-
related professional fees. 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 2007 excludes
approximately $.84 of expense for the amortization of acquisition-related
intangible assets for acquisitions completed through 2006. 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, 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. We exclude gains/losses from the sale of
our equity interests in Newport Corporation and Thoratec Corporation, as well
as other items such as the sale of a business or real estate, the early
retirement of debt and debt facilities and discontinued operations. (We sold
our remaining shares of Newport and Thoratec during the second quarter of
2005.)
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,
February 8, at 9:00 a.m. Eastern time. To listen, dial 866-814-1913 within the
U.S. or 703-639-1357 outside the U.S., and use conference ID 1026514. 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 "Quarterly Results." An audio archive of the call
will be available under "Webcasts and Presentations" through Thursday, March
8, 2007.
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 an annual revenue rate of more than $9 billion, we employ 30,000
people 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 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 under the heading
"Risk Factors" in Thermo Electron's and Fisher Scientific's Quarterly Reports
on Form 10-Q for the third quarter of 2006. We also may make forward-looking
statements about the benefits of the merger of Thermo Electron and Fisher
Scientific, including statements about future financial and operating results,
the new company's plans, objectives, expectations and intentions and other
statements that are not historical facts. These include risks and
uncertainties relating to: the risk that the businesses will not be integrated
successfully; the risk that the cost savings and any other synergies from the
transaction may not be fully realized or may take longer to realize than
expected; disruption from the transaction making it more difficult to maintain
relationships with customers, employees or suppliers; 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; dependence on customers that operate in cyclical
industries; general worldwide economic conditions and related uncertainties;
the effect of changes in governmental regulations; exposure to product
liability claims in excess of insurance coverage; and the effect of exchange
rate fluctuations on international operations. 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
Investor Contact Information:
Ken Apicerno
Phone: 781-622-1111
E-mail: ken.apicerno@thermofisher.com
Consolidated Statement of Income (a)(h)
Three Months Ended
December % December %
(In thousands except per share amounts) 31, of 31, of
2006 Revenues 2005 Revenues
Revenues $1,668,900 $740,787
Costs and Operating Expenses:
Cost of revenues 1,061,473 63.6% 398,227 53.8%
Selling, general and administrative
expenses 403,063 24.2% 185,821 25.1%
Amortization of acquisition-related
intangible assets 93,205 5.6% 25,548 3.5%
Research and development expenses 52,169 3.1% 38,231 5.2%
Restructuring and other costs, net (d) 32,160 1.9% 4,473 0.6%
1,642,070 98.4% 652,300 88.1%
Operating Income 26,830 1.6% 88,487 11.9%
Interest Income 6,669 3,444
Interest Expense (f) (26,923) (7,966)
Other Income, Net 570 876
Income from Continuing Operations
Before Income Taxes 7,146 84,841
Benefit from (Provision for) Income
Taxes 17,775 (29,480)
Income from Continuing Operations 24,921 55,361
Income from Discontinued Operations
(net of income tax provision of $233) 543 -
Gain (Loss) on Disposal of
Discontinued Operations (includes tax
benefit of $157 in 2006, net of
income tax provision of $613 in 2005) (148) 1,044
Net Income $25,316 1.5% $56,405 7.6%
Earnings per Share from Continuing
Operations:
Basic $.08 $.34
Diluted $.08 $.34
Earnings per Share:
Basic $.08 $.35
Diluted $.08 $.34
Weighted Average Shares:
Basic 302,190 162,341
Diluted 318,361 166,312
Reconciliation of Adjusted Operating
Income and Adjusted Operating Margin
GAAP Operating Income (a) $26,830 1.6% $88,487 11.9%
Cost of Revenues Charges (c) 74,375 4.5% 166 0.0%
Restructuring and Other Costs, Net (d) 32,160 1.9% 4,473 0.6%
Pro Forma Stock Option Compensation
Expense - 0.0% (5,232) -0.7%
Stock Compensation Acceleration
Charge (e) 36,747 2.2% - 0.0%
Amortization of Acquisition-related
Intangible Assets 93,205 5.6% 25,548 3.5%
Adjusted Operating Income (b) $263,317 15.8% $113,442 15.3%
Reconciliation of Adjusted Net Income
GAAP Net Income (a) $25,316 1.5% $56,405 7.6%
Cost of Revenues Charges (c) 74,375 4.5% 166 0.0%
Restructuring and Other Costs, Net (d) 32,160 1.9% 4,473 0.6%
Pro Forma Stock Option Compensation
Expense - 0.0% (5,232) -0.7%
Stock Compensation Acceleration
Charge (e) 36,747 2.2% - 0.0%
Amortization of Acquisition-related
Intangible Assets 93,205 5.6% 25,548 3.5%
Interest Expense (f) 930 0.0% - 0.0%
Provision for Income Taxes (g) (80,702) -4.8% (3,225) -0.4%
Discontinued Operations, Net of Tax (395) 0.0% (1,044) -0.2%
Adjusted Net Income (b) $181,636 10.9% $77,091 10.4%
Reconciliation of Adjusted Earnings
per Share
GAAP EPS (a) $0.08 $0.34
Cost of Revenues Charges, Net of Tax (c) 0.14 -
Restructuring and Other Costs, Net
of Tax (d) 0.08 0.02
Pro Forma Stock Option Compensation
Expense, Net of Tax - (0.02)
Stock Compensation Acceleration
Charge, Net of Tax (e) 0.08 -
Amortization of Acquisition-related
Intangible Assets, Net of Tax 0.19 0.11
Interest Expense (f) - -
Provision for Income Taxes (g) - 0.03
Discontinued Operations, Net of Tax - (0.01)
Adjusted EPS (b) $0.57 $0.47
Segment Data Three Months Ended
December % December %
(In thousands except percentage amounts) 31, of 31, of
2006 Revenues 2005 Revenues
Revenues
Analytical Technologies $848,975 50.9% $541,386 73.1%
Laboratory Products and Services 860,766 51.6% 199,401 26.9%
Eliminations (40,841) -2.5% - 0.0%
Consolidated Revenues $1,668,900 100.0% $740,787 100.0%
Operating Income and Operating
Margin
Analytical Technologies $153,853 18.1% $82,143 15.2%
Laboratory Products and Services 109,464 12.7% 31,151 15.6%
Other - 148
Subtotal Reportable Segments 263,317 15.8% 113,442 15.3%
Cost of Revenues Charges (c) (74,375) -4.5% (166) 0.0%
Restructuring and Other Costs,
Net (d) (32,160) -1.9% (4,473) -0.6%
Pro Forma Stock Option
Compensation Expense - 0.0% 5,232 0.7%
Stock Compensation Acceleration
Charge (e) (36,747) -2.2% - 0.0%
Amortization of Acquisition-
related Intangible Assets (93,205) -5.6% (25,548) -3.5%
GAAP Operating Income (a) $26,830 1.6% $88,487 11.9%
Pro Forma Data (Unaudited) (i) Three Months Ended
December % December %
(In millions except percentage amounts) 31, of 31, of
2006 Revenues 2005 Revenues
Pro Forma Revenues (i)
Analytical Technologies $1,023.6 43.6% $885.2 41.7%
Laboratory Products and Services 1,401.7 59.7% 1,308.1 61.6%
Eliminations (77.5) -3.3% (69.1) -3.3%
Pro Forma Combined Revenues 2,347.8 100.0% 2,124.2 100.0%
Pre-merger Fisher Scientific
Results, Net of Eliminations (678.9) (1,383.4)
GAAP Consolidated Revenues (a) $1,668.9 $740.8
Pro Forma Operating Income and
Operating Margin (i)
Analytical Technologies $183.6 17.9% $146.8 16.6%
Laboratory Products and Services 173.6 12.4% 147.9 11.3%
Other/Eliminations (0.1) (0.4)
Pro Forma Adjusted Combined
Operating Income (b) 357.1 15.2% 294.3 13.9%
Pre-merger Fisher Scientific Results
Included Above (93.8) (180.9)
Adjusted Operating Income (b) 263.3 15.8% 113.4 15.3%
Cost of Revenues Charges (c) (74.4) -4.5% (0.1) 0.0%
Restructuring and Other Costs, Net (d) (32.1) -1.9% (4.5) -0.6%
Pro Forma Stock Option Compensation
Expense - 0.0% 5.2 0.7%
Stock Compensation Acceleration
Charge (e) (36.7) -2.2% - 0.0%
Amortization of Acquisition-related
Intangible Assets (93.2) -5.6% (25.5) -3.5%
GAAP Operating Income (a) $26.9 1.6% $88.5 11.9%
(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); charges for the acceleration of
stock-based compensation expense due to a change in control (see note
(e) for details); certain other income/expense and costs associated
with the early termination of debt/credit facilities (see note (f)
for details); the tax consequences of the preceding items (see note
(g) for details); and results of discontinued operations. In 2005,
adjusted results include pro forma stock option compensation
expense. In 2006, aside from the charge discussed in note (e),
stock option expense of $9,569 is included in both reported and
adjusted results as follows: cost of revenues $917; selling, general
and administrative expenses $8,112; and research and development
expenses $540.
(c) Reported results in 2006 include $74,070 of charges for the sale of
inventories revalued at the date of acquisition and $305 of
accelerated depreciation on manufacturing assets being abandoned due
to facility consolidations. Reported results in 2005 include $166 of
accelerated depreciation on manufacturing assets abandoned due to
facility consolidations.
(d) Reported results in 2006 and 2005 include restructuring and other
costs, net, consisting principally of severance, abandoned facility
and other expenses of real estate consolidation, net of net gains on
the sale of product lines and abandoned facilities. Reported results
in 2006 also include $15,242 of charges for in-process research and
development associated with the Fisher merger.
(e) Reported results in 2006 include a charge for the acceleration of
stock-based compensation expense due to a change in control, recorded
as follows: cost of revenues $3,821; selling, general and
administrative expenses $30,844; and research and development expenses
$2,082.
(f) Reported results in 2006 include $930 of cost associated with the
early termination of debt/credit facilities.
(g) Reported provision for income taxes includes $80,702 and $9,215 of
incremental tax benefit in 2006 and 2005, respectively, for the items
in (b) through (d); and $4,159 in 2005 of incremental tax provision
for the estimated effect of tax audits of prior years in a non-U.S.
country. Adjusted provision for income taxes in 2005 includes $1,831
of tax benefits for the pro forma stock option compensation expense.
(h) Consolidated depreciation expense in 2006 and 2005 was $31,306 and
$12,380, respectively.
(i) Pro forma results combine the results of the company with the pre-
merger results of Fisher Scientific International Inc.
Consolidated Statement of Income (a)(h)
Year Ended
December % December %
(In thousands except per share amounts) 31, of 31, of
2006 Revenues 2005 Revenues
Revenues $3,791,617 $2,633,027
Costs and Operating Expenses:
Cost of revenues 2,210,189 58.3% 1,438,079 54.6%
Selling, general and
administrative expenses 952,747 25.1% 684,146 26.0%
Amortization of acquisition-
related intangible assets 170,826 4.5% 77,640 3.0%
Research and development expenses 170,184 4.5% 152,775 5.8%
Restructuring and other costs,
net (d) 45,712 1.2% 16,900 0.6%
3,549,658 93.6% 2,369,540 90.0%
Operating Income 241,959 6.4% 263,487 10.0%
Interest Income 16,419 11,569
Interest Expense (f) (51,930) (26,715)
Other Income, Net (f) 2,922 37,557
Income from Continuing Operations
Before Income Taxes 209,370 285,898
Provision for Income Taxes (43,054) (87,597)
Income from Continuing Operations 166,316 198,301
Income from Discontinued Operations
(net of income tax
provision of $233) 543 -
Gain on Disposal of Discontinued
Operations (net of income tax
provision of $1,146 in 2006 and
$16,341 in 2005) 2,076 24,917
Net Income $168,935 4.5% $223,218 8.5%
Earnings per Share from Continuing
Operations:
Basic $.85 $1.23
Diluted $.82 $1.21
Earnings per Share:
Basic $.86 $1.38
Diluted $.84 $1.36
Weighted Average Shares:
Basic 196,057 161,587
Diluted 203,672 165,334
Reconciliation of Adjusted Operating
Income and Adjusted Operating Margin
GAAP Operating Income (a) $241,959 6.4% $263,487 10.0%
Cost of Revenues Charges (c) 77,625 2.0% 13,387 0.5%
Restructuring and Other Costs,
Net (d) 45,712 1.2% 16,900 0.6%
Pro Forma Stock Option
Compensation Expense - 0.0% (20,922) -0.8%
Stock Compensation Acceleration
Charge (e) 36,747 1.0% - 0.0%
Amortization of Acquisition-
related Intangible Assets 170,826 4.5% 77,640 3.0%
Adjusted Operating Income (b) $572,869 15.1% $350,492 13.3%
Reconciliation of Adjusted Net Income
GAAP Net Income (a) $168,935 4.5% $223,218 8.5%
Cost of Revenues Charges (c) 77,625 2.0% 13,387 0.5%
Restructuring and Other Costs, Net (d) 45,712 1.2% 16,900 0.6%
Pro Forma Stock Option
Compensation Expense - 0.0% (20,922) -0.8%
Stock Compensation Acceleration
Charge (e) 36,747 1.0% - 0.0%
Amortization of Acquisition-
related Intangible Assets 170,826 4.5% 77,640 3.0%
Interest Expense and Other Income,
Net (f) 930 0.0% (27,594) -1.1%
Provision for Income Taxes (g) (110,500) -2.9% (16,224) -0.6%
Discontinued Operations, Net of
Tax (2,619) -0.1% (24,917) -0.9%
Adjusted Net Income (b) $387,656 10.2% $241,488 9.2%
Reconciliation of Adjusted Earnings
per Share
GAAP EPS (a) $0.84 $1.36
Cost of Revenues Charges,
Net of Tax (c) 0.23 0.05
Restructuring and Other Costs,
Net of Tax (d) 0.18 0.07
Pro Forma Stock Option
Compensation Expense, Net of Tax - (0.08)
Stock Compensation Acceleration
Charge, Net of Tax (e) 0.12 -
Amortization of Acquisition-related
Intangible Assets, Net of Tax 0.54 0.30
Interest Expense and Other Income,
Net (f) 0.01 (0.11)
Provision for Income Taxes (g) - 0.03
Discontinued Operations, Net of Tax (0.01) (0.15)
Adjusted EPS (b) $1.91 $1.47
Segment Data Year Ended
December % December %
(In thousands except 31, of 31, of
percentage amounts) 2006 Revenues 2005 Revenues
Revenues
Analytical Technologies $2,425,821 64.0% $2,006,744 76.2%
Laboratory Products and Services 1,406,637 37.1% 626,283 23.8%
Eliminations (40,841) -1.1% - 0.0%
Consolidated Revenues $3,791,617 100.0% $2,633,027 100.0%
Operating Income and Operating
Margin
Analytical Technologies $383,640 15.8% $268,426 13.4%
Laboratory Products and Services 189,229 13.5% 81,918 13.1%
Other - 148
Subtotal Reportable Segments 572,869 15.1% 350,492 13.3%
Cost of Revenues Charges (c) (77,625) -2.0% (13,387) -0.5%
Restructuring and Other Costs,
Net (d) (45,712) -1.2% (16,900) -0.6%
Pro Forma Stock Option
Compensation Expense - 0.0% 20,922 0.8%
Stock Compensation Acceleration
Charge (e) (36,747) -1.0% - 0.0%
Amortization of Acquisition-
related Intangible Assets (170,826) -4.5% (77,640) -3.0%
GAAP Operating Income (a) $241,959 6.4% $263,487 10.0%
Pro Forma Data (Unaudited) (i) Year Ended
December % December %
(In millions except percentage amounts) 31, of 31, of
2006 Revenues 2005 Revenues
Pro Forma Revenues (i)
Analytical Technologies $3,742.5 42.2% $3,369.3 41.7%
Laboratory Products and Services 5,437.6 61.3% 4,980.3 61.7%
Eliminations (309.7) -3.5% (274.7) -3.4%
Pro Forma Combined Revenues 8,870.4 100.0% 8,074.9 100.0%
Pre-merger Fisher Scientific
Results, Net of Eliminations (5,078.8) (5,441.9)
GAAP Consolidated Revenues (a) $3,791.6 $2,633.0
Pro Forma Operating Income and
Operating Margin (i)
Analytical Technologies $645.0 17.2% $540.9 16.1%
Laboratory Products and Services 662.5 12.2% 538.3 10.8%
Other/Eliminations (1.1) (0.4)
Pro Forma Adjusted Combined
Operating Income (b) 1,306.4 14.7% 1,078.8 13.4%
Pre-merger Fisher Scientific Results
Included Above (733.5) (728.3)
Adjusted Operating Income (b) 572.9 15.1% 350.5 13.3%
Cost of Revenues Charges (c) (77.7) -2.0% (13.4) -0.5%
Restructuring and Other Costs, Net (d) (45.7) -1.2% (16.9) -0.6%
Pro Forma Stock Option Compensation
Expense - 0.0% 20.9 0.8%
Stock Compensation Acceleration
Charge (e) (36.7) -1.0% - 0.0%
Amortization of Acquisition-related
Intangible Assets (170.8) -4.5% (77.6) -3.0%
GAAP Operating Income (a) $242.0 6.4% $263.5 10.0%
(a) "GAAP" (reported) results were determined in accordance with U.S.
generally accepted accounting principles (GAAP).
(b) Adjusted results are non-GAAP measures and 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); charges for the acceleration of stock-
based compensation expense due to a change in control (see note (e)
for details); certain other income/expense and costs associated with
the early termination of debt/credit facilities (see note (f) for
details); the tax consequences of the preceding items (see note (g)
for details); and results of discontinued operations. In 2005,
adjusted results include pro forma stock option compensation expense.
In 2006, aside from the charge discussed in note (e), stock option
expense of $28,060 is included in both reported and adjusted results
as follows: cost of revenues $3,040; selling, general and
administrative expenses $23,408; and research and development expenses
$1,612.
(c) Reported results in 2006 include $74,749 of charges for the sale of
inventories revalued at the date of acquisition and $2,876 of
accelerated depreciation on manufacturing assets being abandoned due
to facility consolidations. Reported results in 2005 include $13,387
of charges primarily for the sale of inventories revalued at the date
of acquisition.
(d) Reported results in 2006 and 2005 include restructuring and other
costs, net, consisting principally of severance, abandoned facility
and other expenses of real estate consolidation, net of net gains on
the sale of product lines and abandoned facilities. Reported results
in 2006 also include $15,242 of charges for in-process research and
development associated with the Fisher merger.
(e) Reported results in 2006 include a charge for the acceleration of
stock-based compensation expense due to a change in control, recorded
as follows: cost of revenues $3,821; selling, general and
administrative expenses $30,844; and research and development expenses
$2,082.
(f) Reported results in 2006 include $930 of cost associated with the
early termination of debt/credit facilities in interest expense.
Reported results in 2005 include $27,594 of net gains from the sale of
shares of Newport Corporation and Thoratec Corporation in other
income, net.
(g) Reported provision for income taxes includes $111,741 and $27,705 of
incremental tax benefit in 2006 and 2005, respectively, for the items
in (b) through (e) $1,241 and $4,159 in 2006 and 2005, respectively,
of incremental tax provision for the estimated effect of tax audits of
prior years in a non-U.S. country. Adjusted provision for income taxes
in 2005 includes $7,322 of tax benefits for the pro forma stock option
compensation expense. (h) Consolidated depreciation expense in 2006
and 2005 was $69,947 and $45,632, respectively.
(i) Pro forma results combine the results of the company with the pre-
merger results of Fisher Scientific International Inc.
Condensed Consolidated Balance Sheet
(In thousands) Dec. 31, 2006 Dec. 31, 2005
Assets
Current Assets:
Cash and cash equivalents $667,434 $214,326
Short-term investments 23,762 80,661
Accounts receivable, net 1,392,743 560,172
Inventories 1,164,465 359,392
Other current assets 411,132 139,349
Total current assets 3,659,536 1,353,900
Property, Plant and Equipment, Net 1,256,727 280,654
Acquisition-related Intangible Assets 7,511,565 450,740
Other Assets 309,421 200,080
Goodwill 8,524,989 1,966,195
Total Assets $21,262,238 $4,251,569
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term obligations and current
maturities of long-term obligations $483,298 $130,137
Other current liabilities 1,669,023 661,525
Total current liabilities 2,152,321 791,662
Other Long-term Liabilities 3,017,385 197,965
Long-term Obligations 2,180,705 468,630
Total Shareholders' Equity 13,911,827 2,793,312
Total Liabilities and Shareholders'
Equity $21,262,238 $4,251,569
Note:
The components of the preliminary
purchase price allocation for Fisher
are as follows:
(in billions)
Purchase Consideration (Including
Transaction Costs) $10.3
Assumption of Debt 2.3
Cash Acquired (0.4)
$12.2
Allocation:
Current assets $1.9
Acquired intangible assets 7.2
Other assets (including property,
plant and equipment) 1.2
Goodwill 6.4
Current liabilities (1.0)
Other long-term liabilities
(including long-term deferred
income taxes) (3.0)
Fair value of convertible debt
allocable to equity (0.5)
$12.2
SOURCE Thermo Fisher Scientific Inc.
CONTACT: Media, Lori Gorski, +1-781-622-1242, or
lori.gorski@thermofisher.com, or Investors, Ken Apicerno, +1-781-622-1111, or
ken.apicerno@thermofisher.com, both of Thermo Fisher Scientific Inc.
|
