Thermo Fisher Scientific Reports Second Quarter 2019 Results

Jul. 24, 2019

WALTHAM, Mass., July 24, 2019 /PRNewswire/ -- Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, today reported its financial results for the second quarter ended June 29, 2019.

Second Quarter 2019 Highlights

  • Second quarter revenue increased 4% to $6.32 billion.
  • Second quarter GAAP diluted earnings per share (EPS) increased 50% to $2.77.
  • Second quarter adjusted EPS increased 11% to $3.04.
  • Strengthened our mass spectrometry leadership with new instruments, workflows and software, highlighted by two new-generation Thermo Scientific Orbitrap systems – the Exploris 480 and Eclipse Tribrid – and a new workflow to advance biotherapeutics, called the HR Multi-Attribute Method. In genetic analysis, we launched the Applied Biosystems QuantStudio 6 and 7 Pro Real-Time PCR systems to automate qPCR workflows.
  • Continued to expand our bioproduction capabilities to meet customer demand for biologics, committing $50 million to add manufacturing capacity for single-use technologies at our facilities in the U.S. and Europe, and establishing a Bioprocessing Collaboration Center at our Pharma Services site in St. Louis, Missouri.
  • Opened Customer Experience Center in Seoul, South Korea, to showcase our depth of capabilities for life sciences applications and create a hub for customers to work with our experts and facilitate strategic partnerships within Korea's scientific community.
  • Significantly expanded our CDMO capabilities for pharma and biotech customers, completing the acquisition of Brammer Bio, a leader in viral vector manufacturing for gene and cell therapy, for $1.7 billion and announcing our intent to acquire a GlaxoSmithKline site in Cork, Ireland, for the production of complex Active Pharmaceutical Ingredients (APIs).
  • Completed our previously announced divestiture of the Anatomical Pathology business for $1.14 billion.

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 very strong second-quarter results," said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. "Our team executed well in the quarter and we made great progress with our growth strategy to set our company up for an even stronger future.

"It was an outstanding quarter for technology innovation, and we are especially excited about the launch of two new Orbitrap systems – the Exploris 480 and Eclipse Tribrid – that extend our legacy of breakthrough mass spectrometry. In Asia-Pacific and emerging markets, we continued to capitalize on our leading position, highlighted by strong performance in China.

"We also further strengthened our value proposition for pharma and biotech customers, completing our acquisition of Brammer Bio and announcing our intent to acquire a site from GSK to expand our capacity for complex API manufacturing."

Casper added, "We've made excellent progress through the halfway point in the year, which positions us to achieve an outstanding 2019."

Second Quarter 2019

Revenue for the quarter grew 4% to $6.32 billion in 2019, versus $6.08 billion in 2018. Organic revenue growth was 5%; acquisitions increased revenue by 1% and currency translation decreased revenue by 2%.

As previously disclosed, in the final week of the quarter, the company experienced an outage in one of its data centers that caused delays in the processing of certain orders and shipments. This resulted in some second quarter activity shifting to the third quarter. Thermo Fisher estimates that the outage had a negative impact on total company organic revenue growth of approximately 1% in the second quarter, primarily affecting the Analytical Instruments Segment.

GAAP Earnings Results

GAAP diluted EPS in the second quarter of 2019 increased 50% to $2.77, versus $1.85 in the same quarter last year. GAAP operating income for the second quarter of 2019 grew to $1.50 billion, compared with $0.94 billion in the year-ago quarter. GAAP operating margin increased to 23.7%, compared with 15.4% in the second quarter of 2018. GAAP results for the second quarter of 2019 reflect the gain on the sale of the company's Anatomical Pathology business during the quarter.

Non-GAAP Earnings Results

Adjusted EPS in the second quarter of 2019 increased 11% to $3.04, versus $2.75 in the second quarter of 2018. Adjusted operating income for the second quarter of 2019 grew 6% compared with the year-ago quarter.  Adjusted operating margin was 23.5%, compared with 23.1% in the second quarter of 2018.

2019 Guidance Update

Thermo Fisher is raising its 2019 revenue and earnings guidance primarily to reflect stronger operational performance. The company is raising its revenue guidance to a new range of $25.30 to $25.50 billion versus its previous guidance of $25.17 to $25.47 billion. This would result in 4 to 5% revenue growth over 2018. The company is raising its adjusted EPS guidance to a new range of $12.16 to $12.26, versus its previous guidance of $12.08 to $12.22, for 9 to 10% growth year over year.

Segment Results

Management uses adjusted operating results to monitor and evaluate performance of the company's four business segments, as highlighted below. Since these results are used for this purpose, they are also considered to be prepared in accordance with GAAP.

Life Sciences Solutions Segment

In the second quarter of 2019, Life Sciences Solutions Segment revenue grew 9% to $1.71 billion, compared with revenue of $1.57 billion in the second quarter of 2018. Segment adjusted operating margin increased to 35.6%, versus 33.3% in the 2018 quarter.

Analytical Instruments Segment

Analytical Instruments Segment revenue grew 1% to $1.32 billion in the second quarter of 2019, compared with revenue of $1.31 billion in the second quarter of 2018. Segment adjusted operating margin was 21.6%, versus 22.2% in the 2018 quarter.

Specialty Diagnostics Segment

Specialty Diagnostics Segment revenue increased 1% to $0.94 billion in the second quarter of 2019, compared with revenue of $0.93 billion in the second quarter of 2018. Segment adjusted operating margin was 25.7%, versus 27.2% in the 2018 quarter.

Laboratory Products and Services Segment

In the second quarter of 2019, Laboratory Products and Services Segment revenue grew 3% to $2.63 billion, compared with revenue of $2.55 billion in the second quarter of 2018. Segment adjusted operating margin was 13.1%, versus 13.2% in the 2018 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 certain acquisition-related costs, including charges for the sale of inventories revalued at the date of acquisition and significant transaction costs; restructuring and other costs/income; and amortization of acquisition-related intangible assets. Adjusted EPS also excludes certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, tax provisions/benefits related to the previous items, the impact of significant tax audits or events and the results of 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 is operating cash flow, excluding net 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. 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 3 to 20 years. Based on acquisitions closed through the end of the second quarter of 2019, adjusted EPS will exclude approximately $3.30 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, the impact of significant tax audits or events (such as changes in deferred taxes from enacted tax rate changes or the estimated initial impacts of U.S. tax reform legislation), which are either isolated or cannot be expected to occur again with any 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, excluding net 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 does not provide GAAP financial measures on a forward-looking basis because we are unable to predict with reasonable certainty and without unreasonable effort items such as the timing and amount of future restructuring actions and acquisition-related charges as well as gains or losses from sales of real estate and businesses, the early retirement of debt and the outcome of legal proceedings. The timing and amount of these items are uncertain and could be material to Thermo Fisher's results computed in accordance with GAAP.

Conference Call

Thermo Fisher Scientific will hold its earnings conference call today, July 24, 2019, at 8:30 a.m. Eastern time. To listen, dial (877) 273-7122 within the U.S. or (647) 689-5496 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, August 9, 2019.

About Thermo Fisher Scientific

Thermo Fisher Scientific Inc. (NYSE: TMO) is the world leader in serving science, with revenues of more than $24 billion and approximately 70,000 employees globally. 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, deliver medicines to market 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.

Safe Harbor Statement

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 economic and political conditions and exchange rate fluctuations on international operations; 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 our recent or pending acquisitions 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 March 30, 2019, 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



June 29,


% of


June 30,


% of

(In millions except per share amounts)


2019


Revenues


2018


Revenues










Revenues


$

6,316





$

6,078




Costs and Operating Expenses:









Cost of revenues (c)


3,368



53.3

%


3,211



52.8

%

Selling, general and administrative expenses (d)


1,261



20.0

%


1,230



20.2

%

Amortization of acquisition-related intangible assets


429



6.8

%


441



7.3

%

Research and development expenses


246



3.9

%


242



4.0

%

Restructuring and other (income) costs, net (e)


(484)



-7.7

%


17



0.3

%



4,820



76.3

%


5,141



84.6

%

Operating Income


1,496



23.7

%


937



15.4

%

Interest Income


60





31




Interest Expense


(181)





(170)




Other Income, Net (f)


18





8




Income Before Income Taxes


1,393





806




Provision for Income Taxes (g)


(274)





(54)




Net Income


$

1,119



17.7

%


$

752



12.4

%










Earnings per Share:









Basic


$

2.80





$

1.87




Diluted


$

2.77





$

1.85




Weighted Average Shares:









Basic


400





403




Diluted


403





406






















Reconciliation of Adjusted Operating Income and Adjusted Operating Margin









GAAP Operating Income (a)


$

1,496



23.7

%


$

937



15.4

%

Cost of Revenues Charges, Net (c)


5



0.1

%


5



0.1

%

Selling, General and Administrative Charges, Net (d)


36



0.6

%


3



0.0

%

Restructuring and Other (Income) Costs, Net (e)


(484)



-7.7

%


17



0.3

%

Amortization of Acquisition-related Intangible Assets


429



6.8

%


441



7.3

%

Adjusted Operating Income (b)


$

1,482



23.5

%


$

1,403



23.1

%










Reconciliation of Adjusted Net Income









GAAP Net Income (a)


$

1,119





$

752




Cost of Revenues Charges, Net (c)


5





5




Selling, General and Administrative Charges, Net (d)


36





3




Restructuring and Other (Income) Costs, Net (e)


(484)





17




Amortization of Acquisition-related Intangible Assets


429





441




Other Expense, Net (f)






1




Provision for (Benefit from) Income Taxes (g)


122





(103)




Adjusted Net Income (b)


$

1,227





$

1,116













Reconciliation of Adjusted Earnings per Share









GAAP EPS (a)


$

2.77





$

1.85




Cost of Revenues Charges, Net of Tax (c)


0.01





0.01




Selling, General and Administrative Charges, Net of Tax (d)


0.07





0.01




Restructuring and Other (Income) Costs, Net of Tax (e)


(0.74)





0.03




Amortization of Acquisition-related Intangible Assets, Net of Tax


0.84





0.83




Other Expense, Net of Tax (f)






0.01




Provision for Income Taxes (g)


0.09





0.01




Adjusted EPS (b)


$

3.04





$

2.75













Reconciliation of Free Cash Flow









GAAP Net Cash Provided by Operating Activities (a)


$

1,294





$

1,444




Purchases of Property, Plant and Equipment


(220)





(183)




Proceeds from Sale of Property, Plant and Equipment


6





1




Free Cash Flow


$

1,080





$

1,262




 

Segment Data


Three Months Ended



June 29,


% of


June 30,


% of

(In millions)


2019


Revenues


2018


Revenues










Revenues









Life Sciences Solutions


$

1,710



27.1

%


$

1,569



25.8

%

Analytical Instruments


1,324



21.0

%


1,311



21.6

%

Specialty Diagnostics


943



14.9

%


932



15.3

%

Laboratory Products and Services


2,633



41.7

%


2,550



42.0

%

Eliminations


(294)



-4.7

%


(284)



-4.7

%

Consolidated Revenues


$

6,316



100.0

%


$

6,078



100.0

%










Operating Income and Operating Margin









Life Sciences Solutions


$

609



35.6

%


$

522



33.3

%

Analytical Instruments


286



21.6

%


291



22.2

%

Specialty Diagnostics


242



25.7

%


253



27.2

%

Laboratory Products and Services


345



13.1

%


337



13.2

%

Subtotal Reportable Segments


1,482



23.5

%


1,403



23.1

%










Cost of Revenues Charges, Net (c)


(5)



-0.1

%


(5)



-0.1

%

Selling, General and Administrative Charges, Net (d)


(36)



-0.6

%


(3)



0.0

%

Restructuring and Other Income (Costs), Net (e)


484



7.7

%


(17)



-0.3

%

Amortization of Acquisition-related Intangible Assets


(429)



-6.8

%


(441)



-7.3

%

GAAP Operating Income (a)


$

1,496



23.7

%


$

937



15.4

%



















(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 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 2019 and 2018 include i) $5 and $5, respectively, of charges for the sale of inventories revalued at the date of acquisition.

(d) Reported results in 2019 and 2018 include i) $37 and $4, respectively, of certain third-party expenses, principally transaction/integration costs related to acquisitions and ii) $3 and $1 of credits from changes in estimates of contingent acquisition consideration. Reported results in 2019 also include $2 of accelerated depreciation on fixed assets to be abandoned due to integration synergies and facility consolidations.

(e) Reported results in 2019 and 2018 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 2019 include $505 of gain on the sale of the Anatomical Pathology business and $6 of charges for impairment of acquired technology in development. Reported results in 2018 include $1 of hurricane response costs.

(f) Reported results in 2019 include $1 of net gains from investments and $1 of net charges for the settlement/curtailment of pension plans. Reported results in 2018 include $2 of net gains from investments, $1 of losses on the early extinguishment of debt and $2 of net charges for the settlement/curtailment of pension plans.

(g) Reported provision for income taxes includes i) $(86) and $109 of incremental tax (provision) benefit in 2019 and 2018, respectively, for the pre-tax reconciling items between GAAP and adjusted net income; ii) $7 and $6 in 2019 and 2018, respectively, of incremental tax provision from adjusting the company's non-U.S. deferred tax balances as a result of tax rate changes; and iii) $29 of incremental tax provision in 2019 principally to adjust the impacts of U.S. tax reform legislation based on new guidance/regulations issued during the period.

Notes:

Consolidated depreciation expense is $142 and $130 in 2019 and 2018, respectively.



 

Consolidated Statement of Income (unaudited) (a)(b)











Six Months Ended



June 29,


% of


June 30,


% of

(In millions except per share amounts)


2019


Revenues


2018


Revenues










Revenues


$

12,441





$

11,931




Costs and Operating Expenses:









Cost of revenues (c)


6,661



53.5

%


6,355



53.3

%

Selling, general and administrative expenses (d)


2,492



20.0

%


2,430



20.4

%

Amortization of acquisition-related intangible assets


851



6.8

%


885



7.4

%

Research and development expenses


494



4.0

%


476



4.0

%

Restructuring and other (income) costs, net (e)


(473)



-3.8

%


62



0.5

%



10,025



80.6

%


10,208



85.6

%

Operating Income


2,416



19.4

%


1,723



14.4

%

Interest Income


127





51




Interest Expense


(370)





(333)




Other Income (Expense), Net (f)


37





(1)




Income Before Income Taxes


2,210





1,440




Provision for Income Taxes (g)


(276)





(109)




Net Income


$

1,934



15.5

%


$

1,331



11.2

%










Earnings per Share:









Basic


$

4.84





$

3.31




Diluted


$

4.80





$

3.28




Weighted Average Shares:









Basic


400





402




Diluted


403





406






















Reconciliation of Adjusted Operating Income and Adjusted Operating Margin









GAAP Operating Income (a)


$

2,416



19.4

%


$

1,723



14.4

%

Cost of Revenues Charges (c)


11



0.1

%


8



0.1

%

Selling, General and Administrative Charges, Net (d)


47



0.4

%


11



0.1

%

Restructuring and Other (Income) Costs, Net (e)


(473)



-3.8

%


62



0.5

%

Amortization of Acquisition-related Intangible Assets


851



6.8

%


885



7.4

%

Adjusted Operating Income (b)


$

2,852



22.9

%


$

2,689



22.5

%










Reconciliation of Adjusted Net Income









GAAP Net Income (a)


$

1,934





$

1,331




Cost of Revenues Charges (c)


11





8




Selling, General and Administrative Charges, Net (d)


47





11




Restructuring and Other (Income) Costs, Net (e)


(473)





62




Amortization of Acquisition-related Intangible Assets


851





885




Other (Income) Expense, Net (f)


(7)





9




Benefit from Income Taxes (g)


(3)





(178)




Adjusted Net Income (b)


$

2,360





$

2,128













Reconciliation of Adjusted Earnings per Share









GAAP EPS (a)


$

4.80





$

3.28




Cost of Revenues Charges, Net of Tax (c)


0.02





0.01




Selling, General and Administrative Charges, Net of Tax (d)


0.09





0.02




Restructuring and Other (Income) Costs, Net of Tax (e)


(0.72)





0.12




Amortization of Acquisition-related Intangible Assets, Net of Tax


1.64





1.72




Other (Income) Expense, Net of Tax (f)


(0.01)





0.02




Provision for Income Taxes (g)


0.03





0.07




Adjusted EPS (b)


$

5.85





$

5.24













Reconciliation of Free Cash Flow









GAAP Net Cash Provided by Operating Activities (a)


$

1,943





$

1,522




Purchases of Property, Plant and Equipment


(421)





(301)




Proceeds from Sale of Property, Plant and Equipment


12





3




Free Cash Flow


$

1,534





$

1,224




 

Segment Data


Six Months Ended



June 29,


% of


June 30,


% of

(In millions)


2019


Revenues


2018


Revenues










Revenues









Life Sciences Solutions


$

3,317



26.7

%


$

3,068



25.7

%

Analytical Instruments


2,646



21.3

%


2,568



21.5

%

Specialty Diagnostics


1,900



15.3

%


1,879



15.7

%

Laboratory Products and Services


5,146



41.4

%


4,963



41.6

%

Eliminations


(568)



-4.7

%


(547)



-4.5

%

Consolidated Revenues


$

12,441



100.0

%


$

11,931



100.0

%










Operating Income and Operating Margin









Life Sciences Solutions


$

1,170



35.3

%


$

1,039



33.9

%

Analytical Instruments


568



21.4

%


537



20.9

%

Specialty Diagnostics


484



25.5

%


496



26.4

%

Laboratory Products and Services


630



12.2

%


617



12.4

%

Subtotal Reportable Segments


2,852



22.9

%


2,689



22.5

%










Cost of Revenues Charges (c)


(11)



-0.1

%


(8)



-0.1

%

Selling, General and Administrative Charges, Net (d)


(47)



-0.4

%


(11)



-0.1

%

Restructuring and Other Income (Costs), Net (e)


473



3.8

%


(62)



-0.5

%

Amortization of Acquisition-related Intangible Assets


(851)



-6.8

%


(885)



-7.4

%

GAAP Operating Income (a)


$

2,416



19.4

%


$

1,723



14.4

%



















(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 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 2019 and 2018 include i) $11 and $8 respectively, of charges for the sale of inventories revalued at the date of acquisition.

(d) Reported results in 2019 and 2018 include i) $48 and $12, respectively, of certain third-party expenses, principally transaction/integration costs related to acquisitions and a divestiture and ii) $3 and $1 of credits from changes in estimates of contingent acquisition consideration. Reported results in 2019 also include $2 of accelerated depreciation on fixed assets to be abandoned due to integration synergies and facility consolidations.

(e) Reported results in 2019 and 2018 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 2019 include $505 of gain on sale of the Anatomical Pathology business and $6 of charges for impairment of acquired technology in development. Reported results in 2018 include $6 of net charges for litigation and $4 of hurricane response costs.

(f) Reported results in 2019 include $8 of gains from investments and $1 of net charges for the settlement/curtailment of pension plans. Reported results in 2018 include $4 of net losses from investments, $3 of losses on the early extinguishment of debt and $2 of net charges for the settlement/curtailment of pension plans.

(g) Reported provision for income taxes includes i) $16 and $208 of incremental tax benefit in 2019 and 2018, respectively, for the pre-tax reconciling items between GAAP and adjusted net income; ii) $11 and $9 in 2019 and 2018, respectively, of incremental tax provision from adjusting the company's non-U.S. deferred tax balances as a result of tax rate changes; and iii) $2 and $21 of incremental tax provision in 2019 and 2018, respectively, principally to adjust the impacts of U.S. tax reform legislation based on new guidance/regulations issued during the period.

Notes:

Consolidated depreciation expense is $275 and $261 in 2019 and 2018, respectively.



 

Condensed Consolidated Balance Sheet (unaudited)












June 29,


December 31,

(In millions)


2019


2018






Assets





Current Assets:





Cash and cash equivalents


$

2,288



$

2,103


Accounts receivable, net


4,129



4,136


Inventories


3,209



3,005


Other current assets


1,597



1,381


Total current assets


11,223



10,625


Property, Plant and Equipment, Net


4,394



4,165


Acquisition-related Intangible Assets


14,863



14,978


Other Assets


1,733



1,117


Goodwill


25,757



25,347


Total Assets


$

57,970



$

56,232












Liabilities and Shareholders' Equity





Current Liabilities:





Short-term obligations and current maturities of long-term obligations


$

2,377



$

1,271


Other current liabilities


5,132



4,876


Total current liabilities


7,509



6,147


Other Long-term Liabilities


5,069



4,780


Long-term Obligations


16,663



17,719


Total Shareholders' Equity


28,729



27,586


Total Liabilities and Shareholders' Equity


$

57,970



$

56,232


 

Condensed Consolidated Statement of Cash Flows (unaudited)












Six Months Ended



June 29,


June 30,

(In millions)


2019


2018






Operating Activities





Net income


$

1,934



$

1,331







Adjustments to reconcile net income to net cash provided by operating activities:





Depreciation and amortization


1,126



1,146


Change in deferred income taxes


(365)



(99)


Net gain on sale of business


(505)




Other non-cash expenses, net


144



154


Changes in assets and liabilities, excluding the effects of acquisitions and disposition


(391)



(1,010)


Net cash provided by operating activities


1,943



1,522







Investing Activities





Acquisitions, net of cash acquired


(1,686)



(59)


Purchases of property, plant and equipment


(421)



(301)


Proceeds from sale of property, plant and equipment


12



3


Proceeds from sale of business, net of cash divested


1,126




Other investing activities, net


19



(7)


Net cash used in investing activities


(950)



(364)







Financing Activities





Repayment of debt


(3)



(1,353)


Net proceeds from issuance of commercial paper


1,895



2,761


Repayment of commercial paper


(1,855)



(2,655)


Purchases of company common stock


(750)




Dividends paid


(144)



(129)


Net proceeds from issuance of company common stock under employee stock plans


122



78


Other financing activities, net




(50)


Net cash used in financing activities


(735)



(1,348)







Exchange Rate Effect on Cash


(61)



(215)


Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash


197



(405)


Cash, Cash Equivalents and Restricted Cash at Beginning of Period


2,117



1,361


Cash, Cash Equivalents and Restricted Cash at End of Period


$

2,314



$

956












Free Cash Flow (a)


$

1,534



$

1,224












(a) Free cash flow is net cash provided by operating activities of continuing operations less net purchases of property, plant and equipment.


 

Thermo Fisher Scientific (PRNewsfoto/Thermo Fisher Scientific)

 

Media Contact Information:
Karen Kirkwood
Phone: 781-622-1306
E-mail: karen.kirkwood@thermofisher.com  
Website: www.thermofisher.com  

Investor Contact Information:
Ken Apicerno
Phone: 781-622-1294
E-mail: ken.apicerno@thermofisher.com

 

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SOURCE Thermo Fisher Scientific

NYSE: TMO (Common Stock)

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About Thermo Fisher Scientific

Thermo Fisher Scientific Inc. (NYSE: TMO) is the world leader in serving science, with revenues of more than $24 billion and approximately 70,000 employees globally. 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, deliver medicines to market 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 services. For more information, please visit http://www.thermofisher.com.

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