Thermo Fisher Scientific Reports Second Quarter 2019 Results
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 246 3.9 242 4.0
expenses % %
Restructuring and other (484) -7.7 17 0.3
(income) costs, net (e) % %
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, 5 0.1 5 0.1
Net (c) % %
Selling, General and
Administrative Charges, % %
Net (d) 36 0.6 3 0.0
Restructuring and Other (484) -7.7 17 0.3
(Income) Costs, Net (e) % %
Amortization of
Acquisition-related % %
Intangible Assets 429 6.8 441 7.3
Adjusted Operating Income $
1,482 23.5 $
1,403 23.1
(b) % %
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 (36) -0.6 (3) 0.0
Administrative Charges, Net (d) % %
Restructuring and Other Income 484 7.7 (17) -0.3
(Costs), Net (e) % %
Amortization of Acquisition- (429) -6.8 (441) -7.3
related Intangible Assets % %
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 2,492 20.0 2,430 20.4
administrative expenses
(d) % %
Amortization of 851 6.8 885 7.4
acquisition-related
intangible assets % %
Research and development 494 4.0 476 4.0
expenses
% %
Restructuring and other (473) -3.8 62 0.5
(income) costs, net (e)
% %
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 11 0.1 8 0.1
(c)
% %
Selling, General and 47 0.4 11 0.1
Administrative Charges,
Net (d) % %
Restructuring and Other (473) -3.8 62 0.5
(Income) Costs, Net (e)
% %
Amortization of 851 6.8 885 7.4
Acquisition-related
Intangible Assets % %
Adjusted Operating Income $
2,852 22.9 $
2,689 22.5
(b)
% %
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 (47) -0.4 (11) -0.1
Administrative Charges, Net (d) % %
Restructuring and Other Income 473 3.8 (62) -0.5
(Costs), Net (e) % %
Amortization of Acquisition- (851) -6.8 (885) -7.4
related Intangible Assets % %
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.
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
