Thermo Fisher Scientific Inc. reported its financial results for the second quarter ended June 30, 2018.
WALTHAM, Mass., July 25, 2018 /PRNewswire/ -- Thermo Fisher Scientific, Inc. (NYSE: TMO), the world leader in serving science, today reported its financial results for the second quarter ended June 30, 2018.
Second Quarter 2018 Highlights
- Grew revenue 22% to $6.08 billion.
- Increased GAAP diluted earnings per share (EPS) 19% to $1.85.
- Increased adjusted EPS 20% to $2.75.
- Launched suite of new mass spectrometry systems for life sciences and applied markets - highlighted by the Thermo Scientific Q Exactive UHMR for protein research - as well as new products for clinical research and diagnostics, including the Ion Torrent Oncomine Childhood Cancer Research Assay and the Thermo Scientific B.R.A.H.M.S. Kryptor Gold immunoassay analyzer in Europe.
- Opened new Precision Medicine Science Center in the U.S., giving customers greater access to the range of technologies and expertise we offer to help them accelerate development of individualized patient treatments.
- Announced agreement to acquire Gatan Inc., a leading provider of instrumentation and software to enhance the performance of electron microscopy systems.
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 another excellent quarter, which reflects the strength of our global competitive position," said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. "Conditions across our end markets globally were strong and our team executed well to capture the opportunities for growth.
"Among the highlights during the quarter, we launched a comprehensive line-up of new products to help our customers meet their goals in life science research, applied markets and clinical settings. We continued to effectively leverage our scale to deliver strong growth in Asia-Pacific and emerging markets, including China. We also announced our agreement to acquire Gatan, which is a great fit with our electron microscopy business and will strengthen our customer offering."
Casper added, "Our excellent first half of the year positions us to achieve a very successful 2018."
Second Quarter 2018
Revenue for the quarter grew 22% to $6.08 billion in 2018, versus $4.99 billion in 2017. Organic revenue growth was 8%; acquisitions increased revenue by 12% and currency translation increased revenue by 2%.
GAAP Earnings Results
GAAP diluted EPS in the second quarter increased 19% to $1.85, versus $1.56 in the same quarter last year. GAAP operating income for the second quarter of 2018 grew to $0.94 billion, compared with $0.75 billion in the second quarter of 2017. GAAP operating margin increased to 15.4%, compared with 15.0% in the second quarter of 2017.
Non-GAAP Earnings Results
Adjusted EPS in the second quarter of 2018 increased 20% to $2.75, versus $2.30 in the second quarter of 2017. Adjusted operating income for the second quarter of 2018 grew 21% compared with the year-ago quarter. Adjusted operating margin was 23.1%, compared with 23.2% in the second quarter of 2017.
2018 Guidance Update
Thermo Fisher is raising its 2018 revenue and earnings guidance to reflect strong operational performance, partially offset by less favorable foreign exchange. The company is raising its revenue guidance to a new range of $23.68 to $23.86 billion versus its previous guidance of $23.62 to $23.86 billion. This would result in 13 to 14% revenue growth over 2017. The company is raising its adjusted EPS guidance to a new range of $10.89 to $11.01, versus its previous guidance of $10.80 to $10.96, for 15 to 16% 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 2018, Life Sciences Solutions Segment revenue grew 12% to $1.57 billion, compared with revenue of $1.40 billion in the second quarter of 2017. Segment adjusted operating margin increased to 33.3%, versus 31.9% in the 2017 quarter.
Analytical Instruments Segment
Analytical Instruments Segment revenue grew 13% to $1.31 billion in the second quarter of 2018, compared with revenue of $1.17 billion in the second quarter of 2017. Segment adjusted operating margin increased to 22.2%, versus 19.9% in the 2017 quarter.
Specialty Diagnostics Segment
Specialty Diagnostics Segment revenue grew 8% to $0.93 billion in the second quarter of 2018, compared with revenue of $0.86 billion in the second quarter of 2017. Segment adjusted operating margin was 27.2% in both periods.
Laboratory Products and Services Segment
Laboratory Products and Services Segment results reflect the acquisition of Patheon in late August 2017. In the second quarter of 2018, segment revenue grew 42% to $2.55 billion, compared with revenue of $1.79 billion in the second quarter of 2017. Segment adjusted operating margin was 13.2%, versus 13.7% in the 2017 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 from continuing operations, less net capital expenditures, 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. In 2018, based on acquisitions closed through the end of the second quarter of 2018, our adjusted EPS will exclude approximately $3.35 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 from continuing operations, less net capital expenditures, 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 25, 2018, at 8:30 a.m. Eastern time. To listen, dial (844) 579-6824 within the U.S. or (763) 488-9145 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 10, 2018.
About Thermo Fisher Scientific
Thermo Fisher Scientific Inc. (NYSE: TMO) is the world leader in serving science, with revenues of more than $20 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 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 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 31, 2018, 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.
Media Contact Information:
Karen Kirkwood
Phone: 781-622-1306
E-mail: karen.kirkwood@thermofisher.com
Website: www.thermofisher.com
or
Investor Contact Information:
Ken Apicerno
Phone: 781-622-1294
E-mail: ken.apicerno@thermofisher.com
Consolidated Statement of
Income (unaudited)
(a)(b)
Three Months Ended
June 30, % of July 1, % of
(In millions except per
share amounts) 2018 Revenues 2017 Revenues
----------------------- ---- -------- ---- --------
Revenues $6,078 $4,990
------ ------
Costs and Operating
Expenses:
Cost of revenues (c) 3,211 52.8% 2,578 51.7%
Selling, general and
administrative expenses
(d) 1,230 20.2% 1,039 20.8%
Amortization of
acquisition-related
intangible assets 441 7.3% 380 7.6%
Research and development
expenses 242 4.0% 222 4.4%
Restructuring and other
costs, net (e) 17 0.3% 22 0.5%
5,141 84.6% 4,241 85.0%
----- ---- ----- ----
Operating Income 937 15.4% 749 15.0%
Interest Income 31 18
Interest Expense (170) (134)
Other Income (Expense),
Net (f) 8 (7)
--- ---
Income Before Income
Taxes 806 626
Provision for Income
Taxes (g) (54) (13)
--- ---
Income from Continuing
Operations 752 613
Loss from Discontinued
Operations - (1)
--- ---
Net Income $752 12.4% $612 12.3%
==== ==== ==== ====
Earnings per Share from
Continuing Operations:
Basic $1.87 $1.57
===== =====
Diluted $1.85 $1.56
===== =====
Earnings per Share:
Basic $1.87 $1.57
===== =====
Diluted $1.85 $1.56
===== =====
Weighted Average Shares:
Basic 403 390
=== ===
Diluted 406 393
=== ===
Reconciliation of
Adjusted Operating
Income and Adjusted
Operating Margin
GAAP Operating Income (a) $937 15.4% $749 15.0%
Cost of Revenues Charges
(c) 5 0.1% 1 0.0%
Selling, General and
Administrative Charges,
Net (d) 3 0.0% 7 0.1%
Restructuring and Other
Costs, Net (e) 17 0.3% 22 0.5%
Amortization of
Acquisition-related
Intangible Assets 441 7.3% 380 7.6%
Adjusted Operating Income
(b) $1,403 23.1% $1,159 23.2%
====== ==== ====== ====
Reconciliation of
Adjusted Net Income
GAAP Net Income (a) $752 $612
Cost of Revenues Charges
(c) 5 1
Selling, General and
Administrative Charges,
Net (d) 3 7
Restructuring and Other
Costs, Net (e) 17 22
Amortization of
Acquisition-related
Intangible Assets 441 380
Other (Income) Expense,
Net (f) 1 3
Benefit from Income Taxes
(g) (103) (123)
Discontinued Operations,
Net of Tax - 1
Adjusted Net Income (b) $1,116 $903
====== ====
Reconciliation of
Adjusted Earnings per
Share
GAAP EPS (a) $1.85 $1.56
Cost of Revenues Charges,
Net of Tax (c) 0.01 -
Selling, General and
Administrative Charges,
Net of Tax (d) 0.01 0.01
Restructuring and Other
Costs, Net of Tax (e) 0.03 0.04
Amortization of
Acquisition-related
Intangible Assets, Net
of Tax 0.83 0.68
Other (Income) Expense,
Net of Tax (f) 0.01 0.01
Provision for (Benefit
from) Income Taxes (g) 0.01 -
Discontinued Operations,
Net of Tax - -
Adjusted EPS (b) $2.75 $2.30
===== =====
Reconciliation of Free
Cash Flow
GAAP Net Cash Provided by
Operating Activities (a) $1,444 $849
Net Cash Used in
Discontinued Operations - -
Purchases of Property,
Plant and Equipment (183) (88)
Proceeds from Sale of
Property, Plant and
Equipment 1 1
Free Cash Flow $1,262 $762
====== ====
Segment Data Three Months Ended
June 30, % of July 1, % of
(In millions) 2018 Revenues 2017 Revenues
------------ ---- -------- ---- --------
Revenues
Life Sciences Solutions $1,569 25.8% $1,405 28.2%
Analytical Instruments 1,311 21.6% 1,166 23.4%
Specialty Diagnostics 932 15.3% 862 17.3%
Laboratory Products and
Services 2,550 42.0% 1,792 35.9%
Eliminations (284) -4.7% (235) -4.8%
Consolidated Revenues $6,078 100.0% $4,990 100.0%
------ ----- ------ -----
Operating Income and
Operating Margin
Life Sciences Solutions $522 33.3% $448 31.9%
Analytical Instruments 291 22.2% 232 19.9%
Specialty Diagnostics 253 27.2% 234 27.2%
Laboratory Products and
Services 337 13.2% 245 13.7%
Subtotal Reportable
Segments 1,403 23.1% 1,159 23.2%
Cost of Revenues Charges
(c) (5) -0.1% (1) 0.0%
Selling, General and
Administrative Charges,
Net (d) (3) 0.0% (7) -0.1%
Restructuring and Other
Costs, Net (e) (17) -0.3% (22) -0.5%
Amortization of
Acquisition-related
Intangible Assets (441) -7.3% (380) -7.6%
GAAP Operating Income (a) $937 15.4% $749 15.0%
---- ---- ---- ----
(a) "GAAP" (reported) results were determined in
accordance with U.S. generally accepted accounting
principles (GAAP). The results for 2017 have been
restated for the immaterial impacts of adopting
new guidance on pension accounting.
(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 2018 include $5 of charges for
the sale of inventories revalued at the date of
acquisition. Reported results in 2017 include $1
of accelerated depreciation on fixed assets to be
abandoned due to facility consolidations.
(d) Reported results in 2018 and 2017 include $4 and
$6, respectively, of certain third-party
expenses, principally transaction/integration
costs related to recently completed acquisitions.
Reported results in 2018 also include $1 of
credits from changes in estimates of contingent
acquisition consideration. Reported results in
2017 also included $1 of accelerated depreciation
on fixed assets to be abandoned due to integration
synergies.
(e) Reported results in 2018 and 2017 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 2018 include $1 of hurricane
response costs. Reported results in 2017 include
$2 of charges for the settlement of retirement
plans.
(f) Reported results in 2018 and 2017 include $2 and
$1, respectively, of net gains on investments,
offset in part by $1 and $1, respectively, of
losses on the early extinguishment of debt.
Reported results in 2018 also include $2 of net
charges for the settlement/curtailment of pension
plans. Reported results in 2017 also include a $3
charge related to fees paid to obtain bridge
financing commitments for the acquisition of
Patheon.
(g) Reported provision for income taxes includes i)
$109 and $124 of incremental tax benefit in 2018
and 2017, respectively, for the pre-tax
reconciling items between GAAP and adjusted net
income; ii) $6 in 2018, of incremental tax
provision from adjusting the company's non-U.S.
deferred tax balances as a result of tax rate
changes; and iii) $1 in 2017, of incremental tax
provision due to audit settlements.
Notes:
Consolidated depreciation expense is $130 and $97 in 2018 and
2017, respectively.
Consolidated Statement of
Income (unaudited)
(a)(b)
Six Months Ended
June 30, % of July 1, % of
(In millions except per
share amounts) 2018 Revenues 2017 Revenues
----------------------- ---- -------- ---- --------
Revenues $11,931 $9,755
------- ------
Costs and Operating
Expenses:
Cost of revenues (c) 6,355 53.3% 5,024 51.5%
Selling, general and
administrative expenses
(d) 2,430 20.4% 2,131 21.8%
Amortization of
acquisition-related
intangible assets 885 7.4% 748 7.7%
Research and development
expenses 476 4.0% 437 4.5%
Restructuring and other
costs, net (e) 62 0.5% 46 0.5%
10,208 85.6% 8,386 86.0%
------ ---- ----- ----
Operating Income 1,723 14.4% 1,369 14.0%
Interest Income 51 36
Interest Expense (333) (269)
Other Expense, Net (f) (1) (7)
Income Before Income
Taxes 1,440 1,129
(Provision for) Benefit
from Income Taxes (g) (109) 35
Income from Continuing
Operations 1,331 1,164
Loss from Discontinued
Operations, Net of Tax - (1)
Net Income $1,331 11.2% $1,163 11.9%
====== ==== ====== ====
Earnings per Share from
Continuing Operations:
Basic $3.31 $2.98
===== =====
Diluted $3.28 $2.96
===== =====
Earnings per Share:
Basic $3.31 $2.98
===== =====
Diluted $3.28 $2.95
===== =====
Weighted Average Shares:
Basic 402 390
=== ===
Diluted 406 394
=== ===
Reconciliation of
Adjusted Operating
Income and Adjusted
Operating Margin
GAAP Operating Income (a) $1,723 14.4% $1,369 14.0%
Cost of Revenues Charges
(c) 8 0.1% 32 0.3%
Selling, General and
Administrative Charges,
Net (d) 11 0.1% 38 0.4%
Restructuring and Other
Costs, Net (e) 62 0.5% 46 0.5%
Amortization of
Acquisition-related
Intangible Assets 885 7.4% 748 7.7%
Adjusted Operating Income
(b) $2,689 22.5% $2,233 22.9%
====== ==== ====== ====
Reconciliation of
Adjusted Net Income
GAAP Net Income (a) $1,331 $1,163
Cost of Revenues Charges
(c) 8 32
Selling, General and
Administrative Charges,
Net (d) 11 38
Restructuring and Other
Costs, Net (e) 62 46
Amortization of
Acquisition-related
Intangible Assets 885 748
Other Expense, Net (f) 9 -
Benefit from Income Taxes
(g) (178) (305)
Discontinued Operations,
Net of Tax - 1
Adjusted Net Income (b) $2,128 $1,723
====== ======
Reconciliation of
Adjusted Earnings per
Share
GAAP EPS (a) $3.28 $2.95
Cost of Revenues Charges,
Net of Tax (c) 0.01 0.05
Selling, General and
Administrative Charges,
Net of Tax (d) 0.02 0.07
Restructuring and Other
Costs, Net of Tax (e) 0.12 0.08
Amortization of
Acquisition-related
Intangible Assets, Net
of Tax 1.72 1.38
Other Expense, Net of Tax
(f) 0.02 -
Provision for (Benefit
from) Income Taxes (g) 0.07 (0.15)
Discontinued Operations,
Net of Tax - -
Adjusted EPS (b) $5.24 $4.38
===== =====
Reconciliation of Free
Cash Flow
GAAP Net Cash Provided by
Operating Activities (a) $1,522 $1,210
Net Cash Used in
Discontinued Operations - 1
Purchases of Property,
Plant and Equipment (301) (181)
Proceeds from Sale of
Property, Plant and
Equipment 3 2
--- ---
Free Cash Flow $1,224 $1,032
====== ======
Segment Data Six Months Ended
June 30, % of July 1, % of
(In millions) 2018 Revenues 2017 Revenues
------------ ---- -------- ---- --------
Revenues
Life Sciences Solutions $3,068 25.7% $2,768 28.4%
Analytical Instruments 2,568 21.5% 2,218 22.7%
Specialty Diagnostics 1,879 15.7% 1,728 17.7%
Laboratory Products and
Services 4,963 41.6% 3,491 35.8%
Eliminations (547) -4.5% (450) -4.6%
----
Consolidated Revenues $11,931 100.0% $9,755 100.0%
------- ----- ------ -----
Operating Income and
Operating Margin
Life Sciences Solutions $1,039 33.9% $881 31.8%
Analytical Instruments 537 20.9% 424 19.1%
Specialty Diagnostics 496 26.4% 467 27.0%
Laboratory Products and
Services 617 12.4% 461 13.2%
Subtotal Reportable
Segments 2,689 22.5% 2,233 22.9%
Cost of Revenues Charges
(c) (8) -0.1% (32) -0.3%
Selling, General and
Administrative Charges,
Net (d) (11) -0.1% (38) -0.4%
Restructuring and Other
Costs, Net (e) (62) -0.5% (46) -0.5%
Amortization of
Acquisition-related
Intangible Assets (885) -7.4% (748) -7.7%
GAAP Operating Income (a) $1,723 14.4% $1,369 14.0%
------ ---- ------ ----
(a) "GAAP" (reported) results were determined in
accordance with U.S. generally accepted accounting
principles (GAAP). The results for 2017 have been
restated for the immaterial impacts of adopting
new guidance on pension accounting.
(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 2018 and 2017 include i) $8 and
$31, respectively, of charges for the sale of
inventories revalued at the date of acquisition.
Reported results in 2017 also include $1 of
accelerated depreciation on manufacturing assets
to be abandoned due to facility consolidations.
(d) Reported results in 2018 and 2017 include i) $12
and $12, respectively, of certain third-party
expenses, principally transaction/integration
costs related to recently completed acquisitions
and ii) $(1) and $25, respectively, of (credits)/
charges from changes in estimates of contingent
acquisition consideration. Reported results in
2017 also include $1 of accelerated depreciation
on fixed assets to be abandoned due to integration
synergies.
(e) Reported results in 2018 and 2017 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 2018 include $6 of net charges
for litigation and $4 of hurricane response costs.
Reported results in 2017 include $4 of net charges
for litigation and $2 of charges for the
settlement of retirement plans.
(f) 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.
Reported results in 2017 include $4 of losses on
the early extinguishment of debt and a $3 charge
related to fees paid to obtain bridge financing
commitments for the acquisition of Patheon, offset
in part by $7 of net gains from investments.
(g) Reported provision for income taxes includes i)
$208 and $243 of incremental tax benefit in 2018
and 2017, respectively, for the pre-tax
reconciling items between GAAP and adjusted net
income; ii) $(9) and $63 of incremental tax
(provision) benefit in 2018 and 2017,
respectively, from adjusting the company's non-
U.S. deferred tax balances as a result of tax rate
changes, iii) in 2018, $21 of incremental tax
provision to adjust the estimated initial impacts
of U.S. tax reform legislation recorded in 2017
and iv) in 2017, $1 of incremental tax provision
in 2017 due to audit settlements.
Notes:
Consolidated depreciation expense is $261 and $194 in 2018 and
2017, respectively.
Condensed
Consolidated
Balance Sheet
(unaudited)
June 30, December 31,
(In millions) 2018 2017
------------ ---- ----
Assets
Current Assets:
Cash and cash
equivalents $937 $1,335
Accounts
receivable,
net 3,911 3,879
Inventories 2,866 2,971
Other current
assets 1,760 1,236
Total current
assets 9,474 9,421
----- -----
Property, Plant
and Equipment,
Net 3,952 4,047
Acquisition-
related
Intangible
Assets 15,680 16,684
Other Assets 1,177 1,227
Goodwill 25,120 25,290
Total Assets $55,403 $56,669
======= =======
Liabilities and
Shareholders'
Equity
Current
Liabilities:
Short-term
obligations
and current
maturities of
long-term
obligations $1,711 $2,135
Other current
liabilities 4,269 4,913
Total current
liabilities 5,980 7,048
----- -----
Other Long-
term
Liabilities 5,269 5,335
Long-term
Obligations 17,709 18,873
Total
Shareholders'
Equity 26,445 25,413
Total
Liabilities
and
Shareholders'
Equity $55,403 $56,669
======= =======
Condensed
Consolidated
Statement of
Cash Flows
(unaudited)
Six Months Ended
June 30, July 1,
(In millions) 2018 2017
------------ ---- ----
Operating
Activities
Net income $1,331 $1,163
Loss from
discontinued
operations - 1
Income from
continuing
operations 1,331 1,164
Adjustments to
reconcile net
income to net
cash provided
by operating
activities:
Depreciation
and
amortization 1,146 942
Change in
deferred
income taxes (99) (299)
Other non-cash
expenses, net 154 148
Changes in
assets and
liabilities,
excluding the
effects of
acquisitions
and
dispositions (1,010) (744)
Net cash
provided by
continuing
operations 1,522 1,211
Net cash used
in
discontinued
operations - (1)
Net cash
provided by
operating
activities 1,522 1,210
----- -----
Investing
Activities
Acquisitions,
net of cash
acquired (59) (307)
Purchases of
property,
plant and
equipment (301) (181)
Proceeds from
sale of
property,
plant and
equipment 3 2
Other investing
activities,
net (7) 9
Net cash used
in investing
activities (364) (477)
---- ----
Financing
Activities
Net proceeds
from issuance
of debt - 519
Repayment of
debt (1,353) (1,329)
Net proceeds
from issuance
of commercial
paper 2,761 4,487
Repayment of
commercial
paper (2,655) (3,991)
Purchases of
company common
stock - (750)
Dividends paid (129) (118)
Net proceeds
from issuance
of company
common stock
under employee
stock plans 78 99
Other financing
activities,
net (50) -
Net cash used
in financing
activities (1,348) (1,083)
------ ------
Exchange Rate
Effect on Cash (215) 168
---- ---
Decrease in
Cash, Cash
Equivalents
and Restricted
Cash (405) (182)
Cash, Cash
Equivalents
and Restricted
Cash at
Beginning of
Period 1,361 811
----- ---
Cash, Cash
Equivalents
and Restricted
Cash at End of
Period $956 $629
==== ====
Free Cash Flow
(a) $1,224 $1,032
a) Free cash flow is net cash
provided by operating
activities of continuing
operations less net
purchases of property, plant
and equipment.
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SOURCE Thermo Fisher Scientific
