10-QPeriod: Q2 FY2003

THERMO FISHER SCIENTIFIC INC. Quarterly Report for Q2 Ended Jun 28, 2003

Filed August 7, 2003For Securities:TMO

Summary

Thermo Fisher Scientific Inc. (TMO) reported a modest revenue increase of 1% for the second quarter of 2003 compared to the prior year, reaching $516.4 million. This growth was primarily driven by favorable currency translation effects, which added $32.9 million, while underlying demand in certain segments, particularly Optical Technologies and Measurement and Control, saw a decrease. Profitability showed improvement, with operating income rising to $48.3 million from $35.2 million in the prior year's quarter. This was largely attributable to a significant reduction in restructuring and other costs, which fell from $16.1 million in Q2 2002 to $4.1 million in Q2 2003. The company also reported a gain on the sale of FLIR Systems, Inc. shares, contributing positively to 'Other Income, Net.' For the first six months of 2003, revenues were $1.017 billion, a 2% increase year-over-year, with operating income at $87.6 million, up from $71.9 million in the same period last year, also benefiting from lower restructuring expenses.

Key Highlights

  • 1Revenue increased by 1% to $516.4 million for the second quarter of 2003, largely due to favorable currency translation effects.
  • 2Operating income improved significantly to $48.3 million, up from $35.2 million in the prior year's quarter, driven by reduced restructuring costs.
  • 3Restructuring and other costs decreased substantially from $16.1 million in Q2 2002 to $4.1 million in Q2 2003.
  • 4The company reported gains from the sale of FLIR Systems, Inc. shares, contributing to 'Other Income, Net.'
  • 5For the first six months of 2003, revenues grew 2% to $1.017 billion, with operating income up 22% to $87.6 million.
  • 6The company redeemed $70.9 million in 4 3/8% subordinated convertible debentures in April 2003 and $197.1 million in 4% subordinated convertible debentures in July 2003 to reduce interest costs.

Frequently Asked Questions

The primary driver of revenue growth in the second quarter of 2003 was favorable currency translation effects, which increased revenues by $32.9 million. Underlying demand in certain segments, particularly Optical Technologies and Measurement and Control, experienced a decrease.

Restructuring efforts significantly benefited profitability. Restructuring and other costs decreased from $16.1 million in the second quarter of 2002 to $4.1 million in the second quarter of 2003, leading to a substantial increase in operating income.

The company expects to continue spending on research and development at a rate of 7-7.5% of revenues for at least the near term, focusing spending on projects with the highest estimated returns.

During the first six months of 2003, the company redeemed $70.9 million in 4 3/8% subordinated convertible debentures in April and subsequently redeemed $197.1 million in 4% subordinated convertible debentures in July 2003. These actions were aimed at reducing interest costs. The company also repurchased $74.1 million of its own debt and equity securities.