10-QPeriod: Q3 FY2004

THERMO FISHER SCIENTIFIC INC. Quarterly Report for Q3 Ended Oct 2, 2004

Filed November 8, 2004For Securities:TMO

Summary

Thermo Fisher Scientific Inc. (TMO) reported strong performance for the third quarter of 2004, demonstrating significant revenue growth and improved profitability. Total revenues increased by 21% year-over-year, driven by a combination of organic growth, favorable currency translation, and strategic acquisitions. The company's operating income margin expanded to 11.0% from 9.3% in the prior year, reflecting lower restructuring costs and a more efficient cost base, partly offset by increased amortization from acquisitions. The Life and Laboratory Sciences segment showed robust revenue growth of 27%, while the Measurement and Control segment saw a 9% increase. The divestiture of the Spectra-Physics business is progressing as planned, with a significant gain recognized during the quarter. Management expressed confidence in the company's financial position, citing sufficient cash reserves and available credit facilities to meet future capital requirements.

Key Highlights

  • 1Revenue increased by 21% to $542.3 million for the third quarter of 2004 compared to the same period in 2003, driven by organic growth, acquisitions, and favorable currency translation.
  • 2Operating income for the quarter rose to $59.6 million, with the operating income margin improving to 11.0% from 9.3% in the prior year.
  • 3The Life and Laboratory Sciences segment revenue grew by 27% to $383.2 million, boosted by acquisitions and increased demand.
  • 4The Measurement and Control segment revenue increased by 9% to $159.2 million, primarily due to a rebound in demand and favorable currency effects.
  • 5The company recognized a significant gain on the sale of its Spectra-Physics business, which was completed in July 2004, contributing positively to net income.
  • 6Cash flow from operations for the first nine months of 2004 was $175.6 million, a substantial increase from $102.8 million in the same period of 2003, indicating improved operational cash generation.
  • 7The company's balance sheet shows a healthy cash and cash equivalents position of $335.7 million as of October 2, 2004, supported by strong operating cash flows and available credit lines.

Frequently Asked Questions

Revenue growth was primarily driven by a 21% increase year-over-year, attributed to a combination of organic growth (estimated at 9% for consolidated operations), favorable currency translation effects, and the impact of recent acquisitions, partially offset by divestitures.

The company completed several acquisitions in 2004, including InnaPhase Corporation and US Counseling Services, Inc., which contributed to revenue growth. However, these acquisitions also led to an increase in amortization expense related to intangible assets, impacting profitability margins.

The sale of the Spectra-Physics business to Newport Corporation was completed on July 16, 2004. The company recognized a gain on this sale in the third quarter of 2004, which significantly boosted net income. The results of Spectra-Physics have been classified as discontinued operations for all periods presented.

As of October 2, 2004, the company had outstanding debt of $243.8 million, with 88% due in 2007 and later. Liquidity is supported by cash and short-term investments of $425.9 million and available credit of up to $250 million under its revolving credit agreements. Management believes these resources are sufficient to meet capital requirements for at least the next 24 months.