10-QPeriod: Q2 FY2009

THERMO FISHER SCIENTIFIC INC. Quarterly Report for Q2 Ended Jun 27, 2009

Filed July 31, 2009For Securities:TMO

Summary

Thermo Fisher Scientific Inc. reported revenues of $2.48 billion for the second quarter ended June 27, 2009, a decrease of 8% compared to the prior year's quarter. This decline was attributed to a general economic downturn impacting customer demand, particularly for equipment sales. Despite the revenue challenges, the company demonstrated resilience in managing costs, with operating income decreasing by 22% year-over-year. Restructuring and other costs increased due to economic responses, but productivity improvements helped offset some of the revenue decline. The company's balance sheet shows a solid cash position of $1.42 billion, providing liquidity. However, long-term obligations remain significant at $2.02 billion. The company's strategy continues to focus on augmenting internal growth with strategic acquisitions, such as the Biolab acquisition in April 2009, which expands its geographic reach. Despite a challenging macroeconomic environment, Thermo Fisher maintains a positive outlook on its ability to meet future cash requirements through operating cash flow and available credit.

Key Highlights

  • 1Total revenues for the second quarter of 2009 were $2.48 billion, down 8% year-over-year, primarily due to decreased demand from the global economic downturn.
  • 2Operating income decreased by 22% to $259 million in Q2 2009, reflecting lower profitability from reduced revenues, partly offset by cost controls and productivity improvements.
  • 3The company reported $1.42 billion in cash and cash equivalents as of June 27, 2009, indicating strong liquidity.
  • 4Acquisitions remain a key part of the company's strategy, with the acquisition of Biolab in April 2009 noted as expanding geographic reach.
  • 5Restructuring and other costs increased significantly in Q2 2009 ($13 million vs. $5 million in Q2 2008), largely due to actions taken in response to the economic downturn.
  • 6Effective tax rate decreased to 10.9% in Q2 2009 from 19.6% in Q2 2008, attributed to reduced earnings in higher tax jurisdictions.
  • 7The company generated $734 million in cash flow from operations for the first six months of 2009, an increase from $590 million in the prior year's period, driven by improved working capital management.

Frequently Asked Questions

The decrease in revenue for the second quarter of 2009 was primarily attributed to decreased customer demand, which the company believes is a result of the global economic downturn. Sales of equipment were particularly affected, while sales of consumables showed more modest growth.

Thermo Fisher Scientific is focusing on productivity improvements and lower operating costs, including those resulting from restructuring actions and global sourcing initiatives. While restructuring and other costs increased due to responses to the economic downturn, the company has implemented measures to offset revenue declines.

The company reported strong liquidity with $1.42 billion in cash and cash equivalents as of June 27, 2009. This, combined with future cash flow from operations and available credit under its revolving credit agreement, is considered sufficient to meet its cash requirements for the foreseeable future.

Acquisitions continue to be a part of the company's growth strategy. The key acquisition in the first half of 2009 was Biolab, an Australia-based provider of analytical instruments, life science consumables, and laboratory equipment, which helped broaden the company's geographic reach.